I move:
That Dáil Éireann condemns the economic policies of the Coalition Government which have greatly increased prices and the cost of living and which are causing severe hardship for social welfare recipients and those on lower incomes and calls on the Government to take special measures immediately to safeguard the welfare and the living standards of these sections of the community this winter.
The Coalition Government's economic policies were in the first instance based on a false premise and constitute a recipe for economic disaster, for disruption and for gross inequity. The Taoiseach, as we know, exaggerated our economic difficulties and over-reacted grossly in the remedies which he took. One example of these remedies here tonight was just narrowly passed by this House, narrowly passed because it was a remedy purely and simply to save money at the expense of the education sector. This is only one of a long list of similar propositions by this Government which will be contested in this House by us. Indeed, we will appeal to the Labour Party and the Independent Members to recognise what is really happening here with this Government and the policies they are pursuing.
One of the most insidious and disturbing aspects of this Government's policy is the fact that it is shifting so much of the burden from taxation generally to indirect taxes. The Coalition began their term with a budget that was unnecessary and was aimed at raising unprecedented taxes not in this year but in the coming year, 1982. The purpose of this budget, which contributed so little to this year, can be seen only when we look into the context of next year. These indirect taxes are intended to collect sufficient money in 1982 to help offset the enormous cost of reducing direct taxation. For example, the 50 per cent increase in the 10 per cent rate of VAT will bring an extra yield of £188 million in 1982. One would ask if the savings which are being effected currently in education were necessary at all when you have that kind of money coming into the Government coffers next year, when this is in effect an equivalent of £268 per annum from each PAYE taxpayer.
One of the most unacceptable aspects of the Coalition policies is that the burden of this taxation will fall most heavily on the middle and lower income families. In simple terms these families are heavy consumers of goods and services, but because of their lower incomes and untaxable social welfare benefits they pay very little tax and stand to gain little from the reduction in direct taxation. These are the people to whom we want to address ourselves here tonight particularly. The Coalition's shift from direct taxation to indirect taxation will favour the rich and increase the burden on the poor. It will create more poverty in Ireland and will lead to greater unemployment. I believe that most of even the economic commentators at this stage are coming to recognise the validity of this argument. The Coalition have placed the indirect taxes on the normal household necessities instead of restricting them to luxuries. Of course, they did this because the tax yield from luxuries would be too small in Ireland. The band of luxuries is relatively small in relation to the area covered by the 10 per cent VAT rate, which is the area of normal household consumption.
The effects of these regressive indirect taxes are numerous. They will involve heavier taxes on the poor and on larger families in particular. The VAT increase is a good example since it increases the cost of school books, medicines and household goods. They also increase inflation. The recent budget package added 5 per cent to the CPI and next year's package will, it is estimated, add a further 8 per cent to the CPI. Therefore the Coalition have themselves increased prices by 13 per cent and consequently lessened the prospects for job creation. The indications now are that next year's inflation will be from 22 to 25 per cent as a result mainly of these policies. Indirect taxes result in people with the same incomes paying different amounts of tax according to their consumption patterns. Therefore, when the taxes are placed on non-luxury goods, as they have been by the Coalition, they fall most heavily on the middle and lower income families. Also they hit the one-income families harder than where both parents are working. In this way they are one of the economic instruments which force both parents to work, and they militate against the traditional Irish family.
The shift to heavier indirect taxation will create a greater divergence between the North and the South of Ireland by raising prices here relative to the North. The resulting increase in cross-Border smuggling already apparent will lead to less production here and consequently fewer jobs.
One of the most obvious aspects of the Coalition policies, which is already coming to light, is the whole question of rising prices. The Coalition's honeymoon is over. The gestation has run its course and a new cost of living monster has been born. This monster has easily recognisable distinguishing marks. Families and those on lower incomes will know them well. They include Government-led price increases in household requirements, medicines, schoolbooks and materials. VAT is one of the prime examples of this, with the increase from 10 per cent to 15 per cent. They also include excessive increases in transport costs through Coalition petrol, motoring and CIE cost increases. If we look at the increase in the price of petrol from 1 June to 16 October we see that the price of a gallon of petrol in June was £1.90 and on 16 October it was £2.26, an increase of 36p. Bottled gas, which surely is one of the most widely used methods of heating now especially for people on low incomes, has increased from£4.33 on 1 June to £5.94 on 16 October, an increase of£1.61. A bag of coal increased from £3.50 to £5, an increase of £1.50. When we look at the ESB we find expecially excessive and unwarranted increases. Electricity prices have been increased by 25 per cent on com-domestic bills and 29 per cent on commercial accounts. I pointed to this at the time when the Minister for Finance, Deputy Bruton, introduced his budget in July. He said at that time that the ESB had sought an increase. The NPC had given them 12.3 per cent, but because there was a delay in the implementation and the questioning of the need for such an increase at this time, he felt that they should be given a 25 per cent increase for a period of not less than a year to recoup what might have been lost to them.
This 25 per cent increase, which he included almost as an off-the-cuff remark, is now being shown on the normal domestic and commercial bills, except that on commercial bills it works out at 29 per cent. I have here a bill issued on 3 November which covers the September-October period, the first to include the Coalition increase. The increase in the general domestic rate is from 3.890 pence per unit to 4.360 pence per unit, a 12 per cent increase. The fuel variation surcharge goes up from 1.111 pence per unit to 2.017 pence per unit, an increase of 81 per cent. Even the least involved people in this area will recognise that the fuel variation surcharge should not in that time increase by anything of that order. Indeed, fuel prices have been relatively stable in that period, as was anticipated. The ordinary domestic consumer has been faced with this gigantic increase of 82 per cent in ESB bills.
I understand that the Society of St. vincent de Paul have considerable difficulty in helping people to meet ESB bills and I was quoted a figure of £250,000 which they expend in Dublin as a subsidy on these bills and for some other fuels. They will now come under extreme pressure and at least 25 per cent can be added to that requirement. There will also be more people in need of assistance. The impact of these ESB increases will be very serious for those on lower incomes.
The ESB accounts published in September show a profit of £6.3 million with £26 million for depreciation and £26 million for amortisation, giving them a cash flow of £58 million. Notwithstanding that, the Minister for Finance, as part of the Coalition policy on their assumption of office, gave the ESB a 25 per cent increase on their total electricity income of £400 million. This amounts to an increase of about £100 million. It is disgraceful and reprehensible. The average bill of between £60 and £80 will be increased by amounts ranging from £15 to £20 and this is no small addition in view of the other increases which the Coalition have introduced through VAT and other measures.
This will also have effects on jobs and the provision of employment. The case of Clondalkin Paper Mills is a classic example. In the course of the debate on the Finance Bill I mentioned that their electricity bill is £1.5 million per annum and the Government have without any justification allowed a 29 per cent increase. It is no wonder that this company are faced with a situation in which they will have to let go 470 people. How could they survive under a Government like this, especially when their energy inputs are so high? They can point to the fact that their competitors in other countries receive assistance from Government rather than penalties. This matter is so serious that there should be a public inquiry into the damaging effects on industry and consequently the provision of jobs. A further increase in unemployment will lead to greater demands on the social welfare services and those who are already at work. I hope the Independent Members are nothing the consequences of the policies adopted by the Coalition.
House mortgage interest rates have been increased from 13.15 per cent under Fianna Fáil to 16.25 per cent under the Coalition. At the same time the 1 per cent interest subsidy given by Fianna Fáil has been removed. Speaking on a radio programme, the Minister concerned said he did not regard this as a particularly serious situation but there was a rumour that the rate might go to 18 per cent and in that case they might have to look at the possibility of re-introducing the subsidy. The matter is already very serious and the Coalition should not have removed the subsidy. The increase from 13.15 per cent to 16.25 per cent has added £40 a month to repayments on a £20,000 loan over 20 years. That is the kind of treatment the householder is getting from this Government.
In one area the Coalition are set for an all-time record during the eighties. Their cold-blooded economic policies and the shift from direct to indirect taxes will create a new and expanded poor. Their hare-brained tax plans will leave the 1.5 million people who cannot benefit from their tax plans much worse off because they will have to pay the indirect taxes and the higher prices. These are the 700,000 social welfare recipients, the 100,000 small farmers, the 350,000 in the lower income group who do not pay tax and the 350,000 who pay already only 25 per cent, giving a total of 1.5 million. These people will constitute a new and expanded poor.
Before the election the Coalition denied all of those suggestions. They produced enormous advertisements in the newspapers to prove that they would not increase prices, that they would control them and that we would have a better society if people voted for the Coalition. These appeared under the caption: Fine Gael nail the big lies. One lie they were nailing — and it was one big lie nailed — was that there would be huge increases on petrol, beer and spirits. Fine Gael gave a commitment that, as far as their economic policies were concerned, they would strictly control the prices of these items. Even at this stage I do not have to comment on the way these prices have gone, together with quite a few others.
As far as their commitment in regard to value-added tax was concerned, they adhered to that by not imposing value-added tax on clothing and footwear. However they imposed it on every other conceivable commodity bought for the household as part of the normal weekly package. They said then that all housewives would not gain from the Fine Gael proposals for women, that their package would benefit nine out of ten. I am sure they would like to erase that one now because it will cause enormous difficulty one way or the other.
Then they contended that with Fine Gael all taxpayers with incomes under £50,000 a year would have more take-home pay. I suppose if one assumes that the money will be taken from their weekly budget instead of their take-home pay that could be true but certainly they will have less money at the end of the week than heretofore. There were a number of other commitments given but those are just some relating to prices. These were the promises this Government made so publicly before coming into office. In office they turned around and reversed their ideas in that respect.
One measure mentioned — which they themselves regarded as a very important election issue — was the question of the £9.60 con trick, or what might be described as robbing Peter to pay Paula, charging Peter the cost of the transaction. It is now admitted, off the record, by both Fine Gael and Labour that the promise of a weekly payment of £9.60 to the wife who is fulltime in the home brought an extra eight seats to the Fine Gael party, thus enabling them to form a Coalition with Labour and others. Naturally, with a short run into an election, there was little time to tease out the details of that programme. Consequently, many people viewed this measure as a family support which would be widely available. Indeed, the promise given in the Gaiety Theatre document is a very interesting one. It said in regard to the direct payment of the tax credit in respect of wives working in the family home, that the full amount would be payable even when the present family income fell below £4,000 per annum, thus aiding low income families not liable to tax at present. That was the commitment given in the Coalition document. That was their firm commitment, as expressed in the document put to the Labour Party delegates and endorsed by them. It presented a proposal under which lower income families would benefit along with widows, old age pensioners, small farmers, the unemployed and the handicapped. That is the way people interpreted that promise. What else could it mean? The only conclusion that could be drawn was that it would mean that widows, old age pensioners, small farmers, the unemployed and the handicapped would also benefit from this proposal, and that this would help to offset, in a major way, the increased indirect taxes for them. It would also help the small farmer to live with the Coalition-led inflation rate in excess of 20 per cent. However, we have seen that the policies adopted inevitably would lead to an increase in inflation, the worst possible medicine for the small farmer as he has no way of recouping this in the market place.
The original Fine Gael manifesto spoke only of £23 million to offset the adverse effects of their package on social welfare beneficiaries. It was estimated that 280,000 wives would not benefit under the tax credit arrangements. However, to pay the £9.60 to them each week would cost £140 million. Hence the lack of credibility on our part of the Gaiety Theatre promise to pay the £9.60 even where the income level was below the tax credit level. We find it very difficult to accept that this would be applied across the board to ease the burden the indirect taxes will create for those on lower incomes. If the scheme is to be based on the tax code then those benefits which are taxable only would be included. These would include old age contributory pensions. Therefore, we could expect the wife of the old age contributory pensioner to receive payment but no other social welfare beneficiaries would receive the £9.60 or, in any event, very few of them.
Reverting to the situation of Peter and Paula, there are 500,000 wives of whom 100,000 are working. Therefore potential claimants of the optional £9.60 per week are, at the maximum, 400,000. How many of these will claim if it is optional? How many will be interested in robbing Peter of £500 or £2,000 tax free allowance for Peter will have his weekly income reduced by £9.60 by virtue of a reduced tax free allowance of £2,000 so that claimants can call to the post office or whereever else is designated to collect the £9.60 a week on an appropriate voucher? The family, as a whole, will be no better off. Therefore it will not help in any way to offset the increased indirect tax burden on them. Of course Peter will have to pay for the administrative cost. If one is to assume that, at a minimum, some 500 staff would be required then one is talking about £4 million per annum for staff alone not taking into account postage or stationery. If one takes account of postage at 22p per week for 52 weeks that amounts to £4.75 million overall. If one includes the cheques and envelopes the total cost for 400,000 per week would exceed £9 million. Those are the kinds of potential administrative costs involved. Therefore, Peter must pay his wife, Paula, £9.60 a week and carry £9 million to administer the scheme for his wife. If, of course, he must pay another man's wife as well then his administrative costs will increase correspondingly. Indeed his personal cost will greatly increase if he has to pay for the Gaiety Theatre promise of £9.60 for all those who would not otherwise qualify.
This whole situation obviously has upset the civil servants involved. Here I quote from an article entitled "Civil Servants Attack Critics" which appeared in The Irish Times of Saturday last. The question raised in this article related to civil servants' efficiency in work and the unproductive nature of some of the work.
Without naming him, the association singled out ... an assertion by the Minister for Trade and Tourism, Mr. Kelly, earlier this week in which he talked about unproductive civil servants passing paper to one another. "Yet it is his Government which insists on hordes of civil servants processing an enormous volume of paperwork just to transfer £9.60 from a working husband to a wife working at home."
The association is particularly upset about this kind of operation which, of course, constitutes merely a circular movement of money from Peter to Paula and will do nothing to offset the burden on those people in the lower and middle income groups suffering so severely from the effects of this Government's policies which involve a major increase in indirect taxes falling very heavily on them.
While Fine Gael pursue relentlessly their coldblooded and inhuman economic policies, the Labour Party keep their heads down in a deafening silence. Robert Louis Stevenson said: "The cruelest lies are often told in silence." The deafening silence of the once proud Labour Party tells far more than any words of mine. They remain silent while the social welfare beneficiaries lose the gains they made under Fianna Fáil. Instead of demanding real increases, they accepted a 3 per cent rise in all rates other than old age pensioners, who got 5 per cent. As a result, the widow gets 85p per week extra for herself and 25p for each child. The old age pensioners living alone had their allowances increased by 10p per week, and the dependant of a blind pensioner gets an extra 5p per week.
As I have said, the living alone allowance for the old age pensioner was increased by 10p per week by this kind and compassionate and sincere Government whose policies we are expected to accept. The old age pensioner living alone is in particularly difficult circumstances. It is because of this that such pensioners are given an additional allowance, small and all as it is, but to offer such an elderly person 10p per week to help to offset the kind of increases in costs that I have mentioned, which the Coalition have directly caused, is an insult. Earlier there was some discussion of the fact that the supplement for the dependants of blind pensioners is 5p per week. This is similarly derisory and insulting, particularly in this International Year of Disabled Persons. When told about it, some children say it would not buy a lollipop or an ice cream a week. That is about the size of these increases. They are derisory and must be seen for what they are, a hypocritical sop to sell the Coalition package to the Labour Party.
The Labour Party remained silent also while education, health and social welfare budgets were drastically cut back. The school age was raised to save money, for that and no other reason. It is only the beginning of the process of severe cutbacks in education. We have seen that despite the lofty sentiments expressed about caring for the mentally handicapped and the aged, projects in these areas have been stopped. At Kilcornan in County Galway a major project for the mentally handicapped, on which building was due to be started, has been stopped, though the contract had been approved and was awaiting signature. Money for the project had been provided this year without a Supplementary Estimate. At Carriglea in Waterford, units comprising 50 beds for mentally handicapped adults lie idle. The project was completed but not allowed to go into use. The units had been built, they were ready. Following studies which had been done in the area of the mentally handicapped, one of the highest priorities is the building of care units for adult people. Here are some fine modern units being left idle for want of a relatively small amount of money in the last two months of this year, with greater money during the full year of 1982.
At Ballymun in Dublin, two crisis intervention units for mentally handicapped children were completed but they, too, are lying idle. At Dundalk a new 112-bed geriatric unit, a day centre for 20 to 25 people and a 40-bed welfare unit for elderly people were due to be begun before the end of the year. The money had been allocated but it has been withdrawn, apparently, and there is some dispute about it.
Thanks to pressure from the Fianna Fáil Opposition, old age pensioners, widows and other long-term beneficiaries will be given a double week at Christmas. The Tánaiste and Labour Party Leader, Deputy O'Leary, was forced belatedly into conceding the much-needed Christmas bonus when he and his colleagues in the Coalition should have been demanding an early announcement of the legislation necessary to implement it.
The Coalition claim that they will advance the incomes of social welfare beneficiaries in real terms, but so far the reality is far from this. The double week for Christmas must now be implemented by legislation in the House so that it can be put into operation during the second week in December. That is a very tight schedule, but because it was introduced last year the system is there and we will give it all our support when it is going through the House.
The free fuel scheme has been increased from £3 to £4. I requested the Minister for Finance to have the amount increased to £5 at least, to keep up with the increased cost of a bag of coal. The price of bottled gas is now £5.94 per cylinder. Last year we not only increased the amount but we extended the scheme, but the Coalition have said they will only look at the possibilities of further extending the scheme sometime in the future.
The increases given by the Coalition from 1 October were derisory. They did not even match the inflation imposed by the Coalition's policies. Unemployment has now reached 129,000 on the register and because of Coalition policies that figure will increase further during the coming winter. These policies are doomed to failure. They will create further greater hardships for those on social welfare benefits and for the middle and lower income groups. They are disastrous for families and will lead to greater unemployment, rising prices and the creation of a new and expanded poor. These policies are disastrous for the majority of employees and small farmers and will deal a cruel blow to old age pensioners, widows, the disabled and other less privileged groups.
It is for these reasons that we condemn the coldblooded economic policies of Government Minister who have asked us to regard these coldblooded policies as the correct thing for these times. That is why we condemn these policies and ask the Members of the House to reject the Government's amendment and to support our motion.
