Deputy Bermingham moved the adjournment of the debate last night and he has 29 minutes left.
Financial Resolutions, 1980. - Financial Resolution No. 19: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance).
The background to the budget was one of inflation gone mad, a credit squeeze and a cut-back in various sectors of Government spending, particularly in relation to local authorities. Fianna Fáil when dealing with local authorities remind me of the farmer who after spending two-and-a-half years drinking in the pub blames his workmen when he goes broke. Yesterday we heard the Minister for Fisheries and Forestry blaming the Kildare county manager for not being able to manage in spite of the restrictions imposed on him. I have not always agreed with the manager but I have always found him to be efficient. If he told the truth I am sure he would be telling us that he will find it impossible to manage on the increase allowed in the estimate for that county.
Prior to the budget we were informed that the Estimate for the Department of Health would be seriously cut back. We are now aware that there will be fewer hospitals but all the gimmicks and programmes for helping people to give up smoking and keep fit will continue. Those programmes have been in operation for some time and are not a substitute for a proper health policy. It appears that patients in certain hospitals have been receiving inferior treatment because of overcrowding and a shortage of nurses. We were promised a number of health centres in my constituency but because of the cutbacks they will not be provided this year. The new guidelines for medical cards, which are linked to the CPI, will also mean that fewer people will qualify for those cards. Those guidelines should be reviewed at least monthly. Since the new guidelines were announced in January there has been a serious increase in the cost of food. The price of a loaf of bread was increased by 5p. I should like to remind the Government that under the previous administration those guidelines were reviewed in the middle of the year.
Is the Deputy calling on the Government to take medical cards from more people?
The Deputy had one hour yesterday and during that time uttered a lot of tripe but I did not interrupt him. He should allow me to make my contribution without interruption.
The Deputy was not present for all of my speech.
I left the Chamber because I could not listen to all the tripe. The Deputy's speech was not worthy of comment from me. It reminded me of what I used hear outside chapel gates when I was young.
It was a valid bid for a State car.
It is farcical to think that the guidelines introduced in January will apply for one year because we all know that inflation will reach 20 per cent at the end of 1980. Due to Government action we can expect all commodities to increase in price. It is hard to expect hauliers who must use diesel and petrol to distribute goods to carry the cost of the increase in the cost of those commodities. Consequently, the consumer must suffer.
There was also a serious cut-back in the Estimate for the Department of Education although that was not mentioned in the budget. In my view that will mean fewer schools being built and those who are expecting prefabs to be replaced will have to wait a while longer. There will be no improvement for those who must attend class in overcrowded classrooms. In my view boards of management will be at their wits end trying to get money to run schools and heat them. We can expect a return to the system that operated many years ago when parents were asked to contribute to the cost of running schools. We have been told that secondary education is free but I have no doubt that parents of children attending those schools will have to contribute to the cost of running them. The school bus service which has proved of great benefit to those who live a long distance from school will also suffer.
Many other increases and cut-backs in services will not come to light for some time, such as the increase in the cost of transport and postal and telephone charges. The budget also attacks the younger generation in that the Minister has decided to increase the tax on discos. Those organisations, such as the political parties, who collect funds through local dances will also be hit by that tax. The unfortunate part about that tax is that disco-going is the only alternative our young people have to going to the public house or attending dances in hotels where drink is available. The young people are being driven back to those places. The hotels will be able to afford to pay the tax but rural organisations, and branches of political parties, will find it difficult to meet that tax.
There was also a cut-back in the Estimate for the Department of Agriculture which will mean a reduction in services for farmers. At this stage I should like to refer to a document issued by Fianna Fáil election workers in Kildare in 1977. At that time Fianna Fáil were galloping to power behind Jack Lynch. I wonder what policies would be produced today. According to that document the people of Kildare who must use their cars to get to work, were badly treated by the Coalition. They were told that Fianna Fáil would remove road tax and would offer motorists a better deal. Those who must use cars to get to work are aware of what that better deal has meant to them. The document described certain people in the National Coalition who increased the tax on petrol as Arabs, but I should like to know the description for those in Fianna Fáil who were responsible for the increase of 22p last week. We have heard remarks about the increase of 15p imposed by the Coalition Government. Deputies have stated that the Coalition imposed a greater percentage increase, but percentage increases do not mean much to motorists who are asked to pay an extra 22p per gallon. If Fianna Fáil maintained that the imposition of an extra 15p per gallon on petrol was the act of an Arab, they should have removed that increase when they came to power.
The document produced in Kildare also states that under Fianna Fáil more schools would be built in the county, more teachers appointed and the pupil-teacher ratio would be reduced. The cutbacks in the Estimate for the Department of Education have meant that those promises will not be fulfilled. The people of Kildare do not remember those promises because they did not take them to heart. They also promised more gardai on the beat. I should now like to come to the gem of all promises. The document told the people of Kildare that under Fianna Fáil there would be a high investment in services and roads to restart development. We are all aware that we are the laughing stock of the country because of the condition of the roads in that county. At one time we could boast the best roads in the country. We are all aware of the competition that is in progress to find out what part of the county has the biggest potholes. We are a laughing-stock on television and radio. The potholes in Kildare are so big a Fianna Fáil TD suggested holding a convention in one of them. So much for the high investment in services and roads promised by Fianna Fáil to the people of Kildare when they were looking for votes. That is the background we much consider when we are discussing the budget.
I welcome the necessary increases given under this budget. I do not intend to criticise any of them because they are reasonably good but there are social welfare areas which Fianna Fáil neglected through the years. When Lloyd George, or whoever was responsible, introduced the old age pension in 1905 the qualifying age was 70 years. When Fianna Fáil left office in 1973 it was still 70 years. That was progress. During the term of the Coalition Government the qualifying age for the old age pension was progressively reduced for four years and it was 66 years when they left office. This is the third Fianna Fáil budget and they have not yet reduced that age. In all European countries, except Ireland, the qualifying age is 65 years. Fianna Fáil deliberately neglected this area because the Coalition set the headlines in it when they were in office.
While Fianna Fáil rightly claim that they passed the legislation which made the pay-related scheme possible, it was the National Coalition who implemented it. We are still waiting for the promised pension scheme and for any form of social welfare benefits for the self-employed. In my constituency there are several self-employed people who are only getting a week's wage out of their businesses. If they get sick they can be in very serious financial trouble. Over the years we have been told that social welfare benefit and a pension scheme, to which they would contribute, would be introduced, but so far no move has been made by Fianna Fáil. In my view they do not have any right to be proud of the progress they made in the social welfare area. I am a little disappointed that progress is not being made in regard to social welfare contributions for the self-employed and there is no credit to Fianna Fáil in saying that. Perhaps that scheme has been shelved, like many other schemes at county council level, until more money is available.
The people have a right to expect health services. At present nobody seems to know who is entitled to hospitalisation under the health scheme, and that includes health board officials. Some people say anybody under £7,000 is entitled to free hospitalisation and others say people are entitled to free beds, but they have to pay consultants and surgeons and they can reclaim that money from the Government. I do not understand the system myself. I would like to hear from the Minister for Health on this.
Anyone earning up to £7,000 a year is entitled to total free hospitalisation, including consultants' fees. A person earning over £7,000 a year is entitled to free stay in hospital but pays consultants' fees.
Is there something about the consultants not operating that scheme?
No. The position is that people earning between £5,500 and £7,000 pay consultants' fees and get a refund.
I thank the Taoiseach for explaining the position.
I will have the Minister for Health write to the Deputy.
Health board officials are not carrying out that scheme. They are telling people earning over £5,500 a year that they will have to pay their hospital bills. They are also refusing to give free benefits under the maternity scheme. Perhaps they are trying to save money.
The free fuel scheme is being administered by the health boards for the Department. In Kildare we had a scheme dating back to the time the county council operated it which allowed a supplementary benefit of £1 a week to old age pensioners living alone. This continued at a reduced rate under the health board. Now it is being removed because £1.50 for fuel is being provided. This is a Victorian attitude and I would like to hear that it has not the approval of the Department. This penny pinching affects a section of society least able to bear it. No matter what the Taoiseach or the Minister says people do not understand the scheme.
To sum up, the imposition of 20p on a gallon of petrol and diesel oil will have repercussions and will cause serious inflation over the next six or 12 months. The impact of the 2p increase on petrol and the corresponding increase on diesel and other oils has not yet been felt, but the two increases will have a serious effect on the cost of living. They will lead to unrest among the workers and will make it very difficult to achieve the implementation of a second national wage agreement.
I am happy about the social welfare increases but I had expected that some of the extensions in social welfare benefits we had hoped for would be implemented. For example, an extension of the scheme to include the self-employed is vitally necessary because, as I said, some of these people are barely getting a week's wage out of their businesses and are unable to provide for the time when they might have long periods of illness, including hospitalisation and loss of income.
This budget is undesirable from the point of view that it will increase the cost of living substantially and that it will create unemployment in many fields because of credit squeezes. I know many small firms that have been rendered unable to carry stocks because of the credit squeeze and because of the new higher taxation, all necessary because of the Government's squandermania in the last two-and-a-half years, from which the Taoiseach is now trying to dissociate himself as far as possible. The Minister for the Environment is now here and I should like to draw to his attention the restrictions on local authorities because of the lack of Government financing.
The budget which the Minister for Finance introduced last week is specifically directed towards clear objectives which will contribute to economic development and social justice. It is designed to bring order and balance into our public finances, to divert a significant share of the national income to the less well-off section of our community, and to promote work and enterprise by a substantial reduction in the disincentive impact of personal taxation.
As a community we must work our way out of our present difficulties. This budget, because it is fair and can be seen to be fair, creates the right climate for the universal effort needed throughout the community to enable us to succeed in doing that. It reflects the determination of the Government to set about their economic, social and political tasks in a planned, consistent and energetic manner.
Whatever other criticisms may be levelled against the budget, I believe it must be admitted that it is positive in its approach and that it faces up to our current problems. Individual Deputies may have doubts about the particular approach to some particular situation but they must, I believe, agree that we have moved in on the problem areas with the clear intention of dealing with them.
In settling the budget proposals, the Minister for Finance had to face a number of demanding requirements, some of which tended to pull in different directions. His task was to endeavour to reconcile these conflicting elements and to fit them into an overall coherent strategy.
This was a formidable task. The combination of factors confronting the Minister for Finance this year was perhaps the most difficult that any Minister has had to face in this country in modern times. In these circumstances, the budget he presented represents a major achievement in fiscal and economic management.
The Minister had to frame a budget which would start the process of getting the public finances back into a reasonable balance; would not be deflationary in its impact; would in securing the degree of retrenchment needed in public expenditure do so without detriment to investment, growth and employment; would very positively and in a practical way protect the position of the poorer sections of our community from the effects of inflation; and would make our tax system more equitable by substantially reducing the burden of direct taxation on the great majority of employed pensions. I believe that we have succeeded in meeting this difficult combination of objectives.
During the past year our public finances had got seriously out of line, due to a combination of external inflationary pressures, a deteriorating world economy, an insistent demand at home for better services and higher incomes and some specific but, we hope, non-recurring setbacks.
These elements combined to raise Exchequer borrowing to a level which cannot be sustained without doing permanent damage to the economy and to our currency. Exchequer borrowing as a proportion of GNP over recent years has been as follows: 1975, 16.3 per cent; 1976, 11.2 per cent; 1977, 10.2 per cent; 1978, 12.8 per cent; 1979, 13.7 per cent. As a result of all this the national debt at the end of 1979 was £6.300 million, which is equivalent to about 86 per cent of gross national product in that year. The cost of servicing this debt is £666 million which is more than the annual Exchequer investment expenditure just three years ago.
Some of this borrowing was for excellent purposes but some of it was used simply to meet the deficits on our current budgets. We have now had deficit budgeting for more than ten years. In the past five years alone, borrowing to meet these deficits has come to almost £1.6 billion.
A budget deficit can be a perfectly legitimate piece of economic management to meet a particular economic situation. In our circumstances, however, nobody can argue that it is wise to continue to engage in deficit budgeting year after year when these deficits are contributing to our inflation and to our balance of payments difficulties.
It should be clearly understood that budget deficits are not just a matter for the year in which they occur. They do not disappear. They remain permanently in our national accounts, in the form of the taxation needed to finance them.
A principal aim of this budget was to start the process of reducing the annual budget deficit as the most important contribution we can make to keeping the limit of overall borrowing at an acceptable level. There can be no argument about this being the right thing to do. This year we are bringing the budget deficit down from £520 million to £340 million, from 7.1 per cent to 4.1 per cent of GNP. In the difficult circumstances of this year this represents a major achievement and a significant advance along the right road.
The balance of payments will require continuing attention. Two new factors of very considerable significance have arisen in recent times. One is the dramatic and unprecedented increase in the price of the oil we must import. The second is our membership of the EMS and the consequent break of the traditional link with sterling.
As an open developing economy we cannot have a restrictive doctrinaire approach to our balance of payments. Because we must import the machinery and equipment needed for agricultural and industrial development and the raw materials necessary for both agriculture and industry, we have to take a more flexible line than that open to more selfcontained economies. The achievement of a simple text-book balance is not for us an end in itself.
The lines along which our policy should be treated are reasonably clear. The deficit for 1979 was too high and the fall of £277 million in our external reserves is a cause of anxiety. Our policy and action must be directed towards reducing our deficit on external account, protecting the level of import cover provided by our external reserves and ensuring a stable exchange rate for the Irish pound within the European Monetary System. The tax increases announced in the budget will directly contribute to reducing our total import bill by their disincentive effect on the purchase of major items like oil, motor cars and consumer durables. The reduction in Exchequer borrowing and in the deficit of the current budget will also make a major contribution. Further measures towards improving our general balance of trade will receive increasing attention throughout the year. For instance, undoubtedly more can be achieved in the field of energy conservation, more can be achieved in the area of import substitution and certainly more can be achieved by a more determined effort in finding and exploiting new markets.
We have to achieve an improvement in our trade balance against a difficult world background. The general world outlook is far from encouraging and the January trade figures suggest that there is no automatic improvement of a cyclical nature taking place as yet. The encouraging feature of the deficit in that month—a significant increase in imports of materials for further production—is matched by a significant increase also in the import of consumer goods. There were worthwhile increases in agricultural and industrial exports but the whole picture continues to be dominated by the higher cost of oil imports.
Growth in our largest single market, the United Kingdom, is forecast not to rise this year, not to remain static but to fall by an amount of 2 per cent. Recession, mild or otherwise, is also expected in the United States. Growth in the EEC was forecast some time ago to be 2 per cent in 1980. It is now recognised that that suggestion of a 2 per cent growth was perhaps more than optimistic.
I know the Government have widespread support and goodwill for the high priority they give to good industrial relations. While direct responsibility for industrial relations rests with the social partners, the Government have their responsibility, too, and intend to continue their efforts to ensure the best possible structures to facilitate the straightening out of difficulties. As an employer the Government will continue to improve their record and ensure that their employees can share along with the rest of the community the fruits of economic progress. Claims, grievances, anomalies, all of these must be dealt with in a manner that will avoid disruption of services and particularly the disruption of essential services which have a major impact on the welfare and convenience of the general public.
We are taking measures to support industrial peace because industrial peace can contribute greatly to another major objective not only of Government but of employers, workers and indeed of every man, woman and child in Ireland today. That objective, of course, is full employment. Our commitment to the objective of full employment is total and constant. The changes in the taxation system are designed with this in mind. They are intended to ensure that effort is rewarded, that incentives operate for work, risk and investment and that expansion is soundly based on individual skill and commitment.
Employment must be soundly based in sectors producing goods or providing services within the capacity of the country to pay for them. The important thing is to build up the productive capacity of our economy and the infrastructure we need to operate on a competitive basis with the rest of the world. These types of activities create jobs that are durable and lasting. The term job creation has come to mean different things to different people. Unfortunately, for some it has the undesirable overtones of permanent subsidisation or artificial support.
As part of a policy to stimulate recovery from a recession, or as part of an attack on youth unemployment, there may be a useful role for temporary measures of subsidisation or support. However, if these measures are unduly prolonged or are extended wastefully they become self-defeating. There is no real advantage in simply adding persons on to the public payroll, particularly if the expenditure has to be financed by borrowing. Often money taken in that way means only that the new employment takes the place of other employment, when there is in fact no net increase in the numbers at work. Our overriding principle is the provision, directly or through incentives, of viable and permanent work for all those who require it.
The budget itself and the volume of the Public Capital Programme are designed specifically and directly to that end. Expenditure on the programme this year will be £1,154 million, an increase of over £150 million on last year's outturn.
We have increased by 22 per cent the allocation for the Industrial Development Authority. We have increased by 28 per cent the amount provided for telecommunications development and we have increased by 44 per cent the investment programme of the Electricity Supply Board.
There have been complaints about the state of our roads. I think most of us would agree that these are justified. We recognise that, following the severe winter of 1978-79 and the wet weather of recent months, there has been an exceptional deterioration in road surfaces. The Minister for the Environment is arranging that there will be a much greater emphasis on essential repair work while, at the same time, carrying forward vigorously the programme of development of our national roads. The Minister will be dealing further with this matter in his contribution later in this debate. The capital allocation for road construction and improvement works has been increased by over 45 per cent in two years.
Although our emphasis is on infrastructural and productive investment there will also be a continuing high level of social investment. Housing will receive an extra £23 million in 1980, bringing the total to £183 million. This is additional to the hundreds of millions which will flow in the normal course through the banks, building societies and insurance companies in this year and which we intend to facilitate. Investment in schools and hospitals will be about £77 million. Of course, a great deal of that goes into building and construction work.
I want to say clearly and emphatically now that, despite the unwarranted element of criticism from some quarters, these allocations for productive, infrastructural and social investment are sufficient to maintain existing services at satisfactory levels. There will not be any disruptions, closures or anything of that sort. Indeed we have handled the Public Capital Programme this year with great care. We have gone through it in detail, item by item. We have endeavoured to maintain the total within an acceptable limit while at the same time ensuring that, in each case, adequate resources are provided to enable us to carry on as we are, and that social and economic progress is maintained.
I want to appeal for a commonsense approach by the different interest groups affected by the capital expenditure allocations in this budget. I am asking for responsibility all round. If some particular project, eminently desirable though it may be, cannot begin this year, that need not be the end of the story. There is no need for the project to be abandoned entirely. Is it unreasonable for the Government to ask that some particular project or projects, which cannot be accommodated within the limits proposed for this year, be postponed until next year?
Institutions, agencies, groups and organisations must now play their part in settling priorities and in arranging their programmes of activity so that the allocations put forward in the budget and in the Public Capital Programme for the different areas can be adhered to. What is needed in our circumstances is an endeavour to achieve our economic and social objectives more skilfully and effectively. In many areas we need better administration and better direction rather than more expenditure. Programmes must be aligned directly on their targets and all duplication and overlapping must be eliminated.
The challenge facing us in this area of public capital expenditure is a stimulating one. The constraints required by good financial management must be adhered to. At the same time capital needed to promote social and economic development must be raised economically and expended effectively. This budget lays down the guidelines and we must now proceed within those guidelines to secure the best possible social and economic results. That is, in our view, the right way to provide employment, viable, permanent employment based on investment and growth.
There is a technological revolution taking place within Ireland today. This means that if we are to attain the level and quality of employment we want we will need a well-educated and adaptable work force. This, in turn, requires an effective manpower policy. Industrial sectors experience difficulties from time to time in filling vacancies, especially for skilled workers and in particular parts of the country. A significant increase in job creation can be achieved by more training, more flexibility in work practices and a better matching of job requirements to job expectations. We intend to develop these programmes and in particular to concentrate on improving this matching process through the educational system and National Manpower Service.
Taxation must not only contribute towards the creation of a climate where employment and investment can flourish but must be seen to be fair in its impact. The Government have responded in the budget wisely, generously and comprehensively to the dissatisfaction with the level of taxation imposed on the PAYE sector. We have made this budget a landmark on the road to achieving equity in taxation. The tax concessions, which will cost £220 million in a full year, are the greatest single effort ever made by any Government in this country to deal with inequity in the income tax system.
Our approach has been to raise the tax exemption limits so that more lowincome people are exempt and to widen the income bands so that most taxpayers will pay tax at lower rates. Single persons with taxable incomes of less than £1,700 and married persons with less than £3,400 will now be totally exempt from income tax. The incomes at which higher rates of tax are paid have been significantly raised. Some 180,000 persons who would have paid tax at rates above 35 per cent will now pay it at a maximum of 35 per cent. There is no doubt but that the introduction of income splitting for married taxpayers is the feature of the budget which will be looked upon by many as the most significant change in income taxation for many years.
This of course goes further than the recent Supreme Court judgment which related only to married couples with two incomes. The effect of the budget proposal is that all married persons with the same income will pay the same tax whether they have one or two incomes. This represents a major improvement in the status of women in Irish society.
The Government have also shown their understanding of the needs of families suffering special disabilities and handicaps. To help with the problems and additional expenses which must be borne by families with an incapacitated child, spouse, parent or blind person, we have doubled the allowances in an effort to attempt to redress the disadvantage and social imbalance in favour of such families. The exclusion of 8,000 elderly persons from income tax is another example of our concern for those on low and fixed incomes.
Self-employed persons also could, heretofore, pay their tax in two instalments, one in September and the second in the following January whereas the employee on PAYE paid as he or she earned. We think it only fair and equitable that the self-employed person should be brought into line with the PAYE taxpayer by paying his or her tax in a current year by October of that year.
While this budget is a landmark in moving towards taxation equity, we have much yet to do before we can be satisfied that our taxation system is fair and equitable. We must also seek to have a taxation system which stimulates enterprise and initiative while being at a level necessary to support our public expenditure on economic and social development that we require. We propose to proceed immediately now with the establishment of a far-reaching Commission on Taxation in pursuit of our objective of providing ourselves as a community with a modern streamlined equitable system of taxation.
Not surprisingly the package of measures for the taxation of farmers has been the subject of some comment from the farming organisations. I want at the outset to reject any suggestion that the proposals put forward by the Minister for Finance in the budget represent some sudden change or some new departure. The package now introduced is exactly the one that was put forward by the Government last year except that there are important improvements from the farmers' point of view. Perhaps the most important of these is the guarantee that the lower limit of £40 will be retained for at least three years. That is a factor of considerable importance to the ordinary member of the farming community. One of the understandable complaints and worries a farmer has is that the system will be constantly changing and that he cannot make any long-term specific plan. There is also the allowance made in the accounts for capital expenditure on farm improvements and developments.
To devise a system of taxation for farming profits which will on the one hand ensure that farmers contribute in a fair and equitable manner to the general cost of running the country while at the same time not acting as a disincentive to growth and investment is a very difficult, complex task. We do not pretend that the package contained in this budget is perfect. In particular, we look on the resource tax as a short-term expedient. The accounts system is being extended to all farmers with a valuation of £40 or over. It is not expected that this system will be fully effective this year. It is not likely to bring in an amount of tax which will be proportionate to the earnings of the farmers covered. Accordingly, it was necessary to go ahead with this resource tax element for larger farmers for this year to ensure that pending the full implementation of the accounts system, a contribution of this nature could be replied upon.
I want to emphasise that it is not our intention that this resource tax should be a permanent feature of the system. When the outcome of the application of the accounts system to all farmers with a valuation of £40 or over is available to us and when the adequacy of the returns can be assessed on the basis of the actual amount of tax paid by farmers this year, the resource tax part of the package can and will be reviewed.
I would certainly consider also that the devising of a fair and rational system of taxation for farm profits would be a task to which the new income tax commission might well turn their attention. Farming leaders should now finally come to terms with the situation. They cannot continue to say that the farming community are prepared to pay their fair share of taxation and then proceed to reject every proposal put forward to achieve that objective.
In times of rising prices there is a special responsibility on the Government to take care of those in the community who have to exist on low incomes and those who, because of some disability or disadvantage, need special protection. In settling the provisions of this budget, the Government set out clearly and specifically to improve the general circumstances of the lower income and the disadvantaged sectors of our community and we achieved that by a number of different but related measures.
The most obvious measure, of course, is the substantial across the board increase in all social welfare rates. This increase of 25 per cent in long-term and 20 per cent in short-term rates represents a major move to improve the position of this section of the community. Even in the present difficult economic and financial situation, we were not deflected from discharging our responsibility in this very clear cut, substantial manner.
We have also decided to retain the food subsidies. These are very costly items and they are not entirely satisfactory— and I think everybody admits this—as an instrument of social policy. They are not selective. We decided, nevertheless, that in the present circumstances they should be retained because of the effect their removal would have on lower income families, in particular.
Another major improvement on the social side of this budget is the substantial increase in children's allowances. These allowances have a particular impact where low income families are concerned. We are making a significant contribution towards easing the burden of these families in present circumstances by the substantial increases we are granting from £3.50 a month for the first child to £4.50 and from £5.50 to £7 for each subsequent child.
I believe that this budget has the distinctive stamp of our caring social philosophy. It has been accepted with relief and gratitude by a wide section of the community. I want also to suggest that our critics, both inside and outside this House, might have been gracious enough to acknowledge our achievement in the social welfare sphere.
Deputies
Hear, hear.
It is instructive for us, in the Government, to observe the approach to this budget by Opposition parties and by commentators outside the House, many of whom are not renowned for their favourable attitude towards us. One gets the impression that they have searched around feverishly in peripheral areas for grounds on which to attack the budget. So many areas of this budget itself are so clearly sound and beneficial and right that they have had to leave them strictly alone. The welfare provisions for instance are ignored. The major move towards tax equity and, in particular, the improvement in the status of women as taxpayers, the reduction in the current deficit, the adequate provision for capital expenditure for industrial, commercial and agricultural development—all these things have been wisely ignored. Criticism has been based on what Opposition speakers or commentators forecast as their version of future developments, rather than what is actually in the budget itself.
The clearest commendation that we on this side of the House can find for this budget is the fact that it is not being attacked on the basis of what it actually contains. The attack has had to be confined, in so far as it has existed at all, to some hypothetical developments which are envisaged. There has been, in fact, by the Opposition, a great tilting at windmills.
Deputy FitzGerald's contribution, for example, is one instance of this. First, he says that a test of a budget is whether it increases incentives, and in that I agree with him. We cannot expect people to work or invest if half or more of the reward they obtain is taken by the State. In fact, I remember seeing it quite specifically stated somewhere some years ago that the reason why a particular large company chose not to locate here was the high rates of personal taxation then obtaining for managers and executives. These high rates have continued. Before the budget, a person here could be paying 60 per cent of every extra pound he earned at a level of income a great deal less than half that at which he would pay 60 per cent if he lived, for instance, in the United Kingdom. The comparison with other countries is even more adverse. Disincentives or rates of taxation like that have a detrimental effect on the will to work, to invest, to expand or to create employment.
It is when Deputy FitzGerald seeks to suggest that concessions on the higher tax rates are at the expense of the less well off that I must take issue with him. He conveniently forgets the 75,000 persons in the lower tax bracket who have been excluded from income tax altogether by this budget; the further 8,000 elderly persons who have also been excluded; the income splitting which will benefit virtually every family paying tax; the widening of the tax bands at every point in the scale; the 180,000 people who will have their highest marginal rate reduced to 35 per cent; the increases of 25 per cent and 20 per cent in the rates of welfare payments. He, I am afraid, is compelled to forget and to ignore all these aspects of the budget in order to produce some case that this is not a budget for the less well off and for the lower income sector of our community.
Deputy FitzGerald also conjures up his own particular version of the cost of living. His argument seems to be that, some time later on this year, the cost of living index, by his calculations, will go up by six points. He went on, in a nimble piece of semantics, to talk about an inflation rate of 20 per cent to 22 per cent as if this were already with us. I must point out that there is no statistical basis whatsoever for a prognostication of that sort. What we do know, however, as a matter of fact and as a matter of record, is that under the Coalition Government, of which Deputy FitzGerald was a member, inflation went to more than 24 per cent. What we do know, also, is that, on the basis of the official procedure used by the Central Statistics Office, the impact of the tax changes on prices at mid-May 1980 will be less than 4 per cent. Of course, what happens to prices after mid-May will depend critically on future import price increases and on a number of other factors, some of which are under our control and many of which, unfortunately, are not.
We are in an inflationary situation and it is a cause for grave concern. It is in large measure a reflection, unfortunately, of the difficult economic conditions prevailing throughout the Western world. The annual rate of inflation in Great Britain, for instance, in 1980 is variously estimated to be between 15 per cent and 18 per cent. In the United States, it is well into double figures. In considering this aspect of our economic and fiscal situation, it should be borne in mind that excessive Government expenditure, particularly Government expenditure leading to current budget deficits, is one of the greatest of all domestic sources of inflation. In so far as this budget is concerned, because it takes a very considerable degree of corrective action in that particular area, its overall effect must be counter-inflationary and Deputies should have the good grace and the commonsense to admit that impact of the budget in that way.
This budget marks the first step in a programme designed to achieve economic and social progress, based on strong public finances and firm management of the economy.
It is not our intention just to make the different changes outlined in this budget and leave matters at that, We see the management of the economy as a continuing day-to-day responsibility. The budget proposals represent the strategy and the principal measures necessary to give effect to that strategy.
As the year unfolds, developments will be watched and assessed. We shall maintain our supervision over the economy during the year because we regard this as a dangerous, difficult and crucial year from the point of view of the Irish economy.
The effects of our budgetary measures will be monitored and supervised. Any corrective or supplementary measures which may become necessary in any particular area will be undertaken.
A national budget must of necessity be overall and global in its approach. Its impact may have undue or excessive repercussions in some particular areas. This is inevitable where there are major policy changes affecting the national economy as a whole. It is a responsibility of Government as part of their continuing management of the nation's affairs to watch out for undesirable developments of this sort and be ready to respond to them. Ministers will seek to monitor their particular areas of responsibility from this point of view. Social and economic management requires constant and sensitive attention to problem areas and to unforeseen developments. We will avoid anything in the nature of heavyhanded blunt instrument approach.
I said in my recent Ard-Fheis speech that we believe in government being for the people. This budget is for the people. It is for the old age pensioner, the widow, the unemployed. It is for the taxpayer, particularly for those taxpayers who are parents of families. It is a budget for the people by a Government who are for the people. It is a sound budget. In its approach to the economy it is responsible and balanced. We have set out to provide a sound financial basis on which economic growth and development can be maintained.
It is a fair budget. It makes a very positive contribution to equity and justice in our society. We have set out to improve the situation of the disadvantaged in our society for whom we have a special rsponsibility. We have taken a major step towards equity in the field of personal taxation. I have no hesitation whatever in recommending this budget to the House and to the country.
We have set a clear course for the economic ship. We have prudently trimmed her sails. We intend to keep her head into the wind and sail safely and steadily through these troubled seas, until calmer and better times arrive.
I regret that my maiden speech in the Dáil will have to be more than a little critical of the Government. Many people are only now realising that the income tax reliefs granted on budget day were in fact not as generous as it seemed they were. It is only for the single person or the married couple earning over £10,000 that any significant increase operates. These reliefs in the main came about only because of the Supreme Court decision. I believe that it is the Cork Murphys and not the Haughey administration that should be thanked and deserve praise. Persons whose incomes are under £6,000—and those are in the great majority—will get very little relief.
It is generally accepted that inflation this year will run between 20 and 22 per cent. That means that many workers will see their present income eaten away by higher prices, higher health charges and higher social welfare contributions. I honestly believe that the Government are playing a game of cowboys and indians—the indians did the marching and the chiefs got a big slice of the cake.
I am glad that the Taoiseach is here to listen to my next point which is about young people because I fail to understand his lack of understanding about youth despite the fact that we have the fastest growing young population in Europe. Young people were not worthy of consideration by an arrogant Government. The Government fail to realise that the young people are in fact their most valuable resource and I think it is my duty and responsibility to point out to the Government that we are not second class citizens. At the recent Fianna Fáil Ard-Fheis, the Taoiseach, and I quote from his speech there, said:
We see the energy, idealism, enthusiasm and creativity of our youth as our hope for the future. To equip them for their own future the Government will award a high priority to our youth problems and programmes.
So much for words. I sincerely hope that nobody, not even the young people within Fianna Fáil, are no naive and gullible as to take him at his word. The following Wednesday massive cut-backs were announced in the work experience programme, in the temporary youth employment scheme and in the employment maintenance scheme. Absolutely no effort was made in the budget to rectify this injustice.
The right to work is a basic human right. The Taoiseach has just said that job creation means different things for different people. The simple question is: can you or can you not provide jobs for the people? The seriousness of the situation is already evident in my constituency of North-East Cork where there are 400 people at present on the employment exchange in February, the highest figure for many years. Also, the Seafield Gentex factory in Youghal is in danger of closure. If this were to happen it would be a sad day for the people of Youghal. I make this public appeal to the board of Seafield Gentex and to the Minister for Industry, Commerce and Tourism to ensure that this factory does not close down and lead to the loss of 120 jobs.
I must give credit where credit is due. In the manifesto there was a commitment to full employment but I wonder now where the Fianna Fáil Manifesto stands as regards the promise of full employment. We were led to believe that this was their top priority.
In the field of education there has also been a reversal of policy. The country is facing massive cut-backs in capital investment in education. The effects of this Government policy will be felt for years to come. We all know that our present system of education is antiquated and unsatisfactory. We should be thinking in terms of massive investment in education, not cut-backs. The whole concept of free education is placed in jeopardy by these serious cut-backs. Brother Declan Duffy of the Secreteriat of Catholic Secondary Schools has indicated that the very existence of our secondary schools is threatened by the failure to increase capitation grants. I quote what Brother Duffy said in The Cork Examiner of 28 February 1980:
We really feel that we have no option at this stage but to go to the Taoiseach and put it to him that we be allowed to levy every pupil in the schools to the amount of £50.
If this occurs we will say good-bye to free education and instead of moving forward this rich man's budget will have thrown aside one of the most forward-looking pieces of legislation of the last decades. In doing this the Government are not only going to dishonour the memory of the late Donogh O'Malley but will cast serious doubt on their commitment to youth and social justice. I, as a national teacher, am only too well aware of the problems facing primary schools. Of course Fianna Fáil did promise in that famous manifesto to reduce the pupil-teacher ratio. We know how they have failed in that promise and it was a very simple one.
There are things ignored in the budget which we have to talk about when we are discussing the budget. The only thing the Government did for education was to put a 5 per cent increase on VAT. This applies to school books, copy books, biros and pencils. This will hit the poorer sections of the community hardest.
The budget gives very handsomely to the rich and ignores the growing poverty in the country. Why did the Minister for Finance cut the funds available to the Combat Poverty Committee by 24 per cent? I was bitterly disappointed by that decision. Sister Stanislaus in the Sunday Journal of 2 March said:
The harsh treatment will result in the Committee being unable to fund a range of well-established voluntary organisations.
So much for social justice in this country. We are all striving, irrespective of party, for a caring society but when the example does not come from the top what can one expect? It is only now, like most sections of the community, that farmers are coming to realise how harshly they were treated in the budget. I appeal to the Minister for Finance to withdraw immediately the resource tax before he is called on to do so by the law or the wrath of the farmers.
Deputy Flynn rose.
We will get it now.
Mayo should not start already interrupting Mayo.
(Interruptions.)
The Chair suggests that at least a Mayo Deputy would listen to a fellow Deputy from Mayo.
(Interruptions.)
The state of the nation has been fairly and clearly enunciated by the Taoiseach this morning and by the Minister for Finance in his Budget Statement last week. The country is grateful for the Taoiseach's stimulating speech this morning. I want to remind the House of remarks made by the Taoiseach at the Fianna Fáil Ard Fheis two weeks ago when he stated that the social and economic difficulties we face are immediate and grave. Nobody denies this. When the Minister for Finance stated in his Budget Statement that we are in a time of international economic recession he was stating the position as of now. He also stated that the nation in a period of growing prosperity has found it difficult to adjust to the new international reaction. The state of the nation as of now has been stated clearly by Fianna Fáil in this budget debate.
Fianna Fáil are responsible for it. They have been back in power for more than two years.
(Interruptions.)
On a point of order, when the Deputy talks about the nation, which nation is he talking about?
The Chair has already given a ruling to Deputy Harte that the Deputies are entitled to talk about the whole country.
I am entitled to deal with them in my own time. When I finish I can assure you I will have dealt with most of them pretty effectively. We are not the prophets of doom and gloom.
On a point of order, what is the Deputy talking about? When he says "this nation", which nation is he talking about?
The Chair has already given a ruling on this. Every Deputy is entitled to refer to the nation. We always have, down through the years. There is no question about it. Deputy Flynn to continue.
(Interruptions.)
Deputy Harte will have his own opportunity to speak and Deputy L'Estrange will also have an opportunity.
I want to be assured that those continued interruptions will not take from my time of one hour. If I could have an assurance from you on that matter I would be delighted to continue.
The Deputy will get injury time if Deputy L'Estrange does not stop quickly.
There are no prophets of doom and gloom on the Fianna Fáil benches at the moment. The case has been stated and the Fianna Fáil package to start us on the road towards progress in the eighties is incorporated in the Financial Statement of 27 February. Who would have thought just a month ago that the Government could bring in such a package to deal with our problems at this time? Our difficulties have been stated and our resolve to deal with them is written in every single page of the Budget Statement. The good example has been given by the Government. If the same sense of determination and dedication to duty is evident in every walk of life our present living standards will be maintained and will be improved further by a caring Fianna Fáil Government.
There are no predictions or crystal ball gazing in the Financial Statement. The budget is just a straightforward statement that our difficulties will be overcome by good, sound economic policies. There is a projection in the Budget Statement that if the revenue and expenditure work out as planned our balance of payments deficit will be reduced, our economic advance will be safeguarded, our pound will be secured and our national reserves will be restored to what they were.
The Public Capital Programme is a realistic and well programmed policy. Investment for future growth should be our first priority. Anybody will realise that the increase of 15 per cent in the capital budget programme ensures continued growth and gives continued financial aid in the areas which will lead directly or indirectly to the productive capacity of the economy and to the development of our national infrastructure. I am glad to support the Taoiseach in his sentiments in that regard this morning.
The increase in the capital programme in respect of energy runs from £100 million to £144 million this year. We are giving the capacity to the ESB further to improve their generating capacity to serve the needs of industry and all consumers. New users of electricity have to pay increased costs in relation to first supply. I have always felt that there should be a straightforward levy right across the country. It is strange to me that one can see a person in a northern area who can get a supply of electricity for less than £100 initially. Urban dwellers have the advantage of this facility and rural dwellers have not. If they are a certain distance away from the supply of electricity they often have to pay more than £1,000 to have their houses connected. I hope that in the not too distant future it may be possible to have this matter resolved so that all will pay an equal levy irrespective of where they live.
It is pleasing to see that in the £144 million provision for energy new finance will be made available to Bord na Móna to improve on the development of our bogs. There are many areas where there are hundreds of thousands of acres of undeveloped bog and the only reason they are in that state is because access is difficult. Some of this could be useful in providing improved access to this natural resource. If that were done I am convinced we could have a significant reduction in our balance of payments so far as the purchase of fuel is concerned.
There is a huge increase in industrial promotion under the capital programme. This is a commitment by the Government to see to it that our industrial promotion and the securing of new jobs is maintained. This would be the major responsibility of the IDA. The target to be achieved is 13,000 new jobs each year. It has to be admitted that in the past few years Fianna Fáil have to their credit the creation of unprecedented numbers of new jobs.
Where?
In every sector of the community—industry, agriculture, processing and so on.
There is an increased effort so far as housing is concerned. This has always been the primary concern of Fianna Fáil Governments in the past. We are the people who have maintained the house building programme, this year running from £159 million to £182 million.
This year special attention is to be given to telecommunications. There is an increased allocation from £78 million to £100 million. I do not have to tell this House that there is a great and grave need to have the matter of telecommunications attended to at this time. Telephone development, to a large extent, brings with it increased productivity, increased orders, and certainly it decreases any frustration for those who have to live by the telephone system. There is a big drive on and I am pleased to be able to thank the Minister for Communications for giving this area his wholehearted attention. Indeed, in my native County Mayo we are at present negotiating the making available of a fully automatic exchange for the whole county to be located in Castlebar with a subsidiary automatic exchange in Belmullet, the contract documents for which are to be signed this very week. This is the kind of commitment to development that this Government have traditionally had.
What are the Government going to do about the 24 hour service in Donegal?
This Government believe that telephone development is an absolute essential of industrial promotion and for the future of this country. The Government are to be congratulated for putting so much of their resources into this area at this time. The benefits will be seen by whatever government are in power over the next generations.
I agree it is essential that we should have restraint in some areas. The Taoiseach has been most forthcoming so far as this is concerned. There is no question about it but money incomes will not be allowed to rise further than productivity will allow. We have a system here whereby, if one can make a good case by way of productivity deals or re-structural deals, one is entitled to get more money. It is agreed by all now that we can only get increases in real money incomes when we have earned them, and that will be the policy of this Government in the forseeable future.
There has to be a ceiling on public expenditure both at central and at local level. This cannot be exceeded no matter what the drawbacks are, even if the purchasing power of the pound has to decline. It is absolutely essential in our present situation that the ceiling on expenditure be curtailed. That might be unpopular with anybody who has to serve either at national or local level. But it will provide a breathing space for the Government and enable them to tackle the fundamental problems. This is an essential part of the Fianna Fáil policy at this time: a strict and realistic budgeting programme, coupled with the national will to implement that, will have the desired effect. We must maintain our balance in the economy and avoid serious inflation. This cannot be achieved unless monetary policy is right. This was gone into this morning by the Taoiseach. I believe the steps being taken by the Government, even if they might bite a little hard on occasions, are essential in the present economic situation.
The big problem we have all had to live with in the past six months has been domestic control on credit. This has made things difficult for certain individuals, but is it not significant that after a certain length of time, even with that control, we have learned to adjust ourselves and to be better off for it?
We must maintain as well the external value of our currency. This was made easier by going into the EMS. We should take every advantage available to us under the EMS. We must take the advantage now so that we can call upon the stronger currencies we are now aligned with to give us any help we might need in overcoming our difficulties.
It will be agreed by all that monetary policy alone cannot be relied upon. There is more to it than that. Direct action has to be taken by the Government. That is imperative at this time and the Government have taken it. It was referred to again this morning by the Taoiseach when he talked about incomes policy. There is a need for restraint on incomes. What will it achieve for us? It will improve our competitiveness at home and abroad. It will raise our industrial profits. It will encourage investment and increase job creation potential. Restraint on Government administrative expenditure is the order of the day in this budget. We are not shirking our responsibility. The Government are determined to give a lead in this and show their faith in that they believe certain restraints are necessary at this time.
There is a need for and there will be a critical examination of all activities in the public sector. There will have to be a substantial reduction in the percentage of GNP absorbed by the public sector. Public expenditure has been rising too rapidly over the past number of years. It has been rising more rapidly than the GNP. Public service remuneration has increased threefold even in the one period from 1972 to 1976 alone, and it has risen significantly faster than that in the last number of years. There has to be a curtailment in that regard if we are to proceed to the economic development we all hope for. Perhaps there are ways of dealing with that. I should like to recommend one that perhaps has not yet been mentioned in this debate. There is always a temptation to do things by direct State activity. That has been the policy and the tradition of Governments down through the years, but I believe that some public works should be put out to competitive tender and this would transfer the employment from the public to the private sector. This is needed. It would require a break with tradition but we would have beneficial consequences and it is worth considering.
I am pleased indeed to note in the recent past that the Minister for Communications would seem to agree with me at least in part so far as this is concerned. He feels there should be more scope for the private sector in transport matters, that they should be considered as possibly providing certain limited facilities in the transport sector. I believe this is under active investigation at the moment. It might well be one of the major ways in which new job development potential could be created in the foreseeable future. I feel that this might very well be extended to communications. Other countries in the past and in the present have allowed commercial development of their telephone systems. It has worked successfully not just in the US but in many other countries throughout the world. Some of the private commercial companies that have responsibility for dealing with this type of development are the bluest of the blue chips.
There might be a way whereby some element of private development might enhance the tele-communications system and give a much-needed fillip so far as job creation is concerned. This could be considered also so far as local authority works are concerned. This may be regarded as a hobby horse of mine but I believe that major local authority works could be more cheaply and quickly brought to fruition if they were put up for tender by private enterprise. There would be no job loss so far as local authorities were concerned. With the increased productivity in the new schemes there would be increased demand for maintenance of the works. The local authorities should examine now all their major development works to see if a better deal could be got by having jobs put up to public tender in the private sector. It has always been agreed that in a progressive society the greater part of community wealth should be generated by the private sector. By tradition that sector is less wasteful of resources than public bodies. Consequently, in an effort to get the best value for our money we should consider very carefully all aspects of future development so far as the public sector is concerned.
This budget, in common with budgets introduced by Fianna Fáil since they returned to office in 1977, is asking the private sector to develop to its full potential. Private companies cannot be pillaged by the State as is suggested by some Opposition speakers when they talk about wealth tax and other taxes to be imposed on development so far as native Irish industry is concerned. Such crippling taxes cannot serve the national interest. Expansion and replacement come from a company's own resources and if it is stripped of those resources by inequitable taxation there will be no expansion and no replacement of assets. Instead, there will be a decline in profits, there will be stagnation, redundancies, unemployment and at the end there will be financial debt. This has happened during the years because of severe restraints imposed on native companies. They are entitled to the same privileges and incentives as foreign investors. We might have less activity on the part of Fóir Teoranta if there was a more enlightened policy with regard to taxation of company profits. They are absolutely essential when we talk about diversification, reinvestment and redeployment of capital.
The IDA have done a magnificent job in attracting industries here. The Government have recognised that they have played a major role in bringing to this country much-needed foreign investment and industrialisation. They need the support of the Government and they need extra money. It is a pity they have to be in a race at this time to keep up with job losses in industries that are going by the wayside. If we could remove job losses from existing industries it would be possible to reach the target of 30,000 new jobs each year and to go further. It would be possible to reach the situation of full employment in the 1980s. That is still the aim of the Government. The IDA should move into other areas in a smaller way so far as the west of Ireland is concerned and I shall deal with that matter later.
This is a budget of reality. That is a fair assessment of the whole package. A major aspect is the discretionary price increases. The consumer decides by his own spending pattern how much indirect tax he will pay in any week. If he and his family wish to live frugally he can avoid indirect tax almost completely. Consumers—and this affects housewives in particular—will be able to spend what they can afford. Budgeting the household finances will be an easier exercise. The essentials of life are unchanged. The Government accept that prices are increasing and, consequently, they did not remove food subsidies. Once again, family saving and financial planning will have a real meaning for the family. In this way Fianna Fáil have lived up to their traditional policy of protecting the weaker sections of the community and also protecting the family unit.
There have been increases in the price of drink and cigarettes and there has been the traditional reaction. In the days following the budget there has been a call for abstention from drink and cigarettes but we know that in a few weeks the consumption of alcohol will be back to where it was originally. It has been a feature of Irish life in the past years, that irrespective of what increases are imposed on cigarettes and drink the level of spending does not seem to change. The Taoiseach, the Minister for Health and the Government would be very pleased if the budget-bashing ritual had the effect of causing a decrease in the consumption of alcohol and of smoking. The benefits by way of a decrease in absenteeism, of increased productivity on the factory floor and less expenditure on health financing would far outweigh the revenue from these so-called necessities of life. I am not talking as a kill-joy; I am talking as one who "bends the elbow" a little now and then. I do not smoke very much now and I can appreciate that these items are not necessities of life. There is a saying in my part of the country which I am sure Deputy Harte will appreciate. It is to the effect that people do not care how high the price of drink goes as long as it does not go scarce. So far as I am concerned, people are entitled to drink and to smoke despite the fact that it has been proved beyond doubt that it has a detrimental effect on health, but they are also entitled to say "No" to drink and cigarettes. If they do this they will benefit themselves and their families and they can use their money on other much needed items. They will also benefit the nation from the point of view of health and there will be a consequent decrease in the huge demands on the health services.
Much has been made about the increase in the price of petrol. I am mentioning all the increases because I do not want anyone to say afterwards that I mentioned only the good aspects of the budget and did not refer to the increases. Despite protestations to the contrary, the increase in the price of petrol will have a conserving effect so far as the use of energy resources is concerned. People will consciously decide whether their journey is necessary or frivolous. Of course they are entitled to use their car for a scenic drive in the country but they must accept the fact that they must pay for it. It might also bring about what is long overdue in rural Ireland, car sharing in going to employment in built-up areas. It is not unusual in some of the plants operating in the west of Ireland to see rows and rows of cars parked in the car park. Sometimes three, four or five cars have come from the one village each with one occupant. Car sharing would improve community relations for the people in rural Ireland and if it did nothing more than give a fillip to community activities it would go a long way to improving the situation in rural areas. It might mean an increase and improvement in local entertainment. This may sound incidental, but there has been a decline in that kind of thing in rural Ireland over the past number of years, perhaps because of the greater mobility of people and if there is a decrease in that, that is all the better. We will see new, improved community relationships and activities which would be for the betterment of the people generally. Also every gallon of petrol spared will mean one gallon less to be imported. If we could get a situation of not having to import any oil, then all our economic ills would be set aside. In that regard I am hopeful that the black gold will be found off the west coast of Ireland and in particular off the coast of Mayo. Then it will provide us with a further infrastructure to develop our job potential in that part of the country.
Who can suggest that it is right and proper that there be a total expenditure of some £800 million to feed the fuel demands of 3.5 million people? Surely there is something incongruous in that kind of figure. It is time to tackle this matter once and for all. If this budget proposal goes any way to relieve some part of that situation it will have done a service to the nation in more than one way. There has been wastage of fuel by motorists in the past. It is common on Sunday morning in my parish to see people taking their car from a house half a mile away to their place of worship and on occasion having to drive 200 yards beyond the place of worship to park the car.
Does the Deputy do this?
Before Deputy Harte gets a chance to ask a question, I must admit mea culpa on many occasions and I am probably one of the greatest offenders in that regard. But I have taken this to heart and if time is still available to me I will be delighted to accommodate Deputy Harte by getting some little exercise on Sunday morning from now on and I hope the Deputy will take the good advice also. Motorists have wasted petrol, and the benefits of more careful use must be announced. Apart altogether from the health of the individuals who are driving, people would have more disposable income and there would be less congestion on our roads, fewer frustrations in queues, certainly when one is unfortunate enough to take one's car to the city for a few days, fewer disruptions in business, a reduced balance of payments and less dependence on outside sources for the necessities of life. These are worthwhile. If any measures taken by the Government can improve the situation as far as these things are concerned, I do not see why we should have so much shouting and roaring about the increase. I accept that it is substantial, but it is no more substantial than those which we had to suffer continually under the Opposition during the four years that they were in power.
Is the Deputy advocating the use of the donkey and cart?
The donkey and cart served a very useful purpose in the past. Many a good Irishman used them and as far as I am concerned they will be used——
Again?
——again in the west of Ireland this year.
(Interruptions.)
They will be used again to bring out the fuel from the underdeveloped bogs in the west of Ireland and that will go a long way to help our balance of payments. It is not very nice of Deputy Harte to make disparaging remarks about those people who have to use the donkey and cart to get their fuel supplies out in rural Ireland.
We are not short of donkeys. It is the carts that I am worried about.
I suggest that Deputy Harte listen to Deputy Flynn. We would get on much better if he did without trying to help him in any way.
He has been most patient and I have noticed that he has been listening attentively to me in the last half hour. I take that as an indication of the worth of what I am saying.
Is it a review that the Deputy is reading from?
Should the Deputy come up here he will find that I have some nice headings here and I intend to proceed with them if he will give me the opportunity.
The opportunity that the Deputy will get——
Deputy Harte will have his own opportunity, or "Desperate Dan" will be outside the House if he does not behave himself.
You know how I like a little diversion.
I do, but the Chair does not like it one bit.
The question of taxation was dealt with by the Minister for Finance, and again this morning by the Taoiseach, pretty extensively, and I am not going to dwell too long on it. When the Taoiseach stated not too long ago that we should be ambitious in our approach to taxation in general and equity in taxation particularly, nobody—and I dare say I can include Deputy Harte in that—ever dreamed that the Minister for Finance would in one giant step go 90 per cent of the way to bringing justice into taxation. It is remarkable that in this budget debate Opposition Deputies have steered clear of this section of the financial statement. Why have they not the courage, decency and grace to state openly that this is a major advance, that the people accept it as a major advance and that it has gone almost the full way in bringing about equity once and for all into the taxation system? This budget has been imaginative as far as taxation is concerned. Who would have thought that full income splitting would have been removed in one day's work? I accept that this was a long-standing injustice——
Removed?
——but there are better concessions for the lower paid and no taxation of social welfare benefits. This is a realistic approach to taxation in 1980.
When will we get around to Curly-Wee and Gussie Goose?
Never did the fine bunch of withering violets on the far side think that they would want such a dose of Bio to get over that aspect of the budget as happened here last week. The commission on taxation that has been promised will, I presume, go further and when their report is forthcoming the Fianna Fáil Government will not be found wanting in going the full distance to bring total justice and equity into the taxation system in the very near future.
There has been some increase in taxation as far as the farmers are concerned. I do not want to reiterate what the Taoiseach said this morning, but it is fair comment that the farming organisations have been asking for one thing one month and then certain sections of their supporters and members have been asking for something different. Maybe it was intended that going on two or three different roads at the one time would deflect the Government somehow from their stated intentions. This has not proved to be the case. It was stated last year that accounts would be the fairest way of dealing with everybody who had to pay tax in this country and who was not on PAYE. That is the fairest way to do it. One does not pay tax if one does not have a profit. A predetermined yield is not expected from the farmers on this occasion. Many business people do not have this simplified accounts system which can be used by the farming community, and if it brings in a little extra yield the farmers cannot be aggrieved by it. I hope the farming organisations will accept this package and will accept that the commission will deal with all the outstanding matters in the not too distant future. Most of the people in my constituency do not have to pay a resource tax. However, that is quite a small sum of money and when the benefits derived from the existing tax structure are made available next year it will be reviewed, as the Taoiseach promised. The fact that the £40 valuation levels will stay for at least three years is a great asset as it affords the farming community an opportunity to plan for the next three years and to know their liability as far as tax is concerned. I expect that the farming community will accept this and that we will not have disruptions in that area during this year.
Will the Leas-Cheann Comhairle say how long I have left?
The Deputy has almost 25 minutes.
The taxation policy as enunciated in the Financial Statement took account of the poorer areas. In County Mayo, for example, we have 36,206 farmers with under £20 valuations; we have 1,552 farmers, with between £20 and £33 valuations; we have 227 farmers with valuations between £33 and £40 and we have 314 farmers with valuations over £40. Our rates are roughly £17.40 in the £. Deputies will agree that we have very small valuations. The rates on agricultural land here bring in £544,000, which is 7.7 per cent of the total receipts that come to Mayo County Council. The number of extra farmers brought into the tax net by the provisions in this budget will be 212 and most of them will be in the sliding scale area between £40 and £50 valuations. However, £688,410 or 9.75 per cent of the total revenue to the county is paid by ratepayers other than farmers. The small business men in Mayo pay a lot more than the farming community in rates. The Government pay £3,910,000, or 55 per cent of the total amount of money needed to run the county for a year, and that is from the agricultural grant to the county of £7,062,410. The farmers in County Mayo will not be hard-pressed by the new provisions. I know that areas with better land, with over £70 valuations, will have to pay an increase in their share of taxation but it is a continuation of the policy of a caring and sharing Government that Fianna Fáil have not placed an extra great burden on the small farmers in the west. They appreciate it and thank the Government for their efforts. When one considers that the 212 new farmers who will be brought into the tax net will have the advantage of being able to write off the rates they might have to pay against any possibility of income tax, one can see that it is a very small amount of money indeed.
When the Minister for Finance mentioned the question of a mobile advisory service in relation to taxation there was some derision here. We in County Mayo are not tax dodgers and we welcome this service. Many people have considerable difficulties in dealing with their tax returns and they need advice. It is a great step forward in making this service available to farmers in their local areas. I hope that the Minister will make that service available for quite long periods in the near future.
I congratulate the Government on their employment policies for the west. We had a big increase in employment between 1970 and 1980, of 150 per cent. The figures went up from 2,583 to 6,570 in that period and we are grateful for it. There was an increase in population, as shown in the last census, of 4.1 per cent in Mayo and that is the first increase since the Famine, since 1840. This is very significant in more ways than one. We retained our natural increase and we also came to a situation where for the first time we got some net immigration into the county in the last few years. This was achieved by a Government who recognised that there had been a drain on the youth here for 100 years. We wish to keep going that way.
We have not failed our youth in that area. The Fianna Fáil Government were conscious of their obligation to provide employment in such places as Mayo and we have now reached a situation where we are providing jobs for the young people coming from our second and third level institutions. This increase in our population could not have come about in an area that was traditionally denuded of its population by emigration and migration unless Government policy had taken the initiative and set about industrialising the west. I am grateful for the advances the IDA made in the production of advance factories in my constituency. Two new advance factories, measuring 24,000 square feet each, were authorised for Castlebar, one factory measuring 5,000 square feet was authorised for Westport, there is one in Louisburgh, one in Keel, one in Kiltimagh and one in Claremorris. All this illustrates a firm commitment to continue the progress achieved over the last few years. As soon as the cluster unit at Castlebar, which comprised six individual units and totalled an area of 10,000 square feet, was promoted, we found clients for it. There will be small engineering type industries there that will provide electrical components to meet the demands of industries in the area.
It has been suggested in some quarters that Mayo has done very well and that the emphasis might be shifted to other areas. However, my reason for contributing to this debate is to let the IDA and anybody else involved in industrial promotion know that we need continued growth to cater for the 1,500 young people coming on to the labour market each year from our second level educational institutions. All those new factories that have been established in the county in the past ten years have been staffed by young people. When industries are staffed by young people the same people continue in that employment for a very long time, but this means that there are not job opportunities for young people coming on to the labour market each year. That is why it is absolutely essential that we continue with the programme of advance factories, with advance recruitment and with the selection of suitable industries for the area. We need new industries if we are to prevent emigration from starting again. It would not be to the credit of any Government that it should become necessary for emigration to begin again from County Mayo. For the first time in the county we can look around us and see the urban areas developing and the population growing. The credit for this trend must go to Fianna Fáil. My constituents are happy with the job creation programme and with Government activity in this field.
Apart from the major industries there is a great need in our county to develop small industries. Our county development team are very active and effective in promoting the county as a suitable location for the smaller type of industry. We send teams of people to Britain, to the US and to other places in an effort to help the IDA in attracting small industrialists to Mayo. Because the county is very large—the third largest in the country—and because its population is fairly well dispersed, it is suited ideally to the smaller type of industry. However, one of the disadvantages that faces our people in their efforts to promote the county in this way is that it is not always possible to offer suitable sites in our smaller towns. Therefore, there is a need for suitably serviced sites with full planning permission before the industry hunters go about their business. It is difficult to expect somebody to agree to come to the county to set up an industry on a mere promise that when he gets here the sites will be made available. That is why there is a great need for small advance units, units of about 2,000 square feet, and the developing agency for those units should be the county development team. Funds should be made available from the special regional development fund to this local team in order to enable them to acquire small sites in the rural areas and in the smaller conurbations. I trust that the IDA will take note of my remarks and will make money available to the development team in order to allow them to proceed on the lines I have outlined.
In this budget there has been much emphasis placed on the capital programme and on the need for improved infrastructures throughout the country. There was special reference this morning to roads and that is an aspect to which I should like to make special reference so far as the west is concerned. On the question of transport generally there is need for another airport in the Mayo area. I understand that both Sligo and Waterford have got the go ahead in regard to airports. A feasibility study is being carried out in respect of Mayo in this regard. I trust that the outcome will be satisfactory because another airport is essential if our industrial, agricultural and fishing operations are to continue to develop during the next few years. In addition, the provision of another airport would generate a new tourism drive. I am not taking from Deputy Harte's county when I say that the whole of the west of Ireland is perhaps the last noncommercialised tourist area in western Europe. Given the proper development facilities, it could be a big factor in improving our balance of payments situation. Last year three million pilgrims visited the Marian Shrine at Knock. It is not my wish to take from Deputy Morley's remarks in this regard but we are confident that this type of influx will be a continuing business. Can any other county boast of so many people coming to a location within the county during last year? Admittedly, last year was extraordinary in this regard, but it is accepted that in excess of one million pilgrims will visit the area from now on.
Are Fianna Fáil taking the credit for that, too?
They are taking the credit for having provided the necessary finance to have carried out all the restoration work at Knock in order to facilitate those pilgrims.
Deputy Harte should not interrupt Deputy Flynn.
In addition to facilitating the development of our industrial programme provision of an airport would go a long way to increasing our potential in that regard. It would service also our offshore exploration. It is accepted generally now that the most likely place for an oil find is off the Porcupine Bank. The provision of an airport would service also our fishery development. Deputy Harte's countymen visit the shores of Mayo and fill their boats with Mayo fish and to that extent he might very well support the provision of this extra facility which would assist those fishermen in having the catches delivered to the markets.
Would these be County Mayo, Fianna Fáil fish?
Fianna Fáil red herrings.
We provided wonderful harbour facilities at Ballyglass and these are availed of by fishermen from Donegal who, I might add, are always welcome to Mayo. The Darby Point development is in need of extra finance in order to provide proper berthing facilities for the native Achill fleet.
Is the Deputy talking about the republic of Mayo?
There was reference this morning to the need for new education institutions in order to provide the expertise and the development necessary to service our industries. The Government might consider this a suitable time to provide a third level educational institution in Mayo. We need a regional technical college and we need also an AnCO training centre. Those 1,500 students who leave second level education each year must go either to Sligo or to Galway if they wish to pursue third level education. Though the Buchanan Report may be dead, the memory of it lingers in so far as some of the ideas put forward in respect of centralisation are concerned. I am thinking especially of Mayo. Why should we not have a regional college? In the county there are 22 secondary schools, 14 vocational schools and one community school with a total enrolment for all institutions of 9,012. I shall quote from figures from other counties in this respect. In Carlow there are 3,078 second level students. The figure for Kerry is 9,199, for Donegal it is 6,691, for Galway it is 14,698, for Westmeath it is 5,683, for Louth the figure is 6,829, for Waterford it is 4,901, for Sligo the figure is 4,409, while for Limerick the figure is 12,496. There are 656 young people from our county attending university while 284 are attending other third level institutions. Having regard to these figures we are entitled to a third level education institution.
Hear, hear.
We need to be able to provide the technological training that will be necessary for our young people to have for the industries that we will be developing in the future. According to the Tussing Report there will be required 30,000 new spaces before 1986 in this particular type of education. Surely County Mayo rates as one of the primary places in which to provide such an institution.
Would the Deputy suggest that it be located at Castlebar or at Ballina?
For a very good reason I would suggest Castlebar. There is the infrastructure there to cope with such an institution. Geographically, it would be the ideal location, being in the centre of the county and having a hinterland which caters for about 65,000 people in a total population of 414,000.
The weaker sections of the community have always been a prime concern of Fianna Fáil and this budget, more than anything that has gone before, indicates clearly the right of those weaker sections to share in the general prosperity of the community as a whole. These people must be protected against the impact of economic developments. The budget displays a practical commitment to cushioning the needy against rising prices and greater inflationary tendencies. Because we have a caring and sharing Government we have reached a situation where, by another fell swoop, the Minister for Finance has gone a very long way to making life easier for the needy. The Government have been generous this year and our generosity so far as the weaker sections are concerned has been well received by the public generally.
There is some concern regarding abuse in respect of some of the schemes administered by the State but there is a general anxiety to root out those who would seem to abuse these schemes so that more money may be made available for those in genuine need.
This budget has gone a long way in settling down the community, in settling down the PAYE workers. There is guaranteed increased moneys for the areas that are most in need and the budget has gone a long way also to increasing the standard of living for those in receipt of social welfare payments. In these circumstances the Government must be congratulated. As the Taoiseach said this morning, if the Opposition had a little commonsense and were gracious enough to accept the fact that a major improvement had been effected and that a real start had been made in our endeavours for the eighties the country would have a better chance of attaining the goal that had been set for this decade.
I listened with considerable interest to the Taoiseach's contribution this morning and I think that we can come unambiguously to only one conclusion in relation to that contribution, that is that the Taoiseach is a very much more worried man than we had thought he was before he made that speech.
It is obvious now that it is a prime characteristic of this Fianna Fáil Taoiseach, as it was of his immediate predecessor, that he is far more worried by the people behind him than by those in front of him. I have been puzzling for some days about two immediate reactions to the budget speech of the Minister for Finance. One of these reactions has been on the part of Fianna Fáil Deputies who have come to me and also I understand to other Opposition Deputies in the corridors and have asked us what we think of the budget. This is a fairly unusual way for Fianna Fáil Deputies to support their Minister for Finance. The obvious difference is that at best they are confused and that at worst they are seriously worried about the implications of the budget——
I would suggest that the way these Deputies spoke to Deputy Horgan was "What do you think of that, Deputy Horgan?"
——in the immediate sense for their own political futures and, if they are longer sighted, for the national interest. There is another aspect of reaction to the budget which puzzles me and that is that for the first time in five years the Taoiseach of the day did not come into the House on the morning after the budget speech to defend the provisions of that budget. I know that the Taoiseach intervened the previous evening on the question of the tax on petrol but it is not unusual for a Taoiseach to intervene briefly on Financial Resolutions. However, it has been unknown during the past five years for a Taoiseach deliberately to back away from a confrontation with the Opposition about the budget.
It has been unknown for a budget to be so generous.
The Deputy should not draw me on that lest I should become more ungenerous.
I always knew that the Deputy was conservative.
It is clear now that the reason that the Taoiseach was keeping his powder dry was that he was apprehensive about the political and economical impact of the budget and that he was waiting to see what way the wind was blowing before coming in to defend it.
In addition, the first two Fianna Fáil speakers on the budget were the Minister for Health and Social Welfare and the Minister for Fisheries and Forestry, both of whom were promoted to their positions by the Taoiseach from the backbenches. I have nothing against those two men personally. They made the best of a bad job in their contributions but it is totally reasonable to ask where was the shadow cabinet on this occasion, the cabinet headed by the Tánaiste? Why have there not been contributions to this debate from the second eleven? The answers are clear. The budget is not one which fits in very well with some of the priorities that some of these men might have preferred to see being given a greater place. I should hope to make this more clear in a moment. Apparently what has happened in the seven days since the budget was introduced is that the chill winds of reaction have begun to whistle around the ears of Fianna Fáil backbenchers.
The Fianna Fáil backbenchers, conduits in this as ever, have passed on these messages to their Taoiseach and leader who, obviously upset by the fact that his budget was not going down as well as he thought it would, decided that the time had come finally to come in and stiffen the troops. That is what we saw here this morning, an exercise in stiffening the morale of the Fianna Fáil backbenchers. I believe it was an empty exercise and I do not believe it will have the effect he intended, because the applause from the Fianna Fáil benches was very muted indeed.
There is one significant aspect of this morning's speech to which I feel we can legitimately call the attention of the public and that is the Taoiseach's virtually total abandonment of one of the progressive measures in the Minister's budget speech—there are one or two of these and I will refer to them as I go along—that is, the resource tax on land. Listening to the Taoiseach today one would never think that this proposal was only a week old. The chill winds of reaction, especially from the better off section of the farming community who virtually alone would have been asked to bear this resource tax, have been enough to send the Taoiseach and this Government scuttling for shelter. This week old infant, this mewling, barely adequate resource tax, has now been despatched in an act of political infanticide that can barely have been parallelled in recent years.
In it worthwhile recalling that the Irish Congress of Trade Unions, reviewing the proposal to impose just such a resource tax of £3.50 per £ of RV on farmers of over £70 rateable valuation, described it as modest indeed and looked forward to the time when it would form the basis for an adequate system of capital taxation affecting the really wealthy agricultural landowners and producers. We have been told in this House by the Taoiseach that the tax concerned, instead of being part of a shift towards equity in the taxation system, has suddenly been demoted to the role of a short-term expedient. Those were the words the Taoiseach used.
I suppose we were wrong in the first place ever to take, with any seriousness, the idea that a Fianna Fáil Taoiseach would introduce a worthwhile resource tax and would keep it there until it really started to bite. If we had any fantasies in that direction they must surely have been dispelled by the unmistakable signalling of the Taoiseach to the farming interests, and not to the small farmers who would not have had to pay this resource tax anyway, but to the large farmers, the farmers he is afraid will transfer their political allegiance to other parties, that the resource tax is now up for grabs and if they come a little towards him he will go a long way towards them. This climb down from the resource tax is contemptible in present circumstances, all the more so in the circumstances of the present budget.
We also have to remember that there are other aspects of this budget's approach to taxation which deserve comment and especially in relation to farming. We now have a commitment from the Government not just to auction off the resource tax at the first opportunity but—and I do not think the significance of this has been fully appreciated—to peg at £40 RV, for three years, the level above which farmers have to supply accounts for taxation purposes. Two things might be said about that. First, there is no such commitment in relation to any of the tax concessions for the PAYE sector announced in the same budget. Secondly, whatever else happens in the next three years, we know an election will happen. Here was another example of signalling by the Minister for Finance and the Government to the farming community that in at least this important respect no more will be asked of them in the next three years than is asked this year.
The Leader of Fine Gael in an otherwise very interesting speech made one statement which I found rather odd, when he described this budget as lacking strategy. I do not see anything else in it except strategy. It is a strategy designed to buy off powerful interest groups in society and, as a result, to achieve electoral success. That is the beginning, the middle and the end of this budget. There is nothing ignoble in seeking electoral success, but sometimes the price can be too high. When we look at the concessions in this budget we have to ask ourselves not just what they are but where is the money coming from to finance them, and why are they being made in the first place.
One final point that might be made in relation to farming taxation is this: historically it is true that since the introduction of farmer taxation by the National Coalition Government—to listen to Government speakers one would think they were the only people ever to have taxed farmers—it has consistently happened that the projected revenue from farmer taxation has been over-estimated and the projected revenue from PAYE and other forms of income taxation has been under-estimated. We have to look at the proposals on farm taxation in this budget in that light in particular, and especially we have to look at the now virtual abandonment of the resource tax in the same light.
There is another aspect of the Taoiseach's speech I would like to turn to. He argued that because so many of the concessions in this budget were so popular commentators in this House and outside had to confine their criticisms to articulating some prognostications which had no statistical basis in fact. Of course prognostications have no statistical basis but one man's prognostication is as good as another. The prognosticators on this side of the House have a right to be considered as well as the Taoiseach and it is interesting to note that the Taoiseach did not give us any prognostications of his own.
In passing I might add that I dislike the term "concessions" when applied to certain forms of tax relief, and above all to social welfare benefits. They are not concessions, they are rights and they should be seen as such.
This morning the Taoiseach invited us to consider the budget in all its glory as presented a week ago, to ignore the past virtually entirely and to close our eyes to the future. In this he was following the line he has followed since he came into the House as Taoiseach not long ago. He has managed to dissociate himself politically from a Government of which he was a member for two-and-a-half years and to whose Cabinet decisions he had been collectively bound. I suppose this was part of his appeal to his own backbenchers and one should not hold it too hard against him, but he not only underlined the message that he had nothing to do with the mess of the last two-and-a-half years but asked us to close our eyes to the possible, let alone the probable, future implications and results of this budgetary strategy.
The Taoiseach is an accountant by profession and nobody knows better than he that you cannot look at one year's trading figures of a company in isolation; you must look at the effects your policies have had in the past and at your investment and cash flow projections in the future. We contend that when you look at investment and cash flow projections for the future the future presents a much more dismal prospect than the Taoiseach would like us to believe. He is blaming the problems of today on the misdeeds of yesterday, for which he himself was partly responsible, and he is borrowing from tomorrow to pay for them.
This budgetary strategy will undeniably land us in very serious trouble this time next year, and when I am asked what I think of the budget, part of my answer has to be, "I will tell you in January 1981 because it will not be until then that some of the negative effects of the budget will become apparent". Some of us may not be here then if the Taoiseach decides to make a dart for the country, but that is neither here nor there. I will not argue about percentage points, about whether inflation will be 22 per cent or 16 per cent or whatever, because I do not think you can put a figure on it at this stage. However, it seems clear that the situation must be worse next year than it is this year.
The Taoiseach and the Government will not be able to do next year what they have done this year. Indeed I think we will be very lucky if the Government do not follow the principle which was a feature of at least one other Fianna Fáil Government in which the Taoiseach was Minister for Finance, when they got their sums wrong and had to introduce a supplementary budget in the autumn. I am afraid the taxpayers must prepare themselves for just such a shock this year because we have it on the authority of the Minister for Finance in his budget speech that if more money is needed he will come to the House to look for it. There is only one way he can do that and that is by increasing taxation.
The speech of the Minister for Finance was interesting because at the beginning it seemed to set the scene for some radical measures. In particular it referred to changes that had taken place in the previous year. At column 705 of the Dáil Official Report for 27 February he is quoted as follows:
Obviously there has been a complete change of circumstances compared with the situation as it appeared this time last year.
I can remember sitting here when the Minister said that and waiting with some anticipation for the details he would give us about this complete change in circumstances. What did we get? He spoke about the massive oil price increases and increases that were to come. He said the farming community had met with serious difficulties during the year—he did not go into details about that—and he spoke of the pattern of industrial disputes.
That is not a long shopping list when you draw a line underneath it and put underneath it "a complete change of circumstances". The oil price increase was probably the largest single element in the change that had taken place. I have not got on the tip of my tongue the figure for the value increase in oil prices during the year but I understand they were about 80 per cent. The Minister must have a very short memory if he does not recall that in an earlier year, 1975-76, oil prices went up by nearly four times the percentage that they went up last year and that the budgetary measures taken then and subsequently reduced the rate of inflation to approximately 7 per cent by the time that Government went out of office.
The wheel is now going in the other direction. The inflation rate is either going up or staying as it is. So the complete change of circumstances referred to by the Minister for Finance materialises when we look at the evidence which he adduced in his statement. In the Minister's speech there is a total absence of any statement, assessment or estimate about the effects of the budget on growth next year. We have had from the Department of Finance in their preliminary statement on the budget a comment to the effect that growth next year will likely be less than 3 per cent.
It was reasonable to have expected the Minister for Finance in his budget speech to have said what in his opinion the budget would do to achieve greater growth. Because he did not, the only conclusion we can come to legitimately is that no news is bad news. Though the Taoiseach came here this morning to warn us about a projected negative growth rate in our largest single market, the UK, not even he in a carefully researched and well prepared speech made any reference to the budget's effect on our growth rate. He must be faulted for that.
Both the Minister's and the Taoiseach's speeches can be faulted in relation to jobs. It was 5.15 p.m. on budget day before the Minister for Finance mentioned jobs, and he skated over the subject obviously because it was a very difficult area for him. It is equally obvious that criticism not only from these benches but from the benches behind the Taoiseach have set his ears tingling because he came in here this morning in a deliberate attempt to counter the criticisms that have been made about the budget and its omission of any specific reference to jobs. One can very easily come to the conclusion that there is little more in the Taoiseach's speech today than rhetoric.
I invite Members of the House to compare what the Minister for Finance said on Wednesday last and what the Taoiseach said here this morning about jobs with the pages of material about jobs contained in the Financial Statement of the former Minister for Finance on 7 February 1979. Then there were at least three full pages devoted to jobs, investment and employment creation in all its forms. There is a long way between 1979 and 1980—from three pages of facts, projections and estimates to a couple of stirring phrases delivered on the eve of a battle by a general not altogether sure of his troops. I have differed on many occasions, politically and economically, with the former Minister for Finance, Deputy George Colley. But I do not think that anybody who sat here during not just his budget speech last year but during the detailed discussion of the provisions of the Finance Bill which followed the budget could doubt that man's concern for jobs, could doubt the concern with which he challenged these benches to put forward alternative strategies or measures which would do more to create employment than the measures he was suggesting on the far side of this House. We did our best. Obviously we did not satisfy him, but I would not have expected that we would have done. The important thing is that the argument was about something that is real and important in our society. In place of that argument of last year we have the rhetoric of this year.
In one area of special concern to me, that of education, there were specific promises given in the budget last year for new jobs in the educational sector. It turned out—as I was afraid it might—that many of those proposals for jobs in the educational sector were so ill-conceived and under-financed that the degree of take-up within them was not as large as the Minister for Finance, and presumably the Minister for Education, had hoped. In some cases the degree of take-up was 30 per cent or less and the Minister for Finance and Minister for Education were justifiably criticised from these benches for devising schemes which did not produce the intended jobs. At least they devised schemes. They sat down and tried to do something about giving to our schools, to the hard pressed staffs in our schools, some extra administrative and caretaking facilities. That absence in this year's budget is as nothing compared with some of its other deficiencies. To my mind the major achievement of this budget has been totally to deflect attention from the savage cuts both in the Public Capital Programme and in the Estimates for current expenditure published by the Government in the period between Christmas and budget day. We cannot ignore these for the simple reason that they form part of the budget. The budget, in terms of its desire to reduce borrowing and to cut the current budget deficit, has a direct relationship with the Estimates and with the Public Capital Programme. Here again it was plain that the Taoiseach was coming in to respond to criticism reaching him from the ranks behind him.
Let us look again at education. The Public Capital Programme for education is reduced by 7.5 per cent in money terms. That means a reduction in real terms of the order of 20 per cent; in layman's language, a fifth less will be spent on capital provision in the educational area this year than was spent last year. This is dispiriting news for the parents of children in overcrowded classrooms or perhaps in some of the shanty towns of prefabs that have to do duty as educational facilities in many of our schools.
The situation is not much better when we come to education on current account. When we look at the various subheads here we see that the Government's prating about discretionary expenditure in relation to taxation on drink, tobacco and so on has been designed partly to conceal the fact that they are cutting their own discretionary expenditure very shortly in these areas. Many areas have no money increases at all, which means a cut in real terms when inflation is taken into account. It is interesting to note that the areas in which these cuts tend to be made on the current side are those in which the Government have not traditionally funded the total amount necessary. In other words, in relation to items such as free books, the fees grant element of the money made available to some post-primary schools and so on, where there has had to be traditionally, despite so-called free education, a matching contribution from the private resources of the parent or student concerned, the Government's contribution has been pegged or even cut back. This means that the resources necessary to bridge the gap between what was given last year and what is needed this year will have to be found privately. When we consider this we have also to consider the fact that different people and different parents are in different positions when it comes to finding the extra expenditure that will be called for this year if they are to maintain the educational services for their children at the level at which they were maintained last year. It is all very well to talk about discretionary expenditure but, first of all, one must have some money about which to exercise discretion. For all the changes that are to be made in this budget the fact is that some parents have very much more discretionary powers than others because they have very much more discretionary expenditure. It is precisely the parents who have less money over which to exercise their discretion who will be most seriously hurt by the severe cuts that have been made in the Estimates for current expenditure.
Debate adjourned.
Business suspended at 1.30 p.m. and resumed at 2.30 p.m.