Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Wednesday, 2 May 1979

Vol. 313 No. 12

Finance Bill, 1979: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

I appreciate that it is difficult for the Opposition at any time to speak on a Bill of this kind because it is merely implementing the provisions outlined in the budget by the Minister for Finance. I recall listening this time last year to members of the multi-purpose front bench of the Labour Party being critical of Fianna Fáil and its attitude to employment. One Deputy asked for specific and detailed explanations as to how exactly the measures contained in the Finance Bill would be implemented so far as employment was concerned. Members of the House do not need to be told what the subsequent results of the provisions in that Bill were. We created 23,000 new jobs in 1978. We have taken people off the dole queues. We have renewed confidence in the people generally. The community at large is grateful for the amount of work and the success of the programme and targets set by the Fianna Fáil Government. It was the single largest increase in employment since the foundation of this State.

It is worth noting where the jobs were created. In the public sector the concentration was on the greatest need. The number of new posts created, mostly in the health services, was 12,500. In the last general election one of the major issues was the need to provide extra teachers and extra support for schools. The pupil teacher ratio was something that needed to be taken care of. To a large extent the Government's programme in this area has been an enormous success.

Additional jobs were created in the prison service, the Garda and the Revenue Commission. This budget has provided for 500 extra jobs in the Revenue Commission for examination of accounts and in an effort to bring to heel those people who have made a profession of avoiding paying tax.

I listened to Deputy Barry yesterday when he accused us once again of being anti-family and anti-farmer. My view is that they cannot have it both ways. If the Opposition are reduced to attempting to drive a wedge between the urban and rural communities they have the wrong end of the stick. It is reasonable to point out that we are not a nation of begrudgers but of survivors. We have come through good times and bad together as a people. We will not accept any policies based on envy or greed.

Last year the Government set a target of 5,000 new jobs in the building industry and this target was exceeded by 500. The major contribution to the Government's job creation programme for the construction sector came from the industrial, educational and hospital building projects.

Our commitment to youth has been far ahead of any of the Opposition parties. We were first to recognise the importance of youth and we gave them a special place in our movement long before Labour or Fine Gael or any other party recognised the strength and the needs of young people. On assuming office one of our first tasks was to tackle the problem of school-leavers who could not find jobs. Many parents found themselves unable to support their families as they left school. Times were difficult. The Government initiated work experience programmes and environmental improvement schemes in addition to the construction industry apprenticeship scheme and the Ballyfermot community survey. This involved almost 4,000 participants.

At the time the Opposition took office the overall level of taxation represented about 40 per cent of national income: by 1976, in their first full year in office, that figure was marginally below 46 per cent. At the outset this Government set up a plan to reduce taxation with the result that the overall tax burden is now about 41 per cent of the national income. That speaks for itself, but we have not finished. We recognise that a radical change is needed, that the PAYE sector has a legitimate grievance. In my view that grievance should not manifest itself in endangering employment prospects for those who need work and have not got it. That is one of the dangers of what we saw yesterday and before that. We must not forget those with no work, those on social welfare, the pensioners, the old people, the sick, the disabled who are all living almost on the breadline. Many of them have great difficulty in coming to terms with the position in which they find themselves. Many of the older pensioners find their existence very lonely and unhappy.

The nation cannot be managed without reasonable taxation. Fianna Fáil recognised and did not need anybody on the streets to remind them that the taxation system in some ways is inequitable particularly in regard to distribution and fair incidence of tax in sectors other than the PAYE sector. But changes cannot be made overnight: I do not think even Opposition parties would pretend that they can be. The Government are committed to radical change and have shown that they have the will and the ability to bring about such change leading to a fair distribution of wealth in the whole community.

Substantial reliefs have already been given to taxpayers over a wide spectrum covering income tax, rates, car tax and so on. This has put a great deal of money into taxpayers' pockets. Also, we provided the greatest-ever increase in personal income tax allowances in the two years we have been in office. We have increased the value of the single persons' allowance as much as 68 per cent and the married persons' allowance by 103 per cent, in effect doubling that allowance. That does not take into account acceptance of the national understanding. All that is well ahead of inflation. Fianna Fáil have never been behind in dealing with social welfare recipients, the poor, the elderly and so on. Albeit slowly, but more rapidly than any other party, we have dealt with social welfare children's allowances in the budget and introduced fully pay-related social welfare contributions. These are only two examples. In the budget the Minister for Finance provided for an average increase of 28 per cent in expenditure on social welfare children's allowances. The Minister and the Government deserve credit for that.

In passing, I may say that I spent some time recently in two of the public social welfare offices in Dublin city and I could not speak too highly of the personnel employed there in their dealings with the public. Their job is most difficult but their service, their patience and the work they do are outstanding and they deserve the highest possible praise. The management of these offices is also worthy of praise.

If all the changes I have referred to are taken into account in regard to income tax allowances, social welfare children's allowances and pay-related social welfare contributions, it is obvious that the Government are making a significant contribution to increasing the take-home pay of all employees, particularly those at the lower end of the scale, which is where the emphasis should be. For example, a married person with two children earning £60 per week will now have his net income increased by over 6 per cent before acceptance of the national understanding. A man earning £50 per week will have a net income increase of over 8 per cent, which are certainly reasonable increases.

One thing that worries me is the desperate efforts of the Opposition parties to drive home an advantage that they themselves think they have in the matter of taxation. They attempt to drive a wedge between the urban and the rural communities. They appear to be indulging in the politics of greed and of attempting to separate one section of the community from the other in an effort to gain party advantage. That is regrettable. It ill-becomes political parties to indulge in such behaviour. In my first speech to the House I indicated that I considered each Deputy here should be guided by what is for the best interest of the nation but when I hear speeches such as those we have heard from Deputy Barry and others I get the impression that these people thrive on the difficulties of the nation. However, they have a long way to go before they will be able to dance on our graves. Such an attitude on their part will not reflect well on them in the future.

The changes in taxation this year will mean that 21,000 married people and 19,000 others will be free of taxation. The rural community have indicated their willingness to pay their fair share of tax. The much more moderate approach now of the farmer representatives indicates a willingness on the part of farmers to participate in negotiations with the Government for the purpose of ensuring that a fair share of taxation is paid by farmers, that they contribute like the rest of us to the expenses of running the nation, in maintaining schools, hospitals and so on.

We hear a good deal of talk today about tax evasion. The policies of envy have entered into the area of the self-employed who are now the subjects of much criticism in regard to tax. I take this opportunity of paying tribute to the many fine people who worked hard for up to 16 hours per day on each day of the week to make a living for their families. I am thinking, for instance, of the small shopkeepers who, when times were difficult, extended credit and acted as banker, friend and adviser to many of the people who are now looking over their shoulders in envy at these business people. It is to their credit that they have expanded their businesses as a result of our improved economy. The materialistic society can be seen in terms of a disadvantage to the nation as a whole. The self-employed, too, are prepared to pay their fair share of tax.

Recently a plot of land at Monkstown was sold for a figure in excess of £1 million. It was sold to a builder who indicated his intention of building flats there. This man, according to newspaper reports, made it known that his mother had worked as a waitress in the hotel that had stood on that site. Here is an example of the son of working parents becoming successful. It is to our credit as a nation that we have people like him who are prepared, having made a lot of money, to come back to Ireland, invest here and create employment and wealth. Such people, too, pay their fair share of tax.

The year 1978 was a success. Perhaps it might have been more successful but we had an overall growth rate of about 7 per cent. This equalled our best previous performance. In addition, for the second year in succession Ireland had the fastest rate of economic growth in the EEC. Our inflation rate fell to below 8 per cent or, in other words, it was almost halved compared with the previous year. These factors were accompanied by a strong upsurge in the volume of investment which last year showed an increase of about 15 per cent. However, the most important change in 1978 and also the most satisfying was represented by our performance in the field of employment —an overall increase in employment of 17,000, allowing for redundancies and the previous figure I mentioned of 23,000. That is a fair record in one year. I do not think that any Opposition Deputy will be ungenerous enough to deny the contribution we have made in this area.

Deputy Woods dealt with the comparisons in employment between 1973 and 1978. When the Coalition were in power they felt that nothing could be done to bring about a change in employment. Things could have been better last year if we had not had strikes, particularly unofficial strikes. The Post Office and Are Lingus disputes caused disruption and cost the nation a great deal of money.

It is not in order to discuss strikes unless they can be related to the Finance Bill.

I am not complaining about anything because I am listening carefully with the intention of following the same theme if I am allowed to do so.

He is doing very well.

I hope I will be given the same latitude.

I accept the Chair's ruling in the matter. Deputy Kelly is always given latitude.

More at some times than at others.

The Deputy should deal only with related matters.

Fianna Fáil have provided jobs and tax reliefs. The provisions in the Finance Bill should help to provide more jobs, greater tax reliefs and a fairer distribution of tax. When Deputy Kelly and others speak I hope they will speak on the record. The Deputy cannot deny that there is an air of confidence in the community which has been brought about by the fiscal policies of the Government. The Minister for Finance, Deputy Colley, has been attacked for various statements which, it is said, he has made. In the history of the State we have not had a harder working, more sincere and better Minister for Finance than Deputy George Colley. Never before have we achieved such satisfactory results in such a short time.

That is an invidious comparison because the Taoiseach occupied that office on one occasion. I know it has been forgotten but he was Minister for Finance for a while.

I stand by my statement. The Minister, Deputy Colley, has given the people confidence. The feeling that had this nation on its knees two years ago has been removed by the fiscal policies of the Minister for Finance. Two years ago people were wondering when they would be given a chance to bring about changes in the Community.

The Deputy should get back to the Finance Bill.

I want to pay tribute to the Minister for Finance and to others for the work they have done over the past two years. The Government have achieved a great deal in a short time and the people will be in a position to recognise their achievements on 7 June.

After such a reasonable and temperate speech I suppose it would be ungenerous if I did not say something agreeable. Let us admit that the Minister is hard working. Let me go a bit further and say that when that Minister was in Opposition he was hard working there, too. I also think that he got nothing like a fair deal from the media during the early years of Fianna Fáil's career in Opposition, when he was carrying the weight of his party virtually singlehanded. He was universally sneered at and made little of by the press. Although he is not my kind of man—I do not especially admire him—he is hard working and does his best. Unfortunately, his best is not good enough, partly because of a peculiarly rigid, party-oriented, somewhat supercilious frame of mind which is a native to him, and partly because of the party to which he feels he has to belong.

When I find that he introduces a Finance Bill, as he did here yesterday, by reference to the Government's overall targets in relation to the creation of employment and the rescue of the economy, and when I hear that he is held up to admiration as a man who has got this country moving again at a time when there is almost nothing in the country working, I have to ask myself whether he and his colleagues, including Deputy N. Andrews, are living in the clouds.

There are some features of the Finance Bill which I warmly welcome. They are ones which I urged; and I can nearly claim to be responsible for one of them, one which does not attract much notice. I raised it here a couple of times during Question Time, and the Minister showed a sympathetic interest to which he has now given expression in this Bill. I made the suggestion that the premiums on permanent sickness and accident policies should be deductible for tax purposes. The Minister has now done that, and I think it is an admirable change. The claim for such premiums to be tax deductible is as strong, if not stronger, than the claim for the tax deductibility of VHI premiums.

In addition, I must recognise, as I think everyone on this side does, that the introduction of reliefs for residence-related work is welcome. I do not claim to have been alone in urging this relief, but I have urged it for a couple of years, particularly in the context of energy conservation. I have said repeatedly that the work of insulating old houses which are very wasteful of energy would not only show benefit in our balance of payments and energy conservation but would also give considerable employment. I hope this measure which the Minister has announced will be adequately publicised and that the small building, decorating or renovating firm which might be given an opening here will be encouraged to go out and look for this work and put money into advertising this facility so that householders will take advantage of this opportunity.

I welcome the inclusion of garden work in this concession although I had not thought of it myself and hope this is not too trivial a matter to mention at the beginning of a speech on the Finance Bill. When do-it-yourself shops and garden centres are flourishing as they are in every suburb, there must be an opening for enterprising small firms, which could easily be run by very young people, even school leavers, to take up contract gardening on a small scale, advertising themselves by reference to the relief which the householder will now enjoy. If I understand the Bill correctly, it means that up to £450 can be claimed in a year in regard to this relief. Someone in the highest band of taxation could be approached on the basis that it would cost him only £200 approximately for this work. A great deal of outdoor work could be done for that amount of money. If this concession were properly advertised, I have no doubt that it would lead to a very visible improvement in the standard of visual amenities in our cities and surburbs and elsewhere.

The policy of the State in regard to advertising benefits seems to be obscure. A benefit not just to the individual but to the whole economy, such as I recognise this to be, ought to be properly advertised. Money should be spent on it and I will come back to that point later in a different context. One must contrast the somewhat neglectful and sloppy approach of the State in telling people about the sums available to them with the enormous sums of money pumped into advertising campaigns, in some cases of a shaming absurdity and futility, such as the unspeakable campaign to persuade us that a few scraps of kitchen Irish—that is all they are—are part of what we are. They may very well be part of what Fianna Fáil are with the self-satisfaction induced by being able to speak three or four words of Irish that everybody's granny knew, even though she knew nothing else. About 95 per cent of people in this country have spent long years learning Irish at school and we are asked to pat ourselves on the back and regard ourselves as something special if we understand three or four phrases in regard to which hundreds of thousands of pounds are being spent. This is a shaming campaign.

The Deputy is departing from the Bill.

I agree, but I want to draw a contrast between the brazen absurdity of this campaign, which is only at home in the leprechaun mentality which the party opposite have displayed since the day they were founded, and the possibilities in a modest improvement which has been introduced by the hero of Deputy Andrews. Let us see some money being put into that; I will not begrudge it. However, I very much begrudge the hundreds of thousands of pounds being spent to persuade me that it is part of what I am if I am able to say "la breá" and "An mbeidh cupán tae agat?" Having spent 12 years at school learning this language, just as Deputy Andrews did, I am supposed to think more of myself if I speak a few phrases which are less than my granny knew.

The Deputy is going into detail on the matter.

I am sorry. These things get under my skin and they should get under your skin as well. With respect, you should throw up as well when you see that kind of advertising being conducted at public expense. It is a shame and a disgrace.

The Chair may not take part in debates.

You are a highly regarded Member of this House in your own right, even though you are sitting in the Chair, and since I address my remarks through you, allow me to draw you into the web of my own rhetoric in this matter. I appeal to you to ask yourself whether you have stomach for that advertising campaign. I do not believe you have.

The burden of what Deputy Andrews said was rational and temperate enough and I do not find fault with most of it. In relating the Finance Bill to the over-all approach of the Government towards their professed targets and towards the desire of the Government to secure full employment, he is not standing back and looking sufficiently closely at what is being done in his name. The Government are having difficulty even in finding new words to describe agreements. They have tried the words "contract", "compact", "harmony", and "concord" and now we have a "national understanding" in the vain hope that this will suppress everybody's cupidity and everybody's anxiety to get as much as they can. The Government feel that this "understanding" will defuse this cupidity or relegate it to a neutral area. That will not happen.

If there has been up to this point a reasonable degree of peacefulness and reasonableness in industrial relations and a willingness to settle for, perhaps, a good deal less than one originally set out to seek, it is because until lately the feelings of greed and cupidity, so roundly castigated by Deputy Andrews, were not triumphant. They were suspended like a chemical element in a solution in which ordinary Christian charity and neighbourliness played a part, but in which a part was also played by a kind of muddled conviction that the Government, even though one might not have actually voted for it, were in a kind of way doing their best to play fair with all sides.

That kind of muddled conviction was part of the elements which kept the cupidity and greed suspended. But, if I am making chemical sense, those feelings of greed and capidity have now been precipitated into a thick and bloody-minded sludge at the bottom the metaphorical container I am talking about. The agent which has precipitated them is the realisation that we are now being ruled by a Government who have not made a fair effort to maintain fairness between all sides and to show responsibility, even at the cost of popularity and votes, in distributing benefits and imposing burdens. Visibly they have not made that effort. They created a mood during the election campaign and immediately afterwards which guaranteed, as the present Opposition said it would, an absolute intransigence on the part of the very sectors now being ticked off so roundly by Deputy Andrews. One cannot tell an industrial worker to moderate his wage demands when all he has to do is look around and see, as The Irish Times said yesterday, the people with tans in the middle of the winter. I will not multiply these examples.

I agree with the objects the Minister mentioned here yesterday, and which have come through again in the national understanding in regard to wage moderation. I agree we have to have moderation in wages. Otherwise we will price ourselves out of this and that. Otherwise, so far as the public sector are concerned, we will impose a burden on the State's back which will break it. But I have not got the heart to say that to a man on £60 or £70 a week. How can I say it to him when he knows that three-quarters of capital gains tax has been remitted and that the wealth tax has gone?

I see now there is something called a resource tax. Now that we are talking about Irish being part of what we are it may interest the House to know there is only one Irish word for both "resource" and "wealth". It is "maoin". In our native language, as that advertising agency would have us believe, the resource tax would come out pretty well as a wealth tax, as a tax on wealth or property. When that man sees these things being done, what are we to expect him to do? What reaction is he expected to have to the Taoiseach bleating that we must all pull together, that we must all co-operate, and that we cannot expect the Government to do everything? Before the election, of course, it was a different story. What is his reaction supposed to be to that?

He comes home every week with his wage slip from which several pounds are missing out of the total sum he has earned. No matter what he earns, assuming he does not cheat, he will be paying tax. I have a lot of sympathy with the farmers, at least in regard to the levy, but many farmers have gone through their lives and never had the experience of seeing so much as a red halfpenny chiselled off a £ note. For the industrial worker on £70 or £80 a week it is a weekly experience. What is the use in talking to him about moderation?

There is no use in denying that a Coalition Government in which one party can lose one or two seats and the other party can lose 12 seats have forfeited a great deal of their popularity. I am not complaining about that. They may have made some of their own mistakes for which they can be justly blamed. We did make mistakes. But one of the things which forfeited popularity for us was the firmness with which we maintained a certain course in regard to running the economy at a time of desperate difficulty. It is all very well for Deputy Andrews, Deputy Woods and other Government Deputies to talk about things which happened in 1974 and 1975. There was no economy in the world which was not shaken to its foundations in those years.

We came through that time with a lot of the Government's popularity forfeited. There is no question or doubt about that. It is absolutely true. But at the price of forfeiting our popularity we achieved a certain understanding with the people that there would be even treatment across the board. In 1975 and 1976 we sweated here for long months and sat four days a week, until 10.30 at night on three of them, putting through a Wealth Tax Bill, a Capital Gains Bill, and so on. All for what? So that the next Government could throw away these things and give them as a present to a slice of wealthy supporters who undoubtedly responded by taking the Fine Gael seats in Kildare, in North Tipperary, in Laois-Offaly and in Louth.

It is against that background that we have the bleating about moderation, about all pulling together, and about a national understanding. It simply will not wash. It simply will not do. The Government look like entering a penitential phase now. Of course it is a bit late in the day for them to be penitent. Although there is a national understanding on which the ink is scarcely dry, every section in the country is up on its hind legs shouting.

In conditions like that I would have thought the job of the Minister for Finance was nearly impossible. I am not just playing politics or beating a drum, but I honestly think the complaints from which this country is suffering will not be put right until there is again a Fine Gael Minister over there and a Fine Gael Government with or without the support of the Labour Party. They cannot be put right by a Government who have done as good as setting out to ensure the ungovernability of the people.

Does the Deputy think the people will wear that again?

I am absolutely willing to submit to their judgment. If they do not want us that is a matter for themselves.

Then it is wishful thinking.

If they will wear what Fianna Fáil are doing at the moment they will wear anything.

Deputy Kelly should get back to the Finance Bill without interruption.

Deputy Woods spoke here yesterday. I did not hear him but I read his speech. Before Deputy Andrews goes let me say I appreciate his courtesy in having waited so long to listen to me. I know he has other things to do and I do not expect him to stay.

I have to look after my constituency.

He should look after his constituency by all means.

In here.

Yesterday, evening Deputy Woods was speaking about envy between householders. He was talking about tax evasion and he said he thought it was sad that since the facts about tax evasion are now so widely known any self-employed person is an object of suspicion to his neighbours. He mentioned a self-employed man who is most meticulous about reporting every £ he makes and insists on paying tax on everything. This man was dismayed and hurt and wounded, as naturally he would be, when his next door neighbour assailed him, in words only I suppose, along the lines that he was one of the gougers or the scroungers who are getting away with murder by not paying tax on what they are earning. He reported to Deputy Woods that the same next door neighbour frequently did nixers in the evening on which he believed he paid no tax.

I was very taken with the use by Deputy Woods of that example. When that kind of spirit gets going it is very hard to stop it. Far from doing anything to stop it the Government have done their best to inflame it by the measures they announced before the election and which they carried out on getting power in regard to making things light and easy for the wealthier sections of the community.

The wealthier sections of the community will be interested in this Finance Bill. I want to relate the situation in the Finance Bill, which has been published for a week or two, to something which the chairman of the Allied Irish Banks said at the annual conference of the Irish Management Institute in Killarney last week end. He said he considered that the incidence of personal taxation was so severe that it discouraged the enterprise of the individual and acted as a disincentive to the individual in taking responsibility and trying to work harder for himself and trying to get himself on in life, and so on.

Naturally I do not want to quarrel with an individual outside this House. I have no idea what his politics are, and I do not care. But I want to remind that bank chairman, and the stratum of society for which in a rough sense he may be taken to speak, that the upper limit of personal taxation, severe though it is at 60 per cent or 60p in the £, was 17p higher than that until the National Coalition Government reduced it. In other words, in 1973 when the National Coalition Government were elected this gentlemen was paying not 60p in the £ on the top slice of his earnings but 77p.

In saying all sections should be dealt with fairly, I do not mean to say any section should be hammered. I do not believe in hammering any section. I believe in making them all visibly carry their fair share of the burden. Since there has been so much talk about what the Minister has done for the PAYE tax payer it is fair to point out to the people at the top end of the PAYE scale that the whizz executives, the bankers and all these people who laid on such a ferocious lobby about the wealth tax four or five years ago, were relieved to the extent of 17p in the £ on the upper slice of their income, which in many cases would be the bigger slice, not by Deputy Colley but by Deputy Richie Ryan. They are better off by 17p in the £ thanks to the National Coalition who were supposed to have been so death down on these monied interests.

I was interested in another thing Deputy Woods said. It accords with my own opinion which I voiced here on a parliamentary question a couple of weeks ago in regard to the amount of savings interest which is allowable for tax deduction purposes. On 28 March I asked the Minister what was the limit of tax deductibility on savings interest and how long it had been at that level. The answer I got—and I was sure it would be something like this—was that it was £70 and had been £70 since 1967. The paddy-whack syndrome is too familiar to need stressing again but I comment on the fact that, by a curious accident —and I speak ironically—it is £70 in Britain also. I have not the least doubt that it was slavishly copied from the British. Naturally, anything the British do is more than good enough for the Irish Republic. That is the philosophy which is held on the benches opposite. I do not subscribe to it and never did.

It has been £70 since 1967. If you multiply £70 up by the degree to which the value of money has fallen in the last 12 years, you will find that the allowance in regard to savings interest should be now well over £200. Perhaps I am wrong. I guess roughly £200, perhaps something more than that. It is high time that that level was increased, and Deputy Woods said so, though not so offensively to his own Minister. There would be a unanimity on both sides of the House, that savings are a very important feature of an economy, that people should be, for all kinds of long-term reasons, encouraged in the savings habit. It is time that the incentive, so far as it is an incentive, of making savings interest to some extent tax deductible was looked at again.

I am disappointed that that is not contained in this Finance Bill. I wonder whether the Minister opposite me will recognise that this is a serious suggestion. He knows it to enjoy support from both sides of the House. I would ask the Minister to consider what the cost to the Exchequer would be of raising this level in conformity with the inflation over the last twelve years and incorporating that in an amendment to this Bill at a later stage.

There was another provision in the Bill which I thought was a very ill-judged and very ill-timed measure, considering that the Government is anxious to achieve some kind of peace in industrial relations and trying to damp down excessive wage claims. This is the provision in section 9 which scales down the relief attributable to interest payments on mortgages, where that interest is being paid at a preferential rate. I know it is a privilege, and cannot be called anything else if a bank employee or building society employee or insurance company employee is getting his mortgage at 2 or 3 per cent—I think that 3 per cent is common enough—while other people are paying 12 per cent. That is a privilege which is part of the conditions of employment of the banks and insurance companies. I suppose they use that as bait in order to attract a high level of interest, as indeed they get, from school-leavers looking for employment.

I cannot see that this is so unjust. I quite agree that if the State were doing this, there might be some injustice. I cannot see that a private employer, which is what the bankers and insurance companies are, should not be free, without having the State breathing down his neck, to make what arrangements he chooses with his employees, in regard to preferential rates of interest on loans. I may be wrong about that. Perhaps ordinary equity would require that the State should not be treating these people on a level of equality with others who are paying a much higher rate.

But even if I am wrong about that, I think I am right in saying that this is not the right time to make this change. Figures have been provided for me by some people who have been advising me on this point and it was clear from those figures that this change, although not much publicity has been given to it—depending on the kind of mortgage a man has and also depending what tax-bracket a man's income puts him into, because obviously somebody at the top of the tax ladder would be relatively much more relieved by this concession than someone who is not paying tax in the highest bracket—will mean a difference in visible pound notes of between £3 and £4 at the bottom of the ladder and maybe £7, £8 or £9 a week at the top.

There is this fairly harmless-looking provision in section 9—and mind you, there is nobody better able to calculate, although they talk about the extra burden of work implied by the EMS, what this will mean to their pocket if the tax allowance on mortgage interest is scaled down, than these same bank employees, insurance company employees and building society employees. How do you expect that their trade unions—I think some of them are too grand to call them trade unions —their professional associations, in formulating wage claims are going to miss the fact that a Government measure has taken that much money out of their weekly or monthly salary? They are not going to miss it. It is visibly going to bump up, soup up their wage claims by at least a corresponding amount.

I imagine that the Government are making only a trifling saving by this change and, if so, they will pay dearly for it at the other end because its effect will be, undoubtedly, to add a further edge, a further bit of thrust to the wage claims, some of which are already on the table, which are to be, in due course, advanced by employees who will be affected by this revenue adjustment.

In regard to the general objects of this Finance Bill and in regard to the connection which Deputy Andrews made, in his speech here this morning, between these general objects and things which were happening which tended to frustrate them, he spoke about the visible social discord, about the wedges being driven between the different sections of the people, and paid high tribute—and I acknowledge, a not entirely undeserved tribute—to his own Minister for his hard work in trying to get things right. It is not possible for the Minister, because of his position and because of his party allegiance, to get things right, nor will they be got right until his party leaves office. However, within those very severe constraints, these, admittedly, impossible constraints he is doing his best.

In the course of saying these things, Deputy Andrews actually accused the Opposition of conducting what he called the "politics of envy"—a glittering phrase, indeed, if he had been the first to think of it. He said we were conducting the politics of envy and, apparently, driving these wedges, fomenting these discords between various sections. This is something which he must have heard from his hero, Deputy Colley, Minister for Finance, because I heard the Minister saying that self-same thing a month or six weeks ago, immediately after the big PAYE march when 200,000 people demonstrated. The Minister was here in very foul humour on the next day that the Dáil sat and he roared across to these benches: "Who was it that was setting up these demonstrations?" He said, in the tone of a spiteful schoolgirl—he would like to know he said—in a way that he did know very well who it was—who was setting up these demonstrations and setting the people by the ears. The implication which I and everybody else on this side took from his tone was that he was accusing the Opposition of fomenting these strikes and demonstrations.

I do not speak for the Labour Party. No one seems to speak for them at the moment. It is possible, though I frankly do not believe it, that Deputy Cluskey or some of his merry men were saying: "Now, lads, lay on a massive demonstration and we will get this crowd out the sooner." This is possible but I do not believe it happened. It is possible that some people who are behind the organisation of that, more than likely, in fact, were concerned with the Dublin Council of Trade Unions which called for that first demonstration. They may be Labour Party supporters but to accuse the formal Parliamentary Opposition of fomenting discord was outrageous, only understandable in a man who was under stress, overworked and a rather up-tight, rather unrelaxed personality to begin with. A personality like that, placed under stress and seeing the economy falling into ruins all around him, under the pressure of industrial disruption would be driven to extremes of opinion of that kind, but it was a nonsensical thing to say. As far as Fine Gael are concerned, some trade unionists who are connected with these demonstrations may have been people with allegiance to our party, but if the Minister means that there is anybody on these benches who had any privity with the organisation of these demonstrations or with industrial disruption he is wrong. Possibly there is a caucus in my party busily organising disruption, but if so, they have left me out of it and I am not aware of its existence. They must have excluded me from their councils so far as that dimension of the party's operations is concerned. The Opposition are not fomenting any discord. Naturally, any Opposition will use whatever material is lying to hand in order to make a political point. We had a good example of that from Fianna Fáil when they were in Opposition. We have all done that. The Minister of State, Deputy Wyse, and his colleagues have done that too in their time; but there is a big and important distinction between doing that on the one hand and actively encouraging discord on the other. We have not done that.

I do not wish to interrupt the Deputy, but his own leader accused the Minister of producing faked figures in his budget.

The budget debate is not part of what I am talking about. I am talking about the allegation made by the Minister for Finance and repeated here this morning in somewhat different words by Deputy Andrews in the course of an otherwise unobjectionable speech, that the Opposition were fomenting the politics of envy by encouraging the setting of sector against sector.

Does the Minister opposite seriously think that when the farmers talk about the mob rule of the PAYE earners and the PAYE earners talk about the farming lobby, these organisations or their members are so dim that they are not able to see with their own eyes what is happening? Does he think that it requires Deputy Harte and myself or some Labour Deputy to go down and explain to them how they are being dealt with by a weak and shambling Government? Of course they do not require that. They have their own leaders at non-political or extra-political level to give them the lead in protests about the tax situation.

Let us get this straight before it fades into the mists of time. The reason for the PAYE demonstration, which has subsequently been characterised by the farmers as mob rule, was the fumbling and cowardly foostering over the farm levy announced on 1 February. It was not Fine Gael who laid down that levy nor was it the Labour Party. The main cause was the visible and conspicuous sight of the farmers taking their boots to the budget, and making the levy negotiable within 24 hours when nothing else in the budget was negotiable.

It was that national spectacle—and it was a spectacle because it never happened in this country before and never will happen again when the Government changes sides—which caused the PAYE people to lose their patience. It was not Fine Gael or the Labour Party who did it. It was the spectacle of the Government climbing down in 24 hours to the farming boots. If the thing was negotiable, what other section of the community was invited to come in and say what they would do instead of paying tax? I pay tax on every penny I have, earned and unearned. I have never been invited, nor have any of the professional associations to which I belong or the interest groups with which I can be identified, to say whether we think we should be let off this item of tax in exchange for paying tax some other way, I was a ratepayer all my life until rates were done away with. I was never once consulted by any Government, neither were any of the ratepayers' associations that I ever heard of consulted, as to how we would like to pay rates in respect of the property that we lived in; but the farmers were able to do it.

I have sympathy with the farmers and I think the levy is a crude and blunt instrument. It is as primitive as the old window tax or the salt tax, and the Government are going to pay dearly for having introduced it. They are going to pay even more dearly for not having the courage to stick to it from the first day they introduced it up to the present. They have fumbled, foostered, and let themselves be seen to be cowardly and indecisive. That is something which, with all our faults—and we had faults—was never said about the Coalition Government. You might not like Deputy L. Cosgrave, Deputy R. Ryan, "the Cruiser" or any of the others with whom I worked and who remained together for four-and-a-half years, but you knew where you were with us. If a measure was announced it was proceeded with. We paid the penalty for some of these measures. I do not whinge about that; unless you are willing to be out as well as in, you have no business to be in politics. But the people do not not know where they are with this Government, and that is the reason they are becoming ungovernable, not because of Deputy Harte, myself or the Labour Party.

Deputy Andrews was talking about the politics of envy. It is only a little over two weeks since the Minister for Industry, Commerce and Energy was leaping around the country—when he was in the country at all, which was not often—posturing about his down-facing of the oil companies. The oil companies were represented as being universally a collection of villains.

Sorry, Deputy Kelly, we should not discuss oil or oil companies on a taxation measure. I have given the Deputy a fair bit of latitude. Unless he can relate it to taxation, we cannot discuss it.

I admit, Sir, that you have been generous with me but I want to relate it to what Deputy Andrews said. He accused us of fomenting the politics of envy. What would he say then about a Minister who covers up his own inefficient fumbling in regard to the oil situation by holding up as criminals the oil companies who employ thousands upon thousands of Irish people and on whom thousands of Irish families depend? They are no more saints than is anybody else. They have the same commercial standards as any business, as an Irish national oil company, a private sector company or any other kind of company would have. In other words they want to maximise their profits. That is what business is all about, and I thought that was the message of the Fianna Fáil Party. They were going around as great apologists for the profit motive over the last couple of years until it ceased to suit them to do that. Then suddenly multinationals were the villains in order to cover up the failure of the Minister to stay long enough in the country to get a grip of the situation before flying off on totally unnecessary so-called promotional trips to America.

The Deputy should get back to the Bill. It is really and solely a taxation measure.

Even an oil company is entitled to justice.

All we can discuss about oil on this is the taxation of oil.

All right, Sir. I find it hard to listen to lectures about the politics of envy being fomented from these benches when I have seen the way the Minister for Industry, Commerce and Energy has behaved towards the oil companies over the last two weeks. Even yesterday, when somebody dared to speak about fairness to the oil companies, he said that the oil companies were the darlings of Deputy Peter Barry and myself. That was outrageous and contemptible from a man who belongs to the same party as another Deputy who talks about us fomenting the politics of envy.

Back to the Bill, Deputy.

I will come back to that topic; I have not finished with it.

On a relevant occasion, yes.

I am sure the Deputy agrees with everything that is in this Bill. He has not touched it yet.

Take your oil.

All I want to say now is a general thing about the revenue and the money which a Finance Bill aims to raise. On 28 March last I asked the Minister for Finance a short series of questions about the proportion of State revenue devoted to various heads of expenditure. There is nothing very revolutionary about this. It is reported in the Official Report of 28 March 1979, Volume 313, columns 599 and following. I asked him if he could tell the House:

...the amount of State revenue which will be absorbed by the payment of (a) wages and salaries, ...in the current year as a proportion of £1.

I also asked about pensions, but we are not concerned about that. The figure is so staggering that it is important to stop and think about it for a minute. The proportion of the money which the State raises via the budget and the Finance Bill in the year which will be devoted to the payment of State wages and salaries is 41.6p in the £. It is not a surprising figure, in a way, because everyone knows that wages and salaries are a heavy burden on the State. But when we think that more than £2 in every £5 that the State takes in is paid out in wages and salaries to a rapidly growing army of functionaries and their attendant bureaucratic substructures, surely we would all be spared a great deal of bad temper about taxation if the State would see where, not by any drastic measure, they could economise in regard to the rapid expansion of the State services.

There were times, and not so long ago, when Ministers from both sides of the House would apologise for the overrapid expansion of the civil service and would expect to get credit for keeping the numbers down. So far have we come from those days, when it was regarded as a virtue in a Finance Minister if he was conserving State resources by being careful not to expand the public services beyond strict and pressing necessity, that we now see in the national understanding published last week the Government saying that, if there is a shortfall in the growth of employment, the State together with the private sector would take up the slack by creating perhaps 5,000 more public service jobs.

Either public service jobs are needed or they are not. Either the public require the services of these further 5,000 people or they do not. If we require them, let us by all means have them; but if we do not, let us spare ourselves the expense and spare the people concerned the indignity of employing them in useless duplicatory work. Surely that point of view is not so old fashioned as to be completely unorthodox and undeserving of a hearing. When the State finds itself paying out more than £2 in every £5 collected, in wages and salaries, it is insane for it to be thinking of meeting politically-expressed and politically-generated employment targets by pulling a figure out of the air and saying that another 5,000 people will be taken into the public service. Let us know which Department is short of staff and we will agree to fill up the gaps, but let us not expand the public service irrespective of whether the people are needed or not. That would simply mean that the next time a Deputy asks a question about the amount of public service salaries the figure will be even bigger than 41.6p in the £.

I also asked the Minister to tell us the amount of State revenue which would be absorbed in interest payments on the State debt in the current year expressed as a proportion of £1. This was again a staggering proportion. Deputy Colley on 28 March said that the amount of revenue collected which must go out to keep down interest payments is 21.9p in the £. Surely we are in an absolutely crazy situation where we find ourselves paying out more than £2 in every £5 in wages and salaries and more than £1 in every £5 in interest payments. I know that the public debt has existed as long as the State, and that Governments borrow for expansionary objects and so forth; but they also borrow just to keep election promises and throw the money away recklessly. I would be very attracted towards any Government who would commit themselves towards reducing the debt, who would not promise to do this, that and the other to raise a facile cheer. The Government should commit themselves towards reducing the debt over a term of 15 or 20 years on the assumption that the plan will not be changed, even if they are not in Government that long. There are EEC countries which have no national debt. Belgium, for instance, finances all its expenditure from current revenue. It will not be easy to get out of this habit, but when we find that we are paying more than £1 in every £5 just to pay the interest on the loans, apart from the principal sums which become due at varying times, it is time to ask ourselves if we could not ease this burden, naturally not immediately, may not in ten years, but surely we should plan to close down the national debt over a period of perhaps 20 years.

The Minister of State is near enough to the throne to hear the swish of satin, and he should ask himself what could he do in regard to job creation and in regard to the provision of the infrastructure that we are all shouting about, the roads and the telecommunications, if he had another £1 for every £4 to spend, which he no longer had to hand over to the holders of the public funds.

I would employ some engineers and architects in my Department.

I know the Minister has his own private plans; he would not be worth his salt as a politician if he had not. I am asking the Minister to raise himself to a dizzier height than the Board of Works and ask himself what could he do for public welfare generally if he had an extra £1 for every £4 he had to spend. The Minister would make himself immortal, he would get himself a deathless name as a politician if he had that extra money to spend. We should aim at giving ourselves that money. A Government which can get people to half believe that they are keen on doing away with unemployment should ask themselves whether they might not also plan, in the long run, to do away with the public debt as well.

I had many other things to say but I have a feeling that the Chair will not let me say them.

If they are relevant to taxation, the Deputy may say them.

They are, but only distantly I am afraid.

If the distance is a bit far, no.

I do not want to upset the Chair. I will refer to the bearing that this Finance Bill has on the national understanding which along with the Finance Bill is part of an historic epoch. The national understanding is based on a wage increase figure of 15 per cent spread over 15 months. If I were anxious to cause disruption and set sector against sector in the way Deputy Andrews thinks the Opposition are busily engaged in, I would speak my mind contentiously and aggressively, intending to stir up dissatisfaction. However, I will speak my mind temperately. The 15 per cent in 15 months is too much. I will not lecture an industrial worker or anybody else, least of all the people at the bottom of the scale looking for that. It is not enough for them in the sense that, in order to reach the aspirations they are entitled to entertain, 15 per cent is not enough. But nationally it is too much. The Minister opposite, the Minister for Finance, the Minister for Economic Planning and Development and the Taoiseach all know that it is too much. It is roughly three times the figure which was tacitly understood to be the figure on which plans were being made a year ago. The Minister for Economic Planning and Development admitted here on many occasions that the settlement figure is only a paper figure, that what actually happens in the end due to the phenomenon called wage drift is that one ends up with something like twice the agreed figure because of special agreements and so on. That happened last year. The agreed figure was 8 per cent but we ended up with 16 per cent. What will happen when we start on paper with 15 per cent? Will we end up with 30 per cent? That is why I say, among other reasons, that 15 per cent is too much.

I do not want to damn the national understanding, but I should like to be on record as holding that opinion, and to say the reason the Government and the FUE have been driven to accepting a figure of that level is directly related to the fiscal policy of the Government and to their divisive activities since their return to office in July 1977. I am not saying that there might not be a 15 per cent wage round if the National Coalition were still in office—there might well be; we had bigger wage rounds when we were in office—but it would be within the limits of what could be afforded, not outside those limits. It would not be a figure that was conceded against the background of thousands of marching feet and abuse being hurled against one section of the community by the other.

Those are the conditions Fianna Fáil set out to create and we pointed this out. While I do not wish to damn the national understanding, I must say I am not optimistic about it in the long run, not because of its terms but because of the atmosphere generated by the Government who are presiding over it.

Yesterday when the Minister for Finance spoke on the Finance Bill he said that the main thrust of budgetary policy in 1979 was towards growth of employment, productivity and output to assist in achieving the Government's objectives for economic and social development. That is the message of the budget and the Finance Bill and I should like to pay tribute to the Minister for Finance who has been under severe and unfair attack. Indeed, some time ago the Leader of Fine Gael accused the Minister of falsifying the figures. I was surprised by that attack. It showed the paucity of thought in the party that they had to make that kind of attack in order to gain some advantage over the Government. That attack did not serve democracy and Fine Gael did not gain any kudos. Democracy can only take so much. If statements are made to undermine the authority of Government we are sowing the seeds of grave discontent. Even at this late stage the Leader of Fine Gael should withdraw his remarks. Not only did he cast doubts on the integrity of the Minister but he also cast doubts on the civil servants in the Department.

The Minister for Finance has done more than any Minister for Finance from the Opposition benches to put the national finances in order. In addition he has looked after the weaker sections of the community. This is the kind of commitment that keeps people in the Fianna Fáil Party. During the years our party have shown real concern for the weaker sections and in our budgets we have introduced enlightened social programmes. We converted Fine Gael and Labour to forward thinking in the area of social welfare. We never offered an increase of 10p per week to social welfare recipients. We gave the pensioners sizeable increases; perhaps they were not enough but they meant that these people did not have to live in poverty. We intend to continue on the course we have taken. I am sure the Minister will not worry about all the criticism directed at him. He is carrying out the essential message of Fianna Fáil.

In this Finance Bill we are endeavouring to set the economy on a fair course. We intend to create national wealth and to distribute it fairly. This is what democracy is about. I know that many people do not think our taxation system is equitable. There are defects in it but there are defects in every system. Edmund Burke said that no man was wise enough to tax and to please. We have to face that fact. We have an opportunity now to discard the "them versus us” mentality and to work for the common good. That may sound hackneyed but it is sincerely meant.

It is futile to try to carry on in the present atmosphere. Yesterday someone referred to political strikes. In any strike those who are hardest hit are the weakest section. Every morning I go to the office shortly after 8 a.m. and I see people queueing to draw their pensions because of the present disruption. I am not going to apportion blame for the present state of affairs because that is futile. There are centres where members of the St. Vincent de Paul Society——

We will be dealing with strikes tomorrow in a long debate. We are discussing a taxation measure now and anything said must be related to taxation.

I simply wish to pay tribute to the St. Vincent de Paul Society for what they have done in helping out in this situation. In our taxation system and our budgets we must find a recipe to help us surmount our present difficulties. I have often thought that we should have a State council composed of Government, trade unions and employers. This could be a permanent fixture that would monitor all the economic trends. It could be the instrument by which the national wealth would be distributed. Through this body wage and salary claims could be submitted and instead of people having to strike in order to force an issue their claims could be considered by the board. The board could examine each claim, including those of pensioners, as well as examining the economy and they could show where improvements could be made. Many people get far too much by way of dividends and high salaries while there are families and individuals who find it very hard to maintain themselves in even frugal comfort.

I have seen the energy which has gone into organising demonstrations. One would not deny people's rights in this respect and when I saw the two recent big marches I said to myself that here were people really concerned. The vast majority of our citizens want a change in the taxation system and if we are to protect democracy, all of us, the Government, trade unions and employers, must do some serious thinking about where we are going. Every day public representatives and other concerned people come across cases of extreme hardship. I am told many hotels in rural areas have almost been put out of business because they are not on the automatic telephone system——

The Deputy is getting back to strikes again. We will be dealing with them tomorrow.

The taxation system must be studied carefully and in this respect I submit that this is not a problem for the Government alone: trade unions and employers must also study the tax system and suggest alternatives. Old age pensioners are not all that concerned about the tax system because their main problem is to make ends meet. They say, "A plague on both your houses".

Internationally, we have not got the worst record in regard to strikes and industrial disputes. Many other democratic countries are worse. Here, people should consider what the Government have done in each budget to improve social welfare benefits and to make genuine efforts to provide better living standards for pensioners and other less well-off people. All of us must have a greater concern for the weaker sections, whose interests must be safeguarded. I can recall a time in this city when such people were extremely badly off. This Government have done something to ease that situation, but we have not done enough to distribute the country's wealth more equitably.

Our taxation system has been geared towards making industry more efficient: the Government have been generous in their company taxation policy and consequently large profits have been made. I am not against private enterprise and the profit motive. This week the Taoiseach made one of the most important speeches in his career when he pointed out the danger of monopolies in the private or the public sector. That speech should be studied carefully because monopolies can inflict hardship on our society if they are not controlled properly. The Taoiseach did not belabour private enterprise and monopolies——

The Deputy will have to relate monopolies to taxation policy.

I am suggesting that it may be because of our company taxation policy that monopolies have been enabled to function in the private sector. However, as I have said, unless we can distribute our national wealth in a more equitable way we will be in trouble all the time.

If we are to make significant progress economically we must attract more foreign investment here, capital from abroad which would be used to the best of our ability. Reverting to the taxation system, it is no good blaming the Government all the time for all our ills. As I have said, the unions and employers in the private sector also have a duty to consider the taxation system. I appreciate the concern and the anguish felt by the PAYE people, but we here are part of that sector. As Deputy Kelly said, we are taxed on every penny we earn. We are in the PAYE sector and therefore it astounds me that we have one sector which cavils at paying a fair amount of taxation. I am not going to indulge in farmer bashing because I do not think it serves any purpose. However, we would appreciate a more realistic approach from them because they are part of the nation, and a very important part. There is no use in trying to score points off one another, whether it is the farmers scoring points off the townsman or vice versa. It has got to stop. There is no use referring to the mob rule of one section. There is no such thing as mob rule of one section. There are people in the PAYE sector who are concerned over what they see to be inequality of the system and we are behind them in trying to remove these inequalities, but we should examine the beam in our own eye before trying to remove the mote in another's eye.

Deputy Kelly took Deputy Niall Andrews to task because of his alleged accusation this morning that the Opposition were contributing to the unrest here. I did not hear Deputy Andrews' remarks but, if Deputy Kelly says he did, I accept his word. The point I am making is that the agitation directed at the moment against our taxation system can be resolved. But there is no use in threatening and insulting the Government-unless we are all prepared to find out what is really wrong with the system. Some people may feel that they are paying too much tax, but then we have to think of the man who has no job. Should he not be our first concern? Instead of pulling down any figure who appears to be too affluent we should raise the standards of the family. I have heard it said even here that there are people who do not want to work. There may be a very small section who do not want to work but the vast majority of the people want to work; they want to take part in the development of the nation. Perhaps we as politicians have failed. We have failed to point out that the road is hard and that nobody has yet discovered the perfect taxation system. There is an onus on us. We all have a social contract with our neighbour. We must use whatever intelligence and ability we have in perfecting the taxation system which, after all, is the basis for development or nondevelopment.

We have seen huge changes in the last few years. We can say that emigration is practically finished. We have a shortage of craft workers in many areas. This gives an idea of what we could be doing if we were to get goodwill from all sides. We should be working towards a system which will be fair and equitable, with the Government playing their major part, the trade unions playing their major part and the employers playing their part. Let us always remember that, as trade unionists, most of us have jobs. The employers have their jobs and the Government have their job. However, there is a section of people who have no jobs, including many of our young people. If we are to sustain democracy here, we have to ensure that the Government are given every backing in their job creation programme. I would urge the people studying our taxation system and calling for reform to give the Government that backing. I am not saying reform is not necessary—it is, of course. But I appeal to the people on prolonged strikes to reconsider the whole position in their own interests and also in the interests of those who are suffering so much because of the strike. I am not trying to apportion blame for the strikes; they are much too complicated for that. Whatever benefit is given through our taxation system would be much better used if our people at work would co-operate.

This Bill deserves support. It may well be that the Opposition parties will oppose the Bill, and that is their right, but I suggest that if they are opposing the Bill they might also recognise the fact that in successive Government budgets our taxation system has been perfected to a great degree. There is no good in any section demanding more of the national cake than the country can afford. Each section must pay a fair proportion of tax. I have heard the farmers say that they are willing to pay their fair share. I do not know if we have any willing tax payers or not, but the point is that the Government, in their steps to ensure that all sections pay a fair tax contribution to the national Exchequer, deserve the support of every section. While the Opposition parties may be tempted to make capital out of the present situation, their advantage will be short-lived and it is going against the democratic spirit of the country. We must remember that democracy is the best system we know of, but it is a very delicate thing, something to be nurtured. If there is not sufficient goodwill on all sides, we can do nothing. The trade unions have shown tremendous goodwill in relation to the national understanding. They have worked very hard towards it and the same can be said of most of the employers. It would be far better if we could have said on May day, the day of Saint Joseph the Worker, that we would all aim towards a new deal in taxation so that we can all avail of the benefits given in this Finance Bill. We could show that a small country like ours, with its traditions and beliefs, can create a society with a fair taxation system, with the weaker sections being our first concern. It would be outside the ambit of this debate to deal with the social services.

Yes, Deputy, it would be.

Therefore, I shall not pursue that line. The present Minister has produced ample evidence of his ability and desire to improve the lot of the weaker sections and, indeed, all sections of the community. I would plead that he be given the full backing of all sections, representative of the trade unions, employers, indeed each one of us, because we have a great deal of strife at present causing people unnecessary suffering. We might all decide that we will endeavour to change this order of things and revert to an ordered system of negotiation. If the council I suggested could be established, or even given consideration, then we would have a permanent body monitoring wage claims, and adjudicating on them, with an almost utopian situation in which workers of all categories could enjoy satisfactory wages. At the same time such a council could be monitoring economic trends, ensuring that there was no deviation from the standards achieved. All that is needed is more goodwill for such an ideal, when I believe we could have a fairer deal for everybody who wants to make a living in this country.

What a sad spectacle the country presents at present as we discuss this Finance Bill. Normally the Finance Bill is simply the noncontroversial vehicle for the provisions of the budget. This year the Finance Bill has a social background for discussion in the House of unparalleled discontent with the country's taxation system. It is true that persons or groups taxed are never very happy with the provisions under which they are taxed. But never before in the history of the State since Independence has there been the present outcry on taxation, one which is not confined to the PAYE sector. We have our farmers protesting against provisions which they say should not apply to them. The marches, demonstrations, the parades in the streets of cities and towns throughout the country have been fuelled by the deep indignation felt by PAYE wage and salary earners that they bear a disproportionate weight of taxation; that nine-tenths of taxation is collected from them. That is the justification tion, as they see it, for their demonstrations; they feel that other sections of the community are not as penalised by taxation. Therefore, a general demand has arisen for tax reform, a demand the Government say they have attempted to meet by introducing increased allowances. But back comes the answer from the PAYE representatives, the trade unionists, that a married man with no children on a gross income of £70 a week will have £13.42 deducted from his income between taxation and social welfare contributions, amounting to 19 per cent of his income. Back comes the answer from the PAYE representatives—when told of the Government's concern for their predicament—that the increased allowances afforded them do not keep pace with inflation.

As we discuss the taxation provisions of this Finance Bill there are many uncertainties to which there are no definite answers at present. For example, we have no information on the order for the 2 per cent levy; we do not know exactly where that is to fit into the scheme of things, that is, in relation to the talks with the farmers. Neither do we know—and this bears more closely on the protest about the inadequacy of allowances which have been expressed by PAYE representatives, wage and salary earners—what the annual rate of inflation will be. The Minister for Economic Planning and Development has selected a fortunate quarter, the last quarter of the year, and he says it will be less than 5 per cent for that quarter. There are others, for example, the ESRI, the Central Bank, who predict that over the entire year the annual rate of inflation will be over 12 per cent. If one were to take a less sanguine view of international oil prices than the Minister for Industry, Commerce and Energy one might conclude—taking the effect of such increases into account in our domestic economy—that one would not be too far off the mark in maintaining that our annual rate of inflation this year would be 15 per cent. Therefore, the expressed grievance of trade unionists and others on behalf of PAYE wage and salary earners takes on added justification when one concludes that the allowances granted in the budget will lose their value, or will not retain their real worth, if inflation runs at that kind of figure and if the cost of living goes up by that amount.

Though the general demand for reform of taxation has been made over this period by the marchers and demonstrators—and the Minister in this Finance Bill attempts to answer how the Government have been seriously concerned to meet this general demand for reform—I contend the Government have not met that demand at its heart merely by tinkering with the allowances. Basic to the PAYE demand for reform is the undoubted fact that the majority or too many of our average wage earners, those on or near the average industrial wage rate, arrive at the highest rate of taxation too soon in the tax year. That is basic to their demand.

In other words, when the Minister for Finance in the budget, behind the plan of increasing allowances to the various groups, abolished the lowest tax band of 20 per cent and substituted that of 25 per cent as a starting point, at one stroke he cancelled out a great deal of improvements in the allowances given to our wage earners. He also ensured an earlier passage than before for them into the higher tax bracket. The average industrial worker is well-informed as to his tax situation and is no longer taken in by cosmetic figures. Those workers are aware that two-thirds of their overtime goes in taxation. As they put it: "We work for the State at weekends and when we stay to work at night."

There are plans to curtail overtime and a suggestion that legislation will be introduced in relation to this matter. However, the dilemma of the average industrial worker is that, with the increase in the cost of living, rising prices, the colossal rise in the price of new houses and rents, he is forced to work even longer hours for overtime money even though he realises that two-thirds of it will go into the Government coffers. One can easily visualise the extent of this discontent and indignation among such workers. How many self-employed people would work late nights or at weekends realising that two-thirds of the income would go to the State? The people I am speaking of include those who constitute a large proportion of our work force, young people who are contemplating marriage and they are forced to work overtime for the one-third purchasing money they consider necessary.

Knowledge of this kind brings home to us the futility of the notion that somehow the present wave of tax discontent will go away. There is the feeling that with the approach of summer and, hopefully better weather, all the discontent, the fog and bitterness of the winter will evaporate and be replaced by happy sunny days to the satisfaction of the Government. That will not happen. Yesterday's march may have attracted only 20,000 people but that was an enormous number of marchers to protest once more against the existing tax system. I do not believe that the discontent, which the Minister for Finance dismisses so airily, will pass. The Minister's optimism is misplaced. I regret having to say that because I do not get any satisfaction in mentioning any of the discomfitures faced by the Government on the tax system, although the Government richly deserve it when one thinks of the multi-coloured programme produced by them in order to get a majority here. With the tee-shirted manifesto-ed programme the country had no problem in bringing the warriors back and restoring confidence. As one member of the Cabinet said, there would be no problem if the mighty Government team were returned to office.

Events have given the lie to that view. I take no satisfaction in noting the present level of discontent, but my fear is that the Government cannot realistically gauge the level of discontent. It appears that as they look around their 84 Deputies they take the view that they are fire proofed against popular discontent until 1982. In the meantime they feel that the public will be satisfied with allowances like those given in the budget. That is not the way things are viewed in the streets or in the factories. Our people are bitter at this administration. The Government must return to their plans to decide how to head off this discontent and meet it constructively. We suggested earlier that the Government's faith in increased allowances was misplaced. They must revise the bands if they hope to meet the discontent squarely. The too rapid ascent into the higher grades as it bears on PAYE earners at present must be eliminated. PAYE was never devised to bear so heavily on the average wage earner.

I can understand the Government's temptation in relation to PAYE, because in one sense inflation will improve buoyancy and assist the finances of the Government. However, increasing inflation in the economy puts jobs in jeopardy. We have been told on many occasions—it was repeated by the Minister in his speech—that the creation of jobs is the national objective. We have been told that there will be a massive increase in the public capital programme of 22 per cent over the 1978 outturn. That will not be so massive if the inflation rate is about 15 per cent for this year. The Minister has told us that the main thrust of budgetary policy is towards growth in employment with a drive to increase the number of jobs by 25,000. One does not have to be partisan to be sceptical of that figure. We cannot see that increase coming about this year. It is certainly unwarranted when one looks at the inflationary elements which are now present in the economy. When I was on the benches on the other side very often members of this Government on this side of the House spoke about how much our destiny was in our own hands, that it was useless blaming the Arabs, that the rest of the world did not count, that all was achievable within the three green fields of the jurisdiction of this State. Certain things which are within the territorial jurisdiction of this State have now got out of control and the Government cannot blame anybody else except themselves. To what extent have their actions, budgetary, distributive and general economic policies contributed to doubts on whether the national understanding will find acceptance?

The Minister for Finance stated that the implementation of the terms of the national understanding was conditional on acceptance of the provisions of the pay policy for 1979-80. He said he hoped that the terms of this understanding would be accepted by all concerned. What have the Minister for Finance and the other members of the Cabinet done to get acceptance that a national understanding is needed if the country is to achieve employment objectives? What leadership have the Government given to make the national understanding a reality? Have we had leadership from the Government that would make it possible to gain acceptance of that understanding?

I was in this House when the late Seán Lemass was Taoiseach. I did not agree with many of his policies but he and his Government gave leadership. I cannot say the same for the present Taoiseach. We have had absence of leadership. We have had policies which have lead to wider divisions than ever occurred in the history of the State. I believe that those who represent the PAYE marchers have resisted the temptation to make a town versus country quarrel of the taxation question. They have refused to engage in attacks on farming organisations but the same cannot be said for certain farm leaders. The Government cannot be cleared of the charge that they are chief authors of the kind of potential division which we have at the moment between town and country. This Government of 84 Deputies have fomented division and discord between town and country.

The Government backed down on the original budgetary proposal of 2 per cent. Opinions differ about the justice of that measure. The Cabinet decided on it and then reversed their decision. They executed a U turn in full public view in three stages. There was the Ard-Fheis, the half way turn, the middle of the road turn by the Minister for Finance. It was to stop at sheep and the handicapped areas. It was to include the vulnerable areas of beet, Tuam and west Galway, the heartland of the support of the Government. We then had the complete U turn some days later. That understandably enraged the majority of the PAYE wage and salary earners. It is to the credit of the trade union leaders and the PAYE representatives that they did not rise to that bait and say that their sole enemies in this matter were the farmers. They sought instead to put their case for tax reform in a wider and fairer setting.

They said they had a general demand for tax reform which should include improving the allowances, their indexation, examination of the bands and some immediate alleviation. They said that if they were to be taxed so also should all other sections of the community. Their appeal was addressed to a Government who saw nothing wrong in their policy. Deputies on the Government benches broke into spontaneous applause when the Minister for Finance on the occasion of that first glorious budget of theirs, when the sun shone bright on all their promises and each week witnessed another present, abolished the wealth tax. That is the type of Government the PAYE representatives appealed to. They saw nothing wrong with abolishing wealth tax under the slogan of increasing employment.

We know what happened last year in regard to increasing employment in manufacturing industry. The figures sought by the Government were not achieved. When they were not achieved by private industry the Minister for Economic Planning and Development hinted darkly at a Cuban solution. We have not heard any further details about that particular plan of his. The abolition of the wealth tax could scarcely have been calculated to enhance understanding and get agreement for some kind of national contract.

We also had the additional intention of cutting corporation profits tax 10 per cent without tying that massive concession to any condition that the companies getting it should increase their employment. I have no criticism to make about giving as many concessions as possible bearing in mind all our expenditure and all our programmes. I have no objection whatever to assisting industry if industry responds with the additional jobs. The logic escapes me how we may hand out concessions to industry without linking the concessions to the need for more jobs.

This administration is probably the most right wing in Europe. The leader of the party of reality in Britain, Margaret Thatcher, might like to introduce their taxation policies but she lacks the political nerve to introduce them. She is on trial before the British public in their election tomorrow but I doubt if she would embark on some of the policies embraced with such gay abandon by the Government here who pride themselves on being a central party, a party representing the average man.

I referred to the abolition of the wealth tax. While high in his proverbial ivory tower the official ideologue of this Government, the Minister for Economic Planning and Development, might be convinced of the economic sagacity of abolishing the wealth tax, seeing it as an incentive and encouragement, as Adam Smith would have seen it some centuries before, anyone with an understanding of how our people think could have told him that that measure would not bond society together but would rather divide it, that whatever the merits of its economic usefulness, that measure must increase the forces of envy and suggest to the PAYE wage and salary earners, labouring under their burden of taxation, that some were getting it light while other were getting penal taxation.

Far from acceding to the general demands for tax reforms by PAYE wage and salary earners, the Government are extending the PAYE tax net to include categories which have been excluded up to now. Section 10 makes liable for tax the benefits of the disabled, the unemployed, maternity allowances and even the deserted wives benefits. Over 100,000 persons who depend on such benefits for income maintenance will now become liable. There was no reference to these harsh measures made by the Minister for Finance in his recent budget. No Government with the least pretension to a serious commitment to social justice could have embarked at this time of unparalleled discontent with our tax system, at this time of rising prices, on the course of extending the tax net to the benefits of the disabled, the unemployed, maternity allowances and deserted wives benefits.

At one time there was a saying that a leader of that party merely had to look into his heart to know what the Irish people thought but, I do not know whose heart this Government are looking into. As a person closely acquainted with the way industrial workers think and feel about the tax issues, I must tell the Government that their present reform, tinkering with the tax system, will not allay the present wave of discontent and that they should console themselves with the idea that because yesterday's march was not 100,000 strong somehow the discontent will go away. It will not. The Government may get their think-tank into operation, they may bring them back from semi-retirement soon because the next general election will be fought on taxation. It is an issue as big as that and will last in full strength until that election. I believe it will be a factor in other elections which are approaching. This matter lies outside the scope of our discussion here; it bears on it only marginally.

If the Minister for Finance and his Government believe that they have worked hard to achieve national understanding, they are suffering from a very severe form of amnesia. They forget the general tenor of the action of this Government since they came to office. We know how they came to office. They propagated in the manifesto what I refer to as the philosophy of the pig trough: the group with the biggest snout got the biggest reward. The group with the biggest electoral clout got the biggest selection of sweets and so they brought back 84 Deputies. If one does that in election time and follows that bible through in office, one cannot have a community which is bonded together. One gets what we have now: a community divided as never before with all the elements of a large town and country split, with the leader of the farmers, calling the PAYE section "that mob", with the Government vainly in the middle attempting to quell the rising storm, with mayhem in the industrial relations situation. I know something of mayhem in industrial relations. When I was on the other benches, day after day I heard charges from these benches asking what I was doing about this strike or that strike. The answer now is that one does not do anything about strikes.


We are not discussing strikes in this Bill. We will have an opportunity of doing something about particular strikes tomorrow.

Deputy Lawlor is a young Deputy and during the bank strike I am sure he was preparing for victory in his constituency and his memory may play tricks——

The bank strike does not arise under the Finance Bill.

During that strike I intervened on a number of occasions. We see no evidence of any concern——

I have already said that we will not discuss strikes on this Bill.

No, we would be discussing the air, we would be discussing non-action. There would be no point in discussing them. I agree they do not come within the rules of order and no members of the Government are concerned with them. They go to ground when there is trouble in the country. We learned yesterday that the Minister for Industry, Commerce and Energy only discovered an oil shortage nine days after it happened.

We will not discuss the oil shortage on this Bill either. This is a taxation measure.

Surely it applies to oil?

You may discuss the taxation of oil if you wish, but not oil shortages and prices.

If a Government are ambitious to gain support for their policies, not simply at election time but when in Government, their policies must be seen to be transparently fair. That is the failing of this Government's policy. The regressive nature of our taxation system, as a result of this Government's policies, has been reinforced rather than reduced over the 18 months. Now the PAYE wage and salary earners see the cumulative effects of the action of the Minister for Finance—the full weight of the entire Exchequer bill falls exclusively on their shoulders. They see themselves suffering a major rip-off in our tax system and have authoritatively expressed the view, through their trade unions in their peaceful demonstrations, that they will not tolerate this situation much longer. That is the situation which this Bill refuses to face. As I have said they increased the net rather than reduced it.

The allowances, such as they be, are inadequate if account is taken of rising inflation. The only resort the overtaxed wage earner has is to seek higher wage claims with obvious consequences for industrial relations and we have seen some of these. Other sections of the community may resort to avoidance by the use of accountants. We may not know the effects of that—there may be missed revenue there but it will not take any public form of discontent. That is the path they take but the path the PAYE wage and salary earner takes is to lodge a pay claim. It is logical when one considers the situation. What should the overtaxed young wage earner do when he wants to buy a house which has gone up by over 30 per cent in the last one-and-a-half years? One logical way is to lodge a wage claim and to him and others like him what does it suffice if a Minister says his wage claim is unjust and will make his product uncompetitive? The answer from the wage earner is that he is overtaxed and what is he to do.

The Government have not really gauged the extent of the present discontent. Their complacency is misplaced. Their 84 Deputies can fade overnight if this discontent is not quelled. We live in a strange period in which there are no longer the old certainties and loyalties. The whole tax controversy and reform campaign needs far more radical answering than is given in the Finance Bill. It will not go away. Increased allowances is an inadequate response.

We must avoid wage settlements that will not assist us especially in conditions of our membership of the European Monetary System. It is clear that if wage earners are forced into lodging high wage claims we can only look forward to an increase in unemployment which none of us want. We are not pretending that tax can be abolished. It cannot. However, we are all claiming that the system is unjust. Anyone who looks at the plight of the PAYE earner will accept in fairness that by comparison with other groups he is unfairly taxed and his sense of injustice is grounded in fact.

What has been increased as part of the national understanding? The ceiling has been increased to £7,000 for health coverage. What does one say to a man who is forced to do excessive overtime and because he had a good year goes over that figure and is not covered? What do we say of the man who is forced to contribute under the new social insurance plan and is deprived of the benefits? What do we say of the double taxation under which he labours? His gross income is taxed and is also deducted for insurance purposes on a percentage basis and yet he is not covered.

Wage earners have done their sums. It is no longer possible for a Minister for Finance to carry off the illusion successfully that increasing the allowances in a budget is adequate to keep tax levels within reasonable bounds as they affect the PAYE earners. They are all aware from their pay packets how the allowances work out. They see how, if children's allowances are no longer deductible for tax purposes, the increased allowance is devalued as a result.

In this Bill we will be looking for the incorporation of the principle of indexation as it relates to allowances so that at least they will keep pace with inflation and retain their real value. It is not a new principle. It has already been incorporated in the corporation profits capital charges. One can get credit for rising inflation in terms of set-off in relation to capital profits. We will be looking for the inclusion of a similar principle when it comes to indexation of allowances. It is one thing for them to retain their real value but the heart of the matter lies in the review of the balance of tax and in a more graduated tax band system so that those on middle incomes are not taxed at the highest levels too rapidly, as is the case at present. The obvious and most dangerous consequence from our point of view is that the too rapid ascent into the highest brackets of taxation for a great number of middle wage earners must have adverse consequences on industrial relations.

As I said, the resourse of the overtaxed wage earner is to seek remedy in higher wage claims. He has no other remedy. We know that in many cases these claims lead to stoppages, disruption and many difficulties. Would it not seem logical that our taxation system should supplement and improve the chances of good industrial relations? That has been my fundamental criticism of this budget and this Bill. The question I asked on the budget is the question I ask on the Bill: what does it do to improve the climate for industrial relations? The Minister hopes that the national understanding will be successful. I believe that the Government in their own actions has not assisted the emergence of sufficient support for the national understanding. In their general budgetary policy they have not been fair. They have spread the opinion abroad that they favour certain sections of the community, that they are ready to negotiate with one section and do a deal. We know that the talks with the farmers have broken down but we still have not the actual legislative instrument in respect of this Bill before the House so that we can discuss it here. However, the Government have given the impression that generally speaking their policies are not directed to eliciting the kind of support necessary for the employment policies which they say are necessary.

I do not suggest that the bad state of industrial relations is sought by the Government but I suggest that the Government have a direct responsibility to assist in bringing about good industrial relations and more particularly in the area under their own jurisdiction, the public service. We know the public service has been experiencing a degree of militancy unknown for a considerable time. While one may not ascribe one single comprehensive reason for the high level of conflict between both sides in industry and throughout the public service at present, if one were asked to give an opinion about one comprehensive reason I would say that the Government's taxation policies have a great deal to do with the degree of unrest. In any negotiations a wage claim is considered in the light of insurance deductions, the net take-home pay after tax deduction. These are the normal calculations for negotiators. This trade-off between tax and pay is, I think, the correct procedure; but the trade-off idea must come from a Government which are seen to be fair in their treatment of all sections and seen to be pursuing a distributive role in taking that oad.

This is not a Labour Government, but as a national Government they must seek to represent all sections and they are not doing that at present. I agree that the ideal route to concord in regard to the Government's economic policies as they influence taxation is that there should be a trade-off. There should be accord between those policies and wage negotiations. That was my aim in a previous effort at national understanding when—in 1976, I think—we had the tripartite meetings between Government, employers and unions. On behalf of the Government at that time I made an offer of £100 million, half of it for job creation and half for tax reform. There followed the national agreement in 1977. It may have had its critics. Government spokesmen who were then in Opposition were critical of it, but when people look at that agreement in retrospect they will see that it made a not inconsiderable contribution to the rise in exports and the improvement in the jobs situation in 1977 and 1978.

We are now back, as inevitably we must come back, to another attempt at the same kind of tripartite arrangement. That is what the Government have embarked on in this national understanding. I make the reservation that this attempt at national understanding comes from a Government which have given a leadership which seems to set society at odds with itself. They inherit a state which is now at war with itself. That is not surprising because Fianna. Fáil achieved Government by setting society at odds with itself. In the cynical term of the advertising industry, they segmented the market: each man had a price, each section of the community was given a present. Now the Government seek to restore unity to society and seek national understanding half way through their term of office with double digit inflation returning.

One does not know how many tricks are left in the lockers of this Government but it is a national tragedy that, at a time when this economy, with other economies, has been experiencing improvement in growth, all that precious time has been squandered in policies that have set society at odds with itself. It is a national tragedy that the Government with their overwhelming mandate were not able to give adequate national leadership over this period. They failed to provide that leadership and they ran from the problems——

We are still dealing with taxation.

Debate adjourned.
Business suspended at 1.30 p.m. and resumed at 2.30 p.m.