Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

Dáil Éireann díospóireacht -
Wednesday, 5 May 1982

Vol. 334 No. 2

Financial Resolutions, 1982. - Financial Resolution, No. 6: 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.)

On Thursday I referred to the folly of the former Minister for Finance, Deputy Bruton, introducing in his January budget a proposal to tax short-term social welfare benefits. I disagreed with that proposal, as did the electorate. However, it is important to acknowledge that there are defects in the social welfare system and it would be remiss of Deputies to ignore that. Something must be done in relation to the acknowledged abuses that exist in some areas of the system. One would want to be going around blindfolded and ignoring the facts to pretend otherwise. Recently I received representations from a man who was annoyed that while he was sick from his employment with a local authority he was in receipt under the social welfare system of £33 per week more than he would have been receiving had he been at work. That is manifestly wrong. I know that person was one of the minority who object to this, but it should not happen. The money could go to more necessitous cases. The Minister for Finance, in conjunction with the Minister for Social Welfare, should review the regulations in relation to the calculations of the disability benefit, particularly the pay-related element. If those regulations were rectified an area of complaint would be removed. It distresses the honest workers that others avail of the system to get benefits greatly in excess of their weekly wage. I do not know what revenue is lost to the State in this regard, but I am sure that it is sufficient to warrant a look at the regulations and amendment of them in the light of results of any such investigations.

Every Deputy in every town and village is aware of the malpractice carried on to a considerable extent of persons signing on for unemployment benefit and at the same time working. Anyone who suggests that this is not happening is not acknowledging reality and is ignoring an issue which is detrimental to the welfare of those who should be in receipt of as much social welfare assistance as can be provided. I refer particularly to an area where more assistance is needed, although assistance is given — an area which is in many cases ignored because the people are unable to stand up and fight for their rights. I refer to the mentally handicapped, particularly those who are looked after by their families in their own homes. These are very deserving cases which could do with more financial assistance, which could be provided if the abuses were eliminated.

Another related area on which we have had much discussion over recent weeks is the pay-related social insurance contribution scheme. There has been an amount of misrepresentation in relation to this subject during the course of the debate. One should bear in mind that the contributions made under the scheme are paid directly for benefits administered by the Department of Social Welfare, which benefits have been requested by Deputies on all sides of the House. The most persistent requests are for greater increases in these benefits.

If one compares the present pay-related social insurance scheme with the old national health insurance stamp, the present scheme is manifestly fairer and more equitable in regard to the lower paid worker. Under the old system, the stamp was fixed at one value, irrespective of the gross wage or income of the person involved. This was grossly unfair to those in the lower paid industries in receipt of small wages, by comparison with their counterparts who were engaged in much more lucrative employment. I recall receiving representations from those engaged in the clothing industry—an industry traditionally regarded as one of our lowest paid. Employees were objecting to having to pay £5 per week in respect of national health insurance stamps when in receipt of wages of approximately £50 or £60 a week, while employees engaged in more profitable industries, earning in the region of £150 per week, were paying precisely the same amount. If one equated those wages with the present system, the lower paid person would be paying approximately £3.60 per week while the person in the higher remunerated employment would be paying approximately £13 per week. If one is serious about the distribution of wealth and about social justice this is as it should be.

It is not correct to submit that the system is weighted more heavily, in its absolute terms, against the lower paid worker. It is an important element in the field of social justice that those in receipt of a greater amount of financial reward should pay the greater proportion of the taxes. However, there might be scope for consideration at some later stage, as a result of the review of the system, of a minimum ceiling where the pay-related contribution would begin, just as there is a maximum ceiling where it ceases. Allowing for the recently introduced special income tax allowance which will not really benefit the lower paid worker, if the suggested system were introduced it would directly assist the person in the most vulnerable position.

I welcome the special income tax allowance of £312 which was discussed in the House yesterday. This goes a long way towards eliminating any sense of injustice in relation to the new increased rates. This must be welcomed as an interim measure to help to resolve the existing conflict, which conflict will continue until such time as the system can be examined fully in the light of the report of the Commission on Taxation, which report we expect in the immediate future.

When discussing this issue, it is important to bear in mind that Deputies will be faced with the stark choice of acceding to requests for less taxation and on the other hand trying to equate that with the demand for increased social welfare benefits. Just as it is not possible to put a quart into a pint bottle, it is equally impossible to extract a quart from a pint bottle. If we demand services, we must accept that they will have to be paid for. It is important that justice be done and that those in the position to pay are asked to pay their fair share. In the end, our system of economics, with all its flaws and failings, can only produce a certain amount of tax for redistribution to those in need. It is right that those in need, such as the elderly, the widows and the unemployed, should receive an amount which will allow them to live with dignity.

A Theachta, tá ceithre nóiméid fágtha agat.

Go raibh maith agat. It is equally right that those in a position to pay should do so in proportion to their ability.

I welcome the decision to introduce a special charge on derelict sites. The practice of acquiring for subsequent development property which is allowed to fall into dereliction and depreciate in value is one which should have been discouraged long ago. The media have suggested that the problem in relation to dereliction exists only in this city of Dublin, but every Deputy is aware that it exists in every town and village in Ireland. For the greater benefit of the community at large, it should be prohibited or prevented. I hope the special charge will have a direct and meaningful effect on this situation. It is not right that people should be allowed to buy houses, in many cases over the heads of tenants, allow them to fall into decay so that they may sell them at some future opportune moment and make vast sums of money without, in the meantime, contributing anything to the community at large. It is morally unjustified that this should be allowed to happen and the decision on the special charge is more than welcome.

I wish to refer to the Minister's statement dealing with decentralisation of Government Departments. The reintroduction of this measure is very welcome because many people in rural areas were appalled at the decision of the then Minister, Deputy Bruton, to scrap it and deprive very many areas of an impetus to the development of their local economies. I urge Deputies who had their constituencies included in the original proposals to ask the Minister for Finance to re-include them in the revised programme for decentralisation. I hope that the section of the Department of Posts and Telegraphs which had been projected to be transferred to Dundalk will be placed there and save many hundreds of people from having to travel to Dublin to their employment. The transfer of the Department, while being of benefit to the local economy, would also eliminate a vast amount of traffic on the road between here and the North.

I also wish to draw attention to the absence of any reference in the budget statement to any decision or intention to maintain the special employment subsidy or levy which was available to the clothing and footwear industries, at least until 31 December. I welcome the decision to increase the amount of money available under the employment incentive scheme. This is the work experience programme carried out by——

Gabh mo leithscéal, a Theachta, tá nóiméad sa bhreis tugtha agam duit. The Chair acknowledges the co-operation given to it by Deputy Yates.

I, too, would like to express my appreciation to Deputy Yates and I am sure his contribution will be all the more valuable when he has a little more time to consider it.

This budget reflects our basic philosophy in regard to the development of the economic and social potential of our country. That philosophy is that our country, in its people and its resources, has greater potential for growth and development than any other country in the European Community and that potential must be fully realised.

We have a young labour force which is equipped to master the most advanced technological industrial processes; an emerging corps of Irishmen and Irishwomen possessing the enterprise, energy and innovation required to develop a successful domestic economy and export trade; access to a free-trade European market of 270 million people; financial and tax incentives highly attractive to manufacturing and service industry investment; and an economic infrastructure in telecommunications, roads, urban services and facilities, ports and harbours which is being brought up to the highest modern standards.

The budget gives initial practical effect to our economic and social philosophy though we were unable in the time available to change as much as we would have liked in the budget we inherited. But we have, as we promised, made important fundamental changes which altered greatly its economic thrust and widened substantially its social dimensions.

A central feature of our budget is the targets we have set for a reduction in the budget deficit and in the level of borrowing as compared with 1981. We intend to adhere to these targets through rigid control of the public finances. Should any additional expenditure become necessary for essential purposes, this will have to be met by a corresponding reduction in expenditure elsewhere.

If these are not sufficient, additional taxation might be necessary but we must all now realise that we are reaching a situation where the possibilities of additional revenue are becoming increasingly limited and there is a definite reluctance among the general public to accept further tax measures.

It is mandatory, therefore, that we give greater attention to controlling the growth in public expenditure so as to avoid taxation increases. We have completed the Departmental staffing reviews initiated by the former Minister for Finance, Deputy Bruton, last December. The reports on these reviews have now been submitted and will be used as a basis for securing administrative efficiency and savings in all Departments. This must be done skilfully and sensibly. Essential services to the community, particularly to the underprivileged, must be maintained and the impetus to greater economic activity and employment must be continued. Within those guidelines, we intend to control rigidly the level of public expenditure, by ensuring the most economic deployment of staff and the highest levels of efficiency. This will be a continuing and unremitting exercise.

Equity in our system of taxation is something that should always be pursued but the need for action has now become a matter of urgency. We gave the Irish Congress of Trade Unions a commitment under the second national understanding and we have, in all our taxation decisions, acted to achieve a fairer and more equitable system.

Let me recall that in 1980 we introduced income-splitting for married couples, who now have double the personal allowance and rate bands applicable to single persons.

The special allowance for PAYE employees was introduced by us in 1980. This allowance recognises the need to alleviate in a special way the burden borne by the PAYE sector. Persons and families on low incomes have greatly benefited under our programme for greater equity in taxation. We introduced complete tax exemption limits for people on low incomes, including the ill and the unemployed. We also provided a system of marginal relief for taxpayers with incomes just above the exemption limit. This provided a worthwhile relief for the less well-off while at the same time ensured that the relief is directed to those most in need. As a result of this measure, 75,000 persons were removed from liability to income tax in 1980, 33,000 benefited in 1981 and the improvements in the exemption limits announced in this year's budget will remove about 24,000 low-income taxpayers from liability. Many more have benefited from marginal relief.

Age exemption limits for the elderly have also been raised progressively in recent years and further increases will be made this year. The tax allowances for one-parent families are again being increased this year and, as a result, widowed parents and single parents will have allowances equivalent to the married allowance.

The blind persons allowance, dependent relative allowance and the allowance for persons employed to take care of an incapacitated taxpayer or spouse are all being increased this year in a further move towards tax equity. The tax changes made in the budget, together with our recent decision to make a special increase of £312 in the PAYE allowance for those on the higher PRSI rates, taken in conjunction with the increased taxation on financial institutions and on capital profits are all designed to continue this steady progress towards greater equity in taxation.

Because we recognise taxation equity as a central issue in our society today, we established the Commission on Taxation to review the entire structure and system of taxation with greater equity as a priority objective. The main report of the commission dealing with taxation principles and all forms of direct taxation, including PRSI, will be available shortly.

The recommendations of the commission which is representative of all sectors of the community will provide an opportunity to review and consider what the next measures should be to improve the distribution of taxation in order to redistribute the burden of taxation more fairly throughout the community.

We must also recognise that PRSI contributions now represent direct taxation and must be taken into account in any general reshaping of the taxation structure. We agreed with the Irish Congress of Trade Unions in our consultative discussions with them that greater equity required some adjustment in the taxation burden which the combined PRSI and PAYE demands place on employees.

In making the adjustment we have made of £45 million this year in further PAYE tax allowances, we have gone to the absolute limit that equity and the public finances can sustain at this time. I am glad that this view has been shared by the trade unions who have welcomed our action as a significant attempt this year to ease the situation.

I should like to stress the importance of the consultative process I initiated with congress and with the representatives of employers and farmers in examining together current economic and social issues. In our democratic society, such a process of consultation is essential to ensure greater understanding and co-operation between Government and the main economic and social interests in the face of the serious problems we face in the current recession.

The greater the degree of understanding and agreement between the Government and the main economic groups in the identifying of the extent and nature of our problems the greater are our prospects of success in overcoming those problems.

We are now well under way with the preparation of the Economic Plan which we intend to be the framework for the main economic decisions to be taken over the coming three to four years. The objectives of the plan are to generate the maximum increase in sustainable employment; to reduce the rate of inflation; to maintain living standards and make them more equitable while restoring the balance of payments to more acceptable levels.

In the preparation of this plan, we are enlisting the expert assistance of the Economic and Social Research Institute and other research bodies. In its preparation, also, we will consult with the representatives of trade unions, employers and farmers and with the National Economic and Social Council. We see the plan as one which will reflect the views of the community as a whole on what our objectives for economic expansion should be, what resources they will demand, how these resources can be mobilised and how they can best be used to the most productive purposes.

Through this plan we will chart the course of economic development over the next few years. We envisage it as the first step in establishing a permanent structure for long-term economic and social planning. We believe such a structure would be welcomed by all economic and social interests. It is our intention to develop an effective structure for such planning so as to ensure the widest possible consultation, the fullest possible access to expertise and the greatest possible consensus in our society about how to ensure our optimum economic and social development.

We are a small community whose financial resources are limited relative to the potential for growth which is inherent in our energies and skills, in our natural resources and in the ambitions of our young people. We intend to mobilise all available resources in a concerted action programme to expand output and increase productivity and competitiveness.

This action programme should be based on agreed and clearly defined measures and objectives. We cannot successfully combat unemployment if we have a divisive and disunited approach as a community to the major issue of economic and social policy.

We intend through our Economic Plan in the immediate short-term and subsequently through our longer-term economic and social planning to provide the means for uniting our energies, our skills and our resources in a concerted programme to defeat the present economic recession by expanding the economy and improving social equity.

The possibilities and potential are there. In the face of adverse trading conditions we have developed a growing manufacturing capacity based on advanced science and technology and well able to sell its products abroad. Proof of this is the fact that this year we expect the volume of manufacturing exports to increase by 11 per cent.

We have in the Industrial Development Authority one of the best industrial promotion organisations in the world. It has the task of developing our industrial and service sectors to provide the jobs we need. It has the energy, the enterprise and the expertise. We intend to provide the capital and other funds and facilities necessary for its success.

I availed of my recent visit to the United States to meet President Reagan on St. Patrick's Day, to launch a major new drive by the IDA to increase United States investment in industrial and service projects in this country. I addressed in New York a large and distinguished gathering of leaders in the business and financial community of the United States. In that address, I outlined the opportunities, facilities and incentives we offered for United States overseas investment and I am confident that many have learned, as a result, how unique and attractive these are.

While it is necessary to review our industrial policy and to refine our range of incentives and facilities, any such review must be based on the IDA continuing to perform its essential tasks.

We must be sure that the industrial policies we are pursuing are those which are best for our development in the years ahead. The international economic climate within which our industrial policy must be developed has changed and our policy must take account of these changes.

The energy crisis, the impact of the new industrialised countries on world markets and the increased competition for international investment funds, present unmistakable challenges. The increasing potential of science and technology for industrial innovation and the potential which we have in our indigenous resources can unlock many opportunities and should be developed by us. The review of industrial policy by the National Economic and Social Council, the final phase of which is now nearing completion, will provide the Government with a firm basis on which to plan our future strategies.

Our rapidly growing export earnings owe much to the energies and efficiency of Córas Tráchtála and we have made special additional provision to intensify their programmes. We must intensify further our export drive if we are to increase employment and raise our earnings.

Growth in our economy must come from exports. Apart from the large exporting enterprises established here, we must direct our own domestic industry, our workers and our management to the opportunities for export that exist or can be created. A recent survey showed that only two in five of Irish manufacturing companies export.

How to expand exports faster will be a central objective of our Economic Plan. We must take all possible measures and provide all the necessary resources to mount a major new effort to increase our export earnings. The present arrangements, resources and incentives are not sufficient to generate the rate of increase in exports which the recovering international markets will offer from now on. I attach the highest importance to developing new policies in this area in conjunction with employers, farmers, unions and State agencies.

In these policies, the contribution of our representative offices overseas must be fully utilised and developed. There are many parts of the world where, for historical reasons, and because of the presence of large communities of Irish descent, we should be able to trade to a greater extent than we have. A new combined and co-ordinated effort in the United States, for example, between our State agencies and our representative offices promises worthwhile returns in greater sales of Irish products and wider promotion of Irish economic interests.

The serious financial and trading problems of many of our State-sponsored commercial companies is a cause of grave concern. We are examining urgently the additional investment needed to alleviate or eliminate these problems. We have to decide what additional capital provision is justified structure and trading outlook of each company and the effect of their combined requirements on our overall situation.

We must also ensure for the future that the operations of these companies will be closely monitored by modern management accountancy techniques against specific performance criteria and targets. This will have to be done by a central unit without interfering with the day-to-day decisions and management of these companies.

Probably the most alarming aspect of the current economic recession is the high rate of job losses. This requires us to improve our capacity to anticipate trouble in particular firms or groups of firms and our ability to respond quickly and effectively to difficulties. The rescue services of Fóir Teoranta, the Industrial Development Authority and the Industrial Credit Company must be combined into a flexible, highly-refined co-ordinated service which can both anticipate trading difficulties and provide all practicable and justifiable aid so that job losses and redundancies can be avoided or reduced to the minimum.

I attach special importance to the greater application of scientific and technological innovation to Irish domestic industry both from the viewpoint of import substitution and export growth. We must work steadily towards an arrangement whereby every manufacturing company and every potential entrepreneur has access at local and regional levels to a combination of expert scientific, technological, financial, marketing and management advice. This advice will be directed to ensuring efficiency of operation, greater output, increased employment and better product development in a comprehensive enterprise development programme.

The regional network of third level technological and educational institutes and the State industrial, export and scientific agencies must combine in a concerted regional programme to lift the technological and employment capacity of Irish domestic industry.

The National Enterprise Agency is a new alliance of trade unions, employers and Government directed towards identifying employment opportunities based on technological innovation. This agency has now been re-activated and given an initial funding to set about mobilising the resources of modern science and technology in new employment-creating projects.

I have stressed the regional approach to technological innovation because it is central to the economic and social policy of the Government to mobilise and release the resources of all our regions. Under our concept of economic policy, national output is the sum of the regional outputs.

We are intent, therefore, on diversifying the economic and social life of the regions. A great deficiency in many regions is the lack of public service employment. One of our first acts on resuming office has been to revive the programme for decentralisation of Government posts from Dublin to provincial centres.

Under this programme we will now start advertising for tender those offices for which sites, plans and contract documents are ready. Of course, a necessary part of the implementation of this programme is full consultation with the representatives of the staffs concerned so that difficulties and problems can be satisfactorily resolved.

We will advertise not only for tenders to construct these offices but also for tenders to provide these offices on rental, purchase or other similar terms. We think that investors in property, particularly those funds which are raised in pension contributions or insurance premiums throughout the country, should now look to provincial centres for investment, particularly where the client is the State.

The economy cannot develop satisfactorily if the flow of investment funds is channeled to only a few centres. Other countries have long since ensured that such investment funds participate widely in the economic life of the nation and we are now providing an opportunity for this in our economy.

To match our commitment to regional development, we are at the same time undertaking a comprehensive new programme of urban renewal. It has become increasingly clear in the last decade that the regulatory powers of the planning Acts are not sufficient to bring about the balanced economic and social development needed to create living neighbourhoods in our inner urban areas

We have decided, therefore, to intervene in a positive and energetic way to regenerate those inner urban areas which have suffered economic, social and environmental decline and decay through a combination of unbalanced investment and neglect. Our approach is threefold. We will set up by legislation, which will be introduced almost immediately development commissions for areas of particular neglect in any of our towns and cities. There will also be an inner city authority for Dublin in the first instance to implement economic, social and educational measures for the whole inner city area. Also local authorities are being provided with funds for programmes of special relevance to inner city areas.

We are initiating this programme in the Dublin city area but our intention is to extend it to other similar areas in other towns and cities. Already some elements of our programme have been extended to areas outside Dublin like our £1 million fund for the rehabilitation of dwellings in the inner city areas.

Our commitment to intervening by a combination of administrative, financial and taxation measures to bring back stable neighbourhood life to our inner cities is one that has widespread support throughout the community. We will bring to this programme the same enlightened resolve which in the past cleared the slums and built the great housing estates of the suburbs.

We also intend to improve the quality of life in the suburbs. Too often in the new large housing estates there are instances of social, cultural and economic deprivation even amidst greatly improved housing and neighbourhood conditions. The National Community Development Agency, which will have a fund of £2 million this year, is a new effort to improve the quality and content of community life by combining State aid and the resources in self-help and voluntary effort of communities faced with economic and social deprivation.

Our concern to correct the economic and social inequality between inner city areas and other areas which have benefited from the economic and social progress of recent decades is part of our general concern to reduce economic and social inequality in our society.

We still have significant inequalities of income and opportunity due to social class, family cycle and the fact that we are at a relatively early stage of our full economic and social development. We, as a Government, are fully committed to reducing progressively these inequalities.

Our budget measures were based on our fundamental principle of protecting the living standards of the less-well off and increasing as far as possible the transfer of national income to them. The increase of 25 per cent in social welfare benefits was part of that policy.

In addition to the general improvement for all beneficiaries, we made a number of special improvements for particularly vulnerable categories of the population. These include the double week's payment in September and December for the child dependents of weekly social welfare dependents.

We are providing greater equity for women in the social welfare code by removing the anomaly whereby married women who are separated from their husbands cannot qualify for unemployment assistance unless they have dependent children.

In the field of income tax, we are taking special steps to improve the position of one-parent families, many of whom are women. As a result of the changes proposed, both widowed parents and single parents will be in receipt of allowances equivalent to the married allowances. This is a progressive development and one which has been pressed for over the years by various concerned groups. We know from those writing on the subject of family welfare that the costs of maintaining a family are particularly high when there is only one parent and it is right that their vulnerable position should be ameliorated as much as possible.

Participation in second and third-level education is not adequately spread among all socio-economic classes and we will give special attention to this problem. The increased provision of £200,000 for education services in the educational priority areas of urban centres is a first measure to offset as quickly and as effectively as we can the special educational disadvantages of children in those areas.

The setting up of a task force and the provision of a fund to improve the housing of the elderly living alone is a new measure reflecting our concern with this acute social problem. This country has a high proportion of elderly persons living in poor economic circumstances.

A recent social commentator has said that, because of the structure of modern society, the problems of the elderly rank low, if at all, on most political agendas because they generally have no interest group to represent them. Let me say firmly that we have always kept the elderly high on our political agenda and I am determined that they will remain there.

Our special task force has already commenced work with a fund of £1 million this year to repair and rehabilitate the unsanitary and delapidated accommodation occupied by many elderly persons living alone.

This is part of a consistent series of special measures we have taken over the years to improve the economic and social conditions of the elderly.

We introduced home help and meals on wheels, the system of welfare homes of which there are now 35, the provision of free travel, free electricity and free television licences, the retirement pension scheme, the allowance to look after an elderly relative and the free telephone rental scheme. We have now made provision for a rent subsidy for people in controlled rent dwellings, many of whom are elderly.

A very special reform in this year's budget was the provision that medical cards will be made available to all old age pensioners as of right, a measure which has been warmly welcomed by the Irish Congress of Trade Unions and pensioners' organisations.

We have more than doubled old age pensions in our three budgets in 1980, 1981 and 1982, which has meant a very real increase in the standard of living for elderly persons.

These actions are the practical evidence of our commitment to building progressively a society of greater equality and opportunity for all, including those who have retired from direct economic activity.

We have taken the first step to deal with the problem of speculative gains on the sale of development land by increasing severely the taxation of such gains. We are now considering other measures to ensure the supply of development land to major urban authorities at costs which will be devoid of speculative gains.

Many of the elements in our economic and social policies which I have outlined have been strikingly endorsed by the European Commission in its proposals to the meeting of the Standing Committee on Employment which met last week.

The Commission put forward proposals for a Community action programme to combat unemployment. This arose from the recent European Council, which singled out the need to combat unemployment as the first priority of the Community.

The Commission considers that 1982 is the year in which positive decisions could turn the economic tide towards a more self-sustaining improvement from 1983 onwards. The Commission considers that action should be concentrated on public investment to create public and private jobs, on restructuring of sectors in difficulties, on new enterprises and employment creation and on local employment initiatives and co-operatives.

Our policies reflect these recommendations. We have increased the public investment programmes which are now at levels which are probably the highest in the Community. It is noteworthy that the Commission has singled out, among the objectives of public investment, inner city housing and amenity renewal, expansion of the telecommunications systems, urban sanitary services and new energy sources, all of which figure prominently in our investment policies.

One of the most important measures in our budget was to provide an additional £50 million for investment in the construction industry. This additional investment is directly intended to provide an immediate increase in employment. The bulk of these funds will be expended by local authorities and it is urgently necessary that each individual authority should get schemes and projects off the ground as quickly as possible so that this extra capital can be translated immediately into jobs. The quicker they get these projects and schemes under way the quicker will unemployment in the industry be reduced.

Our programme for expanded technological innovation, ranging from the small industry programme of the IDA and SFADCo to the new National Enterprise Agency, is also clearly within the ambit of the Commission's proposals.

We expect that the Commission will bring forward, arising from the examination of these proposals, specific Community measures to complement and accelerate national programmes. The programmes we are already initiating will we hope be assisted in due course by these Community measures.

I have referred earlier to the need to control the growth in public expenditure. Equally important is the need to ensure that the public administration is fully productive and efficient in the tasks the community assigns to it. The structure of Government Departments has evolved over a long period of time. I am not satisfied that they are necessarily organised in a way that takes account of changing circumstances and the relative importance of different sectors of administration.

It should be possible to make certain changes in organisation and the allocation of functions which would have the effect of a better concentration of effort on major national areas of development. The administrative machinery of Government must be continually reviewed to take account of the changing problems and needs of society and I intend to give effect to that principle.

We have made a determined effort in the budget to reduce the rate of inflation. We maintained food subsidies, subsidised CIE fares and reversed the decision to impose VAT of 18 per cent on clothing and footwear.

With the moderating trend in international prices, particularly in oil prices, we have the opportunity over the coming 12 months to reduce significantly the rate of inflation. This is an economic prize which we must not let elude us by decisions which would generate domestic price increases. Lower rates of inflation will help our exports, increase employment, reduce taxation arising from public service costs and will lessen the erosion of family budgets.

Agriculture is still our most important basic industry. In this respect we differ significantly from most EEC countries where it accounts for only a small proportion of national output and employment. It accounts directly for nearly one-fifth of our total employment and clearly its well-being also greatly affects the development of other sectors of the economy.

We are determined to reverse the downturn which has affected agriculture since 1978, brought about by a combination of adverse influences in prices, input costs and weather. Some progress in halting the recession in agriculture was made in 1981 with the aid of measures which we introduced in 1980 and early 1981. We have finalised the reduced interest rate scheme for farmers in severe financial difficulties. This has come into operation from April 1 and should ease the difficulties of farmers who borrowed for productive purposes but were adversely affected by the recession in their industry and the high rates of interest on borrowed money. We have also brought grants under the Farm Modernisation Scheme back up to the level at which they were before September 1981 and we are using every avenue open to us at EEC level for an early and favourable decision on farm price increases for Irish farmers in 1982. It is in our vital interest that Irish farmers and thereby our whole economy are protected in the review of community policies currently being undertaken. The future well-being of Irish agriculture will also be positively helped by the measures we are adopting to bring down inflation which has been a primary cause of the difficulties experienced by Irish farmers in recent years.

Work is now under way, in consultation with farmer organisations and research and advisory bodies, on a development plan for agriculture. This plan will contain the essential measures to unlock the vast potential for growth which exists in the skill of Irish farmers and in the rich resources of our soil and livestock.

The serious under-utilisation of the capacity of our meat factories and the attendant high unemployment among meat factory workers are matters for grave concern. Currently the through-put in the factories is only about one-quarter of capacity.

We are carrying out, through the sectoral development committee, a fundamental study of the practical ways the output of the beef industry can be increased. This study is being carried out under an expert group representative of trade unions, farmers, meat factories and Government Departments and agencies.

In the meantime, we are taking immediate positive measures to improve the outlook for this industry. Expansion of the breeding herd is a first priority. The calved heifer national-interest subsidy of £70 this year, which we hope to have supplemented by a £22 calf premium from the European Community, is designed to stimulate that expansion. We are pressing for an even more generous calved heifer scheme from the European Community. We have succeeded in obtaining the same export refunds from the EEC for carcase beef as for live cattle. We are concerned to tilt the balance in favour of meat exports as against live cattle exports. Veterinary inspection fees will now be the same for live exports and for meat factories.

The Minister for Agriculture will visit Libya shortly to press that more of their requirements of beef be met from cattle slaughtered in Ireland. We are also developing beef exports to other new markets, including Iraq, Egypt and Saudi Arabia.

We have also been concerned that raw material for the factories was being lost as a result of smuggling into Northern Ireland. As a result of trilateral meetings between the Department of Agriculture, the Northern Ireland authorities and the EEC Commission, improved control measures were brought into force at Northern Ireland factories. These have had the result during recent months of eliminating or substantially reducing the level of cattle smugggling. We will closely watch this situation to ensure that the progress made is maintained.

Oil is an essential strategic resource for the expansion of our economy. The recent abundant supply of oil on the world market and the stabilisation in oil prices have in no way weakened the Government's resolve to explore our own seas to the full and find and bring ashore our own oil. Our own oil supplies would remove an important constraint on our balance of payments in which oil imports account for about one half of the deficit.

Negotiations for the second licensing round will soon be completed. This licensing round will give rise to a very high level of seismic exploration activity in addition to the continuation of the drilling programme. There will be a resultant high level of drilling exploration over the next few years in the areas now to be licensed.

The Porcupine has been the main focus of attention and its possibilities are still being explored. In addition, improved technology now indicates a very considerable potential in the Celtic Sea. This year, the Goban Spur will be drilled for the first time. This will open up a new exploration area and the results could be significant. The drilling here is being carried out in the deepest water so far explored in our exploration programme. There is steadily increasing evidence to justify an expectation that we will locate and bring oil ashore. We will spare no effort in that exciting enterprise.

A major element in our battle to overcome our economic difficulties and pull ourselves out of this recession is the generation of hope and the restoration of confidence. There has been too much destructive comment and exaggerated criticism. I appeal now to the Opposition and other sideline commentators to stop running down our economy. They may see some narrow party political advantage in so doing but they should also understand the damage which they can do to our national morale at home and our standing abroad.

We welcome both constructive advice and practical criticism. But generalised negative and destructive statements about or economy and our currency can be very damaging to the prospects for our economy and for the confidence of overseas investors in it.

What Ireland needs today is a wave of positive thinking. There are opportunities on every side. We must identify them and start planning their development. There has been a surfeit of pessimism and protest, defeatism and denigration. The time has come to list our assets and plan for progress. The IDA, for instance, have put us into the top league in the world of electronics. The possibilities in this field and the related area of satellite communication are enormous and exciting. The sea bed is another new prospect for future development. We will succeed if we believe we can succeed. I am not asking for any starry-eyed foolishness or decrying realistic and sensible criticism and analysis. But I am asking for increased concentration on what can be achieved with the very great resources at our disposal if we organise ourselves efficiently and put in a real effort.

Our income per head in 1981 was £2,327. To double that figure over the coming decades is a task well within our ability as it involves raising industrial output and agricultural output by a combined 6 per cent which is clearly realisable. Our newly developed capacity in technological and entrepreneurial skill should, given favourable international economic conditions, enable us to achieve even faster growth and hence double our income per capita in a shorter period. That is the task and goal which we should face with confidence and faith in our abilities.

I have given the House an outline of the practical and prudent measures the Government have been taking to reverse the undesirable economic and social trends with which we are faced.

These measures are designed to put the economy back on course so as to achieve greater output, increase efficiency, improve social equity and, above all, increase employment.

Through these measures and in our humane approach to our budget proposals, we have clearly demonstrated our commitment to economic progress and our firm resolve to bring about greater social justice. We are pledged to the constant improvement in the quality of Irish society as a whole.

In doing so we will harness the ability, the energy, the idealism and enthusiasm of every section of the community and will utilise to the full our greatest resource of all, the talents, the skill and the genuine patriotism of our young people.

At the end of his speech the Taoiseach referred to the enormous potential of our young people. As one of those young people and the youngest Member of this House, firstly I must note in the period I have been here, almost a year, the rapid changes that have taken place not only to different sides of the House which Members have swapped within that period but also the different approaches and emphases in terms of dialogue put forward by the respective political parties. I fail to understand how in comments on the July speech we have moved from a situation of crisis, future instability and insolvency to one where now we talk about positive thinking, new horizons and a better future. Although I noted in the Taoiseach's speech that he said, quite factually and correctly, that our Government introduced the budgets of 1981 and 1982, it is slightly less than fair to talk about denouncing our input into the 1982 budget. Our greatest achievement within the seven months was that of going within perhaps 2,000 votes throughout the country of inculcating into people the preparedness and the reality to accept what is so essential if we are to have the right conditions to progress economically, to provide enough employment and to have enough money for our many social needs.

The previous Taoiseach spoke of the strictly unavoidable nature of our problem, and I regard the acceptance by the present Taoiseach of the demands which many pressure groups make on our society as the difference, in political terms, between the national interest within Fine Gael and the self-interest within fianna Fáil. As a basically independent Member of this House in so far as I have not been reared to the die-hard political traditions, how hollow the jeers of the Fianna Fáil Members last summer seem. Then they spoke of the unholy alliance, the chicanery and the Gaiety Theatre when we see now the chicanery in regard to the high office of a European Commissionership. Instead of the Gaiety Theatre document we see the unholy alliance of certain of our Independents and the Summerhill parade document in association with Deputy Gregory-Independent. All of this leads the ordinary man in the street to a total lack of credulity about politicians in general as to when they are sincere in what they say in this House.

I do not wish to dwell too much on the political aspect, as it is a debasement of this budget. Perhaps the Minister for Finance when concluding will speak about my first major criticism, the emphasis that Deputy Bruton put upon the need to reform the way we discuss our budget in this House, and the need to plan the public finances in a better way. I find it most disillusioning that I am speaking now, in May, about a budget and the Financial Resolutions especially that were voted on in March, and for that reason are now effective. Therefore, perhaps all of us, even the Taoiseach, are no more than wasting our time reviewing these matters. It would be far more effective and realistic if we were, with due respect, to take some of the power out of the civil servants' hands in preparing budgets, and we would have a full opportunity to discuss the Book of Estimates on the expenditure side and the different proposals for revenue from October onwards as the previous Minister has outlined. I would like to hear some such commitment being made — there has been none in either the Minister's speech or the Taoiseach's speech in this area— and then we could have it reviewed. That would give an opportunity for Members to debate the budget properly and make a real contribution.

As 90 per cent of the Minister's budget is similar to what we in Government had produced on 27 January, for which I voted, all Members of this House are in an invidious position in regard to what they can criticise objectively as they have, in fact, voted on it. My greatest and sincerest objection is the infamous three-card trick that Fianna Fáil have played in this budget. They have fiddled the figures, cooked the books and deceived the public in their preparation of this budget. The first trick is that in regard to the corporation tax of £36 million. Not only is this a repeat of Fianna Fáil's previous performance in this area but it will choke further industries and firms who are fortunate enough to be making a profit. We all know that if growing industries, large or small, are to thrive, they must re-invest in their firms. Now, instead of having some profits available which they can plough back into the firm, they will have to pay it in earlier payments of tax and this will mean that they will have to borrow more money to finance growth in their enterprise. Accordingly, less money will be available for job creation and this will affect interest rates and will lead to a situation where the high interest rate of 22 per cent will not abate.

The second part of the infamous card trick is in regard to tax buoyancy. During the general election we heard that when Fianna Fáil were returned to power there would be tax buoyancy—because everything would be all right—to the amount of £25 million. As this is insufficient now, they allow that it will have to be £45 million. I question seriously the grounds for their optimism. In my constituency I know of no industrial or manufacturing enterprise who in their annual report and accounts for the year ending April 1982 have shown a better year than previous years. Except for a few in the area of electronics and health care products, all industries are caught in a cost-price squeeze and find that their margins are narrowed and that in regard to the real prospect for growth, that is viable exports, things have become so competitive that they cannot produce goods at a competitive price and, therefore, there is no reason either for their employees or their firms to believe that they will see any tax buoyancy.

The real queen, the lady in this three-card trick, must be the £140 million raised in bringing VAT forward to the point of importation. I have outlined the difficulties firms are facing in financing their operations. I believe that this will be the straw which will break the camel's back. I know of an employer in the south of the country, in Munster, who promised a TD, a Member of this House, that he would take on two young lads. A fortnight ago the TD approached this employer who said to him, "I am very sorry, I cannot take on those two young lads. In fact, I have to let off three of my lads. Because I collect my raw material from the docks, it is costing me an extra £40,000 to finance it and I must cut back". In a matter of probably only six months we will see the real effects of this very damaging change. We must remember that when the Government party put this before the people the expected revenue was £45 million in this area. They said clearly that raw materials and imported articles, such as farm machinery, which were so essential for viable production and growth areas such as agriculture and industry would not be affected, yet now they have all been affected and will suffer the knock-on effect. All retailers and wholesalers will have to pass on to their customers the increased costs of financing and this will lead to a situation where the Government's projection of a 2 per cent increase in inflation for the coming year will be extremely inaccurate. Such an amount could be added on now.

The concession in regard to stamp duty will cost £2.3 million in 1982 and £3 million in 1983. We have as yet no indication of the revenue which will accrue in 1983 from the imposition of VAT at the point of importation. This Government have neatly brought into the revenue for this year two months' revenue from next year. This is a measure unlike the imposition of, say, 1p on a bar of chocolate, the revenue from which would accrue every year. The measure the Government have imposed is one of deception; it is fiddling the figures and cooking the books. It is most unfair and misleading and the opening deficit next year will be between £800 million and £900 million.

Let us look at the recent economic performance of Fianna Fáil in government. The opening deficit in January 1981 was £515 million but the resultant deficit was £850 million. Half of the projected current deficit for this year has already been taken up. I realise that there is scope for improvement and that the election had some effect but I feel that the figure for the projected deficit is wrong and is another case of misleading the public. There will be resultant political effects.

A most important matter is the repayment of our enormous debts and our progress as an economy. Our priority must be to create the right background and climate for growth. Our immediate concern must be our currency and the high level of interest rates. Successive Governments have always accepted that ours is a small economy, that we cannot act independently and that we are subject to many European and world factors and changes. Possibly to our detriment we are not strong or competitive enough to fight these trends. It is most alarming to compare our interest rates with those prevailing elsewhere. Interest rates are dropping in Britain, America, Japan, Switzerland and Germany, yet in this country they have never been higher. At present the rate on certain loans is 22 per cent. Any farmer or business man involved either in the manufacturing or service sectors will find that the cost of financing has risen incredibly and his enterprise may no longer be viable.

Successive Governments have said when interest rates have risen that there is nothing they can do and in their simplest form interest rates respond to the market factors of supply and demand. If demand exceeds supply interest rates rise. Both the public and private sectors are now up to their eyes in debt. The Government, through their own agencies and through the semi-State bodies, have borrowed abroad and are repaying in foreign currencies. This is very expensive so they have now turned to the home market and have used up so much of the available domestic credit that there has been a credit squeeze on the private sector which has resulted in closures, job losses and the non-viability of various enterprises. The Government must, through strong leadership and courageous speeches, attempt to reform the will of the people and achieve an acceptance of the need to create the right economic climate, to bring down interest rates and inflation and to cut our borrowing requirement and our current deficit. Unless we ensure that we do not spend, through Government agencies, more money than we are earning, we will always have to borrow and the private sector will be sqeezed for finance. We will be in a vicious circle where there is not enough money to pay for anything and we will continue to borrow.

I do not believe this Government have the political will to be unpopular enough to say to the people that this vicious circle must be broken and that we must cut our cloth according to our measure. The Taoiseach may say that this is negative and gloomy. I accept that there are in our economy enormous areas of potential and growth. Basically we must look for the area where we can produce exports on a viable and competitive basis.

Let us consider the Public Capital Programme for which £1,004 million has been allocated. It is reasonable to ask what value we are getting for this money in terms of viable employment. In fairness to the Government they have a policy on employment. It involves public works schemes and public sector jobs. The Taoiseach referred in his speech to many improvements in the area of urban renewal and social welfare, the recruitment of extra gardaí, the re-introduction of grants for agriculture and measures to combat unemployment. All these measures will have an employment creating effect but at what price? The money will have to be borrowed because we have not the revenue to pay for existing services, let alone new services. Borrowing will put extra demands on the money supply and squeeze the private sector even further. These short-term public works schemes and jobs are at the price of long-term viable private enterprise employment. I would reject that policy in the long-term. It will prove that any addition to the public sector payroll has only an illusory and short-term effect in solving our unemployment problem.

We have enormous natural resources. In the agricultural area, we have 1,200 acres of land which, if it were reclaimed, could produce more. I fail to see why schemes could not be devised, either through the mechanism of the EEC or by the Department of Agriculture, to help us produce more out of our own resources. We should have a scheme of grants to help Irish contractors carry out the necessary work, using Irish machinery. This would keep the money within the economy and in 20 years' time we would benefit from that. In addition, we would have the short-term gain of reducing unemployment.

In the south-east we export timber at £1 per tonne to the Scandinavian countries. In many counties there is an enormous potential for timber and forestry production. In the west of Ireland one can see miles of bogland that could be developed. I do not see any reason why this bogland cannot be stripped off. We are importing coal and other energy products. We could plant acres of forestry that could be used. In the south-east we have not even one drying kiln to process timber. The Department of Social Welfare operate free fuel schemes whereby the Government, out of borrowed money, pay vouchers to people, and rightly so. Yet we are providing very cheap fuel for the Scandinavian countries. It is absolutely crazy. This is one area where jobs could be created and where there would be a return for State money.

The Celtic Sea has enormous potential for herring fishing. Deputy D'Arcy and the Minister of State, Deputy Allen, will know of the fish processing firm of the Lett Brothers in Batt Street, Wexford. This firm is very successful and it proves that Irish companies and firms can be successful. It started 25 years ago as a small enterprise in a tin shed but now employs many people. The firm exports rainbow trout, shrimp and many fish products and it sells quality products at a competitive price. I do not understand why we are importing fish valued at £10 million when we have enormous potential for mariculture. I do not understand why we do not utilise fully the lakes in the west of Ireland, the inland rivers and the Celtic Sea. I know many fishermen have great difficulties at the moment, but much work could be done in the area of fish processing. Efforts should be made to improve arrangements for storing fish and for selling it at a competitive price.

This country has enormous potential for tourism. Somehow politicians and State agencies tend to hive this area off to Bord Fáilte. Our State agencies deal with people every day of the week, foreigners as well as natives, and I do not know why they are not orientated towards selling this country as a place in which to holiday. A circular should be issued to each local authority to ensure that the regional tourist board produce a leaflet setting out what each county has to offer. This leaflet should be easily available. Every other country does its utmost to encourage visitors and we should not be an exception.

We should look again at our public capital programme and give it closer scrutiny. I accept the need for infrastructural improvements. In the short- and long-term we must consider how to help private enterprise by way of grants or subsidised interest rates and so ensure that our abundant natural resources are utilised to the full. In this way we will create jobs and provide money for the many social services we need.

In the area of employment I am very alarmed at the lack of incentive to work. I know of many people who have worked and reared their families for 27 years. For them there is very little incentive to go to work. They know that when they work they must pay their PRSI contributions, but if they were unemployed they would collect pay-related benefit. When they are working they pay income tax but if unemployed they would get a tax rebate over one year. Instead of paying levies on employment they would get redundancy pay if their firm ceased operations. Instead of acting in the national interest and in the interest of their company by accepting a pay increase of 12 per cent, they would get a 25 per cent increase on social welfare benefits. If they work a five-day week they get paid for five days, but social welfare operates for six days. There is the ludicrous situation that where people on a five-day week have been put on a three-day week because of the recession they find they are better off. When the economic situation improves and the company reverts to a normal five-day week they have to be compensated for working a five-day week because social welfare operates on six days. this is a crazy situation, especially as the State cannot afford to pay this cost out of its own revenue. The money has to be borrowed.

Low paid workers were assisted by the family income supplement of £4 per week but unfortunately this allowance has been abolished. This raises a question of whether there is an incentive to work. I accept that social welfare recipients are dependent on the Government for their livelihood, but there must be a ruthless approach to this matter so that it will pay people to get up and go to work each day. The present situation leads to abuses. At the moment people draw unemployment benefit or unemployment assistance and also work on the nixer. If we do not do something in this area we will have a society where dog eats dog, where people on the nixer will be envious of those on the dole full-time and both of those categories will be envied by the people who are paying for them by working full-time. The Government must direct their attention to this matter.

There are several points in the budget which relate to young farmers. As Deputies from Wexford know, a few nights ago we had a meeting with Macra na Feirme at which three requests were made, all of which the Government are in a position to grant. First, there was a request that the two-year period during which stamp duty liability on land to young farmers is removed should be extended. I am glad that this Government have maintained the commitment we gave in respect of young farmers under the age of 35. However, this concession should be extended for longer than two years. In this way farms could be retained as family holdings and young people would have an incentive to come home and work them. Young farmers could be more ambitious in their plans for their farms and this would be in the national interest. I tabled a parliamentary question knowing it would be ruled out of order by the Ceann Comhairle. However, I hope the Minister will respond to this point later in the debate.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
Barr
Roinn