Seanad Éireann debate -
Thursday, 26 Jan 2006

Vol. 182 No. 11

Appropriation Act 2005: Statements.

Minister for Finance (Mr. Cowen)

I am pleased to be here today to resume discussions on the Appropriation Act 2005. As the House is aware, the Bill was enacted in December 2005, giving statutory effect to voted expenditure for 2005. At the outset, I would like to brief the House in similar terms to those which I briefed the Dáil yesterday in respect of the issue of capital carryover from 2005 to 2006 for the Vote of the Health Service Executive, HSE. The Appropriation Act 2005 made provision for a capital carryover into 2006 of some €346 million on capital expenditure programme priorities in 2006, including some €56 million for the HSE.

My Department was advised late on Tuesday, 17 January 2006 by the Department of Health and Children that the Health Service Executive had advised it on that day that there may be some alterations to its estimated outturn and consequently to its capital carryover figure of €56.4 million included in the Appropriation Act 2005. The Act provided that, with regard to the HSE, a sum of €56.4 million could be made available for spending in 2006 in respect of capital not disbursed in 2005. My Department has been advised by the Department of Health and Children that, on the basis of the preliminary outturn figures for 2005 from the HSE, the capital savings anticipated by the HSE in December may have been used to meet similar size costs under the current expenditure heading. The Department of Health and Children is awaiting final verification of the outturn from the HSE.

The implications of this development for the 2006 capital budget for the HSE will be reviewed in the context of the 2006 Revised Estimates Volume. I am determined to ensure that it will not have an adverse impact on the plans for the HSE's capital spending in 2006. As matters stand, the 2006 capital allocation for the HSE is €558 million; an increase of 10% on the provisional 2005 outturn.

The legal instrument which gives effect to the carryover of funds from 2005 to 2006 and which determines the actual amounts to be carried forward is a ministerial order. Under the relevant legislation — section 91 of the Finance Act 2004 — the order must be made before the end of March and the draft order will be put formally before the Dáil for approval by resolution. The Revised Estimates Volume will also include details of the carry over under each Vote and I will be accordingly advising the Dáil in due course in compliance with the legal requirements.

I want to make it clear to this House that this development has no implications for the multi-annual approach to capital investment or the availability of the capital carryover facility. The five-year capital envelope system introduced in 2004 will remain in place, as will the facility to carry over savings of up to 10% of the capital allocation for spending in the following year. The reaction to the multi-annual system and to the carryover facility has been uniformly positive. In particular, Departments and implementing agencies have indicated that it has greatly assisted more efficient planning and management of their capital programmes and projects. It has also discouraged any rush to sub-optimal end year capital spend to avoid savings occurring.

In 2005, some €237 million of capital carryover from 2004 was available for spend on key areas such as transport, social housing and education. Under the old system, this amount would have been surrendered to the Exchequer and lost to the areas in question. Excluding the HSE €56 million, the amount of carryover available for spend in 2006 will be €290 million. This will be invested again in key areas including transport, housing and industrial promotion.

Before I turn to the most significant elements of public expenditure in 2005, I will highlight some key budgetary and economic outcomes in 2005. The Exchequer statement published earlier this month showed an Exchequer borrowing requirement of just under €500 million. This compares with an initial forecast on budget day 2005 of almost €3 billion. On a general Government balance basis, the position improved from a projected deficit of €1.2 billion to a surplus of almost €700 million. This excellent outcome is a product of the Government's prudent fiscal policies and sound management of the economy.

Overall the economy is forecast to have grown by 4.6% in 2005. There has been an 89,000 increase in the numbers employed. The debt to GDP ratio has fallen to 28%. Under the stewardship of this Government, this robust economic position is forecast to continue in 2006 with forecast growth in GDP of 4.8% and growth in employment of 3.1%. Sensible economic policies are driving growth, which provides the resources to fund essential public services and address priority social needs over the medium term.

In line with this Government's policy to maintain expenditure growth at sustainable levels consistent with the growth in available resources, the end-year Exchequer returns showed an increase in net voted current spending in 2005 of approximately 9%, or approximately €2.5 billion. The vast bulk of these increases were targeted by the Government at the priority areas of health, approximately €1 billion; education, €450 million; and social and family affairs, €425 million. Between them, these three priorities accounted for over three-quarters of the total increase in net current spending.

It is important to place on the record that increased spending is leading to substantial improvements in the delivery of services. I will provide some examples of this. In the health sector, expenditure under the National Treatment Purchase Fund has been over €140 million since its inception. This scheme now generally facilitates anyone waiting more than three months for a routine surgical procedure. Since its establishment in 2002, over 37,000 patients have had treatment arranged for them by the fund.

In the period since 1997, there has been a dramatic increase in frontline staff in the health service as follows: 2,000 additional medical and dental personnel, including 620 additional consultants; 7,000 additional nurses; and nearly 7,000 other health professionals such as speech and language therapists, physiotherapists, social care and social workers, psychologists and environmental health officers.

Expenditure on the medical card services scheme had increased to approximately €1.4 billion by the end of 2005, from €360 million in 1997. The increased funding in this area provided for the introduction of medical cards to all over 70s and the new GP visit card. It also funded significant increases in income guidelines — the guidelines were increased by a total of 29% in 2005 — and simplification of the means test, which is now based on people's income after tax and PRSI and takes account of reasonable rent and mortgage payments, child care expenses and travel to work expenses.

In education, the pupil-teacher ratios have fallen since 1996-97 at primary and post-primary levels from 22.3:1 and 16:1 to a 2003-04 level of 17:1 and 13.6:1, respectively. There are now more than 5,000 primary school teachers working solely with children with special needs and there are nearly 6,000 special needs assistants providing individual support in schools to children with special needs. At third level, there have been significant increases in participation rates, rising to 54% in 2003. Third level participation rates were 44% in 1997. This increase reflects Government policies to broaden access to third Ievel education.

Gross spending on social welfare last year amounted to over €12 billion. The increases in social welfare spending have been targeted at the least well-off in our society. In particular, the Government has provided for significant increases in the old age pension, unemployment assistance and child benefit. Since 1997, these rates have increased from just under €100 per week to €193 per week for the old age contributory pension; from €83 per week to €166 per week for the lowest rate of unemployment assistance, which represents a doubling of this rate; and from €38 per month to €150 per month for the rate of child benefit for the first and second child.

While the Appropriation Act refers to expenditure in 2005 it is relevant to recall details of the budget announced last December. The budget saw a major investment of resources in key areas such as social welfare, child care and education. A social welfare package, costing over €1.1 billion in 2006, reflected significant increases in personal social welfare rates. These increases were well in excess of inflation and included an increase of €14 per week on the old age pension. A multi-annual child care package worth some €2.65 billion was announced. This included a new annual payment of some €1,000 in respect of every child aged six or under and a major programme of investment in child care facilities.

I announced significant additional investment in education including the creation of a multi-annual strategic innovation fund for third-level education, which has been widely welcomed by that sector. This investment recognises the sector's key role in nurturing the skills base necessary to compete in the modern global economy. I challenge the Opposition to outline which elements of the budget package do not represent value for money. The budget targeted resources in a major way at areas of need and also in areas related to our future competitiveness.

Significant additional investment is not limited to current expenditure. The Government has put a major investment programme in place to radically enhance our infrastructure to meet the needs of a modern society with a rapidly expanding economy. Net cash spend on investment in 2005 was almost €5.8 billion, an increase of over €600 million, or approximately 13% on the 2004 outturn. The biggest increases in capital spending were on the social and affordable housing programme, the school building programme, roads and public transport and science and technology development programmes.

In November 2005 the Government launched Transport 21, a ten-year capital investment framework for transport that provides for gross investment of €34.4 billion. This initiative, involving a massive acceleration of investment in transport, is an important expansion of the multi-annual capital investment framework and will facilitate better long-term planning in a sector which is central to the economic and social development of the State. The budget provided for investment of €43.5 billion under the 2006-10 multi-annual capital envelope, including provision for Transport 21. Some €38 billion is being provided for Exchequer capital investment and €5.5 million for PPP-funded investment. This capital investment is producing tangible results, including better and more houses, better and more schools and a major enhancement of our motorway network and public transport capacity. We will continue to give top priority to investment through the National Development Plan 2007-2013, which is currently in the initial stages of preparation.

I have already referred to the real outputs arising from Government expenditure. It is appropriate that I outline the initiatives introduced by the Government in recent years to promote better value for money for the taxpayer. As I indicated earlier, in 2004 the Government moved capital spending onto a multi-annual framework. This has given the financial certainty to Departments and agencies to plan their capital programmes over a medium-term horizon. The result has been better management of programmes and projects. To complement the multi-annual capital framework my Department issued in February 2005 a revised edition of Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector. The new guidelines put in place a rigorous approach to project appraisal. They also provide for proportionality in project appraisal, depending on the size and scale of projects. In particular, they require detailed cost-benefit analysis for all projects costing over €50 million. I subsequently reduced this threshold to €30 million on foot of the additional value for money measures I set out in my address of 20 October last to the Dublin Chamber of Commerce.

The Government announced in October last an initiative in relation to the management of information and communication technology projects and consultancy. This includes provision for a peer review process for major ICT projects and for review of the guidelines in respect of the engagement and management of consultants. I also announced on 20 October additional measures to promote greater value for money including ex ante evaluation and formalised contracts review of projects over €30 million, more competition for public sector contracts, a requirement to put out to tender extension of major service contracts and recruitment and training of specialist IT, capital project appraisal and management staff.

Engagement with Departments has been ongoing to ensure that these measures are fully implemented. Substantial progress has also been made on the introduction of fixed price public sector contracts for construction and related services. Consultations on the implementation details with the construction industry are advanced with a view to introducing shortly the new range of fixed price contracts. These new contracts will transfer appropriate risks to contractors where they are best placed to manage them thus reducing the potential for cost overruns. Evidence is already emerging that the reforms of recent years in regard to capital spending, appraisal and management are making an impact. Most projects, notably in the roads area are now within budget and on or, more likely, ahead of schedule.

The Government accepts that there should be a more transparent system for reporting to Parliament on outputs achieved for resources invested. In my recent budget I announced Government proposals for a reform of the budgetary and Estimates process. The proposals involve my meeting the Committee on Finance and the Public Service early in the year to discuss the economic and fiscal background to the three-year medium-term framework as set out in the stability programme that we submit to the EU Commission. I also proposed as a new feature that my Department would publish updates of the multi-annual projections the following autumn.

To facilitate more meaningful consideration of the annual Estimates I have proposed that from 2007, each Minister will publish an annual outputs statement setting out the performance targets for their expenditure programmes. These statements will be presented to the relevant select committees together with the Department's annual Estimates to facilitate consideration of what is being achieved for the public expenditure being voted. From 2008 the statements will also provide information on actual outturns against targets.

On foot of the budget announcement I extended an invitation in December to the Opposition spokespersons on finance and the party Whips to meet with me to discuss issues in relation to the implementation of the Government's proposals. I regret to say that a negative response has been received from the Labour Party to my invitation to discussions. This is disappointing as the Government's proposals involve real reform and provide an opportunity for enhancing accountability in regard to the Estimates and budgetary process. I would like to advance this issue by consensus and I hope that, notwithstanding the Labour Party's stated position, my invitation to discuss these proposals will be taken up by all parties so that real improvements to Oireachtas scrutiny of the public expenditure and budgetary policies can be achieved over time and in a spirit of co-operation.

The year 2005 was another successful one for the Irish economy. The Government's prudent policies have seen continued economic growth, buoyant tax revenues and significant increases in public expenditure with associated improvements in public services. In the recent Estimates and budget the Government has made provision for further significant increases in expenditure which will deliver better public services. These, combined with the additional value for money initiatives introduced in 2005, should ensure that 2006 sees further progress on the Government's commitment to delivering modern class infrastructure and better public services.

Mr. Browne

I welcome the Minister and his officials to the House. I am deputising for Senator John Paul Phelan who cannot be here today and will do my best to represent the party. I took notes during the Minister's speech about different areas on which I will disagree with him. While I am not an economist I understand that a Minister for Finance controls only spending. He or she hopes revenue will come in and has some influence on it by setting the tax rate. Recent figures have proven that this Government has overcharged its customers and underspent by €700 million on public services. That might be good in a business but in a Government it is shocking as it means it is not delivering services to the taxpayer.

I cannot understand why Ministers, when given their allocation of funding, do not continuously undertake reviews. For example, last year Deputy Paul McGrath showed the Department of Education and Science had underspent on the school building programme. Every day in this House there are matters on the Adjournment regarding schools awaiting funding. I have proposed a matter today regarding a school in Carlow that has been awaiting funding for five or six years. Some schools get the funding but do not spend it. In that case other schools should be fast tracked ahead of them. There is no excuse for money not being spent. If it is allocated, the service should be forced to use it, and if not it should be reallocated to another service.

The Health Service Executive has spent capital funding on current expenditure. There will be a statement on it in the Dáil this afternoon. It is a cause of concern to the taxpayer. When the capital funding of €564 million was announced last July, Carlow and Kilkenny, including St. Luke's Hospital in Kilkenny, got nothing. I raised it in the House at the time.

At Cabinet level, St. Luke's has been mentioned as an example of how a hospital should be run. There are no patients on trolleys and the hospital uses its limited resources very effectively. It has a very poor accident and emergency department but a minor injuries unit has been established. However, the staff and patients of the hospital got a slap in the face by getting no funding. That was rectified when, by pure coincidence, the Tánaiste had to visit the hospital the next day, which was a cause of major embarrassment. Thankfully, she provided some funding for the hospital last year and she guaranteed more funding this year. I will pursue this issue again to make sure that St. Luke's is not the victim of this overspend by the HSE. The hospital should not bear the brunt of this mistake.

We are all concerned about public spending. The Government has underspent by €700 million in some areas, yet there has been overspending on projects like the Dublin Port tunnel where, according to newspaper reports, the contractors are seeking an additional €400 million. We have been told that the roofs are caving in and must be fixed. I appreciate that infrastructural projects are not easy to manage and I am pleased that road projects are now coming in on time and on budget. However, some of our projects are way behind schedule. It is embarrassing that we do not have a metro that serves Dublin Airport. In any other major city, one can travel from the airport to the city centre by metro, but one cannot do it here. On the metro systems of Paris, London or New York, photographs will be displayed of immigrants who built them, many of whom were Irish. Yet in our country, we do not have an underground system at all, or even the planning for one.

I was critical of the stamp duty provisions in the recent budget. Stamp duty explained some of the increased revenue this year, due to the increased sales of houses. It is grossly unfair that stamp duty rates were not altered. I do not have much sympathy for those who have four or five properties, but two out of every five properties currently purchased are being bought by investors. That means that the person starting off is struggling to get on the ladder. There was opportunity in the budget for the Minister to change the stamp duty rates. People who have a family home and who want to trade up to a bigger second-hand home are also hit by stamp duty. A case should be made to exempt them as it is only logical that people trade up to a bigger home over time.

The Minister's late father was involved in politics in the 1980s. If he was here now and saw the amount of money available, he would be amazed. No one could have predicted the huge economic growth in the country in the past years. We have all collectively failed to plan adequately. A few years ago people would have been delighted with just a job, even more so if their spouses also had jobs. Unfortunately, there are downsides to this. People need two jobs to pay off a huge mortgage. They need to move out of their own area to afford a house. The Minister's constituency is like my own as there are now many people who commute to Dublin, some of them from Senator Brady's constituency. They ultimately do not want to live there, but they have no choice as they cannot afford a house in Dublin.

Mr. Brady

They come back to us now and then.

Mr. Browne

They are in the promised land now, so they might stay. I am sure the story is the same in Offaly.

Dr. Mansergh

I am sure Carlow is a nice place to live.

Mr. Browne

It surely is, but they might not appreciate it. These people get into their cars at 6.30 a.m., drop their children to a crèche, collect them at 7.00 p.m., and put them straight to bed. There are many downsides to this way of life. We have failed to plan in this area.

It must be asked if this very significant increase in spending is sustainable on a long-term basis. We have economic cycles, such as recession and growth, that occur all the time. What happens when the economy starts to slow down? We are increasing health spending this year by €1 billion, but what happens when things go wrong? In England, the Minister's counterpart, Mr. Gordon Brown, has called a halt and stated that he cannot continue throwing money at the NHS without seeing a consequent improvement in service.

The Minister spoke highly of the National Treatment Purchase Fund, but Deputy McManus exposed that for the fraud it is. Patients who are waiting over a certain period of time are entitled to treatment and nobody has a problem with that. However, it was farcical to see them being treated in the same hospital where they were waiting. Why was the hospital not given the extra funding in the first place? The patient would then have been facilitated.

I am becoming increasingly concerned at the creeping privatisation of the health service. I welcome the involvement of the private sector in the health service, but the State must have a major role in the provision of health resources. The obvious answer is that the State should provide more funding to hospitals and we would then not need the National Treatment Purchase Fund. Patients would be seen on time and in their own area. I know of one lady in Carlow who had to go to Galway to get a knee operation. She could have had it done near her locality and the distance involved has put much strain on her family. Are the taxpayers getting value for money in such cases?

How many new GP-only medical cards have been issued at this stage? I understand that only a tiny percentage of those promised have been delivered. That was not mentioned in the Minister's speech. What about the pupil-teacher ratio? We hear about ratios of 17 children to one teacher, which bemuses me. When the pupil-teacher ratio is being worked out, walking principles are taken into account, which is very disingenuous. We should be honest and set maximum class sizes. There are many classes with significantly more than 30 pupils in them. That has a huge impact on children later on.

It costs more than €250,000 to keep one prisoner for one year. If we spent one tenth of that on better school resources, people might not end up in prison in the first place. There is a clear link between educational disadvantage and ending up in prison. The Minister might be convinced that the pupil-teacher ratio is low, but that is not the case on the ground. We should set maximum class sizes and teachers should not be in classes with 30 to 35 pupils, where children do not get the level of attention they deserve. While I welcome the extra resources devoted to education, most parents and teachers want smaller class sizes.

I was quite happy with the Social Welfare Bill 2005, but I would like to make a suggestion about the free fuel allowance. Some people get a delivery of oil in October. The free fuel allowance is currently paid weekly, which is of little use to people who have to pay up to €400 in October. It might be possible to change the scheme to allow people to get a six month cheque rather than a weekly cheque, which would enable them to buy the fuel in bulk. That was suggested to me by a community welfare officer and it makes sense.

The Transport 21 presentation did not go according to plan for the Government. The media and the public were very cautious about it. It seemed to be a re-launching of an old package. The Government had a major challenge in delivering on time and on budget for all the major transport projects. I recently had the honour of travelling to the Minister's constituency. The road from Clara to Roscommon must be the worst in the country. Leaving Dublin for the west, people can see little benefit for their area from Transport 21. We should not ignore the need for local authorities to put in outer relief roads in towns rather than inner relief roads because the former can be far more effective than motorways. Unfortunately, the normal response when one seeks funding to open up land for such roadways is that the motorway must take precedence. While Carlow is shortly to get a motorway, there is, nonetheless, a great need in this rapidly growing town for other minor roads. We should not be just looking to motorways to resolve these difficulties.

The Minister neglected to mention PPARS when he referred to the management of ICT projects and consultancies and I can understand why. This symbolises the Government's failure to take control of an issue. A system has been installed costing €150 million which has not delivered or produced the required results. It can only cater for a fraction of the total staff. The Government was very slow to identify the problem. Even when my colleagues asked about it last July, it took until October before action was taken. While the project has been suspended we are still not sure whether the problem is resolved. Some Ministers talk about it being a great success. The Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, thought that €150 million was only a drop in the ocean. If he is that generous with his money, I should not mind singing carols at his house next Christmas. Perhaps he will show a different type of generosity than he does with taxpayers' money, however.

I will conclude by conceding that much progress has been made. However, I can give two examples to the contrary involving friends who live in Dublin. One, in Castleknock, cannot get on the train in the morning which takes a few minutes to get to the city centre, because there is no space on it — unless she wants to start the day like a sardine and arrive in a bad temper. That is not just my version of events. I have heard Senator Morrissey raise this in the House as well. Another friend of mine took a full hour to get from Lucan to the city centre last night on a bus. The public is not getting the service it should.

Finally, the Minister might take up an issue which has not been handled well by his Minister of State. This concerns the Lacken Weir in Kilkenny, where the main drainage works have cost €40 million more than initially planned. I accept that they are working well, but there is a small problem in that the salmon have difficulty in getting up to the weir.

Mr. Daly

I thought the salmon were almost gone.

Mr. Browne

They nearly are and if the Minister of State, Deputy Gallagher, has his way they will be shortly.

Mr. Daly

First, they say there are no salmon. Now there are too many. One cannot win.

Mr. Browne

The salmon cannot get up to the weir. Apart from the Minister of State, Deputy Parlon, launching a vicious attack on "silly little fish" on local radio, he has done very little besides. We have seen a complete failure of systems there. He has appeared before the Joint Committee on Communications, Marine and Natural Resources and is due back again, I believe, next week. The point is that no account was taken in the €40 million project of the salmon trying to spawn upstream and the local fishermen, who know the river, have been totally ignored in this matter. I appreciate that problems can arise when projects are being built. Nonetheless, I ask the Office of Public Works to listen, for a change, to local opinion which is in tune with what is happening.

Dr. Mansergh

I came in here this morning on the DART at 8.40 a.m. It was an extended train and I had a seat and was able to read the newspaper.

I welcome the Minister and his officials, many of whom I have had pleasure in working with in the past. I thank the Minister for his comprehensive exposition of the situation including the issue relating to health spending. As regards capital spending, I am very glad that the Cashel-Clonmel hospital reorganisation project is going ahead this year. As regards the previous speaker's comments, one cannot possibly talk about the taxpayer being overcharged when there is a Government deficit and a public debt.

I want to compliment the Minister on his management of the economy over the past 16 or 17 months. We are virtually in a unique situation, when the Government has not had to increase taxes in two budgets in a row. I do not know whether there is any precedent for this. Expenditure is set to rise. The Minister's speech said it was up 9% last year. I believe the outturn will be about 11%, although the post-budget Revised Estimates will give us a final figure for the moment. In any event, expenditure is rising by about 11% and we are also able to reduce the debt to GDP ratio somewhat further. It is currently 28%. I well recall, as I am sure the Minister does, that in 1987 the debt to GDP ratio was 127%, as it was then measured. I am not at all unhappy at the steady downward pressure on that which gives us more financial freedom and is greatly envied by most countries in Europe.

When one visits other countries one finds finance Ministers arguing that it is impossible to keep down taxes, increase expenditure and control deficits. The fact is we are doing that at the moment. The Minister's predecessors, in the 1980s, thought this was quite impossible to do as well, so we are in an extremely fortunate situation.

I was in Austria over the new year where they were complaining about record unemployment for 50 years. It is now 7.5% there and I accept that by previous Irish and general European standards that is not particularly high. The Portuguese economy has stalled. They put all their cohesion funding into roads, motorways and so on, while neglecting education. They compare themselves to Ireland where a good deal more money was invested in education. Mr. Gordon Brown, the British Chancellor of the Exchequer, was mentioned a few moments ago. In Britain the economy is bumping up against the 3% EU ceiling and he is facing some difficulties as a result.

Spending here is very definitely under control. As we know, the Minister is as likely to be criticised for underspending as he is for overspending. As he has pointed out, systems have been put in place to discourage sub-optimal end of year spending. I welcome the announcement that he will be coming to the Joint Committee on Finance and the Public Service to set out the parameters for the period ahead. I am, however, somewhat disappointed that the Labour Party has declined his invitation for a briefing. It shows a certain lack of self-confidence in one's position when one appears to be afraid of the facts and the parameters.

The new year has been accompanied by a wealth of positive economic indicators. An 89,000 increase in employment is totally unprecedented. For the first time in three or four years, there has been a rise, again, in net industrial jobs. This casts doubt on those commentators who suggest that we are simply moving over to a service economy and all our industry will go to places far afield. I believe this is extremely simplistic and that the wealth creation of the industrial sector is very important. Once again, there has been a very low level of industrial disputes and days lost. It has been one of the lowest years for redundancies in recent times. Lower income workers get the best deal in this country compared to any other in Europe, as the European Commission, which is responsible for the comparative data, keeps telling us. Real earnings are rising by roughly twice the level of inflation. What is definitely unusual, and perhaps the Minister should prize this fact, is that surveys show small firms are upbeat on job creation. It is not often that representative organisations such as small firms' bodies are optimistic about the economy. The debate about whether Ireland is closer to Boston than to Berlin is an artificial one. In the past the capital of Germany was Bonn. I refer to a quotation from Ludwig Erhardt, the architect of the German economic miracle. He said the freer an economy, the more social it is. There is a great deal of truth in that statement. I acknowledge there is a place for government intervention and nobody will dispute that. I note that the Heritage Foundation which is regarded by some as a very right-wing, economic think-tank, rated Ireland as the third freest economy. Despite the source of this observation, I would take it as a compliment rather than something we should be deeply worried about.

Against that background I was saddened by the introduction of the topic of reintroducing, as we are allowed to do, work permits for immigrants from central and eastern Europe. If we were in a situation of plunging employment and growth declining down to zero, I accept this matter would be a legitimate subject for discussion and it is so provided for in the European regulations. However, I do not believe there is any objective justification for raising this topic in current conditions, where we have the lowest unemployment in Europe and where wages and earnings are still clearly rising by considerably more than the rate of inflation. If people thought we were seriously thinking of doing so it would send a devastating signal and would show a loss of nerve and mean that we would renege on commitments for which we were praised.

There is substantial evidence to show that immigration is underpinning the current dynamic growth of our economy. This is not just true of the situation in the Dublin area. The haulage industry and much of the horticultural industry depend on immigrant workers. The living standards of everyone in the country are linked to the current work permit system. A corporation tax rate of 12% — which we introduced — which is used for conducting every type of business, has made this country one of the most attractive countries in which to do business.

Mr. Ross

Hear, hear.

Dr. Mansergh

It is therefore not surprising that business people are attracted to Ireland as the rate is a lot more attractive than in many other countries with the concomitant result that we attract workers who are coming to fill the jobs that business offers. I understand the human reaction — and I sometimes feel this way myself — of being nervous at the vertiginous level of growth which the country is undergoing. There is no precedent in our history for this type of situation and we are not quite sure what is around the next corner. I fully support the notion that adequate labour standards should be properly enforced and I am confident this will be a topic for the social partnership negotiations.

This side of the House has been subjected to a lot of argument from the moral high ground, particularly on the subject of immigration. If some reasonably senior person from Fianna Fáil, not necessarily a Minister, had raised the topic of introducing work permits, the Government would have been accused in no uncertain terms of engaging in the political race to the bottom. I would like to hear more clearly than I have heard before whether people like Senator Ryan or Deputy Michael D. Higgins in the other House, fully endorse both the tone and content of the introduction of this topic by the Labour Party. I notice it is being praised in some quarters as a shrewd political move. I am a little disappointed that the usual cheerleaders for the left and particularly for the Labour Party are using that sort of terminology and are not looking at it in the moral way that they would undoubtedly have adopted if the proposal had come from Fianna Fáil.

The Opposition and, in particular, Opposition leaders, wish to persuade the Irish people that they are exercising leadership. I do not consider Deputy Rabbitte's intervention on this subject a very edifying example of leadership. I acknowledge one can point to the 85% of people in the opinion polls who are in agreement. However, it is the duty of politicians to work through the issues, to explain the effects of taking such action and to calm fears, not to play or pander to them.

As somebody who in the past has had some relationship with and was involved with the Labour Party in the creation of a Government in 1993-94, I would not be attracted to doing business with the Labour Party if this is its policy. As somebody who defends the trade union movement I am a little disappointed that it has gone along so readily with this idea and I would not defend the movement on that issue.

I thank the Minister——

Mr. Browne

Sinn Féin might be at the table.

Dr. Mansergh

——and I congratulate him on a very positive report on both the management of the economy last year and the prospects for the economy this year.

Mr. Browne

Does the Senator favour Fianna Fáil and Sinn Féin?

Mr. Ross

I find myself in agreement with virtually everything said by Senator Mansergh, bar his final remarks. My read on the situation is that despite his reservations about Deputy Rabbitte's intervention in the immigration issue, they would sit comfortably in the next Cabinet if all goes according to plan for both parties and I see no great difficulty in that.

I welcome the Minister to the House. There is a current mantra that it is a great time to be in Government and a difficult time to be in Opposition. The assumption behind that statement is that the Government is not responsible for the economic boom but that this has all happened by luck and that it is very frustrating for an Opposition to be attacking the Government sitting so prettily in the middle of this boom and benefiting from it. There is a certain amount of truth in the fact that both this Government and the previous Government who presided over this boom have had their share of luck to be in position at the right time. However, the Government deserves a great deal of credit for its behaviour during this boom. A boom can be blown pretty easily. One can lose the confidence of the international community and frighten away outside investors quite easily. One can make some disastrous decisions however lucky one is.

Whereas we have seen the highlighting of what are, in the global context, trivial mistakes, such as the controversy that arose this morning where the Opposition drew blood about the health service, in the overall management of the economy these are small beer. This Government has steered the economy particularly successfully and wisely in a situation where it could have, had it yielded to immediate political pressures at all times, blown the boom. It did not do that.

I will point out instances where the Government has played an extraordinarily successful role, for which it should get due credit. Senator Mansergh correctly highlighted the issue of the 12.5% corporate tax rate. There has been immense pressure from Europe to raise that tax rate and for the harmonisation of taxes. The Government has courageously resisted that pressure. It is self interest but there undoubtedly has been a great deal of pressure from France and other countries on this issue. The result of the Government's decision is the arrival of the multinationals to this country.

Furthermore, the trade union movement, with which the Taoiseach has an unhealthy affinity, has pressed for corporate tax to be increased to 15%, a rate which would cause eyebrows to raise in the United States and elsewhere. It would send the signal that we intend to resist the approaches of multinationals even though these have been the midwives of the boom. The Government has also introduced an income and capital gains tax regime which has attracted service, software and other industries from overseas.

Had there been different people in different positions and different parties with different philosophies in power, we could have raised corporate tax to 20%. In the rainbow coalition Government, Fine Gael found it impossible to reduce the top rate of income tax from 48% because of the Labour Party on its back. This Government and the former Minister for Finance reduced income tax, reduced capital gains tax to 20% and stuck stubbornly by the 12.5% corporate tax rate. Those were the most significant decisions in continuing to boost and maintain prosperity.

That is not a popular line to take. Implicit in my remarks is that the Irish indigenous industries are not responsible for the boom and that we must give the credit to the global economy and outside factors. That is true to a large extent. Despite what Senator Mansergh said about indigenous manufacturing industry, it has been in decline, as has farming. However, the response to that has been to quietly bite the bullet, acknowledge that fact and find a way out by inviting in foreign industries which will boost the economy.

It is difficult to say "thank you" to the United States, and it is not necessary to do so. However, it is necessary to acknowledge that without the entry of American companies in the economy, the boom would not have occurred. That is the principal explanation for the Irish economy outstripping its European colleagues so obviously and consistently. I am a little more simplistic than academics such as Senator Mansergh——

Dr. Mansergh

I was never an academic in my life.

Mr. Ross

I am sorry. Cerebral people such as Senator Mansergh always dismiss——

Mr. Norris

Cerebral people or terrible people?

Mr. Ross

——slogans and easy answers with a wave of their hand, describing them as simplistic. I am a simplistic person.

Mr. Norris

Hear, hear.

Dr. Mansergh

The Senator is disingenuous.

Mr. Ross

I am quite disingenuous as well. However, I have consistently examined this simplistic argument between Boston and Berlin. The reason people do not like coming down on one side or the other is that we are unapologetically in the Boston camp. We are not good Europeans in the sense that we kowtow to European diktats, as we did previously. In fact, ours is an American led economy within the European Union. That is why we are so prosperous.

That is not an easy thing for an Irish Government to accept or trumpet; it prefers to claim all the credit for the wonderful boom and the presence of the multinationals. It is partly due to the Government but it is also a recognition of a hugely changing trend in the Irish economy. There is full employment but that is due to the fact that there are foreign multinationals here. Thank God for that. The prosperity is due to that and it is continuing daily. While one receives press releases each day from any Department that is vaguely associated with the creation of jobs and from any Deputy associated with the area, the big picture, which is that we are part of the global economy and not a little island economy any more, is something we are reluctant to recognise.

That is why, to some extent, we make such an awful fuss about the partnership talks. This gives us the image of the Government negotiating with its own vested interests, agreeing a pay deal and claiming it as the reason for the Celtic tiger. We hear everywhere and from all sides of this House, day after day, that what underpins the economic boom are the talks and the pay deal. It is nonsense because it is not provable. However, it is easy to say, even though there is little evidence for it. It should be acknowledged that the agreements have brought about a certain amount of industrial peace. There is no total peace because people regularly breach the agreement.

As I said on the Order of Business yesterday, the pay deal is rapidly becoming irrelevant. We will have the great pageant in Dublin Castle in a few weeks and witness the midnight, cliffhanger negotiations, with the Taoiseach arriving to sort out this or that problem, probably at 1 a.m. Perhaps the Minister for Finance, Deputy Cowen, or the Minister of State, Deputy Parlon, will be there too. They will knock a few heads together and, abracadabra, there will be a pay deal and much more besides. Wait and see. The important thing will be, regardless of what happens in Dublin Castle afterwards, to say, "Look, the economy is booming; the trade unions, the employers and ourselves have once again agreed how it should be run. We have done it really well for the past ten years between the three of us and we will do it again".

Dr. Mansergh

For the past 20 years.

Mr. Ross

They had done it badly before, but they have done it well for the past ten years. Fianna Fáil was not in Government for the past 20 years.

Dr. Mansergh

Since 1987.

Mr. Ross

Fianna Fáil was not in Government for all of that time.

Acting Chairman (Mr. J. Walsh)

Senator Ross, without interruption.

Mr. Ross

I pay tribute to a great member of Fianna Fáil, Donogh O'Malley. In 1969 the Government of which he was a member introduced free secondary education, the bedrock of the well-educated population we have today. That decision was one of the most foresighted decisions as demonstrated by the numbers educated over the past 20 years. These people are better educated than many in Europe, they speak English and are ready for the multinationals to come in and give them jobs. But for that education, they would have emigrated.

It is only fair that credit be given to the Government for pursuing this philosophy; it is a philosophy and not left wing ideas. This is liberal economics the Government has pursued, albeit quietly, because it does not like being branded as being ideological in any way. It prefers to sit in the centre and hopes nobody notices when it takes ideological decisions. However, it has been a Government decision to welcome huge corporations to produce the prosperity the country has enjoyed.

We must recognise that one of the reasons the partnership talks are so irrelevant and so much of a pageant and so undermining of this House is that Mr. David Begg who will be there in all his glory on the day they all crown each other will represent probably less than one third of the workforce. The employers' group, IBEC, will be there. Its paymasters include AIB, Bank of Ireland and its main paymaster, CRH, the monopolist. The paymasters also include the cartels and the semi-States which are in the Government's pocket anyway. The partnership agreement will be a kind of public service deal cooked up between the public service and a few business men who run large banks and semi-State companies.

Who is not in that deal? None of the multinationals could give a tinker's fart about it. They would not have anything to do with it. They will not be part of the deal and none of their employees will be represented in it. However, the Government will state that it has agreed a great deal for the future of the country, despite this being utterly irrelevant.

Acting Chairman

The Senator's time has concluded.

Mr. Ross

I forgot about the spending side, which is what this debate should be about. The Chair should have picked me up on this and then my contribution would have been relevant.

Mr. Norris

The Senator is a parsimonious old Prod.

Mr. Ross

On the issue of spending, I plead with the Minister to find the money to alleviate the incredible problems of motorists on the M50. If this needs €400 million or €500 million, it will be well worth it in the long term because the damage being done to the economy through the delay to industry and individuals is immeasurable. Will the Minister of State give us some reassurance that the negotiations which have been going on between the NRA and National Toll Roads have not broken down irretrievably? If they have, will the Minister move in and set the tolls at zero, as is within his power?

Mr. Brady

I wish to give two minutes of my time to Senator Norris.

Acting Chairman

Is that agreed? Agreed.

Mr. Brady

I welcome the Minister of State to the House and thank the Minister for Finance for the clear and precise contribution he made earlier which presented a good overall picture of where we stand. The budgetary and financial position of this State, in particular that of the past ten years, did not happen by accident. We have progressed to our current position through foresight and courage.

Contrary to what has been said, through the process of partnership and prudent management we are now in probably the best economic position in the history of our State. The question is how to continue or sustain this. It is the job of the Opposition to oppose and I have yet to hear anybody on that side agree we are in good shape, in a good position and have opportunities we did not have before. Perhaps if they did agree, particularly with regard to educational opportunities, they would be in a better position.

People have more and this presents its own challenges and problems. The Government must manage these and ensure it deals with the challenges. I have seen at first hand the progress made in places such as the north inner city. This area has moved from a position where there were generations of unemployment, inadequate housing and possibly the lowest standards of education. It has moved from this because of the initiatives and decisions taken by the Government over the past number of years.

Today in the north inner city complete households are in employment and decrepit flat complexes have been demolished and replaced by self-owned or state-of-the-art housing and community facilities. There is significant improvement in educational facilities and programmes throughout the area, up to and including a third level college in the docklands area. If people had suggested ten years ago we would have a third level college in the docklands, they would have been laughed at.

I see the changes that have been made, in particular those that have come about because of the investment in education. Education is key. Communities and individuals have become confident enough to engage in the process of change and to take responsibility rather than sit back as they did in the past and take whatever was given to them. Over the past week I attended two functions. At one, a conference of the Dublin Docklands Authority, some 150 community activists got together with the State agencies, the Garda, Dublin City Council and the Dublin Docklands Authority, to thrash out all the issues relevant to them such as policing, security, education, housing, etc. This would not have happened ten or 15 years ago because the people would not have had the confidence to get involved in the process.

Last night in Store Street, the Garda Commissioner launched the annual report of the community policing forum, which has been up and running in the north-east inner city for the past seven or eight years. At this event more than 100 local people engaged with gardaí face to face, discussed their problems and heard from them what they were doing about them. This would not have happened without the changes that have taken place in the area as a result of investment and the prudent management of the economy. It all goes back to this, as I see every day of the week through people and organisations in the area.

In his budget speech last December the Minister said the budget was rooted in the belief that Irish people could continue to achieve extraordinary things, provided Government created the right environment for them to do so. He went on to list some priorities, education being the first. It is accepted that the quality of the education of our young people has been at the heart of the economic success of the past 15 years.

The Budget Statement also refers to infrastructure, supporting the family and reaching full equality. This provides an insight into how we see the future and how the progress that has been made can and will be sustained. Even at the basic level of household budgeting, value plays a key role. I was delighted to hear the Minister mention value for money in his comments. We have fully taken on the task of trying to achieve it. If people do not feel they are getting value for money or feel they are being ripped off, any benefits that accrue from having spent this money are lost. This concept can be extended further.

As the Minister stated, great strides have been made to ensure we achieve value for money for every euro spent on behalf of the taxpayer. When one considers that our budget over the past 12 to 15 years has increased from €9 billion to over €40 billion this year, one will conclude that there are bound to be problems with fiscal management. Systems need to be enhanced and brought up to speed with the rapid changes that are taking place.

The Minister of State referred to the multi-annual capital framework. Anybody who deals with groups or organisations on the ground will see the improvements that changes in this regard have made. Organisations which used to have to apply each year for money were not able to plan ahead and did not know where they were going from year to year. They are now in a position to submit a five-year plan to a Department and ask for a commitment on funding that plan for a period of four or five years. This allows clubs and organisations to proceed with their work and it has led to great improvements on the ground.

On the issue of detailed cost benefit analysis, analysing what one is going to spend is a fundamental requirement for those in business and individuals. A commitment has been and is being made to go into great detail in analysing.

On the guidelines on the engagement and management of consultants, every organisation and business hires consultants to advise it. It is a question of value for money in that if people do not feel they are getting value for money, any benefits that accrue from the measures they take or the investments they make are eradicated. We must concentrate on realising the benefits associated with what we are doing. We have made progress and I congratulate the Minister for Finance and the Minister of State on their management of the economy.

Mr. Norris

I am grateful to my colleague Senator Brady for allowing me a couple of minutes of his time. I usually use the opportunity that arises while discussing the Appropriation Act to take up matters about which I have been lobbied by various charities. I have a folder containing correspondence from Age Action Ireland, Focus Ireland and organisations associated with child poverty and social inclusion for farm families.

Other Members have raised my concerns, some of which have been addressed at least partially in the budget, and I therefore want to make just one point which concerns a very decent man who lobbied me. I was actually part of a group that went up the Amazon in Brazil to raise funds for the blind. The man who lobbied me was a Garda driver who owned and drove his own car for 20 years. He was fully sighted at the age of 41 and at 42 he became blind. He represents various organisations for the blind. His problem and that of the people he represents is that blind people are excluded from the disabled drivers' and passengers' tax concessions scheme, which gives tax refunds to people to afford them mobility and allow them adapt motor cars so they can have independence. The blind have free travel on public transport and are allowed to have special discs to allow them have their vehicles parked in parking spaces for the disabled, yet they are excluded from the concessions scheme, which seems very unfair. I ask the Minister to reconsider this situation.

The cost of living for a blind person is estimated to be one third more than that for a fully able-bodied person. It is a question of whether the person is disabled and whether the provision of a car and driver, which is a lot more expensive than mere modification, should be considered feasible for inclusion in the scheme. Many proprietors of car showrooms assume automatically that blind people are entitled to the concession and advise them to this effect.

Consider the position if immobility is a criterion under the scheme. I am told and believe that a blind person, if taken out of a car and dumped in the middle of the road, would be just as immobile as a paraplegic who fell out of his or her wheelchair, but for different reasons. I am making the case that, under European legislation, statutory policies are required to be inclusive. In this case, unless the Minister has, without my knowing it, made a change in the budget already — I do not believe he has — the policies are not inclusive.

I am sorry to have to say that Ireland is the only EU country that does not give financial assistance to blind people towards the cost of mobility. In Britain and Northern Ireland, there is a care and mobility allowance which is not even means-tested. It is not a great sum of money but if it were granted here it would make a great transformation to the lives of the vulnerable citizens to whom I refer. I ask the Minister of State to take this on board.

Mr. Ryan

I was not going to participate in this debate as I have a few other things to do but a couple of comments that were made enticed me into the Chamber. It needs to be reiterated that the best Minister for Finance the country has had in recent years in terms of economic growth and low inflation was Deputy Quinn. The average rate of inflation during his term as Minister was lower than obtained under his successors. That is not to say that the country has collapsed or anything like it.

As I stated before, the present regime did not create the Celtic tiger but inherited it. It is the first time I have used the awful term "Celtic tiger" in this House and have tried to avoid it. The Government has used its inheritance very badly and that is the subject of our debate. It is not that it created the growth because we all know it did not. It acknowledges this when it gets an occasional grip on reality.

Dr. Mansergh

It started under Fianna Fáil and the Labour Party.

Mr. Ryan

I would not dispute that. The facts nevertheless speak for themselves in respect of Deputy Quinn's term as Minister for Finance. Having said that, it is now a question of how to manage success. Nobody is more delighted than I am that we are now talking about managing success rather than about the dreadful period of the 1980s when we were managing failure. I will not waste time trying to say who was responsible for that failure. It is extraordinarily different to be talking about the problems of success.

One of my concerns is that there is in all our institutions, particularly our public service institutions, a reluctance to accept that what we are now doing is managing success. Many of the reference points and signposts that were used in the past to avoid the pitfalls of failure with which we were so familiar are getting in the way of a creative approach to success. In this regard, consider the extraordinary failure to deal with our transport infrastructure. The best we can hope for is that we will at least have the framework of a decent road infrastructure by 2009 or 2010, 13 years after the Government will have come into power. It will take nearly as long to have a decent rail infrastructure. We might have a decent urban public transport system by then if we are fortunate. However, we probably will not have proper telecommunications infrastructure because of the apparent inability to come to a single view on how to deal with it. As Senator Quinn, who is hardly an ideologue of the left, stated in the House on many occasions, we are falling rapidly behind.

What is repeatedly involved in this is our failure to acknowledge and manage success. We avoid the pitfalls that were a characteristic of failure but in the process we restrain our ability to institutionalise in bricks, mortar, roads, railways, public transport infrastructure and telecommunications infrastructure the success that has been achieved. The reason for this, as Senator Ross stated, is that while nobody disputes the capacity of the liberal market model to create wealth — Karl Marx had no problem accepting that — the liberal market model flops hopelessly in the way in which it pretends that the wealth created will be used.

The liberal market remains ideologically nailed to a view of the superior efficiency of individual private decisions over those of the community. This is due to an extraordinary ideological commitment to the concept of utility, which John Stuart Mill thought up over 200 years ago, and which no sane, modern psychologist or anthropologist would believe now. Unfortunately, economics has nailed itself to this mast of the individual maximising his or her utility. It has then managed to convince itself that as it is not possible to understand what each individual sees as his or her own utility, therefore, it is not possible to know or out-do the individual. This is close to witchcraft.

Someone once told me that the connection between economics and science is similar to the connection between astrology and astronomy. They use the same language but one is a science whereas the other is close to witchcraft. This need not apply to economics per se but to the belief in the idea of rational economic man, which is at the root of the belief in the liberal market model as a way to use the wealth created. The real job of a modern social democratic government is to manage the capacity to create wealth and to use the wealth created in the ways the market will always fail to do, not because there are, as the economists like to call them, market failures, but because the market not only will not but cannot do so. This is where the issues at the core of our national debate arise.

The first issue concerns the extraordinary inequality of income. Given international indices of income inequality, Ireland is more unequal than the United Kingdom. In the UK, 16% of all income is now — I will not say "earned"— paid to the top 1% of income earners. Therefore, I must assume that the percentage of national income that goes to the top 1% of income earners in this country is even higher. The exact figures are not available from the Revenue Commissioners because they do not break it down to the top 1% of income earners, so it is difficult to find the facts. However, I have outlined the position in Britain, which I will accept has got worse under Gordon Brown before the Minister of State reminds me.

At the other end of the income scale, we have had the introduction of the minimum wage, which I welcome and which was a progressive decision by the present Government and one I support. However, its introduction has been accompanied by a manifest increase in the number of working poor, which is where the debate arises about the present level of participation in our economy of workers from outside the State. One does not have to have much more than a rudimentary interest in economics to note that if perhaps 200,000 people come into an economy the size of Ireland, which has a labour force of approximately 2 million to 2.5 million depending on how it is measured, and are told they are free to work but that they will not receive any social assistance if they do not get a job, only one obvious conclusion can be arrived at by a rationalist economist, namely, that this will bid down wages at the bottom end of the economy. At best, it will ensure that the numbers working on minimum wage will increase. The fact that there has been a spectacular increase in the numbers at work in recent years without a spectacular increase in the amount of income tax revenue accruing to the State is a clear indicator of this.

An official of the Department of Finance was quoted during the most recent publication of Government figures as accepting that most new jobs were low wage jobs. If the view of the Government is that low wage jobs are the way to go, let it tell the people that — I do not want to go that way. I want an economy in which those at work feel rewarded and feel they are participating in the country's prosperity. Those stuck in minimum wage jobs do not feel they are participating in the success of the economy but that they are victims of its success and providers of services for the 80% who benefit.

This is where the issue concerning large scale immigrant labour arises and where the stories from around the country arise. It is why my party correctly stated that if we cannot create a regime in which decency is built into the institutions of employment, we will have to tell the employing class which, in our view, is beginning to use immigrant labour to undercut wages and working conditions, that it cannot have access to that supply of labour.

Who believes that 70,000 workers in the building industry are genuinely self-employed? I do not believe it and neither does anybody in the building sector trade unions, although others may. It is a scam to ensure employers avoid paying. We know there has been a significant increase in the numbers of people from outside the State working in the building industry.

With regard to the question of evidence, political parties, even one has big and successful as the Labour Party, have limited resources. It is the job of a state which is committed to the concept of fairness to find out if these practices are taking place and to prevent them. The extraordinarily slow, reluctant, glacial progress towards increasing the number of industrial inspectors — there are 31 inspectors — suggests that not only was the Government not prepared to do anything in this regard, but that it wanted as far as possible to avoid finding out about malpractice because, one can only conclude, it suspected it was taking place and believed it was good for the economy.

If there exists in the heart of Government a belief that cheap labour — I do not mean efficient, competitive labour — is a necessary part of our prosperity, that is where we disagree. I do not accept that it is necessary that 80% of workers have reasonable prosperity while 20% should be in menial, poorly paid, futureless employment.

This brings me to the other aspect of partnership, which is that, as Senator Ross keeps telling us, only 30% of the workforce are members of trade unions. That is an undisputable fact. What is not a fact is the conclusion drawn from this, namely, that the other 70% are not members of trade unions because they choose not to be. The Irish Times of 9 January last carried an article by a lecturer in industrial relations at University College, Dublin, which cited surveys carried out by ESRI and UCD and quoted figures, which I have not seen challenged, suggesting that two-thirds of those working in non-unionised employment claimed they would like to join a union if they were asked and if they did not think their employer would object. The clear implication is that they thought their employer would object. What is the meaning of partnership if approximately 40% of our workforce are in places of employment where the employers are hostile to the participation of workers in one of the pillars of social partnership? That contradicts partnership. I challenge the Government to change legislation on equal status and similar principles to make it illegal for an employer to discriminate through recruitment or promotion, or any other way against members of their staff who join trade unions. It should be a free choice and a neutral matter.

Imagine the horror that would ensue if ICTU said it would negotiate only with employers who were not members of IBEC, or with farmers who were not members of the IFA because it did not believe in collective negotiations. Why is it only workers against whom other partners in social partnership may discriminate if they join a trade union? According to this study, close to 70% of our workers would be in trade unions if they were not afraid of their employers.

The recently arrived new workers are in a culture which allows and encourages employers to discourage people from participating in social partnership. When an employer tells an employee that he or she disapproves of union membership this effectively means the employer does not want the employee to participate in social partnership. We are telling people that is okay. It is not okay.

That is why, yet again, I challenge the Government. It may be sanctimonious about my party leader's use of some phrases that perhaps would have been better not used but that should not distract it. Is the Government prepared to put together legal and institutional arrangements which will guarantee that everybody working in this State will have the same rights to money, holidays, pensions and security? Will it put the resources into such arrangements or will it be happy to be rated as a so-called "free economy"? It is unfortunate that Senator Mansergh, whom I know to be of the left, used this term, which boils down to an economy in which capital is free to behave as it wishes at the expense of everybody else.

Mr. Daly

I welcome the Minister of State at the Department of Finance, Deputy Parlon, to the House and thank the Minister for Finance for his opening remarks. This debate affords an opportunity for Members of the House at the start of a new year to examine the performance of the Government and hear its view of how the economy will expand, develop and consolidate in the future. We heard a great deal from the Opposition in the run-up to the return of the Dáil and Seanad from recess. If we can judge the new dynamic of Fine Gael and the Labour Party from what we have heard here today the Government is safe for another 25 years.

Mr. Browne

I am deputising.

Mr. Daly

I am not being flippant. I have listened carefully to the Opposition spokespeople but have not heard a single constructive proposal from the Mullingar contingent, if one can call it that. We have not heard how they would tackle some difficulties in the overall thriving economy. No matter how well the Government does there will naturally be issues that create problems. These must be tackled and resolved. The public knows that, and expects that these things happen. The people are not fools, they know of such problems from their own businesses, whether one is a farmer having difficulty with his herd or a business man who has a problem disposing of a line of commodities he did not expect to move slowly. Everybody knows that difficulties arise.

We would like to hear from the Opposition what the alternative is, so that we can judge how it can make a meaningful change in the Government's direction. The Opposition's contribution so far today has been very disappointing.

I wish to comment on some of the Minister's opening remarks and explain how his proposals may inhibit rather than help the projected undertaking. I refer in particular to the last part of his speech wherein he referred to the new contract for public works. I presume this was initiated while discussion took place between the Government and the unions to find a way to tighten up the contracts and make them more effective in the execution and delivery of some of the large projects.

Last year, I met representatives of the 30,000 people employed in the construction industry in the mid-west. They had grave reservations about how that contract was taking effect, especially in regard to small companies. I raised the point they made at the time and am glad to have another opportunity to raise it. They said that if the bulk of the risk is transferred from whoever carried it before to some of the small construction companies they would not be able to fulfil all the detail of the contracts and would lose out on them. Some small construction companies might be forced into a situation in which it would be economically impossible to compete. This would lead to delays and frustrations in the schemes, bankruptcy, litigation and court hearings.

In the construction business people are well capable of negotiating, for example in County Clare there is a water investment programme worth approximately €196 million. A small village sewerage scheme costs approximately €9 million or €10 million. There are approximately 40 such schemes including sewerage and other water services. That programme has been charted since 2003 but very little of it, apart from some minor aspects, has been executed or is likely to be, under the present arrangement.

Approximately nine small village sewerage schemes are ready to issue contract documents. They have not advanced under the system contemplated whereby schemes are grouped together as units. Sometimes these schemes may be 30 miles apart in, for example, Ballyvaughan and Doolin and other smaller villages in the county. These have all been held up for the past three or four years.

Substantial capital allocations set aside in the Department of the Environment, Heritage and Local Government have not been drawn down because it is physically impossible to put them together under the present system. Will the Minister of State make inquiries through his office about some of the small drainage schemes which are holding up development?

The Oireachtas Joint Committee on Communications, Marine and Natural Resources recently discussed the inability of salmon to leap the weir in Kilkenny. There are hundreds of culverts and small river catchments from which salmon cannot escape because the culverts have been broken down through coastal erosion or whatever. There is no way to deal with these problems which are doing significant damage to fish and stocks. I will not go into detail about this today because it is an issue to discuss on another occasion.

The emphasis has been on drift netting and the damage it has done to fish stocks. Far more damage has been done to fish stocks, particularly salmon stocks, by the erosion of the old culverts resulting from local improvement work schemes 40 or 50 years ago. Enormous damage is being done to salmon stocks through the inability of fish to move upstream for the sake of €40,000 or €50,000.

I compliment the Minister for Social and Family Affairs, Deputy Brennan, on the reforms he has undertaken on social affairs generally. I draw his attention to a number of anomalies that have arisen, especially concerning less well off sections of the community. For example, in the recent budget substantial increases were given in welfare payments to people in those categories. However, many elderly people living in council houses find that before they draw down their social welfare increases, their differential rents increase also. The result is that benefits from budget increases are eroded by further increases in differential rents and new refuse collection charges under the new privatisation system. The old system, whereby local authorities collected refuse and operated waiver schemes, is being superseded by this new privatised system which does not include waivers. This causes quite a bit of hardship for elderly people living alone.

Given the balanced development of the economy, the Government must not lose sight of the regions. This is why I wish to compliment the Minister of State on his decentralisation programme which should be accelerated. There has been a negative response from the Opposition whose members say they will look at decentralisation when they get back into Government, but it will never be examined if that happens.

Mr. Browne

The Government wants to win back seats because it lost council seats last year.

Mr. Daly

On the shape of things at the moment, the Opposition will never get back into Government.

Dr. Mansergh

Did the Senator look at the opinion polls? The public supports decentralisation.

Mr. Browne

They did not do so in the local elections.

Acting Chairman (Labhrás Ó Murchú)

Senator Daly without interruption please.

Mr. Daly

I wish to compliment the Minister of State on facing down the type of hysteria that has been created in several places, including media criticism. Decentralisation is an excellent commitment from the Government and one that should be speeded up. I am glad that the Kilrush, Listowel and Newcastle West initiative is working well.

Mr. Browne

How well planned was it?

Mr. Daly

I encourage the Minister of State to press ahead with decentralisation and to leave aside the negative comments that have been made. Some 20 years ago, 1,500 jobs were successfully moved to Limerick, Ennis and Nenagh. Nothing is insurmountable in this matter and if some people have difficulties they can be ironed out. Overall, however, the decentralisation policy needs to be pursued vigorously.

As regards the regions, the Minister of State should talk to his colleague the Minister for Enterprise, Trade and Employment about the consolidation of Shannon Development's work in the mid-west region. Shannon Development has operated successfully in the region since 1959 and is an example for other areas of how such an organisation can successfully combine tourism, industry and regional development. When the Government examines the reorganisation of industry, it should continue to support Shannon which has enjoyed such support in the past. In that way the company can continue its regional development work in the mid-west.

Acting Chairman

As no one else is offering, I call on the Minister of State to conclude.

Minister of State at the Department of Finance (Mr. Parlon)

I thank all Senators who have contributed to this important debate. It was an opportunity for the House to reflect on the Government's economic and budgetary policy. Although I missed Senator Browne's apparently dynamic contribution, I will pick it up later.

Mr. Browne

I will send the Minister of State a copy.

Mr. Parlon

I have to correct some of the things he said, however. Fair-minded commentators in the House would have to agree that we find ourselves in a very positive position. I missed Senator Browne's contribution because I was on my way over here. Apparently, however, he chose to raise the issue of the Kilkenny flood scheme. Despite all the snide remarks made about it, it must be said that it is a superb scheme.

Mr. Browne

It would want to be for €48 million.

Mr. Parlon

We never hear a word of concern about flooding difficulties there, but unfortunately such things cost money. While Kilkenny may be slightly removed from Senator Browne's bailiwick, it is an historically and archaeologically important city. We had to take into account many important issues that made the superb scheme quite an expensive one.

The Senator referred to a comment alleged to have been made by me. I wish to put this matter on the record. Senator John Paul Phelan made the same accusation on a radio programme in Kilkenny recently, yet he was forced to retract it a few days later. He suggested that I made light of the plight of some salmon which could not make their way up river, calling them "silly fish" in the House. On checking the record, however, Senator John Paul Phelan was unable to find such a remark. I never made any such comment in this House.

Mr. Browne

Not in this House, but he did on local radio.

Mr. Parlon

I have taken my responsibilities extremely seriously. Recently, the chairman of the Office of Public Works appeared before the Joint Committee on Communications, Marine and Natural Resources. On that occasion, he gave an undertaking that whatever final modifications need to be made to the weir to allow it to work 100%, they will be done in consultation with all those involved, including anglers and other experts.

Mr. Browne

Good.

Mr. Parlon

That is something to which we are extremely committed.

Mr. Browne

Two years later, though.

Mr. Parlon

Yes but if it was a simple situation it would have been solved a long time ago.

Mr. Browne

If only people had listened.

Mr. Parlon

There were some minor deficits in the plan that will be corrected. I wish to put it on the record of this House, however, that I have taken my responsibilities in that respect very seriously. I ask Senator Browne to re-check the record. I never referred to "silly fish" in this House.

Mr. Browne

I was referring to local radio.

Mr. Parlon

I will now deal with a few other issues. Senator Browne was apparently also critical of the Transport 21 initiative. I find it hard to understand why he could be critical of any initiative that focuses on the completion of our five main interurban motorways by 2010. The budget announced by the Minister for Transport during the past week entails substantial expenditure on the country's road infrastructure, including motorways, bypasses and regional roads.

Senator Ryan referred to employment rights and I felt he was trying to support his party leader. He was not very convincing, however, in terms of the position he adopted because he tried to put the cart before the horse. When Deputy Rabbitte came out with his initial statement he tried to cause major concern by making a plea to a certain part of the electorate. We have heard anecdotal evidence that immigrant workers are a threat to Irish jobs, but that is absolute nonsense.

Mr. Browne

It is not.

Mr. Parlon

Nobody has come up with any evidence. We created over 90,000 jobs last year and all the indications are that we will create in excess of 60,000 this year. We have the lowest unemployment rate in the European Union. The Labour Party's statement amounts to a disingenuous scare tactic. The Government has agreed that this issue will be an important one in the forthcoming social partnership talks. The process will provide an opportunity for trade unions to put forward their views on the issue. The Government is interested in the unions' viewpoints and will respond to those particular issues.

Senator Ross was certainly entertaining and admitted himself that some of his comments were off the point. He referred to the M50 toll bridge, which is an issue for my colleague, the Minister for Transport. The State benefits substantially from the toll bridge's income and from VAT. The issue is under consideration by the Minister, Deputy Cullen, however, and I have no doubt that the Government will make a decision on it in due course.

Senator Daly appreciated the opportunity to reflect on the inquiries he has made. Yesterday, by coincidence, I received a group from Kildysart in the Senator's constituency, concerning a drainage issue. Perhaps I should have advised the Senator beforehand, but the group may have done so. I appreciate the Senator's comments on decentralisation. Some of the detractors of decentralisation have been found to be not listening and out of touch with the general public. Figures I saw in a recent poll suggest that almost 80% of people in the regions favour decentralisation. Tremendous progress is being made with decentralisation, which we are advancing very quickly. However, like everything else, it takes time and has to be planned and executed properly. When one interferes with people's lives, it is entirely voluntary. People are being allowed to make their own plans and arrangements, and the very best built infrastructure is being put in placed since that is what civil servants deserve.

The general consensus that I feel the House expresses is extremely strong appreciation of the very good management of the budget. I believe Senator Brady referred to the fact that it is not so long ago that we had a €9 billion budget. Now it is €40 billion, and that is a sign of the tremendous progress made by the Government and the country.

I once again thank Senators for their contributions. The points that we have noted will be taken up and responded to.

Acting Chairman

When is it proposed to sit again?

Dr. Mansergh

At 2.30 p.m. next Wednesday.