Dáil Éireann díospóireacht -
Wednesday, 17 Oct 1979

Vol. 316 No. 1

Private Members' Business. - Restoration of Food Subsidies: Motion.

Mr. B. Desmond

I move:

That Dáil Éireann, aware of the serious economic mismanagement of the economy by the Government and of the major increase in inflation in 1979 which is now projected at 13 per cent for this year and further aware of even larger price increases in certain basic food commodities, emphatically calls on the Government to restore food subsidies, so that the living standards of those most affected by this regressive policy, namely, the poor, the elderly, the unemployed, the underprivileged and large families, are not further eroded.

I understand that the motion and the amendment to it have been circulated. In January last the Labour Party tabled a motion for Private Members' time, deploring the decision of the Government to phase out food subsidies, thus increasing the price of butter by 8p per pound, the price of milk by 2p per pint and the price of flour by 3p per kilo. At that time we pointed out strongly that that type of policy inevitably would have an adverse inflationary impact on the living standards of the poor, the elderly, the unemployed, the underprivileged and on larger families in particular. At that time we were experiencing an inflation rate of 7.6 per cent but today that figure has almost doubled. This is at a time when, though we are not aware yet of the final decision on the part of the Government, there is a prospect in the next budget of the second stage in the phasing out of food subsidies. It is logical to assume that if the policy to phase out food subsidies is to be continued, the final phase in this respect is imminent. Therefore, we have tabled this motion so that the public, concerned social organisations, the trade union movement and in particular that large body of marginal Deputies, the Fianna Fáil backbenchers, might impress clearly on the Government the need to end this regressive policy.

When we tabled the motion before the House now—that was during the summer recess—the annual rate of inflation for this year was projected at 13 per cent, but since then the best available forecast indicates a figure in the region of 14 per cent. In addition, there are increases in the pipeline. For example, it is anticipated that there will be an increase in the price of electricity. I understand there is a further recommendation before the Government for an increase in electricity of some 16 per cent plus a 2½ per cent fuel variation charge increase. Such an increase would give a spurt to further inflation in respect of every household. Only this week the OECD stated that the Irish price level increased at an annualised rate of 15.5 per cent in the six months to August, 1979. The average rate of inflation in the Community in the same period amounted to 11.4 per cent. Therefore, we can assess clearly the impact of imprudent domestic Government policy of which, in part, the withdrawal of food subsidies was an element.

In our motion we refer to the serious mismanagement of the economy by the Government. Apparently this year we shall have a budget deficit of some £500 million or almost twice the level projected by the Tánaiste in January last. Even in the crisis days of 1973-74 when the price of crude oil quadrupled, I suggest that the previous Government exercised at least some prudent management of the State's finances or intended to do so in circumstances which were drastically more stringent and difficult than those facing the Government today. It seems that our rate of borrowing will now be of the order of 13 or 13½ per cent of GNP. This situation, as we resume this Dáil session, emphasises the confetti money policies being followed and shows that our national Exchequer finances are in some disarray, if not in ruins, while Ministers seek to shift their responsibility to all and sundry.

Admittedly, there has been a measure of improvement in the employment situation but the unemployment figure remains at 85,000. To that extent one might say that the Fianna Fáil election targets have not been met even to the extent of half what was promised. But then we had what can only be called the immortal words of my constituency colleague recently who, as reported in the newspapers, advised us not to be too obsessed with arithmetic. Regrettably, the arithmetic cannot be regarded as pleasant reading. However, it is indicative of a situation that must be emphasised to the House on this our first day's meeting after a, presumably, not too exhausting three-and-a-half month's holidays, something which the rest of the population did not have the opportunity of enjoying.

Regardless of what view one might have about the success or otherwise of the counter-inflationary policies attempted by the previous Administration, we at least introduced, as one of our counter-inflationary measures, what were then substantial subsidies on food. The subsidies applied to flour, bread, butter, milk and town gas. In addition, in the budget of 1975, we removed value-added tax from food. The effect of this was no less than 4 per cent on the consumer price index. The subsidies were extended further in 1976-77. At that time, despite raging inflation we took the unprecedented step of maintaining and improving the living standards of the unemployed, the elderly and other vulnerable groups. Today we have an inflation rate of 14 per cent. The FUE who are not known to give vent to exaggerated statements, estimate, on the basis of the best forecast available to them, that the inflation rate is 14 per cent. Some commentators estimate the rate as being of the order of 16½ per cent. The recent annualised rate from the OECD is of the order of 16.5 per cent. Whether or which, there is the inescapable conclusion that the 12 per cent which was given in weekly rates of short-term unemployment welfare payments, the 16 per cent increase given last January to long-term recipients and the rather miserly £1 increase given this month have been eroded by inflation. In many instances, these moneys were received a month late by recipients.

On top of that, we had the removal of the food subsidies throughout this year. One of the major beneficial effects of providing food subsidies is that they can be used to contain and reduce the rate of inflation, as the previous Administration did. To mid-November 1978 the annual inflation rate was 7.9 per cent. The removal of the food subsidies contributed at least 1 per cent to the inflationary impetus, and 2½ to 3 per cent to the food price commodity group at that time. To mid-August of this year the consumer price index shows an inflation rate of 13.6 per cent. It is interesting to note that the UK based Reward Regional Surveys indicated an inflation rate in the Republic of 16.7 per cent at present, with Irish prices some 11 per cent higher than UK prices.

Mr. M. O'Leary

We will all remember that.

Professor O'Donoghue

The Deputy's erstwhile colleague, Senator Keating, denounced that as grossly inaccurate.

Mr. B. Desmond

I do not want to place particular stress on that survey, but I well recall that before the last general election there were leaps of joy when that organisation produced a survey, and certain Ministers-to-be, notably Deputy Colley, Deputy O'Malley and Deputy O'Donoghue were whooping it up—that is the only phrase I can use—when the survey was produced.

Mr. M. O'Leary

They were contributors to that organisation then. I do not know if that is the case now.

Professor O'Donoghue

Which organisation?

Mr. M. O'Leary

Subscribers.

An Leas-Cheann Comhairle

Deputy Desmond is in possession.

Mr. B. Desmond

Contributors or otherwise, they were net beneficiaries in the end from the propaganda of that exercise. It is quite clear that the impact to date of the part abolition of the food subsidies has created hardship for the lower income groups in our community, and has also been somewhat self-defeating in terms of public expenditure. I would put it this way to the Government. In January 1979, at the time of the partial withdrawal of food subsidies, the Minister for Economic Planning and Development and his colleagues were holding firmly to a suggested 5 per cent wage increase. There was a general feeling that it would be very valuable if the national economy restrained itself to a 5 per cent proposed pay increase in 1979. It was hoped to carry that strategy forward into the early 1980s.

That strategy was jettisoned and now, in the first phase of the national pay increase under the national understanding, we have paid out a figure of 9 per cent. An increase of 9.4 per cent is forecast for phase 2. This has all been contingent on movements of the consumer price index up to 16 per cent. I do not see the logic of abolishing food subsidies and jacking up the consumer price index even by miniscule amounts of 1 or 2 per cent, giving it an inflationary impetus and then having to pay for that under the national understanding. Because the consumer price index has gone up, one has to give a further increase in national pay.

The logic would have been to keep down the consumer price index by whatever means possible, even if that had meant a reversal of Government policy. Then one would not have had to pay a massive second phase under the national understanding, as will probably happen. The £22 million which was saved allegedly by the abolition of food subsidies will have to be handed back to the relatively better off sections of the working population, those who benefit predominantly from the national pay agreements. I suggest, with respect, that this strategy is reminiscent of the fate of the bird which flew in every-decreasing circles.

The Taoiseach and the Minister for Finance have asserted repeatedly that the partial abolition of the food subsidies would add less than 1 per cent to the consumer price index. The figure which is of some importance is that relating to the food commodity group in the index. From mid-May 1978 to mid-May 1979 that figure increased by 16.4 per cent. There was a seasonal fall in the mid-August sector due to good weather, but the food index group has been consistently higher in 1977 and 1978 in terms of inflationary increase than the overall index. That is an important factor in trying to reduce the level of inflation for less well-off persons.

Fianna Fáil also maintained that the rich and poor benefit alike from the food subsidies. We had this argument trotted out time and time again. It is essential that we should analyse exactly what impact increased prices arising out of the abolition of food subsidies have had. The latest available information was published within the past few weeks in the household budget survey. I do not propose to go into that here, because I went into it before, but this survey gives the expenditure of households on most food items in relation to their incomes. The latest results are for 1977 and, therefore, they are slightly dated. They give the distribution of expenditure among households and a breakdown by social groups, by income levels and size of households.

The data show very clearly that expenditure on bread, milk and butter as a percentage of total expenditure on food is relatively low for the higher income groups, and relatively high for the social groups 3, 4, 5 and 6. Data are also available in regard to income levels. The lower income groups spend a much higher proportion of their food expenditure on bread, milk and butter than do the better off. If you take an analysis of families of different sizes, the pattern emerges very clearly. Apart from oneperson families, who are mainly the elderly living alone, the proportion of food expenditure devoted to bread, milk and butter rises steadily as family size in creases.

The household budget survey, which is only a few weeks old, gives details of money spent on food in 1977. People can take the data made available in the National Prices Commission material on grocery prices in 1976 and calculate the quantities of food items purchased by the various sized families. It reinforces my assertion that the importance of bread, butter and milk in the diets of some families is overwhelming. The poor, the unemployed, those on quite low incomes, the elderly who live alone, people with large families spend a greater proportion of their food expenditure on bread, butter and milk than do the relatively well-off.

The evidence is overwhelming and in no way supports the bland assertion by the Government right through this year that the rich and poor benefit alike from the food subsidies. It is true that there is an element of benefit for everybody but the element is weighted emphatically on the side of those who are less well off. The approach of the Government in that regard is contradictory. Only the other evening I was going through a file of data issued by Fianna Fáil during the last general election. The Fianna Fáil canvassers' guide is a most remarkable document which will go down in electoral history. Theses will be written on it in the year 2000 when it surfaces again in the consciences of political scientists. Page 77 of the guide contains the following question and answer for the party faithful on the doorstep: "Will Fianna Fáil put VAT back on food?" The answer was "No. On the contrary, Fianna Fáil is in favour of food subsidies which reduce the price of everyday foods and we pressed the Coalition to introduce them for the best part of a year before they finally did so." There is no suggestion that since Fianna Fáil came back into power they would abolish them.

Professor O'Donoghue

That was one of the few accurate statements made by the Deputy in 20 minutes.

Mr. B. Desmond

I have the guide here and I will photostat it for the Minister.

Professor O'Donoghue

It is accurate.

Mr. B. Desmond

The guide for canvassers has only one question in black. It says: "Will Fianna Fáil put VAT back on food?", and it goes on to give the reply which I have quoted. It does not say, "Should we get back, Deputy-to-be Martin O'Donoghue in Trinity College said that perhaps one way of curbing public expenditure might be to reduce food subsidies." The guide for the party faithful said that Fianna Fáil were in favour of food subsidies which reduce the price of everyday food.

Professor O'Donoghue

That is true.

Mr. B. Desmond

It goes on to deal with education. There is no ambiguity on education. Other sections of the guide are ambiguous like the section on the North. That makes some reading.

An Leas-Cheann Comhairle

It does not arise on this motion.

Mr. B. Desmond

I would not dare punish the House with quotations from that section.

(Interruptions.)

An Leas-Cheann Comhairle

Deputy Desmond on the motion.

Mr. B. Desmond

I do not want to be called for an interview with An Taoiseach.

An Leas-Cheann Comhairle

That does not arise on this motion.

Mr. B. Desmond

The overall social policy of the abolition is summed up by a very honourable body of men and women, namely, the Society of St. Vincent de Paul. Their general reaction to Government policy prior to the budget of 1979 was:

The thinking behind this submission runs counter to the apparent assumption underlying the Government's present policies that it is possible to distinguish clearly between economic and social issues and between the interests of the economically active and the rest of the population. In the comments on the last Budget the Society expressed grave concern that its proposals gave least benefit to those on low incomes and provided examples to support this view. This trend has been continued with the partial withdrawal of subsidies on food which has hit families on lower incomes hardest because food is not simply one item but the major item of expenditure of all people on low incomes. The Society shares the Government's wish to achieve full employment and recognises that in a period of economic difficulty the Government is faced with extremely difficult problems in deciding priorities. However, the Society maintains that the drive towards full employment should not and cannot be carried out regardless of the social consequences, particularly to those on low incomes.

The Society recognises that the present economic difficulties requires sacrifices but it urges the Government to ensure that these sacrifices are made for the poor rather than by the poor.

That quotation sums up my party's condemnation of current Government policy in this regard.

I now turn to the amendment to the Labour Party motion. I regret to say that the Minister for Finance has put down what I can only describe as a pathetic proposition. The amendment of opposition to our motion states "including its policy to fade out food subsidies in order to make additional funds available for productive investment while protecting the interests of...through the medium of increased social welfare payments.". We should realise that we are debating the removal of £22 million food subsidies to those who are less well off in our community. If we are that preoccupied about productive investment and scarce resources for productive investment why did the Government take the decision immediately they came into office to abolish car tax? That cost about the same as the abolition of food subsidies. Where is their egalitarianism? Where is their social justice relative to people in need? How productive was the abolition of rates on all multiple domestic dwellings? If one has a summer home, an old cottage in Connemara, another old patio down in Wexford and a bit of a £60,000 house in Dublin, there is no problem as they are all exempt from rates. In the next budget that will cost us a cool £100 million while the unfortunate person who is unemployed cannot get the benefit of a £22 million food subsidy.

Professor O'Donoghue

Can we take it that Labour Party policy is to reintroduce rates?

Mr. B. Desmond

I am just posing the question in terms of what we have done.

Professor O'Donoghue

The Deputy does not approve of his own party's policies. The Labour Party also committed itself to the abolition of rates.

Mr. B. Desmond

There is time for examination of conscience. One has to examine more than one's conscience in the light of State finances at the moment. How job creative was the virtual abolition of capital taxation which for this year alone would at least be equivalent in terms of lost revenue to the abolition of food subsidies? About £15 million went down the drain this year on the dismantling of all capital taxation. That amount would have paid for the food subsidies.

Today I got a reply from the Minister for Finance which makes fascinating reading. I asked him in relation to assessments of wealth tax for the period ended 5 April 1977 how much was held in holdings outside the State. His reply was £280 million held by about 5,000 people. I would be interested to know how much has been repatriated as a result of the Government's decision. We shall never know. I suspect that a 1 per cent tax on that £280 million would not be missed by the people concerned. Individually there were only 4,000 but there were 2,000 discretionary trusts and there were 2,800 private non-trading companies and some persons were in there three or four times; there were probably about 5,000 people in all. Would a 1 per cent tax on them to pay for food subsidies destroy productive investment here? There is not a chance of it.

The amendment says that money must be made available, that food subsidies must be phased out in order to make additional funds available for productive investment. Who do we really think we are fooling? Contrast that £22 million with the £1,800 million IDA investment programme in fixed assets over the next five years. Their target figure of expenditure is £1,800 million and that £22 million apparently is of such importance that it is going to make or break that investment programme. Who do we think we are fooling in that regard?

Professor O'Donoghue

It is not the IDA who are going to spend it.

Mr. B. Desmond

Let us take it in the context of the current national budget. Our current expenditure at the moment is running at about £2,700 million a year. The industry, commerce and energy sector alone is £163 million. The public capital programme expenditure at the moment is £1,000 million. But food subsidies must go because productive investment prospects would crumble. If he wants to turn the argument around the other way the Taoiseach meets Mr. Helmut Schmidt, he throws a dinner for him in Iveagh House and stands up and says the Irish rate of investment, at nearly 27 per cent of GNP in 1978 and an estimated 29 per cent in 1979, is among the highest in Europe. But we had to abolish food subsidies in order to have productive investment.

The placing of those funds and that money in any context highlights the paucity of the thought behind the so-called economic strategy in the amendment. I just do not accept it. My party cannot accept that that is the way to run the State finances and to manage any country. We have therefore again tabled this motion. It would be interesting to hear from the Minister whether any further Government decision has been taken in relation to food subsidies for next year's budget. I fully appreciate that at the time of the last decision no decision was taken about when or if it might happen, but it was a policy to be implemented and if that policy is to be implemented on a logical basis it should be phased out over a period of years early on in the Government's strategy. It would be quite interesting to hear whether that policy is still being pursued.

One can only conclude that this Government are bankrupt not only in terms of resources to manage the economy on a day to day basis but also in terms of social strategy, in terms of providing the necessary resources for the economic and social development of the country. I feel very strongly about the question of food subsidies. I think it was a hallmark of the approach of the Government which was socially wrong; it was reflective of a philosophy that I just do not like and could not support and which in the long run will prove to be erroneous. This is becoming more and more evident as we enter mid-term in the lifetime of this Government and I have no doubt that the error of that strategy will be self-evident to those who support the Labour Party motion and accordingly I move the motion in my own name and in the names of all the members of the Parliamentary Labour Party.

Minister for Economic Planning and Development (Professor O'Donoghue)

I move amendment No. 1:

To delete all words after "aware of" and substitute "the difficulties facing the economy both at the national and international levels, endorses the policies of the Government to promote social and economic progress, including its policy to phase out food subsidies in order to make additional funds available for productive investment while protecting the interests of the less-privileged through the medium of increased social welfare payments."

This is the third time in the space of about 12 months that we have had a discussion on food subsidies. I find it extraordinary that here we are on this third occasion and we again have spokesmen for the Labour Party not only continuing to repeat errors of fact but also continuing to pursue a policy line in this area which is against the interests of the less privileged groups in our community.

The essential argument I want to make first is that any Government which have a certain amount of money available and have the choice of using that money either for general food subsidies or for specific improvements in social welfare benefits or other services available to the poorer groups will see that it is much better to use the money for specific improvements rather than apply it generally for food subsidies. I will illustrate that argument. I have done so before, but I must confess I find it extraordinary that I have never heard any response from the opposite side of the House to this argument. I take it therefore that at this juncture it cannot be a simple oversight on their part but simply that they find it convenient to ignore an argument which they find impossible to refute. It was interesting that two or three times Deputy Desmond was skating fairly close to the point where he might have to take up my argument but each time he saw the danger and retreated from the brink before he toppled over into the difficulty. Let me make the point as quickly and as simply as I can. Let us take the words of the Labour Party motion before the House. We are told about the projected inflation rate emphatically causing the Government to restore food subsidies so that the living standards of those most affected by this regressive policy—namely, the poor, the elderly, the unemployed, the underprivileged and large families—are not further eroded.

Let us take the most recent change that has been made in this area by the Government. From 1 October the Government have introduced an additional increase of £1 per week in all social welfare benefits. That is in addition to the normal annual increase which took place in the spring. This increase of £1 a week will, in a full year, cost about £19 million. Had we chosen to use that money in the way which the Labour Party would hold out to us, what benefit would it have provided for the very groups which they claim they want to help, the poor, the underprivileged and unemployed? For a family earning £50 or less the average saving would be 19 pence. That covers all the groups, virtually to the last person, mentioned in the Labour Party motion. They would have us believe that the Government ought to have turned away from the opportunity of giving these underprivileged groups an increase of £1 weekly and instead should have introduced a policy which would have given them 19 pence a week. Where would the rest of the money have gone? It would have been spent in subsidising food consumption for the better-off groups in the community.

It was incredibly ironic that Deputy Barry Desmond had the flaming nerve to quote the President of the Society of St. Vincent de Paul in saying that in our approach to policy what was needed was sacrifice for the poor rather than sacrifice by the poor. Deputy Desmond tried to imply that their approach would achieve that result whereas the policy of the Government, we are supposed to believe, is the opposite; we are supposed to be inflicting sacrifice on the poor. The Government have chosen to do what I expect the Society of St. Vincent de Paul had in mind. We are asking the other three-quarters or five-sixths of the population to make the relative sacrifice in favour of the poor. We have chosen to use the money—in this instance, £19 million—by giving it all to the poor. We have given all of it, not just one-sixth of it. That is the essence of the argument. Any additional points under this heading will simply clarify that, embellish it and elaborate on it. That is the central issue. If we have a certain amount of money available, should we give it in a general food subsidy to everybody, knowing that five-sixths of all the money will go to better-off groups, or should we concentrate whatever money we have and give it all to the poor? The Government, in my view, have chosen correctly in deciding to turn away from the superficially more attractive policy but fundamentally unsound arguments which underlie that approach, and have not been caught up in faulty semantics. They have identified the best way to help underprivileged groups in our community.

In case anyone thinks I am being selective in taking the £1 increase agreed in the autumn of this year, I would make the point that taken in conjunction with the increases already agreed in the spring the total improvements in social welfare benefits for this year will range between 20 per cent and 24 per cent. Without going into a debate on arithmetic and taking as the rate of inflation Deputy Desmond's figure of 14 per cent, that clearly demonstrates that there is a very substantial real improvement in the social welfare category, a much larger increase than took place in any previous year in the past decade, despite the fact that this is a year in which Deputy Desmond would have us believe the Government are mismanaging our economic affairs. We are so mismanaging affairs that we can still produce the best improvement in well over a decade. I should like to hear Deputy Desmond trying to explain to the old, the unemployed and the poor that his version of mismanagement is a policy which brings about the fastest improvements in their situation.

Numbers were cunningly and selectively brought into the argument on food prices. There was reference to the fact that food prices had risen by 16 per cent in the year to the end of May. I was waiting for the Deputy to deal with what has been happening in more recent months but he simply told us that there was the usual seasonal fall in food prices during the summer months. We were not told what happened but the clear impression was conveyed to us that food prices had been rising and are rising more rapidly than non-food prices and that therefore the adverse effect of inflation on lower income groups who spend a greater fraction of their income on food was even more pronounced. What has been happening? According to the information I have, normal published statistics available to everybody, in the quarter from February to May of this year food prices rose by two per cent, while non-food prices rose by 3.9 per cent. In the quarter from mid-May to mid-August, food prices rose by 1.6 per cent and non-food prices rose by 5.2 per cent. In other words, during that six-month period food prices rose by less than four per cent. The latest indicators available suggest that this relatively modest rate of increase is continuing, so that it would be more accurate to say that for the best part of a year food prices are rising by about 8 per cent at a time when non-food prices are rising much more rapidly.

No such information was put forward by Deputy Desmond, nor did he make any such inference. We had an extraordinarily selective presentation. Indeed, I think it is more accurate to say there was an extraordinary misrepresentation of the information under this heading. If the Deputy wished to pursue the argument about a normal seasonal decline in prices during the summer months, why did he not tell us that there was a normal seasonal increase during the winter months. The reason for the high figures during the earlier period is that much of the large increase in food prices last winter was associated with the exceptionally severe weather conditions which drove up the prices of vegetables, meat and a number of other items.

That is the basic situation with regard to trends in food prices and movements in the income position of the social welfare groups. There is no substance whatsoever in any argument which tries to allege that the policies of the Government have worsened their position. On the contrary, as the information I have given to the House makes quite clear, the Government's approach has brought about the fastest improvement in more than a decade in the real living standards of the lower income categories. This contrasts very sharply with the alleged concern demonstrated during the Coalition years. Deputy Desmond was trying to have us believe that during the very difficult years in the wake of the 1973 oil crisis the Coalition Government had managed to bring about a substantial improvement in the position of social welfare recipients. That is not so. Looking at the record for that four-year period one finds that the real improvement in the position of social welfare categories was somewhere in the region of 2 per cent per year.

That contrasted very poorly with the real improvement of about 6 per cent per year that had taken place during the period 1969-73 of Fianna Fáil Government. It also contrasted very poorly with the 6 per cent improvement recorded in 1977-78 and, of course, it contrasts even more poorly with the approximate 8 per cent to 10 per cent improvement taking place this year. There is the real record—a miserable 2 per cent improvement by the Coalition contrasting with past annual improvements of the order of 6 per cent during the period of office of Fianna Fáil and in this year, in the year of alleged mismanagement, a real improvement of from 8 per cent to 10 per cent under a Fianna Fáil Government. Hence my opening remark that I was astounded at the audacity of the Labour Party spokesman coming in here and trying to allege, as was evident from the wording of the motion and the tenor of their spokeman's remarks, that in some way the behaviour of the Government in this area had been against the interests of the weaker sections of the community.

I should like to spend a few moments, just for the record, in pointing out some of the inaccuracies in Deputy Desmond's remarks. I said that this was the third time that not only had we got the wrong argument but we had also got frequent misstatements of fact. I almost ran out of space writing down the various inaccuracies. When I have more time I may go through the official record and list all the inaccuracies as an interesting lesson in arithmetic but since I have not an obsession with arithmetic and believe in concentrating on the essentials, I shall just take a few examples that struck me while the Deputy was speaking.

When Deputy Desmond was talking about improvements in social welfare benefits this year he said "All these increases have been eroded by inflation". I have said that that is simply not so and I have given the information to demonstrate that it is not so. I have not confined myself to innuendo, asides, ambiguous remarks or anything else. I am quite happy to lay it clearly on the record of the House that the social welfare increases this year result in the best real improvement for more than a decade and that, therefore, they have not been eroded by inflation as alleged by Deputy Desmond.

At another point Deputy Desmond referred to debating this subject earlier and, possibly in an attempt to justify coming back again today, he said that "subsidies have been reduced throughout this year", implying that in some sense the Government had taken further action to reduce the subsidies since the specific changes agreed last January. The only major change I know of in the course of this year was in the completely opposite direction to the one Deputy Desmond had in mind. The only change I could find quickly was that in July of this year as part of an EEC arrangement the subsidy on butter was increased so that the price was reduced by 5p per lb. If that is continuing to remove subsidies throughout the year, I can only say I am fascinated at the use of language——

Mr. Enright

Is the Minister saying the EEC were wrong in granting the subsidy?

Professor O'Donoghue

That is not the point. It was part of an EEC programme. The opportunity was there and, of course, we availed of it. If we are given the choice of availing of an EEC subsidy of course we will take it because there is a national benefit but that does not invalidate my basic argument that if it is the Irish Government spending Irish taxpayers' money and having a choice——

Mr. Enright

Does the Minister think the EEC were wrong in granting the subsidy?

Professor O'Donoghue

That is not the point at issue. I am dealing with the specific point that Deputy Desmond was implying that subsidies had been reduced in the course of this year and I am quoting the only information I can find to show that the only change was in the opposite direction.

The third interesting point he made—it takes us a little away from food subsidies but it bears on some of the other elements in the amendment proposed by the Government and perhaps it is not irrelevant—was that he thought this policy was self-defeating, that earlier in the year Ministers had been looking for a pay increase of 5 per cent and that subsequently they had to move away from that and accept the much higher settlement that emerged in the national understanding. I do not recall anybody on the Government side of the House at any stage setting out a 5 per cent pay norm this year. On a number of occasions I spoke about the size of the real improvement that could take place but I was very careful not to put a percentage figure on it. I can recall the Taoiseach and the Tánaiste talking about the need to get pay increases this year down to single digits which, for most reasonable people, implies anything from 1 per cent to 9 per cent, not 10 per cent plus. I do not recall any reference to 5 per cent. I am not aware of the particular information Deputy Desmond had in mind.

At another point he told us that food prices had risen consistently faster than non-food prices. I think I have dealt with that in my earlier point about the actual rate of food price increases in the course of this year as against the course of non-food increases because for two quarters in a row they have risen more slowly and all the evidence available suggests that when the November figures are available they will confirm that pattern. If the Deputy had wanted to make any statement for this year it would have been more accurate to say the opposite, that food prices have risen consistently at a slower rate than non-food prices.

The fifth inaccuracy was the Deputy's statement that in pleading for reversal of the Government's policy on subsidies and asking that they be restored he said that this was an item of expenditure, an element that was weighted emphatically in favour of the less well off. Here was the Deputy again trying to put on the record what is simply not true because, as I made clear in my opening remarks, the policy of spending money on food subsidies does not favour the less well-off. Five-sixths of the money goes to the better-off and one-sixth goes to the less well-off. He is five to one wrong on that matter. I repeat that the way to favour the less well-off is to give any available funds directly to them.

That is the essential argument about food subsidies but since there are one or two other topics that are touched on in the motion and in the amendment and since Deputy Desmond made a few passing references to them, perhaps I should deal with them as briefly as I can. Again, I shall have to correct an inaccuracy on his part. He referred to this paltry sum of £22 million, asking what was this when the Government's budget is so large and when the IDA are going to spend £1,800 million on an investment programme.

The IDA will not spend that money. That is the total investment in industry envisaged during that period. On behalf of the Government, the IDA will spend a small fraction only of that sum by way of grants. The bulk of the money will come from the investment capital and the various loans and so forth which these firms will undertake. It is just an example of the liberal way in which numbers are tossed around without much regard for their accuracy or relevancy.

In relation to the remarks about employment and helping the unemployed, there are a few points I would like to take up. Although the live register is not an accurate indicator of the true level of unemployment, I cannot resist noting at this juncture, since we have had this debate so many times, that since the figure for unemployed is as Deputy Barry Desmond says, now standing at 85,000, it is a reduction of 23,000 in two years and during that two year period it would seem that immigration has been of the order of 13,000 a year, say 26,000 or 27,000, to give a round figure of 50,000 for two years. On the authority of the Leader of the Labour Party that is the figure that they should claim as the increase in employment in the past two years. On a number of occasions when I sought to deal with what happened, with the relationship between increases in employment, the numbers on the live register, emigration movements and so forth, Deputy Cluskey consistently argued that there had been emigration last year and the year before of the order of 14,000 and that the fall in the live register was not due to any increase in employment, but to emigration, since the census figures demonstrate accurately that the reverse is the case, that there is an inflow of people rather than an outflow, the logic of the Labour Party argument as enunciated by their Leader should be that they accept that employment has increased more rapidly than the Government claim, by 50,000 in two years. I will be delighted to hear their comments under that heading.

When we previously debated this subject in March last I talked about the need to avoid looking at any of these policies in isolation, as it could be misleading and unhelpful to an overall grasp of the situation simply to look at what was happening to food subsidies or any one item. The Government's view was that if we were to make satisfactory progress in tackling our economic and social problems we needed a more comprehensive approach which would bring together policies dealing with employment, taxation, improvements in social welfare services and other elements relevant to securing economic and social advance. I am happy that in the intervening months we have been successful in developing that approach. I refer to the fact that an agreement has been arrived at in the form of a national understanding with employers and trade unions which sets out to secure an agreement between all three parties to an overall programme designed to promote increased employment, to ensure that taxation policies are in harmony with this and to bring about the fastest rate of social progress. Under the terms of that understanding a number of changes have already taken place. In addition to the improvement in social welfare benefits there has been an improvement in health eligibility limits and in the course of coming weeks there will be an income tax rebate to PAYE taxpayers as part of the specific proposals that have been arrived at under this more general framework. It is in this more recent comprehensive approach to solving our economic and social problems that I see a greater hope for the future rather than in having the time of this House wasted in listening to material which is both inaccurate and out of date.

Mr. Enright

The Minister's attitude in regard to this motion amazes me. While we have had quite a long dissertation from the Minister in regard to food subsidies, employment and so on, in the election manifesto of 1977 Fianna Fáil spoke a lot about price control. On page 11 of the manifesto it is stated:

Fianna Fáil will regard price control as an important matter and will therefore revert to the position where a member of the Government is responsible for it and for dealing with the underlying causes of inflation.

The Taoiseach designated either the Minister for Industry, Commerce and Energy or one of his Ministers of State as the person responsible for price control. I am therefore surprised that none of them is present in the House tonight. Without any disrespect to the Minister present, not he but the Minister for Industry, Commerce and Energy or one of his Ministers of State should be here because it is with them that the responsibility lies. If a member of the Government is responsible for price control, the Government are failing with regard to this important matter.

This motion is important throughout the country. If we just touch briefly—because time does not permit a lengthy discourse—on the various aspects of the mismanagement of the economy by the Government, or management as the Minister, Deputy O'Donoghue, would call it, we will show just what is happening.

In the agricultural sector there has been a great deal of dispondency because of the Government's attitude to this section of the community. There have been budget proposals and yet more proposals presented in this House which have affected the agricultural community. I can only touch on these matters in passing because time does not permit me to make a longer statement. I want to touch on other matters—job creation in industry, the building industry, tourism and——

An Leas-Cheann Comhairle

Surely the Deputy is not going to touch on all these matters on this motion. This motion is limited in scope. We will not deal with tourism and so on on a motion of this nature and the Deputy knows it.

Mr. Enright

I would ask for your guidance, Sir. If I am to deal with the serious economic mismanagement of the economy, am I prevented from touching on agriculture, industry, building, tourism, credit and so on? Do these matters not come under the economic management of the country?

An Leas-Cheann Comhairle

The motion deals with food subsidies. Other matters may be brought under the motion but the Deputy may not cover the whole field of government. He will be permitted to make incidental references to those matters but we are dealing mainly with food subsidies and social matters. If the Deputy looks at the motion he will see that.

Mr. Enright

Time does not permit me to enter into a long argument with the Chair——

An Leas-Cheann Comhairle

That would not be much use because the Chair has to guide the Deputy as best he can.

Mr. Enright

I can only briefly touch on each of these matters and have no wish to enter into an argument with the Chair. There appears to be despondency throughout the agricultural community because of the Government's attitude bringing in the 2 per cent levy, rates, income tax——

An Leas-Cheann Comhairle

The Deputy will have to deal with the motion before the House. We are not dealing with taxation and other matters of that kind.

Mr. Enright

I put it to you, Sir, that we are dealing with the economic mismanagement of the economy.

An Leas-Cheann Comhairle

We are not dealing with taxation. It would not be in order to deal with the 2 per cent levy on this motion.

Mr. Enright

I bow to your decision but feel the Chair in its wisdom is not correct when it prevents me from touching on those matters which deal with the economy. Inflation has been dealt with. In the three-month period to August the consumer price index rose by 4.1 per cent and up to mid-May it rose by 3.2 per cent. If we recognise either of those increases, we could have a rate of inflation of 14, 15 or 16 per cent. This is having a serious effect on prices and is causing serious problems for everyone.

Irrespective of what arguments the Minister puts forward, the people are being seriously affected by inflation. At the end of last year the Government decided to withdraw the subsidy of 8p per lb on butter, 2p per pint on milk and 2½p per kilogram on flour and wheatmeal. This was a serious turn for the worst. The less well-off sections of our community were most seriously affected. If the Minister checks the figures in front of him he will see that until those subsidies were removed, the Government appeared to be making some progress in checking the rate of inflation, but from that point on, inflation started spiralling upwards and it appears to be continuing in that direction.

When the Government withdrew the food subsidies that caused great alarm. Irrespective of how the Minister looks at it, the people most affected were those with large families and the less well off. The withdrawal of these subsidies was a grave blunder. I ask the Minister to think over this matter in the quietness of his own home. He said this was the third time this matter had been debated in this House, that he had heard the same argument and that he gave the same reply. Maybe we are wrong, but I honestly believe the Minister is wrong. He is not listening to what is being said by the Opposition or by members of his own party because if he was he would accept this motion.

I was amazed the Government decided to withdraw these subsidies and I am further amazed that the Government are refusing to restore them. I want to touch briefly on a debate in this House on 18 February, 1975, when the present Minister for Industry, Commerce and Energy, then Deputy O'Malley, spoke on food subsidies. At column 701 of the Official Report he said:

Perhaps the most obvious of all the various steps open to the Government to take, which they are not taking at the moment, is the question of subsidies, and in particular subsidies on food. In Britain, certain commodities such as butter, milk, and so on, which are paid for, for the most part, out of EEC funds, are subsidised.

At that time the Minister for Industry and Commerce said we should have food subsidies. At column 702, dealing with benefits the farming community were receiving when there was expansion in the economy and when farmers particularly were benefiting from the work of Deputy Mark Clinton in Europe, Deputy O'Malley said;

Increases in the price to farmers for beef and milk were announced within the past week after an EEC decision. Inevitably, unless subsidies are introduced, there will be further increases, within the next couple of weeks at the outside, to the consumer in the price of all these items. Butter, milk, cheese and meat are fundamental basic necessities for everyday life. Their prices have been going up and up, and they will go up again. With all the extra money which, happily, is coming into the country as a result of our entry into the EEC, and having regard to the good prices farmers are getting for beef and milk, surely it is possible for the Government to devote some of the extra money coming into the Exchequer to the subsidisation of these essential commodities as has been done in Britain very successfully.

That was the view of the present Minister for Industry, Commerce and Energy in February 1975 when he wanted food subsidies brought in here.

Professor O'Donoghue

That is right.

Mr. Enright

The Minister agrees that is what was said.

Professor O'Donoghue

We were campaigning for that because we saw prices were going up about 30 per cent a year.

Mr. Enright

For a man who quotes figures so freely I am surprised at him throwing out that remark. Having asked for subsidies and spoken for them over long periods, you arrive in Government with these subsidies in existence and then decide to withdraw them. That is a sad move for an Irish Government. It is a grave mistake and even now the Government should realise it. Even if a mistake is made people will be more sympathetic if the Government recognise it rather than compound it by continuing with it.

The Minister should seriously consider restoring the food subsidies. The subsidies that were made available and the efforts then made and made at different periods by us in Government helped to show that we were aware of increases in prices but we were prepared to deal with them. In 1976 subsidies cost the Exchequer £39.82 million. At column 988 of the Official Report of 8 March 1977 the then Parliamentary Secretary, Deputy Bruton, said:

Had these subsidies not been introduced the price of a lb. of butter would be 20 pence higher than it is today. The pint of milk would be twopence higher and the price of the standard loaf would be 5½ pence higher than it is today. This year these subsidies will cost the Exchequer £48 million.

The Government removed value-added tax from food in September, 1973. That tax had been imposed on food by the Fianna Fáil Government. In July 1975, the Government removed value-added tax from clothes, footwear, electricity and heating fuels, all commodities upon which value-added tax had been imposed by the Fianna Fáil Government.

These food subsidies were introduced by us because we felt they would benefit sections of the community we felt we had a duty and obligation to assist and support. A similar duty rests on the present Government. They are not recognising it or standing up to it. Now, when prices are escalating rapidly, when we see daily increases this is very important. The larger increases are normally held for late on Friday evening when most public representatives may not be available. There was a particularly large number of price increases in July and August when this House was not meeting. These were imposed on an unsuspecting public at a time when the Government felt something else would prevent them from getting the attention they deserved.

Some of these price rises had a serious effect on the economy. Many will have a spin-off affecting other sections of the community. I see the Minister for Posts and Telegraphs arriving in the House. On 5 July 1979 he announced a 20 per cent increase in postal charges which directly or indirectly affected industry and business. Another increase was announced in regard to CIE fares when bus and rail fares and freight charges rose by up to 20 per cent. This increase hit the poorer section of the community particularly hard, those without motor cars who use public transport to get to and from work. A 20 per cent increase was certainly serious for them. Prior to that we had a 19.5 per cent increase in ESB charges. The Minister talks of 13 per cent and 14 per cent in different items but increases in these items really hit the poorer sections of the community.

In the past few weeks we have seen the price rises that occurred and all of them are affecting the larger families, the people in the lower income group, people not in a position to meet them. The Government must not be conscious of the serious effect these increases are having on such people. As prices are going, the Minister should seriously consider doing something in regard to fuel and heating in the coming winter. I had a telephone call yesterday morning from a doctor attending two people living together. He is seriously concerned about their prospects of obtaining fuel for the winter because they may be unable to obtain solid fuel.

Debate adjourned.