Seanad Éireann debate -
Thursday, 10 Feb 2000

Vol. 162 No. 6

Programme for Prosperity and Fairness: Statements.

Minister for Finance (Mr. McCreevy)

I welcome the opportunity to talk about the Programme for Prosperity and Fairness and to hear the views of the Seanad on the new partnership agreement.

This social partnership agreement is the fifth since 1987. These agreements have contributed significantly to economic and social development. They have been central to the economic stability which enabled the economy to grow more than twice as fast as the EU since 1987, to deliver six times the EU rate of employment growth and to raise living standards, as measured by per capita personal consumption, twice as fast as the EU average.

It is no wonder that the Government with the social partners sought to preserve and strengthen this key element in our broad national strategy for economic and social progress. The objectives of the programme relate both to economic and social progress. As well as the pay terms which have been agreed, the programme sets out a comprehensive series of integrated economic and social objectives and the operational framework to achieve them.

The new programme is set in the context of the Government's Action Programme for the Millennium, as recently reviewed, and of the national development plan. It has been crucially informed by the social and economic vision for the modern Ireland set out in the recent NESC report. It is the culmination of three months of hard work by all the pillars of the social partnership. It involved considerable and detailed discussions and tough negotiations and I thank all who contributed to its development.

Implemented in the same positive spirit as it was conceived, the programme contains the basis for continuing the prosperity and progress we have enjoyed over the past decade. It has the capacity to ensure that past problems, such as high unemployment and pervasive social exclusion, involuntary emigration, stultifying levels of taxation and national indebtedness, do not return to crucify our people. However, it remains as true today as it ever was that no one owes us a living.

I view this programme as a vital ingredient in building the Ireland of the 21st century which delivers further prosperity for all our people, achieves equity and fairness throughout our society and which helps us to realise our full economic potential and our full potential for social inclusion. We will not be thanked by future generations if we let this opportunity slip. We must not assume as a nation that our past success guarantees the future. It does not. All of us within each of the pillars of the social partnership must be prepared to play our part in ensuring the success of the programme. I stress this point because any failure by us to meet emerging challenges will imperil the future. While there are no guarantees of plain sailing, I remain optimistic about Ireland's economic prospects.

The programme is predicated on and dependent upon achieving an average annual GNP growth rate of approximately 5.6% over the period to 2002 – inter alia on the basis of sustained improvements in productivity, that emerging supply side constraints will be overcome and that significant budgetary surpluses will be maintained through the programme. If economic growth exceeds this level, it may be possible to apply additional resources in a balanced way to accelerate progress towards the priority objectives of the programme, including social inclusion. Equally, if growth falls below this level it may be necessary to make more gradual progress. The entire package is carefully constructed to achieve a balanced outcome, offering a win win situation for all. If we each play our role in carrying its spirit forward, we can aspire also to the promise it holds out for each of us.

I emphasise some aspects of the programme's content. The basic pay terms of the new agreement are the same in the public service and the private sector. The new agreement, if ratified, will commence in the public service on 1 October 2000 and will last for two years and nine months, expiring on 30 June 2003. It provides for the following increases in basic pay: 5.5% from 1 October 2000 plus a further 5.5% from 1 October 2001, plus a final increase of 4% from 1 October 2002. As in the private sector, there is provision for minimum increases of £12 a week in the first phase, £11 in the second phase and £9 in the third phase.

In addition to the basic pay terms of the programme, a separate agreement has been concluded with the Public Services Committee of congress relating to certain groups colloquially known as "early settlers". These groups have been arguing for some time that the local bargaining increases they received under the PCW were later exceeded by other groups. This agreement, which is conditional on acceptance of the Programme for Prosperity and Fairness, provides for an increase of 3% from 1 October 2000 for the "early settlers".

A resolution of the early settlers issue which would not give rise to new instability by sparking off further claims by other groups had to be found if a new programme was to be agreed. The 3% payment has been agreed with all the unions involved – both early and late settlers – and will close the final chapter on the PCW.

The agreement provides for a public service monitoring group to oversee the implementation of this and any future public service pay agreements. This group will provide a means of ensuring that the terms agreed between the parties at national level are implemented in practice within the various parts of the public service. It will be open to either side to raise any alleged breaches of the agreement in this forum.

The industrial peace terms of the overall pay agreement also apply, of course, to the public service. In addition, the public service terms include a commitment to put in place voluntary codes of practice on dispute procedures to address, in particular, the maintenance of essential services. These codes of practice are to be agreed in each sector by 30 June 2000. If any difficulties arise in this regard, there is provision for the matter to be referred to the Labour Court or Arbitration Board as appropriate.

The draft programme also outlines the key objectives to be achieved under the next phase of the public service modernisation programme. These will involve ongoing implementation of statements of strategy or service delivery plans within each sector based on the relevant policy documents and the SMI modernisation programme; design and implementation of performance management systems to support implementation; and implementation of challenging service standards set in consultation with the recipients of the service. It will also require greater organisational adaptability and flexibility in responding to service needs and that issues such as changes in grading, broadbanding and teamworking be addressed.

The programme outlines the actions to be pursued in the Civil Service, the health services, the education sector and the local authority services. Corresponding actions are to be pursued in other parts of the public service. Overall, this represents a far more developed and sector-specific framework than was the case under Partnership 2000.

To ensure that this ambitious programme is developed and implemented, the public service pay annex makes it clear that payment of the final phase increase of 4% is conditional on specific performance indicators being established in each sector by 1 April 2001, and achieving these sectoral targets by 1 April 2002 – with progress assessed at organisational level by 1 October 2002.

The strong attachment to historical cross-sectoral pay relativities has bedevilled public service pay in the past. Apart from any other considerations, the rigidities inherent in the old system made it virtually impossible to deal with groups who might have had a justifiable case for a pay adjustment because of the knock-on effects which any such adjustment would have on other groups.

A more recent problem is the perception of some public servants that their pay has fallen behind private sector pay, while private sector employees believe that public service pay has increased at a faster rate than theirs. Public service pay cannot evolve in isolation. It has to be set in the context of pay in the wider economy, to ensure equity between public service and private sector employees.

The new agreement provides for a public service benchmarking body to undertake a fundamental examination of the pay of public service employees vis-à-vis the private sector, and make recommendations. This will not be an old-fashioned pay review. The benchmarking exercise will cover both pay and jobs in the public service and across the economy. It will examine and compare job content, duties and responsibilities in both sectors. The examination will also be based on in-depth and comprehensive research, examination and analysis of private sector pay across a range of employment types and sectors and will take account of the way reward systems are structured in the private sector.

The benchmarking body will be asked to produce its report and recommendations by the end of 2002, to allow the parties to discuss the implementation of its recommendations in the context of any successor to the Programme for Prosperity and Fairness. Any increase which might emerge from the exercise will not take effect during the period of this agreement. It has been accepted that any outstanding claims or commitments relating to the pay of any group will be subsumed within the benchmarking exercise and will be dealt with solely in that context.

The agreement makes it clear that cross-sectoral relativities are incompatible with the operation of benchmarking. In addition, the terms of reference make it clear that, even within a given sector, traditional or historical relativities between groups will not prevent the benchmarking body from recommending what it considers are appropriate pay rates on the basis of existing circumstances. There will be only one report covering all the groups involved, in order to achieve a coherent and integrated approach and to avoid the problems of the past, where an award based on the alleged exceptional circumstances of a particular group quickly led to a spiral of special pay increases right across the public service.

The Government entered the talks on a new national programme determined that we needed, like any employer, to have certainty about the development of the pay bill over the period the agreement, to have stability and industrial peace within the public service, to advance the process of public service modernisation, and to tackle the issue of cross-sectoral relativities. I believe the draft agreement addresses all these issues, which have been the source of significant difficulties in recent years, in a constructive and balanced way and provides a logical and coherent approach going forward.

The national minimum wage Bill will come before the Houses of the Oireachtas in the near future. The Government has decided, in line with the commitment in the programme for Government, that the national minimum wage agreement will be introduced with effect from 1 April this year, and that the minimum hourly rate will be £4.40. The pay agreement supports increases to £4.70 from 1 July 2001, and to £5 from 1 October 2002. I particularly welcome the agreement that no repercussive claims will be made by trade unions or employees as a result of the introduction of the minimum wage.

Tax reform has been a key element of our approach to partnership since 1987. The combination of agreed pay increases with significant reductions in personal taxation has delivered substantial increases in net take home pay for all workers over the period of partnership. This approach will continue under the Programme for Prosperity and Fairness. Over the period of the new agreement, up to and including budget 2003, take home pay of workers will increase by up to 25% or more when the taxation and pay elements are taken into account.

The Government has already begun a process of tax reform and tax reduction. We have introduced tax credits and have acted to remove substantial numbers from the top tax rate. We have pursued a policy of balanced tax measures, increasing allowances, widening bands and cutting tax rates. These policies have been welcomed by taxpayers and have contributed to increasing prosperity and fairness.

The structure is in place for continued tax reform under the new agreement. Tax benefits can be delivered through increased personal tax credits, widening the standard rate band and reductions in the rates at which tax is levied. It is an agreed policy objective of the Government and the social partners that, over time, all those earning below the minimum wage will be removed from the tax net.

The social partners support the policy of establishing a single standard rate band for all individual taxpayers, and agree that the level of the standard rate band should be kept under review with the objective of ensuring that, over time, at least 80% of taxpayers are not subject to the higher rate of income tax. There is also agreement that a special working group will be set up to examine the role which refundable tax credits can play in the tax and welfare systems, and that employee share ownership, gain sharing and profit sharing and other financial employee incentives have a role in the development and deepening of partnership.

I agree with the social partners that confidence in the fairness of the tax system is a prerequisite for successful partnership and that this must be maintained by determined action to combat tax evasion and fraud and to reduce opportunities for tax avoidance. The Government is fully aware of the need to maintain confidence in the efficacy of the tax system and I am confident that the major and extensive new powers given to the Revenue Commissioners in the 1999 Finance Act provide a sound basis for tackling those who seek to evade their tax responsibilities.

As the Taoiseach said at Monday's launch, social justice, together with stabilisation and growth, are the key goals upon which the new programme is founded. It contains key objectives in the social inclusion and equality areas and outlines the various actions which will be undertaken to achieve these objectives. Together, the actions involved, backed by a £1.5 billion commitment to enable them to be implemented, represent a considerable demonstration of the priority which the Government accords to ensuring that the fruits of our new-found prosperity will be shared among all our people.

In the central area of income adequacy, the real value of social welfare payments will be maintained and, where possible, enhanced in the context of making substantial progress over the period of the agreement towards a target of £100 per week for the lowest rates of social welfare. For pensioners, the agreement confirms that the level of old age pensions will be improved in line with the commitments given in the Government's review of An Action Programme for the Millennium.

Senators will be only too well aware of the widened public interest and concern about the issue of child care. In the budget, I allocated £46 million a year for the child care area. This will be spent principally on increasing the supply of child care places throughout the country. There is unanimity that increasing the supply of places is the most urgent task in the whole child care area. This £46 million is the first instalment of the £250 million committed in the national development plan to assist the private and voluntary sector increase the number of child care places and to improve the quality of care provided. The issue of support for parents will be examined thoroughly this year, in consultation with the social partners, and the next budget will contain the Government's response.

The agreement commits us all to creating a fair and inclusive society for everybody. To help achieve this, a wide-ranging programme of action has been agreed in areas such as disability, gender, refugees and equality proofing. In addition, several relevant institutions have been established, including the Equality Authority, the Office of the Director of Equality Investigations and the National Disability Authority.

The partnership process which we have evolved in Ireland is unique and has served us well. The new agreement outlines a basis for enhancing both our economic prosperity and the inclusiveness of our society through the first three years of the new millennium. As I said earlier, it offers a win-win situation for all.

Mr. J. Doyle

Many factors have contributed to the improvement in the economy since 1987 – a well educated labour force which has adapted well to the high tech industries, major urban renewal, an increase in tourism and European funding. One of the most important factors, however, in the improvement in the economy has been social partnership. This has been a feature since 1987 when unions, employers and Government struck a deal to get the economy out of the deep depression into which it had been dragged by excessive borrowing and unreasonable pay demands by public sector workers at a time of high unemployment. The various national wage agreements since that time have played an important part in creating the Irish economic miracle.

There are some economists who argue that social partnership is no longer necessary because at a time of record growth and labour shortages pay should be allowed to find its own level. Central Bank data show that labour productivity in Ireland has grown much faster over the past 15 years than it has in our major trading partners, countries such as the UK, the US and Germany. The weakness of the euro has made the productivity gap appear even wider than it actually is. Over time, however, productivity gains here will start to converge with those in other countries.

Some economists, including Professor Brendan Walsh of UCD, have argued that paying employees higher wages is a valid mechanism for slowing economic growth in a gradual fashion. He believes that rising wage levels will act to reduce competitiveness and thus act as a welcome break on the economy. There is no doubt that the economy is expanding at an unsustainable rate. Last week a leading firm of stockbrokers predicted that growth would touch 9% this year, having exceeded 10% last year. Given that unemployment has already fallen to 5% and job shortages have developed in a number of sectors, the desirability of such rapid growth at a time when the physical infrastructure of the State is unable to cope is questionable. It would generate strong upward pressure on wage levels in key sectors. Mr. Jim Power of Bank of Ireland is of the view that the wage element of the proposed agreement – 15.5% over 33 months – is largely irrelevant because market forces are already delivering this sort of pay growth. Wage growth, he states, will continue because we have reached full employment. He is of the opinion that social partnership was important back in 1987 when we faced high wage demands at a time of high unemployment but now it is just trying to impose restraint on wages and will not work in practice.

While respecting the views of these economists, I am nevertheless of the view that national pay agreements play an important role in our economy. The alternative is local pay bargaining which has the potential for long disputes and tends to throw up widely different views on what is appropriate. At least a national pay deal acts as an anchor rather than as a ceiling to pay. It gives some sort of stability and protection from the worst excesses of bitter industrial disputes.

When negotiations opened before Christmas on the Programme for Prosperity and Fairness, the General Secretary of the Irish Congress of Trade Unions, Mr. Peter Cassells, insisted that prosperity must be shared more fairly and the budget surplus used to improve living standards and to invest in services for vulnerable groups such as the elderly, people with disabilities and the homeless. If the recent budget failed to address these issues then the Programme for Prosperity and Fairness has gone some way towards bridging the gap. I am pleased to note that for lower paid workers there is a floor of a minimum payment of £12.00 in the first year, £11.00 in the second year and £9.00 in the last nine months. On top of that there is a special social welfare package which exempts the first £200 per week from PRSI and raises the exemption level for the health levy from £226 to £280 per week. This is worth £5 per week, which will push their cumulative pay increase over 33 months to around 20%.

I am pleased to note that underpinning this new agreement is a growing recognition that the distribution of available resources must be seen to be fair. As a result, the allocation for social inclusion measures within this agreement are substantially increased. I pay tribute to those who argued the case for the less well off and the socially deprived in the new national agreement. It gives me great pleasure to acknowledge the contribution made by Senator Joe O'Toole in this matter.

Reading and listening to the media would lead one to believe that the Programme for Prosperity and Fairness was solely about a wage agreement, but seeing the document for the first time late last evening I realised the programme covers a wide range of issues. I am indebted again to Senator O'Toole for providing me with a photocopy of the document. It is only right and proper that if we are discussing an issue as important as this document in the House, then Members should be circulated with the document shortly after its publication. The agreement covers a wide range of issues and is one of the best social documents I have read in recent times.

The Programme for Prosperity and Fairness aims to keep the economy competitive, provides a strong basis for future prosperity, improves the quality of life and standards for all, and brings about a fairer and more inclusive Ireland. The programme is built around five operational frameworks: improving living standards; furthering prosperity and economic inclusion; achieving social inclusion and equality; adapting successfully to change; and renewing partnership.

One could speak at length on the many issues covered in these frameworks, but I want to make some remarks on the third framework, which deals with social inclusion and equality. I can sum up in a simple way the objectives of this framework by stating that its main thrust is to create the conditions where people will enjoy a better quality of life and where poverty and the causes of poverty can be eliminated from society. Under this framework disadvantaged areas are targeted for investment. Over the past ten years the success of the economy has been the envy of many European countries. Great wealth has been created and the standards of living of many people have improved, but unfortunately the rising tide has not lifted all boats. There are many areas which still have problems of social exclusion and deprivation. Some 25 areas have been identified over the past years where deprived urban and rural communities are in greatest need.

I am pleased that an interdepartmental committee will be established to identify and clarify the range of existing and proposed social exclusion measures in the national development plan from which integrated targeted intervention measures can be developed. The committee will make recommendations to Government by December 2000, enabling the 25 areas to be designated with a prioritised list of measures which can be implemented within the three year framework.

I am also pleased that the document refers to local government, which has an important part to play in future prosperity. I have always welcomed the special policy committees which allow local sectoral interests, including the social partners, to participate alongside public representatives in the development of policy for their local authorities. The county and city enterprise boards, which have been a great success, will now have an explicit social inclusion focus in their strategies. Under the urban disadvantage heading, the local drugs task forces will continue to be funded to undertake initiatives to combat drug misuse in their areas. Funding will also be provided to urban areas outside the local task force areas where an emerging drug problem is evident.

Many Members of the House will know that the city of Dublin has a serious heroin problem. It has been estimated that there are over 13,000 heroin addicts in Dublin city and the Eastern Health Board, of which I am a member, has been endeavouring over the past number of years to provide services to combat the effects of drug abuse. Recently the board requested Dr. Michael Farrell and his colleagues from the National Addiction Centre, London, to assess the progress the board had made, and his report was published recently. The report gives the management and members of the board reason to feel a justifiable sense of achievement. The report confirms that by providing services for people who have abused drugs, already some drugs centres in the Eastern Health Board area have been able to record a return to work of 40% of those who have been provided with treatment and rehabilitation. I understand this figure is high in the league of international comparisons. The centres are also reporting reductions in crime levels of between 60% and 80% in their catchment area. This is a point which I hope might be taken into consider ation by those residents groups who have resisted the establishment of drug treatment centres in their areas, some of which have been supported by "enlightened" politicians.

The more heartening point in the report for me is that there is a 70% reduction in heroin consumption. Such a reduction in heroin use has been reported to be associated with a similar reduction in offending behaviour and it would be reasonable to estimate that the treatment for these individuals has effectively reduced the level of criminal offences by 70%. It is also heartening that the report shows there are now 119 general practitioners signed up to the protocol who are providing methadone treatment for their patients in their own surgeries. I make these points because it shows that investment by successive Governments in the treatment of drug addicts can be beneficial and I am delighted that the Programme for Prosperity and Fairness proposes to continue this investment.

Returning to the wage aspect of the agreement, the document has introduced a new word, benchmarking, to the vocabulary of public service pay. The trades unions have agreed to cast aside old relativities and sign up to a new benchmarking agenda. The aim of benchmarking is to recommend salary levels for the main grades in the civil and public services in the light of private sector pay. A benchmarking report will be published by 2002, with a view to being included in the next agreement. The trades unions have also agreed that any special pay claims will be dealt with through this channel, effectively agreeing not to exceed the terms of the pay agreement. As the Minister stated, the antiquated system of relativities has been a major flaw in public service pay policy over the decades and if benchmarking guarantees that relativities and knock on claims will be controlled by the new system, then it will be the hallmark of this new wage agreement.

There is cause for concern that wage increases of the type agreed in the new deal will trigger further inflationary pressures and damage the competitiveness of the economy. The inflation rate of 3.4% is now the highest in the EU while the kind of wage increases proposed in the Programme for Prosperity and Fairness are two to three times more generous than those on offer in the economies of Ireland's main trading partners. There is also concern that the national wage agreement will be an additional contributor to the gradual overheating of the economy. The signs of overheating are clearly evident in the surging house prices, the infrastructure deficit and the labour shortages in almost every sector of the economy. On balance, however, the economic boom can be sustained, even allowing for generous pay increases, as the pay element proposed is broadly in line with assumptions made by the ERSI in its mid-term review that the economy would grow at 5% each year. There are risks involved in the new wage agreement but the benefits of a relatively peaceful industrial environment make those risks worth taking. As the Minister stated, we are in a win-win situation. I hope on the way through the programme there are no own goals scored. I wish the programme success.

Mr. Bonner

I noted the earlier presence of the Minister for Finance, Deputy McCreevy. He has survived the onslaught which he faced before the Christmas recess. I am sure that after the publication today of the Finance Bill, he will finally put all his critics to bed. I welcome the Minister of State at the Department of Education and Science, Deputy O'Dea, to the House. A White Paper which he is about to publish will address many of the items related to education which are referred to in the national agreement.

We can hold this debate on the new programme, the Programme for Prosperity and Fairness, with confidence knowing that it will contribute positively to the development of the economy over the next three years. We cannot pre-empt the decision of the 540,000 trade unionists who will be voting on the PPF programme over the next seven weeks. The programme is very balanced and it guarantees that low paid workers will receive sizeable pay increases over the next three years. We all know of the great economic growth in recent times, but wealth has not been distributed evenly across all sectors of our society. This social imbalance needs to be rectified not only within the new Programme for Prosperity and Fairness but also within broader Government policies that are implemented across the board.

I welcome the strong provisions included in the national development plan, which the European Commission is considering, outlining our social and economic investment priorities for the period 2000-2006. Serious priority is being given in this plan to target both European Union Structural Funds and national Exchequer moneys to combat youth and long-term unemployment, to help early school leavers, to promote higher standards of adult literacy, to support drug rehabilitation programmes and to fight key social problems which are prevalent in urban and rural blackspots. We must not build a two-tier society where the wealthy become richer and the poor become poorer. This would fly in the face of what has constituted the fabric of Irish society, not only for decades but for centuries past.

We must realise that economic growth must be spread across all sectors of society. In the 1980s when an economic boom took place in Britain, the policies pursued by the then Conservative Government only ensured that social divisions broadened and that the poor would not gain from economic growth. We cannot and must not make the same mistakes.

The national development plan, the Government's budgetary strategies over the next three years and the Programme for Prosperity and Fairness must all work in tandem to help low-paid workers and target social difficulties. While we must consolidate the economic progress we have made in recent years, we must also ask ourselves how such growth came about. It is well recognised, both within the European Union and in the broader world, that the policies pursued by the Fianna Fáil Government in 1987, in terms of building up a social partnership agreement between trade unions and employers, helped to lay the groundwork for strong economic growth in the mid-1990s.

The benefits of social partnership are many. It reduces the number of days lost due to industrial unrest. It gives great confidence to both indigenous and foreign investors that Ireland is a good place in which to locate factories, because employers know exactly the level of wages which has to be paid over a specific timeframe. The situation is different in many other European Union member states. For example, in France bilateral talks take place between specific unions and the Government on a monthly basis. If that were the case here industrial unrest would grow, more industrial work days would clearly be lost and the climate for good investment would be diminished.

Over the past 13 years consecutive Governments have always built on the need to promote social partnership in terms of the implementation of Government policies. The new Programme for Prosperity and Fairness is the latest of these programmes. I hope the 540,000 trade unionists who will be voting in the coming weeks will support the new programme; there are many reasons why they should. The programme ensures, as the Taoiseach has said, that everyone will gain a fair share from the prosperity we have gained. It offers cumulative pay rises of up to 20.5% and tax cuts of at least 10% by the year 2002. Besides tax cuts worth at least £1.5 billion over the next three years, the PPF provides for £1.5 billion in social inclusion measures. This will see basic social welfare payments move towards £100 pounds per week. The biggest gains will be by those earning less than £200 a week who will not have to pay PRSI, and public service workers such as teachers who will get a 3% early settlers pay increase. Lower paid workers will receive cumulative pay increases of 20.5% and early settlers a cumulative increase of 19%. Other workers will receive cumulative increases of 15.75%.

I welcome the additional measures in the forthcoming Social Welfare Bill – to be published on Monday next – aimed at improving the position of low-paid workers. The measures were announced by the Government yesterday. These changes clearly take into account discussions on the new PPF agreement which has been finalised in recent weeks. Changes in this regard will include PRSI exemption for employees. Employees paying classes A and H, earning £226 or less per week, will be exempt from paying PRSI. Over 460,000 employees will gain up to £5.67 per week from this additional measure.

Some 172,000 employees and self-employed workers will be exempted from the health contribution levy. The earnings limit for exempting employees from the 2% health contribution is to be increased from £217 to £280 per week. All employees earning between £217 and £280 per week and all self-employed people earning between £11,250 and £14,560 will benefit by up to £5.60 per week at a cost to the State of £52.6 million pounds in a full year.

These measures are additional to further improvements agreed by the Government recently, including the extension of the new carer's benefit, increases in old age contributory pension, increases in the invalidity pension and a new means of assessment for unemployment assistance and non-contributory pension claimants with savings.

The Government is committed by means of the Partnership for Prosperity and Fairness to ensure that real and tangible financial benefits are given to low-paid workers. This is also a central focus of the national development plan which outlines our economic and social investment priorities for the seven year period 2000-2006. The ICTU general secretary, Mr. Peter Cassells, described the PPF as the best deal that can be got out of this process for workers and people on low incomes. This agreement reached under the Programme for Prosperity and Fairness will guarantee that increases of at least 25% over the next 33 months will be secured for low income workers. While it may be difficult for trade unions not to support this deal, we must respect their democratic right to support or reject such an negotiated package.

What will the package mean in real terms for ordinary workers? The income of someone now earning £200 a week will rise to £212 per week in the first year, £223 in year two and £232 in year three. If someone is earning £400 a week, this will rise to £422 in the first year of this agreement, £445 in the second year and £463 in the nine-month phase three. That is an increase of £45 over the period of the agreement.

Last week I read carefully the article written by Father Seán Healy, director of the justice office of the Conference of Religious in Ireland. He said he believed that this national agreement would ensure that all benefits of our economic growth are distributed fairly. He rightly stated that this strengthens the democratic process while addressing the fact that consensus is needed if resolutions to social problems are to be found. There is also the question of sustainability within the PPF which, Fr. Healy believes, is also addressed by means of the text of the agreement.

The PPF states that the need to ensure an achievement of improvements in living standards in the shorter term is consistent with the long-term sustainability of economic and social progress, including the protection of the environment. For the first time, a concerted effort will be made to agree on a set of national progress indicators which will include the value of unpaid work, the cost of environmental damage, the cost of resource consumption and a variety of other important measures that will help give a more rounded picture to our economy.

While the pay deal will pour extra money into our economy, our competitiveness will not be lost. This is because our growth rates will rise to between 9% and 10% this year alone. The growth rate in our economy should and will ensure that these pay increases can be subsumed within the overall working of our economy. There is also a clear political consensus among many of the political parties in the Oireachtas that partnership is the way to solving many of our economic and social difficulties. Other EU member states look with envy at the manner in which many consecutive Irish Governments have secured social and economic agreements. Economic wage agreements give stability to an economy, which is one of the most important prerequisites if we are to entice new industry here and create more long-term sustainable jobs.

Competitiveness is a core theme of the programme, which has identified some key competitiveness challenges. To meet these challenges, we must secure a leading position in the emerging information society. We must promote lifelong learning as a national priority. We must move up the value chain of economic activity by investing in research and development, innovation and upskilling. We must continue to reform our regulatory and competition systems and modernise the public service to ensure the provision of quality services lies at the heart of all public service organisations.

The programme contains a package of measures to develop key sectors of the economy, including indigenous and foreign-owned industry, small businesses and services, tourism, construction, energy, the food industry, forestry and the marine sector. The new programme reflects a shared commitment by the Government and the farming organisations to the continued development of a competitive, high quality and high value agricultural sector, which ensures increased living standards for farm families, in line with increased standards in the rest of the economy.

It is almost 12 months since the Government approved the Agenda 2000 reform package for the CAP for the period 2000-6. The Agenda 2000 reforms have resulted in price reductions in the beef, dairy and cereal sectors, while appropriate compensatory measures have been put in place to offset such price reductions. Under the Agenda 2000 programme, there is also increased funding for the rural environmental protections scheme and support is given for programmes such as the farm retirement scheme, on-farm investment and rural development measures such as the Leader Plus initiative.

The Programme for Prosperity and Fairness builds on the Agenda 2000 reform programme concerning the CAP. The PPF package for the agricultural sector involves continuing investment in agriculture policies for individual product areas, a deepening of the standard of service provided to farmers, a renewed effort to eradicate animal disease and a taxation system that underpins the long-term viability of this sector.

The Programme for Prosperity and Fairness is not simply about pay but addresses other key social problems. The programme supports the tackling of the growing need for social and affordable housing, as well as the need to improve the existing social housing stock. There will be substantial investment in local authority homes in the next four years, as well as in the voluntary housing sector. The social partners and the Government will work together to tackle the urgent need for more affordable housing.

The programme recognises that policies to support child care initiatives are a cornerstone of future social and economic progress. This includes a commitment to a substantial increase in child benefit over the period of the agreement, with a priority focus on progress towards £100 per month for third and subsequent children. The Government is committed to take key decisions to build an equitable framework to support parents with child care needs.

The implementation of the health package under the Programme for Prosperity and Fairness will have a significant impact on the quality of life of our citizens and will be of particular benefit to disadvantaged groups. The programme includes a series of measures to target health promotion and preventative strategies. Major capital investment is also planned under the national development plan, as is the upgrading of facilities in the community health sector. Initiatives are set out to address specific needs, including those of children, people with disabilities and women.

As a Member of Seanad Éireann representing the constituency of Donegal South-West, I wish to turn to the provisions in the Programme for Prosperity and Fairness concerning the marine sector. One of the most important challenges facing the marine sector is the review of the Common Fisheries Policy in 2002. Opportunities for the fishing industry in the context of this review will be maximised, including pursuing the long-standing case for a significant increase in Ireland's quota share and more effective fisheries management systems within the CFP framework.

I hope the Department of the Marine and Natural Resources reads the parts of the programme relating to the marine sector. This is the first time I have seen an acknowledgement of the deficiencies in the fishing industry. The programme refers to the need "to balance the objectives and parameters of the EU Common Fisheries Policy with the potential to develop the sector in coastal regions where alternative work programmes are few". I come from such an area, which relies totally at present on tourism and the fishing industry. Since the CFP was put in place, our industry has continued to reduce. It is only due to the initiative of many fishermen involved in the pelagic fleet that any progress has been made in the industry.

I am glad to see an acknowledgment in the programme that "opportunities for the fishing industry in the context of this review will be maximised, including pursuing the long-standing case for a significant increase in Ireland's quota share". Year after year nobody pays any attention to this difficulty, which will only be redressed by political decisions rather than departmental decisions.

The programme also refers to the need for "more effective fisheries management systems within the CFP". We agree with conservation and management. However, it always seems that it is only our fishermen who have to adhere to conservation and management requirements. The fisheries programme will also address the difficulties that arose due to very lacklustre polices for the development of the industry. For years, it was a question of selling whatever one could for whatever value one could get in any market. I am glad to see an effort will now be made to maximise the value added potential of our fishery resource through the supply and demand chain.

Another important factor is the development of aquaculture, so that we can realise the significant further potential of this industry for sustainable development. There has been a huge development of aquaculture in my county. Unfortunately, it has been hindered by a lack of resources. No proper sewage treatment plants exist, which means the water quality is deficient. Many people who have been in the industry for years cannot get proper licences now because of the poor water quality.

There are many other aspects of the industry, such as the development of the inland fisheries, to which we referred when we debated the Fisheries (Amendment) Bill before Christmas. The programme states, "The fish processing sector will be supported to create a competitive value-added capability of scale at national and international level through development of new products". It goes on to state, "Investment support strategies for the medium to long term will be informed by a comprehensive review of the processing sector to be carried out in early 2000". In addition, "A first class national fish and shellfish health monitoring and research capability will be developed and resourced to provide the highest service delivery standards" to the fishing sector.

We must ensure "safe products of top class quality for the consumer in line with the Food Safety Authority and export requirements". We are an exporting country and European consumers have great confidence in the Irish food products. Irish and European consumers enjoy eating Irish fish products. They are recognised as being of the highest standards in terms of food quality. This process must be continued. The PPF recognises this is a key objective.

The agreement has been designed to ensure industrial peace. There is no doubt that the industrial peace that followed the previous agreements was instrumental in creating the Celtic tiger and developing the economic success we have achieved in recent years with substantial current budget surpluses. The package will share the fruits of the economic growth more equitably than has happened in previous social contracts.

Many of the measures needed to implement the Programme for Prosperity and Fairness will be included in the social welfare and finance Bills being published this week. However, many other elements, such as addressing the child care issue and the removal of all those on the minimum wage from the tax net, will depend on securing economic growth of approximately 5.6% per annum.

The programme also attempts to break the old system for pay relativities within the public sector by linking salary levels in the main grade of the civil and public service to private sector pay rates. Previous programmes failed in relation to this issue. An extra £2.8 billion will be spent by the Government to buy industrial peace in the public sector over the next three years.

Many economists have claimed that this agreement will fuel an already overheating economy with additional cash and have advised against such a measure. They have warned that present surpluses should not be used in such a manner, that is, by giving large tax cuts and wage increases. This action can lead to higher inflation which was the downfall of our economy in the 1970s and early to mid-1980s. We have the highest rate of inflation in the EU at a projected 4% per annum this year.

These same economists have suggested investing in infrastructure in the good times and giving tax cuts when the economy slows down. This agreement includes a bit of both. However, the promise of three years of industrial peace, generous wage increases for the low paid, the possibility of 80% of taxpayers being on the standard tax rate, the many measures promoting social inclusion and giving an acceptable level of income to pensioners and those depending on social welfare payments are positive elements which should be endorsed by all the social partners.

I referred earlier to some of the social welfare changes. The new carer's benefit, which would allow employees to take job protected leave of absence to care for incapacitated relatives, will be payable for 15 months instead of 12 months. The benefit, which is based on PRSI contributions and will not be means tested, will be approximately £88 per week payable from next October. The issue of carers is leading to much dissatisfaction and we, as public representatives, are faced with it on a weekly basis. It costs the State far more if relatives are institutionalised rather than being kept at home and their carer receiving the carer's allowance. More flexibility should be allowed in relation to means testing. I refer, in particular, to widows who have no means other than a small income. Many of the widows in my county have small British pensions. On a review, their pensions are calculated at a sterling rate and they find that after a year their carer's allowance has been substantially reduced. They have budgeted their family income based on what they have received in the previous year. There should be more flexibility when deciding on that.

I welcome the new means assessment for unemployment assistance and non-contributory pension payments. The Government has given a commitment that all social welfare payments will be a minimum of £100 per week at the end of this agreement. The programme for Government promised pensioners a minimum of £100 per week, which will be reached in the next budget. The minimum social welfare payment will be reached by the end of this agreement.

During the last general election I met unemployed people in a very rural and peripheral part of County Donegal. I asked what would satisfy them and one said an increase of £10 per week in the single person's social welfare payment. They have received an £11 per week increase over the past three years of this Government and under this agreement they will receive a further £28 per week approximately over the next three years. That shows the progress we have made in the past two and a half years and I hope further progress which will be made in the next 33 months.

I said earlier the Minister is about to introduce a White Paper on education. This programme's commitment to recruit 1,500 new teachers over the next three years, the lifetime of the agreement, at primary and post primary levels is welcome. This is on top of the 1,000 extra teachers announced by the Minister in December. This is the largest number of new teaching posts created in a single year. It will assist in attacking the problem of early school leavers and will help give second chance education to many. The posts will be allocated to meet the greater needs within the partnership for education. The allocation of additional teachers will lead to smaller classes and an improvement in the pupil teacher ratio. It will also allow for concentration on subjects where standards and grades have been slipping. Money will also be provided to target areas of disadvantage.

Proper education for all, including lifelong learning and training for proper skills, is an important element of this agreement. Major funding will be provided for secondary schools to encourage adults to return to the classroom. The Government is committed to underpin lifelong learning with £1 billion in funding during the lifetime of the current national development plan. There is a great need to have more skilled workers available for the thousands of jobs coming on stream. Some 75% of the long-term unemployed have low levels of education and 50% of those between 25 and 65 years of age have no leaving certificate. These statistics show the relevance of education to employment. In my county, particularly on the Inishowen peninsula, statistics show the difficulties faced with huge levels of unemployment mainly due to a poor level of education.

I mentioned the different items in the programme in relation to farming and the marine industry. Many infrastructural difficulties are being addressed in the Programme for Prosperity and Fairness, particularly transport. There is a recognition that public transport must be improved and that bottlenecks need to be overcome to improve people's quality of life and to sustain economic growth. A reduction in travel time to work in congested urban areas will be tackled. Public private partnerships will be used to speed up delivery of the new transport systems and there will be immediate investment in our national roads and motorways.

I welcome the £17 million provided to my county by the NRA last week. There is a large number of roads in County Donegal. We hope that over the next two to three years the two remaining stretches of national primary road will be improved and restored. However, we need substantial funding, particularly in the west of the county, for the national secondary road, the N56. Donegal County Council plans to spend between £50 million and £70 million over the next five to six years. Last week, under the national roads programme, we received £4.5 million for specific projects from the Department of the Environment and Local Government from a total package of £15 million. However, the other £10.5 million provided for road maintenance and strengthening under the multi-annual programme is not sufficient.

The roads infrastructure may or may not contribute to the high levels of unemployment. We are told the national unemployment figure is 4.9%, that we have now reached full employment and that there are huge labour shortfalls. County Donegal still has 21% to 22% unemployment and special research should be carried out in counties such as Donegal and Louth where there are still high levels of unemployment. What is the underlying factor causing this unemployment? I know we have little hope of foreign investment, although the IDA has been instructed to provide up to 50% of new jobs in the BMW region. The annual report of Údarás na Gaeltachta, an agency which has dealt favourably with my county and other counties on the western seaboard, showed a decrease in jobs. I do not know where we will turn or what will happen in relation to unemployment but I do not believe we are tackling the issues which could create employment.

I said earlier the marine industry needs to be sustained. Unfortunately, because the majority of the marine processing industry is based in Donegal and there is only a small number of public representatives from that area in the Houses of the Oireachtas, the issue is not being given high enough priority. The bodies representing the fishermen do not have the same national prominence as the IFA. There are other areas which we could tackle, such as tourism. I heard this morning on Raidió na Gaeltachta that the Department of Tourism, Sport and Recreation provided £250,000 in additional moneys for marketing grants. We are marketed to death at this stage. The problem is that we have no basic tourism infrastructure other than the scenery and the welcome of the people. This specific area should be looked at to try to introduce tax incentives and possibly grants to enable people who want to develop tourism infrastructure to do so. The town renewal programme will be of no benefit even if a couple of towns in west Donegal are included. I would like the Government to expand the rural renewal pilot scheme in the upper Shannon region to west Donegal.

I acknowledge the efforts of all those who took part in the negotiations on the programme and who worked to reach an agreement on it. I pay particular tribute to Senator O'Toole for his efforts not only in working to finalise the programme but also in providing us with copies of the agreement, which were difficult to get yesterday, as they enabled us to prepare for this debate.

The core objectives of the programme are to build a fair, inclusive society, to eliminate urban and rural poverty and to ensure that the economic success and benefits achieved are shared by all our people so that no one is left behind. I look forward to the progress of the programme over the next 33 months. I believe much progress will be made in tackling the many deficiencies in our society over the next 33 months.

Mr. O'Toole

I thank the Senator for his kind words. I very much appreciate them. Many people from all walks of life, the social community pillar, the trade union pillar, the employers pillar and Government employees in the Department and various Departments of State contributed to make this agreement possible. If I might single out one group, I would mention the extraordinary work done by civil servants during the negotiations on the agreement. I saw many of them working up to 3 a.m. or 4 a.m. and they were back at their desks the next morning at 10 a.m. or 11 a.m. That contribution is often forgotten.

The most important point about this programme is that it is a compromise document. It is a classic case of four interest groups with an overarching objective of achieving what is in the country's best common good. Those four groups negotiated to reach agreement on economic and social progress here over the next three years and they did that in a way that did not cut across the autonomy or discretion and power of any of the groups.

Members raised the issue here about the participation of the Houses of the Oireachtas in the negotiations. This agreement is part of the implementation of the Government's programme. The Government implements it in consultation with the social partners. I could pick out a hundred things in this document that do not meet precisely my set of demands which I would like changed, but I am sure so could the community and employers pillar, the business pillar and the Government. When employees, who are members of a trade union, get a copy of this document from a trade union, they must read it in the context that it represents an attempt to bring together the greatest needs and demands of all the different groups. It that sense, it will not satisfy fully any particular group. This is a starting off position which reasonable people must bear in mind.

The programme is based on certain levels of economic progress. If I might gently tease the Minister of State on what he said, he reflected the cautious view of the Department of Finance, which is dependent on economic growth of 5.6% over the next three years. That rate has increased by 0.1% since I heard him speak about this matter a month ago. It will not have gone unnoticed that over the last two weeks Goodbody Stockbrokers indicated economic growth would be above 7.5% and ABN AMRO said that it would be closer to 10%. That is quite in order. It is also important to recognise that the one factor that could undermine the effectiveness of this agreement is inflation, if it got out of hand. Perhaps people over-reacted last month to inflation figures which seem to have gone very high. However, it should be recognised that almost 1% of that increase comes down to one issue – the increased excise duty on tobacco following the budget, so that was perfectly understandable and in order.

The other issue to which the Minister of State referred is the establishment of a public service monitoring group. He clarified a matter that is somewhat unclear in the programme. That group will be established to oversee the current as well as future public service pay agreements. That is important.

Previous speakers and the Minister of State have given an overview of the objectives of the programme, the elements that are in it in terms of the broad brush strokes. I would like to cherry pick some issues in it of which people should be aware. The programme underlines the Government's policy on individualisation, perhaps not in exactly the same words used by the Minister for Finance in his budget speech but it supports a move in that direction. Most importantly, there is the objective in the programme under taxation to try to bring all those who are paid less than the national proposed minimum wage out of the tax net. Members should reflect on that for a moment. That is probably of more value to the people concerned than any of the pay increases or other tax improvements. Effectively, if it is delivered, it will mean people who are entering the tax net at £110 a week will not enter it in future until they earn approximately £170 a week. That difference of £60 in their tax free allowance will mean they will have a net gain of approximately £25 or £30 a week. That would be of greatest significance. If I was to commend the Government to prioritise one issue in the programme, that would be it.

A question has been raised as to whether some unions are unenthusiastic about the agreement. Those unions, in particular my colleagues in MANDATE which organises employees in shops, are worried that people on low levels of pay will not get their full share of national wealth. That is perfectly understandable. I know they would welcome this measure.

The agreement gives a commitment to the introduction of a national minimum wage and, more importantly, to increase the level from £4.40 in steps up to £5. The figure of £5 an hour is minimal. It is pretty parsimonious of industry not to agree to pay people more than £5 an hour. Any of us working in the Dublin area know employers will not get people to work for that kind of money in Dublin because people could not afford to pay their bus fares in and out of town to take up a job that would pay that rate per hour. It would have been a more generous gesture if they agreed to increase that figure.

Under taxation, there is an objective that within the three years and under the next three budgets 80% of taxpayers will be on the normal or the basic tax rate. That is an extraordinarily important objective that will be met. Not everyone agrees with the detail of measure. There are many people in the trade union movement, myself included, who would say that the reduction of the tax rate, which is a major priority for the Minister, is the least important and that we would prefer there to be a widening of the bands. We would prefer more people to be brought into the normal tax rate and other improvements made, but nonetheless that was one of the compromises we had to make in our discussions.

I will not go into the pay issue as it has been dealt with. While industry and business people talked about the importance of this programme to them in terms of giving them certainty and being able to plan for the future knowing what their wage costs will be, there are many ordinary working people, whether they work on the factory floor, in shops, schools, professions or wherever, who also appreciate knowing what their salaries will be over the next three years, as that will allow them to plan. It gives people a great sense of reassurance to be able to pick up this document and know, irrespective of whether they are happy with the level of increase, which they probably are not because none of us ever is, what their salaries will be next year, the year after and the year after that. People with repayments on a house will be able to look at the difference in disposable income that the increased salary will give them in the second and third years of the agreement and that will give them some comfort. They will have a chance to take a holiday that they cannot afford this year. It will also give them a chance to improve the quality of their lives.

I would also draw more attention than previous speakers to modernising the public service. Outside the public service there is an unfair and unfortunate view of what happens in it. The area I know best is education. Over the past four years teachers, management boards and everyone involved in primary education have taken on and managed elements and levels of change which have not been matched anywhere else in the private sector. This applies not just to teachers but it is mostly teachers. They have taken on a new curriculum. They joined the information, communication and technological age and are making it available to children, the next generation. That is crucially important. They are looking at new languages and science. We will have to sit down and negotiate with the Department of Education and Science about it. If restructuring is required it will have to be included in negotiations and monetary rewards given as we go along.

Contained in this agreement for the first time is an overall structure for modernisation and change within the public sector. It goes through a certain number of stages outlined clearly on page 24 of the document. There is an overall statement of strategy which caters for education, local government, the health sector and the Civil Service. It outlines what we should try to achieve and how important are those targets.

Reference is also made to a business or service, how it will be planned, how to provide a means to manage the performance within that system and how to deliver a quality service. First there is a strategic approach, then overall planning, followed by performance planning at local level and then service delivery. How does that happen? I will move away from business language and apply it to the health or education area. In the education area the strategy statement will include overall issues like the curriculum, the policies of the Department of Education and Science entered into in co-operation and by discussion with the education partners. That is the overall goal. That is what we are trying to achieve whether it is literacy, subjects or whatever. That is what is important. How do we make this work in a small school in Sligo or Dingle? We do that by putting in place a school plan in every school in Ireland. In the business world it would be called a business plan. The school plan might have been referred to in previous years as a scéim seachtanna or scéim bliana or weekly, monthly or yearly plan. The plan would outline all the subjects to be covered over the year. It also indicates what the school intends to achieve. Very often it might not be able to achieve certain goals but it is an honest attempt to outline what it is trying to do. The plan is also brought to the attention of parents and the school management. It is not a private document. Under the Education Act it must be accessible.

We have the overall picture and school plans but how do we ensure they are put in place? How do we verify that the process is working? In primary education that can be done through an evaluation system conducted by the inspectorate. People should recognise that. In the document we have an absolute model of how something is planned nationally, implemented locally and verified locally by an external agency such as the inspectorate. I can give similar outlines of what will happen in the health and local government sectors and in the Civil Service. I want people to understand that the public sector is modernising at quite a pace and this programme allows people to have confidence in the quality of the service.

We must always watch the balance between reducing tax and the State's investment in the public service. We need good education and health services. We do not want queues in outpatient clinics. We do not want children in overcrowded classes. We must get the right balance between all those things but we must also give value to the taxpayer. As a teacher I can say that teachers wish to be accountable. Workers in the health sector and the Civil Service also wish to be accountable. All the people in the public sector unions with whom I deal on a daily basis are in the business to ensure that a quality service is being provided. It is not our job to protect people in the Civil Service who are not doing their job well. Taxpayers' money is used to pay people whether they are in the Civil Service, the wider public service or teachers. It is in all our interests that a quality service is provided for people who are depending on us. That is the modernisation of the public service.

Another huge area is investment in lifelong learning. In this document there is a chronological approach beginning with early childhood education and learning. That also includes child care, primary education, post-primary education, third level education and adult education. This is the first time I have seen that type of an education spectrum outlined in a national agreement. Anyone will agree that is important and it is something about which we need to be aware.

It is not just those broad brush strokes that are mentioned. The document goes into detail about ensuring that there will be teacher supply. Many Members will recall the late 1980s when there was a large number of unemployed teachers. They could not get jobs for love or money and had to leave Ireland. This programme puts in place a commitment from Government to increase the teacher numbers in schools by almost 2,000 over the next three years between primary and post-primary. There is also an agreement that the Department of Education and Science will sit down with the education partners to agree where new teachers are needed. They will decide if teachers are needed in rural schools which have too many children in multi-grade classes or whether more remedial teachers are necessary.

A commitment has been given to invest in and provide special education. Special education gets a specific mention in the programme because it states that children with special needs and disabilities will be looked after. Many Members have asked me what is the position regarding principal teachers in small primary schools. There is a commitment in the programme to implement the outcome of the review group on principal teachers within three years. That puts in place what we badly need. Principal teachers have phoned me to tell me what a bad job I have done and that it will take three years to implement the scheme but in my view it puts in place something which has been needed for many years and it will only take a couple of years to fully implement it.

If we look at that balance in education and then go beyond that, we can say we are now looking at education from the womb to the tomb. Child care is now being dealt with in a serious way and money and tax credits are being made available. That makes it important also. These are fundamental and specific issues. I could also throw into that loop the fact that £1.5 billion will be invested in social inclusion policies. I have great difficulty coming to terms with these figures. When I was growing up people used the term "billion" with a sense of awe but now it is used every day. If £1.5 billion is invested in making this a more inclusive society, how can trade Unionists or other people vote against the programme? How can people vote against an investment in an improved quality of life for the most marginalised and excluded members of society? That is an important issue. The fact that the programme clearly refers to refugees, travellers and other marginalised groups and contains an understanding that these people are entitled to support from the Government, the State and the community is important in terms of granting them parity of esteem.

It should be remembered that the issues about which people are concerned, such as traffic congestion in rural and urban areas, are dealt with in this document. Another important aspect of this document is that it contains rural proofing. In other words, it represents the first serious attempt to ensure that rural areas obtain their due share of the investment on offer. That development will be warmly welcomed.

The programme includes a clear understanding of the importance of supporting people in disadvantaged communities and areas. It contains a set of objectives in this regard, including dealing with the drugs problem and tackling all forms of disadvantage. With regard to the latter, the programme contains two sections on housing which deal not only with local authority housing provision but with the needs of people in local and middle income groups who wish to purchase houses.

I accept that many aspects of the programme may be aspirational. However, it is a serious attempt on the part of the representatives of all sections of society to put on paper a series of objectives under the heading "A Programme for Prosperity and Fairness" and set out our stall for the next two to three years. In my opinion the programme, which attempts to deal with issues of major national importance, represents the way to do business. It deals with the issue of pay and I accept that the pay deal is not good enough. As a trade union general secretary I would have liked to see higher wage increases being granted. On the other hand, the Government has given a commitment to supplement the 15% increase with tax changes over the next three budgets which will improve people's net take home pay by a further 10%. That is an attractive package.

I have dealt with the modernisation of the public sector. I did not deal with the area of partnership and I do not have the time available to do so. However, it is important that we develop a partnership approach in the public and private sector. To put it simply and crudely, the programme recognises the importance of employers and businesses encouraging members of their workforces to use their intelligence at work. In other words, people will be asked to put forward their views and proposals and it will not be a case of their merely being directed to complete certain given tasks. The programme encourages those at all levels in the workplace – from board members to sub-board members to those on the factory floor, etc. – to discuss how their companies and institutions could be more efficient, deliver a better service and be more family friendly.

This programme is the first serious attempt I have come across to try to achieve a balance between people's personal and working lives, to develop family friendly policies and to set out clear objectives on issues such as job-sharing, flexible working hours, teleworking, etc. We have reached the stage in our economic growth where people work harder and longer. To ensure that they retain their workforce, employers will have to be more flexible than heretofore. That cannot be a bad thing.

The programme also makes a serious attempt to address the issue of equality. I am sorry that there are no women present in the House for this part of my contribution.

Acting Chairman (Dr. Henry)

There is one in the Chair.

Mr. O'Toole

Unfortunately, the acting chairperson is not allowed to contribute to the debate.

Mr. Dardis

The Senator should not provoke the Chair.

Mr. O'Toole

I am making this point on foot of comments which were made some weeks ago. Male Senators can appreciate and welcome the move made in the programme towards equality. I am of the view that if a social revolution ever takes place in this country it will be led by middle-aged males. I can get away with making such statements because there are no female Senators present to interrupt me.

The acting chairperson and I share views on the importance of equality and we will communicate those views to the female Members of the House when they choose to visit us and contribute to the debate.

Acting Chairman

The Senator should not refer to their absence. I am sure they are following his contribution on the monitors in their offices.

Mr. O'Toole

The rule is that a particular Member's absence may not be referred to, whereas reference may be made to a group within the House. Gender absences have been referred to on a number of recent occasions and I did not want to miss the opportunity to make such a reference. I intend to do so on many occasions during the coming months.

Acting Chairman

Not in the next five minutes, I hope.

Mr. O'Toole

The issues of equality and bullying in the workplace, which are very serious, are addressed in the programme. It is high time that this was done. There is no doubt that people suffer in the workplace. I am glad the problem of bullying in the workplace is dealt with in the programme because there is a great deal of nonsense spoken about it and we need to distinguish between people who lose their temper on occasion and those who make persistent attempts to undermine and bully others. The various committees to be established under the programme will try to address the problem of bullying and to put structures in place to deal with it.

There are many other issues such as e-commerce with which I should deal. However, in the time remaining I wish to comment on the way the programme was put together. Some Members do not share my view but I believe that an efficient Government is one which consults. Regardless of the problems which have arisen in respect of Governments over the past 12 years – Members on both sides have criticised them in turn – they have all been prepared to negotiate with the trade union movement and the business sector to try to work through economic plans which had the support of all sectors of society. In recent years, the process has been extended to include people from the voluntary and community sector who represent those most marginalised in our society. Successive Governments presented their plans to these representatives who, in turn, put forward their views and a compromise was eventually achieved.

The programme before us is a compromise and a model of consultation. It is, perhaps, not a model of efficiency in terms of how it was concluded. It is unfortunate that certain people had to remain in negotiations until 3 a.m. or 4 a.m. in order to hammer sense into the representatives of other groups. However, I am sure my views would be reciprocated by the representatives to whom I refer.

This programme represents a consensus. There is nothing more important in a modern democracy than putting forward a plan for the country, the economy, the people and the marginalised which has been achieved by consensus. The programme considers people's position in the work place, in the nation and in the broader world. It deals with people – young, old, disabled, refugees, travellers and the marginalised – in terms of their entire lives and looks at supporting them at important stages of their development. It also deals with the economy in terms of spending and saving, productivity, competitiveness, inflation and growth. I cannot think of a better model we could use to map out our future.

The only criticism aimed at the programme is that there was not enough consultation with Members of both Houses. Perhaps Members should be allowed to put forward their views but there is always a danger that the process could descend into a party political conflict. This is a very good model from the point of view of a Government consulting with the people and I compliment this and previous Governments on the way they set about doing so. It has worked for the past 12 years and we have achieved unprecedented growth.

Many of us are unhappy with the level of wealth sharing and more could have been done in this agreement for those on low incomes. I would like to see more money for those I represent and I could list 100 items which I would like improved. However, this agreement represents the consensus position of all the opposing groups. It is a creative manifestation of the tension between four groups with four different sets of demands which have been brought together with the over-arching objective of seeking the common good.

Mr. Dardis

I welcome the Minister of State and I wish the middle-aged Senator O'Toole well in the development of the social revolution to which he looks forward. I always realised he was literate but I did not realise until today that he was innumerate. Perhaps he will address that deficiency.

I welcome Senator O'Toole's endorsement of the programme and on behalf of the Progressive Democrats I wish to express great satisfaction at the successful conclusion of another three-year national agreement and the launch of the Programme for Prosperity and Fairness. We hope it will be endorsed by all the parties which subscribed to it.

The partnership model has served this country extraordinarily well over the past 12 years. The combination of economic certainty and industrial peace has created a climate conducive to social progress, the prosperity of the country and its citizens and helped the significant growth in inward investment. This investment has also been assisted by the fact that this is an English speaking, stable western democracy. These facts are sometimes taken for granted but they contribute significantly to the attractiveness of this country for foreign investment and industry.

Without doubt social partnership has played a major role in the transformation of the economy since the late 1980s. The scale of that transformation has been remarkable by any standards. Employment has surged to unprecedented levels considered unattainable six or seven years ago. Unemployment has fallen dramatically as a result and Ireland is well on the way to becoming one of the wealthiest countries in Europe – a fact thought impossible ten years ago.

Last year the Progressive Democrats identified three elements essential to any new accord – it must facilitate responsible wage growth, it must allow for gain sharing in the workplace and it must embody a new approach to pay determination in the public service. The PPF satisfies these three requirements. The new agreement will give every working person a significant increase in nominal wages – 15% over 33 months. The real value of that increase will be substantially boosted by the tax reduction commitments set out in the agreement. When the tax provisions are taken into account, the PPF will deliver an increase in net pay of about 25% in less than three years. This is a significant increase by any standards and would have been considered unattainable a few years ago. Ireland is now the most rapidly growing economy in the developed world and we can afford pay increases and tax reductions of this magnitude. I do not share some of the fears expressed with regard to consequent inflationary pressures. I am aware of the recent increase in domestic inflation but the tax and pay elements are sustainable within the context of our economic growth.

It has also been a fundamental belief of the Progressive Democrats that only an enterprise economy can generate the resources necessary to create an inclusive society. That is the essential philosophy which underpins the agreement. The new agreement will cut taxes, improve incentives, encourage and reward risk taking, and generate additional tax revenues for the Exchequer by generating new economic activity. These extra resources will fund the very generous initiatives and social provisions which are welcome and essential features of the agreement.

Not too long ago we were given a spurious choice between cuts in taxes or services. When I entered the House ten years ago there was a small audience for the argument that tax reductions would lead to increases in revenue which would make it possible to pay for services and lead to greater job creation. However, that philosophy is now widely accepted. In the past 11 years we have slashed the rates of corporation, capital and income tax. Since 1989 the two rates of income tax have fallen by a cumulative 22% and it is a matter of considerable satisfaction to me that 21 of those 22 points came off while the Progressive Democrats were in Government. During this period of tax reduction, spending on public services has raced ahead. For example, public expenditure on social services has more than doubled in that period and this is clear evidence that cutting taxes hurts no one and helps everyone.

The new national agreement cannot be viewed entirely on its own but must be seen in the con text of the ambitious programme set out in the national development plan. It is important to consider the two programmes together. It must also be seen in the context of the commitment which the coalition parties have pledged to deliver within the lifetime of this Administration.

We can look forward to the decade ahead with real confidence. For the first time in the history of the State we can truthfully say that our future is in our own hands. There is no limit to what we can achieve in the coming years, including on important issues such as poverty. For years long-term unemployment had been one of the most fundamental causes of poverty, condemning successive generations to despair and preventing them from playing their full part in society – the social inclusion issue. Speaking recently, the Tánaiste, Deputy Harney, who has direct responsibility for employment, said that it was her objective, and that of her party and the Government, to achieve the effective elimination of long-term unemployment within the lifetime of this Administration. Such an objective would have been regarded as impossible five years ago.

The Government has already achieved much and will achieve more. However, even if it does nothing other than eliminate the scourge of long-term unemployment, it will have done a great service to the people. We must now start to think in terms of quality rather than quantity. Let us consider employment and jobs policy where for years our position was so bad that we were happy to take whatever was going on the jobs front, and that was an understandable position. However, the result was that we went into competition with Third World countries for low wage jobs which are now unsustainable given our rapid pace of economic growth.

We will have to enhance the quality of Irish employment and that is catered for under the training and education provisions in the agreement. We will also have to exploit the significant opportunities available in international financial services, electronic commerce and software engineering and consultancy. We have already shown that we can succeed in these areas and I have every confidence that these sectors can be the driving forces in the Irish economy in the years and decades ahead.

The issues of quality and competition in consumer choice are also closely interrelated. A State-owned monopoly dominated our skies 15 years ago. Today, as a result of deregulation, we have one of the most vibrant and fastest growing aviation markets in the world. Almost everyone can afford to fly and that affordability is due almost entirely to the liberalisation of the market which took place in the mid-1980s. The benefits of aviation deregulation to consumers have been immense and the same can be said of the telecommunications sector where, instead of a State monopoly, there are several companies vying with each other to offer new products and services to consumers at keenly competitive rates.

The lessons of liberalisation must be learned. Whether with regard to taxis, public transport or energy provision, this economy has much to gain from greater deregulation and liberalisation of the market. The consensus which has emerged through this programme is the proper model in terms of providing stability and a framework within which society can develop and prosper and continue to experience the sustained growth of recent years.

I share Senator O'Toole's view that the growth projection of 5.6% which the Minister gave this morning is conservative and that it could be higher, notwithstanding inflationary pressures. I referred to that earlier and I do not believe inflation must necessarily rise above its current level. I hope it will be lower.

Senator O'Toole raised an important issue about which I am concerned – the degree to which our democratically elected Parliament is bypassed, whereby the social partners sit with the Executive to devise a programme. It is a good programme and I do not take issue with what has emerged from it. However, there has to be a mechanism whereby Parliament can be more directly involved in the process. I take Senator O'Toole's point that it cannot be so cumbersome as to lead to what in Europe is called sclerosis, which means that everything stops. Nevertheless, there should be a role for Parliament. We are fulfilling that role today in terms of reviewing the programme, but perhaps some thought could be given to the input Parliament might make to the process, through the committee system or otherwise.

The Minister has dealt comprehensively with the issue of public service pay. I welcome the benchmarking initiative and the efforts to overcome difficulties caused by pay relativity within the public sector which creates a vicious circle whereby one claim leads to more and more knock-on claims so that by the time we get to the end of the line we are back to square one and the whole process begins again.

I also welcome the introduction of the national minimum wage, in relation to which the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, played a key role. One can argue about the level of the minimum wage. However, the concept is entirely reasonable, and giving people at the lower end of the scale a living wage will not affect our competitiveness. I note that under the programme the minimum is to be increased from £4.70 an hour to £5 an hour by 1 October 2002. It is important also to take pay and tax together and to look at the increase in net take home pay of workers. It is through that conjunction that we have achieved a very significant increase.

The issue of social inclusion is critical and I am glad to see it given strong emphasis in the programme. The aims of the programme as enunciated in the introduction are to keep our economy competitive in a rapidly changing world, provide a strong basis for further economic prosperity, improve quality of life and living standards for all and bring about a fairer and more inclusive Ireland. They are worthy and laudable aims. What is in the programme affords us every opportunity to achieve them. I hope it will be implemented for the benefit of all citizens and that the prosperity we have enjoyed will continue.

I am pleased to see an explicit commitment in the programme with regard to the starting of 22,000 local authority houses from 2000-03. Such initiatives need to be progressed with a certain urgency so that people who have been left out of the net, including child carers and other categories specified in the programme, can share in the prosperity which many have enjoyed but which some have enjoyed to a much lesser extent.

Mr. L. Fitzgerald

I welcome the new agreement which, after a rocky passage, has reached its destination with the conclusion of the negotiations between the social partners last Monday. There are still difficult tasks ahead, particularly for the unions who have to sell the package to their members, but I am extremely heartened by the positive, constructive and responsible approach of Senator O'Toole and the manner in which, as a leading and very able trade union leader, he defined his vision of what partnership is about in terms of the economy and international affairs. I want to pay as high a compliment as I can to him for the manner in which he set out his stall here today. He could, for vested or selfish interests, have taken a different approach, but he took a very responsible approach. It is now over to the Irish Congress of Trade Unions and the other partners to sell the programme to their members. I understand that it will be some weeks before it is finalised. We in the Houses of the Oireachtas wish them well in their endeavours.

The package provides a 15% pay rise for private sector workers and 18% for many public servants over 33 months. It has been broadly welcomed and will be voted on over the next few weeks. While the pay rises are the largest ever agreed under the five pay deals, they are felt to reflect market trends and the expected growth in pay rates. The accord also offers tax cuts of at least 10% by 2002. The pay rises and the tax package have to be taken in aggregation to appreciate the full extent of what is on offer. Allied to that is the very significant element of investment in social inclusion which is reflected across the board. In education it is reflected from pre-school through to adult education.

I welcome the Minister of State at the Department of Health and Children, Dr. Moffatt, to the House. The contribution of his Department will be quite substantial in that area. I also welcome the substantial contribution that has been made in education, pre-school, primary, second level and adult education. I look forward to the forthcoming publication of the first ever White Paper on adult education which, if the Green Paper is anything to go by, will give a definitive and focused approach to second chance education. The target for the next six years is to reserve a substantial number of places at third level for second chance applicants. That is very welcome.

I warmly welcome this agreement, which is balanced, reasonable, responsible and fair. What has been agreed by the Government, the social partners and the voluntary groups after three to four months of negotiation is a new programme for prosperity and fairness.

Sitting suspended at 1.02 p.m. and resumed at 2 p.m.

Mr. L. Fitzgerald

The Taoiseach, the Tánaiste, the Minister for Finance and other Ministers as well as their negotiating teams and the social partners must be commended for remaining focused and assiduously sticking to their task of bringing the negotiations to a successful conclusion and finalising the partnership agreement, despite distractions such as the Northern Ireland peace process. Previous speakers, including an experienced senior trade union leader, spoke about the vital role of partnership. Social partnership on pay and other issues has served this country well since 1987. It has created increases in income and it has led to our having one of the best records of job creation in Europe.

The level of trust engendered among the partners through successive agreements has brought this economy from the brink of bankruptcy in 1987 to the boom we are experiencing today. That transformation was unimaginable in the mid-1980s when I served in the other House. At that time foreign debt doubled, unemployment rose rapidly, inflation was in double figures and there was widespread industrial unrest which resulted in huge losses of man hours at work through strikes and work-to-rule campaigns. Against this background, growth was stagnant and poverty was widespread. The success of the trust engendered manifested itself in a new era of industrial peace which has steered our economy out of the morass of the mid-1980s to a completely new era of growth, prosperity and progress.

In these booming times, with increased immigration and skills shortages in many industrial sectors, it is easy to forget the scale of emigration which blighted this country for so long. Over 200,000 people left Ireland in the 1980s to find work abroad. In 1988, before the fruits of partnership came into effect, almost as many people emigrated from Ireland as were born here. Ireland was unique among other nations in this regard. Most people went to work in Britain where there are still at least three quarters of a million Irish born people living and working. Britain siphoned off our surplus labour for decades.

Emigration became the safety valve which prevented social unrest at home but it also helped the five partnerships to create the conditions which have led to our current economic growth. I am sure most economic commentators would agree that only for these partnerships we would have become a banana republic long before the arrival of the new millennium. Instead, our success story has become the envy of Europe. One disadvantage is that our begging bowl days at the EU table are over. Every pound we receive from Europe in the future will be hard earned.

I want to speak about the management of recent agreements by the Government and the other partners, particularly the unions. From the outset of the talks in August or September last year, the Taoiseach was at pains to emphasise that significant groups should not substitute strikes and industrial conflict for the partnership approach through agreed procedures which are at the heart of social partnership. He also emphasised the Government's corresponding concern that the terms of Partnership 2000 should be fully honoured by all sides. The Government honoured in full the terms of that agreement and previous agreements and it accepted the outcome of adjudication through agreed procedures in the context of cost saving changes of the type envisaged in the Programme for Competitiveness and Work.

The Government has also promoted an ethos of public service modernisation based on partnership. This was commented on in great detail by Senator O'Toole this morning and I was delighted and heartened to hear what he said. There is no doubt this approach has been a phenomenal success. Support has also been forthcoming for the development of new forms of partnership in enterprise, previously not envisaged, through tax policies and the work of the national centre for partnership.

Another vitally important ingredient in the Government's approach to this new agreement was its stated intention from the start to take a new approach and to be innovative in meeting the aspirations of public service employees while, at the same time, respecting prudent limits on public expenditure. Any responsible Government must balance the two in the long-term interest of the country and its people. The Taoiseach emphasised that both he and the Government fully recognised the key role the trade union movement, through ICTU, is playing in developing our social partnership model to the benefit of everyone. It is constantly being improved so that greater trust is built up. He further emphasised the Government's commitment to the further development of that model in the period ahead. However, he pointed out that this would only be achieved if the terms agreed through partnership were applied.

Nobody could argue with the view that social partnership has delivered a dramatic increase in employment and living standards. It has brought about improvements in public services and finances and has provided a climate of certainty and confidence. Everyone knows where the goalposts are and they know they will not move once the agreed procedures are in place. Once trust was established, the partners knew they would not be hoodwinked. Naturally, there have been exceptions where certain groups have not been able to meet their targets, which is regrettable. In general, this approach benefited both inward investment and employment growth because investors knew where they stood with this country's workforce. They regarded Ireland as an increasingly reliable and attractive base in which to invest in industry and technology.

Emigration among our graduates, for example, has dropped to a record low from a decade ago, when one in five left Ireland. Record numbers of young people graduate from third level colleges and the buoyant economy is providing jobs for more and more of them. The number of graduates with jobs is at an all-time high. Last year, for example, a total of 34,288 people received awards ranging from certificates to post-graduate degrees. The percentage directly entering employment rose by 2.4% to 56.3% while the percentage undertaking further studies or training dropped from 38.8% to 35%.

The percentage emigrating to work has dropped to 8% from a high of 20% a decade ago. The percentage in the seeking employment category last year was at 2.4%, a tiny increase on the previous year. The latest survey from the Higher Education Authority late last year provides a snapshot of where the 1998 recipients were placed at the end of April 1999. At six to nine months after completing their course of studies, the report shows improvements in the number finding jobs in all areas. Overall, the report shows that of those in employment, over 86% were employed in Ireland. Nearly 14% were employed overseas, the lowest proportion since 1983. The Chairman of the Higher Education Authority, Dr. Don Thornhill, said the proportion of graduates securing work overseas is the lowest since these surveys began almost 20 years ago.

Another interesting and beneficial aspect of partnership is that it has recognised and managed the links between different sectors or aspects of the economy. On analysis, one understands that the living standards of workers are determined, not by how fast nominal wages rise, but rather by the security and volume of jobs, the levels of taxation, the rate of inflation and the quality and volume of public services. This was commented on in detail by previous speakers and by Senator O'Toole.

I refer again to facing change and challenge together through trust. Social partnership has so positively promoted trust among the partners that this has enabled the Government to face social challenges and structural changes in our society, working together with all the other partners. Those challenges and changes could not have been faced by a Government on its own. Let us be honest about it – without partnership, they simply could not have been taken on and achieved in this beneficial and successful manner.

The agreement is a product of all of these benefits of the partnership. The agreement now concluded, subject to ratification by congress, whom we wish well and hope will ratify it, and the trade union movement, is a product of all of these benefits. It represents a new and far greater maturity in industrial relations, as the programme, if adopted, will be underpinned by industrial harmony. I am delighted that what seemed initially to be an almost impossible resolution has finally been arrived at in a manner that provides huge and substantial resources, targeted at promoting social inclusion. These resources have been targeted at education through all sectors, which Senator O'Toole very fairly acknowledged. They have been targeted at social welfare, expenditure on infrastructure, and used to recognise and respond to the needs of those who are in isolated rural communities. They have also been targeted at the health services.

The results of the negotiations are to be highly commended and will not, as some prophets of doom forecast, increase inflation to great heights. It is a very balanced, integrated response to the needs of all sectors in our community. It is inflation-proofed and while there might be minor variations in the inflation rate, by and large the package is a great launch for the Irish economy in the new millennium.