Appropriation Bill, 1996 [ Certified Money Bill ]: Second and Subsequent Stages.

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

A Chathaoirligh, as it is my first time in this House since you assumed high office, may I take the liberty of wishing you every success, good health and fortune? We all wish the circumstances of your elevation were otherwise —we dealt with that at another time—but you have my sincere good wishes.

I welcome this opportunity, in the unavoidable absence of my colleague, the Minister for Finance, to address Seanad Éireann today on the 1996 Appropriation Bill. The annual Appropriation Bill gives statutory effect to the departmental Estimates for the Supply Services, non-capital and capital, including all Supplementary Estimates which were approved by the Dáil since the last Appropriation Act. The Bill appropriates to the various services listed in the Schedule the sum of £11,043 million. This total amount comprises the original Estimates of £10,794 million, as voted by Dáil Éireann last July, and Supplementary Estimates totalling £249 million. In line with the normal practice, the Bill also approves the use of departmental receipts amounting to £1,019 million as appropriations-in-aid.

Most of the focus of public debate on Government expenditure is on the level of spending on gross non-capital supply services. This relates to the day-to-day spending of Departments. The 1996 Estimate for gross non-capital spending as published in the revised Estimates Volume was £12,087 million which was subsequently increased by £50 million following the presentation of a revised Estimate for the Department of Agriculture, Food and Forestry, to provide £50 million in respect of EU disallowances. The Supplementary Estimates provided for in the Appropriation Bill add a further £131 million on top of this £50 million. These additions bring total 1996 gross current spending to £12,268 million. This is the figure for gross current expenditure referred to by the Minister for Finance in his statement on the publication of the 1997 Estimates last week. It represents an increase of 6.7 per cent in nominal terms or 4.8 per cent in real terms over 1995. It is likely that the actual 1996 outturn will be lower than £12,268 million since savings may emerge between now and the end of the year.

In his statement on the Estimates, the Minister dealt comprehensively with the reasons expenditure overruns have occurred this year which have necessitated the Supplementary Estimates included in the Appropriation Bill. The Minister explained in considerable detail the reasons spending has increased in 1996 in order to show that the criticisms which have been made recently that public expenditure is out of control are unjustified and misleading. The single biggest increases in current spending have been for the EU agricultural disallowances or beef fines and for additional spending due to the BSE crisis. These two items alone added £113 million to gross current spending this year. This additional expenditure was absolutely unavoidable and arose from circumstances which were entirely outside the Government's control.

It is true that the Government also decided to increase spending this year in a number of other areas where there was a clear and pressing need to do so. For example, it was necessary to allocate additional resources to the Government's anti-crime package. Also additional funds were provided to meet pressures in the health area in relation to the cost of the community drugs schemes and to reduce waiting lists.

I want to repeat in this House the assurance given by the Minister for Finance in the Dáil yesterday that the additional expenditure which has emerged this year does not in any way signal a weakening of this Government's resolve to control public expenditure. Spending is being closely monitored and controlled. The Government has taken steps to improve the expenditure management systems in Departments through a tightening up of the normal expenditure reporting arrangements. Further measures to improve the expenditure management process are being introduced as part of the strategic management initiative, to which I will refer in more detail later.

In his statement in the Dáil yesterday, the Minister for Finance gave a detailed outline of the position in relation to expenditure in 1997. I do not propose to go over the same ground today. However, one very important point which the Minister made is worth repeating and it is this: the fundamental measure of the health of the public finances is the level of the general Government deficit. The House can rest assured that, on this measure, the public finances are firmly under control.

There has been much criticism that the Government has exceeded the demanding targets which it set for itself to limit the growth in current public expenditure to an average increase of 2 per cent above inflation over the years 1996 and 1997. However, it is misleading and blinkered to look at the position on expenditure in isolation from the overall budgetary position. Government budgetary policy is very much on course to meet the requirements for participation in economic and monetary union. The Government's expenditure plans for 1997, as detailed in the Estimates published last week, are an integral part of the overall budgetary framework and are entirely consistent with the achievement of the Government's overall budgetary goals.

The budgetary framework which the Government has decided for 1997 and in a medium-term context will allow for a level of Government borrowing or general Government deficit which is well within the guidelines set out in the Maastricht Treaty and in the EU stability and growth pact, final details of which were agreed at last weekend's EU Summit in Dublin Castle. I would like to take this opportunity to pay tribute to the efforts and considerable skill of my colleague, the Minister for Finance, Deputy Ruairí Quinn, in successfully negotiating the stability and growth pact which will give a decisive further impetus to economic and monetary union.

This Government's record on controlling public expenditure stands up well to scrutiny when one looks at the position under the previous Government. The real increase in current public spending in the years 1992-94, inclusive, was an average of about 6 per cent per annum. This is significantly higher than the average of about 4 per cent per annum in the period 1995-97 under this Government. It is clear, therefore, that this Government, in line with the broad thrust of its stated policy, has achieved a considerable measure of success in slowing down the rate of growth in public expenditure.

The Government's commitment to maintaining firm control of the public finances and public expenditure in particular over the medium-term has been put in clearer focus by the move to a three year multi-annual budgetary cycle.

The new approach to framing the budget will mean that it will now be possible for the Government to examine policy changes on spending or taxation in the light of their impact on a clear and agreed benchmark and in the overall budget context. The overriding aim is to give the Government more effective control over the evolution of the major budgetary aggregates and the allocation of resources between spending programmes. The Minister for Finance is determined that progress will continue to be made with this approach to framing the Estimates and budget.

The strategic management initiative now under way in all Departments will widen and deepen this process. Under the new public expenditure and financial management system outlined inDelivering Better Government, which was launched by the Taoiseach on 2 May of this year, there will be a major devolution of responsibility to Departments for the expenditure programmes under their aegis. There will also be a strong emphasis on reviewing expenditure programmes to ensure the best possible value for money.

As the medium-term planning system is introduced and broad indicative allocations are settled by the Government for different programmes, Departments will be encouraged to improve the efficiency and effectiveness of those programmes. There will be a major incentive for Departments to make certain that they have in place management systems designed to produce the maximum value for money. On a broader level, the strategic management initiative continues to make progress in the Civil Service. A number of Departments and offices have already published a strategy statement—I received the Tánaiste's today —and several more will become available before the end of the year.

The general availability of statements of strategy for each Department and office marks a major step forward for the SMI. These strategy statements, by setting out the objectives and priorities for each Department, allow the business of individual Departments to be more rigorously scrutinised. Their availability also helps to bring greater clarity to the complex business of public administration and in this regard constitute a very valuable contribution to a better understanding of work in this area. Crucially, the SMI is also about delivering better services to the public, realising efficiencies and making the best use of our resources. I have no doubt that as SMI takes deeper root within Departments, and as the disciplines which it engenders become the norm at all levels of management, its impact will become increasingly apparent and will facilitate the delivery of cost effective and efficient public services.

The publication earlier this year of the programme of change,Delivering Better Government, has given renewed impetus to the SMI process. This programme is directed at achieving real and lasting improvements in efficiency and effectiveness in the civil and public service. Its aim is to ensure that only the best management practices are employed, practices which emphasise the highest standards of performance and the pursuit of excellence in service delivery and which recognise the primacy of the customer.

A key objective ofDelivering Better Government is the introduction of an enhanced framework for devolving responsibility and accountability. This will require amendments to the Ministers and Secretaries Act, and legislation will shortly be brought before the Oireachtas to give effect to this. The proposed framework will provide a legal mechanism for enabling responsibilities and accountability within the civil service to be clearly identified and assigned while preserving the ultimate responsibility of Ministers to Dáil Éireann, as required by the Constitution.

Delivering Better Government will also introduce improvements in other areas such as the better management of human resources, enhanced financial management systems and procedures to which I have already referred, as well as the better use of information technology and improved co-ordination between Departments in the management of key national issues such as child care and the environment. Overall, I am confident these initiatives will result in a more efficient and effective civil and public service which provides good value for money, and I know the Government can depend on continuing support from all sides of this House in progressing this important initiative.

Section 3 extends the termination date of the temporary £1,000 vehicle registration tax scrap repayment scheme introduced in the Finance Act, 1995. Under the scheme the Revenue Commissioners will repay £1,000 VRT to a person who, between 1 July 1995 and 31 December 1996, scraps a car which is ten years old or more and, at the same time, buys and registers a new car. The scheme will now run up to 31 December, 1997 on the same terms and conditions as currently apply. Senators will be interested to know that since July 1995, more than 23,000 cars have been scrapped under the scheme. More than 18,000 of these were in the ten to 16 years old age bracket but a number of vehicles 30 years old and over have also been scrapped.

The scheme has been a great success and has been very positively received by the public and by the motor trade. It has helped to remove many old and dangerous cars from the roads. The replacement of these older models by new cars purchased under the scheme has also benefited the environment through the consequent reduction in air pollution due to the latest levels of technology in the newer cars. In addition, vehicles which might eventually have been dumped or abandoned are scrapped, crushed and disposed of in a proper and environmentally friendly manner. It has not, however, increased the total car stock so it cannot be blamed for extra traffic congestion in our cities and towns.

The scheme has also provided a boost for sales of new cars and has brought the purchase of a new car within the grasp of some car owners who might not otherwise have been able to purchase one. The scheme has helped increase car registrations in 1996 to record levels with in excess of 114,000 new car registrations expected by the end of the year. Other factors have also played a major role. These include the low interest rate environment, the increase in consumers' disposable income, the stable economic climate and the fact that further economic growth can be relied upon and one can invest in a new car with some degree of confidence in the future.

Senators will be aware that the motor trade had asked for the scheme to be renewed for a further year. While the scheme clearly assists those selling cars, this was not the determining factor in the decision to extend the scheme. The quality and the age profile of our national car stock needed to be addressed. Furthermore, the continuation of the scheme for another year will dovetail with the Government's announcement in October that it will introduce compulsory car testing from 1998. Owners of cars of ten or more years will have a final chance to dispose of them under the extended scrap repayment scheme especially if they fear their car is unlikely to pass the proposed tests without expenditure on repairs or improvements.

There has been some coverage in the media of dealers who have sold cars worth more than £1,000 traded in under the scrappage scheme instead of scrapping them as is required. In those instances, the dealers have not informed the customers of their old vehicles' intended fate. I hear from the trade this may have happened in no more than 20 cases at the most. While I do not condone such action, Senators will appreciate this must be seen in the context of nearly 23,000 payments to date. In cases where cars were sold on, the required certification of destruction was not issued and the £1,000 payment of VRT was not made to the dealer.

While there does not appear to have been any revenue loss, customers may feel they have lost out by selling a car for less than it is worth. This practice is totally against the spirit and the intention of the car scrappage scheme and the Minister for Finance has made this view clear to the trade. I am pleased the Society of the Irish Motor Industry has directed its members that if a garage wishes to sell on a car surrendered under the scheme, it should only do so with the consent of the customer and that all cars offered and accepted under the scheme should be scrapped. This assurance is welcome and the Minister for Finance has asked the Office of the Revenue Commissioners to monitor the situation. This scheme was one of the more enlightened initiatives in the public arena in the recent past. It had its doubters both in official circles and in the trade but it has been successful. I have no doubt the scheme will generate the same enthusiasm in its final year as it has in the past eighteen months.

The Appropriation Bill is normally one of the last items of legislative business to be dealt with in any year. As such it presents a good opportunity to review the performance of the economy during the year. The economy continues to perform exceptionally well. Economic growth in 1996 as measured by the increase in GNP is expected to be around 6 per cent. This rate of economic growth is well in excess of the average of our EU or OECD partners. The economy is expected to continue to grow strongly in the coming years but perhaps not quite at the very high levels of recent years.

Consumer confidence remains very buoyant. This is clearly evident in all the major towns and cities. Consumers are spending more because interest rates are at historically low levels, more jobs have been created and people have seen an increase in their real disposable incomes. Retail sales in the first eight months of 1996 were nearly 7 per cent higher in volume terms than in the same period in 1995. Investment by industry and business generally has also recorded a further substantial increase this year, underlining the high level of confidence in the economy. This confidence derives largely from a belief that the Government's management of the economy and of the public finances will continue to steer us on a path of low budget deficits and high economic growth. The Government is determined that this course is followed.

Ireland's inflation rate for 1996, as measured by the average increase in the consumer price index will be 1.6 per cent, a very satisfactory performance. Export growth this year has slowed down somewhat, reflecting the sharp fall in some of our European markets in the first six months of the year and also the effect of the BSE crisis on agricultural exports. Export growth of 10 per cent in volume terms, however, represents a very satisfactory performance.

On the employment front, in 1996 alone, it is estimated that 50,000 new jobs were created which is a remarkable achievement. The increase has been strongest in the fast growing services sector. Industry also recorded appreciable job gains, particularly in high technology areas of manufacturing. I acknowledge that unemployment, particularly long-term unemployment, remains an intractable problem. However, the Government has taken important steps to tackle this problem through the allocation of substantial additional resources, both this year and in 1997, for FÁS training and employment schemes, including the community employment scheme.

As we approach the end of the year, I take this opportunity to mention the successful conclusion of what has generally been acknowledged to have been an outstanding Irish Presidency of the European Union. I believe all those involved—the Taoiseach, the Government and public officials alike—can be justifiably proud of their achievement. It has reflected very well on the Irish public service and I personally to extend my thanks to all those who worked so hard to make it a success. From attendance at Council meetings in Brussels and chairing conciliation meetings, I am aware of the work carried out by our public servants, at home and abroad, over and above the call of duty. In no small way their tremendous commitment to the governance of Ireland and its role in Europe helped to make our Presidency a success. As Minister of State with responsibility in this area, I thank them for their great commitment to the success of Ireland's Presidency.

I commend the Bill to the House. I wish the Cathaoirleach and Members a very happy and peaceful Christmas.

The spirit of goodwill that flows through my veins at this time of year may prevent me from harping on the old adage that self praise is no praise. The Government inherited the benefits of an economic boom when it entered office in 1994 and, thankfully, it has done little to prevent that boom continuing. It is not unfair to remind the parties in Government that, when in Opposition from 1987 to 1992—in some cases to 1994—they attacked every measure put in place to resolve the economic problems prevalent at that time and construct the foundations of the current economic revival. They spurned the idea of good and prudent economic management at that time and it is clear they have now begun to turn a blind eye to the necessity for such management.

In 1992, when recovery was well under way, one of the junior partners in the present Coalition entered Government and can claim some credit for what occurred between 1992 and 1994, but it must equally share blame for any mistakes made during that period. However, I fear the left wing of the Labour Party, and the even further left wing of Democratic Left, are propelling this country down the same disastrous economic road it entered in the 1970s and 1980s for which politicians of all hues must still bear their fair share of blame.

I worked in the Department of Finance in 1973 and I recall we first began to spend ourselves into difficulties at that time. If the records of the period are consulted, it is obvious that the deficits incurred were quite small. It is also apparent that the first steps taken toward the expenditure madness which prevailed in the following 15 years were also small. The reality is that expenditure accelerated in the 1970s when it appeared safe and prudent to do so in terms of priming the economy. However, we could not get off the expenditure spiral once we entered it. Expenditure continued to accelerate between 1983 and 1987 and it was only after 1987, when economic reality began to dawn on politicians on all sides, that steps were taken to bring the madness to an end.

Given current positive economic indicators, reducing public expenditure and, more precisely, the existing deficit—the current debt burden— should be a priority for the Government. Servicing foreign and domestic debts remains one of the heaviest burdens borne by PAYE taxpayers. Everyone recognises this reality and is aware of the statistics. Servicing these debts continues to consume the majority of the revenue gained by the State through personal taxation, particularly that obtained from taxes paid by PAYE workers.

Honest taxpayers cannot defer their debts, hide their incomes by using clever accounting practices or rely on rich and powerful friends to pay their domestic bills. Therefore, we owe it to them to ensure that there is universal and honest compliance with the nation's tax system. Powerful people in business and politics cannot be allowed to adopt aná la carte attitude to the tax laws of the State. However, matters of taxation are not the primary issues dealt with in the Appropriation Bill. We also owe it to honest taxpayers to adopt a prudent and careful stewardship of their money. After all, every penny in the State's coffers belongs to the taxpayers. The third thing we owe to taxpayers is to take every measure possible to minimise the tax burden. Today's debate is focused on the latter two responsibilities.

The rise in public spending next year means that the Government is expanding its demands on taxpayers by four times the rate of inflation and the cost of that spending will be six times higher than in the current year. If exceptional issues are factored out and we compare like with like, the actual increase in the spending bill will be 7.4 per cent. That is taxpayers' money. It is not possible to consider each expenditure head but the point must be made that inflation stands at approximately 1.6 per cent and Government expenditure should not rise above that level; Government expenditure should be capped. It can be argued that there are endless good causes which can put demands on the taxpayer. However, no Government has the right to recklessly expand the bills that taxpayers are obliged to pay.

A Finance Minister once stated that there is an essential truth about being a Finance Minister. The individual in question stood to physically lose his head. At the time of the revolution in France it was pointed out that that which Government spends it must first take from its citizens. We seem to have lost sight of this. Next year the Government will spend approximately £13 billion, which represents £13,000 for each taxpayer or £4,000 for every man, woman and child. I do not doubt that the Government and the Minister could state that most of the items covered under the expenditure heads are good and prudent. However, the reality is that we are spending at a rate we cannot afford.

This Government's attitude, which is reflected in the presentation of the Appropriation Bill, is smug, dangerously complacent and breathtakingly reckless and it sacrifices prudent financial management on the altar of political expediency and short-term political gain. The Bill is storing up problems for future taxpayers. I know senior advisers in the Department of Finance have indicated their alarm at the excessive increase in expenditure and the failure of this Government to reach any financial targets it has set. Because of the artificiality of the Bill, it is not possible to go through each heading of public expenditure or for me to address the issues raised in the appropriation accounts. I would like to touch on four specific issues, two of which relate to taxation— the changes in the RPT and in local government service charges. The third issue concerns the numbers in the Civil Service and the fourth relates to a trivial detail, bonus payments to civil servants.

I welcome the decision by Government to abolish the residential property tax which was cooked up at a barbecue attended by a Fine Gael Taoiseach and a current Labour junior Minister. Like so many things concocted at barbecues, it has proven to be a singularly indigestible taxation. More trouble has been caused by the RPT than the tax has been worth. Abolition will cost the Exchequer approximately £15 million which the Minister will get back from a 50 per cent hike in stamp duty. These changes will be widely welcomed, notably along the east coast and particularly in Dublin city south of the River Liffey and in north Wicklow in places such as Bray, Greystones and Delgany. The RPT has been one of the most stupid things the Labour Party ever inflicted on us and it became a tax on modest dwellings owned by ordinary taxpayers.

There is, however, a danger in the decision taken on stamp duty charges. Ultimately, the 50 per cent hike in stamp duty will have the same regressive and discriminatory effect on a small and identifiable area. In effect, the change in stamp duty will rob some property owners of the fruits of their savings which they have invested in their homes. That burden will inevitably fall on taxpayers and homeowners who dispose of their homes in south Dublin and north Wicklow. The universal applause which today greets the decision to get rid of the stupid residential property tax will ultimately raise further questions.

I refer to the decision on local charges. Again, this imposition was first introduced by the Labour Party. Two things have happened since service charges were introduced. First, the amount of the tax has grown spectacularly in virtually every tax year and, second, public resistance to the tax has consolidated, particularly since the Dublin West by-election, a fact we must accept. The decision to pay for this change by transferring the yield from motor tax to local authorities will be problematic and raises several issues.

I agree that motor tax should go to local authorities expenditure. It is a good idea and I applaud the Minister for introducing it. However, I suggest that it would be more appropriate that the money be transferred to local authorities to spend on roads, particular county roads. The deficiencies in county and by-roads are highlighted by the amount of Structural Funds going into the national road network. Motor taxation should go to local authorities for roads and not be used as a stop gap to rectify the crisis in local government finance which has arisen because of universal political cowardice to do anything about it. This change will rob Peter to pay Paul.

This could also have the effect of being a cap on the amount of expenditure local authorities can sustain. Although we are in the happy position that, roughly speaking, the amount of money being transferred from motor tax will compensate for the abolition of water and sewerage charges, it is unlikely such an equation will always exist. If local authority members want to expand services, they will be tied rather haphazardly to the level of income which the motor tax transfer, which will not really be controlled by local authorities although there will be some flexibility, will provide.

It would be unfair to criticise this decision in detail because we do not know as yet how the change will be effected. Perhaps the Minister of State and her colleagues will turn their minds to a number of specific issues over the Christmas period. As she knows, there is the major issue of equalisation and there will be a problem, particularly if we try to introduce a variable rate of taxation on the relative local authorities borders. A number of issues need to be addressed in this regard.

The strategic management initiative is a good and an ongoing measure and is having positive beneficial effects on the Civil Service. I am concerned about the inexorable upward increase in the number of civil servants. The Minister for Finance said yesterday in the other House that there will be an increase of 600 per year. It is worth reminding ourselves that between 1922 and 1947 there was virtually no increase in Civil Service numbers. Between 1947 and 1957 Civil Service numbers increased by approximately 100 to 120 per year. Through the 1960s and into the 1970s the increase in the number of civil servants reached 1,000 per year. It was out of control by the end of the 1970s when, as part of the policy of pump priming, there was effectively an open door to recruitment in the public service. There is nothing wrong with recruiting more public servants to provide beneficial services to the people. However, we must remember that when we increase the number by one, we are taking on a burden for 40 years. That is a reality of which we sometimes lose sight.

I understand that between 1994 and 1995 Civil Service and public service numbers have risen by approximately 3,700. The Minister will appreciate it has been difficult for me to research the specifics and this figure is only a reported statistic. If it is true, it means that all the benefits from the redundancy package introduced in the Civil Service some years ago have been wiped out. We have a problem here because we should look for something which is more efficient.

The Minister rightly referred to the tremendous work done by civil servants during Ireland's Presidency of the EU. I had the honour to be a civil servant when Ireland joined the EU. The Minister rightly said that our civil servants have provided an extraordinary service to this nation throughout our EU membership. That contribution is spread throughout the Civil Service and the wider public service. Today's print media has criticised bonus payments of between £2,000 and £2,600 to certain people in the diplomatic corps and in the Department of Foreign Affairs. I do not agree with that principle because disruption is part of the diplomatic service. If bonuses are to be paid, it is unfair that they are focused on one Department. Civil servants in the Minister's Department, the Department of Agriculture, Food and Forestry, other Departments and State agencies have given a huge amount of their time. If there is to be a benefit payment — I question the idea of a cash payment — it is unfair and inequitable to focus on one Department.

I wish the Minister of State and her staff well over Christmas and in the preparation of the budget. It will be an interesting and exciting time for us. While this is not meant to be a carping criticism, there is a danger of smugness and complacency in the economic management of this State. Things are going well and please God that will continue for many years. As the Minister of State rightly said, we have intractable problems, such as unemployment, to address and we still have a huge debt which has been worked up by successive Administrations over the years though I will not blame any party. When times are good it is prudent management to cut the debt and ensure there is not a continuing burden on taxpayers.

Each year the Appropriation Bill brings our work to a close. It restructures our finances to bring them into line at the end of the year and I do not intend to delay its passage through the House.

I congratulate the Minister for Finance, Deputy Quinn, and the Government on the performance of the economy in the last two years. The finances are firmly under control and Government budgetary policy is on course to meet the requirements for participation in economic and monetary union. We can be proud of the way our economy has boomed in recent years. Interest rates are the lowest this country has ever experienced. This is a boost for householders and the construction and other industries. When industry can borrow at low repayment rates it affects every aspect of its operations, particularly the cost of unit production.

Inflation is 1.6 per cent this year. Never have we had such low inflation. We can also be proud of the country's progress in job creation. Approximately 100,000 jobs were created in the past two years. The number of unemployed has decreased in recent months and fallen to the lowest level for a number of years.

I congratulate the Government on its introduction of the multi-annual budgeting strategy. It is a great development. It is good for the Government, regardless of its composition, and Departments to have a strategy to bring projects on stream over a number of years. It facilitates planning and means that when commitments are given by Government they will be honoured. This is a welcome development.

I congratulate the Minister on extending the car scappage scheme which has been most successful. Approximately 23,000 cars were scrapped and 114,000 new cars were registered this year. The scheme has been welcomed by the motor industry and all members were enthusiastic that it be extended. The scheme will benefit everybody, especially road users, because our roads will be safer.

The Minister of State mentioned two areas in which spending has increased — the much publicised BSE problem and the anti-crime package. The Minister for Justice has performed particularly well in the last 12 months. She has a difficult portfolio. I congratulate her on the manner in which she tackled the many problems that arose. She has introduced many valuable legislative measures. I also congratulate the Fianna Fáil Party for introducing Bills which complement those introduced by the Minister. This has led to an increase in spending but in this case it can be justified. It means our country will be a safer place. The people are happy to have secured the changes they sought.

I welcome the announcement by the Minister for the Environment of changes in funding for local authorities. I agree with the calls by other Senators for a full debate on this issue. I have sought a debate on the problem of waste disposal. It is one of the biggest difficulties facing local authorities and we must deal with it. It is a major issue for the east coast; it is probably a bigger problem there than in the rest of the country. There should be an early debate on the issue and it should be part of a wider debate on the funding of local authorities. The removal of the residential property tax is welcome. The increase in property prices in recent years had brought a number of householders into the net and I am pleased with the Government's decision in that regard.

I wish to be associated with the tributes by Senator Roche and the Minister of State for our public service. After my dealings with them in the past I can only speak highly of them. They are to be commended on their work and efficiency.

I wish to be associated with the good wishes for a happy Christmas and new year expressed by the Leader of the House to the staff of the Seanad this morning.

I wish to discuss the Irish Presidency of the EU and how it was conducted. I was in Brussels last month and everybody I met was most impressed by the work of the Irish people — Civil Service, Ministers, Tánaiste and Taoiseach. Their handling of the Presidency was considered excellent by our fellow Europeans. It made one proud to be Irish to see how, as a small nation, we could carry out our work so well.

With regard to the Bill before the House, every year has its high and low points and budgetary adjustments must be made. This year we were obliged to pay beef fines of approximately £50 million. There was also excess spending to deal with the BSE problem. Extra money had to be expended on an anti-crime package that was long overdue. People flout the law, break into the homes of old people and inflict injury on young and old with no regard for human life. A cruel culture has developed among people involved in crime.

We also had to spend extra money on the community drugs scheme and on decreasing waiting lists. Spending has been closely monitored and controlled and we are on line for economic and monetary union in 1999. Our affairs have been handled well and we are within the guidelines of the Maastricht Treaty and the new suitablity and growth pact agreed by the EU Summit last weekend.

I welcome the strategic management initiative to improve efficiency and effectiveness. Greater co-ordination is needed between Departments and local authorities. Coming from a coastal constituency, we often try to get the Department of the Marine or the county council to carry out a function and sometimes it falls between both and long delays can develop. I would like to see closer co-operation between the Department of the Marine and the local authority in aquaculture, pier building, control of fishing, pollution and other such matters.

I also welcome the extension of the car scrappage scheme which has been very successful in putting many new cars on the road. Old and dangerous cars and those polluting the atmosphere have been scrapped. The extension has also been welcomed by the motor trade.

I compliment the Minister for the Environment, Deputy Howlin, for introducing the new local government package. It is long overdue and combining it with the increase in the number of new cars will mean more money for local authorities. If this continues, there will be no need to increase car tax as was suggested. I am happy with the schemes introduced by the Minister for Finance, Deputy Quinn, and the Minister for the Environment abolishing RPT and water and sewerage charges. In Coalition Governments, a policy may often not suit one party but it will have to be agreed. In the 1992 Government the Labour Party agreed with issues that were not part of their policy. When a policy is formulated by a coalition, compromises must be made. We have to take responsibility for the whole package afterwards.

Senator Roche must have taken his anti-Labour Party pill this morning.

The Senator should not be sensitive. I love all parties.

It is a bitter pill when the Minister for Finance is successful in running the financial affairs of the country, which some people thought he could not do. The scrappage scheme was introduced by the Minister who, although a member of the Labour Party, is still part of a Coalition Government. Therefore, it is still part of Government policy.

It is good to see inflation as low as 1.6 per cent. However, despite this there should still be increases in the budget for old age pensioners and single parents who are struggling to live. The increase is often gobbled up quickly by increases in essential items that are sometimes higher than the inflation rate of 1.6 per cent.

I wish everyone in the House a happy Christmas.

I thank Senators for their contributions and their support of my complimentary remarks on the public sector, particularly as we conclude our Presidency of the EU. The public service contributed enormously and beyond the call of duty to the success of this Presidency.

I will not take up the various political points made by Senator Roche. I could write his script and he could write mine; we have been around too long to play this game at the penultimate hour of this session. I will respond to his comments on numbers in the public service. We expect an approximate increase of 250 civil servants in the public service in the coming year. There are between 210,000 and 230,000 public servants, depending on the method of assessing numbers in the Government Vote as distinct from local authorities and health boards. In a total of 210,00 public servants we are expecting an increase of about 600, which is a small percentage. Increases are extremely tightly controlled and approval must go to Government for any proposed additional numbers in the Civil Service. I accept that the scheme of 1987-89 had an important effect in reducing numbers. However, it was crude in terms of axing some services.

As regards the voluntary early retirement scheme, we could not control those who wanted to go. Sometimes it was the best and brightest who were cherry picked by the private sector and who availed of this scheme leaving gaps in certain specialities and services. Those we encouraged to leave, who were suffering from burnout, intractable problems or were no longer suitable for the job, were the least likely to go.

In terms of numbers, the scheme was effective but not in delivering a quality service to the customer. This is what the public service is about, and I include politicians as public servants. If the service is no longer required, the same may apply to those delivering it. If the service is not efficiently delivered those delivering it may not be the right people to do so. We must view the public and Civil Service in terms of the service they are required to provide. A major part of the strategic management initiative is to refocus on the customer and to ask what are we providing? How are we providing it? Should we be providing it? Could it be best provided elsewhere? We could then decide the number of public and civil servants needed to most efficiently and effectively provide a quality service with best value for money.

This issue should be looked at from the other side. We can indulge in the numbers game, score political points and I can accuse the last Fianna Fáil-Progressive Democrat-Labour Governments of reducing the number of civil servants. The scheme in 1987-89 worked quantitatively but not qualitatively. While there is not an absolute embargo now, any increases must be approved by Government. This means we can get the essential services, experience and new skill we need. At the same time, we check whether the resources to provide the service are there already and then carefully allow for the employment of those with specific skills or extra numbers if that is what is required.

I would like to think we have moved past the crude numbers game in the public service, even though we must control the overall level of staffing. Ireland has a narrow productive base and can only afford to pay for so many to deliver Governmental services needed for our quality of life. We must have a sophisticated way of sorting out what staff we need and where we need them. There is a major case for more and easier redeployment. There are areas working themselves out of existence with technology and mechanisms. We do not need as many administrative staff as we did but rather staff with new skills and specialities.

There was a huge rate in numbers in the 1950s and 1960s but since then an enormous number of public servants has been involved in the Northern Ireland peace process. They are committed to that work until the problems there are resolved. A huge number of public servants has been committed to Ireland's membership of the EEC, EC and EU. They are needed because we continue to depend extremely heavily on the best and brightest in the public service in terms of their work in the international arena. Ireland is now a proud main player in world trade because of the contribution of successive Governments.

I will debate this aspect with anybody and play politics if necessary. If I was in Opposition, there are plenty of statistics I could use to play the political game. However, in analysing the public service and the quality of work of public servants, I hope people will consider it in terms of quality rather than quantity. The number must be strictly controlled but not to the point of using it as a crude weapon which allows the best and brightest to be cherry picked by the private sector. The strategic management initiative is a bigger, more sophisticated game plan, but it also keeps a close eye on value for money and taxpayers who must ultimately pay the bill.

I mentioned the economy and public expenditure and that we are strictly within the Maastricht guidelines. The real measure of a Government's performance is the level of borrowing and general deficit and the average increase is well within the Maastricht Treaty guidelines and the EU stability and growth pact, the details of which were fixed last week by the Minister for Finance during the EU summit in Dublin. I have no concerns about this matter. If one averages it over the last few years, the level is 2 per cent lower than the figure achieved by the previous Government in four years. It was running at 6 per cent but the average over the last three years is 4 per cent.

This is not good enough. We should be kept on our toes and it is good that the private sector and the Opposition say it is unsatisfactory. It should be pitched at the rate of inflation, but that is in an ideal world. The areas which caused increases in the borrowing limit in 1996 included the problem of the EU disallowances — the beef fines — and BSE. That difficulty was not of the Government's making. If we want to be political, although I am not sure it is the right time of the year or the place, the fines are a hangover from the last two Governments. We can whack each other politically but if we are intellectually honest it was not caused during this Government's regime. It is an historic fine which must be paid now.

The BSE crisis goes back to 1989-90 and the feeding of meat and bone meal to cattle and perhaps efforts to thwart the rules introduced by the then Government. There has been a catching up in terms of results on the ground but the taxpayers must pay a high cost to shore up the agricultural sector which is an essential industry whether one lives in an urban or rural area. It is an enormous contributor to GNP and a large number of people depends on agriculture for income and a way of life. There must be a base line and the compensatory payments are for the depopulation of BSE herds.

Another area is hospital waiting lists. It is difficult to legislate for the number of hip operations which can be done in a year. Legislation cannot prevent people suffering arthritis in their hips or other problems. In so far as the Government can control this area, it will do so. However, good Government and democracy is ultimately about responding to the needs of the people in a careful and considered manner. It is not just about balancing the books but meeting social needs. I will not apologise for the Government breaching the guidelines set for expenditure on health in relation to the drugs subsidy scheme and the hospital waiting lists for elective surgery because this was necessary.

The Government and I believe passionately that there should not be a two stream health system. Those with GMS cards should not have to wait longer to be relieved of their pain through hip, heart and other surgery than those in the private sector. I believe in private sector health insurance which relieves the taxpayer and the Government in many cases when people are in a position to look after their needs. However, this should only apply to the support structures and not essential medicine.

It is fine if one wants a private room in a particular hospital and other independent factors in relation to decision making about one's medicine and surgery. However, the quality of health and medical care should not be determined by whether one is a private or public sector patient. Access should be available. If one wants to pay for extra frills, let private sector hospital insurance pay for them. I am in favour of that because it removes the extra expense from the taxpayer. However, there should not be two streams and I fully support the Government's and the Minister for Health's insistence that extra resources were required to reduce surgery waiting lists. This was another extra expenditure for which provision was not made at the beginning of the year.

There are a number of areas where the Government has breached the targets set down at the start of the year. However, as a member of the Government and a democrat who cares about public expenditure and controlling public finances, I will ultimately listen to the essential needs of the people before the black line is drawn. Having the books in order is critical, but I will not pay the price if it involves the health of the people. We must pay for exigencies such as EU disallowances and the costs involved in the hepatitis C issue. There are costs in areas outside the Government's control which must be met to respond to the needs of the people involved.

In that case is there any point setting targets?

I thank the Senator for the spirit of his contribution. I can also play politics with this matter but it is not the time or place. The Senator is aware that there is wonderful confidence in this Government's ability to run the economy given the buoyancy in consumer spending, low interest rates and the low inflation rate of 1.6 per cent. The people have confidence in the Government's handling of the economy but we could do without the banana skins. However, the electorate is sufficiently sophisticated to distinguish the Government's control and handling of the economy from other political factors. These are a distraction but no more than that. People want to have confidence in the Government to run the economy, increase disposable income and, above all, to know the ship of State is in solid hands. I assure the House that is the case.

Question put and agreed to.
Bill reported without recommendation, received for final consideration and ordered to be returned to the Dáil.