Yesterday I had about five minutes and in those five minutes I said that in a way I thought this debate was premature because it was evident from the form of the statements made by the Taoiseach and the Minister for Finance the previous day that they had not thought out or thrashed out as a Government, politically or departmentally, the implications of this scheme for us. If this debate is premature how much more premature was it for the Minister for Finance to create the impression, an impression with which the rest of the Government appeared to go along—certainly there was no sign of dissent—over a month ago that, irrespective of the British decision in this regard, we were going to enter this scheme. I drew attention yesterday to the indignation the Taoiseach showed the previous day when Deputy P. Barry alleged the Taoiseach had expressed such a point of view. I think Deputy P. Barry had been confusing The Taoiseach with the Minister for Finance because it is certain the Minister for Finance did create that impression. There are more instances than one but I will just cite The Irish Times report of 19 September, which came from Brussels, and quoted Deputy Colley's reaction as Minister for Finance after the end of the EEC Finance Council meeting. The Minister said: “If, however, Britain decided not to participate it would be essential to enable the Republic to join.” I read that, and so would anybody else, as being a commitment in principle, assuming we can get the money he had in mind, to align this country with this scheme irrespective of the British decision. I am not the only person, and neither is Deputy Barry, who drew this conclusion. A paper delivered by Mr. David Croughan, senior economist in the Confederation of Irish Industry, pointed out at a seminar of the Irish Council of the European Movement last week that this decision had been made in principle. I quote: “Indeed, Government statements to date have been fairly firm that Ireland will join the European Monetary System regardless of what the UK decision is.” That certainly implies——
European Monetary System: Motion (Resumed).
Before the Deputy goes any further, do not muddy the waters any more. We consistently said our decision would be taken independently of the British decision provided the terms are right.
Provided the terms were right. We could live on the surface of the moon if the terms were right.
There is an important distinction. I will develop it in my own speech.
I think the Minister should at least—I respect his profession as an economist—not misinterpret two very definitive statements made by the Taoiseach and the Minister for Finance, without any critical standards apparently being applied to them and without any figures given, which makes it very difficult for the layman to understand what exactly is involved for this country. The impression given this month by the Government, and Deputy Barry is quite right in this, is that we will go in irrespective of what Britain does. Any decision can be predictable if certain conditions are observed.
That is what we said.
The impression given was that a decision had been made in principle. Here I want to accuse the Government of doing something which is entirely in the tradition they have displayed and fostered for 50 years, the tradition of playing down to the ignorance of the people. I accuse them in this regard of an exercise in what I describe as leprechaun economics.
Green, no doubt.
This is a weak witted Wolfe Toneism which finds its expression in the idea that there is some national objective to be achieved in breaking the link with sterling even if half the people in the country are thrown out of their jobs. I will give an example of the leprechaun mentality. It comes from "Tuarascáil" in The Irish Times of last Wednesday. I made a rough translation of it:
It was a nice thing that George Colley said on Sunday: that there will be an end, maybe, to the link between our own money and that of Britain before he puts his Budget before the Dail at the beginning of next year. But we hope, if Britain stays out of the Community monetary system, that Mr. Colley will make some bargain with them, the way that both sorts of pound will be valid in the Six Counties.
What kind of bargain could you make the way both pounds would be? I do not see any aid to economic bargaining.
Really a lawyer ought to know perfectly well there is only one piece of paper valid in any one State at any one time.
I am not finished with "Tuarascáil".
It would be an imbecile thing if we had to go for a bureau de change under a bush or at the back of a bramble every time we went to Crossmaglen or Aughnacloy.... Now that pigs have golden tails and cows have golden horns it would be right that we would be able to depend on ourselves and part with the British pound with or without Community help. But the Act of Union will never be repealed until this is a currency independent of the British pound in all Ireland.
That shows the Irish literary tradition is flourishing.
That is the least of what it shows and I will concede that one straight away. What it does show is that it is lucky from some points of view that they are printed in Irish because they would be laughed out of it if they were printed in English. That point of view is entirely in consonance with the atmosphere which the Government are allowing to creep up. It has a grand ring about it. The pikes will be together by the rising of the moon to break the link with sterling. We will be doing it on the Curragh of Kildare next.
I am still waiting to hear from the Government a serious assessment of the prospects for the Irish £ in the event that the English £ and itself drift apart. I do not want to offend Deputy O'Kennedy, the Minister for Foreign Affairs, but I cannot regard his speech as a serious contribution on this topic. The Taoiseach spoke on this matter on Tuesday and I will give you my interpretation of the Fianna Fáil language, for what it is worth. I feel that the Taoiseach, as a former Minister for Finance, has grave misgivings, which he is dressing up in Fianna Fáil speech, about this weak-witted Wolfe Toneism on the financial plane. His misgivings came through when he said:
An important element in our assessment will concern the implications of participation in the system on relations with Northern Ireland and progress towards the objective of national unity by consent. The most favourable outcome from this view-point would clearly be the establishment of a durable system on a basis that would embrace both the United Kingdom and Ireland and would have a beneficial impact on both economies. An acceleration of economic development in this part of the country would enhance the economic attractions of cross-Border economic co-operation and of eventual national unity.
I do not doubt the Taoiseach's commitment to national unity any more than I doubt the commitment of any other Deputy, but when I see this hare being raised in this context it is a signal that he has grave misgivings about an unconsidered departure of the Irish £ from the British £.
I am neither for it nor against it. I am for it if the terms are right. I would ally us with the Finnish mark or with Icelandic currency if the terms were right. I am waiting to get from the Government their assessment of two things. One of them is what the Irish £ is worth by itself, a naked bare Irish £. That question has not yet been raised. When that has been established and we have made a calculation of what the value of our £ by itself would be, I want to know whether the balance of advantage would be for or against joining a system which would award it a value on its own merits, independent of sterling. It is scarcely credible that a debate like this could be in its third day and the Government, who have appointed a special Minister for Economic Planning and Development, could still have left us unenlightened about this. I am not an economist, I have to fly by the seat of my pants in dealing with matters like this and I do not mind being lectured by the Minister. I just hope that he will not leave this bit out of his lecture when he replies.
Do we get extra time to lecture?
A question will be asked in Europe and in the rest of the world which never has been asked before: what is the Irish £ worth? Myles na gCopaleen once got impatient when he heard people talking about the link with sterling and said: "The Irish £ is sterling, the only difference being that instead of a portrait of Queen Elizabeth there is a personable shawlie on the £ note." What is our currency worth independent of the British £? The Taoiseach and the Minister for Finance said nothing on that subject.
The Deputy should not take his economic advice from Myles na gCopaleen.
I should like to know whether this debate will conclude without our hearing anything about this from the Government. I should like to know from the leprechaun economists on the other side, whether senior or junior—the junior leprechauns felt that they were not being taken seriously in the councils of Europe and had to be given a grander title so that they would not be shoved down below the salt altogether—what their calculation is in this regard. Might it be the case in the event of the British not joining this system and our deciding that the conditions were right that the Department of Finance or the Department for Economic Planning and Development calculate that our £ will be attached to the European system at a level above or below that of the British £? What are the consequences for our naked £?
The Minister must realise that this exercise is pretty empty. In both Houses and on both sides there are not five people capable of debating this subject with an adequate professional knowledge. The rest of us just have to do our best. I presume that values attached to currencies are not simply pulled out of the air or arbitrarily chosen. They are related to factors like a country's balance of trade and they are contrived to exist at a point that will ensure that a country is not beggared, and does not beggar its neighbours. The currency which we will be using once we are separated from the British £ will have some value. I cannot foresee what it will be, but I would have expected the Taoiseach or the Minister for Finance to tell us. Will it be the case that, while the British will go on getting 3.75 marks for their £, we will get only, say, 2.50 dm for ours and that, while the British will be getting 8 francs for their £, we will be getting only 6? Is that a possibility? I should like to know what the Government think about this. If the situation is as I have outlined, then we will be getting only 70p in Holyhead for an Irish £. What effect will that have on our economy? In the short term it will have a very healthy effect on our exports, but what effect will it have on the enormous relative preponderance of manufactured consumer goods imported from Britain? What effect will it have on the consumer price index and what effect will the CPI have on wage rounds thereafter? This House will make itself ridiculous if it concludes this debate without discussing these questions.
I listened to three speeches from the Government side and the impression that remains with me is that, so far from being enlightened as to the probabilities of a financial kind which this system opens up, we were being lectured by all three Ministers, particularly by Deputy O'Kennedy, in regard to restraint and discipline. I lost count of the number of times the Minister for Foreign Affairs spoke about discipline. He was like an evangelising scoutmaster—discipline, discipline, discipline. He was waving his rod at us for an hour and ten minutes about discipline. That is not good enough in a debate on the European Monetary System. If there never were such a thing as the European Monetary System, discipline in regard to wage demands and discipline by the Government in what they offer to people by way of reliefs is required at the best of times.
In regard to the centre of gravity of Deputy O'Kennedy's speech yesterday, I am reminded of something which the Taoiseach said:
The new system can increase investment and trade. It can reduce unemployment and inflation. But it is equally true that none of these things will happen if we diverge too widely from the standard of practices which have ensured the success of the major Continental economies.
"Diverge widely"? When were we ever next or near the practices—economic, social or political—which left the Germans and the Dutch where they are?
When I was a student in Germany 24 years ago I was getting 11.65 marks for a £1 note. I can now get 3.75 marks. That difference is accounted for by an inestimable amount of German sweat, hard work, restraint and discipline, all the things Deputy O'Kennedy is in favour of but that he never preached to his electors in north Tipperary at election time. The Taoiseach, Deputy Lynch never used the television to preach coming up to election time. The Germans and the people who are of the same kidney as themselves have achieved that. They have achieved that not by lying in bed with brandy hangovers but by getting up at 5 o'clock in the morning and eating their breakfast on the trams and doing three hours work before a time when Donnybrook Bridge is choked with traffic from people going into their business which they are going to leave again in another hour and a half for their lunch break. That is how they did it. When did we ever come next or near such practices? When were we ever encouraged to come next or near such practices? It has been a soft sell from that side of the House from the day that party ever started, soft soap and soft options.
The Coalition got a hammering from the press and from the Opposition which put it out of Government because it had an unsympathetic face. It had in a lot of ways. I will never be found apologising for, say, Senator's Cooney's hard line towards the people who would put bombs in a passenger train, and I will not apologise for Deputy Ryan's perhaps excessive moods of speech when he was telling the people that he was not just going to soak the wage earners but that he was going to soak the rest as well in order to pull the economy out of the recession. These were disagreeable things to have to say and do but they were done by a Government with a sense of responsibility. When we went to the polls in 1977 we did not make a flock of promises which now the Taoiseach is trying to persuade the people to forget.
"We must not diverge too widely from the practices which have ensured the success of the major continental economies". By coincidence I was in Germany during their last general election. I happened to be there during the week coming up not just to their last general election but coming up to their last two general elections. I cannot tell you the gap, I cannot describe the depth of the abyss that separates the political practice in what is now a model democracy from that here. I could not describe the scorn and contempt with which something like the Fianna Fáil manifesto would have been received by the kind of people I am talking about who achieved that economic miracle. I cannot describe how beneath contempt the Fianna Fáil Party and all it stands for and all it has stood for would be regarded by the people in Munich, in Bremen, in Frankfurt, who have brought that economy up from ruins and put it at the head of Europe.
Before the Deputy waxes eloquent, where are the 14 fairytales of 1973.
I am coming to that. When I think of 1973, when I think of that modest 14-point programme, when I think of what I suppose was the starryeyed optimism, which seemed very unreasonable at the beginning of February of that year, with which it was put together and when I think what an enormous proportion of it was achieved in difficult times, I feel sad at the thought, not that I am out of a job—believe me, I cannot say how little that means because I am perhaps in a sense happier on these benches in some ways——
The Deputy will have to be unhappy before too long.
——it makes me sad for the people, the rank and file workers who simply could not find it within them to be bought by Fianna Fáil, the voters who could not find it in them to be attracted by those promises. It makes me feel sad for them and sadder still for the vital 50,000 who were persuaded to change sides by the remission of motor taxation which of course they should still be paying. It makes me sad to think of the occasional failures of the 14-point plan. We promised to control prices and we made a miserable failure of that. I never denied it. I said it in this House as early as 1974 that we never should have made such a promise. It was a foolish promise to make and we have paid the penalty for it. I do not whinge about it or complain about it. If I have anything to do with manifestos in future that promise will never appear in it and I would say it will never appear on a Fianna Fáil one again either on their present performance.
Never mind the prices. Tell us about the promises of employment.
It is the quality of the Taoiseach's contribution here that we should not diverge from the continental practices that put the Germans, the Dutch and the Danes where they are. We could not be further away from these practices and we are being dragged further and further away from them by the manner and style of the Fianna Fáil Party and Government in the 1977 election and after. Of course there is a weak attempt to draw back now. There is a hope that the people will now accept a cold bath which they will perhaps have a chance to get themselves dry from and warm from before the next election comes along.
The Taoiseach made a speech of bottomless fatuity in Belfield yesterday in which he said that redundancies were responsible for the fact that the employment targets of Fianna Fáil had not been reached. I am amazed the students did not run him out. He might as well have said that prices were to blame for inflation. That is the level of the contribution from a man who wants us "not to diverge too far from continental practices". He would not survive for five minutes at the head of the CDU or the SPD.
We are dealing with the conclusions.
At every stage of this short speech I am trying to stick to the text which has been put before this House by two members of the Government. I am not going to say much more but if I could be allowed a bit of latitude I want to divert for a moment from the kind of controversial material I have been giving the House up to this and to say something which I hope the House will regard as constructive. The reason why this exercise with the EMS is a potentially perilous one for us lies embedded somewhere in the reflections to which the Taoiseach gave expression, in the words "we should not diverge from the European practice". Another reason why it is perilous for us and why the questions which I want to hear discussed and answered here are vital is that we have too many trade eggs in one basket.
That situation has enormously improved as can be freely admitted since 1970 or thereabouts but we still have far too many trade eggs in one basket. Therefore the question of breaking the link, about which I have no chauvinist feelings one way or the other, with the currency of that large trading partner is a vital one for us. But there is a corollary to that simple proposition and it is that we should make ten times more effort than we are doing—in saying that I do not in any way mean to belittle the efforts of Córas Tráchtála; indeed I would like to praise Córas Tráchtála and everybody else connected with trade here—we should make ten times more effort to diversify our trade with the other countries in Europe so that whatever happens to the British £ we will not be entirely dependent on the relationship of our trading economy to theirs.
I promise not to be contentious any more. I would be grateful for five minutes to read to the House something which I feel deserves publication in a more serious context than in the Aer Lingus inflight magazine "Cara". It is an interview with a gentleman called Anthony Cooney who was the representative of Córas Tráchtála in Western Germany. He says some very interesting things about the Irish exporters in Germany and what he says about Germany applies equally to Holland, Belgium and, in a slightly lesser degree, to France, Italy and Denmark. He points out first of all that there is a difficulty in communication between the Irish exporter and the Germans. What he says about Germany can be taken as applicable to the whole of the continental EEC. The difficulty in communications arises from or is very largely contributed to by the inability of the Irish exporter to speak any language except his own. This handicap will be with us as long as Irish business executives are unable to communicate with the Germans in German on the same level as German businessmen can communicate in English. The interviewer asked him if there was any noticeable improvement in this situation. Mr. Cooney said:
I certainly have not seen any on the ground this side. I could possibly count on the fingers of one hand the number of Irish businessmen I have known over recent years who can speak German with any effect, in a business context.
At a later point in the interview he urged that the semi-State bodies should blackguard—although he did not use that word—the Department of Education into providing a better training in continental languages. The Japs, the Chinese and the people in Hong Kong would not think this a fatuous suggestion. French is the only language that gets a look in for reasons that are 100 years out of date. He then spoke about the situation with regard to trying to assess what a huge market such as the German market needs. It was constantly being put to him by the interviewer that the Irish product could stand up to other products and he replied that there are some things associated with Ireland and with the image it has, such as the fresh air, that do not need to be especially pushed in Germany. The Germans will buy items such as tweed, smoked salmon and holidays but he regards it as an eccentric idea that he should buy a computer or a chemical ingredient produced in Ireland. It is a new idea to him. That idea is even more exotic still when it comes to consumer goods. He said:
We would have to put the German consumer on the analyst's couch, and ask him a number of questions in relation to Ireland, before we could even begin to make decisions about what for example our promotional symbol should be, or what kind of flavour our promotional activity should take. There is an awful lot of work involved in this kind of activity, there is an awful lot of money involved. But even that would not be a problem if there was a firm consciousness, a determination among the organisation whose responsibility it is to do this kind of thing, that it should happen. The determination does not exist.
I am not blaming the Government for this. This is a deep-rooted problem, educationally and socially, but it is highly relevant to what we are discussing now. Mr. Cooney was asked whether Irish people generally had taken advantage of new Common Market links to set up business in Germany and he replied:
No, and this is disturbing and saddening. All politicians and Ministers have been keen to remind us that entry into the Common Market would mean expanded or extended home markets. But the fact is that we are not treating these markets like home markets.
If the people from Hong Kong were here they would not be long learning how to penetrate those markets and their politicians would not be slow to regard that as a number one priority, that the national aspirations should take a back seat for a few years. Mr. Cooney continued:
We are still treating them like foreign markets, we are afraid of them. I think there are only four Irish citizens running registered businesses in Germany at this point in time. That is some four to five years after our entry into the European Common Market.
Of those four or five businesses I think a couple of them are pubs.
This is the kind of thing we should be talking about in this debate. It should not be an exercise in trying to persuade the people that we have threshed out the matter of the EMS. We have not. We have not faced up to the real problem of breaking down our excessive dependence on Britain as a trading partner and, secondly, we are still waiting from the Government side a calculation of what the Irish £ will be worth when it is standing by itself. I hope it will not be beneath the dignity of the Minister for Economic Planning and Development to deal with both these matters in his reply.
The most important issue to arise at the Bremen Conference was the question of the EMS and the questions that arise from that. Whether all the member states join or not, the creation of a greater zone of economic stability in the Community will have important consequences for trade and economic activity in all regions and sectors. The consequences for agriculture are special ones and I should like to concentrate on them.
Currency instability has had a greater impact for agriculture in the Common Market than in the Community market for other goods and services. Because of the nature of the common price system the Community has had to introduce MCAs to counteract monetary disturbances that we have seen during the decade. We are all aware of the results. The unity of the market has been broken and trade distortions have multiplied. While we had high MCA charges our exports to many markets were penalised. Nevertheless, it is only fair to point out that without MCAs the Common Agricultural Policy as we know it would hardly have survived intact. Trade with certain markets, especially the United Kingdom, has been facilitated by MCAs.
If the new monetary system is established the present complex MCA position will be stabilised and simplified. If the new system is successful the prospect of a gradual phasing out of existing MCAs will be enhanced greatly. This is important for the whole Community since it would mean a return to the situation where all producers and traders were on the same footing and it would involve substantial savings for the Community budget. It is particularly important for us since it is the only sure way to eliminate the anomalies and inaccuracies of the MCA system, some— but by no means all—of which are greatly to our disadvantage. Apart from this and also apart from certain technical changes in the way in which MCAs are calculated, the new system would not involve any substantial changes in the common agricultural policy.
Of course the system could have particular trade implications if we were members of the EMS and the United Kingdom was not a member. Breaking parity with sterling would affect trade in agricultural products to only a fairly small degree. This is because the much maligned MCA system insulates agriculture from the immediate effects of exchange rate changes. About 90 per cent of our agricultural exports are subject to MCAs. If the Irish £ were to appreciate against sterling, for the export of these products to the United Kingdom the result would imply a corresponding increase in the MCA subsidy.
There are a small number of agricultural products—sheepmeat and potatoes are the main ones—that are not subject to MCAs. For sheepmeat we are looking increasingly to France rather than to the United Kingdom for our export outlets and stable exchange rates would help us there. For potatoes, the future prospects would be greatly influenced by whether we succeed in getting a useful common organisation during the next few months.
Certain processed products are also outside the MCA system. In the event of a break with sterling and a consequential appreciation of the Irish £ some difficulties could arise. In the case of some processed products there are anomalies in the MCA system and they involve problems for us at present. These problems could be aggravated. However, much would depend on the extent to which we succeed in reducing the rate of inflation.
In other respects the EMS has consequences of considerable importance for us. We have seen tremendous developments in Irish agriculture in recent years. To a large extent these are due to the stimulation of a reasonably rapid increase in the price of goods produced by the farmer. The biggest single factor in these price increases has been the fairly frequent green £ increases. Often this policy of adjusting the green £ in line with the movement of sterling is a sensible one for us and the results are obvious. In a new system we must expect fairly infrequent green £ adjustments and consequently less price stimulations in agricultural development.
We would expect other incentives—a lower rate of inflation, for instance. However, the main emphasis for agricultural development in better farming would come from efficiency, greater productivity and greater output. We must be in a position to compete on equal terms with our partners in the Community or we will not succeed. Even though we could no longer rely on inflation and green £ changes to provide large price increases for farmers, there is no reason why Irish agriculture should not continue to thrive and prosper even giving increased efficiency, productivity and output. In planning for greater development Irish farmers have the estimable security of the Common Agricultural Policy. I mentioned earlier that I do not see the new European Monetary System in itself involving any major changes in the CAP. Neither despite some recent comments, should changes of any kind have to be made as the price of the establishment of the EMS. The agricultural policy has served the Community well. There is a firm commitment among the majority within the Community to the principles and mechanisms underlining the policy. These will not be bargained away. The policy will develop otherwise it will fossilise, but its fundamentals will not be changed. There will be development and not dilution.
Bremen did, however, call for some changes in their reference to consideration for special agricultural problems in the Mediterranean and other less favoured regions, though there is no doubt that the market organisation for some Mediterranean products is weak.
We have always supported and will continue to support efforts to strengthen these markets. This strengthening must not, however, be at the expense of producers elsewhere in the Community and it is our firm intention to insist on that. Market improvements alone will not solve the problems of the Mediterranean or of other less favoured regions.
Structural developments also are required and we have consistently pressed for these. A major advance has been made in this regard by the inclusion in the last price package of the special Mediterranean action programme and of drainage measures for Ireland. At the same time I secured the commitment of Mr. Gundelach on behalf of the Commission for further structural proposals for the west of Ireland. At the Taoiseach's insistence the reference to the Mediterranean areas in the Bremen conclusions was extended to include other less favoured regions and to take account of that commitment. Detailed arrangements for the new western drainage measures have been prepared by my Department and the Office of Public Works and these are now in the final stages of being cleared in Brussels. As soon as clearance is received the new arrangements will be announced and the schemes can be got under way.
As regards the further measures for the west, officials of my Department and of the Board of Works have had a number of discussions with the Commission officials over the past few months including visits by officials of the Commission to the west of Ireland and proposals for further measures are now being drawn up by the Commission. When the Commission have taken a decision I would hope that the proposals could be approved by the Council of Ministers within a reasonable period.
In conclusion, I see EMS as involving no major changes for the Common Agricultural Policy. It should stabilise and possibly make easier the phased elimination of MCAs. If we join and this results in a break with sterling, the majority of agricultural products are insulated from the effects by the Community system. Finally, and most important, future agricultural development in an EMS situation will more than ever depend on the ability of our farmers to increase their efficiency and productivity. I have no doubts about their ability to do this.
The Taoiseach in his introductory comments to this debate indicated very clearly that most of the work on this issue has yet to be done. He indicated also that as yet it is not possible to come to any firm conclusions about this prospect of closer monetary co-operation. It is necessary at this stage again to remind ourselves of that salient fact. One has only to read this morning's newspapers to see continuing negotiations between the British Prime Minister and the German Government and the discussions therein to appreciate that as yet a great deal of water has to flow under the bridges of the Nine before we can really come to any definite conclusions as to the balance of the advantage to this country of joining the system.
There seems to be an automatic fatalistic assumption in this country that willy-nilly whatever the French and the Germans jointly devise—and that is the nub of the issue—it is they who are making the running and whatever they devise we will automatically hop on that Franco-German train overnight. We are not quite sure even what the destination is going to be. We must be careful on this. It reminds me of the kind of euphoric statements which were made in 1972. I will be glad to get the sketch afterwards.
Sorry about that.
We must remind ourselves that in 1972 there was a great deal of euphoria in this country on entry into the Community. I was very much in favour of entry and still am. I held then that the net balance of advantage lay with this country joining. I was not very popular with some sections of the trade union and labour movements for advancing that view at that time, but it was done with a degree of sobriety. Therefore, some of the more euphoric nonsense which is talked in relation to this issue has to be discarded very rapidly.
The Taoiseach has suggested, and I quote him, "The new system can increase investment and trade. It can reduce unemployment and inflation". This is not necessarily true. It is a hypothetical proposition. It is like saying that if we give up sin overnight we will finish up in Heaven but we will not be aware of that consequence until after we are dead. Some of the euphoria which has been generated around this issue has been elevated to a degree of complexity with which the common politician and the common electorate could not possibly appreciate. This is a little bit of hoo-hah which some politicians like to indulge in on the basis that they know best for the electorate in their countries.
One has to look at the situation in a very calm and objective manner. I want to go on record, as I did when we entered the Community in 1972, that I am not opposed to the idea of a sensible scheme for monetary stability in Europe provided the scheme is conceived in such a way that it will facilitate the immediate and long-term growth of the European economies. I am not opposed in principle to this new scheme. I would favour it provided—this is a tremendous proviso—the Community arrangements for the transfer of capital resources are designed to make a real impact on unemployment in Ireland and in the Community. I am not opposed to such a scheme provided there is sufficient flexibility within it to protect ordinary national, economic and social objectives but there is no indication that that is so. There is not as yet the slightest indication that the introduction of this new system will result in the transfer of any resources to this country or to any other country.
The Minister for Finance came to the House on Tuesday last and spoke about Ireland looking for £650 million. There is not the slightest indication so far that we will get even £1 transferred resources because of engaging in this operation. We may make a big deal about certain transitional arrangements in relation to agriculture in the west of Ireland. They may be major to some areas of the west of Ireland but I believe they would have come irrespective of any negotiations in relation to European co-operation. It has to be put on the record that the degree of transferred resources to date in the Community has been very small. We have to be careful to ensure that any new scheme of voluntary stability will not inhibit the prospect of radical, national and structural planning which we need here and which we do not have. We have not any development of major State enterprise here. We must ensure that the new disciplines will not inhibit that in any way.
We all know that we have a pretty bad system of industrial relations with virtually no worker participation in enterprises here. The result of this is that by and large workers care very little about the viability of the enterprises they work in. There is no indication that this system will encourage that development. As politicians we have very little control over the general banking system here and there is no indication that the introduction of this new monetary system will give any impetus to such control.
We are entitled in those circumstances to have considerable reservations about the real impact of this new monetary system. As we know, we tend to have fashions. We had a fashion in the mid-sixties of the development of free trade with Britain. Now we are coming on to a further economic fashion. It is now fashionable to spend one's time talking about economic and monetary co-operation. It is incredible that a number of member states in the Community, including Ireland, with the possible exception of Britain, are following sheep-like this Franco-German self-centred and self-interested initiative without asking for and without securing one institutional reform in the Community. There is no question of Ireland going to the French and Germans and saying that we want the regional fund changed and we want the social fund changed as a quid pro quo for our involvement. There is no indication that there is any marriage between institutional reform in those proposals and the introduction of the Franco-German initiative. That is a pity because that opportunity is open to us in those negotiations.
It is not wise to rush headlong by the middle of December into this new arrangement. Who is doing all the running? It is the French and the Germans. I have been on the Council of Europe for the past five years and I have met many French and German politicians. I am a member of the Economic and Social Committee of the Council of Europe. They have assured me on many occasions, even as late as a few weeks ago, that if it suits them they will ditch it, just as the French did on many occasions and as the Germans will do if it suits them. That is why I have some support for the caution, some of which may be chauvinistic but a good deal of which is a bit more hard-nosed, of Jim Callaghan and the British Treasury. They will not be taken for a soft ride in terms of these negotiations.
Our Minister is off to Bonn. I am quite certain that the President of the Commission, Mr. Jenkins was given the assurance that we were anxious to enter irrespective of the cost. The £650 million, apart from it being of very little relevance, is the Irish sop we are seeking for entry. I say that as one who has repeatedly wished to see Ireland deeply involved in European integration in the Common Market. As one who campaigned within my own party at a time when it was unpopular to support that point of view, I feel that we have to be very careful in these negotiations.
Another assumption that has gained a great deal of influence in recent years is that the exchange rates can be enormous in terms of the economic and social development of individual economies. That is no more than a point of view. It is not necessarily a fact of life. I do not necessarily share the view that changes in exchange rates have a dominant influence on the balance of payments adjustments. I do not necessarily share the view that exchange-rate mechanisms which the Community currently enjoy are going to pose major problems for producers, traders, investors and the servicing of the public debt. I admit that fluctuating rates do not help in an atmosphere of uncertainty but I question their influence. There is too much pre-occupation with post Keynesian economic theory on the part of the Government, Mr. Jenkins and some of the Commission's personnel involved in these proposals. I hold the view that there are more vitally influencing factors here than exchange rate relationships. Our incomes policy could wipe out our current disabilities in relation to exchange rates. One major change in our industrial relations policy could wipe out the relative impact of exchange rate fluctuations and the disabilities they have for Irish exports and for our general relationship with Europe.
Our failure to resolve major problems both in industry and agriculture is of much greater importance. We have a level of industrial technology and of general entrepreneurial skill which are quite low. These are of greater importance in terms of our economic and national development than the influence of any exchange rate policy that we might wish to follow The general level of import prices outside the EEC can be of even greater importance.
Without trying to knock the relative importance of this debate, it has to be stressed that the extent to which we indulge in closer monetary co-operation is no panacea for our remaining problems. Some of the euphoria which has been generated by the Government in relation to this issue has to be discounted to a considerable degree.
One of the major observations of the Taoiseach and the Minister is the need for discipline if we enter into this new relationship. If we are to enter into it with confidence, the Minister said, it will require improved productivity and a general commitment to the necessary incomes policy from the commencement of the new system. The Minister was preceded by the Taoiseach when he said that the Government will have to operate fiscal and monetary policies which will sustain growth, encourage employment and keep down costs. He indicated that the social partners will be under an inescapable obligation to complement those efforts. In particular, he said, it will be essential to ensure that the rate of increase in incomes does not out-strip productivity.
I view with great scepticism, if not downright cynicism, comments of that nature. There is no national effort in relation to incomes policy of any shape, size or consequence. The efforts of the previous Government, particularly the efforts of the much maligned former Minister for Finance, to try to have some developments towards an incomes policy floundered and he was kicked out on his ear; so were the rest of us. We were not successful in creating a national climate of moderation and restraint in relation to incomes policies. Now we have the Taoiseach, even last night, chasing around the country saying that if we are to have a new system of monetary co-operation we must accept the disciplines of the French and the Germans, in so far as they are the leaders in terms of what comprises discipline at this stage.
No matter what sector one looks at at present, no sector is willing to observe any form of moderation and restraint in income control. This was being deliberately encouraged by Fianna Fáil prior to the election. The situation now is that the Garda Síochána wish to have substantial pay increases well in excess of national pay agreements. The local authority engineers feel they must have their slice of the cake. The Post Office technicians, another major group, wish to have their share of the action. Every speculator in the country has already had his share of the action with the changes in capital taxation. There is not a farmer in the country who wishes to pay a penny more in taxation. Deputy Haughey handed the medical consultants a 25 per cent increase on the basis of buying some involvment from them in a more comprehensive health scheme. Go through the list and take any interest group and you will not find restraint. Is there any restraint on the part of Ministers? People drive around in State cars at a conservative cost to the tax-payer of £35,000 for a Mercedes.
We are stretching the Motion a bit to bring in the Ministers' transport and things like that. I realise we are dealing with restraints——
Is the Deputy trying to prove that the Coalition were more restrained?
As a decent christian I cross my heart and accept that they were just as bad.
So far as the Chair is concerned, we are dealing with the disciplines that may be imposed as a result of our entry, but the Chair would like to keep the debate somewhere near what is before the House. It is not easy because it involves so much. However, the Deputy is widening it quite a lot by introducing State cars and transport and that kind of thing.
I want to deal with what has already been put to the House at the introduction of this debate. The Taoiseach said:
I now want to deal with the implications for economic behaviour here in Ireland. There is no point in going along with the belief that any mechanism to safeguard a currency can of itself protect us from the effects of folly.
I am talking about the ingredients of that folly.
I accept that, but the Deputy is going into very great detail that would not be quite in order.
It is irrelevant detail.
Does the Minister suggest that when I talk about sectional groups who are in no way preoccupied by any form of income discipline it is irrelevant?
I did not say that was irrelevant but the reference to State transport was irrelevant.
Will Deputy Desmond get back to the motion?
We have evidence at all levels including the behaviour of individual politicians of all Governments——
But there has been no change in behaviour. The Deputy has admitted that.
Sorry, Minister, and the Deputy, we are getting away from that point and getting on with the debate on the motion.
But I should like the record to be accurate.
I shall make the record absolutely accurate. In a situation—may I say directly to the Minister—where we call for national restraint I think it is a bit of a joke when 15 Ministers, seven Ministers of State and half a dozen other associates of the previous Government and this Government drive around in transport which costs——
I have already asked the Deputy to get away from that point. We cannot discuss ministerial transport on this motion.
Apparently Deputy Lawlor does not agree with my figure. I shall speak to him afterwards and I shall prove how right my figure is.
Deputy Desmond on the motion.
In giving these examples I have referred to what I regard as sectional indifference to any form of restraint or moderation. No matter what sector one takes one finds not the slightest response in relation to the need for income discipline put forward by the Taoiseach and the Minister for Finance. We have created that climate as politicians because in successive elections we have tried to convince people that they need only vote for us to get automatically the benefits of such selfishness and automatically the economy will continue to expand. We know from bitter experience and the experience of some 93,000 people still unemployed that that kind of situation cannot be sustained in an economy the size of ours. That is my fundamental point. We have been hypocritical with the Irish people because we have failed and continue to fail, even by the personal example of Ministers, to convince the people of the need for such restraint.
I think my point is echoed very well and very coherently by the President of the ICTU, Mr. O'Sullivan, this morning, when he pointed out the kind of social climate we have created in which none of us produces goods with great productivity, starts a factory, exports our commodities, travels to the markets, learns a foreign language and becomes an entrepreneur in the truest sense. We have not trained our Irish people to develop in that way; but we have trained them to make a buck as fast as they can, to speculate and grow fat on the backs of their fellow countrymen. We have encouraged that system and climate. The present Government have been adept in fostering that climate over the years.
The question of transfer payments loomed large in recent debate and has been referred to, particularly by the Minister for Finance in his speech. The papers submitted to date by the Irish members of the committee participating in these negotiations advance an estimate of £650 million. This has been defined by the Minister for Finance as additional investment required in the immediate and narrow context of entry to the system.
This amount is extraordinarily small bearing in mind the amount of transfer payment which we require not just in terms of economic and monetary co-operation but in terms of any real prospect of transfer of Community resources in the system itself. It should be pointed out that FEOGA guarantee expenditure which has come to us and which has brought great benefit particularly to the farming community—I do not regard that expenditure as being in the normal definition of the term a resource transfer. Some people in Ireland have taken this into account in talking of transfer payments from the Community to us. This would seriously distort any consideration of transfer payments. It simply represents payments made to us under the FEOGA guarantee section which have been very substantial, some £350 million for 1978 in the latest estimate. That sum, in my opinion, is the overall impact of CAP and merely one element in the operation of the Common Market as a whole. I do not regard it as a transfer payment but rather as a repercussion of the integration of the market itself.
Resource transfer mechanisms are, in particular, the FEOGA guidance section, the social fund and the regional fund. Any examination of these three areas will show that payments to us are, by and large, rather minimal. In 1976 Ireland received about 5 per cent of the total of the payments available within the Community. It seems an extraordinary figure that the receipts to this country from the social fund and the European Regional Development Fund should represent only .3 per cent of Ireland's GNP. It seems an extremely low level of resource transfers to the least well off State as we allege we are, and it is true enough. It is a very small indication of the resource transfers resulting from the present mechanisms.
I want to refer to the reply by the Minister for Finance as reported at columns 271 and 272 of the Official Report of 12 October 1978. In the five years since 1973 to 1978, on average we have received about £17 million a year from the social fund. That is a miniscule allocation to us. We have received amounts varying from £4.6 million in 1973, £8.4 million in 1974, about £12 million in 1976, about £20 million in 1977, and £25 million in 1978. The average payment to us from the social fund over the past five years has been £17.3 million. The regional development fund payment for 1978 is estimated at £17 million. There has been a whole range of studies such as the regional studies jointly financed by Ireland and the Communities, pilot projects and studies to combat poverty, projects in the hydrocarbons sector, research and development projects, moneys for miscellaneous surveys and studies carried out by Irish agencies for the Commission. For those we get about £1 million in 1978.
One has to start these negotiations by pointing out to the Community in no uncertain terms that the contribution by the Community to this country in terms of real resource transfers by and large has been minimal. Of course—and this is grist to the mill of what one would call the anti-common marketeers—the reverse has happened and the disparities have widened since Ireland joined the Community. In Ireland's case, GNP per head has fallen relative to the Community average despite the fact that we negotiated Protocol 30 of the Treaty of Accession which recognised the special problems of concern to us and the need to ensure the success of the Irish Government's policy on industrial and economic development.
I recall the tremendous Dail debate on that Protocol. I recall the way in which the Protocol called on the Community institutions to use all the means at their disposal under the Treaties for the purpose of achieving those objectives, and in particular the financial resources of the Community. During that period the GNP per capita of the most well off countries has improved. Admittedly in isolation it improved in Ireland too, but relative to the Community it declined and our general rate of unemployment is still the highest in the Community.
With regard to the estimate of £650 million the Minister said it is necessary to have regard to the balance of political and tactical realities. He dismissed it as that and gave no further elaboration. I do not think his heart is very much in the prospect of obtaining even £650 million of transitional aid. It must be pointed out repeatedly to the Community that we have not benefited to any significant degree from transfer resources. The tremendous benefit which the CAP has been to Irish farmers has over-shadowed dramatically the impact we expected from other areas, particularly the social fund and the regional development fund.
The speeches by the Taoiseach and the Minister rather dismissively ignored the tremendous impact a change in exchange rates could have on Irish industry. I am talking not so much in the context of an incomes policy or wage costs generally, but in the context of the impact a new system dealing with the prevailing rates of exchange could have. The problems of a number of industries which are already in serious difficulties, notably the clothing, footwear and furniture industries which are experiencing great difficulty in competing on the home market, would be exacerbated if the Irish £ were to be revalued against sterling.
There shall be further consultation between the Government and the Confederation of Irish Industry and the individual industrial sectors prior to the conclusion of the negotiations. I hope this will come about. There is no evidence of much consultation as yet. Next December this House could be presented with a fait accompli by the Government saying: “This is the package. We have negotiated it at the final meeting and we are in”. I do not think the Government are sufficiently sophisticated to take on this issue on their own. I do not think sufficient study has been made of the situation to enable the Government to proceed willy-nilly with the negotiations and bring back a package whether we like it or not.
There should be further extensive consultations between the Government and the CII and the individual sectors about the impact of possible changes. Since we do not yet know the variables open to us, it is not possible as yet to assess the precise changes. Reading contributions made by a number of CII experts in this field, and appreciating the disquiet which is quite evident now in many sectors of the business community about this proposal, the Government would be well advised to initiate extensive consultations with them.
These are my observations on this proposal. I do not believe the introduction of the new system envisaged will necessarily take Europe any more rapidly out of recession. We are now in the final stages of recession and the prospects are reasonably good in terms of economic indicators, but I do not hold the view that we are on the verge of a major breakthrough simply because of a new system of monetary co-operation being introduced. The euphoria about the EMS, particularly the euphoria generated by the President of the Commission, Mr. Jenkins, is somewhat irrelevant in terms of the origins of the proposals and in terms of the real intent behind them.
The Irish Government have lost an opportunity of seeking major institutional changes parallel with these negotiations. That opportunity is not likely to come again because the French and the Germans are not likely to provide an opportunity for such fundamental negotiations in regard to institutional changes again, but will rather proceed on the basis of their own self-interest and expect the other countries of the Nine to go along with them. In reality that is what we are doing, and it is in that context we have to view these negotiations.
This debate centres on a fundamental financial matter and, when one removes the emotion of the initial comments, one is down to a very fundamental economic matter which must be debated at length. Both the Taoiseach and the Minister for Finance were very forthcoming. They certainly gave the House a broad outline of the up-to-date situation.
If one looks back to 1927 when the punt was introduced, one finds that at that stage it was necessary to get some confidence associated with the currency and, as it was directly linked with sterling, it is worth-while now to look back at the situation. Quoting from Reade & Company, a financial organisation which produced a paper on Ireland in a European monetary union, they said: "At the foundation of the State there was a need to establish confidence in the currency of the new Government. Guaranteeing a one for one link with the strongest currency in the world was seen as the best way of achieving this. Since confidence has been established by now and since sterling is no longer a strong currency, that particular argument has lost some of its relevancy".
What we are now looking at is a similar situation and the sterling, over the past seven years particularly, has gone through some rather trying times. It is literally impossible now for our manufacturing industry and our exporters to plan and programme their policies because very wide fluctuations can very suddenly appear and distort their whole costs system, their manufacturing costs and their raw material costs, and can have some very adverse effects.
It is opportune that the European Monetary System should, therefore, be debated at this time in the light of those experiences, particularly the experiences during the previous Government's term in office. Our exports and our efforts to generate economic development were badly affected by the drastic devaluation in our currency and, while it gave our exporters a possible advantage, the fact is that imports rose steeply due to the fall in the value of sterling. We are now looking at the possibility of linking up with the other European currencies. We must approach this in an aggressive and positive way. It will certainly bring about a need for greater efficiency. Maybe that is no harm. Maybe that is the challenge necessary and, if the challenge is taken up, the advantages can be very great.
The restraints such a link will bring about in the fluctuation of currency can certainly be advantageous. Looking at the example of the workings of "Snake", while it was not a perfect system, it certainly helped those partaking in that currency arrangement during those traumatic years of very high inflation. I think it was in 1974 that Britain, France and Italy left "Snake" because the disciplines of their economy and the restrictions it was putting on their finances were too great and so they could not remain within the system. The devaluation of the currency during that period certainly had its adverse effects and naturally, when Britain left and sterling was taken out, that had adverse effects for us.
Now the trend is for our exports to move considerably away from our literally total dependence on the British market and that is opening up new horizons for us. In that situation the opportunity of linking with European currencies will open up new lucrative avenues of expansion if we can bring about a realistic cost situation at home. One of the major advantages since joining the EEC has been to farming and spin off industries. Yet there are anomalies and those anomalies have created some problems for our added value processing industries, particularly the MCAs. The continuing situation regarding the green £, while to the advantage to the farming community, has very often had adverse spin off effects from the point of view of creating maximum employment in the food processing industry. One would hope that, when all the other major considerations have been evaluated by the Government and the decision is in favour of joining, there would be a much more realistic and a much greater opportunity for expansion.
In referring to agriculture it is, I think, worth commenting on the recent symposium of the Irish Council of the European movement. An executive of the Irish Farmers' Association addressing that gathering said that, since Irish farmers were less productive than their EEC counterparts, a European Monetary Union would expose Irish agriculture to intense competition. If we are less productive, this is the opportune time to become more productive. This is one of the major challenges when looking in detail at the implications of joining this monetary union.
Between 1973 and 1977 one sees that sterling depreciated by 17.2 per cent against the franc, by 36 per cent against the German mark and by 17.4 per cent against the dollar. That highlights the very unstable situation developing during that period. If we are to develop our exports we must endeavour to get a co-ordinated and positive approach to our costs. The Government very successfully negotiated the national wage agreement and the Minister for Economic Planning and Development is, no doubt, discussing with the social partners the need for another co-ordinated approach to wage increases.
It is not fair to highlight, as Deputy Barry Desmond has done, certain sectors where there was ground to be made up over a period. Some sectors may have moved along at the same pace as others. The forthcoming challenge will create problems for industry in the short term. It is quite unfair to criticise the Minister for Finance for going to Bonn. Following the visit by the British Prime Minister, this is the ideal time to get exact up-to-date information. It does not make sense to criticise that.
It is impossible at this stage to make a hard and fast decision when the British Government are still discussing this matter. If they decide to enter, it will create a more favourable climate for us in considering the question. If Britain goes in, it would not be possible for us to contemplate staying outside the system. We, positively, must get into a queueing situation behind the British in making the decision as to whether we should enter or not. The situation is not unlike that which existed when we were talking about entering the EEC. Because of our trade with Britain we had to look very seriously at the situation and consider what we would do if they should not enter. It is obvious that this decision will be affected in different ways by the British decision.
We must look at situations which may develop and at the options in regard to the financial link. We must consider the options presented by the basket currency system and the parity grid system. It would appear that the parity grid system would probably be more favourable from our point of view. Looking at the method of operating and the stabilising of currency and the percentage which prevailed in the "Snake" situation, it is obviously desirable that one's currency would be controllable and that costs and potential exports would not be affected in the way we have experienced during the past four or five years. It is also worth while to reflect on the position of the Central Bank during the period of inflation and the devaluing of the Irish £ along with sterling and the lack of control we had in those circumstances. Hopefully that situation would not repeat itself. If entry to the European Monetary Union would bring stability, then it is most desirable.
One must look at the band of investment in the country and the countries involved in this investment, particularly the US, Japan and Germany, as well as Britain. This opens up the whole question of currency linking, and in the medium to long term it is to our advantage to be part of the system. The trend in investment during the past three or four years has broadened greatly and when other currencies are coming in by way of investment we must align ourselves as closely as possible. Much of our export potential will be going to the countries of origin and therefore the stabilising of sterling against those currencies is desirable. The potential for industrial investment which can arise from closer co-operation with the mainland European countries appears to be really strong due to the advantageous climate which we in Government have created since returning to office. There would definitely be a greater potential for attracting further investment, mainly from Germany and, hopefully, also from France. They have tended from time to time over the past number of years to look towards Eastern Europe. Becoming more closely aligned with the other EEC members in the currency link would certainly bring about a better situation in that area.
The break with sterling, which has been talked about so much in recent times, needs very careful consideration. I cannot quite grasp the reason for a lot of the comments from Opposition members on the situation. I cannot understand this sudden urge to discuss this matter in detail. Brendan Halligan, one of the prominent members of the Labour Party, during their period in office certainly brought this to the forefront but it was normally associated with emotion rather than with hard figures. I cannot contemplate a situation where a break with sterling would be a real option unless there were a lot more figures to back up the idea. We are still dependent on the British market for about 50 per cent of our exports and, with the strengthening of sterling, London has again become on the of the major financial centres in the world. That is to our advantage and a link with sterling in a new European monetary system could have great benefits for us and strengthen the Irish £ which was set up in 1927 because we wanted it linked with the strongest currency available at that time. Now we have an opportunity of linking with some of the world's strongest currencies, particularly the German mark. This will be a great challenge. If we accept this challenge and if the detail of the central fund and the initial assistance is forthcoming, there is tremendous potential for us.
The Taoiseach and the Minister for Finance have been very forthright in giving us a broad picture of the present situation. Reading the text of the Taoiseach's and the Minister's addresses it is very hard to find where the grounds are for the comments made by the Opposition. The Taoiseach outlined the situation broadly. The Minister gave more detail and figures. How one could draw the conclusion that there is a difference of opinion between the Taoiseach and the Minister is beyond me. With our small open economy, staying out of the EMS would certainly leave us isolated as would have been the situation had we not joined the EEC. It is opportune that the monetary union discussions are taking place a number of years after our joining the EEC when we have developed and diverted much of our trade to our other members. Now is the right time to have the opportunity of joining the monetary union. It is indeed a positive and programmed policy of a more integrated Europe. There certainly have been comments about the possibility of being drawn into the centre where a lot of the activity is. There have been comments about the reasons why the German Government have suddenly decided to press ahead with these discussions. They appear to be the forerunners in the discussions but if one goes back to the Werner Report of 1960 one would see that this is where the idea was first mooted so there is nothing new about a European monetary union.
It has been on the table for quite some time. With the stabilising of sterling our other European partners see it as an opportunity of bringing about co-ordination and getting away from these major fluctuations which we have had to contend with in the past, particularly during the Coalition's period in office. Work has been going on behind the scenes on the part of the financial planners within the Cabinet, the Minister for Economic Planning and Development and the Minister for Finance. We are now getting an opportunity to voice our general comments. A lot of work remains to be done but the informed discussion that we are having on the matter now will make the decision that much easier when the full options become available to us. The time scale is extremely tight and that is probably to our advantage in that decisions have to be considered in great detail and it is not something which can be allowed to drag on because of the spin-off problems the uncertainty would create. The possibility of getting closer to the European mainland in this way, with vast markets becoming available to us, will certainly be to our advantage. The fact that we will be part of this strong financial bloc will also mean that we will be in a position to exploit to our own advantage the Middle East markets and beyond. If it brings about a greater co-ordination and a more stable planning situation in finance it can only be to our advantage.
The one remaining item I would like to refer to is the situation regarding the dollar premium and the possibility of other than sterling finance coming into the Irish investment market. Our Central Bank would naturally have to have restraints on this particular source of supply of finance funds but that is another area where with proper control over a period we could engage in greater investment and, looking at the percentages that have prevailed, from 20 per cent up to 90 per cent and now standing at 40 per cent, there is a real possibility of getting in a greater flow of investment funds.
The British situation, when finally considered hopefully will be on the side of entry to the monetary union. Their present attitude possibly is not unlike their stance on joining the EEC itself and, when the matter has been fully debated and hopefully they join, it will then open up to our country a wonderful opportunity. We have to look at it in that light and aggressively formulate policies to take the maximum advantage. The disadvantages have been spelt out and they are real and they have been recognised. The cost situation, the ability to produce, the reference from the farming community that we are not as productive in this area as in other areas, are questions that have to be faced up to. We must prepare now to go into the eighties. We have the opportunity. We can gain a much wider market for our exports. At this early stage it is desirable no doubt as the Taoiseach said, to modify our demands. I was surprised that Deputy Desmond referred to the fact that we were not looking for some structural changes within the EEC.
In his address the Taoiseach highlighted some anomalies, particularly with regard to the regional fund, and he hoped that in the process of negotiating the EMS we could bring about certain changes that would be to our advantage. This is an ideal opportunity and it is high on the Government's priority list. It is a real opportunity to get more assistance from the regional fund and will help to develop a greater importance for that policy. The regional fund has been to our advantage to a limited extent, but there is much room for improvement. In the discussions that will take place we can take advantage of the circumstances and obtain some improvements with regard to the fund.
I consider that our timing is right. The fact that we have had a preliminary detailed briefing allows us to consider in greater depth the problems involved and the modifications that will be needed. When the Minister for Finance concludes his further meetings I hope we will have the situation that the British Government will have decided that it is to their advantage to enter the EMS. In such a situation it would be positively to our advantage to join.
We have real potential but we must highlight it. The unions and employers must be made aware of what is involved. They must be made aware of the fact that, while there may be restrictions and a need for restraint, it will be to the overall benefit. There will be advantages for us and we can continue on the path of creating the employment we have been so successful in doing since we returned to office.
It is no exaggeration to say that this is a very important debate. The proposals for monetary union have significant and serious implications for a country like ours. We are a small peripheral maritime region remote from the centre of the European mainland, but nevertheless we are now a member of the European Economic Community.
The proposed monetary union has major economic and social implications for the country. It is vitally important that public interest and awareness be created about the significance of this latest EEC proposal. In a debate such as this complex issues are raised and it is difficult for the layman to analyse and give a judgment on the pros and cons of monetary union. However, because of the serious implications this proposal would have for Ireland, it is important that an effort be made in the debate here to try to relate the proposal to the problems of ordinary people throughout the country. The proposal for monetary union is a natural and logical milestone on the road towards ultimate European union. It is the logical extension and the practical application of the basic philosophy enshrined in the Treaty of Rome where a movement was envisaged towards economic, monetary, political and complete European union.
I listened to the Taoiseach's contribution last Tuesday when he opened the debate and I have had an opportunity to study his fairly detailed speech. It strikes me that, while European monetary union is a logical evolution of the whole concept of European union, nevertheless for this country there are certain prerequisites and preconditions that will have to be fulfilled before we contemplate taking such a major irrevocable step. I am glad that the Taoiseach in his speech adverted to what is perhaps the most important aspect and in the brief speech I propose to make I shall concentrate almost exclusively on this aspect of the proposal.
The Taoiseach referred to the Bremen Council and the proposal in relation to monetary union and he stated:
The Bremen Council called for continued consideration of special agricultural problems in the Mediterranean regions and in other less favoured regions. The reference to "other less favoured regions" was included at my insistence. I regard this emphasis as particularly important. It is intended to cover further Community action to improve the structure of agriculture in the West of Ireland.
Before contemplating such a major step as that proposed at the Bremen Council we must be realistic. We must face the facts. We must examine the practical results that have emanated from our membership of the EEC.
One of the great attractions of EEC membership—the aspect which appealed most to people and which influenced their overwhelming vote in favour of entry—was that there would be available to this country, particularly to the under-developed western region, financial and other resources that would enable us to formulate and implement a new dynamic programme of regional development. The Taoiseach also referred to this important aspect of regional development. He said that the matter we are discussing is concerned essentially with two issues. The first is the monetary arrangement which would govern parity changes with reference to creating a zone of monetary stability in Europe; the second, studies of the measures needed to strengthen the economies of the less prosperous member countries of the Community in the context of these arrangements. He also pointed out that he regarded this formulation and implementation of a coherent regional development policy as a vital aspect of this issue.
If one looks at it in a narrow, economic and perhaps academic sense, monetary union is an exciting prospect with the wide differences in currencies between one country and another and so forth, and the manner in which monetary union would facilitate international trade and economic growth and development. It is important to bear in mind that for a small country like Ireland where many economic, social and democratic problems exists, un-regulated growth and development of this kind could have very serious consequences. It is discouraging to note that after five years of membership, instead of the disparities between the favoured and less-favoured regions in the EEC being eliminated they have been widened and our growth and development here have not kept pace with those of other countries in the EEC. Before we can contemplate finally making an irrevocable decision to support the concept of monetary union, among all the issues to be considered the one of paramount importance to this country is to ensure that the EEC recognise and realise the disparities which exist between the richer and poorer nations in the EEC. Up to now the EEC have failed to recognise the gravity of these disparities. In the protocol to our accession special recognition was given—although I feel it was mere lip-service—to the fact that we had special economic and social problems here. It looked as if the EEC were serious in their concern about Ireland. Not merely was a decision taken to recognise the serious problems of our more remote regions but the entire island of Ireland was regarded as a special development region in the EEC context. However, in the five years that have passed no serious attempt has been made by the EEC—and perhaps successive Governments here are partially to blame for this—to give practical expression to the pledges contained in the protocol of our accession to the EEC in the form of a coherent, comprehensive, realistic regional development policy which would help us to accelerate the development of our less-favoured regions and which also would enable this country to accelerate economic and social development to bring us on to a level with the more favoured countries.
That is why I am worried about this proposal in relation to European monetary union although the logic of it is perfect from a purely economic point of view. I endorse what the Taoiseach has said and I hope a serious effort will be made to convince the EEC of the dire need for a formal, comprehensive, realistic regional development policy. A regional development policy should have two objectives in a European context. From our point of view these two objectives are formulated and implemented policies which will enable this country as a whole to accelerate economic growth and development. The second objective must be to ensure that the regional disparities which exist in this country can be eliminated. I recognise, appreciate and welcome the fact that the Taoiseach has adverted to this need for a coherent regional development policy.
Perhaps this whole debate and the proposals for European monetary union have implications for the Minister sitting opposite within the aegis of his departmental responsibility for economic planning and development. As well as endeavouring to have the EEC formulate a coherent or comprehensive regional development policy, each individual nation has an onus, in this regard and here I am talking particularly about Ireland. There is an onus on us also, on the Government of the day and on the powers that be. Time is running out. It is a matter of extreme urgency that we think about formulating an acceptable and appropriate regional development policy which would be appropriate to the special problems of this country and which will enable the Government to go to the EEC and say "We have now formulated a comprehensive, realistic regional development policy appropriate to our needs", and we can go and look for the necessary financial assistance from the regional fund, the social fund, FEOGA and other agencies which have relevance to that.
I want to talk on a non-political basis here. I am talking largely in the light of my personal experience of having being a Government Minister with responsibility over four years for economic development in what by any criteria might be called the least developed region in western Europe. I recall bringing the former Commissioner, Mr. George Thomson, to the Aran Islands and along the western seaboard a couple of years ago and he saw for himself the stark reality of trying to promote and generate economic development in those regions in a way which would in turn generate employment. I appreciate the problem from my own experience, and I want to talk in this context of our regional development policy of the real problems and the enormous challenge of trying to build up the western regions of our country and putting in the necessary infrastructure, the communications, roads and so forth. To do this on a proper basis would demand resources which we have not got at our diposal here. Therefore we rely more and more on the availability of these resources from the relevent EEC area.
I recall that Father McDyer, a man whom I frequently quote here and commend for the wonderful work he did in that small parish of Glencolumbkille, on many occasions, publicly and privately, expressed the hope that the type of development which he engaged in so successfully in that small parish could be carried out in every other parish. He, as well as I, looked for the availability of substantial resources from the EEC. It is all right to have an academic discussion about monetary union, its implications, international finance, international trade and so forth, but we cannot lose sight of the basic problems we are confronted with here. I believe that the implementation by the EEC and the Irish Government of a comprehensive regional development policy is vitally essential before we contemplate any further major steps such as monetary union.
I would like to outline as briefly as possible some of the problems which I see. The EEC have failed up to now to come up with a proper regional development policy. This is probably due to the fact that successive Governments have failed to recognise the need for such a policy. I have never accepted the idea of the system under the regional fund whereby an industry established one year is the following year listed among the projects qualifying for regional aid. I am sure the Minister for Economic Planning and Development will agree with me that this is not the way to approach the problem of regional development.
As well as the need for special recognition to be given to the problems of the less prosperous member states there will also be other problems, which have been dealt with in the Taoiseach's speech. There is the question of what we do if Britain does not go in. The thinking underlined in the Taoiseach's speech and those of other Ministers is the hope that all the EEC nations will agree to monetary union and that, as far as we are concerned, as the Taoiseach said:
... measures to strengthen the economies of the less prosperous member states would be essential if the zone of monetary stability is to succeed.
The Taoiseach in his sentence has referred to the basic problem as far as we are concerned. Special measures will have to be instituted to ensure the progress of the less favoured regions of the EEC.
The pros and cons of the proposals for monetary union have been very thoroughly analysed by various speakers who are far more competent to do so than I am. Most of my remarks are related to the Minister for Economic Planning and Development. I hope he will give us some idea how he sees the second issue arising from the Bremen Conference being applied in practice. This, as outlined in the Taoiseach's speech is:
... studies of the measures needed to strengthen the economies of the less prosperous member countries of the Community in the context of these arrangements.
I feel it is vital that the Minister tell us how he sees this being applied in a European context and also in relation to Ireland. What study is being undertaken in this respect?
The Minister for Finance said that some officials from the EEC have been over here studying some of the problems. He referred, in particular, to the drainage of the west of Ireland. I fully agree with the drainage of the west of Ireland and I am glad that the EEC have made financial assistance available for this. The problems of the west of Ireland cannot be solved on a piecemeal basis. While the drainage of the west is a basic structural problem providing funds for this is not the full answer. I have been preaching this both in Government and outside Government. Regional development is not industrial development nor agricultural development alone. It is the total of a lot of things. It relates to the natural resources in the west, tourism, agriculture, fisheries, industrial development, mineral development, fish processing and so forth. It is essential to have a policy which will ensure the maximum development of the different sectors in a co-ordinated manner.
I endeavoured to give practical expression to this type of comprehensive co-ordinated regional policy and planning by pushing the idea of the western development board. I believe the EEC are approaching the question of regional development the wrong way. There is no co-ordination between the regional fund, the social fund and FEOGA as well as the new dimension for drainage. I would like to see a comprehensive policy coordinated for the western region, which may be called the western development board or be under some other name. I do not mind what it is called but I envisage this western development board as using all the available resources. Each should be developed to the maximum extent but have the necessary overall co-ordination avoiding duplication. I feel it is vital to get away from the haphazard piecemeal development which we have had. A massive drainage programme of the west should be undertaken within the context of an overall economic regional development programme to see how that fits in, how the improved land can be developed to get greater production from it and how that production can be processed.
I do not want to hog the debate. At this stage of my life I may be over-conscious of the problem. I may be considered a crank in relation to regional development, but in the light of my four years' experience working in the most remote areas I feel that it is an exciting challenge. A major part of the Minister's function must relate to regional development. A national development strategy must be implemented at local level.
Monetary union is a major issue. The ideal situation would be for all the countries involved to agree. If one or two of them decide to opt out, particularly Britain, we will have a serious decision to make. The issue of monetary union must be approached on a broad national basis in the sense that it transcends party politics. If this proposal becomes a reality we must endeavour to ensure that it works to our best advantage.
As Deputy O'Donnell said, this is a matter of great national importance and not one of party politics. It is, as has been said by many speakers, the most important decision we have had to face for a long time, at least comparable to our decision to join the common market in 1973.
I am a novice when it comes to discussing economics and exchange rates. However, I do have views to express on the possible impact of the proposal on employment. For many months I have been saying that the Government's policy for the creation of employment is basically and historically wrong. By their policies the Government have sought, almost to the exclusion of everything else, to encourage private enterprise in the hope that private enterprise will create more employment. Even at this early stage, many people doubt the wisdom of their policies in relation to job creation. It has been a fatal mistake to place all their eggs in the private enterprise basket. The reason it is a fatal mistake is that we are under-productive in comparison with the other member states. The NESC Report dealing with employment projections shows that in comparison with the Benelux countries and Denmark, two Irish workers produce almost as much as one worker in the Benelux countries. The comparison is even worse with Germany. It means that we have twice as many people at work than our output merits by continental standards. The Government encourage private enterprise to employ more people to become less competitive. As profit is the main motive of private enterprise, what has private enterprise said to the Government? Not to put it too crudely, they have told the Government to get stuffed.
The Deputy should relate to the motion.
This is basic and central to the motion.
It is also basically wrong.
There is a professor of economics over there who has all the theory but none of the practice. He is a great theoretician but has no common sense.
Let us hear the Deputy's common sense.
His arithmetic has been wrong. We are under-productive. As well as the problem of unemployment we have the problem of under-employment. I was shocked to hear the Minister of State at the Department of the Taoiseach telling me this week that the proposed census will not have any questions relating to employment or occupation. The criticism was made that the Coalition Government did not have a census and that is a valid criticism. It is equally valid to criticise the Government for ignoring the problems of unemployment and under-employment.
The conclusions of the Presidency of the European Council is the matter before the House.
We are talking about the proposed European Monetary System.
That is one of the matters arising from it.
We are not just talking about the convergence of inflation and growth rates. We are talking about the convergence of employment rates. Apart from Belgium, we have the highest level of registered unemployed in the EEC. The Government made a tragic mistake by placing all their eggs in the private enterprise basket. This has allowed the Government to adopt policies which favour the rich and penalise the poor. This leads to another problem, to the deep malaise here compared with the rest of Europe in industrial relations. Perhaps it is not articulated as such but the policies the Government have been pursuing favour the rich and penalise the poor, abolishing wealth tax, taxing children's allowances, abolishing rates even on sumptuous mansions and talking about removing food subsidies. That has caused an alien feeling in the work force which has resulted in massive malaise. In the past year over 70 per cent of all disputes were unofficial. I shall return to that subject later. I want to concentrate on employment because this is central to the whole debate, in my view, on the EMS.
I wish the Deputy would convince the Chair that he is dealing with a matter before the House.
The last thing he wants to do is talk about the EMS.
I have already admitted that my knowledge of economics is bad——
The Deputy has been sent into the House to keep the debate going and talk about anything other than the EMS.
——but my knowledge of simple arithmetic and common sense is good. I now invite the Minister to see his policies in practice in my constituency. Let him see the poverty——
Almost 20,000 more people at work. Under your policies there would not have been a single extra job.
Is the Minister telling us that the wealth tax has created one job?
The Deputy is telling us that it was a tragic mistake to put people to work.
Is the Minister saying that the abolition of wealth tax created one single job? It did, in Japan and Germany but not in Ireland.
We cannot have this cross-fire debate. Deputy Mitchell will deal with the matter before the House. Again, I remind him that it is concerned with the conclusions of the Presidency of the European Council.
As far as I am concerned the central problem relating to the EMS and the one which has first priority for this country is the employment problem. Judging by my visit to Germany a few weeks ago it is the central problem there also. They are alarmed because their unemployment has reached 4 per cent and that allows for a female participation rate about three times the Irish rate and for the fact that they produce twice as much per worker as here. Yet, our registered unemployment is more than twice the German rate. While in Germany I was amused to find that the proposals of the present Opposition in Germany to solve their unemployment problem included—they must have read the Minister's Green Paper; I do not know if he read theirs but I think they read his—work sharing——
That does not arise.
——the reduced working week, reduced working year and earlier pensions and so on. When I asked the German party involved about the effect of a shorter working week and year on the availability of people for second jobs—two jobbing as the Minister has called it—there was no answer. What about the availability of people who retired early? Of course there was no answer. The fact is that it is no answer and what the Minister has proposed in his Green Paper is no answer. The only true answer to unemployment is to create productive employment by economic growth used for that purpose, not make-work jobs but real productive employment, wealth producing rather than wealth consuming jobs.
Last year and again this year we have had unparallelled economic growth, 7 per cent last year and 6½ per cent this year. It has been wasted rather than used by the State to create wealth producing jobs. It has been wasted on the wealthy people, presented to them on a plate. I challenge the Minister to tell the House how many jobs have been created as a result of the abolition of wealth tax, if any. The Government have squandered the economic growth left by the National Coalition and sustained into this year.
There has been the greatest increase in employment that the State has known.
There was an increase of 3,000 in manufacturing industry in the last 12 months after 7 per cent economic growth, after massive expenditure by the National Coalition—£50 million provided in the 1977 budget—the employment incentive scheme and, it must be said, moneys provided by the present Government.
The massive spending produced no jobs?
Yes, because the massive spending—no, the massive spending by this Government on wealth tax, on the abolition of rates and car tax has not created a single job. It has squandered economic growth——
We are not discussing employment on this motion. We are discussing the proposal to introduce the EMS in the European Community. There is a great deal of latitude on it but it does not include going into details on employment.
I think we have established that the last thing he will do is talk about the conclusions of the Presidency.
I trust the Chair will protect me against the Minister.
I thought the Deputy was doing very well.
I shall protect Deputies as long as they are in order and that is all. The motion is very wide but not that wide.
I thought it hardly necessary to establish the great implications for employment——
Not at all. The Deputy is trying to drag into the debate domestic and economic policies. There will be other opportunities for them.
I am leading up to the implications for unemployment of the proposed EMS.
Will the Deputy please tell us how the proposals will affect employment or unemployment?
Could I ask for the protection of the Chair against these interruptions.
Yes, the Minister will not interrupt but the Deputy will have to keep to the motion.
My apologies.
In passing the Deputy is entitled to mention the effect that our entry into this proposed monetary system might have on employment here but to go deeply into figures would be completely out of order.
I have no wish to fall out with the Chair. The House, the Chair and the whole country will accept that the central problem confronting us, and confronting the EEC as a whole, is unemployment. It is asserted that the European Monetary System will bring economic stability.
Monetary stability.
Tell that to the people in Ballyfermot and I sure they will know the difference.
I am simply trying to help.
Stability is being sought to generate economic growth which will generate growth in employment. Unquestionably unemployment is the central problem which has to be tackled and, therefore, it is central to the European Monetary System. Because of mistaken policies currently being pursued, which I am asking the Government to change dramatically, we are not ready to enter into this proposed monetary system and take full advantage of it. I cannot think of a time since 1960 when we were so unprepared to deal with a proposal for a changed monetary system than we are at the moment because of the tragic change in policy on 5 July 1977.
The Minister for Economic Planning and Development knows all about these things and, when he is replying, I hope he will let us know what in his opinion will be the effects of the European Monetary System on unemployment in Ireland. What will be its impact on the participation rate, as the economists call it, for the whole work force. I mentioned unemployment and underemployment. In addition, our participation rate is the lowest in Europe, especially for women. We are vastly underemployed and under productive. How does the Minister see the European monetary system affecting this?
I fear that, because of our under-employment, our underproductivity, and our high unemployment we will come off worst under this system. Our economic growth, which is the highest in the EEC, should be an advantage, but our huge underemployment will be a dramatic disadvantage. Before we enter any European monetary system we should be aiming at getting our participation rate right and converging with the European rate. We should be getting our productivity rate right. Instead of an improvement in that regard, there has been a slight disimprovement. We have taken a turn for the worst. This calls for a dramatic change of emphasis by the Government. Although it is important I have no wish to go into the question of domestic policy on job creation.
So long as the Deputy understands that, he appreciates what the motion is all about. We cannot get into domestic matters.
I want to ask the Minister and the Government to throw away their conservative ideology and their private enterprise ideology, not that I think private enterprise is wrong. I am very much for private enterprise and a mixed economy. Private enterprise in Ireland cannot produce the goods for the Government because it is already over-manned. Therefore, we must depend on new projects which the IDA are trying and which are not working nearly as fast as we need them. The only alternative is State commercial enterprise.
Could we have some suggestions about what that State enterprise might be?
Yes, but I am sure the Leas-Cheann Comhairle would not let me.
I doubt that it would be in order to get into that field either. It is in order to suggest that to meet the demands of this new currency we should have more State enterprise, but the Deputy should leave it at that.
I want the Minister to reply at the end of the debate and not after every sentence.
My apologies. I thought I was helping the Deputy.
When the Minister is replying to the debate he will get every opportunity to deal with the points raised.
The Minister asked me to make suggestions. I made them before, and I will take the opportunity in the very near future to do so again. The figure of £650 million has been mentioned by many people. It was certainly mentioned by the Minister for Finance and I think also by the Taoiseach. I know it is not a definite, final figure. The Germans, the French, the Italians, the Danes or the British are not in the business of giving out money, of giving gifts, of giving money away. Anything they give has a price tag. They will give £650 million or whatever is finally agreed, only if it is to their advantage.
As a country we are often described by economists and others as net beneficiaries of the EEC meaning, presumably, that we get more out of the EEC budget than we put into it. An ordinary person reading about net beneficiaries would think somebody else must be a net loser, that we cannot all be net beneficiaries because we cannot all take more out of the budget than we put into it. It would appear that, out of the kindness of their hearts, because they love Ireland and Ireland has a weaker economy and is poorer and so on, some other European countries are subsidising Ireland. In fact, nothing could be further from the truth. The non-budgetary benefits, the trade benefits, and so on, to the other EEC countries, especially the continental ones, are much greater than any budgetary benefits we enjoy. They are all net beneficiaries. I suppose that is the basic idea of the Common Market. We all combine together for the common good but I believe the others are much greater net beneficiaries in the total sense than we are.
Similarly, with the European Monetary System they will be seeking their own national advantage and, if they pay us £650 million, it will be the price they are prepared to pay for similar gains from us. We will not get one penny for nothing. When talking, therefore, about aid from the Common Market we ought to emphasise this point. Whatever we get will have a price on it. We will get nothing for nothing. That is the truth of the Common Market. Indeed, it is the truth of human life. Now I want to know what we will have to pay for this £650 million.
Referring to the fact that Ireland is a net beneficiary in the EEC, the Taoiseach said:
But the essential point is that notwithstanding the regional fund and budget transfers to Ireland under the present system, we appear, on these statistics, which are admittedly out of date, to be diverging economically from rather than converging with the more prosperous areas of the Community.
That is a very important point. Although we are supposed to be net beneficiaries we have in fact fallen behind. Why? Because the strong economies of the EEC are doing much better out of it than are weak economies like us. We are now paying and will continue to pay a huge price in subsidies to the wealthier countries of the EEC rather than the reverse. I hope the Minister will refer to this whole question of budget transfers, the regional fund and so on, and tell us whether we are in fact net beneficiaries or net losers and, if the latter, why.
Dealing with the question of monetary stability, in my not too long lifetime there have been arguments for monetary stability and fixed exchange rates. My understanding is that monetary stability and fixed exchange rates led to the vast economic problems that arose in the UK which led to a number of devaluations. so that eventually, in the interests of stability, fixed exchange rates were abandoned. Now we are back once more to the idea that we need fixed, or fairly fixed, exchange rates. This could well be the fashion of the day. It could well be of not enduring importance. Who knows but that in five years time, perhaps sooner, perhaps later, the fashion will change and economists will proclaim that fixed exchange rates are too restrictive, too restraining, and are causing havoc in individual economies and nations should return to a floating currency. Currencies should be more flexible. That could well happen and I would like to hear the Minister for Economic Planning and Development give us his views on this. To me, it is like the hoolahoop. It comes into fashion every ten or 15 years. It goes out of fashion again and something else takes its place.
I was not at all surprised that at the Bremen summit the British were the least enthusiastic about the European Monetary System. I do not know if they have become more enthusiastic since. There are some indications that they may have but, from their own experience, they have every cause to be worried about fixed exchange rates. It is a very big issue. Is it a fashion? Is it something that will last for a few years? Will we be confronted some years hence with the advice that there should be more flexibility and the £ should float? If that should be the eventuality than the risks which seem inherent in this whole proposal are to me questionable. I look forward to hearing the Minister on that aspect.
I was surprised to hear on the radio yesterday an eminent economist say, talking about the breaking of the link with sterling, that had that happened four years ago the £ would have appreciated in value. It was fashionable on the part of young economists then to talk about breaking away from sterling. Had that happened our £ would have appreciated in value. If the same thing happened today our £ would not appreciate in value. It would depreciate against the £ sterling and we would be less well off. That means that the British economy, helped undoubtedly by North Sea oil, has overtaken ours. They have put their house in better order. This comes back then to the question of policy on employment and policy on wages and salaries. The British Government have been very courageous in their policy on wages. They fought for and got their 10 per cent last year and they are fighting now for 5 per cent this year. This Government wanted 5 per cent. It got 8 per cent. That is as high as 16 per cent in private industry. There is no wages policy. There is a massive wage drift due mainly to the Government's own spending policy. Borrow £820 million and spend, spend, spend.
Again the Deputy is getting away from the motion.
I am.
Is the Deputy in favour of everyone undermining the terms of the national wage agreement?
We will not go into that. There will be an opportunity to deal with that at some other time.
The Deputy is saying there is no wages policy and that in a year in which there was a freely negotiated national wage agreement and where there were very complex additional terms introduced to facilitate both unions and——
The Minister will have ample opportunity to deal with the points raised when he comes to speak.
But they are not relevant.
I will show the Minister they are relevant. We are talking about a floating currency as against fixed exchange rates. An eminent economist said yesterday that had we decided unilaterally to break away from the English £ four years ago our £ would have appreciated in value. If we did that today the Irish £ would depreciate in value. I do not think the Minister is denying that. Two or three years ago it would have appreciated in value.
The Deputy shall not take me as assenting.
Is the Minister dissenting?
Yes. I am certainly not assenting.
The Minister will have an opportunity to speak later on.
By implication, the Deputy is trying to associate me with a statement made by someone. I do not even know who made the statement or the context in which it was made.
Deputy Mitchell on the motion, please.
The economist, speaking on the radio yesterday—I think it was the Rodney Rice programme— pointed out that now the Irish £ would depreciate against the British £.
That is his opinion.
Two or three years ago it would have appreciated. That is very relevant to the debate. If the British decide not to go in and we decide to enter the system, our £ is weak.
Could I enquire if the £ was to devalue if we stayed out and broke the link while Britain went in or was it the other way round?
The very stark opinion offered by this economist whose name now escapes me——
I should simply like to know.
The Deputy is entitled to make the case that has been made by a certain unnamed economist.
In his opinion, the Irish £ would depreciate against the British £ if the link were broken now. He said that two or three years ago the Irish £ would have appreciated. He was asked why this was so. In his view, North Sea oil accounted in part of this but it was also due to the success the British Government have had in their wages policy. The British worker has become more competitive. I am saying that not only have the British Government done well in their wages policy but the Irish Government by their spendthrift policy and free-for-all manifesto created the environment in which people want more and think that more is there. They got 8 per cent in theory under the national wage agreement, but the Minister will know that in some cases increases have been as much as 16 per cent, which means a wage drift of about 8 per cent and that means less competitiveness. The Government's wages policy is wrong. Their job creation policy is wrong. It is designed to make the productive part of our economy less competitive because the Government are trying to persuade employers to employ more people when, by European standards, they should be employing fewer.
I am amazed by the Taoiseach's speech at UCD the other day. I am also amazed by the recent speech made by the Minister for Economic Planning and Development in which he expressed surprise at the number of redundancies. I and several other Deputies told him it was obvious there would be more redundancies since Irish industry is over-manned. Yet the Minister, who knows everything about economics, did not know there would be so many redundancies.
We are getting into a domestic economic debate.
There will be more redundancies, especially in the context of a European Monetary System because we will have to compete within exchange rates. We have the additional burden of being an off-shore island with transport costs and difficulties in getting to the European mainland.
The Government's job creation policies are wrong; their lack of wages policy is wrong. They are leading us into an increasingly uncompetitive situation and they are causing unemployment to be perpetuated at a very high level. Because of this free-for-all, spending environment created, many workers have been making unreasonable demands over and above the national wage agreement and when these demands have not been met there have been unofficial disputes. The level of unofficial disputes—71 per cent of all disputes this year are unofficial—is in major part a result of the spend, spend, spend environment created by the Government's manifesto. The malaise in industrial relations——
The Deputy is now making a budget speech and is not staying on the motion. I have given every latitude, and there is a lot of latitude on the motion, but we cannot go fully into domestic economic matters.
I do not mean to transgress. This malaise in industrial relations, as a result of the lack of wages policy and of bad job creation policy, has added to our lack of competitiveness and that is what this debate is about. We are becoming less and less competitive and the finger must be pointed directly at the completely misguided and misdirected policies of the Government, who have so ill-prepared us for the massive challenge now confronting us.
On the subject of competitiveness the Taoiseach said:
These changes affect in the most fundamental way the competitiveness with which we can sell, our rates of inflation—and ultimately the levels of economic growth and employment we can attain.
The basic idea behind the proposed EMS is greatly to reduce such fluctuations by building up the monetary influence of the Community to be more commensurate with its collective economic weight. Stability of exchange rates between all the currencies of member states would itself contribute to this.
The fluctuations referred to by the Taoiseach were those effecting rates of inflation, levels of economic growth and employment. That is what the EMS is about. The Taoiseach said so and I agree with him.
The Taoiseach went on to say:
The Community cannot flourish if trade does not flourish and individual member states are affected in the same way to a greater or lesser extent. We, with imports and exports equivalent to more than 90 per cent of Gross National Product, are particularly vulnerable. Other things being equal, the greater the expansion in international trade, the greater the benefit to us.
I have already spoken about the bad effect of Government policy on job creation, industrial relations and competitiveness. Now I want to refer to the effect of the Government's policy on imports. They have misspent the economic growth created by the National Coalition Government and are continuing this year with misguided policies. They completely wasted the growth. Where has it been spent? It has been spent in Japan, in Germany, on a consumer boom, an import boom causing us further problems and facing us with a possible balance of payments' problem. But money generated by the economic growth left by the National Coalition Government has been, because of Government policy, spent on imports. When the Taoiseach spoke about the growth of international trade I am sure, even though he did not spell it out, that he meant a two-way growth in international trade. The fact is our exports have been growing at a much lesser rate than our imports and that is directly attributable again to Government policy. I want to measure my words and I do not wish to exaggerate but never before in the history of this country has a Government's economic policies been so out of place, so wrong at the time. That is the whole basis of my contribution to this debate today. I plead with the Government to change the policies, forget about the manifesto if need be, get the right policies, abandon the outrageous foolishness of the manifesto and go back to the more responsible and statesman-like approach of the National Coalition programme.
I do not wish to detain the House much longer. I just want to recall that this whole question, this whole debate and the next and future debates are to do with unemployment and employment. It is the central, most pressing economic problem facing us as a country and the EEC as a Community. Economic growth is being sought not just for the sake of economic growth but to provide the extra worthwhile jobs that are so badly needed here and elsewhere. That is what economic growth is about. Every other aspect of the EEC economy proposals either monetary or economic are to do with generating growth controlling inflation and achieving monetary stability so that the climate will be better for employment prospects. Inflation, industrial relations, trade, imports and exports, competitiveness, are all connected with this question. Under every single one of those headings the Government's policies have not only been wrong but monstrously so.
When this debate was announced, like many other people particularly Members of this House, I was glad that the Taoiseach said that it would be a preliminary debate, that further information would be available and when that was available another debate would take place. I got the impression, as so many other people did, that this was something which had not gone very far and we were going to be in on the ground floor of the debate, that ideas would be tossed around in this House and before an official decision was taken we would be able to get far more information about what exactly was going to happen. In fact when the Taoiseach spoke two days ago in this House he said:
The purpose of this debate is to discuss the conclusions and to afford the House an opportunity of considering and expressing views on the proposals put forward there for a European Monetary System.
He was talking about Bremen. He said:
A fair amount of work has been done on these proposals but this work is as yet incomplete. It is, therefore, not possible to come to firm decisions.
The Taoiseach went on to say that he would discuss them in general terms and the Ministers mainly responsible would have more information and be able to give the House a better idea of what was happening and he hoped that the contributions made by Deputies would be helpful. I hope mine will be helpful. I was amazed to find that almost immediately afterwards the Minister for Finance came in and in concluding his speech said:
Many of the details of the system have not yet been settled. So far the discussion have been mainly carried out in expert Committees—the Committee of Central Bank Governors and the Monetary Committee—and there has been little real negotiation at political level.
Then he makes the astonishing statement:
But from the few meetings of Finance Ministers that have been held I have carried away the firm impression that the system will be brought into operation next year.
The Minister goes on to say:
A further meeting of the Finance Council is to be held on 20 November and it will then report to the European Council. The European Council has undertaken to take decisions and to make commitments on the system at its meeting in Brussels on 4/5 December.
It is rather a pity that somebody did not tell the Taoiseach this because apparently he was under the impression that things were entirely different. He was under the impression that before any final decision was taken that this House would get an opportunity of discussing the matter very fully. But it appears from what he said that the work is incomplete and that it is not possible to come to firm decisions. The Minister does not agree and feels that decisions will be taken. In fact some decisions have been taken.
So far in the House—and I have gone to a good deal of trouble to listen to and read up what has been said from the Government side—there has apparently been no effort made by any Government spokesman to try to answer the number of very relevant questions which were put from this side of the House earlier on. Of course we do not expect the Government to have a crystal ball. We do not expect the Government to know exactly what is going to happen. For instance, we do not expect the Government to be able to say with any degree of certainty whether or not Britain is going to join the EMS but the very least we could expect is that somebody would be able to venture an opinion on whether they would or not and if Britain goes in, how certain things will turn out and, if Britain does not go in, what the likely result will be. Apparently it has not been considered necessary to do this.
I do not know whether the famous majority of 20 has anything to do with this. To be fair to the Ministers I have only heard one Minister crowing about this but some of the backbenchers of Fianna Fáil, particularly down the country at county council meetings have a habit of saying "It does not matter what you think about it. This is what Fianna Fáil are going to do". At the back of their minds is the idea that it does not really matter what is said in this House or it does not really matter what we know because apart from what the experts have to say outside unless Government Ministers and the Government in general comes clean about it we will not know what actually is happening until it has happened.
Therefore I am surprised and disappointed that the Government have not made a greater effort to bring us into their confidence and to let us know what exactly will be the result if a decision is taken and particularly what will be the result of Britain coming in or staying out. There was also the question of this famous £650 million. I am amazed to find that nobody seems to be able to say where this figure came from. Perhaps the Minister or whoever is replying to the debate might let us know where exactly that figure came from. Did they snap their fingers in the air and decide on that figure? If they did not do that, will the Minister tell us how they arrived at the figure? I am sorry to have to ask the Minister for Economic Planning and Development for an answer to that question. He is an economist and is good at his job but he has been known to make some terrible predictions. It will be very little use to us in a year's time if he should come along to this House and tell us that he is sorry that things are not going to turn out as he expected and that he does not know the reason.
I do not expect anybody to have a crystal ball. I do not expect the Government to be able to state the position exactly but I expect them to be able to say why they have chosen a certain figure. I expect them to tell us how that figure was arrived at and to explain why they consider it is adequate. I do not expect the Government to act as though they were in a trade union bargaining situation, where they ask for a certain amount but will accept less. From my own experience years ago I discovered that to let that information be known to the other people engaged in negotiations meant that one would get a lesser amount.
I do not know nearly as much about the matter as the Government but I think the amount mentioned is entirely inadequate. However, I could be convinced if the Government speakers could let us know with some degree of certainty how the figure was reached. I should like them to tell us what will be the general result if that amount is given. I should also like to know what are the hopes of getting the amount mentioned or any amount.
The Minister must be aware that so far there is no mechanism by which this can be arranged. It just cannot be done. There has been a considerable amount of generalisation. If a person wants to sell something he shows the best side of the bargain to the potential buyer. I know that the Germans, the main backers of the EMS with the French, would like to give the impression that everything can be done but that we should leave plenty of loose ends so that different interpretations can be given later. We cannot afford to make a mistake on this matter. We must know exactly what will happen. The Taoiseach said "This work is yet incomplete. It is not possible to come to firm decisions" and the Minister for Finance told us that there has been little real negotiations at political level. How can the Government come to this House with the suggestion of what is the right thing to do when it is quite obvious that they do not know whether or not it is right that we should enter the EMS?
I know it is easy to wave away comments like this and to say that we will have another debate, but if my guess is correct whatever arrangements are being made will be neatly tied up in a package and we will not be able to get out of them by the time the second debate takes place. If that is so, it is increasingly obvious that we must get the information that all of us have been asking for in this House.
We know that, if Britain does not enter, the effect on industry here could be catastrophic. I was very impressed with some of the work carried out on behalf of the farmers by the chief economist of the IFA, Mr. Lorcan Blake. I was impressed by the arguments set out in the paper he presented at the seminar in Dublin on 13 October on the EMS and the sterling link. He has scotched the idea that it would spell ruin for the farmers if the British did not enter the EMS. He pointed out the fact, of which so many people do not seem to be aware, that the compensatory arrangements already in operation would mean that it would not matter so much. I cannot understand why we have not received similar information or comments from the industrial side.
I am only a layman in this matter but I have had a certain amount of experience in this House and I cannot understand why it does not seem possible to estimate what will be the effects on industry. It is my personal opinion that, if we enter the EMS and Britain does not, the effects will be very bad. I realise there are a lot of political kudos in the old thing of "having a bash at the old enemy", of saying that at last we are breaking the link with sterling. I am quite sure Fianna Fáil would be able to get a considerable number of people returning to them from the more extreme organisations simply because they felt that something was being done, but that is of little use to the man or woman who will lose their job as a result of an illconsidered decision that is taken because nobody has gone to the trouble of finding out what exactly will happen.
I said earlier I do not expect the Government to have a crystal ball that will tell them everything that will happen in the future about this matter, but I think that the alternatives, if Britain enters or does not enter, should be easily ascertainable. For that reason I think that before this debate took place a document should have been produced that put down in black and white what would be the effects. The Government have a majority of more than 20 in this House but responsibility rests with the House for giving an opinion on what is proposed. Responsibility also rests on the House to advise the Government as to whether what they are doing is right or wrong. I do not want to be taken by anybody as saying that the Labour Party are opposed to the idea of entry. That would not be correct, but we are entitled to the relevant information. I am demanding, as did other Members of my party and Members of Fine Gael, that we be given sufficient information to make up our minds. If the Government do not know—and it is my opinion that they do not know because they have not enough information—I think it was wrong for them to go as far as they have gone without getting that information.
It is very easy to be critical. Members of the Government are past experts at criticising in this House, whether it is justified or not. All of us do it but party politics should not be played on this issue. I am not saying here that we are opposed to the EMS just because the Government are in favour of it. However, my party consider that if a mistake is made now that mistake can have terrible effects on this country in years to come. Therefore, it is only right and just that we should be told much more than we have been told. The only reason I can see for not telling us is that the Government do not know.
There is another aspect which I do not want to go into too deeply. What will happen if Britain stays out and as a result Northern Ireland stays out? Does it not immediately create a further barrier and not, as a foolish Fianna Fáil back-bencher said, strengthen the position vis-à-vis the Border? It would leave another very strong barrier whereby the people in the North could claim that this was proof they were English and we were Irish.
My colleague, Deputy Mitchell, referred to the punt as opposed to the £. That is a handy way of differentiating between the two, but the British £ is recognised here as it is in London. We are talking about the £ and the effect of the change which may occur if Britain stays out of the EMS and we go into it.
Again, I want to make it clear that we are not opposed to the idea of a scheme for monetary stability in Europe. All of us from time to time have felt that some type of monetary stability would be grand to have. It would be nice if we knew that next week, next year and so on our money was going to be the same in relation to that of other countries. A ridiculous situation has been allowed to continue whereby people, particularly those who have worked hard all their lives and are reaching retiring age, may feel that they have enough to keep them in comfort and then find that that is not so. What they have is not worth as much as they thought it would be and instead of living in comfort they are living in penury. We would not be opposed to the idea of a scheme for monetary stability in Europe if the scheme is conceived in such a way that it will facilitate the medium and long-term growth of European economies.
We would not in principle be opposed to the scheme if, unlike Community arrangements so far, it was backed by transfers of capital resources designed to make a major impact on our unemployment problem and if there is sufficient flexibility within the new scheme to protect national economic and social objectives. This House and the Government know that, far from the bonanza which we were supposed to be getting by way of social assistance when we joined the EEC, we seem to be getting even less than we were. There is no use in anybody, particularly members of the Government who have the responsibility, trying to say "It is all right, within the EEC we are partners, we are the same as the other eight and they will see us right". They will not do any such thing. As with every other bloc, when the opportunity arises it is dog eat dog and the little dog is the fellow who gets eaten up because the big dogs will take their share of him. It is evident that, despite efforts of successive Ministers in Government to try to get our share, the EEC big guns have taken every opportunity to try to get more than their share and to do things which they would resent if done by a small country like Ireland.
Do not let anyone try to cod us that we have not an unemployment problem. Even the Minister for Economic Planning and Development is now aware that we have, after a year of Fianna Fáil rule. We cannot just get all the unemployed to emigrate. If that was done it might achieve what the Taoiseach wants, the elimination of the dole queues. Maybe that is what Fianna Fáil have in mind. If they have not, then they must ensure that the money which will come to this country will be a lot more than they are looking for.
The Government must put down in black and white how they propose to spend the £650 million, what exactly they intend to use it for and how they assess £650 million as being the correct amount. Is it just a figure taken out of the air? Perhaps somebody said that £650 million is a lot of money, nearly as much as the £850 million which they had to borrow this year. The £850 million has been of very little use to the Government this year and the £650 million is entirely inadequate. I am not an expert; I am using my own experience as a politician to estimate what the amount should be. Not alone will it not solve the unemployment problem but we could have a far worse unemployment problem. If the people cannot get employment and if the social welfare amounts which they get are not going to be kept in line, we are going to end up perhaps with real hunger in the country.
The decision to go into the EEC was backed by a massive vote here. In my opinion, it was taken far too quickly. The questions of what we should get before we went in and what the opposition was were badly handled. How would the people of the country vote now if they got a similar opportunity? The Government at the time said that we had to do this, that Britain were going in and if we did not go in we would be in a bad position and so forth. Those were the arguments used.
It now appears that Britain may not go into the EMS. That does not seem to have the influence on the Government's decision that it could have. I have not any greater love for Britain than has any member of Fianna Fáil. I know what the British stand for and that from time to time they are doing well or doing badly, but they are our customer and they have taken about 46 per cent of the produce of Ireland. As long as that is the case we must take cognisance of what they do. It is nonsense for somebody to try to wave a tricolour and claim to be doing the patriotic thing, saying that we do not care what Britain does and we are not tied to the £ sterling. We may get a few cheers from people who say "This is wonderful; at last we are going to get away from them and our punt and their £ will be entirely different". That will be of very little use when the unemployment problem will grow. We could find ourselves in the position of being unable to compete at all, particularly if our punt were to go up, while we import produce from Britain.
A Leas-Cheann Comhairle, I am aware that you are trying to be fair and I do not want to take advantage of you, but I point out that even at present imports of British goods which can be produced here constitute a national scandal. I do not blame the Government entirely for this. I blame the people who import these goods. In a sizeable country town I went to five drapers' shops before I could buy an Irish-made shirt. That is a shame in a country where so many in that industry are unemployed. The same applies to shoes.
That is all an aside.
I pointed that out to you, Sir, before I started making it.
That does not put it in order.
I succeeded in getting it in though, by doing that. If we go in without Britain imports are bound to increase. There are still people who will buy foreign goods and particularly British goods, and will continue to buy simply because the goods are a little cheaper, even though members of their families may find themselves out of jobs as a result. We are not giving the attention to this matter which should be given to it. I feel the Government rushed in to the House to have a debate on this matter without putting anything very important or very definite before the House. I am long enough in politics to know that there are times when it is opportune to have debates on certain things and it is not every day that one gets the election of a Pope coming up in a week in which something which is likely to get a fair bit of contentious publicity is to be debated. I will not blame the Government for using the opportunity to try to get it crowded off the pages and to have nobody except those who take the trouble to come into this House know anything about it.
We should leave the Pope out of this debate.
No, this is a very definite part of my speech because I believe it is true that the Government did not have the details which I would expect them to have before bringing this into the House. I remember commenting to one of my colleagues many years ago, when the Minister for Health, who has just entered the House, was Minister for Finance that, whether I agreed or disagreed with him, if he was asked for facts on a question of finance—at that time I had the honour to be spokesman for my party on finance—he had the answer at the tip of his fingers. I suggest he would not bring before the House the type of thing we are debating because, being an expert on it, he would feel that his job was to be able to answer all the questions. So far, we have got no answers. I do not know what the reply will be like but I imagine we will have more muffling of the problem, a lot of reference to the fact that it is the first of two debates and when the second debate comes along it will give a lot more information than we have now. The decisions will be taken by that time and then there will be nothing that the House or even the Government, if the error of their ways is pointed out to them, can do about having the matter rectified.
This can be a matter of major importance or one of very little importance. If the Government are serious about having a discussion on it and giving an opportunity to Members of the House to debate it I believe the onus is on them to produce in detail what is likely to happen. I referred earlier to the extraordinary difference between what the Taoiseach and the Minister for Finance had to say. The Taoiseach is very definite when he says:
It is, therefore, not possible to come to firm decisions.
He said that while a fair amount of work had been done the work had not yet been completed. I would not quarrel with that. He also said, which is the really important thing:
I will discuss them in general terms and the Ministers mainly responsible will go into more detail, particularly on progress so far.
What way did the Minister for Finance go into detail? After waffling for quite a bit he eventually came out with a gem:
... there has been little real negotiation at political level. But from the few meetings of Finance Ministers that have been held I have carried away the firm impression that the system will be brought into operation next year.
The Minister for Finance had been attending the meetings. It is rather a pity he did not give this information to the Taoiseach because he could then have said that whether we like it or not, no matter what discussions have taken place, the decision is that it will be put into operation next year and we will have very little say in it. It is too bad if my interpretation is the correct one. I cannot give any other interpretation to it because of what the Minister then said:
A further meeting of the Finance Council is to be held on 20 November and it will then report to the European Council. The European Council will undertake to take decisions and make commitments on the system at their meeting in Brussels on 4-5 December.
The Taoiseach in his speech and the Minister for Finance earlier in his speech admitted that neither of them know exactly what is happening but the Minister now says that decisions will be taken pretty quickly and that it will come into operation next year.
I got the impression from the Taoiseach that he felt that this was something which would be discussed over several months. The Minister for Finance was pretty definite. If he is correct in his assumption that the discussions will take place on 4 and 5 December and decisions will be taken by the European Council and commitments on the system made, then I feel that he is correct in saying that it will come into operation next year.
When I listened to what the Taoiseach and the Minister for Finance had to say and I went through all the documentation I felt that this was perhaps the old Fianna Fáil arrogance of: "we are doing it, it does not matter to anybody else but we have made our decision." I went through the details given and it has now become clearer to me that they are saying: "We do not know what will happen or how it will happen, but it will happen." That is pathetic coming from the Government.
They are saying the very same thing with regard to the £650 million. If they came into the House and, as they are so good at doing, produced a shopping basket and said: "This is how we are going to spend it, this is what we require the money for, and this is how we estimate the amount", then we would all have to say they are at least doing their job. This is not what has happened. They are simply saying to us that is what they think we may get. We are not in government and we cannot be sure of the figures but at least we are satisfied that the £650 million compensation they are talking about appears to be entirely inadequate.