I sat in the House from 10.30 this morning until 3 o'clock and I listened to every contribution made. This is the first time, in a reference to unemployment, that any speaker has been reprimanded. I suggest you are wrongly informed of the situation. It would be interesting to go back and read the record for this morning if you want evidence. Unemployment is directly related to the imposition of taxation, no matter what type it is, whether it is wealth tax or any other tax. At a time when a spirit of initiative and enterprise is called for these qualities are destroyed by the introduction of this type of stupid, ideological legislation. As Deputy Collins said this morning this has been brought about by the Labour Party insisting on being in a position to go back to their people using the slogan: "We made sure they introduced legislation which will tax the wealthy". What a misnomer. That must be the greatest lie of all time after the 14-point plan. The people who will be affected by this type of capital taxation are the humblest workers in factories. People are debarred because of the penal taxation we are about to introduce from using their entrepreneur, initiative and enterprise and the first to be affected are the workers.
Far from putting the man they are supposed to be going after out of business they are increasing the dole queues. We are coming to the stage when those who try to do something constructive are penalised and those who succeed are squeezed. I can see in operation a frenzied policy of envy, a policy of begrudging. I challenge any member of the Labour Party to say if anyone of them employs anybody. Do they know anything about how business is conducted, about what is entailed in trying to build up a successful business, about the hurdles and hardships that have to be overcome, about the shortage of credit? How often do we have employers getting less out of the business than the employees at the end of the week?
The inevitable result of these type of capital taxation policies will be to kill off any man who is prepared to risk his money in industry, who is prepared to start a new business or to increase his existing business; indeed, who is prepared to invest from borrowed money in the vague hope that at some time in the future he may be able to pay not the capital but the interest. At this stage in our development national economic leadership was never so badly needed. At Question Time the Minister for Industry and Commerce pathetically tried to hold a situation that was untenable. Factories are closing down, unemployment is increasing and there is no money for various Government schemes. That Minister boasted about an export promotion that yielded £150,000. It was because the Minister led that promotion that it was given such publicity.
I led an all-party delegation to Libya recently and the orders that resulted from our visit have exceeded substantially the amount the Minister is now boasting of. It is pathetic that we have a Government who are burying their heads in the sand, clinging to some outmoded socialistic ideology that the wealthy must be taxed so that we will have enough money to distribute. Last night Deputy Desmond said only a few hundred would be subject to this tax but if this is the case what will be the cost of collecting? What will be the return?
Near my constituency we had a situation where one of the biggest American companies — it was rated in the top twenty companies in the world —was about to start an industry for the manufacture of computers and calculators but because of the attitude of this Government that concern pulled out of the scheme thereby depriving 500 people of jobs. When I attended the meeting of the southern committee of Cork County Council on Monday we were informed that a crisis situation has developed in the southern committee area where there is a shortfall of more than £3 million. As a result, further jobs are in jeopardy. This has meant that we have lost 2,000 new jobs which were about to be created in Cork Harbour. This occurred because we did not have the money to put in the proper water and sewerage schemes and the jobs will not materialise.
The time of the House is being wasted by the introduction of penal legislation at a time when we should be introducing incentives to people to create new jobs. In May, 103,000 people were unemployed and funds were found to try to buy their silence. However, nothing has been done to try to cure the disease. As long as public outcry can be bought off until the next general election the Coalition feel they have done a proper job. The fact that every day that passes we sink deeper into the morass does not seem to matter at all to the responsible Ministers.
It has become obvious to anybody who studies the political scene that the needs of our economy are totally subservient to the short-term personal political needs of those who govern us. We have the ridiculous situation brought about by the Minister for Justice in the Seanad who is trying to introduce the Criminal Law (Jurisdiction) Bill. I do not know what the Minister is at. What relevance or importance has that Bill now? Our people are crying out for new jobs but the Government see as their most important function the introduction of a Bill that is meaningless towards the creation of employment. Maybe, if the British Government cracked the whip and told our Government that they must provide more jobs for our people, as they cracked the whip in regard to the Criminal Law (Jurisdiction) Bill, we might get more action.
Individually, the members of this Government are intelligent men but collectively they seem to act like idiots and that is something I cannot fathom. Surely there is a member of the Government who can use a grain of common sense and suggest that they all get down to the business of running the country. It is great having the PROs, the publicity, Dr. Cruise-O'Brien and the Minister for Education going on the radio and television —they are nice and articulate people —but that is not their job. Their job is to manage the economy of the country. If they were to be judged on the results of that management in any commercial enterprise they would not be employed for very long.
Does anybody care to remember the infamous 14-point plan that was put before the people at the last general election to stabilise prices, halt redundancies, reduce unemployment, and produce a planned programme of economic development? This must now be one of the sickest jokes of the century. Our transport and electricity costs have soared, but we introduced capital taxation; our industrial exports for the first time in ten years have dropped, but we introduce capital taxation, the Criminal Law (Jurisdication) Bill and discuss irrelevancies such as BBC 1, BBC 2 and RTE 2. Of course, this is the smokescreen to hide the reality of what is going on. It is a pity that we have not on the Government side the late Deputy Sweetman. Whether one agreed with him politically or not one knew that when it came to the business of the country he had his head firmly screwed on. He would not tolerate the type of messing that is going on now, the type of half-baked legislation we are getting, the type of legislation which is emanating from a shotgun marriage between pink-eyed conservatives on one side and punch-drunk socialists on the other.
That marriage, like the previous two marriages, will not work out. Costs and prices are soaring and our workers are being asked to restrain themselves and not look for more wages. No one can blame the workers looking for more in order to stay afloat, not to mind save or put away for the future. They need more wages in order to pay for the huge increases occurring daily. Why did the Government not throw in the towel and say they could not control prices?
Can we blame the workers for trying to protect their wives and families in a situation like that? If we were to stop this form of lunacy now, maybe we could make some recovery? There is some recognition for the first time that we have a crisis on our hands. I suppose we must be thankful for the fact that recognition has dawned on somebody of the enormity of the crisis. But what are we going to do about it? The Taoiseach who, in fairness to him, was never afraid to speak out the truth, has said we were living on borrowed time and on the goodwill of our creditors. It was rather significant that this was in the evening papers but was deleted from some of the morning papers the following day. Maybe somebody in the Government Information Services thought we had gone a bit too far. However, he is an honest man. He told the truth. That is the exact situation. We are living on borrowed time and on the goodwill of our creditors, and unless we pull up our socks immediately, there will be no future for this country.
In my constituency the town of Kinsale 16 years ago was virtually a ghost town, but because of incentives, encouragement and the building up of the advantages of Kinsale as an area for industrial development, it became a town of full employment. Alas, in the past two years that town is again approaching the situation of a dead town unless the Government change course and encourage more and more industrialists to set up industry here. It is all very fine to talk about the flight from the land, but unless we can provide industrial employment next door to agricultural employment, then we are going to have this flight from the land. There is no way in which wealth tax, capital acquisitions tax or capital gains tax will put an extra slice of bread into the mouths of poor people. The only way is to create new jobs, to give people the opportunity of earning more money, thus giving to their families and to the community a higher standard of living. The men of 1916 gave their lives in order that we might achieve that. There are one or two Ministers in the Government who would ask us to forget about 1916, that it was just one big bad dream, that it never occurred. But that is what those men died for, to give us the opportunity of working in our own country and giving our children those same opportunities.
What can be done about the situation? It is very hard when you are in opposition to make suggestions to a Government who seem to be totally deaf to the protests that are emanating from all sides about their capital taxation programme. However, the first thing I would say was vital was for the Government to create a mood of confidence among investors that we are a country who are not going to welsh on any deals or contracts we have entered into, that we are a country where your industry will not be nationalised the following morning, and that we are a country that can supply probably the best and most educated labour force in the world.
There are things we must impress on prospective investors. I am afraid we are not doing it. Confidence seems to be completely lost as regards what is happening in this country. The Minister for Labour, Mr. O'Leary, said recently:
The greatest danger of all is that many firms struggling now to keep their heads above water will sink for ever.
I want to ask him and his colleagues what are they doing about ensuring that these firms which are trying to keep their heads above water will not sink for ever. Is introducing taxation a method of ensuring that they will not sink? Is the introduction of a penal system in relation to thrift and hard work and enterprise going to ensure that they will not sink? I say that it is time the members of this Government, and especially the Labour members, woke up and realised what business is about. We are told that Ireland's rate of inflation is the worst in the Community. Can anyone tell me what one positive step has been taken to curb inflation?
The farmer who is the backbone of the economy, under the wealth tax proposals is subject to £1,000 fine if he does not give information on his neighbour. "Spy for us or else you are fined £1,000". Surely that is going back 70 or 80 years in the treatment of the people, when we ask the farmer to spy on his neighbour, to give information to the Revenue Commissioners so that he can be taxed or he is fined £1,000. That is a ludicrously stupid situation at this moment of economic crisis. I suppose that the euphoria of attaining office has not yet given way to the realisation of what government is about, the harsh realities of government, and maybe they are not aware of the facts of our economic situation and what can be done about them. I think the Government have thrown in the towel and have said "Leave it to the PR men. We pay them enough and we employ enough of them so let them cover for us", and there are many PR people working in the Government Information Service who will have to earn their money if they are to continue to cover up for the Government. The day of reckoning is very close; when the people are going to demand action and not alone action but constructive action by this Government.
One of the most popular misconceptions about the Government's capital taxation proposals is that they will affect only the very rich, but the contrary is true. The poor people will be the first to suffer. The cost of these proposals, particularly the annual wealth tax, will undoubtedly find its way into the prices of various commodities and add to our already crippling cost of living. Prices are going to increase and workers are going to demand more wages and the cycle will go on and on, all because of the action of the Government. In so far as these capital taxation proposals inhibit enterprise, they will cause the loss of further jobs, as they have already done, as is evidenced by the results for many of the firms which we discussed at question time; but more important, they are going to hinder the creation of any new jobs, and all this at a time when we have the worst unemployment situation we have had since the last Coalition were in office.
The Government have also refused to build into their proposals an automatic adjustment of the threshold for liability in line with inflation. One would imagine that inflation did not exist, and yet it is running at 28 per cent per annum at the moment, the highest in any of the EEC countries. The result is many thousands of Irish people who now think these proposals will never affect them will find themselves very shortly caught up in the net, and Deputy Barry Desmond was being honest on the radio when he said that once the principle had been accepted, it was an easy matter after that to adjust the rate, thus clearly indicating to us and the people in the country the danger of this tax. The slogan of "Tax the wealthy" is a great slogan but eventually it is going to include practically everybody.
I submit that the Coalition's capital taxation programme will directly, or indirectly, affect every man, woman and child in this country and that as a result some of them may have to emigrate, others may not be able to go into the type of employment for which they deem their qualifications suitable, and others will have to join the lengthening dole queues. I have had the extraordinary situation over the past couple of weeks of having graduates coming looking for a job, not a teaching job—some of them had their B.A. and Higher Diploma—but any job. Surely we cannot sit complacently here and look at a situation in which what we consider the cream of our country, on whom there has been a substantial investment by the taxpayers, coming out of our universities and looking for a job. One person said to me "As long as I do not have to queue at the dole office, I will work at anything". The Coalition Government have a lot to answer for in putting young people in that position.
Before the last election, there was a great fanfare of trumpets about death duties being abolished. Everybody took the announcement at its face value and considered that this slogan of the Coalition was one of the principal reasons in rural Ireland for their getting into government. Nobody ever said then that these were to be replaced by another tax, another form of duty called an inheritance tax. I would go further and say that death duties being abolished, they have been replaced by three different taxes, wealth tax, capital gains tax and inheritance tax, because this Government are so hungry for money that they are just not going to stop at any source where they see any few pounds showing their heads. We all know that this a most short-sighted policy and a sure recipe for economic disaster.
What are we going to do about it? Are we going to sit down and objectively examine the details of our capital taxation proposals? Are we going to ask ourselves if section 2 of the Wealth Tax Bill is really necessary. Is it making any positive contribution to our economic development? If the Government answer honestly it must say that it is not and that in fact the opposite is happening; it is an economic liability. I have no doubt that the introduction of wealth tax will retard our economic development. It has already done so as I have instanced. In our case with an economy so much less developed than in the case of our EEC partners wealth tax is economic nonsense at present. Whoever in the Government had this brain child should be taken out and shot.
Some of our wealthiest partners in the EEC have no wealth tax, and those that have operate it on a much more restricted basis than is proposed here. I cannot think of anything better calculated to inhibit people from investing, taking risks and creating employment than this tax. Even more important is the effect on foreign investment. Nothing could be more calculated to deter and discourage that type of investment. Yet, this is what the Government are doing. Even they must realise that any taxation proposals at this time are undesirable, with inflation running at about 28 per cent, with unemployment about 104,000, an annual increase of 32 per cent in prices and a huge and dangerous balance of payments. I am particularly concerned that in the past two years our agricultural industry has gone through its worst-ever period. Many firms are now close to bankruptcy due to shortage of cash and no growth in the economy. This type of situation demands dynamic leadership from the Government, and we get capital taxation proposals.
I hear Coalition speakers in this House and at by-elections saying that we have a very serious economic situation but it is outside our control, that it is an imported crisis; yet we are introducing legislation that will compound that crisis and ensure we never recover from it. The Minister for Finance has adopted a conservative laissez faire attitude towards the whole problem, and instead of tackling our problems he has been spending the time of this House and of his Department on capital taxation proposals which would present problems far worse than those we already have and yield perhaps a tiny revenue to the State.
We are wasting the time of the House debating legislation such as that now before us. Fianna Fáil will give all Bills detailed examination and debate, but it is necessary to convince us that the time and energy of the House are not being wasted on matters largely irrelevant to the problems facing us especially in rural Ireland. The Minister will not even build into the new taxation an automatic adjustment to keep it in line with inflation. Instead, he says we will review the position from time to time. Of what is he afraid? He has already shown that he will not agree with an automatic adjustment for inflation in income tax by means of personal allowances but again he promises a regular review. If that promise is like the 14-point plan we got before the last election, we know what it is worth. The result of that dilatory attitude of the Minister is that personal allowances are increased by 15 per cent while the latest yearly figure for inflation shows an increase of 24 per cent.
The Government's proposals are totally unfair to the self-employed man. These people trying to provide for retirement in the present inflationary situation are being hammered from every direction. With the present proposals and the inflation they cannot make any plans for retirement. It is an impossible situation. I suppose a wealth tax would make some economic sense in a buoyant economy and would certainly make some sense if productive assets were excluded. But they are not. Surely we need to employ productively the maximum amount of assets we can lay our hands on. Having taxed those assets already the Government, with this legislation, intend to tax them further. Whether the assets are used productively or not is immaterial to this Government; they are just a subject for taxation. This is economic lunacy where you have an economy which demands more investment and creation of more new jobs. I do not know how it will end, but I think that rather than having a just society we shall have a "bust" society. Nobody will get any pleasure from that.
We must continue to impress on the Government the dangers in the course of action they are taking. The managing director of the Bank of Ireland Group has said that loan demands continue to be slack, that they would be underlent during the next six months. Surely that is one of the most significant statements we have had in recent times. In other words the money is there but there is nobody to lend it to. The confidence of the business community has been shattered by the policy of this Government. Business people will not pay up to 16 per cent interest for money that will be eroded by inflation and capital taxation. Why should they render themselves victims of a bankruptcy court?
Young people leaving school are facing a dismal future. The dole queues continue to grow and industries that were founded and nurtured during Fianna Fáil's terms of office are now closing down. In every Department of Government there is total failure and, as we know, each Department is linked directly with the Department of Finance but in the absence of a thriving economy every Department will be a total failure. Since Fianna Fáil left office in 1973, fertiliser prices, for instance, have trebled and the prices of young cattle are a third of what they were then.
