asked the Minister for Economic Planning and Development if the terms of the proposed national pay agreement will be made liable to any "clawback" whatsoever.
9.
Ceisteanna—Questions. Oral Answers. - National Pay Agreement.
8.
asked the Minister for Economic Planning and Development if he will make a statement on his talks with the ICTU and the FUE relating to the proposed national pay agreement.
10.
asked the Minister for Economic Planning and Development if the national pay agreement is in keeping with the Government's policies.
With the permission of the Ceann Comhairle, I propose to take Questions Nos. 8, 9 and 10 together. Discussions with the ICTU and the employers' representatives were held on 9 February at the invitation of the Government. The purpose of these discussions was to ensure that the parties to the wage negotiations would be aware of the Government's views on the role which an appropriate wage agreement could play in their overall economic policy. The opportunity was availed of to outline once again the Government's overall economic strategy, with particular attention to employment plans, and to emphasise the crucial role which wage developments had to play in the success of this strategy. No proposals were put to either party as to the terms of an agreement which would be acceptable to the Government. They were informed, however, that the policies introduced in this year's budget could not remain unchanged if an excessive settlement which threatened our competitiveness and our job-creation programmes were made, and that corrective action would be taken.
In the event, the terms negotiated for the proposed national pay agreement will result in an increase in basic wage rates of 7 per cent in 1978, and the Government have decided that this figure is sufficiently close to their original requirement of 5 per cent to render acceptable the terms of the new agreement. Accordingly, the Government do not intend to take corrective action where the terms of the new agreement are strictly adhered to. It must, however, be stated that these terms make targets for future jobs, prices and investment somewhat more difficult to attain. The Government will therefore be especially vigilant to ensure that these terms are not exceeded in any individual cases and that action will be taken against any parties who should engage in excessive settlements.
You will appreciate, a Cheann Comhairle, that there are three questions there and I have a number of supplementaries. First in relation to the possibility of a clawback on increases, I wonder if the Minister will assure the House that, in order to facilitate the passage of the national pay agreement, there will be an adjustment in tax-free allowances for the national pay increases plus the two increases announced by the Minister for Health and Social Welfare in social welfare insurance contributions?
I am not quite clear as to what the Deputy's question is. Is he asking that the changes in income tax allowance as announced in the budget should go through? They are going through.
I ask the Minister to assure the House that the increases agreed in the national pay agreement will not be reduced by taxation or by the increases in social insurance just announced.
I do not understand that. Is the Deputy saying we should now revoke the proposed increases in social insurance contributions?
The Minister probably does not realise that the ordinary working people get £68 tax-free allowance, including allowance for social welfare contributions which have now gone up by two increases in the last week. I am asking, in order to facilitate the passage of the national pay agreement, that such tax-free allowance will be increased. I am also asking that there be no clawback on the terms of the national pay agreement.
I have already indicated that there will be no clawback on the terms of the national pay agreement.
Will you assure the House that there will be an increase in tax-free allowances to meet the increase?
My understanding is that the allowance in question is normally adjusted. If the Deputy tables a specific question about the system of operation of tax-free allowances I will undertake to give a precise answer.
You will know that the social welfare contribution has gone up and the health——
The Deputy will please address the Chair. This custom of addressing the Minister across the floor is not in keeping with the best order.
Will the Minister assure the House that the social welfare tax-free allowance will be increased in order to meet the recent increases?
My understanding is that whatever the normal arrangements are in that area will operate. I do not have details of the concise way in which all the income tax allowances are adjusted. I know that the basic increases in tax-free allowances, which are far and away the most important changes, are going through, and that there is no question of any clawback being applied either to those or to the increased pay amounts suggested under the proposed national wage agreement.
I am calling the next question.
I have a couple of supplementaries.
I have allowed four on this question. I will allow Deputy Kelly one question.
I have two.
I will allow one from the Labour Benches and that will conclude.
In relation to the Minister's main reply when he spoke about the appeals for wage restraint and the crucial relationship between wage restraint and economic development, which are commonplace under all Governments, he did say that policies or tax concessions could not remain unchanged.
This is a speech, Deputy.
I am trying to cast in one question what would otherwise take three or four, but the Chair is limiting me to one. The Minister said that these tax concession policies could not remain unchanged unless the guidelines of the pay agreement were respected. I ask the Minister whether that condition was made plain to the people by his party before the election?
Surely that is not a relevant question.
Surely you will allow the Minister to answer. Was it or was it not made plain?
Is the Deputy asking me to go back and re-fight the election campaign?
Deputy O'Leary.
I ask the Minister to say yes or no.
So far as I know we said that our policies were formulated on the basis of a pay rise in the region of 5 per cent.
That does not answer the Deputy.
I will go further and point out that we are saying that we will accept a greater increase in pay rates without adjustment of taxation. It is as obvious as night follows day that no Government could allow their policies to remain unchanged if there were any substantial development in the economy, be it from pay rises, from external price rises or from any action.
We know it is obvious. It was not obvious when the Minister was canvassing for votes.
I am not aware of anybody being misled or misinformed as to the nature——
Could I ask the Minister, regarding the figure he gives for a 7 per cent increase in 1978 based on the proposals at present, whether he is taking into account the carry-over from the previous year as well as the 2 per cent allowable negotiating manoeuvrability at local level? If he is taking this into account I am surprised that he is giving the figure of 7 per cent. I would have thought it was well in excess of 7 per cent.
The phrase was "proposed national pay agreement will result in an increase in basic wage rates of 7 per cent in 1978". The Deputy's question is directed to asking about the extent to which actual earnings or pay receipts will rise this year. The carry-over effect from last year will be in excess of 4 per cent. That, combined with the new proposed agreement, would mean that the basic earnings would rise by something between 11 per cent and 12 per cent. The total increase in earnings, depending on estimates one makes for such factors as additional overtime, bonuses, incentive payments and so on, could average between 14 and 15 per cent this year.
Does that not suggest a radical change in Government policy?
May I ask——
I am not allowing any more supplementary questions. Question No. 11, please.
On a point of order——
(Interruptions.)
I have called the next question.