Financial Resolutions 1979. - Financial Resolution No. 8: General (Resumed).

Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Economic Planning and Development).

In my introductory remarks on the budget speech I said that this was a good budget. Contrary to what the Coalition have been saying it was a good budget for families, for children and above all for young people. If you tease your way through the budget and separate the various sectors you will find that this budget has a lot for young people, particularly those who are seeking jobs or who are currently unemployed.

Our economy is in good order. Our inflation rate has been brought down to 7.6 per cent, our growth rate has been brought up to 7 per cent and our exports and job creation are at record levels. In that sense, the economy is in good hands and is progressing well. The targets of reducing borrowing to 10½ per cent and reducing inflation by the end of the year to 5 per cent and increasing jobs by 25 per cent are phase two in the economic development programme and are a major task for all of us. Broadly speaking these targets are to be achieved by moderate income increases, low levels of inflation and a better tax and social allowance situation for all people.

The jobs and wages targets are reasonable and one might say they constitute an ambitious package. The first part of the package I would like to look at is the social part. I welcome the general increase across the board of 12 per cent for unemployment, disability, maternity and short-term welfare. On the other hand, we have received a 16 per cent increase for long-term welfare such as old age pensioners and widows. Everyone in the House will welcome such a contribution, and although I would like to see these increases at an even higher level, we must recognise that, in the context of our economic circumstances, these are fairly substantial increases in this year.

There has been a lot of comment on children's allowances. There is an overall increase in expenditure of 28 per cent on this, which is considerable. For the first child this works out at an increase from £2.30 to £3.50 per month, or a 52 per cent increase. For the second child it is £4.10 to £5.50 or a 34 per cent increase. For the third child it is £4.85 to £5.50, a 14 per cent increase. Taking a family with five children the overall effect is a 22 per cent increase. A mother with three children will receive an extra £3.25 per month or a 29 per cent increase. A mother with five children will receive £4.55 per month or a 22 per cent increase.

I listened to some Opposition speakers and their comments in relation to the budget. I was surprised at the views of the Leader of the Opposition, Deputy Garret FitzGerald. He regarded the increases in children's allowances as poor and he did not consider the budget to be a family type one. I compared this budget with the January 1977 budget of the Coalition. I found that children's allowances were increased by the Coalition Government in their last budget by 50p per month for all but the first child. The first child was included in that increase. In comparing the first, second and third child in that budget with this budget I found that the present budget increases the first child by £1.20 versus no increase in the last Coalition budget. The second child gets an extra £1.40 as against 50p in the last Coalition budget. The third and subsequent child gets an extra 65p as against 50p in the Coalition budget. Taking it overall, the mother with three children receives £3.25 from the Minister for Finance in this budget as against £1 in the Coalition budget. The Minister for Finance has given substantial increases.

We have our own views as to how things might be done, but it is only fair to recognise that the increases are substantial. It is hypocritical and somewhat tongue in cheek for people who gave small increases in the last budget to claim that these increases are small. In effect, taking the first three children the increase is 3.25 times that given in the last Coalition budget.

I looked a little further to see what the differences were in tax-free allowances. I found that for a single person in the last Coalition budget in 1977 there was an increased allowance of £45 bringing the total to £665. In this budget the Minister has given an increased allowance of £250 for a single person bringing it to £1,115 or close on double the figure which the Coalition introduced at that time. It must be recognised that there have been very substantial increases in tax allowances. One would think from reading the press and statements of various Opposition politicians that the increases given were not of a sufficient magnitude.

The last Coalition budget gave £90 extra tax-free allowance to married couples bringing the total to £1,100 whereas in this budget the increase was £500 for married couples bringing the total to £2,230 which is slightly more than double the figure which existed in the last Coalition budget. In the last budget £50 was given to a single person, widow or single parent bringing the total to £735 whereas in this budget, not only has the Minister for Finance given £250, bringing it to £1,185, he has introduced a novel extra £250 bringing the total to £1,435 tax free allowance. Against this comparison I find it very hard to take the comments which have been made by the principal Opposition speakers up to this stage. It would be more constructive in everybody's interest to admit honestly that Fianna Fáil in their first two budgets have given very substantial increases in tax-free allowances.

Except for children.

I will come to that point. They have increased the tax-free allowances very substantially and in so far as would be possible in that time they have fulfilled the promises given. In addition, inflation has been kept down to 7.6 per cent which means in effect that the allowances and the benefits are worth something in real terms and are not whittled away by inflation as soon as you have them in your pocket. I welcome those substantial increases. I personally favoured higher increases in the 12 to 18 age group for children's allowances and I hope that at some stage in the future the Minister will consider that proposal further.

In relation to Deputy Horgan's interjection, I was speaking about the mother in that case. I turn now to her husband, because the child allowance generally affects the husband at this stage. That represents minus £22 and that has a varying effect depending on the tax position. It is a complicated thing to discuss in a short few moments, but the basic principle of giving the greater increase to the lower income people will be agreed to by most fair-minded and reasonable people. I accept that as a measure. I welcome also the measures for the one-parent families in respect of whom there is another special increase of £250 in the tax-free allowances, and this will be very valuable for widows, deserted wives, unmarried mothers and separated parents.

Another measure relates to the increased allowance in respect of interest on house mortgages. Any increase in this area is welcome, and this is a definite attempt to keep in touch with the change in house costs.

Turning to the tax package, the £500 increase is an advantage to families. A man earning the average industrial wage and with two children can now earn £2,750 or with three children, £3,000 before he is liable for tax. This represents the equivalent of a 4 per cent wage increase.

I have said that I consider this budget to be an important one for youth. I will refer briefly to a few of the points which come to my attention in relation to the Minister's speech. For instance, we have a work experience programme for which there is an extra £1.8 million, bringing a total of £3 million and providing 6,000 places. There is a temporary scheme for youth employment in community work operated by the Department of Education. Development officers are to be appointed. The AnCO training programme has been tremendously increased, providing total AnCO places of 6,370. There is the temporary hire agency which could also play an important part for young people seeking jobs. There is provision for further employment creation of £3.2 million for the creation of the equivalent of 1,000 temporary posts. There is thus a total of £20 million which will be spent mainly on young people in special job creation.

There are commitments in this budget to improvements in the tax system. There has been a sense of grievance felt by PAYE taxpayers about inequity in the system, and a number of measures have been taken in this regard. There is a commitment to provide 25,000 more jobs which will mean 25,000 more people paying tax in the first instance. There is a commitment to people on higher incomes paying more tax and an extra 6,000 farmers will be brought into the tax net. In addition to this there is the agricultural levy which at 2 per cent is expected to bring in £16 million during 1979. There has been a considerable amount of comment on this already in the media and elsewhere, and in this case a number of possible anomalies are raised which have to be discussed and sorted out in a rational way, but the principle remains that the volume of money must be collected from the farming community. The Minister for Finance has a duty to all of the people to collect this money and in that he has been quite forthright. He has also said that he is quite prepared to discuss in a rational and reasonable way any anomalies or hardships that may arise, and I am sure that representations will be made to ensure that any anomalies are dealt with effectively.

The PAYE taxpayers are concerned about the self-employed and there has been a certain amount of grievance in this regard. The Minister for Finance has made a commitment to additional staff in an attempt to cover this more effectively. He has powers which can be used in legal proceedings but which have not generally been used. I know he is going to consider this seriously, but I would hope that this facility would not be over-used. There should be a speeding up of the agreement of accounts of self-employed people. There is too much delay in finally agreeing accounts. I understand that there is a considerable volume of money in bank accounts awaiting final agreement and settlement. I hope that the additional staff who will be provided will enable the Revenue Commissioners to clear up these accounts and get on to chasing people who are evading tax. There should be a register of accountants approved by the Department of Finance and the list should be published in the public interest. The public should know whether accountants are reliable. I believe that the vast majority of them are, and in the kind of society that we have I would prefer a situation where they take the onus and carry out the task and the Revenue Commissioners are involved only in checking and from time to time sample checking. In this way the system could be much more efficient and the backlog of accounts of increasing numbers of people, including the farmers who are coming into the accounting system, could be cleared. People are sometimes suspicious of accountants, and it has been said that an accountant can make a story whichever way you like it. I do not believe that. There may be accountants who would do this but it is not generally the case, and that should be recognised by the Revenue Commissioners in their dealing with accountants. If we are to set about duplicating this work nationally we will lose a great deal, and obviously it will take a whole ocean of Revenue Commissioners to duplicate the work of the accountants. I would like to see more efficiency and effectiveness in this regard.

On the question of doctors, dentists, consultants and such categories on whom there has been a good deal of comment recently, I may be naïve about this but I believe that most of these people, even for peace of mind apart from anything else, put forward their accounts fairly honestly. It could be valuable to publish a list of the top 20 or 50 different professional groups, not naming the people concerned but publishing the kinds of tax paid in the areas so that people would realise the volume of tax which is paid. Quite a few of these people pay substantial amounts of tax. These figures and facts are available to the Revenue Commissioners and we are not really aware of the details of them.

In the controversy which has been going on recently, there is considerable confusion about the statistics which are involved in the collection of taxes generally. The latest report of the Revenue Commissioners which was available in 1976 shows that 614,277 PAYE people were actually paying tax. In income tax in general, which would include all income tax, 110,000 did not qualify to pay because of low incomes; 289,000 on incomes below £1,500 paid 5.54 per cent of tax under PAYE. In other words about 35 per cent of the PAYE people paid 5.5 per cent of the PAYE tax, so there are variations within PAYE as well as within other areas. If we look at that as tax per head, we find that of the 614,000 PAYE earners the tax paid per head in that year was an average of £372. If we take those who are earning under £1,500, the 289,000 we find that their average was £43 per head but if we go on up to the remainder who pay the bulk of the tax the 325,277 paid £663 per head. These figures relate to 1976 which is the latest report available. In contrast to that, the self-employed which at that stage numbered 344,202 paid £1,257,000 and the unearned incomes group of 14,376 paid £876. The very low number of unearned income people is striking and it reflects the fact that not many people own shares and other means of having unearned income. People are inclined to talk about this at times as if there were vast numbers of people with unearned incomes. Unfortunately, that is not the case.

On the budget in general, I have noticed that the small savings for the year 1978 increased to a record £65 million, and I also note that the State currently lends £660 million to farmers in business enterprises but that they lend nothing to low income but trustworthy individuals who are often in the clutches of hire purchase companies or money lenders. We could do with another device to deal with that situation. We need a small man's bank, or a division of the banks which would cater for the short-term needs of small individuals which would operate within the local communities. In my day-to-day experiences I see a great number of hard-working trustworthy people who because of their positions do not come into the echelon which can get a small bank overdraft, and I am concerned about people in that situation. About £5 million should be advanced as risk money to assist people like that. The policy of commercial banks, is shown on television by advertisements showing a fairly well dressed person who obviously has a good job and good future becoming a client of the bank. That is very good and I am glad to see such people being involved and being able to get money without having to turn to hire purchase firms or money lenders but I would like to see more of the people on lower incomes, whose future is improving within the economy being able to obtain money in this way. We should look at the possibility of making a positive move in this direction.

In relation to the policy of commercial banks, one could ask, how much do they lose per year to small defaulters? The amount is negligible. They should be prepared to lose up to 2 per cent to this category because if they are not doing that they are not going after the market, they are only taking the most secure risks and consequently they are leaving a large number of people outside of their influence and leaving them depending on high interest charges elsewhere. Changes are coming and there will be a situation where a far greater number of people will be paying by cheque and will be paid by cheque. This affords an opportunity to encourage people into this way of saving and of dealing in their business. If the private commercial interests, particularly the banks are not prepared to do this, the State should encourage the trustee banks to expand in that direction and provide a small man's bank. This may not seem very important when we are talking in terms of the multi-million pounds provided for industry and agriculture. But we are talking about people on the ground, people on low incomes, people who have to face great difficulties, who still get money from money lenders at a very high price. The people in that situation have to pay the highest hire purchase rates which is a very severe depressant on their well-being and on their sharing in the increasing wealth and prosperity of the country.

In relation to economic development I am pleased to see the Government commitment to job creation. The target of 25,000 extra jobs is ambitious. I welcome the Government's direct contribution of an additional 7,170, jobs. As far as industry and agriculture are concerned we are now in phase 2. They have been given the impetus and the assistance and now it is time to deliver the goods, particularly in terms of increased job creation. Job creation is getting major backing from the State and is one of our major planks in the present economic development. However, it is important that we do not lose sight of the potential and the opportunities still existing in the semi-State sector who have a vital part to play and must not be overlooked. In relation to the IDA, for instance, I can only echo the views of other Members of the House in congratulating them on their dynamic performance and the success they have been achieving in stimulating job creation and development. As far as CTT are concerned new goods whether agricultural or industrial must be sold. We must promote the sale of new products and we must continue to give leadership and assistance to industry in this area.

There is a great deal to be done as yet. I should like to see a greater allocation of resources to CTT because they have the task of promoting exports and developing new markets. All the other work we do will be frustrated if we do not match our other efforts in the area of responsibility of CTT. I should like to see more vigorous export campaigns to match our EMS entry. EMS membership offers many possibilities for us, particularly in relation to continental markets, and I should like to see increased investment in that area. With the tremendous numbers of young people we have and the help of our educational and training facilities, I believe we can produce the goods, but we must sell these goods in highly competitive export markets.

The Buy Irish campaign is closely allied to this. It would be a great mistake to weaken in any way our efforts in this campaign. We must maintain and intensify our efforts in every possible way. Guinness and Kerrygold are major brand names and their sales campaigns do not relent at any time; neither should we relent in the Buy Irish campaign. We must keep up the pressure.

There are too many stores which do not stock a fair share of Irish goods. We talk about the farmer contributing a fair share of tax but we could also talk about stores stocking a fair share of Irish goods. I am often reminded by my constituents of stores which do not stock Irish goods. The quality of Irish goods is improving all the time. In the period after Christmas I was very glad to see a good variety of Irish goods, such as shoes, in competition with imported ones. There is certainly an improvement, but we must continue to support this development and intensify the Buy Irish campaign.

We should encourage groups within industry to mount promotional campaigns. While individual sectors may be too small to mount such campaigns themselves, by grouping together they have many common interests which could be promoted.

The semi-State sector has a major contribution to make to economic development, and I should like to see this sector being given the opportunity to make that contribution. I should welcome an immediate review of the objectives, operations and priorities of the semi-State bodies. I know that the joint committee are looking at the activities of some semi-State bodies and I have listed these in various categories. Under the financial heading there are bodies such as Irish Life, VHI, ACC, ICC and Fóir Teoranta. Then there are the energy bodies such as the ESB, Bord na Móna and An Bord Gais. There are also the manufacturing and transport bodies and some others. I have looked at their contribution to the economy in current terms.

Taking the 1977 statistics in relation to finance companies, they had a gross profit before tax of £80 million. The energy companies had a gross profit of £30 million; the manufacturing companies had a loss of £3.5 million, and the transport companies, as we may have guessed, had a deficit of £30.2 million. The other bodies had a total profit of £1.5 million. The total profit was £78.4 million. The bulk of the profit came from Irish Life and this represented £78.6 million; the profit of VHI was £.2 million; ACC £1.7 million; ICC £1.9 million and Fóir Teoranta minus £1.8 million, giving a total of £80.5 million. The ESB made a profit before tax of £29 million, while Bord na Móna had a profit of £.9 million. In the manufacturing area, CSET made a profit of £3 million; NET had a loss of £4.3 million; they were the two major components.

These are major factors in our economy, and the manufacturing sector seem to give some cause for concern. The financial companies are operating in the area in which we seem to be making most money.

Looking at the figures in relation to strikes and the number of man days lost, Aer Lingus lost 89,700 man days, NET lost 60,000, CIE 6,000, RTE 5,820 and the Department of Posts and Telegraphs 5,305. One might think that some of these bodies would have a somewhat different record and the number of man days lost might not be as high as one would expect.

Obviously energy is of great importance, and the scope of operations and the development strategy of Bord na Móna are most important. There is an opportunity for much greater development within Bord na Móna not only in regard to energy consumption but in regard to the diversification of products. I know that the Act has put a stay on the hands of the Bord from time to time. Under the Act they are in the raw materials producing business, and this stifles the initiative to some extent in diversifying into consumer-type products.

We need to decide quite clearly the role and function of semi-State bodies. I appreciate that they are limited by Act and that is one of the reasons why the responsibility falls back on this House. Many of the Acts are now out of date, for instance, the Turf Development Act of 1946, and there is an onus on the Oireachtas to review and bring up to date such Acts. I welcome the work currently being done by the joint committee.

We should consider the appointment of professional teams to review semi-State bodies and make recommendations on areas of potential development for which Acts may need to be altered. Such teams could report to select committees of the Oireachtas. I should like to see these teams comprising people with wide experience in industry. I will not mention particular industries, but we all know the companies in the manufacturing sector which score very high in practical commercial terms. It is in the practical, commercial, profit-making areas that semi-State bodies have their greatest difficulties. I should like to see mixed teams of people drawn from a wide area, including the accounting organisations, not purely accountants, but commercially-orientated business people who could sit in with top management of the semi-State bodies and review their strategies and potential for development. On this basis one could work out various practical propositions for development which could then be given the backing of any necessary changes in legislation.

While we develop our private sector, industry and agriculture, and put a great deal of our interest in investment in them, we must recognise that the semi-State bodies have a major part to play and afford them the opportunity of so doing. As I see them, the semi-State bodies are very strong on control and accountability. For instance, the Comptroller and Auditor General will keep us right on the financial side and, in the case of those semi-State bodies coming under the Companies Act, the independent audits carried out keep us right also. In that sense we are quite clear; we know that the money is there; we know on what it is being or has been spent. Of course accountability generally is becoming increasingly directed at the relevant Ministers and their Departments. That is a very desirable change. But there is little accounting for performance in the commercial sense. This has led to the establishment of the select committee of the Oireachtas to investigate the overall situation of semi-State bodies. In summary I would say that the cash has been accounted for but the commercial performance has not been evaluated in any real sense. The direction in which these semi-State bodies are headed is not clear; their potential for development has not been defined. That potential constitutes the big question mark at present. I am quite certain that people within these semi-State bodies would be very glad to indicate the potential they see and in respect of which they may feel there are some limitations on their operations. The loss potential has not been identified and there is an urgent need to give impetus to semi-State bodies in this respect. I should like to see them afforded an opportunity to explore their undeveloped potential.

In regard to the question of industrial relations the main objectives of the budget have been the ultimate creation of full employment and the immediate creation of an additional 25,000 jobs. We know that 50 per cent of our population is under 25. We know that 43 per cent of our young people are unemployed. We know also that over the next ten years we will have massive numbers of young people leaving school, looking for jobs. Thinking about that I looked up the figures to ascertain just how many children are at school in this country at present when I found the figure to be close to 900,000. This is a very significant and sobering figure for anybody wanting to run away in a selfish way, saying they are not really interested in the people coming on after them or whether or not they will have jobs. The Government are right to aim for such an ambitious target as 25,000 jobs per annum. Bearing in mind that there are almost 900,000 children at school, assuming that there will be approximately 300,000 coming on to the labour market over the next five years, that is something of the order of 60,000 coming on per annum in each of those years, we ascertain an idea of the size of the problem. It is very important that people get the whole debate on wages, industrial relations, self, country and future—and children particularly—into proper perspective. It is when one sees it in that perspective only that one realises firstly that the Government have to go for a target of 25,000 new jobs per annum. Not alone must they go for that target but they must achieve it if we are to have stability and sanity within our society in the future.

In that sense commentators like to regard the Government's job target as ambitious at 25,000 per annum. As can be seen from the figures I have quoted, even this achievement will be barely adequate compared with the needs confronting us. For the sake of these children we cannot afford to follow the British example of a self-destructive policy in industrial relations; we must work out solutions to our own industrial problems. In that respect I welcome particularly the statements by the craft unions towards the end of last week and the recent statements by the main unions in relation to future wage negotiations. These people are taking a very sensible and realistic approach. Their suggestion of a national understanding on wages constitutes a realistic approach to the problem. Within that broad consensus I hope people will have a common interest in seeking reasonable solutions to our problems.

Certainly the budget has provided the basis for such an approach. It provides stability in the £. Inflation is under control and can remain under control if we decide to keep it that way. In itself it is providing a 4 per cent real increase in incomes for a person with an average industrial wage of some £80 per week. For people on a lower wage scale it provides something more than that.

I welcome particularly the assistance being given in the social welfare category; here I am referring to the 16 per cent increase. I recognise also the benefits given to families. If these are considered in the context of the period since Fianna Fáil assumed office this time one will realise they are quite substantial. I welcome also the funds provided for job creation, growth and further wealth. If we adopt a sensible approach to industrial relations in this sense—with the lead given by the Government—then we should achieve something more like the future for which we would all hope and which is there for us in terms of wealth, growth and well-being within a just society. This calls for a response in the way of moderate and realistic wage increases. It calls also for real increases in incomes, wealth and improved productivity. Further it calls for a fairer spread of taxes of all kinds. Ultimately it will lead to a better life for all our people which we must be capable of achieving if we set our minds to it on both sides of this House.

I should like to congratulate the Minister for Finance and his colleagues on what I regard as a balanced budget, one which affords an opportunity to develop our country within another valuable and useful phase. It constitutes a good basis for growth and provides a framework for job creation and for the attainment of full employment by 1983.

I fully agree with the sentiments expressed by Deputy Woods towards the end of his speech when he said that the provisions of this budget—in the plan outlined therein— hopefully would lead to a better life for us all. That is a very laudable sentiment with which any fair-minded person must agree. However, that is one side of the coin only. To achieve that we must face reality: the fact is that we are now discussing what is a second budget of 1979. This second budget of 1979 is a strange mixture of what I would regard as fact on the one hand and illusion on the other.

One full week after the Minister has outlined the provisions and details—he spoke indeed for two hours last week—there are still many thousands of people here who are not aware of where they stand with regard to so-called benefits which accrued to them as the result of the Minister's provisions or the losses they might have incurred as a result of other provisions in this second budget in 1979. I fear that when many of them find out and when the mist clears they will be disappointed. I agree that the Minister had to face and still faces very serious problems which in many cases are of the Minister's and of his party's own making, because some 18 or 19 months ago, through a manifesto published by Fianna Fáil, they sought power which they succeeded in getting and, subsequently, found that the price paid was, and still is, much too high. So the day of reckoning has come and the problems which face the Minister and the Government and all of us, problems in areas like industrial relations, unemployment, prices, social welfare, increased demands for ever-increasing wages, are a direct result of the policy adopted by a party intent on getting power at any price. On the road to success they made promises which raised the expectations of every sector in this community to a very high level. Of course the expectations were not and could not be realised.

Prior to the introduction in the House by the Minister for Finance of this budget he went through the normal discourses and discussions with many sectors in the community, farmers, the PAYE sector and the smaller groupings to discuss with them what their approach might be in the event of the Minister taking course A, B or C and he was given certain replies. Through his negotiations he collected very valuable information. The end result of that was that the unions, through congress, asked that in order to facilitate the Government and the employers in coming to an agreement on wage increase demands they expected their slice of the cake, and the price they put on that slice of the cake was £100 million in taxation refunds. Of course they were disappointed last week when that £100 millions turned out to be something in the region of £30 million. On reflection it now transpires that those people who expected to get a certain relief in return for facilitating the other social partners, the Government and the employers, now find to their horror that not only will they not be better off but that they will now be paying roughly £4 per week in 1979 as opposed to £3 per week in 1978. We all know the result of that kind of operation, because the ever winding circle of higher prices and inflation will follow. These are some of the facts concerning that area which the Minister had to face.

In order to meet in some way the demands of the PAYE sector the Minister tried a different ploy. It would seem that he set out to penalise a different sector of the community in order to give the impression that he was giving relief to the PAYE sector. The end result of that was that both the farmers and the unions ended up dissatisfied. A reduction in the level of valuation at which tax became applicable and the increase in the multiplier to 125 were two measures which brought an ever increasing number of farmers into the tax net. In reality most people expected that this kind of adjustment would be made. Many of them no doubt felt that the adjustment might not be as severe as it turned out to be but the main bone of contention was the introduction of the 2 per cent agricultural levy. A week is a long time in politics, and we are now aware of the reaction of the farming community to this new tax, this new imposition on them. We also know the reaction of some members of the Minister's own party who felt so strongly about this issue and were so pressurised by their constituents that they decided to go public on this in the past few days. The main difficulty with this kind of across-the-board imposition is that it does not take into consideration the payees' capacity to pay this tax. This is the most unjust and unjustifiable aspect of this tax. The agricultural community, to which it specifically refers, were incensed by this because it did not relate at all to income. Income tax is normally based on income, and in the business world if one makes a profit one pays tax and if one does not make a profit one does not pay tax. Despite all these anomalies, it is a fair rule-of-thumb which was completely ignored in this new imposition.

Looking at the commodities to which this tax refers one is not left in doubt as to the result. From a certain date in 1979 the tax will apply to pigs, sheep, sugar beet, cattle going to slaughter for export. It will have one of two possible results. The producer may suffer because the purchaser will take into account the fact that he must pay the 2 per cent before the commodity or animal goes into processing, and therefore he will reduce payment to the producer by that amount or a fraction thereof. If he does not do that, the producer will pay 2 per cent, and whether it be backward or forward to the checkout in a supermarket, the housewife will pay, and the result will be further inflation. The most unjust aspect of this is that it does not take into account the ability or the capacity of the payee to pay the tax.

The up-to-date position on that tax is that having deliberated at length, the Government party have seen fit to issue a statement that the whole thing is being looked into with a view to amending it, they hope, to the satisfaction of their backbenchers and of the farming community. The statement issued at 4 o'clock this afternoon does not mean much to a politician—indeed it does not mean anything. Either way the Government are faced with cutting their losses and ensuring that they will suffer loss of face to the least possible degree. Loss of face they will suffer whether they abolish this tax or bulldoze their way and impose this penal tax on people who cannot afford to pay.

Last week the Taoiseach naturally tried to make a case for the budget provisions. He referred to food subsidies. As I stated at the outset, this is the second 1979 budget, because this year was not one hour old before we had the first budget which yielded £20 million plus to the Exchequer through the simple device of partially withdrawing food subsidies. In that way the Government went back on a promise given in the manifesto before the general election, during the campaign and since assuming office.

No later than last March the Minister for Industry, Commerce and Energy jumped down my throat when I suggested it had been rumoured that food subsidies might be withdrawn. He denied the allegation vehemently and boasted that something in the region of £67 million was being paid in subsidies at that time. Three months later the Green Paper was published and for the first time we learned of the Government's commitment to abolish food subsidies. Shortly before Christmas we had the White Paper which reiterated that commitment, and of course the real thing took place on New Year's Day with the announcement during the bank holiday weekend of the partial withdrawal of the subsidies, resulting in the price of butter going up by 8p in the pound together with increases in the price of bread and milk.

At that time it was stated that the consequential increase in the CPI would be in the region of 0.7 per cent, and the Taoiseach last week trotted out 0.7 per cent, less than ¾ of a percentage point in the CPI. Of course it means an increase in the cost of living and this has fierce relevance to thousands of our people because the CPI figures are calculated in accordance with certain criteria. Here and in Western Europe there are people who spend about 18 per cent of their total income on food. They are people in the well-developed economies, people who have high incomes. On the other end of the scale there are people who spend more than 50 per cent of their gross incomes on food. Indeed, there are many thousands of people who spend 70 or 80 per cent of their gross incomes on food.

I compliment the NPC for their limited but very informative survey on the shopping habits of people in the lower income groups, in this city, such as the unemployed and old age pensioners. The figures were astounding. The withdrawal of food subsidies of 1 per cent to the person spending up to 80 per cent of his income on food represents not an increase in cost of 0.7 per cent but an increase of between 12 and 15 per cent or maybe more in some cases in their annual food bill. That is why I say that the trotting out of this figure for accountancy purposes is all very well and I am sure it is correct but the reality is very different for those people in the lower income group. Therefore, I was amazed to hear the Taoiseach say on Thursday last that food subsidies had outlived their usefulness. I wonder what any old age pensioner receiving £13.65 per week or any old age pension couple receiving £20 per week would think of such a statement. They would take a dim view of that kind of philosophy. When talking about this budget, therefore, we are talking about the second budget of 1979.

The question of inflation has been referred to. Inflation has been reduced. According to the mid-November figure it is not at 7.8 per cent. The target outlined by the Minister is 5 per cent. It is more than likely that for the quarter ending mid-February, taking all the increases into account, the figure for inflation will be seen to be in the region of 4 per cent. This figure is based on the Government's data. Do we take it that if the target set is to be achieved, inflation during the next 11 months will be 1 per cent to give us an end-of-year figure of a 5 per cent rate? With all the optimism and with all the trust possible, I do not think that without good works this situation can be brought about. This budget will not result in an inflation rate of 5 per cent by the end of 1979.

The Minister is a man to whom I would give full marks for optimism and for trying to placate the people who know they are not getting what they are told they are getting. The figures produced by the Government would suggest strongly—hopefully I will be proved wrong on this—an inflation rate of about 10 per cent by the end of this year. I shall refer here to further provisions which were outlined for us last week in relation to children's allowances. Like everything else the increases seem to be generous but on closer scrutiny they are meagre and in addition they are biased because it would seem that there is less going to the larger families. Also, there is the infamous clawback in tax allowances.

The increases outlined are in effect about 13p per week for the first child, 17½p per week for the second child and a ½p per week for each additional child. We have heard a lot in the past few weeks about this being the year of the child. According to the Minister the ideal family would be a two-child family because for the larger family there is little or no relief in the budget.

The increases in social welfare seem also to be generous but again under close scrutiny they do not result in what I would regard as a just increase for the people involved. Many people thought in their innocence that the old age pension qualifying age would be reduced to 65. In 1973 the National Coalition set about reducing the qualifying age from 70. That was the age that had applied since the foundation of the State. By the time we were leaving office we had reduced the age to 66 but after Fianna Fáil assumed office the expectations of the many 65-year-olds were not realised because not one day was taken off the qualifying age after we left office. Although Fianna Fáil have been in Government for three-quarters of the time that this State has been founded they have not once made an attempt to take as much as a minute off the qualifying age for old age pension.

Many existing pensioners thought that the means test which applied to the non-contributory old age pension would be amended in their favour but the £6 per week means test remains despite inflation and despite the expectations raised that something would be done in this regard. These are the people who are now in receipt of increased old age pensions but whose costs are increasing way ahead of these increases. When one considers the removal of food subsidies and also that the increases in the allowances will not come into operation until April and having regard also to the fact that there will not be further increases for these people until April 1980, I could not imagine anybody venturing to say that enough is being done for those people.

I talked some time ago about the reality of these increases and the effect they have on this type of social welfare recipient. I will give one more figure in relation to the increases which have taken place since Fianna Fáil took office. In 1977 they produced what was called the National Coalition food basket and they showed graphically the increases in prices of basic food commodities which had taken place during the four-and-a-half years of National Coalition Government. After 18 months of Fianna Fáil Government, I went through the same exercise last month. I discovered to my horror that in the case of butter, bread, milk, sugar and cheese, the average increase was 31 per cent due to price increases approved by the Minister for Industry, Commerce and Energy on the one hand and, on the other, due to the partial withdrawal of food subsidies. Yet we were told prior to the budget that the provisions in the budget would take into account the increases caused by the withdrawal of these subsidies. When one considers that no further increases will take place until next April 12 months the increases enshrined in this document are grossly inadequate. There is no Minister—I do not care how good he is at figures, juggling them or otherwise—who can tell me that the increases given in the light of that increase of 31 per cent are adequate. I wonder if the Minister would consider or will commit himself to giving an interim increase in the event of a further withdrawal of food subsidies. I am not a betting man, but I would safely say that there is more likelihood of having a budget between now and the end of the this year than there is of these people getting a supplementary increase next October to take account of the vast increases taking place around us every day.

On social welfare increases, the demarcation line drawn between short-term beneficiaries and long-term recipients is, to say the least, amazing. What amazes me more is the way the Minister and other speakers from his party have tried to justify the new approach to social welfare recipients. How can anybody stand up and say that a person in receipt of unemployment assistance should not get an increase which is compatible with the cost of living and, at the same time, say that an old age pensioner should get an increase which is supposed to be compatible with the cost of living? It is blatantly discriminatory. The idea of the state of a person in receipt of unemployment assistance being short-term is laughable. The Minister and the Minister of State must know that there are people in receipt of unemployment assistance for the past two, three or four years. Yet this social welfare assistance is regarded as short-term. I am sorry it is not short-term. There are 102,000 plus people unemployed, and even with the best will in the world and with the provisions of increased employment there are many thousands of people in receipt of unemployment assistance whose payments will be anything but short-term. Yet there is this discrimination against them because, in theory, it should be short-term. In fact, it will be long-term for many of them.

It is working from a wrong premise to suggest that, because these should be short-term, the increases should not be of the order which the long-term beneficiaries would get. It is discriminating against people who are already discriminated against because of their inability to get work through the inability of the Government to provide them with it.

In this year's budget we have a hotch potch of provisions many of which are misunderstood. There are many people completely confused about what they got and what they did not get. Some of them are living in the belief, as Dickens said, that something might turn up. They will be badly disappointed when they discover that nothing will turn up.

The relief in this budget falls far short of the expectations of the community. Indeed, some measures in this budget may provoke certain sections of this community into actions which they do not want to take but many of them feel that there is no other way out, and the package of withdrawal of subsidies, the meagre relief in taxation in some cases, the giving with one hand and taking back with the other, are absolutely provocative. People are at the moment trying to negotiate a national wage agreement with their social partners only to have the carpet pulled from under them by this kind of policy. Of course, the technical issue here is that if this package fails, do not blame the Government, blame the unions.

I do not intend to get into a party political debate on the budget; that has all been well dealt with since the Minister released the details here last Wednesday. However, there should be reference to the Opposition's attitude shown in their attempt to do nothing other than criticise without offering positive alternative suggestions. It was very barren indeed. It is always very easy to be the hurler on the ditch and to issue reams of destructive criticism. It is much more difficult to produce alternatives. The Opposition this year have reached a new low in their criticism of the most comprehensive budget ever announced to this House. The budget was spelt out in great detail and backed up with a supplementary document. The Minister is to be complimented for the foresight shown in the budget and for his detailed preparation. Probably part of the Opposition's problem is that they found it a weighty and detailed document containing much information, and rather than go to the trouble of assessing it in depth they decided to go on the political attack. Does any rational person really believe that their wild accusations and negative criticisms can be anything other than political point scoring?

Before going into detail on the content of the budget it is worth while making some very brief comparisons concerning the major thrust which we intend this budget to have, that is in the creation of employment. It is worth taking a brief look at the Coalition's record in job creation. We find that in their first full year, 1973-74, in the aftermath of taking over from our party they had an increase of 10,000 new jobs. However, when they endeavoured to implement their rather hurriedly put together 14-point plan they managed in 1974-75 to have a minus of 18,000. Not alone were they unable to maintain the people at work but we had a minus figure. Unfortunately, 1975-76 was not much better, with 16,000 people losing their jobs. For 1976-77, with this party taking over Government by the end of 1977, we can report 6,000 jobs created. It has been said time and again in this House that in 1977 new jobs totalling 17,000 were created. That is very much part of the Government's plan and programme as set out prior to the general election, and our commitments were very clearly spelt out. The Opposition now like to cite a number of items in the manifesto as promises, but that was an integrated package which was put before the people and supported. In 1975 when the Coalition Government were at the height of their financial planning they managed to have the State borrowing at 16.5 per cent and also achieved a minus 18,000 in the labour force. This indicates a very muddled financial control situation which is equalled only by their comments on this budget. They have neither the capacity nor the ability to programme or plan. The former Minister for Finance last week when commenting on the budget was very critical of the fact that we have released a green paper and a Government white paper. Unfortunately, after a number of promises during his term of office it was not possible, probably because of differences of opinion within the Cabinet at that time, to produce any document, even though our spokesman in Opposition called for some form of planning.

We are now at stage 2 of the Government's programme for spending, planning and job creation. We have 61 per cent of the capital programme invested in housing, schools, hospitals and roads, and that is what the community have been calling for. That is where people see real worthwhile progress and development and that is the path this Government are going to follow. A total 69 per cent plus an extra £250 million will go into Government investment programmes this financial year, which represents a major shift in State finances. It indicates recognition of (1) the needs and (2) the job creation element. We have aligned this major shift in Government spending on a target of 25,000 new jobs in 1979. That is positively ambitious.

Last week Deputy FitzGerald cited the variation between the Central Bank's figures and the Government's figures regarding inflation and productivity in 1979, and rightly so. There is a small percentage in the difference which would be anticipated by any forward-looking financial expert. We in power should endeavour to create the employment necessary and to set down ambitious programmes. There is no point in any Government in our circumstances planning and programming for a stalemate situation. We want to see Government spending cut back to 10.5 per cent and thus get the finances of this country back into a situation where at least it will not require a tremendous amount of the annual capital programme merely to service the national debt. We want to see the State finances directed in the main towards job creation. That is what this budget is intended to do, and we will not be deflected from that path. We cannot afford to be.

It is not acceptable for certain Opposition spokesmen to decry what we have done for the less fortunate, if they do not say how they would have produced additional funds above the excellent increases we provided in the budget. We gave a 16 per cent increase to long-term social welfare recipients and that is a respectable increase to a group who have no lobbying strength, who cannot send delegations to make detailed submissions. The Government recognised that they are the less fortunate and for the first time in many years a real increase has been given to them. Short-term social welfare recipients have received a 12 per cent increase. If we can produce the 25,000 new jobs an extra 25,000 people will be contributing to the national cake instead of requesting the State to supply them with a reasonable income. The 25,000 new jobs will create a spin-off which will benefit about 75,000 people. In 1979 there will be 25,000 people bringing in extra income. In this way we will in due course alleviate poverty altogether. If Opposition spokesmen decry the percentages social welfare recipients are getting they must come up with alternative proposals in relation to the management of the economy.

From the comment of my constituents I feel that people have recognised the budget as a very comprehensive financial package which is workable even if ambitious. We must not deviate from the Government programme on job creation. Job creation affects all other aspects of Government policy and if we achieve the 1979 job target we have set ourselves, we will have put the country on the right course. One of the major factors in relation to our achieving our targets is a wage settlement. It was very heartening last Sunday to hear one of the most prominent members of the trade union movement going into detail about the options open in relation to our 1979 wage settlement. The Vice-President of the Irish Transport and General Workers Union and a member of the Congress could not agree to the percentage figure mentioned by the Government but they took a very positive and constructive line in relation to pay settlements. There was a great desire not to create a similar situation to that which prevails in the UK where unco-operative unions just do not function. We must avoid that situation at all costs. The members of the trade union movement charged with the responsibility of seeking increases for their members recognise that while we would all like to pay high percentages it is just not practical. If we allowed the percentage which some unions request, we would forego the investment for job creation. There is no point in the head of a household receiving a 10 or 15 per cent wage increase if his son or daughter cannot secure employment. That is why I would urge the trade union movement to take into account the major undercurrent of job creation in our strategy. The creation of new jobs hinges on a reasonable wage settlement and it is our duty to do all in our power to secure such a settlement. The trade unions and the people in general must accept that they are part of the Government programme and they must play their part in our three-year programme for the abolition of unemployment. We must encourage the people to accept that the abolition of unemployment is achievable, and thereby encourage the making of a reasonable wage settlement of about 4 per cent in 1979. If we do that we will be working together for the country. At the end of 1979, if the Government programme is achieved and if the co-operation of the power sectors in the Community is forthcoming, the Minister for Finance in his 1980 budget will be in a position once again to give real financial benefit to the less well off in the community.

Debate adjourned.