I was not in the House when Deputy J. Lynch, Leader of the Opposition, spoke in the budget debate but I read his observations as published in The Irish Press of 30th January, 1976. He referred to the cost of living, to prices and then went on to say that the Government should resign before they were run out of office. Had I been in the House on that occasion I would have had to be helped out because I could not resist langhing out loud hearing Deputy Lynch, Leader of the Opposition, dealing with the cost of living, prices and unemployment particularly having regard to the promises made and the undertakings given by his party not alone in this House but also in Clery's Ballroom some years ago when they pledged themselves to create 25,000 new jobs a year. Having regard to the undertaking in Clery's Ballroom and then having examined the Fianna Fáil first and second programmes for economic expansion Deputy Lynch creates amusement and laughter not alone among the public but also among Members of this House familiar with the Fianna Fáil undertaking and promises in relation to prices, cost of living and unemployment.
Financial Resolutions, 1976. - Financial Resolution No. 11— General (Resumed).
There is not much to laugh at today.
Their concern is quite amusing.
The whole Fianna Fáil Party would get a paralytic stroke——
Order.
We have now heard Deputy Coughlan's contribution to the budget debate.
I will come in at the right time.
The Parliamentary Secretary, without interruption.
One of the country's great problems over the years was an unhealthy imbalance in our population structure. I referred yesterday to emigration which is now curtailed to a great extent. A large proportion of our young and enterprising people was lost to the country through emigration. These young people represent the life blood of the country; but we are now rapidly approaching the situation where the percentage of the population between 15 and 25 years of age will be the highest in Europe. This is a very welcome population trend. As a result, the Government must create 155,000 new jobs in manufacturing industry between now and 1980. This represents an average of 31,000 new jobs per year. The Minister referred to this matter in his budget speech. It represents a massive challenge to the Government. However, the Government's drive, sincerity, ability and understanding of the problem will encourage them to meet this challenge.
It is this challenge which has assisted the Government in arriving at their priorities despite the fact that there have been difficulties due to world economic depression. In this connection, it is well to note that £119 million was made available for new jobs. This is an increase of 82 per cent on what was available last year.
When Deputy Lalor makes his contribution—I challenge him to speak in this debate—it will be interesting to hear him opposing the increases in old age pensions and the raising of income tax allowances. I will be interested to hear what he has to say. I challenge the Chief Whip of the Fianna Fáil Party to comment on these matters. We would like to see on record what Deputy Lalor has to say about these increases, whether he disagrees with the improvements in social welfare and also if he disagrees with the fact that £119 million is being made available for providing new jobs.
Reference was made by Members, and by journalists in the national and provincial newspapers, to the increase of 10p per gallon on petrol. Despite this increase, we still have the second lowest priced petrol in the EEC countries, the only country with a lower price is the United Kingdom. We will have to wait for the provisions in the British budget to see if they increase the price of petrol. It was desirable, in my opinion, to increase the price of petrol. Last year petrol imports cost £200 million, three times the amount it cost in 1973. It is vitally necessary for us to cut down as far as possible on our consumption of petrol. Before the last general election the Fine Gael and Labour Parties gave an undertaking to look after the weaker sections of the community and they have done this. It is their intention to continue to do so. There has been considerable improvement in social welfare services from 1973 to 1975 and this shows the concern of the Government.
No one denies that the budget has been a tough one but we were all asked to make sacrifices just as citizens in other countries who are all suffering from this worldwide recession and economic blizzard. A pay pause would mean that workers, trade unions, and organised sections, would be making some sacrifice for the good of the whole community. It would not be too much to ask every drinker to forego one pint per week.
I am sorry to interrupt the Parliamentary Secretary but the time allotted to him is almost exhausted. He might now make his concluding remarks.
The drinker should sacrifice one pint per week, the motorist at least one gallon of petrol per week and one small whiskey per week and the heavy smoker one packet of cigarettes per week. There is no need for the agitation which Fianna Fáil are trying to stir up.
Many people ask where the money is going. What is the Government doing with it? How are the taxes allocated? Let me give one example. In 1972-73 the Department of Local Government allotted to Kerry County Council for house purchase, reconstruction loans and supplementary grants a sum of £470,000 under a Fianna Fáil Government. In 1975 we increased their allocation to £1,620,000. For the same county, under Fianna Fáil they were allotted for local authority housing construction, £407,000; in 1975 under the National Coalition they received £1,470,000. For water and sewerage Kerry County Council got £87,000 under Fianna Fáil and last year, under the present Government the allocation was £776,000. Finally, for roads for the same county, they got £418,000 under Fianna Fáil which was increased to £740,000 under the National Coalition.
There has been a most generous allocation of moneys to all local authorities for all services. I have given figures for one county but I can give particulars for any county, if required. I hope the Minister for Finance will be able to continue in this way. His budget may not have been a popular one but it is preferable to have an unpopular budget, honestly designed, than to have a popular budget dishonestly designed, as I witnessed under Fianna Fáil Governments over many years. This is an honest budget. The Minister has made a most successful job of it and I am sure he will have the co-operation of the people in achieving his aims and ambitions.
I was listening to the previous speaker with feelings of amazement because I was wondering what budget he was talking about. Was it the one we had last week, a budget that had no relevance whatever to the twin problems facing us, the major problems of unemployment and galloping inflation? All this budget did was to exacerbate an already disastrous situation with regard to unemployment. The Minister, and the Government, had the responsibility placed on their shoulders a short three years ago to rule this country for the benefit of the people of the country. The budget of last week made no effort whatsoever to tackle the grave social problem of unemployment. On the contrary, every section of the budget, despite the comments of the Parliamentary Secretary, from rising petrol prices to car tax and other taxes hits at the economic base of the country and will create further unemployment, than we have at the moment. The figure may even rise as high as 120,000 people.
This budget finally nailed the well-nurtured myth, nurtured by the present Government, that all of our economic ills have been caused by the oil sheiks or other world economic problems. Our main problem is the Government in power because they are bankrupt of ideas. They have brought us to the edge of the precipice and when the full effects of the budget work their way through the economy we are liable to go over that precipice. There are so many disastrous provisions in it that it would be necessary to speak for a week to give it the full attention it deserves and to highlight the small print and the effects it will have on us all. However, it is not possible to go into it in such detail. Other speakers have covered various points. I intend to concentrate on a couple.
The greatest single attack in the budget was on the motor industry and the motoring public. Prior to the introduction of the budget a memo was sent to the Minister for Finance from the PMPA, the Road Transport Organisation and the AA. They outlined very clearly the reasons why the Minister, in the formulation of budget policy, should not impose further taxes on the motor industry. They also outlined the reasons why the motor car plays such an important role in Irish society. I can do nothing better than quote from one section of the memo sent to the Minister for Finance in January by the motoring organisations:
The role of the motor vehicle in the professional, commercial and industrial life of the nation has grown in significance and importance since 1946 to such an extent that it is now indispensable.
Next to his house, the motor car is the most expensive single item in which the motoring citizen invests. To the vast majority the car is required for work related journeys.
The massive deployment of urban populations towards the peripheral areas of cities occurring over the past 20 years has been on the presumption that motoring costs would at least be kept within the capabilities of the average salary and wage earner. Now that he is trapped in an outlying suburban dwelling a rise in motoring costs, beyond the limits he can afford, must mean severe hardship especially in view of the fact that such a high proportion of this section of the population are young married couples already weighed down by heavy mortgage repayments. This is the section of the population upon which the nation depends for the future.
A side effect of this deployment is the increase in costs involved in the distribution of goods from city storage areas to the suburbs.
Because of the growing extent to which the motor vehicle features in all aspects of the life of the nation it follows that motoring costs are a most sensitive barometer of the general cost of living, a fact which is being constantly emphasised by the motoring organisations.
All these points are an explanation as to why the Government should not have imposed further burdens on the motorist in this budget. However, despite the pleas from the motoring organisations and the very good case they made, the Minister made a savage attack on the motorist. The myth that the car is a luxury and is only needed as such was blown a long time ago but the Minister still seems to think it is a luxury instead of realising that it is an essential to most people nowadays.
Many other items were also hit in this budget. I am involved in the glasshouse industry in my own constituency. The Minister, with the increase in fuel oil, together with the increases before Christmas and the extra VAT from 1st March, has made another savage attact on this industry. Is the Minister for Agriculture and Fisheries, in advising the Minister for Finance on these matters, trying to wipe out the glasshouse industry? Is he, as one of the Agricultural Ministers in the EEC, going along with the European ideas of eliminating the glasshouse industry, as seems to be evident from the heavy burden placed on the industry?
The increase in oil charges not only affects the glasshouse industry; it also concerns the ESB, the Gas Company and eventually, when it works its way through the system, it will mean increases in ESB and in gas charges for the people who are already overburdened with these heavy bills.
There is one aspect of the budget which has not been widely publicised, and that is the effect of this budget on differential rents. Up to now, if a man was in receipt of unemployment benefit his differential rent was calculated on 50 per cent of what he was receiving in unemployment benefit. Consequently, when he was unemployed, his differential rent decreased considerably every week. However, the Minister stated—in a throwaway remark during his speech—that from now on anybody in receipt of unemployment benefit will have the full unemployment benefit taken into account in calculating the differential rent. This will mean an increase each week in all differential rents for those who are at present unemployed. This is a very heavy blow to people who through no fault of their own—but through the fault of the Government—are unemployed. They are already faced with the problems of rising costs and now they have this additional increase.
I cannot discuss all my points in detail as the time is not available but the next point I wish to make is on the Department of Posts and Telegraphs. The Minister for Posts and Telegraphs comments on every item under the sun except that for which he has responsibility, namely, the Department of Posts and Telegraphs. There is an unfortunate strike at the moment and I should like to know what action the Minister has taken to settle it. The phone service, through lack of attention, is reaching a critical stage from a business point of view. This is not just a result of the strike, it has been deteriorating steadily over the last number of years. What action has the Minister taken in this regard since he assumed responsibility for the Department?
I am sorry to interrupt the Deputy but that is not strictly relevant to the budget debate.
I just wanted to make the point. Another industry which has been attacked by the Minister in the budget is the tourist industry. As a result of the budget VAT will be charged on car hire. If a tourist wants to hire a car he must now for the first time pay VAT on it. In other words, the small type of car most often hired by tourists will be increased by up to £8 or £10 per week. Surely, at a time when the tourist industry is experiencing major problems the last thing it needs is an extra financial burden.
We hear a lot of talk from the Government about the need to protect the institutions of the State and law and order generally. There is one institution in any democracy which should not be attacked, one on which we heard much bleating from the present members of the Government when they were in Opposition; that is the freedom of the Press. There has been a savage attack, that is all it can be described as, by this Government on the whole Press structure. We have a strong provincial Press and we have a strong national Press but we want to keep it that way. This Government, by the increase in VAT, have tolled the death-knell of many of the provincial papers and some of the major dailies. If ever there was a classic example of the dog biting the hand that feeds it, this Government attacking the newspapers has to be it. They have been praised and defended by the Press so often that for them to turn on their masters seems extraordinary. I would appeal to the Minister to remove the newspaper industry from the net of VAT.
We are also told that the Government are the great protectors of law and order and that so many of the problems of this country are due to the massive bill that has to be met for the Army and the Garda. One would think that there was never an Army or a Garda in the country before they came into office. I would ask what exactly have they done about law and order in my constituency. Post office raids, bank raids, armoured car robberies are a daily occurrence. What are the Government doing about this? Why, for example, in one area of my constitubeing looked after by a sergeant and six gardaí? I speak about the Malahide-Portmarnock area. Why have we not got proper policing in those new suburban areas?
The matters to which the Deputy is referring would be more appropriate to the Estimate for the Department of Justice.
I realise that. I just wanted to make the point that the money was not, in my view, being wisely spent. The fishing industry has also come in under a tax in this budget. With the increase in fuel bills that the fishermen will have to meet because of this budget—immediately with the 2p per gallon and then the increase in VAT on 1st March—they will find themselves in a very difficult position. The Government have no policy with regard to the fishing industry and there are no signs of any policy decisions being made in regard to the fishing industry. I would appeal to the Minister, even at this late stage, to give some assistance to the fishermen of this country.
There were various gibes from the other side of the House during the debate as to how we would tackle the question of employment, rising costs and so on. I made a suggestion on a number of occasions and I intend making it again now. There are 120,000 people unemployed at the moment. Rather than just paying out dole the Government should employ those people and give them some self respect.
I would suggest that the Government should set up a semi-State board known as "Amenity Ireland" which would employ substantial numbers of those on the unemployment register and would give a handsome bounty to the public in the form of enhanced amenities throughout the country. I envisage the board employing people for such work as the design and improvement of amenity areas, for example, playing fields, parks, beaches, riverside walks and so on. The emphasis of the board would be on high quality work being performed. With this in mind it would be essential to use the services of other agencies such as AnCO for training. It is important to emphasise that projects undertaken by the board would be additional to amenity works of the various local authorities. Rather than there being a conflict between the local authorities and the board, I would envisage that as the work of the board progressed there would be very close liaison between them.
At first sight, this proposal might be assumed to be merely the old relief work scheme under another name. However, there is no question of the activities of the board being in any way similar. My proposal is for permanent employment for workers. Secondly, training in the skills of the job would be a central feature. Thirdly, the board would employ design and technical personnel who would be specifically directed to high quality amenity projects and the results of their efforts would be both distinctive and rewarding to the public. I would envisage that when that board got under way they could employ many thousands of people who are at present without jobs. It would have the double effect of training and permanent employment and would also have the effect of improving our countryside and our amenities for the public rather than just handing out the dole as it is at the moment.
In conclusion, I have a copy of the election address of the Minister for Finance at the last general election. The Minister, as part of his election manifesto in his own area, made some startling promises which when looked at three years later in the light of the budget he brought in last week, make very sorry reading. He said they would stop the price rise, that the immediate economic aims of the new Government would be to stabilise prices, halt redundancies and reduce unemployment under a programme of planned economic development. He said that Fine Gael in Government would immediately introduce strict price control. That is from the election address of the Minister for Finance, the same Minister who brought in the budget last week.
He went on to talk about pensions and that they would reduce the age every year. What happened the reduction in age for the old age pension this year? What happened that firm commitment made by the Coalition at the time of the last general election? He said that the unjust aspects of differential rents would be removed. Last week the Minister increased the differential rents for those unfortunate people who are unemployed. He said rates would be reduced drastically by transferring health charges and housing subsidies to central taxation and would be replaced progressively by a form of taxation related to the ability of persons to pay. The same Minister for Finance brought in this budget last week, and when the increased fuel costs work their way again through to local government level they will further increase the already savage rates burden on the people.
The Minister promised there would be help for farmers and fishermen, that small farmers would be helped and a vigorous land reclamation programme brought in. That was three years ago but we have heard nothing of it since except last week when the farmers got a rap of about £20 million. He said: "The new Government will make greater investment in harbours and fisheries. They have fishermen to take advantage of the opportunities offered in the EEC"— bunkum as it turns out. False promises. Nothing but false promises. "The Government will carry out a new dynamic development programme for tourism to enable the industry to overcome its present difficulties." You could go on reading other promises that were made by the Minister for Finance. If the Minister were to review the promises he made, compare them with his performance and compare them with the performance of Fianna Fáil when they were in Government, the honourable thing would be for the Minister to resign.
This year we witnessed an entirely new approach by the Government to their responsibility of presenting to the nation an annual budget and an economic programme that that budget is intended to initiate and to control. Heretofore that duty was discharged by the Minister for Finance unveiling his proposals, explaining the different provisions, outlining the objectives and the strategy which will be used to maintain those objectives, defending those aspects of the budget which needed to be defended and claiming credit for any social or economic achievements which merited acclaim. This year, however, the Minister for Finance has sought to evade his responsibilities by resorting to the diversionary tactic of asking critics of his budget to say what they would have done and to put forward their alternatives. He has endeavoured, and indeed so has the Taoiseach, to channel this budget debate along those artificial lines. He has sought to promote the fallacy that unless the Opposition put forward a budget of their own they have no right to criticise his.
I want to state clearly that that is an indefensible position for any Minister for Finance to adopt. A budget should be the Government's major announcement on the economy. It should be a comprehensive outline of their thinking and planning for the year ahead. This year's budget in particular was awaited by the public with more anxiety than any budget for many years. There was a widespread hope and anxiety that because of the severity which was threatened, the budget was going to face up to the present desperate situation and offer some prospects for the future.
There was this year more than any other year in modern times a need for the Government to endeavour to formulate the right economic policy and to demonstrate to the public that they were the right policies and to secure their acceptance on as wide a public scale as possible.
That is what the situation called for and it is an abdication by the Minister for Finance of his fundamental responsibility to retreat into this negative, defenceless posture of replying to all the criticisms which are made of his budget by merely asking the critics what they would have done instead. It would have been preferable but indeed pathetic if the Minister had made some sort of credible attempt to defend his proposals on their merits and explain them to an anxious public.
A constructive solution to the present difficulties is not to be found in any simple criticism of the individual provisions of this budget or the putting forward of particular specific alternatives to the Minister's specific proposals, as the Minister suggests we should do. Any solution must first be sought in an analysis of the process that has brought us to this sorry pass, the situation which made this sort of budget necessary. As the Minister has given no such analysis he could not therefore give any indication in this budget as to how we were to attempt to pull ourselves out of the situation. We must all realise that this budget is simply the end product of a three-year period of mismanagement, of a series of incorrect analyses and misjudgments and mistiming.
I do not think it serves any great constructive economic purpose simply to criticise the budget as a budget. I believe that if you mismanage an economy the way ours has been mismanaged over the last three years then you can hardly avoid a budget of this sort at the end of that period.
Adequately to debate this budget I believe that it is necessary to look back over the history of the last three years, to trace the developments which have brought this country to the economic and financial state which made the Minister for Finance feel compelled to bring in the sort of budget he has done on this occasion.
That sort of review I believe is an important preliminary to discussing the budget, not because it gives us an opportunity to criticise the mismanagement, the mistakes and the mismanagements and the culpable failure of the Minister and his colleagues to protect our economy and to safeguard our finances but because it is not possible to begin to point to or chart any way forward out of this present disastrous situation until we fully understand how we got into it in the first place and appreciate the combination of circumstances and the sequence of events that have brought it about. I believe that such a way out of our present situation can be charted if we first of all arrive at the basic understanding and an accurate appreciation of exactly what went wrong.
It is not difficult to trace the unfolding course of events or to identify the crucial elements and the particular turning points. The latest quarterly report of the Central Bank gives a clear outline of these principal features. The dominant element, of course, was the rate of inflation. The growth in the rate of inflation mirrors accurately, in an inverse ratio, the dramatic decline in our economic wellbeing—11 per cent in 1973, 17 per cent in 1974 and 21 per cent in 1975—as I say, in inverse ratio, the exact reflection of the decline in our economic wellbeing.
As national output declined unemployment rose but despite declining national output and rising unemployment, money incomes in the nonagricultural sector rose by 23 per cent in 1975 and in the public sector by 40 per cent. The profits on which private industry rely to finance investment development declined and all but disappeared. Our public finances under the combined pressure of the escalating costs of servicing the public debt and this rapid rise in public service pay got completely out of control. Budget deficits rose from £5½ million in 1972-73 to £10 million in 1973-74, to £92 million in 1974, the nine-month period, and £259 million in 1975. Corresponding with those budget deficits Government borrowing rocketed from £199 million in 1972-73 to £385 million in 1974, the nine-month period, and to £733 million last year.
Any single one of those elements in that chapter would have been a cause for concern, but all coming together as they did, not in single file but in battalions, they have added up to an unprecedented picture of economic desolation. That is a situation with which this budget makes no attempt to come to grips. That is our major criticism of this budget. The Minister has not put forward any clearly formulated operationally feasible rescue policy. He holds out no hope for those countless thousands who anxiously waited for some indication in this budget that the Government could and would grasp the nettle and embark on some programme that would ultimately get the situation under control. The first major deficiency in the Minister's thinking in his approach to this year's budget is his refusal to accept, or if he accepts it to publicly acknowledge it, that the situation is really catastrophic, that the economy has been fundamentally undermined at its very roots.
Unemployment keeps on rising. The existing companies in Irish industry and agriculture are at the very threshold of liquidity and it is almost certain that a new wave of close-downs bringing further massive lay-offs in employment will occur in May or June of this year unless something is done. That refusal on the part of the Minister to acknowledge the fundamental nature of the Irish economic problem today is responsible for this totally limited holding type of budget which he has introduced. It is presenting that major shift in policy thinking which is the real need in our situation at present. That shift in economic policy thinking must be based on a sober, factual realisation that we are headed for prolonged structural unemployment and that prolonged unemployment is going to threaten the very fabric of our society. It must be understood by the Government that it is absolutely suicidal to do nothing more than wait for some international upturn to solve our problems. They are not those sort of problems.
An upturn in the world economy, if and when it comes, will only mean that some individual elements in our economy will do a bit better. It will be a superficial improvement. It will make no dent whatever on the long term strategic unemployment which faces us at present. Once an economy like ours moves down into this sort of fundamental crisis in which we now are, one of two things happen. Either the very intensity of the crisis generates the sort of responses which gets us moving forward on to a growth path, as happened in 1957, or we become an international casualty. Either we break this crisis or it breaks us.
There is a second defect in the Minister's approach that arises largely though not exclusively, from the first, from his failure to comprehend the essential nature of the present situation. He has seen his budgetary task this year in purely fiscal Exchequer terms. He has a major Exchequer problem. The fact that it is of his own making may have subconsciously dictated his response, which was simply to bring forward a budget solely designed to deal with that Exchequer financial problem and to do no more. He ignored the reality that what is good for the Exchequer may not necessarily be good for the economy. When the Minister was faced, as he was, with the enormity of the fiscal problem which he had created he lost his nerve. He has confined his efforts strictly to the needs of Exchequer management without daring to undertake one single economic development measure in this budget.
This limited and inhibited view of the Minister of his budgetary responsibility on this occasion has lead him into a number of paradoxical situations. He has identified inflation and employment as the two principal problems. While he did not say a great deal about what he was proposing to do about employment, he stipulated that getting down the rate of inflation was his first priority and to this end we must have a pay pause. What he actually did in the budget cannot possibly be reconciled with either of those two stated objectives. In fact, the measures which he outlined in the budget will all contribute directly to exacerbating the situation on both those fronts, in employment and inflation.
The new taxes will add four or five per cent to the cost of living and add that amount to the inflation rates rather than reducing inflation. Of course, one of the greatest possible inducements that you can offer for the adoption of a voluntary pay pause is to try to maintain or even increase the level of disposable income in the hands of the working population. Instead of doing that these budgetary provisions by the Minister will drastically reduce that volume of disposable income. The budget will push up domestic costs with clearly consequential detrimental implications for existing levels of employment.
The Minister's frantic scramble to get out from under the mounting budget deficits of his three disastrous years in office has lead him into these contradictory situations. He appears like a bemused doctor treating his patients with a variety of symptoms, dealing separately with each symptom only to find that the cure for one aggravates another. What is really needed is a general tonic. The same confused thinking has lead the Minister into miscalculating the level of taxation which he needed to impose. I believe here again there is an element of his having lost his nerve. The situation clearly called for some increases in taxation, everybody admits that. Some attempt to reduce the budget deficit was called for. While it is a question of judgment and estimation and forecasting, the Minister has underestimated the prospect for revenue buoyancy during the coming year. He would actually have got more revenue by doing less.
In particular, I want to suggest that the return from VAT in 1976 will be much greater than the budget arithmetic indicates. The White Paper on receipts and expenditure shows an estimated increase in VAT revenue of only 2.8 per cent at existing rates. That seems to represent a very considerable under-estimation. Consumption has been sluggish now for two-and-a-half years and it is reasonable to anticipate an upward surge in consumption this year. Furthermore, inflation this year is likely to be somewhere in the neighbourhood of 13, 14 or 15 per cent, and taking those two possibilities or certainties into account, 2.8 per cent, which presumably is the rate carried through into the new level for VAT, is clearly pessimistically low. If this level of under-estimation which I see in the VAT returns is consistently followed throughout the schedule of Exchequer receipts, then the Minister could have pitched the level of these new taxes which he has imposed much lower than he has, while at the same time maintaining the deficit at £327 million. Alternatively he could have earmarked additional funds for job creation while anticipating a much greater revenue buoyancy.
There is no evidence in the general layout of this budget or the package that this budget represents that the Minister has learned any lessons from his disastrous experience during 1975 or has gained anything from looking back at the miscalculations and the misjudgments of that depressing year. The explanatory tables for this year follow the same pattern, the same depressing foreboding uncertainty as did those of January, 1975. The 1975 January budget and the taxation it imposed led inevitably to the inflationary national wage agreement in April of that year and the Minister for Finance, when he was confronted with the implications for the economy and for the Exchequer of that national wage agreement, which incidentally was warmly welcomed by his colleague, the Minister for Labour, reversed engines completely and brought in his June budget. In that budget he endeavoured to put back into the pockets of the spending consumer more money than he had taken out in his taxation measures in January.
It is crucial for us to ask the Minister if he is going to tread that same sort of zig-zag path again this year. Is the severity of these tax impositions and the reduction of the disposable income of the working population which they necessitate going to propel us once more along the same road that we trod last year. Whatever the Minister is going to do about incomes let him do it now. Indeed, if it is not already too late, let him start the crucial discussions now to settle the pattern for the year ahead and not repeat last year's erratic and unpredictable performance.
That is an essential basic lesson the Minister should have learned from his stop-go erratic career in 1975. While the Minister's late-in-the-day and un-co-ordinated attempt to make some show of pulling down the crucifying deficit on current account is apparent, some of the particular measures are inexplicable. I cannot comprehend the thinking behind the decision to abolish the income tax concession for agricultural co-operatives. It makes no sense. Neither, indeed, did the Minister in his budget statement make any attempt to explain or to justify this action. In my view it is one which is directly counter to what should be a major national effort to promote here an efficient food processing industry.
At the beginning of this year I read that the President of France appointed a new full-time Secretary of State with special responsibility for promoting the French food processing industry because he was not prepared to contemplate that a major food producer like France should have an out-of-date, inefficient and ineffective food processing industry. The Commission of the European Communities, recognising the basic economic value of our food processing and agronomic business industry, make substantial grants available for modernisation and adaptation of their business by co-operatives. Just at this very moment when that process is taking place our Minister decides to take this retrograde step. When you take the abolition of the income tax concession for the agricultural co-operatives in conjunction with the taking away of the 1 per cent VAT arrangement for farmers and the brutal change in the small farmers' social welfare income supplement, when you take those three together, they seem to me, and I am sorry to have to say this, to add up to the inescapable conclusion that this Minister for Finance has a conscious or subconscious suburban anti-farmer bias. I believe the evidence that that is so is becoming incontrovertible. He must overcome that bias, if it exists, because our greatest national asset still is and will be for a long time our agricultural industry. Its growth, its development and its efficiency are vital to the national economic welfare, no matter what anybody thinks, and I would certainly see an expanded and efficient Irish food processing industry, firmly based on efficient agricultural production, as an integral part of a rational economic development plan.
The Minister keeps asking us what would we have done and what should he have put in the budget. I want to give some brief views on that aspect. The need on this occasion was for a budget linked to a clear policy of revival. I believe the nation would have accepted a much together budget if it could be seen as setting the scene and preparing the ground for recovery; even though the budget was tough it was providing the process whereby we were going to get ourselves out of this paralysed situation in which we find ourselves and hoist ourselves on to some growth path or path of recovery.
I propose now to outline the strategy the Minister for Finance should in my view have adopted to initiate that process of recovery and to get it under way. I would like to suggest some strategies which would clearly indicate that the Government wished to get a grip on the economy, wished to chart a positive clear path out of the present crisis, so that we would eventually get back to a reasonable state of progress and development. One of the first things the Minister should have done was to include in this budget a specific action programme of immediate job creation. The budget should have outlined a series of particular projects which were to be activated immediately. This programme of job creation is, in my view, essential on both economic and social grounds. It is needed to restore consumer confidence and to dissipate the blanket of frustration and despair which permeates our whole national life at this moment.
These jobs will have to be provided sooner or later. There is no doubt about that. The unemployment figures clearly indicate that sooner or later such a programme will have to be undertaken. I believe that it should be undertaken now. I further believe that at least £100 million should have been allocated in this budget for immediate expenditure on this programme of job creation. I believe also that the provision of that amount can certainly be accommodated within the confines of the Minister's current and capital budgetary provisions. It would involve certainly a greater reliance on revenue buoyancy but I am prepared to stake my reputation on the fact that that revenue buoyancy will materialise. It would also involve our recasting of the capital budget. I will come to that later. Because of its urgent necessity this job creation need not be either export-oriented or even productive. These are the tests which we have always laid down for expenditure of capital moneys on job creation. Up to now we have always demanded that they must have some export-oriented aspect or they must be productive. I do not believe that, in this immediate job creation programme which this budget should have started, these considerations need to be taken into consideration.
This programme would have a combination of social, economic pump priming, morale boosting, consumer demand stimulating purposes and the conventional cost/benefit tests would simply not be applicable. What is needed is large-scale employment intensive schemes on a regional basis. This would clearly indicate the involvement of the local authorities. These local authorities have the necessary apparatus and every one of them has a stockpile of suitable labour intensive probe work. I put this concept forward at the time of the June budget last year and I was sneered at by the Taoiseach, but the need now is even more over-riding than it was then and I hope that the superficial reaction of the Taoiseach will be modified on this occasion.
Deputy Burke suggested a new type of organisation and amenities board and obviously he is thinking along the same lines as I am in this connection. I do not think it matters a great deal what the job creates, the thing is to create the job. There is, according to the ESRI, no shortage of infrastructural roads, schools, hospitals, environmental or other projects readily available which could be activated within a matter of weeks. The construction industry would naturally be an area which would provide a wide variety of immediate employment opportunities. The tourist industry would also provide the same sort of opportunities that this programme could avail of immediately and with great benefit both to the programme itself and to the economy as a whole in the future. The tourist industry is labour intensive, de-centralised, and by its very nature any funds put into it under this programme would have a multiplier effect and would spread rapidly throughout the whole economy.
It would make long-term economic sense to start now to embark on the comprehensive planning of a wide range of long-term construction infrastructures, even if the actual commencement of the particular project is not envisaged for some time to come. There is a widespread pool of skilled services in this field unused at present. It is the sort of work into which school leavers in particular could be readily absorbed. It would undoubtedly represent a worthwhile investment in the future, an investment in the long-term which could be utilised advantageously when our economic conditions would be better and more satisfactory. The comprehensive range of environmental and community amenities of useful economic infrastructural developments could be provided, and would be provided, as a fringe benefit of this job creation programme which I believe should have been started in this budget. That immediate widespread programme of job creation, adequately financed, starting now, without any economic or financial benefit limitations but concerned solely with the provision of employment, is my first submission as to what should have been included in this budget and was not, and which the Minister even now should come forward and undertake.
My second submission is that the Minister should have brought forward in this budget concrete proposals for the immediate establishment of a national economic planning process, a process which would be designed to produce a national economic plan for the next four- or five-year period, to produce a plan which would get to grips in a fundamental way with our basic economic problem, set about reversing the present economic paralysis and get us back on to some level of normal economic development by 1980 at least. Let me immediately make it clear that I am not talking about a plan but a planning process I do not believe the Government could have brought forward for publication at the time of this budget a fully articulated national economic plan nor, indeed, would such a plan, prepared by the Government only, and put forward as such, be of any use whatsoever in present circumstances.
The Minister could and should have included in this budget the establishment of the planning machinery. This next national plan must not just be simply a document outlining an economic programme. It must be a continuing consultative process with progress constantly monitored, and targets and methods revised and updated on an ongoing continuous basis. The comprehensive planning machinery which would produce such a plant would also have to supervise its implementation and keep its progress under constant review and be responsible for its revision and updating during its period of operation.
The planning machinery must include all the elements which would be involved in the operation of the plan itself in practice. It is only in this way that their full commitment to its successful implication can be procured. The plan must not just be a piece of paper but an agreed operational programme representing the expressed concensus of all those who will participate in its operation. The next national economic plan must provide a forum within which the claims of all sections of the national pool of resources can be thrashed out whether they are wage earners, farmers, businessmen or the Government. All these elements must come together in a forum, thrash out their respective needs and demands and agree on an overall national programme based on that agreement.
The wage bargaining process must be an integral and fundamental part of the plan and the planning process. So also must the Government's own demands. Today the public sector finances, both current and capital, are of such fundamental importance to the economy that they must be built into any national economic plan as an integral part. Everyone now recognises the crucial importance to the performance of the economy of the wage bargaining process and the only rational approach is to build that wage bargaining process into the planning process itself as an integral part. This is the crucial vital element which is necessary to ensure the success of any national economic plan.
To try to formulate and put forward an economic development programme or plan without the wage bargaining process built into it would be simply to hand down a document to the trade unions and to exhort them to adhere to its parameters and would be a futile exercise. It is equally vital that the Government's own financial programme, both on current and capital accounts, be built into the programme or plan. The employment of the capital resources, the level of income redistribution in the interests of social justice, the priorities in current expenditure, must all be outlined at least in general terms in the plan. The Minister's thinking on this matter of economic planning seems to be comprised in his sole wish for a pay pause during 1976.
Leaving aside for a moment the very pertinent consideration that these particular budget provisions of his militate against the likelihood of such a pay pause becoming a reality and granting that it were to come about, a pay pause on its own for 12 months is no substitute for an economic policy. It is not much more than a temporary palliative. Unless it is part of a comprehensive approach it is not even likely to succeed as a pay pause per se. In fact, to just stipulate a pay pause simpliciter is something of a farce. It is simply paying lip service to a standard canon of economic orthodoxy. What is really needed is the full involvement in the whole planning process and the commitment to the objectives of the trade union movement, to try to channel the energies and the drive of trade unions into planning and implementing long-term social and economic objectives and to try to divert their thinking and their capacities away from the immediate employer-labour confrontation sort of situation. I do not believe it is naive to expect that the trade unions would fully co-operate in such a planning machinery process as I outlined. I believe there are very positive indications that they would do so.
The third component I would like to see included in this budget is a realistic programme for the rationalisation of public expenditure. It is important to distinguish between a planned budget deficit and an unplanned one, though it may be legitimate for economic policy reasons to plan for a deficit on the current budget. But, a situation in which a deficit is out of control, where the actual realised deficit is far greater than was planned for, is totally indefensible. That is what happened in 1975. It indicates more clearly than anything else that our public finances are out of control and that they must be brought back under control before we can make any attempt at solving our economic difficulties. That is a different matter from eliminating deficits and bringing the budget back into balance. If a deficit must be incurred for economic policy reasons, then it must be a measured, predetermined deficit and the amount which is stipulated as being the deficit must be adhered to. That is elementary and any other sort of situation opens the door to financial chaos.
It is also important that, in this connection, to be clear in our minds about budget deficit financing in respect of its implications for good financial and economic management. Economists rightly argue that there is nothing sacrosanct about an annually balanced budget and there certainly is not from the point of view of the economist because the economist is quite prepared to project his budgetary disciplines over a period of years and to accept annual deficits in the short-term in the light of balance being restored over a period of years. But for a Minister for Finance, the situation in practice is completely different from the academic sort of situation that presents itself to the mind of the economist.
He can plan for a deficit in any year very easily indeed, but when the time comes to return to equilibrium, to effect the economies in public expenditure necessary, it is an entirely different matter. This is precisely the situation in which the Minister now finds himself. The temptation to incur budget deficits on current account in the interests of a particular economic objective is there but every Minister for Finance must realise that if he embarks on a programme of budget deficiting he must, sooner or later, face up to the need to get those budget deficits back under control and restore a balance over some period of years. Everybody concerned would like to be assured that the Minister for Finance has such a programme in mind and that he has learned the harsh, bitter lesson that budget deficit financing is a very tempting process to embark upon but a very difficult one from which to extricate oneself.
Public service pay must be rationalised. This must be brought about by a combination of restraint and redeployment of personnel in the public departments. I have complete confidence in the spirit and integrity of our public servants. I recognise that their professional organisations are fully entitled to protect their vital interests, their status and their standards but I do not believe that the public service as a body will not respond to the overall national interest if it is clearly expressed to them and if they are dealt with in a straightforward honourable manner by the Minister for Finance of the day. I believe that between the operation of restraint in public service pay, and a fundamental redeployment of resources inside the public service, it is along those lines that some attempt must be made to get the level of public expenditure and, in particular, public service pay back under control.
The fourth major component which should have, in my view, been included in the budget would have been a positive programme of assistance for our domestic manufacturing industry. An essential ingredient of any recipe for recovery is to get the private sector industries moving forward again. That can only be done by meeting their liquidity problems and restoring their profit levels. Over the last two years in particular domestic industry has been relentlessly squeezed between wage inflation on the one hand and price control on the other. It has been squeezed to a point where its profits, its confidence, and its capacity to invest in development has been reduced to zero.
The Government resorted to domestic resources on a massive scale last year to meet their borrowing requirements and they are almost certain to do the same again this year. Where will this leave private industry? The budget makes no reference whatever to this crucial area. Manufacturing industry must provide an unprecedented number of new jobs over the next four or five years. In its present parlour state, it has no prospect whatever of doing that. Indeed, it is more likely that liquidity problems may well bring on a new wave of major lay-offs before this summer. Where are the measures to deal with this fundamental, far-reaching problem? Has something on the lines of the National Enterprise Board, being set up in Great Britain, been considered here? Are we still hoping that we can tackle these new unprecedented problems with the policy instruments of 20 years ago? The Government must use their vast economic and financial power to promote existing industry through some new mechanisms and on the basis of radically altered concepts of the Government's responsibility to private industry.
If the Government can create the sort of planning process I have outlined, with the trade unions committed not to an isolated pay pause but to national growth targets and orderly pay progress, they can then say to private industry: "Where are your plans for growth? What are your investment needs? Here is how we are going to meet them." On the other hand, if they offer some new type of socialist bureaucracy, as was foreshadowed in some of the recent speeches of the Minister for Industry and Commerce, then we can pull down the shutters and forget about private enterprise making any contribution to our present massive problems.
That is not a fair description of what I said.
In the international level the same considerations apply. If we could offer a potential international investor a stable, future prospect, with all the elements in the economy committed to an agreed growth programme, if that situation existed, it would no longer be necessary for the IDA to keep on offering bigger and bigger bribes to persuade the reluctant, international investor to overlook the attractions of Holland where people work harder and where inflation is under control and to come here instead.
It must be recognised that the fire has gone out of our industrial development drive. I am not, in that context, criticising the IDA. The IDA have developed a very efficient, sophisticated machinery for their particular purposes, but in the official establishment corridors and in the managerial suites of offices there no longer exists that compelling urge, that motivation to promote Irish economic development in every way and all the time. There is not the commitment there should be. We have had an alarming number of instances which illustrate the wrong approach and the wrong mentality in these areas. A friend of mine feels very strongly that there is a new type of manager in the semi-State organisations who is more concerned with his own career and status and keeping the file right than getting on with some particular project or initiating some new development.
There must be an aggressive search for every possible development in agriculture and in industry. It is not like the 1930s or the 1950s; we now have the structure of agencies and specialised services. There is the Institute for Industrial Research and Standards. We have the enterprise, the abilities and capacities. We have the training and the skill. It is only a question of mobilising them and firing them with enthusiasm. That brings us back to the question of national leadership and the absence of any guidance or inspiration from the Government.
Maybe they just do not believe in an Irish thing. I once—in a slip-of-the-tongue phrase—described them as a non-national Government and I was taken to task by a leader writer for using a phrase which he described as meaningless. I wonder does he still think it is meaningless when he sees the Irish Life incident and others of that nature? There is apparently a complete lack of confidence in Irish people to do anything and to go abroad for practically everything.
I should like to deal with the situation in regard to the development of our offshore oil resources but I do not have the time. However, the budget should have contained an up-to-date authentic assessment of the likely impact, first of all, of the development possibilities and, secondly, of the likely impact of those developments on our economy. Such an authentic, authoritative statement from the Government is long overdue. We are entitled to some assessment of what precisely the development of these offshore oil resources will mean to the country in concrete, economic terms; whether it is necessary for the Government to dispel the feeling which some people have that even though the economic situation is desperate, even though we cannot see any hope for the future, that sooner or later oil will start to flow and all will be well. That miasmic sort of situation must be dealt with authentically and authoritatively by the Government.
I want to turn very briefly to the capital budget. Over the last three or four years, quite a startling change has taken place in the relative importance of the capital and current budget. Public attention, indeed official pronouncements, are still directed predominantly to the current budget, to the current expenditure and the manner in which the necessary taxes to meet this expenditure are provided. The corresponding expenditure on the capital side, and more particularly the manner in which the resources to meet that capital expenditure will be made available, does not receive anything like the public scrutiny it deserves.
The fact is, that in 1976 the amount needed for capital expenditure, including budget deficit as projected and the service of the public debt, is £1,298 million which is almost the same in volume as the total current expenditure on the supply services. In those circumstances, a much greater degree of attention should be paid to the capital budget both on the current and capital side by this House and by commentators in general.
The manner in which the current budget is financed is set out in detail, the taxes are spelled out and discussed by the House. But in so far as the capital budget is concerned, the vast bulk of the capital to be raised is simply stated in the official accounts as a residue figure. No indication is given as to the way in which the amount is to be raised. The terms, length of time, interest rates or the extent to which foreign borrowing will be resorted to, or the impact the Government's borrowing requirements will have on the domestic credit situation are not dealt with. I believe, that to an increasing extent, because of the importance of the capital budget we should have a much fuller presentation of it to the House and a greater discussion of it.
Even though the borrowing programme is not discussed in the House in advance, it does not appear that we have any cause for complaint about the manner in which it was managed last year. The total amount required by the Government to meet capital commitments was £800 million, an extraordinary figure. Leaving aside for the moment the implications of adding that amount to the national debt, it must be recognised that, simply on a technical level, the Department of Finance did a very skilful job in the manner in which they mobilised resources to meet a requirement of that magnitude. The fact that they were able to get through the year with only having to resort to foreign borrowing to the extent of £163 million represents a major technical achievement on their part. While we should note that they resorted to the Central Bank for the borrowing of £50 million, and while we must have some doubts about the legitimacy of that particular manoeuvre, nevertheless, in the overall the borrowing programme was carried through last year by the Department of Finance with very considerable skill indeed.
While we resorted to foreign borrowing to the extent of £163 million last year, at the same time our external reserve holdings went up by £184 million. If one can count, as I believe we can, on the Central Bank managing their portfolio of external investments with skill and confidence, then I cannot see any great detriment to our national economic position by borrowing abroad to the extent of £164 million in the context of last year's financial circumstances. I know that the economic theorist likes to compare foreign borrowing unfavourably with domestic borrowing. In the outcome of last year, with foreign borrowing to the extent of £163 million and our external assets going up by £184 million, there is not a great deal of disadvantage to our economy in that sort of situation.
I stipulated that a sum of £100 million should be allocated immediately for the short-term provision of jobs. Unfortunately, I have not got the time at my disposal now to indicate precisely where that £100 million could be found within the context of the Minister's budget, current and capital, but I believe it can. The public capital programme, a total of £596 million, comprises many elements of long-term impact from the economic point of view. If the constituent elements of that overall public capital programme were relentlessly examined and projects of expenditures which have a long-term impact pruned, a sum of £100 million could be allocated out of the total for immedite job creation, particularly if I am right in thinking that revenue buoyancy this year will create a great deal more than the Minister anticipates. In any event, if we cannot have the £100 million which I stipulate should be spent immediately on short-term job creation either from revenue buoyancy or from reallocation of the total public capital programme, then I would not hesitate, in the circumstances in which we find ourselves, with no particular balance of payments problem likely to arise in the near future, to go abroad again next year for another £100 million to meet our requirements.
This budget makes no attempt to come to grips with the fundamental deep-rooted crisis in the Irish economy. It is limited to dealing with the Exchequer problems which confronted the Government. In so far as the two objectives of policy it set out are concerned many of the measures it contains are directly counter to the achievement of those two objectives. It should, to my mind, have outlined an immediate programme of job creation involving something of the order of £100 million expenditure, the establishment of a planning process for the formulation of a national economic plan to bring us up to 1980, specific measures for the rationalisation of public expenditure, for getting budget deficits and public expenditure under control, a specific range of policies for the rehabilitation of domestic industry and an authoritative assessment of our offshore oil development programme and its estimated impact on the economy.
In the overall the Government's response to the crucial situation which confronts the nation presents a depressing, hopeless picture. There is no indication of any full realisation by the Government of the depth and extent of the crisis, or any determination to come to grips with it in a fundamental way. This Government give no policy leadership, no inspiration to the community as a whole. They make no attempt to set goals and generate the enterprise and initiative necessary for their achievement. The Fianna Fáil Government which came to office in 1957 demonstrated how political power could be used effectively and successfully for the attainment of economic policy objectives. I believe the time is rapidly approaching when we are going to have to do so again. This budget spells out that message clearly and unequivocally to this House.
Before going on to the body of what I want to say, I should like to put on the record some comments on the speech I have just listened to. I was about to say that it was the first serious contribution on the economy that I had heard from the Opposition during the term of the present Government. While I would disagree with some things, I found in it a great deal that was interesting and closely reasoned and with which the Government and I would agree, and I will be coming back to the planning aspect of it. Then I am afraid I listened with amazement, after being very interested and stimulated to what I can only call the authentic gleam of dottiness in the non-national reference. The Deputy half explained that it was a slip previously and now he reiterates it slowly and deliberately——
I will exonerate the Minister from that. I will give him private absolution.
Thank you. I do not want a private exoneration. I do not need it. If one thinks of the composition of a Government, if one thinks of the membership, and if one thinks that we are put here by the same democratic process that put here all our predecessors, to describe us as non-nationals seems to me to be a descent into total unreason. I am reminded of the story of someone in an asylum who convinces a visitor that he is totally rational and sane and then when the visitor is departing to do something about the injustice does some very violent act just to remind the visitor of the importance of the occasion.
This sudden descent into unreasonableness was unworthy of the Deputy and I am sorry about it because we were beginning, perhaps, to have an economic debate instead of the mutually self-contradictory abuse which has passed over recent years for discussion on the budget and on the economy. But as I said I shall be coming back to planning later on and to some of the other themes, the theme of public service pay also because I am convinced, as obviously the Deputy was when he gave so much time to them, that these are crucial things.
First, I want to put things on the record which I did not put there previously in any sort of detail. I want to say something on the matter of public sector pay and I want specifically to start with pay for women which is relevant because the moneys we are voting are moneys which will pay public service salaries, women included. The basic document on this is not of recent origin. It is not the Report of the Commission on the Status of Women. It goes back to ILO Convention No. 100 of 1951, which is a quarter of a century ago, so that the problem of sex discrimination has not just appeared with the report of the Commission on the Status of Women. It is important to differentiate between different sorts of pay discrimination if one wants a rational discussion because it seems to me that they got mixed up in the debate. There is sex discrimination to which the ILO Convention of a quarter of a century ago makes reference. But it is important to remember that in our public service there is other discrimination. There is marriage discrimination; there is also discrimination on the basis of allowance per child, which does not exist in the private sector in general, and if we want a rational discussion and if the banner is raised of the rate for the job, there is also discrimination of increments on the basis of length of service. I there is an identical job with two people doing it, regardless of sex or marital status, not differing in ability, only differing in the length of service, there can be different rates of pay in the public service. That also is a discrimination. Let us be rational about it. Let us spell out what——
I thought service pay was a cardinal principle now in all trade union negotiations, increments for long service and so on, in all sorts of employments.
I was pointing out the sort of discrimination that exists, discrimination by sex, discrimination by marital status, discrimination by whether one has children, discrimination on the basis of length of service. The great unreason it seems to me arose because there was suddenly nailed to the banner the demands received for total abolition of discrimination of all kinds. When people looked at it they found they wanted to abolish some discriminations but not others. I have not heard them saying they want the abolition of the discrimination on the basis of length of service. I have not heard them calling for the abolition of the discrimination on this matter of size of family. I have heard it suggested by intelligent people that this is a moral question, a moral question that you must abolish the discrimination that exists in Ireland. Elimination was not carried out by our predecessors but, in fairness, they were getting ready to do it had they had the budget of 1973. I think they would have started doing it in that budget. The recommendation of the commission was a recommendation that in five slices going up to the end of 1977, by the 31st December, 1977, the differential would be severe. The first of those slices was in 1973. In fact, it was pulled back a little to 17½ per cent and then in conditions of boom we thought we could do it a little more quickly than the Commission on the Status of Women recommended. We thought we could do it completely by now. The whole row has been about the going back to what in Europe would be called the modality of implementation suggested by the Commission on the Status of Women. The commitment to the abolition of that distinction is there and 60 per cent of the actions to the abolition have been taken and the only discussion was about whether in the middle of a depression one ought to proceed more rapidly than one was originally recommended or whether one would revert to the modality originally recommended.
It seems to me, therefore, to have engendered both confusion, because people did not define what they were talking about, and also a degree of passion that I do not think is warranted. If we had said we do not believe in the principle that would be their cause of criticism. If we said we were going to abolish the 60 per cent of the way that has already been travelled, that would be a fair basis for criticism. To say that in the middle of an extremely difficult budget-making period that one may not consider the slowing up of implementation seems to me unreasonable.
Therefore I want to say, in regard to the matter in the public service —I will be coming back in a moment to talk about general public service pay—I suppose it is not the place here, as we are discussing the budget, to talk about the private sector except in one regard, because I am the Minister responsible for industry and I think I am in order if I talk about the economic health of three sections of industry where the immediate implementation of equal pay for women would have a direct bearing on the whole future of particular industrial concerns and also would have a direct bearing on profitability.
The sectors from which I have had representations are only three. One is footwear, one is sugar confectionery and one is clothing and I do not think anyone suggests that those sectors should be excluded totally. I think it reasonable, again in the middle of a depression, where an approach is made by a particular firm, where it is made by workers and management of that firm, that a stay of implementation of equal pay should be permissible. I say that for this reason, that I think there are signs of the passing of the depression. I know that they are visible in countries like the United States, Japan and Germany because there they are very obvious. I believe that one can detect some statistical evidence of the passing of the recession here. For particular sections of our industry they have a future if they survive. It is a live horse and you will get grass situation.
If, for example, to be perfectly specific, our footwear industry collapses in the middle of a depression then the thought that it could be revived on the scale of our domestic market presents one with great difficulty. If it collapses, revival would be very difficult indeed. If, on the other hand, it survives, then the prospect of subsequent growth and subsequent consolidation is very real and therefore one has a survival period and I think that the arguments for deferral in particular firms, in particular sectors and where the approach is made by the different members of the social partnership, then the case is a very good one indeed.
That is all I want to say in regard to equality of pay except to note the record. It seems to me the worse the time the more we need serious political discussion. Indeed, I think we need good Opposition now rather than the sort of Opposition that we have been having. The lack of credibility of the Opposition over the last three years is because often they have so completely forgotten the necessary postures of power that they said irresponsible things in the interval and they totally changed direction and that makes them look lighthearted, irresponsible and non-serious. We have had an example of that in the Opposition speeches about this issue of equal pay because the ILO Convention, as I say, was in 1951 and the interim report of the All-Party Committee on the Constitution which recommended this implementation of equality was in 1967. The Devlin Report on the Public Service made a similar recommendation and there was a UK law in 1970 and after all there were 16 years of power when the problems and the difficulties were there and so was the opportunity. The ILO decision was taken as long ago as 1951 and there was no implementation. One could make the case of difficulties each time.
I have just been making the case of difficulties in regard to three sectors of our industry and I know the cases of difficulty and I also know the difficulties of budget-making but it does seem a bit frivolous that people who had as long a period of opportunity to act as I have indicated and did not do so should now become the extreme vociferous champions of immediate action in a way that goes beyond the recommendation of the Commission on the Status of Women and requires implementation more rapidly at a time of world depression. That seems to me irresponsible and lighthearted—that 180 degree change of direction.
In regard to the position of women in society, I must affirm that I feel the stigma of indifference and the stigma that this is something I do not care about or that my party do not care about. I feel that very severely. I believe, in fact, that first it is untrue and secondly that our record demonstrates the untruth of it because in a period of less than three years, in regard to women, the record of this Government is extremely good. I could talk about family law, maintenance enforcement, arrangements for unmarried mothers, allowances for single women below the retiring age, social welfare for widows and so on. There is hardly a sector in which reform was possible where it has not been made. I deeply regret the slowing of the rate of implementation—because that is what it is—of equality for women in the public service but it has a significance for the whole economy and for the control of public service pay as a whole, which I will come back to later, because I believe that that control of public service pay is extremely important and is one of the keys to our successful development over the next few years.
On the matter of public service pay, I want to put on the record of the House a quotation of attitude to it from someone that I now describe— I will do it in more detail in a moment —as a voice of the Opposition who can properly be looked on as an opposition. I am referring to Professor Martin O'Donoghue, and it might be objected that Professor Martin O'Donoghue is a distinguished economist, a member of the staff, a professor in my own university of Trinity, and that is true.
I am obliged to point out that there is a convention where, if it can at all be avoided, the names of persons from outside the House ought not be mentioned. This is for the obvious reason that those persons cannot defend themselves against attacks made under the privilege of this House.
Quote Matt Merrigan.
Far from making an attack, I should like to record that Professor O'Donoghue is someone I consider both a friend, because our personal relations are good, and someone whose mind and whose judgement I much admire. I have no intention of attacking him. I want to quote from him, without attack, as an indication of his opinion and it is a quotation from a newspaper.
May I make a point? The economic policy of the Fianna Fáil Party is enunciated by Front bench speakers and——
If I am so assured by the Deputy I must accept that assurance but I can say that he was the personal economic adviser to the last Taoiseach who is the Leader of the Fianna Fáil Party.
And still is.
Yes. He does not claim to speak authoritatively for the Opposition party but his voice is an important voice of opinion——
Professor Martin O'Donoghue is a distinguished economist and as such he takes part in many discussion programmes and in many public debates in his capacity as a Professor of Economics. It is important to realise that in that capacity he is not voicing any official Fianna Fáil viewpoint but simply his own view as a distinguished economist.
If I am assured that it is not an official viewpoint——
There is a time limit attached to this debate and intrusion of the kind we are having cannot be countenanced by the Chair.
I do not want to spend more time discussing Professor O'Donoghue's status because I think we have talked enough about it but he gave an opinion and I am quoting from The Irish Times of 22nd January in the business section and I quote:
In the later panel discussion Professor O'Donoghue recommended a 10% deduction in public service pay. He based his call for a reduction on the fact that public service pay had increased by 160% in the last four years, when the cumulative rate of inflation was only 70%.
This is the crucial thing that I want to come to. I am not advocating a reduction in public service pay of 10 per cent or any other percentage. But I am pointing out that someone who is both a distinguished economist and a significant voice, who is listened to from the Fianna Fáil side on economics, has made this demand. He further pointed out that there has been a great difference between the rate of increase in prices, or with inflation, and the rate of increase of public service pay. I want to amplify that second point because it seems to be very important. Public servants have security. They have a special position in society, and while I think it absolutely right that no one should call for a disimprovement in their relative position, I think it necessary in the middle of a depression, and when it is very desirable to be able to mobilise funds in the constructive way that the last Deputy was talking about, that the pay in the public service should not increase more rapidly than the pay of other sectors. I think that that is directing money away from investment. Some of our budget-making difficulties have arisen because the public sector pay, in so far as I am able to measure it, has increased more rapidly than the pay of other sectors. Professor O'Donoghue has said it has increased more rapidly than inflation, and that is true, but then in good times that is desirable because that simply indicates that people's standards of living is rising. When the gross national product is rising, of course, that is an end that we all desire. But at a time of difficulty it is not desirable that it should rise more rapidly than the GNP and it is not desirable that it should rise more rapidly than the income of other sectors.
As far as I can measure it, and I would affirm that the record of these figures are crude, this would require a more sophisticated and expert economic analysis of pay rates than I am capable of or have the time to do. But the difference I am going to indicate is so large that I think it is real even with the imprecise methods that I have used. In so far as I have been able to get figures and compare like with like, in the period from the budget year of 1972-73 to the budget year of 1975—and the 1975 figure is provisional—the average pay per employee in the public service increased by 100 per cent. It is rather easier in the case of the transportable goods industries, in the industrial part of the private sector, because one has an index. The index is the weekly earnings of industrial workers and there the increase over the comparable period was 73 per cent. I do not claim that either of those figures is right to a half a percentage point, but they are so different as to satisfy me that in the public sector pay has risen much more rapidly than it has in transportable goods industries and of course, it has also been more rapid than the rate of inflation.
The point here which justifies a slowing in the rate of implementation of equal pay for women is the following factor. I am talking now about the public service. The implementation which was always negotiated was the implementation of the married rate for men. That was taken to be the rate for the job in all the negotiations. But the practice in many Community countries, and indeed in the community institutions themselves, is to have equality of pay in the sense that it conforms with the Rome Treaty and indeed with the ILO document that I referred to earlier, but also to have a marriage allowance. If one goes bang for unmarried men and women for the rate for the job for the married people regardless of sex the next stage, of course, of wage bargaining is the immediate effort, which I think would not be the way to solve the problem but I can see it happening, to open the differential again by some from of marriage allowance of the type that occurs in Europe and of the type that is consistent with the European and the ILO position, and that gives a lead via the women for another surge in public service pay all round, and that is a very dangerous thing.
I think we have had a transfer within the moneys available of too much into the sector of public service pay too rapidly, much too rapidly, but it is not that I want to see a stagnation of income in the public service. I agree that there has been the dramatic rise Professor O'Donoghue mentioned and I have tried to give figures for that.
I would use this occasion then to say to the public service that I echo what the last speaker said about their probity, their honour and their sense of dedication. I am also satisfied that now the structure of our public service needs reform. I think it can be made to be more efficient and indeed in that sense more rewarding and more satisfying to the people in it. I think sometimes they feel frustrated by the structures. The structures need reform. In regard, therefore, in general to their loyalty to the State, to the people who pay them, to their dedication and to their honesty, I do not think there is any question on either side of the House that this is respected. In regard to the efficiency of the structures we might have consensus all round the House that they could be improved and, in my view, they need to be improved. I have said this before and I will go on saying it until we get some sort of major reforms.
I do not think it is fair that they should use what is already a rather privileged position and, as the modern State develops, a very powerful position, to get more than other sectors or to get a particular differential for themselves because of that position. All I would wish them to do—because they have very expert people among them in the public service unions with a great deal of economic knowledge—is to examine the economic fact in regard to the evolution of public service pay to see if what Professor O'Donoghue, in one way, and I in another way, and others who have looked at it in other ways, are saying is true about the past evolution. If it is true would they extend to their pay demands the same sort of responsibility that they show in all other aspects of their work by moderating these demands in the present circumstances? I think that is a reasonable point and I would only make it if the figures show it. I am willing to leave the experts, much more expert than I, do the detailed scrutiny of those figures because I am satisfied that that scrutiny will reveal all I have said. The emphasis placed by the last speaker on the significance of public service pay is very important.
When one talks about the whole problem of budget making, a certain amount comes in and that can be wrong. Last year's estimates by the Revenue Commissioners were, in fact, a little bit high. The last speaker who has expert knowledge from his own ten years as Minister for Finance has given us his considered opinion that perhaps the buoyancy this year is going to be greater than allowed for. I hope he is right. That does indicate that these things are difficult to be certain about. We are all in the hands of the best guess of the Revenue Commissions who are experienced people because, if they say something, we may have an opinion that they are right or they are wrong, that they are going too high or too low, but who are we to say from our inexpertise to their expertise: "You are wrong. You must move it upwards or downwards a bit", even though we may have that opinion and even though we may turn out to right. You have a certain prediction from the Revenue Commissioners. You have a certain tax base and you have borrowing. If you do not want to increase the borrowing, and if your predictions from expert sources are for a certain increase, then the problem is always, and I am sure Deputy Haughey knows this as well as anybody in the House, one of allocation. This is why the control of public service pay seems to be so important because we do not want to borrow more. In fact, as the recession passes, I share the desire for balance as much as anybody else. I even know of an economic argument that has been particularly developed in Denmark and other Scandinavian countries that says that you get a positive stimulus from the fact of your budget being in balance apart from the formal fact that the two sides are equal to each other. I think there is some truth in that and there is some Danish evidence to prove it. We do not want to borrow more. We want to reduce borrowing. We do not have a GNP growth. We know the amounts, therefore, approximately totally to be distributed and we want to distribute that into growth and into social justice. Those are the two guidelines. I believe —I will come to that in a minute because I want now to talk about the evolution of the expenditures in the sectors of interests to me—that we have reallocated in the direction of social justice and in the direction of growth in this budget. I would like to give evidence from Professor O'Donoghue again in regard to our redistribution of a social justice kind. I am quoting again from The Irish Times of 22nd January and it says:
In a similar fashion he advocated reductions in social welfare benefits. He said that since 1973 there had been no growth in real output, that in the same period social welfare benefits had continued to rise in real terms.
Those are the facts. I do not quarrel with his facts at all but I disagree with his conclusion about the desirability of reductions because I think that the reallocation to the poorest and the most disadvantaged is profoundly right in this budget and in previous budgets and it is something that I am very proud of. If you are going to reallocate to the poorest and the most disadvantaged and if you are going also to try to get serious money for investment in productive growth, then the squeeze has to come somewhere if you are going to reduce your borrowings in real terms and adjust it to inflation in actual terms. That restraint can only be in the only bit that is left, namely, the public sector. The arguments there are quite clear and I think that people, in the long run, are reasonable and that these arguments will get through and are getting through.
I want to defend the rightness of this budget—I believe in its rightness —in regard to the most disadvantaged sector. I personally would resist, and I know my party in this Coalition would resist, the call for cuts in the area of social welfare. I also want to affirm what seems to me——
The Government have cut it in the case of the west —the small farmers' dole.
That is a very simplistic presentation of it. If we were to look at the history of most Governments——
I am just stating the fact.
No. Just on the fact——
It is very appropriate to social welfare.
Members should be allowed to speak without interruption.
I should not take up the point but I look on that as the elimination of people who should not have been recipients of social welfare at all. It is the elimination of one sector where it was agreed there was an abuse. I cannot accept that that is a cut in social welfare to those who are properly social welfare recipients.
I want to talk about the evolution of the moneys available for industrial development because we have had strictures that this was an area that we were ignoring. The figures show the contrary. I want to talk about the evolution of two categories of money, money under the heading of industry in the public capital programme and under the heading of loan finance for industry. The total of those two figures in the 1971-1972 budget was £44.68 million. In the budget of 1972-1973 it actually declined to £42.20 million. In the 1973-1974 budget it rose to £50 million and the out-turn for 1975 was £89.88 million. That is a little less than the estimate, but it was for the reasons of Fóir Teoranta and ICC estimates. It does not indicate a diminution but some people overestimated only in those two sectors.
The estimate for 1976 is £153.73 million. That is an increase of 71 per cent compared with the 1975 outturn. That is a very dramatic increase which I think provides, when one analyses these figures, precisely the stimulus for the private sector that the last speaker called for and that I agree is necessary. That sort of increase in those two totals is a tremendous stimulus at the time it is needed. When the Deputy said it should be there I agree with him. That is a very dramatic increase. I am not going to go through the individual breakdowns now but those things are readily available. We had this in the sectors where I bear responsibility and not because it is me but because I believe the economic analysis that says that money ought to go preferentially to those areas is the correct one. The figures are there in the budget and that seems to me a rightness, a correctness in the budget. That seems to be the fulfilling of something that it might be said we ought to be doing. I can only reply: "Yes we ought to be doing it and, "yes, we are doing it."
I want to come back to the record of the House to a theme that I have thought a great deal about in private. Before that I said something about public service pay. I talked about its rate of evolution. Before going on to the matter of planning, I want to talk about the question in general of the evolution of wages. At a time when GNP is declining and where one does not want to increase borrowing—in fact, the opposite is the desirable thing—the analogy of the cake has been made rather amusing and, in effect, fun of I must admit but it is still a very useful analogy that we all need. If we do not add to the cake by further borrowing which in my view is not permissible anyhow—we can only remove resources where we want them by restraint in other sectors. Then it is a rearrangement between sectors. I talked about public service pay but if we are talking about the economy as a whole I would like to utter some thoughts about the whole question of wage restraint and a pay pause. It is permissible to ask for that on conditions very similar to the conditions laid down by the last Deputy. It is a hopeful sign that in certain important issues at this time that we can have consensus. My conditions are, firstly, that we go on looking after the most disadvantaged sector in a differential and special way. Secondly, that we say to people that it is not simply saying: please solve everybody's problems by not asking for any more wages for the coming 12 months. It is part of a more extended scheme and also a scheme—and, again, I agree with the last speaker—which has to be the result of very wide discussions and participation. It is not an imposed scheme of planning but a scheme that comes out of widespread discussion. Those are absolutely proper conditions because I have always taken the point of view, as a member of the Labour Party and still as a member of the broadcasting section of the Workers' Union of Ireland and as a trade unionist also——
What section?
The people I joined when in RTE, Deputy, and I have remained. It is a reasonable tradition in the trade union movement that one may retained one's membership of a particular place even if one does not do the work any more. I am still a member of that section of the WUI. I might go back broadcasting again one of these years, Deputy. One never knows how life will evolve.
God willing.
I trust the Minister will recall that we worked together satisfactorily at one time.
Indeed, I do. The point I was making is that I have always taken the point of view that merely saying we will solve the problems of the economy at the expense of wages is nonsense. I have always simultaneously said that if workers see a pattern, see an evolution and see their place in it there is not limit to the demands than can be made on their reasonableness, their constructiveness and their patriotism, that they will not be treated as people who can be simply used as a blunt instrument to solve a problem in a short-term way and will give their commitment in something which is positively and constructively planned. They have said that clearly. I am glad to put on the record that that is my understanding of the pay pause, a pay pause in saying that there is no growth in GNP at the moment, there is even a decline. It is saying that it is necessary to target moneys in hard times towards the weak, towards the protection of jobs also, protection of employment, towards the creation of new employment and in those circumstances and in the circumstances of a long-term evolution and the solving of problems, it is permissible to ask people not to use their special bargaining power to strive at a particularly difficult time and for a finite period to increase their own income.
I believe that, of course, one is in a position of bargaining. Of course, it is not going to be easy because I understand the feeling of irritation of each individual who is thinking of his own pocket in a perfectly permissible way, of his own family, of his own wife, of his own kids. The desire to have more is a normal, positive and constructive human desire. It is the basis of economic growth, in fact, that individual desire to be better off. I think it is permissible to ask that it be held in abeyance temporarily. I am satisfied, though there will be the taking of positions and bargaining, that if we all behave reasonably and well we can get the sort of pause our economy requires.
I would make this observation in regard to the general economic significance of a pause. Firstly, it makes budgeting easier and the money can go where it is most needed. But there is a second aspect which in relation to my own Department is even more important. We have had dramatic pay rises in recent years. We have become members of the community where we are much the poorest in terms of individual per capita income but with the spread of communications and the spread of contact there is a very natural desire and tendency for the equalisation of pay rates. If that happens quickly in the structure of our industry, it simply destroys whole sectors of industry. We can only have that increase in real living standards in parallel with an increase in investment and an increase in productivity per person. We cannot go to European levels of pay without going to European levels of industrial development. Otherwise, we bankrupt the industries on which our future depends.
Over the last two or three years, if one looks at the figures where our pay has risen more rapidly than in other countries, we ought to have been losing out very dramatically in terms of the competitiveness of our exports. We have lost out a little but not yet to the point of destructiveness for sectors of our industries but what has rescued us is nothing that we did domestically. What rescued us, in fact, was the downfloat of the £ so that everywhere outside the sterling area that downfloat was compensated for by the increase in our pay costs. But that downfloat of the £ looks to be over and to depend on an extraneous circumstance, and extraneous accident—it has to do with the UK economy but very little to do with this little economy which is part of sterling—to solve our problems a second time would be extremely foolhardy. It solved them to a degree, though not totally. Six months ago I was hearing from our exporters that lack of orders was the most serious limit to their economic health and their expansion; now I am hearing that comparative price movements are becoming a difficulty.
That will affect us much more in the future than it has in the past because we cannot look to a second £ devaluation of anything comparable to the 30 per cent devaluation that has taken place since 1971. To do so would be madness and not, therefore, to show restraint for the sake of future economic health would be madness. The argument about past unit costs on world markets had not been very good when analysed in real terms, but it is going to become a very powerful argument in the near future. Therefore, I want to add my voice to those seeking restraint in the context, and on the basis, that I have set out.
I wish now to refer to the matter of planning. I have been referring to this in various places over the last 20 years and at the Labour Party Conference and also at the Confederation of Irish Industry meeting recently. It was when speaking to both of the social partners in this regard that I started developing my thoughts. I use the word "started" because this must be a democratic process and not a process imposed from the top. I interjected when the last speaker referred to my desire to impose a socialist bureaucracy because, though it may be a reasonable political dig to get in, it does not, believe me, describe what I want.
I do not want any sort of bureaucracy, socialist or otherwise, and I have made it perfectly clear that the structures and policies of a country must correspond to the balance of political opinion in that country. I am not talking about my private belief, or my party's belief, that there is clearly not a consensus for socialist policies or a majority in favour of socialist policies here at this time and for me to try by manipulation to advance public policy beyond the point which public opinion wishes would be acting improperly. It is not something I have ever done or would ever wish to do.
Let me say what we mean by planning and why it is so important. Let me make a little detour to talk about the successes and the failures of the past in regard to planning because there have been both. It is not as if we had no history and were taking a clean sheet of paper, we have had both. I had publicly the opportunity recently to pay an absolutely sincere tribute to Dr. T.K. Whitaker and I mention his name to indicate a certain set of developments without spending time on them. We had the beginning of planning in Ireland and we were knocked off course by economic events because planning, when it is in its developmental stages, is fine as long as all the best guesses turn out to be right but it is not so good when it is half-built as a mechanism and it is not so good when they turn out to be wrong. We only half-built it in the past.
It is also fair that I should put something about the role of Opposition on the record of the House. I have often been critical of the destructive role of Opposition over the last three years, saying that people said negative, damaging and harmful things. When the targeting of our previous half-effort at planning—I do not mean that contemptuously but we only went half way—started to go wrong, when in changed economic circumstances, the assumptions and the results started going wrong it was almost an irresistible target for people in Opposition to throw stones at. They threw stones at it and they scored direct hits because it was not hard to score direct hits; it was very easy. But, in retrospect, it seems that instead of people being encouraged to go on and build the whole edifice there was a bit of a loss of nerve and there was, in fact, the backing-off from a process that had we gone completely through with it when we started we would have had mechanisms that we need. We would be in a better position than we are now.
I say that, first, to make an observation about Opposition; secondly, to say that the idea is not a new one and thirdly, to indicate—one must indicate this in fairness if we are to have a success this time—that it is important that we have national concensus about it. That is why I found that section of Deputy Haughey's speech particularly encouraging because it seems it could get a great deal of concensus around the House. Success depends on a national concensus. I, therefore, make these observations to indicate that it is not new and that no party have a monopoly in the initiation or support of it. I regret that it was not persisted in, strengthened and refined as a mechanism in the past, that it was not backed up.
My plea was for its extension as a mechanism.
Yes, mine also. I am saying that the retreat from the earlier programmes when they started to go wrong was a pity and that criticism that was easy and accurate but not constructive was a contributing factor to that. Let us return to where we are now. We have had a process from the time we were six months in office, which was a very easy time, and then, with the beginning of the Yom Kippur War, we had a time when every economic indicator—they were sometimes pointing in opposite directions simultaneously—and every pundit was saying contradictory things. The task of a Government was one of seeing that the dyke did not break anywhere, a task of carrying out continuous running repairs and keeping the flood out and the economy basically sound.
Because of the success and the fundamental correctness of the budgets of this Government during our period of office—I am not making apologies for the level of unemployment or trying to make difficulties go away with words—our people have not realised at all how fundamental the world crisis has been and how enormous the difficulties have been. I assure Deputies opposite that the Government recognise that and have recognised it from the autumn of 1973. We had a task of keeping the fundamental structures intact and keeping the fundamental mechanisms functioning. Now when we begin to see the first signs in our own figures of the upturn coming it is heartening, not only for the Government, but for industry and the economy as a whole. Although there is serious unemployment and although there has been a drop in GNP at the same time the basic structures are intact and functioning and with, in my experience of them, a great deal more morale and a great deal more confidence throughout industry than the previous speaker seems to think. I believe that our economy, our industry and agriculture, notwithstanding the loud things they say—and it is perfectly natural and proper they should say them— or their verbalisations of this moment, are in much a better heart than one might have hoped for when that storm hit. We are coming through these difficulties in a way that indicates a maturity of our institutions that I find very heartening. That is not only a private opinion, it is one that is widely held.
However, let us come to the question of planning. First, we need two separate things and I would refer Deputies to what was said by the Minister for Finance in the budget. This is not an issue where there is disagreement between Government and Opposition and it is not an issue —Deputy Haughey showed this extremely well when he described the way the process ought to work— where one pulls instant imposed things out of the hat. Let me say that when asked for details of the structures in this budget he is making a separation between structure and functions that will not work. The designing of the structures—and we need structures—can only proceed in parallel with the decisions about what we do.
If we were to design structures now and incorporate them in that budget we would pre-empt many of the basic decisions which must be the content of the discussion that will follow the Green Paper and that will involve all sections of the community. To say: "You may discuss and have inputs into the plan"—that is important—"but we will decide the structures", while that might be a desirable mechanism in terms in the appearance of instant action it would only be a mechanism that would make it difficult.
The sort of planning we need goes further than previous planning. If I put in very simple terms the defects of the previous planning, it was that the Government made a best guess about what was desirable; we even made a best guess about what was possible and what was likely. As long as all the assumptions on which that best guessing was made remain valid, the results were good but when the assumptions did not correspond with the way the economy was evolving it turned very bad. When it started turning bad, when people began losing faith, which I regret, there was no mechanism of correction, there was no mechanism of mobilising resources. In other words, it was descriptive rather than the sort of planning which actually made things happen.
That is what I was saying.
I thought the Deputy made a good speech on that aspect and I agreed with him. It is dreadful to use the words "planification"—it seems like using a big word where a small word will do—but the word "planning" means so many different things that we need to refine the term somewhat. The reason I am using "planification"—I agree with the groans it produces—is that it refers to a mechanism specifically as it is being developed by the French. On the one hand, planning, can mean what happened here in the last decade, which is only half the mechanism we need, but, on the other hand it could be something like what is being done in Russia, which is ten times what we need. All of those different systems are covered by the word "planning".
What we need is, first, something which is democratic. That means there must be not just consultation but the inputs in a finite form from the different social partners as well as from the Government. Secondly, there must be flexibility and, thirdly, it must be real enough to be able to mobilise the finance. There must be institutions that can mobilise very significant amounts of money. Therefore, I agree with the last speaker about the role of Government and the role of the capital programme but I do not think those institutions exist currently. They are not things which can be plucked out of the air and imposed on people, they must come about as a result of discussion.
I am particularly indebted to the work of Professor Brendan Walsh about demographic projections and I should also pay tribute to the work of the IDA. I think our demographic evolution is such that we need to mobilise resources and target them over the next decade in a way that goes far beyond anything that IDA or other such programmes make possible for us if we are to have the sort of economic growth that we can get. It will be essential if we are to solve the sort of demographic programme because of the growth in the labour force, the growth of young people in that labour force, the growth of the number of children at schools and, therefore, the growth of housing and school requirements, which the Deputy will understand.
All of these needs require a planning structure, first, to measure certain things and secondly, to say how fast one can proceed with out straining the resources. There are two other things which were not involved in this in the past. Then, thirdly, there must be a mechanism for mobilising and directing the resources; fourthly, there must be a mechanism for mobilising and getting the commitment of the social partners in the different sectors of the community.
I do not think there is any disagreement about this. I referred to what was said by the Minister for Finance, that is that a mechanism is not instant and the extent to which one tries to cut corners is simply a measure of the extent to which animosities and bad judgments are made. It must genuinely be a developed things which comes from the democratic process. When I heard Deputy Haughey speak about the mechanism, with all the difficulties and strengths involved, I felt I could not have described it any better. He may not take that as a compliment, but from me it is a compliment. There is a separate thing, namely, that the mechanism cannot be brought into instant existence and the effects of what it does cannot show through quickly either. The real effects of that will only come through to our economy, at best, in 1978-79.
In my own planning, there are two separate things: one is the long-term —I used the words "planification"— it means a particular sort of planning; there is another aspect of it which is very strong and important in France and it is strong and important here, and that is to structure a trusting, benevolent and a mutually helpful relationship between the private and public sectors. They must not be thought of, in our small context, as being against each other—that one must benefit and the other must shrivel. In fact, it is the condition of success of both, that it is a symbiotic relationship where they help each other. The French have been able to structure that and so have a number of other countries such as Sweden, but it is not automatic and it is not easy. That is another precondition. That all relates to a long-term thing which would only become effective in 1978-79.
The separate matters is to have the sort of money and responses which can make it possible to take advantage of the upturn in the world economy. In the short-term, we have placed too much emphasis on export-led growth. We can have plenty of home consumption, plenty of development of infrastructure and plenty of development of our own country for our own people. In the short-term the benefit will come from an upturn in overseas demand and, therefore, a rise in the percentage utilisation of our factory installations and a drop in unit costs as volume and the pursuit of exports increases.
I believe the amounts of money being voted to the industrial sector, which I have already placed on the record, are such a large increase as to provide some of the pump-priming money for that development. If that element of the budget, with the 70 per cent increase on estimated 1975 with projected 1976, has been missed, it is a great mistake because it is bringing a large amount to that sector at the time when it is necessary.
There are other measures which can be taken and will be taken over the next months which should not require inclusion in the budget but are essential if we are to give the short-term boost to industry within the present mechanism to get some export-led growth. However, I look on that as a completely separate problem from the planning problem because the planning problem cannot be solved that quickly.
I am sorry to interrupt the Minister but his time is almost exhausted.
Well, I shall omit the further theme which I wished to refer to. I want to repeat something which is important. I do not want to inhibit criticism on the basis that it is destructive; it is for each person to judge how far he can go in criticism and to judge the effect of that on the nation. My conviction, that the bringing of this small, fragile economy, recently open to free trade, through this world depression in the basically sound working order which it is in —it is in sound working order and its morale basically is sound—is a considerable achievement. The basic reason for that achievment is that on each occasion the severely criticised deficit budget was introduced—and I was pleased to hear what the last Deputy had to say on this—it was basically correct.
With hindsight one can always find small defects—and Opposition can find them at the time—but the basic strategy was correct and the proof of this is the fundamental strength and, in my conviction, the fundamental confidence of our economy and the ability of that economy now to take off and respond and lift indicate the signs of growth which I believe the figures now demonstrate.
I have listened to the three previous budgets introduced by the present Minister and I can say that I had a certain amount of understanding of his reasons for doing what he did in those budgets. He had an anxiety to please I am sure when he first found himself in this office. I am sure he had a duty, too, to please those different diverse elements that went to make up the Coalition. But I must say that I cannot understand the thinking behind the present budget and no explanation has been offered to me for some of the items that were dealt with and the reason why they were dealt with in a particular way. I was pleased to be in for the contribution of the Minister for Industry and Commerce and his reference to planning and, unwittingly perhaps, he gave us an inkling into the attitude of the Government and the extraordinary decisions or lack of decisions evidenced in the budget. I gathered from his closing remarks that he was under the impression that we were not faced with very big problems here and that the Government had done a wonderful job in bringing our fragile economy through this world recession and could compliment themselves on the wonderful work they have done for Ireland.
I do not know how far removed the Cabinet is from the thinking of the ordinary people but the Minister would travel a long way, further than Ballymore I am sure, before he would discover anyone that would agree with him.
As far as Mayo?
Possibly or even Achill Island. Possibly he would be less inclined to travel to Mayo after some of the recent decisions which were taken and which were not put to the people in Mayo recently.
The Deputy knows the answer in Mayo as well as I do.
This was a budget that was awaited by the people all over the country. I know that we at county council level were exhorted by our officials and were exhorted by members of the Minister's own party to wait until the announcements in the budget were made known and then we would see how much we had in the coming year for the building of houses, how much we would have for sanitary services, how much for roads. As the subject of planning was mentioned it might be no harm to remark that when you are dealing with matters such as this and do not know the position from day to day it is indeed very hard to plan ahead and very hard for people at council level to know where they are going. The stop-go situation we have now is no help towards long-term planning at council level or at any level.
At the last January meeting of our council we were told by the officials to wait for the budget and the provisions in it and that would let us see where we stood. This was the position all over the country. In every household there were people who looked forward to this budget and hoped that something would be done to help school leavers who had no jobs, wage earners threatened with redundancy, or possibly made redundant, and engaged couples who were hoping to build their new houses, and who had been told and had high hopes that something positive might be done to enable them to do this. There were factories on a knife-edge, possibly very lucky to be still functioning at all and giving employment. They, too, were waiting to see what the provisions of the budget would bring them. The hard-pressed heads of families particularly were hoping for relief in the budget. I can say that in every case the people were sadly disillusioned by the budget and I cannot see that there is any help or any hope for them.
As I see it, the Minister had two problems to solve in the budget, two big problems—the spiralling inflation and the fact that we have 117,000 people unemployed here. They were the two big problems to which the Minister should have applied himself. His duty was to solve those. Even if he did not solve them immediately, as I am sure nobody could have done, at least he should have laid the ground work for their solution. Within the budget framework I can see nothing that helped either of those cases. I would like particularly to deal with the unemployment situation. What did the budget do, has anyone pointed out anything that the budget did to help to solve our unemployment situation? Is there anything in the budget that will provide one job for anyone here? The only new jobs that will be created will be those of tax inspectors and officers in the Revenue Commissioners. The Minister's insistence on tracking down tax evaders relentlessly indicates that there will be a need for more people in those positions. I cannot see that many more people will be needed for the extra employment this budget will generate.
I would like to deal with the building industry. It has been pointed out that here is one industry where an investment could give a ready return. No other industry is capable of being lifted off the floor as quickly as the building industry. Much of the material that would be used would be native material, or at least we would hope that the Government would ensure that it would be native material. The Minister and the Taoiseach in their contributions referred to the money that is available now to the building industry and made comparisons with what was available some years ago. They can quote statistics, they can quote the number of houses that were finished last year, and the number of houses that were built by the local authorities; they can twist the facts any way they like but the truth is that the bottom has fallen out of the building trade. If you go down the country and ask any group of men who were involved in this they will not talk to you in statistical terms. They will just tell you that three years ago they had plenty of work and now they have none. Those are the facts. They can twist them any way they like but that is the position. It is no use telling the people that there is a world recession, or talking about conditions abroad or prices in the Middle East. They want to hear about domestic matters. In Naas and in Newbridge, there are thousands of applications in for new houses and developments.
No applications for development have been granted for the last three years because we have not the necessary sanitary facilities for new buildings. Therefore, there is a complete stoppage on any development in the Naas, Newbridge, Kilcullen areas. All we await there is sanction by the Department of Local Government of a regional sewerage scheme to cater for that area and areas as far as Clane and Sallins and further afield. Another scheme has been submitted of a similar nature for north Kildare. Officials from our council have gone to the Minister for Local Government and have indicated that we have done our homework and that if we can be assured by the Department that we can get £800,000 for the next three years we will be in a position to go ahead and release all the schemes and immediately help to improve building in the private sector and possibly introduce new industries to that area too. This would generate quite a lot of work. As an indication that the developers themselves are more aware of the need to do this, they have come to our officials in the council and have indicated that they would be prepared to put up some of the money to enable this development to go ahead. I could only wish that the same enthusiasm was in evidence on the part of the Government. Our officials went to the Department in January last and mentioned this scheme as being a must and they also mentioned the fact that in the rural area of Aran and Killinea there was a group water scheme awaiting sanction which would cater for 700 or 800 houses. It is a very ambitious scheme. The headworks have to be carried out by the Department. There is a reservoir and an extension of the pipeline. They pointed out that this was something that they were most anxious to see going ahead. The officials from the Department asked them to which would they give first priority. Our officials answered that where you were deciding between the development of the Naas/Newbridge area on the one hand and the extension of services to old residents on the other hand, you should not have to decide priorities. Up to now, whoever was supplying the money, as soon as the schemes were ready, within a reasonable time they went ahead. I would like an assurance that the Government will do their bit to enable this work to go ahead. At the moment we in Kildare are in the position that we do not know where we stand from one month to the next. Nobody can run a county, much less a country, on that type of shoestring budget.
Much talk has been made about local authority houses and the number of houses that were built. The Minister for Industry and Commerce mentioned that in France they were able to advance schemes in the public and private sectors together. It would seem that this expertise has not found its way to the Government here and in particular to the Minister for Local Government. It would appear that, whatever is being done at local authority level, the private sector in the building line must suffer. It would appear that the Minister has a mania to ensure that local authority houses will be built no matter what happens in the private sector. Maybe it is that he is so anxious to prove that he has no dealings whatsoever with the private sector that he feels it essential to do this. Up to now we had a very good record of house building in Kildare. We are now in a position that we do not know how much money we will get. Even in January they were not aware of how much money we had coming to us for the coming year. The last allocation that was given to us just enabled us to pay our bills and there was no talk about what was to happen in 1976.
Recently a circular was issued with regard to the building of houses in future, that you must act on a CMO's report and decide where the need is greatest before you are allowed even to plan for the houses that you will be lucky to see occupied in 1978. This is the new thinking with regard to the building of local authority houses and I cannot see that it will be helpful in any way. It is quite obvious to me that the reports at this point in time will be completely outdated in two years' time. The old system, which proved to be very good and effective, in Kildare at least, is now to be changed. One of the reasons advanced, I am told, is that other areas seemed not to get the number of houses to which they were entitled and that the housing problem was more acute in other areas than in Kildare. Therefore, it appears that the policy of this Government is to bring down good counties to the level of those which are not so good rather than to raise standards and that the Government are prepared to accept the level of the lowest as being the standard desired.
I wish also to mention the change in the regulation concerning the advance buying of land for housing. In Kildare we were in a position to acquire a land bank at a fair price, hold it for a number of years and meet all our housing requirements, with sites where necessary. This had also the advantage of providing industrial sites, fully serviced sites available in different areas and many of the industries which we have now in the county are there because industrialists who wished to settle here were in a position to view the site, see its possibility and not talk about something remote in the future but something which was already there. It is a direct tribute to the Fianna Fáil Party that this type of site was available in Kildare town when Black and Decker were looking for a factory and I am glad to say that that factory is functioning now. This is no longer the position. We must again show need before we are allowed to buy land in any area. This is all because of the scarcity of money. It is a very short-term policy and it can have disastrous effects in the long run.
No changes have been made which would enable people to build their houses. One change that was made was a ridiculous change where the Local Government grant, which is normally £325, is no longer available as it was formally to people building new houses. A single person must now be earning less than £40 a week to qualify for this grant or to qualify for any grant. A married man with three children must be earning less than £46 a week to qualify for this grant. He would be a brave man indeed who would attempt to build his house today if he was earning less than £40 a week. The Government have ordained that no grant at all will be available for such a person and that the biggest loan that can be given to him is £4,500. We have brought suggestions before this House that the loan should be increased to £6,000, that the income level for loans should be increased to £3,000 and that grants should be increased to a realistic figure.
This is a matter which would be more appropriate to an Estimate debate.
I see. These proposals which we brought forward and hoped would generate investment in the building industry were voted on here by the Coalition Parties and they openly decided that they would not support them. I cannot understand how the members of the Cabinet can be so removed from the thinking of the ordinary people in the decisions that they made here in this House. Are those people, whose voices are heard all over the country, dumb when they come to Dublin? Do they not let their Ministerial colleagues know the feelings of the people? A pre-budget decision was made which had the effect of ensuring that 900 fewer houses would be built in Ireland this year by people building their own houses. This decision must have disastrous effects.
What I have been saying with regard to the building industry must have a certain bearing on the possibilities of improving the employment situation within our country. These matters which we have suggested have not been adopted. They have been cast aside.
The other matter which I mentioned as being of vital importance and that the Minister should help to cure is the matter of inflation. In the past year the only helpful measure which curbed inflation in any way was the tardy adoption of the suggestion by Deputy Colley concerning food subsidies, and that is the only suggestion the Minister adopted during the year which helped to hold down the cost of living and decrease it in any way, if only for a short time. It would appear that the Minister is too proud to take any advice that might come from this or any other area. It is clear that the increased taxation promised for March will drive inflation up again. I am told that inflation is worse here than anywhere else in Europe with the exception of Britain. Indeed, we must be very sick indeed when we have reached that plight.
Prices are higher here now for drink, petrol and some other commodities than in Northern Ireland and Britain. It is obvious to anyone that this must have a distastrous effect on tourism. Up to now, apart from our scenery—thank God the Government have not succeeded a whole lot in harming that yet—we had a position where we could entice people to come here because we had better value for money in food and other items. But that no longer obtains.
I do not quibble with the Government over the increases on drink and tobacco. I made my position on this clear last year. People are not forced to drink or smoke. I did mention when the first hefty increase was put on oil that it would be better if the Government of the day put that increase on drink and tobacco to enable our goods and our industries here to function better. I said that if I had a choice I would have preferred to see an increase in drink and tobacco rather than on petrol and oil. The Minister had the best of both worlds again this time. Not alone has he increased drink and tobacco, but he has also put a savage increase on petrol and car tax. It would appear that the motorist has become the prime target of the present Minister. Possibly the reason for that is easily understood. While the tax on tobacco and drink is somewhat in the nature of a voluntary tax, the tax on cars must increase the revenue because people are forced to use their cars, for many people it is a way of life and they must have a car.
When at first the petrol and oil charges increased here because of the attitude of the oil producing countries we were very prone to blame them and lay much of our present ills at the doorstep of the Arabs. I am sure nobody could blame the Arabs or anybody else for increasing their prices when a commodity they are producing and selling cheaply is being sold in this country at a much inflated price and being used as the chief means of collecting taxes. We all felt we had reached the zenith of prices as far as petrol was concerned, but in this present budget the Minister has out-heroded Herod.
I got a further insight into the thinking of this Cabinet when the Taoiseach remarked that commercial travellers were enabled to charge the increases that their travelling would now cost them against their income tax. But there is no mention now of the poor man who must drive to work and the men whom the Minister for Local Government championed for many years, the man who must drive from Meath, Louth and Kildare to those few jobs that are now left on the building sites in Dublin. They are not able to charge it against their income tax. I am confident that if Irish people are given a chance they would prefer work to charity and work to dole, but they now see a situation in which the cost of getting to work and the cost of keeping a car legally on the road is so prohibitive that it might not even be worth a candle and they might be better to join the dole queue.
It is clear that the increased costs in transport and production will mean an increase in the cost of our goods and make them less competitive abroad. We will be faced with a worsening situation with regard to the balance of payments. It is unthinkable that any Minister should wittingly impose a tax on the oil to run our factories today with so many factories on the brink of closure. Yet that is what was done.
I should like to refer to the primary industry in this country, agriculture and the amount of muddled thinking that is evident in the present Coalition Government with regard to agriculture. A move was made recently to remove the £17 exemption from rates for those who employ a workman on their farm. For many years this has been pointed out as being far too small. The General Council of County Councils and others have recommended that it be increased. The answer given to them by the present Government is that it should be done away with altogether. Here we have being removed a little employment premium, a little incentive to those who employ the people still on the land. When this matter was raised at local level Labour representatives were heard to remark that the farmers in the last year had a rip-roaring year. It was pointed out by the council officials in giving the number of people that availed of this £17 abatement of rates that Bord na Móna were getting this for some of their workers and that the stud farm owners were getting it too. Reference was made by the Labour members to wealthy stud farmers and the crime it was that these people should avail of this abatement in the rates.
It is high time that somebody explained to these people that, if there are wealthy stud farmers availing of this, we should be very pleased to encourage them into our country and to remain there. Many of those wealthy stud farm owners in the past year have taken less than the sire's fee for their foals and their yearlings. No provision should be made to discourage them from coming here. We should encourage them to give employment here. Employment in the racing industry is very important in my constituency. It is one industry that has not got a grant but only asks to be allowed to go its own way without interference. It is pleasant to remark that Bord na Móna are, up to now, well able to enjoy this abatement of rates. They are one semi-State bodies doing their duty. Nothing State body who seem to be paying their way. Whether that is as a result of the weather or as a result of their policies I do not know, but it is pleasant to know that we have some semi-can condone this madness of removing that small employment premium.
I think it is necessary to remark on the blow that has been struck at the farmers' co-operative movement. The farmers worked hard to build up this movement and now they are getting the typical Ryan squeeze. The foundations laid by Paddy the Cope are undone by a Minister who now finds that he either could not or would not cope.
A further word about borrowing. This would appear to be the Minister's only cure. I am glad the previous speaker mentioned that borrowing did not help to increase the national cake but, be that as it may, for every year that this Government have been in office the amount of borrowing has increased. The Minister said that borrowing was not a panacea for all our ills and that his intentions were that he would phase out borrowing over a three-year period.
He did not say that.
The Minister for Defence says he did not say that but I sat here and listened to him saying it. Perhaps my hearing or my interpretation of what he said is not as acute as the Minister for Defence's, but that was my reading of it; it would wipe out the deficit or he will borrow to get rid of the deficit. I am not an expert because I think the more expert you get the more confused you get, but it would appear that the Minister's attitude would be, when he said he would phase out his borrowing over a three-year period, that "Lord, I wish to be saved but not yet" and he would like to have one more fling.
The Minister in a facetious reference to Dublin Opinion referred to Seán Citizen and, I presume, in an effort to make some compensation to the ladies and to ensure equality of the sexes, he also mentioned Mary Citizen as well and he advised both Seán and Mary to tighten their belts or whatever the female equivalent of the belt would be. But I could see no evidence whatsoever that the Minister was prepared to tighten his own girdle and I think that, when the next election comes round, the Minister will get a good example of what Dublin's opinion is of him.
We have a huge national debt and we are in effect, for a little country like us, tying a millstone around our neck. To service this debt imposes a very crippling burden and it is obvious to anyone that our duty is to lessen this burden if we are ever to raise our heads again. The Minister has done nothing except to add to it from one year to the other and there is no sense whatsoever in that.
I would like to ask what provisions have been made in this budget for education. I cannot see that any extra moneys have been provided for education. Where are the high priorities now with the bright young sparks that were over here some short three years ago who were very interested that every student in Ireland would get a new deal and that the pupil/teacher ratio would be reduced in Dublin and other city schools? It now would appear that we must wait until we can afford this. There is another type of teacher and we cannot afford to wait until we can afford it and that is the remedial teacher. Our teaching departments are crying out for remedial teachers who are not being provided by the Government. Under direct decision of the Government they are not providing them. You only get one chance to remedy a child's education and this chance is gone. A further indication of the stop-go mentality with regard to education was the decision last year to get rid of so many untrained teachers and not to allow teachers to have an extension after 65 years of age. It was obvious to us, even though we were not experts, and neither had we the benefit of lectures from Ministers in the Cabinet, that with no teachers coming out in this year there would be a shortage of teachers. We pointed out this and I am glad to say that the Minister did eventually avail of our advice but, even so, I notice now that we have to look to the North of Ireland to get teachers to come back down here to fill the needs for next year.
To show our attitude, not alone to education and to the lack of facilities for remedial teachers and others, I would like to make one short reference to a very black spot indeed with regard to dental health. For many years it has been pointed out that the services being provided in the primary schools with regard to our children's dental treatment were very, very bad indeed and it is a very lucky school that would see the dentist visit that school every two years and an exceptional one that would have an annual visit from the dentist. We were told during all that time that the reason why we could not have a proper service was that dentists were not prepared to go into the school dental service and they stayed in private practice. Recently it was pointed out to us that dentists were freely available now but when we looked to the Eastern Health Board for 12 dentists to be appointed we were told that we could not have them, that they had money to pay for only two.
I come to a little matter nearer to the heart of my listeners now when I refer to law and order. Reference has been made in the brief with regard to cost of law and order in this country.
Indeed, this Government have always indicated that their platform was one that was based on law and order and they would try to indicate too that we here on this side did not stand for law and order at all. They pointed out the reasons for the increase in expenditure and I welcome any money spent on the Defence Forces and the Garda although I am saddened that these mock patriots' madness should have necessitated this extra expense at a time when we cannot afford it. But, with regard to the Garda and the Army, I wonder are their efforts getting the full backing and co-operation of the Government. For instance, in the courts I do not believe that much of the work of the Garda is being backed up by the courts. I can understand the reluctance to pursue cases when gardaí bring a case to court, as happened in our country recently, when the superintendent gave evidence with regard to roadside trading and the road hazard and the District Justice who felt that, because he passed by there, he was in a position to throw out that case. No wonder the gardaí are disillusioned and no wonder they are disillusioned when they look at political patronage in the appointment of judges and other senior legislative posts by the Government. No wonder they are disillusioned and feel that it is all one great big sham. It is not conducive to developing confidence anyhow.
The Government have a certain responsibility with regard to the present spate of robberies of post office vans and trains and banks. These are daily problems now. We are having four robberies a day. Four robberies a day is nothing unusual now and I would ask the Government what are they doing about that. If they are so concerned with law and order could we not see some fruits of their labour? The security here leaves a lot to be desired and recently aspersions were cast on all and sundry, but not so much the Government, for a big explosives find. We have in our county an explosives factory and unfortunately some years ago some foolish soldiers were found guilty of bringing out a few ounces of explosives. But recently tons of explosives were found. That received wide publicity and great mention in all the news media, particulary the English media, and a doubt was cast on many firms in this country to whom these explosives are supplied, big industrial firms. One in particular has wide connections with Kildare and would possibly be the user of most explosives from this factory. I have no doubt, from the chat I have with people, that the Taoiseach is well aware of the lack of security in this factory. The Minister is aware also that gardaí may be able to do something but members of the Defence Forces on duty can do very little. Their powers to search are limited. I am told that some time ago when this case against the Army with regard to the bringing out of small quantities of explosives, was being blown up out of all proportion to its size, that an Army officer was in a position to prove that large quantities of explosives were taken out of that factory and that the security there was negligible——
Deputy, we are getting away from the financial policy.
——and when he went to the Taoiseach with that information no action was taken. When this Army officer threatened to resign he was approached by two senior members of the Cabinet and advised to change his mind.
This is a matter for another occasion.
Of course it is all totally untrue and mischievous.
We should keep to financial policy.
I will get back to that now, Sir. Mention has been made of price increases. I sat here on the night individual prices were being discussed. I remember the confusion that existed on the night of the budget, not alone with the Minister but with the Taoiseach with regard to when these increases were to be implemented. The subsequent confusion that existed between the Department of Finance and the Department of Industry and Commerce as to when they should be increased or when the increases became operative proves to me that there is complete confusion and lack of liaison between the different Departments. It was a sad example of departmental bungling and conflicting statements.
The previous speaker mentioned the need for planning. He gave us some credit for the planning that was done during the Fianna Fáil administration and mentioned that the present Government had done some planning but that they were knocked off course. It amazes me that the Minister for Finance gave us an excuse for not making any plans for the future, that the outlook was too hazy to plan ahead. We encouraged him to plan and said there was a necessity for planning in a case like that, but it would appear that the Minister decided to opt out of planning because conditions were too uncertain for him to plan. It is no wonder everyone else feels the need for a guiding hand when the Minister has none to offer them.
I must compliment the Minister for Finance on having the gumption to do one thing. He did not feel obliged this year to keep all the rash promises that were made and decided he would leave the old age pension age at 67 because he could not afford to reduce it to 66. I give him credit for that.
The person of 66 will not give him credit.
They will not but at the same time it is the first indication that the Minister is prepared to do something that is politically unpalatable when he feels it is for the good of the country. I suppose it should be an indication to him also and to his colleagues—particularly his colleagues in the Labour Party—that they should not make rash promises when they might find afterwards that they are not able to keep them.
I welcome the increases to social welfare recipients. The present increases will hardly compensate for the increases in the cost of living. By next March when VAT on items not classed as essentials in increased they will find the going pretty tough indeed, particularly with the VAT on fuel. This appears to be still classed by the Government as non-essential. The only hope I have is that when March comes the weather will be fine and the increases in gas and ESB charges, which are bound to follow, will not have such a disastrous effect on old age pensioners and social welfare recipients who now find themselves faced with bigger fuel bills.
It would appear that the Labour members in the Cabinet look upon themselves as the champions of the poor. On every occasion they have made it very clear where their first priorities lie. The policies they are pursuing now will never deprive them of poor people to champion. It has always been Fianna Fáil policy on social welfare and for those who are less well-off, that we would uplift them to a standard we felt was desirable, or a standard we could afford. It would appear to be the policy of the Government to lower the standards and drag others down to the level of the less well-off.
The wealth tax posturing and the financial resolutions which have frightened millions out of this country cannot have helped but to leave everyone a little bit poorer. I would like to quote from Mrs. Thatcher, who gave this advice to politicians:
It is not the business of politicians to try to please everyone. It is their business to try to do justice to everyone, and this involves doing justice to the strong, the able, the enterprising and the thrifty, as well as to the weak and unfortunate. How else can a struggling country survive? Wealth has to be created as well as shared, and it is not created by the State, by public corporations or by welfare services. It is created by division, the ideas, the hard work and the savings, yes, the capital of men and women in industry, in commerce and on the land.
We could profit to some extent by an examination of the situation that exists in England. We are usually some years behind progress in England. We may be some years yet from the abyss into which England has fallen and we could profit from that.
The only hope that has been given by the Government with regard to the future is oil, and they are waiting for this oil to flow. The first forecasts have now been tempered somewhat, but I feel that is a slim hope indeed. It is obvious that the Minister must realise this budget has only made matters worse. I quote a random set of headings from a daily paper the day after the budget; "General Disappointment Over Budget Strategy"; "An Unwelcome But Unsurprising Budget No Help To The Economy"; "Robert's Pessimistic On Hopes For A Pay Pause"; "New Economic Policies Needed"; "No Euphoria In Industry At Budget Provisions". They are not very complimentary. The one that is least complimentary comes from the investment community: "Relief That The Budget Is Not Deflationary". That is hardly a reason for any Government to rejoice. If it is not deflationary, we presume the budget must be inflationary.
The Minister must have experts in his own Department. They would hardly be there unless they have a certain amount of expertise, and they are paid to advise him. Many of them were there in our time also. The personnel has not changed to any great extent. Surely they gave the Minister good advice. It cannot be possible that all the experts' opinions after the budget differed so much from the experts in his own Department before the budget. It must be that the Minister got this advice and decided to ignore it. He must have got good advice but he decided not to act on it. Therefore, his sin is all the greater because of that.
I always thought that the same economic laws applied to countries as applied to households. It is obvious one cannot keep borrowing forever, that the day of reckoning must come, and that no family can live beyond its means forever. It seems natural that those laws should apply to a country. There are people who think they are above these simple rules and the Minister for Finance would appear to be among those people. He has acted consistently in all his budgets up to now as if he were immune from the simple rule, "pay your way". Some are even inclined to believe that he had some magical formula that would make everything right in the end. I must confess for a mad moment or two I felt that he might pull some rabbit out of the hat sometime to show what his mettle was. If the members of the Cabinet have a trump up their sleeve, now is the time to be playing it. Our people are anxious to see what they have to offer them. Even though they may find some difficulty in explaining their wonderful financial plans to mere mortals like us over on this side of the House, they should let us see the fruit of their endeavours, what their wonderful intellect has turned out.
We are not so dumb over here that we would be numb to any improvement in the employment or inflationary situation, and if we see any sign of this in action we will give the Government credit for it; we will believe them. What our people need is straight dealing and the Minister has not given them that. Maybe the Minister has a difficulty in serving two masters; he cannot serve the conservatives in Fine Gael on one hand and the socialists in Labour on the other. I am sure that there is quite a lot of political tug-of-war going on. It is obvious to me that the motivating force behind this budget was not the good of this country but was again, as it has been in the other budgets, political expediency. The will to take politically unpopular measures is tempered by the need to be all things to all men, although the somersault with regard to the equal pay issue proved that the present Coalition cannot be all things to all women just yet.
The promises made in the first flushes of victory in their new found office have to be broken. I can visualise the great amount of horse-trading that must have gone on between the Minister for Labour, in his demands for 1976, and the Minister for Finance, who had scraped the bottom of the barrel in 1975. I can only compare the present Minister for Finance with a central character in a very popular song now, The Rhinestone Cowboy, who declares: “There has been a load of compromising on the road to my horizon, but I am going to be where the lights are shining on me”. That would appear to be the attitude that permeates the present Cabinet. I would forgive the Minister his past mistakes if he had the gumption to make an honest effort to cure the many ills that beset this country, but he did not try. Maybe he has not the will nor the means to do it. Either his pride or his party—maybe I should say parties —or his policies will not allow him to do this. This country was never as low as it is now. Never did the country need an injection of confidence more. The budget did nothing to help the situation.
The only answer apparent in the Minister's budget is to tax more, to spend more and to borrow more. There is no long-term productive plan for investment. Never was so much frittered away on so little. The normal person could not continue to borrow as the Minister is borrowing, but the normal person is not in the position to produce guarantors like the Minister can produce. The Minister is fortunate that he can use the unwilling Irish people as guarantors. He can say he got a mandate from almost half of them in 1973 but those people never expected that he would pawn their future, and their children's future, in the pursuit of popularity. He will find in the near future that that popularity is very transient.
Under our old educational scheme we had standard books—this is some 80 years ago—in all classes. People used refer to "going to the third book or the sixth book". These were widely used. They were interspersed with maxims, old sayings and quotations and the ones most quoted were the sayings of "Poor Richard". Possibly the best known saying of "Poor Richard" was, "Better to go to bed hungry than rise in debt". Our modern version of "Poor Richard" would be the present Minister for Finance, who turned the phrase since he became Minister to, "Better to rise in debt than to go to bed hungry". I am afraid that if his policies continue, as they have under the present regime, very few people will thank him because many people will go hungry to bed and still rise in debt.
I take Deputy Power's last quotation and say certainly it is better to go to bed having had a meal and to rise in debt, if one can properly fund in time to come, than "to go to bed hungry" as was the situation for social welfare recipients under Fianna Fáil. I am not saying that the main theme of the budget was the improvement of social welfare recipients' lot but they were looked after as to the estimated amount of inflation that will be here this year. When one takes into account the June budget, which gave considerable benefits and about which I will be talking later, any increase in the cost of living which should occur should be well covered by the increases given to social welfare recipients.
It is amazing to find Deputy Power, in his last quotation, his sort of grand finale, telling us that Fianna Fáil would prefer to see people going to bed hungry than, as a sovereign nation, to seeing us control our financial affairs in such a way that the world will give us money that we can repay and we can tell them, how and when we shall repay it. Perhaps, it is an indication of how little Deputy Power knows about the matter when he says that the Minister for Finance indicated he was going to stop all borrowing in the next few years. Everybody knows that we have an undeveloped nation, and an undeveloped nation, just as with an undeveloped business, must borrow as the years go on. It is only when one does not indicate to one's lenders how one is going to repay that borrowing, it is only when one borrows without a thought of how to repay or with the knowledge that one cannot repay, that such a nation is what could be described as a banana Republic. Ireland stands proudly.
Fianna Fáil followed that policy through the years also. Whatever other disastrous policies they followed they followed the policy of balancing their budget. Some of the deficits they produced, as a percentage of the gross national product and as a percentage of the total capital and current expenditure, were often much greater than the deficit produced here. What the Minister for Finance said, which was twisted or mistaken by Deputy Power, was that he would endeavour to wipe out the deficit in the next few years. He regarded it as healthy that this should be so, that we should go into the budget year by year with budgets balanced at that point in time, with our borrowings covered in the years to come by taxation and without taking from below the line of expenditure any deficit which again must be covered by taxation in the years to come. That is the great difference.
I wish to say, with collective responsibility as one member of a cabinet of 15, that this budget was produced on the basis of repayment of anything borrowed plus deficits in the years to come and that taxation was imposed to that extent. The people may take it that there is stability. We are trying to set up a situation of stability to bring us from the trough of this international recession at the earliest possible point to the pinnacle when things improve. There are signs that that improvement is coming.
We are advised, as I think every nation in Europe and possibly in the world, that when there are signs of the lifting of a recession, the last thing that lifts is employment. You get an improvement in orders, in inquiries about purchases of primary goods or industrial goods, and you get an improvement generally in business; but it is at a later stage—and when I say "later" I do not mean years, I mean months—that you get an improvement in employment. After all, people who have had the experience of an international recession and have seen themselves in a position where they could employ fewer people, when this improvement arrives they want to be quite sure that it is not temporary. They want to be quite sure that there is stability there. It is towards this end that the budget was framed.
Deputy Power was quite extraordinary in his remarks on law and order. He mentioned tiny removals of explosives and so forth. I want to say that there is no such thing as a tiny removal of explosives for subversive reasons. In fact, any removal is of a most serious nature. I do not want to digress from this budget debate any further than that. I shall have my opportunity on the Estimate for Defence to deal with it, but it seems quite extraordinary. It seems almost as much as if Fianna Fáil are still on this double-think situation where you have the "grá mo chroí, mo chrúiscín", and sort of sneaking regard for subversives, where you have to be like a one-man band, where you play the fiddle and at the same time bang your leg up and down and bang the drum at the back. That is a mistake. Everyone in this country must be unequivocally behind the security forces and the Government in their efforts on law and order. Deputy Power said: "Could we not see some fruits from their labour?" There are many fruits from their labour. If I was to pick one out of a hat, I would say the recovery of £25,600 and the apprehension of certain gentlemen yesterday. That is a fair fruit from their labour. I could quote the Herrema case, but I must not digress. I must stay with the budget. I will speak of that matter when the opportunity and laws of this House allow me.
Then Deputy Power said something extraordinary. He read out comments from various people like the Federated Union of Employers and so on and when he came to the stock-brokers he told us that they said they were very glad that this budget was not deflationary. He then drew the conclusion that it must be inflationary. There is no such thing in his book as trying to achieve an even keel, there is no such thing as trying to achieve stability. As far as he is concerned, you are either pushing or pulling. Neither this budget nor this Government are pushing or pulling. What they are trying to do—I will use an old country term—is set the ball so that when the game starts we will be ready to make our first pitch.
In fact, Ireland, as a tiny nation, will be ready to get the best opportunity and the best effects from the rise in this recession at the earliest possible time. That did not make it an easy budget.
Perhaps the best thing we should do is to examine the budget. First of all, this Government—the whole 15 of us with collective responsibility—had to decide what was a reasonable figure for a deficit bearing in mind the colossal inflation of 23 per cent, the effects of the national wage agreement, and taking into account the inflation which distorted it, not through our fault but as a result of worldwide increases in prices. It was then wise to estimate what it was going to cost us to run the country. What were the items that just had to be met? What were the items that wisely should be postponed? What were the items—and I want to be quite specific about this— that wisely should be increased for productive reasons and for employment reasons? Then what should be the wise borrowing for years to come, leaving of course between that and the wise deficit the figure for taxation? As a percentage of the total sum to be expended, namely £1,682.6 million, it was decided on all the best advice that at this time, with the borrowing that was necessary and the fact that when you borrow abroad you do not get any tax back from the dividends on the premiums paid, that the wise deficit was in the order of £320-£330 million. It was on that basis that the Government framed this budget.
Having decided in each Department in a series of budget meetings, exactly what was the correct amount to spend in each Department, it was found, taking into account the wise borrowing abroad as well as the wise borrowing at home, that the total amount of extra taxation that should be applied was £107 million. It was then the job of the Government to apportion that £107 million if possible in a way that would increase employment and production and, when it was not possible to have it that way, in a way that would decrease as little as possible. That was the position facing the Government this year. It was not a position where you should have an inflationary budget and I do not mean inflationary in relation to money terms. I mean inflationary in the sense of inflating the economy to the stage where there were more jobs, more money flowing, more opportunity and so on. Behind us we had our achievements— 25,000 houses a year, and unparalleled increases in social welfare. Deputy Power used the quotation—it is better to go to bed hungry than to rise in debt. I would not prescribe that for my own case and I do not think the nation would prescribe it for themselves either.
Our increases in social welfare were totally unparallelled. We did a wise job on them and brought them to the stage where at least people can live in some dignity when they are unfortunately in the social welfare bracket.
We had the Dutch auction before the last election on the removal of rates from all private houses by Fianna Fáil. People did not believe them. If they had done so, they would have had to replace them with some other tax. We said we would remove health from rates in slices and we are so doing. As a result the rates are much lower than they would have been. In regard to the qualifying age for receipt of the old age pension, great play was made of the fact that this year it was not possible to reduce it by one year. We will not be put out of office. We will be here to do it next year.
What about prices?
I will deal with prices shortly. I thank the Deputy for reminding me. The pay-related benefit scheme cushioned many families against the situation in which they would be reduced from perhaps a very good income to a very small one. People become accustomed to sending their children to a particular school, to studying extra subjects such as music. People also become accustomed to a certain standard of food and a certain standard of living. They are happy to pay a little extra and have what amounts to a national insurance scheme. They do not object to paying a little extra so that they can have this pay-related benefit to assist them when they are ill or unemployed. They can live in decency and dignity and preserve their normal standards as far as possible.
Fianna Fáil introduced the pay-related scheme.
Yes, but at what level? I wish to refer to some other schemes such as the one to provide payment for unmarried girls at the age of 58 years. This is a very important thing. Then there was the removal of housing subsidies from rates. I remember some years ago when I was a member of Drogheda Corporation all that was asked of us was a generous contribution from the local rates when we built a housing scheme. "A generous contribution" in old money was half a crown a week. But then the housing subsidy on the rates became an unbearable burden on those who owned their own houses and the situation had to be examined to see what could be done. Before the last general election we decided to remove this burden. We also promised something else to which we have adhered, and provision is made for it in this budget. We promised a progressive increase in tax-free alowances for PAYE taxpayers.