Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

Dáil Éireann díospóireacht -
Tuesday, 15 Feb 1983

Vol. 340 No. 1

Financial Resolutions, 1983. - Financial Resolution No. 14: 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.)

When I last spoke I referred to the suspension of portion of the farm modernisation scheme. Work in relation to land improvement will still be grant-aided as will work under the western drainage scheme. The programme for western development will be assisted as was previously the case.

A national interest subsidy scheme of 5 per cent which was introduced in December 1981 to provide a subsidy for two years on borrowings for investment under the farm modernisation scheme by non-development farmers is being suspended. There has been a fall of 4 per cent to 5 per cent in interest rates over the past six months or so and we feel a full two-year period is not now justified. The subsidy payments will accordingly be limited to one year only but farmers benefiting under the interest scheme for farmers in severe financial difficulty, that is the rescue package, will continue to get the subsidy for two years. The 5 per cent subsidy was paid to farmers irrespective of whether there was any real need for it and in present circumstances this has obviously been reconsidered. The saving involved in 1983 will be £2 million. The EEC 5 per cent interest scheme for development farmers will continue to operate.

The cost of the schemes for the eradication of bovine TB and brucellosis is very substantial and I have previously voiced my concern about the vast expenditure involved. I understand that in 1983 the cost will be approximately £24 million. This is a great drain on Exchequer resources. Notwithstanding that, it has been agreed that the Exchequer will provide a further £3 million to meet the Government's commitment to increase the reactor compensation grants. This is an increase of 35 per cent per annum. I have not yet announced the exact details of the payments but hope to do so in the next week or two. It will be an increase over present reactor prices of something in the region of 35 per cent on average. It is obvious that there are many inhibiting factors in getting rid of disease in cattle. The price of reactors is not up to the market value. Much of the evasion and falsification involved in moving animals illegally is connected with this low price. This is a positive step to help farmers obtain a more realistic value. Hopefully we will reach a stage where full market value can be paid for such animals thus eliminating the temptation to move them illegally.

The improvement of these grants to realistic levels will reduce the need for payments out of the hardship fund which is designed to help farmers who are severely hit by disease problems. Payments from the hardship fund will in future be confined to cases where total depopulation of the herd is deemed necessary on animal health grounds. The decrease will be of the order of £.65 million in 1983. The reduced demand on the hardship fund together with some tightening up of the management of the eradication schemes as a whole and more careful monitoring of the volume and rate of testing to be undertaken will yield a saving of about £1.8 million in 1983.

As regards the £3 million being made available to enable reactor grants to be increased, I shall be making a detailed announcement shortly but I would like it to be known at this stage that the improved grants will be payable in respect of all reactors detected on or after 31 January 1983, the date on which the current annual round of testing commenced.

I have also been reviewing the operation of the farmers` retirement scheme. It can be hardly described as having been successful; in fact only 594 farmers availed of it in nine years, a very small number for a national scheme. By suspending the scheme we hope to save £1 million in 1983. The reasons the scheme has not been successful are complex and embrace deep-seated social attitudes which are obviously not offset by the financial benefits available under the scheme. Despite the small number of participants, the scheme has proved costly to the State. Because of the age pattern and location of the retiring farmers the cost of the land purchased from them falls almost entirely on the Exchequer and only about 10 per cent of the cases have qualified for subvention by the EEC. In addition, resale of the land purchased has involved the Land Commission in heavy losses.

To qualify for EEC subvention the farmer retiring would need to be in the 55-65 age bracket and in most of our cases farmers have been over 66 years of age. Secondly, the land acquired from the retiring farmer must be allocated to a development farmer and there is no recoupment from the EEC if the land is not so allocated. Unfortunately, much of the land in question has had to be allocated to people other than development farmers and did not qualify for the EEC grant.

Most of the people I have encountered who have made inquiries about this scheme have been farmers who wished to hand over land to a son or sons. This scheme does not cater for that type of case. The Land Commission allocate the land as they see fit and there is no guarantee to a father that his son will benefit from his participation in the retirement scheme. This difficulty stopped a lot of people who might have been enticed into the scheme. It is an understandable difficulty.

We have now had quite a few years' experience of farmer retirement measures and the time is opportune to reconsider the contribution which retirement can make to structural reform in the future and to see how retirement could be made more socially acceptable. This reappraisal is being carried out in the context of the review of land policy generally which I have initiated in my Department. In the meantime I am suspending the scheme as outlined for the reasons stated.

In my attempts to achieve land reform, long-term leasing is one of my objectives. I am gratified by the amount of support I have received from the farming organisations, the IFA and the ICMSA, and also from the ICOS, the body governing the co-operative movement. They have shown a keen interest in long-term leasing of land. Also a number of co-operative societies around the country have individually shown a willingness to get involved and I hope to be able to make some contribution, not just in words but in actual cash in the current year, towards the development of a scheme for long-term leasing.

Under the disadvantaged areas scheme it has been decided that farmers whose off-farm income combined with that of their spouses exceeds £3,500 in the income tax year to 5 April 1983 will not be eligible for livestock headage grants in 1983. The introduction of the lower limit on non-farm income for the 1983 schemes will enable the limited resources available to be used to benefit those most in need of assistance, that is full-time farmers and those with lower off-farm earnings who depend on farming for their livelihood. Those now excluded will in fact be persons with incomes of nearly £70 per week from outside agriculture plus the income from their farms. The saving envisaged in 1983 is £0.5 million.

It is also my intention to disband An Comhairle Olla, The Wool Council. The main functions of An Comhairle Olla included the introduction of grading of wool for sale, the registration of wool buyers and the licensing of wool exporters. These objectives have long since been implemented and expenditure on current activities such as wool displays, shearing demonstrations and so on, and promotion of wool must be regarded as a low priority item in the present financial situation. These activities, while useful, do not justify the continuance of State expenditure in present circumstances and it has, therefore, been decided to abolish the council. All the staff, with one exception, are Department officials and they will continue to implement the statutory requirements of the Wool Marketing Act. The saving will be £60,000 in 1983 but about £100,000 in a full year.

I should like to emphasise that the decision to wind up the council should not be interpreted in any way whatsoever as a reflection on their performance. I appreciate that they have done a very good job but we feel that The Wool Council have outlived their usefulness and can be done without in the present economic climate. The schemes involved are generally administered by officials from my Department and this can be done without any undue extra effort. The marketing of wool has improved greatly over the years and this is due in large part to the activities of the council and the valuable services rendered by the members over the years.

In deciding where the reductions in the expenditure of my Department will be made, my objective has been to ensure that they should have as little effect as possible on the ordinary productive farmer. Of course, it is not always possible to make reductions that will have no effect and it is nonsense to suggest that there is a painless path back to financial stability.

The most direct and obvious way in which the use of existing resources can be maximised is through expansion of the national herd. In many respects the infrastructure already exists to cater for an increase in animal numbers. The main thrust of agricultural policy must, therefore, lie in this area. With livestock and livestock products supplying more than 70 per cent of gross agricultural output, this is the best starting point for achieving higher output and income. With this in mind we will look to the EEC for measures aimed at encouraging herd expansion and, of course, the recent Commission proposals for the continuation of the calf premium and the suckler cow arrangements are welcome. At last week's meeting of the EEC agricultural Ministers there was a certain amount of resistance to the renewal of these measures, although they were contained in the Commission's original proposals and we would be hoping for an increase in the premiums and subsidies. I hope that the opposition withers away and does not resurrect in the coming talks because these special measures are a vital aid for our farmers in increasing the national herd. The levels of incentives available under these measures could, however, be improved and I will be following this up even though at the most recent meeting of the Council of Ministers some member states raised objections to even the existing levels of assistance for Ireland. Coupled with the calved heifer grant of £70 and the headage payments in the disadvantaged areas, these two measures constitute a substantial incentive to increase livestock numbers. Indeed, a farmer in the disadvantaged areas can get as much as £167 in grants for an extra heifer and calf while a farmer outside those areas can get as much as £116. These certainly make expansion of the breeding herd an attractive proposition.

The budget contained a number of other items of significance for agriculture. The VAT rebate for farmers is to be increased from 1.8 per cent to 2.3 per cent. This 0.5 per cent increase represents about £10 million for farmers and offsets the extra VAT which they will have to pay on their inputs. The stock relief rate for farmers paying income tax is being continued for a further year at 110 per cent and this will maintain the incentive to expand the breeding herd. The concessionary fuel oil arrangement for the glasshouse industry is also being continued. On the Estimates side the changes include a sum of £5 million for the continuation of EEC special measures for the subsidisation of AI and ground limestone. These measures which are financed equally by FEOGA and the Exchequer are due to expire in May and it is my aim to have them continued. The revised Estimates also included an extra £93,000 for ACOT to assist the agricultural college at Ballinafad, County Mayo. I had numerous representations from Deputies, particularly Deputy Kenny, to retain that college which is involved in training young farmers for the current year. In order to be fully effective and to bring about a return to higher growth and better employment opportunities, the overall measures being taken by the Government will be reinforced by further steps in the fields of incomes, investment, production and exports.

Substantial growth in output, particularly for export, is needed if the economy is to provide the large increase in sustainable jobs that is required over the medium term to halt, and ultimately to reverse, the current upward trend in unemployment. This means improving the competitiveness of Irish products as regards price and in other important respects such as reliability and service. At the same time, the present unsustainable level of public sector borrowing, particularly from abroad, has to be reduced. We must also ensure that public investment is directed to projects which yield a substantial positive return to the economy.

The performance of agriculture during 1982 has already demonstrated the ability of the industry to contribute to progress and growth in the economy. Following three years of depressed agricultural output and incomes brought about by a combination of factors, including a severe cost-price squeeze and adverse weather, the improvement in both output and incomes during 1982 was most welcome and most encouraging. We can thank the weather for that. We had a good year climatically, milk yields were up substantially and all aspects of farming benefited. Our weather conditions are often commented on but for once they benefited us to a considerable extent in 1982.

These developments show that agriculture is capable of returning to the dynamism and buoyancy of the mid-seventies, with all the benefits for farmers' incomes, gross national product and the balance of payments that these developments imply.

There is now a sound infrastructure on which further growth of agricultural output can be based. Many Irish farmers are already achieving very high levels of output and where these farmers have led, others can follow.

I find it interesting, and pleasing, to learn that some farmers, particularly those in my constituency, can attain milk produce levels comparable to those of farmers on the Continent. While the national average is between 600 and 700 per cow per annum farmers in my constituency can produce milk yields of between 1,200 and 1,300 gallons per annum and that shows that our farmers can do as well as those on the Continent if the effort is made. In the long run the only way to raise farm incomes is through increased and more efficiently produced output on the farm. Achievement of progress and prosperity will depend on making the most effective use of available resources. Only in this way can we secure the economic expansion which will ensure a better future for all the people on the land of Ireland.

At the outset, I should like to congratulate the Leas-Cheann Comhairle on his appointment and to wish him well in his performance of the arduous tasks he will face. I should like to refer to the lead up to the budget. After the general election Fine Gael invited the Labour Party to walk into their parlour and to partake with them of the fruits of office. The Labour Party then proceeded with their now well-known ritual dance of wrestling with their conscience. Having done so they acquiesced and the budget before the House is the result of that union. To say that it is difficult to see any similarity between what was promised by the two parties prior to the general election and what is contained in the budget is self-evident. It is a sad commentary on the parties which form the Government that they should have so little concern for what they said they would do before the election especially when compared with what they have done since elected. Socialism, as far as the Labour Party are concerned, is dead. Of course, there are those who never believed that the Labour Party had any socialist content in their philosophy but those who believed that there was a socialist philosophy there have got a rude awakening.

The experiences of the Labour Party in former Coalitions should have been sufficient to cause them to eschew Coalitions for evermore but it appears that the lure of office is as strong today as it ever was and that the Labour Party find themselves trapped by their own decision in a conservative Fine Gael web. The people for whose cause the Labour Party had pledged their unequivocal support, the poor, the sick, the unemployed and the under-privileged are now being made to carry a sharply disproportionate share of the burden in the Coalition's bookkeeping exercise. The increases granted to social welfare recipients have reduced their living standards in real terms, not alone because they will only be granted increases of between ten and 12 per cent — between 4 per cent and 6 per cent below the estimated rate of inflation — but also because the increases will not be paid until the end of June. Children's allowances will remain static and children's allowances for apprentices under 18 years of age are being abolished. Before I deal with the content of the budget I should like to refer to the document, Principal Features of the Budget, in which the Minister for Finance refers to what he claims Fianna Fáil were about to do and what he has done in this budget, the purpose of the comparison being to try to blame the former Government for his own Government's actions. I totally reject the Minister's attitude on this matter.

The Fianna Fáil Government published the Book of Estimates before the general election. Because of this, the Fine Gael and Labour Parties knew what the Estimates contained during the election campaign. That the Fianna Fáil Government should have published the Estimates in the circumstances was unprecedented. The Fine Gael and Labour Parties, therefore, were in a position to accept or reject the implications of the Estimates. The Labour Party rejected them almost completely out of hand before the election. Both parties were in a position to state just where they stood in relation to them.

As a simple example I will take the case where Fianna Fáil appeared to be considering altering the pupil-teacher ratio in post-primary schools. The Fine Gael and Labour Parties replied to the teachers' organisations before the election proclaiming that they would not agree to any such change in the pupil-teacher ratio. Those who had an interest in this matter were able to decide whether they agreed with what Fianna Fáil appeared to be going to do in this matter, or whether they accepted the Fine Gael and Labour stance in relation to such a change, and vote accordingly.

Because of the publication of the Estimates, the voters could vote for what were supposed to be the then Government's proposals or for the Fine Gael-Labour alternatives. They voted against the Fianna Fáil proposals and a Fine Gael-Labour Coalition ensued. The people rightly expected the implementation of the Fine Gael-Labour policy and not the Fianna Fáil policy, and they were very sadly disappointed.

The nub of what I am saying is that the Coalition Government are responsible for their actions and must be made to accept that responsibility. The people elected the two parties in the Coalition, once they formed a Coalition, to carry out their policies, and Fianna Fáil have not the slighest intention of accepting any responsibility for those policies. I could go into some detail, which I do not propose to do now, on the difference between Coalition policy and Fine Gael and Labour policies. I am accepting the situation that we have a Coalition Government which put forward their policy to the people, a policy which they told the people they would follow, and we have seen the result.

The manner of the implementation of the cuts suggested by Fianna Fáil must also be given due consideration. If we take the cuts in the education estimate, the Fianna Fáil attitude is that such cuts would be implemented only after due consideration and consultation with the parents, teachers and other interested bodies. Such consultation would have prevented the total chaos which has existed in the educational sphere since the Coalition cuts were announced.

My final point on this matter for the moment is that the Fianna Fáil Estimates must be viewed in the context of the document The Way Forward which stated the problems and difficulties facing the Government and pointed to the manner in which the Fianna Fáil Government proposed to deal with them, and how they proposed in a determined, systematic and well-thought out manner to advance the economy, to create employment, and to take care of those in need.

In the Coalition budget we have a stark bookkeeping exercise and, far from having anything of substance about employment, social welfare, health, education and so on, we have the philosophy of despair only. To create a national corporation and impose it on this type of concept will be little better than window-dressing at best, and a mean and cynical effort to delude the people at worst. We were never short of money, even during times of recession, to finance worthwhile ideas and help them to develop, and our records shows that to be so. The problem was whether worthwhile proposals and ideas were there which the Government could finance and develop.

I have already pointed out that the Labour Party, with full knowledge of the Estimates, rejected many Fianna Fáil proposals out of hand and put alternatives to the electorate which the electorate accepted. I am not concerning myself to any great extent with the Fine Gael Party because I never believed they were anything but a conservative party, in recent times trying to put on a liberal face. I would not expect the social changes from them which my party visualise for the future, any more than they accepted the really forward-looking changes we made in social legislation in the past.

The Labour Party at least should have been expected to underwrite a different social policy, and either to implement it or leave the Coalition. The Labour Party programme published prior to the election in November is now totally contradicted by their actions in respect of the budget. It is a shame that so little respect was shown by that party for the people who voted for them in all good faith. I want to quote from the Labour document Jobs, Equality and Justice published before the November general election. On page 3 under the heading “Who Pays for the Crisis?” we read:

The main parties——

—meaning Fianna Fáil and Fine Gael—

—— propose massive cuts in public spending falling especially on health and social services and affecting the weakest of the community. Labour rejects utterly any policy that makes the poor, the unemployed, the sick, the homeless and the young bear the brunt of corrective measures.

That is what they said to the electorate and it was on that policy that voters voted for the Labour Party. How has Labour Party policy, as seen in the budget, lived up to that manifesto? Labour have done the exact opposite to what they promised the electorate. In this Labour-Fine Gael Coalition budget they are making certain that the poor, the sick, the unemployed, the underprivileged and the young bear the brunt of the corrective measures. A disproportionate load has been placed on these people.

By granting a mean 10 per cent to 12 per cent increase in pensions, benefits and allowances, much below the estimated increase in inflation, by cutting back severely on short-term benefit payments for those unfortunate enough to be on short-term working, by putting 5 per cent extra taxation on the few briquettes and blocks needed for warmth, the Labour Party are forcing the poor, the needy, the underprivileged, the unemployed and the sick to carry a burden well above that which they are capable of carrying.

By imposing transport charges on young children seeking admission to post-primary schools they are inflicting an excessive burden on these young people and, more particularly, on underprivileged young people who will now be unable to attend school for financial reasons. The Labour Party now apparently believe that those who are most vulnerable must carry a disproportionate share of the load.

I again quote from page 3 of the Labour Party manifesto:

... The wealthy to pay the major share of the cost of economic adjustment....

I note that the Tánaiste pointed out recently that there were certain elements incorporated in the budget which were Labour policy in operation. One of the matters to which he referred was that if a person has a house valued at £65,000 or over and earns an income in excess of £20,000 a year he will pay a few shillings in tax. That is one of the great concessions made by Fine Gael to the Labour Party. Is this what the Labour Party manifesto meant? The man whose income is cut by £20 per week because of short time working will hardly be amused.

The Tánaiste also said that the Labour Party had gained concessions from Fine Gael because the Labour Party were responsible for the decision to make every farmer fill in a tax return. That is nonsense because everybody knows that from the date a court issued its decision in respect of poor law valuation a decision to compel every farmer to make a tax return was inevitable. It had nothing whatsoever to do with Labour policy.

I also quote from page 4 of the Labour Party manifesto:

...no further increases in VAT on essentials....

Need I say more? I wish, however, to emphasise the words "no further increases" because this clearly relates to items which are already charged at different VAT rates at present and not on articles which are zero-rated. I do this because I suspect efforts might be made by the Coalition to pretend that they were referring to zero-rated goods. When it is noted that we will now be paying almost half the normal selling price extra on some goods because of VAT, then we have some real understanding of the effect of the increases.

The policy of the Fianna Fáil Party has always had a social content. The problems of the old, sick and underprivileged have been matters of constant and deep concern to them. Their concern was shown by the fact that, for quite some time, increases of 25 per cent have been granted annually to social welfare recipients by Fianna Fáil Governments, the objective being not only to help people dependent on social welfare to keep pace with inflation but also an attempt to increase the real value of social welfare payments. We always recognised that we had a special duty to the old who had worked hard all their lives to help improve the standard of living of those who came after them. We believed that there was a consequent responsibility on us to ensure that they were not forgotten. The Coalition in this budget have certainly forgotten them. Fine Gael and Labour who in the run up to the election were so loud in their demands and in their promises of justice, fair play and equity for the poor and underprivileged have now not only gone back on their promises but have worsened the conditions in which the same poor, sick and underprivileged must live in the future.

To put it mildly, the budget in so far as the poor are concerned, is a cynical exercise of which both parties, but especially the Labour Party, should feel deeply ashamed. It is totally unacceptable that people in receipt of social welfare should be forced to carry a burden which it is clearly beyond their capacity to bear, especially when you remember the lavish promises made to those same people before the general election last November. We were told by the Coalition Party that they stood for a comprehensive health scheme and no cutbacks. Those are the exact words used in a Labour pamphlet which was circulated in my constituency before the election. Far from developing a more comprehensive health scheme, we are faced with considerable cutbacks to the tune of £12.3 million net. The drugs refund scheme, which helped those in the middle income group, but more especially those who were just outside the means test limit for medical cards to cope with the enormous cost of drugs, has been rendered almost useless. Provision for that scheme has been cut from £13 million to £8 million. How can the Government expect people who must take expensive drugs regularly to continue with their treatment? Even with costs as they were prior to the budget, there were many cases of people who, because of financial necessity, simply stopped using drugs and imperilled their health as a result. What will the position be in relation to those people now? The amount payable per month at present will have to be increased considerably and it will be impossible for many people, especially those relatively close to but above the medical card income limit, to meet the increased costs. This will result in their giving up drugs which their doctor regards as being essential for their wellbeing. I have no doubt that because of the change there will be a public demand for less stringent tests for medical cards. But however the public may protest, when we look at the Government's attitude to old age pensioners, whose medical cards are being withdrawn in very large numbers by the health boards, there can be little hope for them. It is another pointer to Government policy in the social welfare area.

When I remember the furore before the election in respect of the £5 contribution for certain outpatient services introduced by voluntary hospitals, which did not have to be paid by people holding medical cards, people covered by long-term illnesses, children under 16 years of age, emergency cases, maternity patients or by people suffering from infectious diseases, I wonder what the people who reacted so angrily to the £5 charge have had to say about the matter at that time if they realised that the £5 charge would be removed, that there would be severe cutbacks in the health services, that the drug refund scheme would be drastically reduced resulting in higher payments for drugs and that many old age pensioners would have had their medical cards withdrawn. Here again we have a situation where the poorer people are being forced to finance the better off and the effect of all of this on the health services will create further problems for many people. These problems will come to the surface when the changes in the health services become apparent, and more especially in the light of the specific promises given by the Labour Party that there would not be any cuts in the health services.

The basic problem facing the country at the moment is unemployment. The number of unemployed is at an exceptionally high level. Day after day more people are losing their jobs. The bookkeeping style of budget introduced by the Minister for Finance is unimaginative. The whole thrust of the budget is deflationary and far from holding out any prospect of more employment or even holding the level we have at the moment the opposite is the case.

As a result of the budget we face the prospect of vastly increased unemployment levels. Those whose jobs have been put in jeopardy are dreading the thought of what tomorrow may bring. The Minister's objective appears to have been a book-balancing one and it will result in slowing down economic activity considerably. When framing the budget the Minister might have been expected to give some thought to the traumatic experience being suffered by the unemployed who had been led to expect that the many promises of the new Government would be fulfilled. Instead, as a result of this budget they find a bleak future facing them. The general belief is that, as a result of the budget, many more will join the ranks of the unemployed. The feeling of despondency and hopelessness facing those people who suddenly find themselves unemployed, especially in middle age or later years, is frightening. They can see no future. They feel let down in front of their families and they feel isolated from their comrades. For these people the budget holds out no hope.

There is no plan or strategy for the provision of employment: indeed, the reverse is the case. The whole thrust of this deflationary budget is in the opposite direction. The 1 per cent levy put on all gross income and deducted from net pay, the VAT increases and the special fuel tax, among other things, will reduce the buying power of the public to such an extent and will result in such resistance to buying that of itself it will cause more unemployment.

In his speech the Taoiseach said that the Government now intend making plans to deal with unemployment. I am sure he is aware that the questions of provision of employment and of budgetary strategy are inter-related and cannot be considered in isolation. In the budget the Government have dealt with their financial strategy but that strategy is deflationary and it reduces any real prospect of progress towards the provision of jobs. It appears to me that any planning done now will be for the sole purpose of window-dressing and when in the future it fails to produce results the gloom and despair among the unemployed will be even deeper.

The development of industrial employment is vital and the IDA have done trojan work in this sphere for many years. Looking at development in the industrial sphere in my constituency, it is clear that the provision of industrial employment in large, medium and small industries is basic to overcoming the serious unemployment problems facing us. Of itself industrial employment also increases service jobs.

I do not wish to underestimate the problems facing us at the present time. I am aware of the difficulties facing industry and the IDA in their efforts to promote industry, but I fail to see how reducing the money to the IDA for the promotion of industrial development will help. I am convinced that at this critical juncture in our history we should be providing more money for the IDA to pursue their objective of creating more employment. They should be in a position to pursue more industries abroad and encourage them to come here. They should be in a position to give every assistance to industries at home as well as to seek out young people who have worthwhile ideas and who, if given the necessary financial impetus, could help to provide jobs. To reduce the allocation to the IDA is deplorable. It is an admission by the Government that they have given up all hope of improving the employment situation.

In the document giving the principal features of the budget, the Government take the attitude that because the expected level of grant payments fell below the amount anticipated they should reduce the allocation to the IDA. This is the policy of despair and it will be poor consolation for the many unemployed. The least the Government should do is to inform the IDA that if more money is needed it will be allocated immediately. Whatever cutbacks may be needed in other areas of expenditure, a job-producing agency such as the IDA should be allocated more money, and certainly the allocation should not be reduced.

More industry is needed immediately in my constituency, especially in the Drogheda, Dundalk and Ardee areas where there is a constant rise in the numbers unemployed. These people will find it very difficult to understand why money to the IDA is being reduced at a time when the unemployment queues are growing. The input of the IDA in industrial development in my constituency is well known and appreciated. The cutback now is inexplicable and will be poor encouragement for all those concerned in industrial development to give of their best. To say that the amount of money needed was not as great as anticipated is not the answer. The Minister and the Government must take another look at the situation in this area and at least see that further moneys, if needed, will be available to the IDA and they must not force the IDA to operate within the narrow confines of the amount of money now being made available to them.

I will refer to another aspect of industry which is being hit severely by this budget. An increase in taxation, which perhaps to the uninitiated would appear to be a relatively minor matter, is in reality of considerable gravity for many industries, particularly for two in my constituency of Louth. I refer to the increase of 1p per gallon on hydrocarbon oils. This increase, which appears so small in itself, will have very serious repercussions on the two industries to which I refer. One of these is already on an enforced holiday. The fact that a further 1p per gallon is added to their costings will result in a considerable increase in their costs and will do little to help this industry is also on their feet. The other industry is also a very heavy user of the type of oil in question. They have gone through very difficult times and this further imposition will not help, to put it mildly.

How deeply has the Minister examined this matter? As I have said, to the uninitiated it appears to be a relatively small matter and, if I remember rightly, the Minister in his speech said that no increase had been put on this type of oil for some time. I repeat that it is a very heavy imposition and it creates specially difficult problems for the industries I have in mind who use very large quantities of this oil. I have not got figures here of the level of excise duty on hydrocarbon oils of other member countries of the EEC but if my memory serves me rightly it is at a much lower level than it is here. I can remember not very long ago examining this situation and finding that no excise duty whatever was imposed on hydrocarbon oils in some member states of the EEC. While I have not up-to-date information on this here, nevertheless from past experience I can safely say that the duty on hydrocarbon oils is much lower in other EEC countries than it is here and, because of the level of excise duty here, it is much more difficult for industries here using large quantities of this oil to be competitive. In industries where jobs would appear to be at risk already the situation can only deteriorate. I do not propose to name the industries that I have referred to, but I suggest that if the Minister will have a look at his files in relation to this matter he will find that I have made representations on quite a number of occasions in regard to them. I feel very strongly that this tax should be reviewed. The extra income to the Exchequer can hardly justify the potential loss of jobs which is likely to arise as a result of the increase in this duty.

This budget contains a reduction of £13 million for housing. In the document entitled Principal Features of Budget the Government state that the revised assessment of the Housing Finance Agency for 1983 requirements has enabled a reduction of £10 million to be made in this provision. Of course this means in effect that this system of financing housing which was brought in by the last Coalition has proved a failure, but I do not see any reason why that £10 million which was saved in that area in respect of housing could not be used in other areas of house building. This will be the most seriously shaken sector of the economy as a result of the budget. Job losses in this area have occurred over a period but this will accelerate the number of building workers losing their employment. The forecast by those involved in the construction industry is that very large numbers of building workers will become unemployed in the course of 1983. The need for the development of roads and infrastructure generally is recognised by all. If we are to overcome the problems of the recession and particularly when these problems are overcome, we will need a worthwhile road system and the infrastructure necessary for the development of industry, but hopes in that direction have been dealt a very severe blow by this budget. In relation to road construction and development I am keeping an eye on Donore Road and Rathmullen Road in Drogheda which are in a deplorable condition. The residents there were given to understand in recent times that in a relatively short space of time all would be well. I hope that is so.

As far as my constituency is concerned there are other problems in the employment area which relate to house building and infrastructure generally. Cement Roadstone have one of their factories sited at Drogheda. This factory will be affected severely by the cutback in building construction work. They had already had problems in relation to the importation of foreign cement which I have done my utmost to counteract. Now by the Government's decision in this budget a situation is being created which can lead to more unemployment in this cement processing industry. I hope that the Minister will keep in mind the needs and problems of this factory. I also hope that he will impress on his colleagues, as I did on mine when Fianna Fáil were in office, that they should encourage the use of Irish cement and discourage by every means in their power the importation of foreign cement. Too many individuals go around to various ports throughout the country holding out prospects of a few jobs so as to be facilitated in the importation of cement from abroad. This is highly damaging to that long-established industry in Drogheda. When these individuals find their activities no longer pay high profits they will pull out of the areas in which they established themselves without the slightest regret or concern for the people they employ. In the meantime while they are there they can do irreparable damage to a very worth-while industry in Drogheda which uses home-based raw materials.

The problem on one side of the coin is the importation of foreign cement. The problem on the other side for cement workers is the cutback in demand for cement due to fewer buildings, houses or otherwise, being erected. The large cutbacks in this area do not augur well for recovery. The enormous cutbacks by the Minister for Finance in his reconsideration of the Public Capital Programme of Fianna Fáil will surely have a significant detrimental effect on building generally. The building sector will bear the brunt of these cutbacks. If one includes in one's calculation — as indeed one must — the inflation rate this year, the severe impact on costs resulting from VAT increases on construction and on building materials, it must follow that there will be quite a considerable fall in building activity which will result in lay-offs on building sites and cutbacks in the production of cement in Drogheda.

We have now a very severe unemployment problem. Unemployment among our young people is very high. A nation with half its population under 25 years should be a nation with the incentive and the will to develop. The budget has nothing in it to help young people leaving school at various levels. There is no prospect for them. They have a unique contribution to make to the development of the country but the budget, which is deflationary, has nothing to offer them. There is no prospect of employment for them and no direction as to how they can contribute. If this is allowed to continue our many unemployed young people will begin to stagnate and end up unemployable.

I have a particular interest in the tourist industry especially since I was Minister for Tourism. At that time I saw very great potential in tourism for our economic growth. At the end of the 1973-77 Coalition period tourism had become a stagnant industry. Tourist numbers were falling off considerably when I took office as Minister for Tourism. Fianna Fáil recognised the value of tourism and we underlined the importance of this industry by putting the word tourism into the Minister's title. Under Fianna Fáil's policy tourism began to develop and soon became one of our major industries. About 1978 we had the largest number of tourists ever coming here. The industry was growing at a great rate.

Tourism provided more and more employment over the years and it seemed to be well set for further development in the future. The tourist industry has had its problems over the last two years and those will now be exacerbated by this budget. The penal increase in VAT will severely hit all facets of the industry including goods and services. The two increases in the price of petrol, one in the budget and one at the beginning of January, as well as the enormous increases in the price of liquor are pricing us out of the tourist market for foreign tourists as well as for our own people to take holidays at home. There is little doubt that we will see a further decline in this industry, which has not far to drop to be on the ground.

Forecasts have already been made about the likely increases in hotel tariffs during this year. Those increases plus the cost of getting tourists to the holiday resorts will deter people from holidaying here and this will result in more money spent abroad. My constituency of Louth is a Border constituency which is very badly hit. Taxes generally and particularly the price of petrol are very much lower in Northern Ireland than they are here. The result is that there is a very considerable drop in business in the hotels and public houses in my constituency. Petrol pumps, particularly in the part of the constituency close to the Border, are lying idle. The manager of one hotel informed me that in February 1982 they already had bookings from the North for 20 to 30 weddings. At the same time this year they had one booking. This will result in a great loss for hoteliers and public house owners. It will create a serious situation for the people employed in the industry as well as the whole locality. If no action is taken the extra increases put on in the budget will mean an end to this very great industry. In some of the villages close to the Border, which had a very high reputation as tourist areas, there are hardly any visitors in the summer in comparison with a few years ago when they were crowded out.

In the course of my speech I have directed most of my criticism to the Labour Party because the budget presented to the Dáil by the Minister for Finance is exactly what we have come to expect from Fine Gael Ministers for Finance. They can only bring those budgets before the House because the Labour Party are giving support to them. In this instance they are giving support to a Fine Gael-orientated budget. The Fine Gael Party are anxious at times to give the impression that they are a radical party but it is by their deeds you will know them. Their deeds are starkly portrayed in this budget. When one examines the Labour Party election programme of November 1982 one is immediately struck by the stark differences between what was put forward then as policy and the policy now being given the full support of the Labour Party. The poor, the unemployed and the sick are not forgotten by the Labour Party. In relation to this budget they would be a lot better off if they were because the Labour Party are ensuring now that they will find 1983 a much more difficult year than 1982. What of the homeless? By a decision of the Government, which includes the Labour Party, money for housing has been reduced and this will ensure that the homeless will unfortunately remain homeless. What of the young? The Labour Party and Fine Gael Coalition by their imposition of transport charges for post-primary students are ensuring that few of these children will be able to receive further education. This is hardly the policy on which the members of the Labour Party were elected.

My other reason for concentrating on Labour Party policy is that I have noticed in my constituency that the local branch of the Labour Party, particularly in Drogheda, as soon as it was evident that the manna from heaven which was promised during the election campaign was failing to materialise, immediately attempted to distance themselves from the actions of the Coalition Government in order to give the impression that they had no responsibility for the deeds of that Government. When the Minister for Education, Deputy Gemma Hussey, announced her education cuts and when Deputy Mitchell, the Minister for Transport, made the rather silly statement that CIE workers should accept a reduction in their wages, which may I point out in respect of the latter nobody with any sense believed, they became the targets. We had headlines in the local paper of 31 January stating that the Labour TD had not ruled out the possibility of voting against the budget if, for example, substantial increases were not granted to people on social welfare payments. Let us consider what social welfare recipients are to receive by way of increases. First, the increases are well below the estimated increase in inflation and in addition they will not be paid until the end of June. The result of this is a severe drop in the standard of living of the old, the sick, the underprivileged and the unemployed and what is even worse, they will be asked to pay greatly increased VAT charges. They will have to pay a 5 per cent levy on their briquettes and logs. However, if I were to deal with all the extra costs to which the poor are to be subjected, I would not have time to talk about anything else.

In the following week The Drogheda Independent carried the heading, “Labour Hits Out at Cabinet Members”. Singled out for mention in that context were the Minister for Education because of the cuts in education, and the Minister for Transport and Minister for Posts and Telegraphs because of the suggested reduction in the pay of CIE workers. At the Labour Convention in Limerick the Drogheda branch of the Labour party voted for a coalition Government. The votes of all Labour Deputies put into office all the Members of the Government and are supporting them in office. The Minister for Education would not be in office were it not for the votes of Labour Deputies. The same can be said for the Minister for Transport and Minister for Posts and Telegraphs. If the Drogheda branch of the Labour Party were so anxious to get out from under when the cuts in education were announced, what must be their attitude now in supporting a budget that is lowering the living standards of the old and the underprivileged and which is increasing VAT charges by 5 per cent while imposing a fuel rate of up to 5 per cent in addition to collecting an income levy of 1 per cent from the worker's pay packet? At the same time, the Government are increasing petrol prices, reducing money for housing, reducing money for the IDA and so on. If the Drogheda branch of the Labour Party could go into hysterics about a rather silly statement from the Minister for Transport, and Minister for Posts and Telegraphs, when we all know that the possibility of cuts in the wages of CIE workers is not on, how much more hysterical must these branch members be now after the budget? The simple fact is that for the purpose of achieving office, Labour, supported by the delegates from the Louth constituency, voted for a coalition. They are responsible now for the plight of those they promised faithfully to protect. They were seen as people who would bring in a new era for the poor, the jobless and the underprivileged. Certainly it is a new era but not for these groups of people in terms of what they expected from Labour.

This deflationary budget offers no hope for the unemployed. It is a budget that reduces the living standards of those who are unable to help themselves and for whom much more concern might have been shown by the Government. It is a budget which underlines a policy of despair.

The Taoiseach in his contribution to this debate outlined clearly the differences between this Government and the previous administration in terms of the formulation of the budget. These differences do not lie in the level of Exchequer borrowing. Indeed, both Governments agreed very much on the level of £1,700 million for the Exchequer borrowing requirements. The difference between them revolved around whether the current budget deficit or the capital budget should take the adjustment. The previous Government clearly would have opted to sustain the capital programme at all costs and to seek even more severe adjustments in the current budget. The implication of that should be stressed. We do not know exactly what course of action the previous Government would have taken had they aimed for achieving the lower deficit of £750 million that they mentioned. However the difficulty they had in implementing cuts to the tune of £134 million — something that they expressed a commitment to but did not put through in policy decisions — suggests very much that the extra adjustment would have come by way of a higher level of taxation, probably to the order of £150 million to £200 million.

In the light of this it is very difficult to take seriously the Opposition's jibe that this is a bookkeepers' budget and that it is repressive and deflationary. It is clear that the strategy of the Leader of the Opposition, as underlined in his speech, of opting for a £750 million deficit would have involved far more severe taxation on the hard-pressed taxpayer. By this time we have all recognised the difficulty of borrowing abroad this year. It is regrettable in this difficult year that the ability to use resources raised abroad to help the economy out of one of its most severe depressions in a number of years, has been dissipated in the past five years by Governments borrowing at times when it was not necessary to do so and for projects that were proven to be not worthwhile. That is the reason for our being forced and constrained in this budget, despite the severe depression and the high level of unemployment, to opt for a budget that is taking money out of the economy. It gives us no pleasure to have to do that but we do so in the growing realisation that if we are to continue to raise finance abroad in order to implement the necessary projects and to create the employment that is necessary, we must remain within those limits.

The Government are right in putting much greater emphasis on cuts in the capital programme than would have been the case if the previous Government had remained in office.

Deputy Haughey criticised the cuts in the capital programme. That criticism was echoed by Deputy Faulkner who said that these cuts would result in unemployment. We must realise that in the past five years the capital programme has almost doubled but that it has not in any way increased the level of growth in the output of the economy nor resulted in a sustained employment growth. Although the capital programme has succeeded in giving a short-term stimulus to employment, the problem is that it has not been devoted to areas of worthwhile investment. That short-term stimulus may be regretted by the Leader of the Opposition. In order to provide employment by way of the capital programme for one person the cost is about £40,000 whereas the cost on the current side in that respect is only £7,000. Therefore, unless the extra £33,000 devoted to the capital programme results in the production of something really worth while, we are dissipating resources that could be used for employing our young people and for reducing the high level of unemployment.

It is to be welcomed that this Government have gone for trimming the capital programme in the areas where there is notable waste. There are some areas which obviously have been hit, such as Government offices. It is well known that there are vacant Government offices around this city and there is no point continuing to expand the building and construction of public offices for Government Departments on the grounds that this is a stimulus to employment, a very expensive and wasteful stimulus. The existing advance factory programme has a lot of factory space idle — two million square feet — and it would have been foolish to press ahead with the same vigour in that area.

I have done some study in the area of arterial drainage. It is clear that we have gone beyond the point where investment in this area is producing worthwhile returns. That programme needs to be restructured drastically if it is to achieve worth-while results for farmers who are supposed to benefit from it. It was correct for the Government to cut back on this programme. The level of investment in the area of farm modernisation grants has gone beyond what is economically justifiable. In the present situation where there is a clear choice between either raising more taxation or pressing on with these wasteful schemes, I believe the Government were right to call a halt to those schemes and trim them back.

In relation to the capital programme the Minister gave a very important commitment to improve procedures for planning and controlling capital expenditure generally. What is involved here is the long-sought-after appraisal of capital spending before it goes ahead. Until systematic appraisal of our capital spending is introduced, we can be quite confident that the kind of wasteful spending we have seen in recent years will continue in the capital area. It is appropriate therefore to bring in proper assessment before we use the scarce resources of taxpayers for these purposes.

As I said, I worked in the area of arterial drainage. That is one area where the Office of Public Works have used appraisal procedures. However, there is a lesson to be learned from that, that it is possible under appraisal procedures to show virtually any investment to be worth while. What is critical is the sort of assumptions put in, what one assumes about future growth and the output from the capital project. It was clear to me that it was not right to leave the job of appraisal within the Department bringing forward the proposal. There is a natural incentive to regard all one's geese as swans, to regard one's capital project as well worth while, and therefore to overestimate its value to the community. In my view a system of appraisal should use independent outsiders, such as the National Planning Board proposed in the joint programme of Government, for this purpose.

I would like to consider the current spending side of the budget. It has been said by a number of Opposition speakers that the Government did not go far enough in cutting current spending. Deputy Brennan dealt at length with that point which must be seen in the context of the last few years. If it is looked at in that context it will be seen that the Government have gone a long way towards trimming current spending rather than putting all the burden on the taxpayers once again. For example, in 1982 current spending went up by 23½ per cent. This year the Estimates are down very considerably to a 13 per cent growth. That is very significant progress in putting the current spending house in some degree of order. In real terms that means that in 1982 consumption spending increased by 1½ per cent; this year it is budgeted that it will be down by 2½ per cent. I do not think Deputy Brennan's criticism holds water. The Government have tried to bring forward real cuts in the Estimates and we are seeing the painful difficulties of putting through any expenditure cuts by the degree of opposition that has been aroused in the educational and other areas which have been hit.

It must be remembered that in one budget one cannot succeed in trimming spending to the extent one would like. At present public current spending is made up as follows: debt services, 25 per cent; public service pay, about 37 per cent and social welfare 22 per cent.

In those three areas, where there is virtually no scope for trimming in the short term, there is 84 per cent of Government spending. It is only the remaining 16 per cent which offer any scope for trimming. If that remainder is trimmed very drastically there will be the inevitable result that while people are kept on in public service employment the services will be starved because a civil servant cannot work just on his pay. He needs the other resources that go with an individual in employment. If we pruned further, the inevitable consequences would be that services would be strangled. For example, a county council worker could be sent out to mend the roads without even a shovel. That was a real constraint on this Government in trimming back in the spending area. This budget forced emphasis on significant increases in taxation which to all of us were regrettable.

I commend the Minister for renewing the Government's commitment to presentation of current spending in a form that Deputies and the public at large can make sense of. He committed the Government to setting out in programme fashion the various expenditures involved — objectives for specific programmes, quantifying the output from those programmes and estimating the level of costs. It is regrettable that at present we do not see what we are getting for the money we are devoting to a certain area, but we have fallen into the habit of measuring by input what is achieved by spending. For example, in the area of education there is undue emphasis on the pupil-teacher ratio, but that does not tell all that the education programmes are achieving. Likewise, the ratio of gardaí to people does not tell all that can be achieved in the security area. In my view, we have unduly blinkered ourselves from many important options that should be considered by this House. I welcome the Minister's commitment to have a more sensible way of presenting programmes so that we can debate those real options that are alternatives to simply increasing the numbers employed in various areas of the public sector.

There is one other point I should like to make in passing, that is that it is regrettable that, in the presentation of spending at present — certainly as regards the global figures — no distinction is being made between expenditure cuts and increases in charges. That is regrettable. If increases in charges are regarded as expenditure cuts they are inclined to blur the need for real elimination of waste in certain areas. If there is a wasteful programme I do not believe the answer is to put in charges that make a taxpayer finance part of it. Rather we need to see the full cost of the various programmes and not blur them by charges. I do not say that charges are not desirable. In many areas I believe increased charges will not only improve the efficiency of the services, such as those in local authority areas — because they will have to answer to the person who pays the charge — but will also increase democracy in relation to those services. If a person is paying the piper there is a greater chance he will call the tune. I should not like to see charges brought in under the guise of just another form of cutting spending. They provide an easy option which I do not think should be used in ensuing years. In those years there will be a need to shift the emphasis very dramatically from taking more in the form of taxation or in charges from the taxpayer.

I should like to deal now with the question of public sector pay. It is important that in this budget the Minister has pointed up for the first time that there is a stark choice between pay and employment not only in the private sector where trade unions and employers now realise that but he has also pointed up that that choice exists in the public sector also. Pay increases in the public sector must be financed. In the past we have deferred that, to some extent, by the expedient of borrowing. But it is important that this year the Minister has laid down quite clearly that public sector pay increases will have to be financed in this, the same year, by effecting expenditure cuts somewhere else. It is important to bring that home to the public at large at this stage, that pay increases in the public sector do mean either increased taxation or cuts in spending, that they are not costless.

The whole question of public sector pay, constituting as it does such a large component of our public spending, will have to be tackled as a priority in the coming year. There is no doubt that the present practice of internal comparisons within the public service, used as the basis for pay claims and arbitrated upon quite separately from national pay agreements, has resulted in dramatic increases in public pay over the last couple of years. It is the system that is, to a very large extent, at fault. Therefore, it is important that decisions on what the public sector should be paid enter the same forum in which decisions in respect of all sectors, the private included, are taken. Without such integration of the two sectors there will be the danger that our sectors exposed to external competition will become increasingly uncompetitive because their pay rates will be pushed up by demands from within the public sector based on an antiquated system of bargaining.

Something must be done in the very near future about the system of pay negotation in the public sector. The blunt instruments used in the past year or so, such as absolute freezes on special pay awards, or attempts to hold the line for a short period merely put off the evil day because the arbitration agreements are proceeding. There were recent arbitration agreements deferred but in time they will have to be met. Until we devise a better system, providing pay negotiations within the public sector which maintain competitiveness within the economy at large, we shall be in serious difficulty on the pay front and will experience serious difficulty in getting the best out of our public sector.

I should like to turn now to the question of taxation. I do not think anybody on any side of the House can be happy that the Minister for Finance has had to dig so deeply once again into taxpayers' pockets. It is especially regrettable at a time when the Government and the public at large recognise the need for dramatic tax reform throughout our taxation system. The Government's commitment to tax reform is absolutely beyond doubt. It is enshrined in the Joint Programme for Government and is proven also by the record of Coalitions in the past in their having introduced new initiatives and effected radical changes in our taxation code. In the Coalition's period in office between 1974 and 1977 they introduced for the first time farmer taxation and for the first time also capital taxation. In their more recent period in Government they introduced radical tax reform by way of tax credits. Also for the first time they gave teeth to the capital gains tax code by abolishing the tapering relief that had obtained until then.

Therefore this House should have no doubt about the commitment of this Government to the radical reform of our taxation code. In this budget, although the message that has come across is one of increases in taxation, we have made a significant start on the necessary path to tax reform. In this connection the area in which everybody sees the need for action is that of the inequity between the PAYE sector, the self-employed, farmers and others. There are two reasons the self-employed and others have not made a proper contribution to the tax yield. One is the way in which their reckonable income is determined. There they have two advantages, one that they use last year's income as the basis for calculating their tax liability and the other that they have very significant allowances not available to the PAYE earner. One of the other reasons the self-employed and so on have not made a large contribution is that there is ample evidence that the delay in payment from that sector is dramatic. In the last report of the Revenue Commissioners they gave figures of the ratio of tax remaining due at the end of one, two and four years to the tax that had actually been paid at that stage. Just to give the House an example of the situation, in the PAYE sector, after one year, the proportion of tax due to that already paid was 1½ per cent, after two years only ½ per cent and, after four years, virtually everything had been paid. The situation in the self-employed sector is completely different — after one year there was 70 per cent due as a proportion of the tax that had been paid, after two years a further 50 per cent still remained due and, after four years, 20 per cent due.

A similar situation prevails in the case of capital gains tax. Therefore there is a very serious problem occasioned by delay in raising taxation from areas other than the PAYE sector. This is one area to which the Minister has committed himself to action and in respect of which he has taken immediate action this year. The report of the Revenue Commissioners also highlights the problem that we have an ineffective collection system. For example, last year there were enforcement actions taken out for a sum of £350 million from 50,000 taxpayers. That is a massive sum. Tax collectors had to take legal action against taxpayers in order to have that money collected. Indeed, it is that poor method of collection that has caused the delays now being experienced. The Comptroller and Auditor General himself has drawn attention to that fact. In 1980 and 1981 a quarter only of the taxation being pursued by the Revenue Commissioners through the legal system, through enforcement actions, was in fact collected.

The Auditor General commenting on that fact said: "They do not represent the full contributions which such enforcement procedures make towards safeguarding the collection of far greater amounts under each tax head which are due on a current basis". Without the threat of enforcement receipts from current collection would drop. The Auditor General is highlighting the fact that as a result of poor enforcement procedures not only do we have a delay in the collection of tax but there are many people who are obviously evading. It is welcome that the Minister has gone a very significant way towards eliminating the problems that have made the contributions from the self-employed sector so small.

The Minister is committed to increasing the level of penalties in relation to tax evasion. The Auditor General's report gives us some indication of the problem in that area. There were very few cases of tax evasion followed up in the year. There were only about 100 cases and the penalty imposed was 33 per cent in addition to the tax which was due. That is cheap money for someone who has been evading tax. If you went to the bank and tried to raise the kind of money that had been reneged on by the taxpayer you would be asked by the bank for far more than 33 per cent. Far from being a real penalty there is almost an incentive for evasion.

The Minister made important progress in the budget by doing three things — bringing the self-employed under the same tax year as the PAYE sector; taking effective action to increase penalties and the disincentive to evade even to the extent of publishing the names of those involved in settlement and, thirdly, taking dramatic steps in the area of tax assessments and delays allowed for periods of appeal. I am happy the Government made significant progress in the area of tax reform.

We have brought in a property tax. The Minister has penalised the advantage which existed heretofore for people with second homes and large personal borrowings for unproductive uses. These are significant reforms in the tax code but this budget has not said all that is to be said in the area of tax reform. It is a start.

The Minister initiated an investigation of the capital acquisitions tax and taxation of small businesses. It is in the Joint Programme for Government that tax credits will be investigated. Another matter we will have to examine is that of payroll taxes. Over the past few years they have been taking an increasing portion of the taxpayers' pound and they are a direct tax on unemployment. It is not to be recommended that such taxes become a permanent part of the tax code. The Government's commitment is clear in the area of tax reform. There is much that needs to be done. The Commission on Income Taxation Report, which is before the Government, will be examined seriously. It is regrettable that they presented the package as a single one and more or less built the whole report around the fact that they could not be considered separately. Piecemeal reform is important in the tax code and there will be a need for gradual reform. To hope that a single report could be accepted and implemented en bloc is unrealistic.

It is important that the examination in a systematic way of expenditure proposals both current and capital and the examination of the tax code in order to bring in radical reform is carried on in future years. The Government should publish a plan for the public sector. It is important that they know where the Government are going in the area of their spending and tax proposals. That kind of plan coupled with the important work of the task force as outlined in the Joint Programme for Government designed to deal with the bottlenecks preventing employment growth is the real way to plan. The attempted planning offered by the previous Government in The Way Forward, mainly to publish grandiose objectives without any policy which would set about achieving these objectives, may be convincing to people who do not read the report, but are convinced by a glossy report shaken in the air. That is not the way to plan. This Government in their commitment to reform spending procedures and our tax code and provide a task force to iron out problems in employment and industries is the real way forward and is the proper planning procedure for the country.

This budget is just part of the instalment of budgets we get from month to month. It is a big instalment when added to the taxes put on the old reliables — beer, tobacco, motor spirits and so on. It has been described as disastrous and catastrophic. I would be the last to disagree with either of these appellations.

Previous speakers may have their views and present reasonable arguments about a path leading somewhere which the Government's strategy would appear to have convinced them of, but I do not see it as such. The realities are more stark and cannot be explained away by pointing to the strategy of budgeting in this fashion. We have these taxes. Let us be aware that the taxes imposed bear mainly on those who are working and who are increasingly unable to bear the burdens imposed on them. These taxpayers are getting fewer in number while there is a growing need for taxes. We must ask how long this state of affairs can continue.

It has been said, and will be said again, that our situation is no different from that prevailing in other countries in Europe and the world generally and that we cannot escape the effects of this worldwide depression. On the other hand, what are we doing about it? What reserves have we to call upon? We must not idle our way through it but must work our way out of our difficulties instead of becoming further bogged down in the mire of the national debt, which is now a massive burden and will be so for many years.

It is being said that the problem of borrowing for current spending is being tackled and that the spending spree in which we have indulged for many years has now come to an end. There is a reduction of £91 million in demand for this purpose this year as against last year. When we consider how this reduction is being made, we must ask whether we are satisfied that this is a good tactic. It has been stated that only one in every three vacancies arising in the public service may be filled in the foreseeable future. By this strategy we will be adding further to the unemployment problem which is already out of hand.

A massive cut of £330 million has been made in capital spending. In a very direct way this will add immensely to the numbers unemployed and deny us the benefits which could be provided by so many of the unemployed, particularly in the construction industry. This industry has been the hardest hit during the past few years and we have come to recognise it as the most important barometer of the well-being of the economy. When it is down, the economy is down; when it is up, everything is on the up. Our country is unique in western Europe in that we have a rising population and in these times of depression we have not the old safety valve of emigration to take our surplus labour off the market. We must find work for our people at home or pay them to be unemployed, which seems to be the strategy of this Government even more than of the previous Government, who, had they remained in office somewhat longer, might have taken the steps necessary to reflate the construction industry. This is the one industry which is not dependent on outside markets and which is less dependent on imported materials than any other. Thousands of its workers are on the dole queues and are drawing from the State almost as much as they would get on average in take-home pay if they were constructing our roads, building houses, hospitals, water and sewerage schemes and other projects which are so badly needed.

Without these things our young people will not be prepared to stay in this country even when the recession is over and they have jobs. They will not be prepared to stay unless they can be properly housed and enjoy all the essential services. It seems the height of folly and madness, bad strategy and bad economics that we are paying almost as much to keep people idle as they would earn on the building sites and the roads, providing the infrastructure which will be so badly needed in the future if we are to retain our population. I have been advocating this policy for the past five years. It is crazy beyond imagining that we are now contemplating not only the continuance of unemployment at the present level but also a massive cut of £330 million in capital expenditure. We are compiling a recipe for putting many more people on the dole queue, to the detriment of our infrastructure.

It hardly needs to be said that the road system is breaking down and there is no future for it unless there is a massive input of capital immediately. There has been neglect for at least ten years and we have been penny pinching in the maintenance of even the lesser roads to the point where in certain places we soon will not have any roads at all. That is supposed to be good economics. We save on that today even though we may have no road tomorrow. We save on the building of houses today and in the future we will see people leaving the country to get jobs elsewhere because they have no future here without a roof over their heads. Instead of giving a little encouragement to all those who would be interested in house building and the construction industry in general there is a massive pull out of capital to this sector of the economy. This is a dire warning to our people that there is no thought to the future and no thought for young couples getting married and hoping to bring up families. They will have no prospect of housing, either public or private. The costs of private housing have escalated to the point where the vast majority of young people have no prospect of ever being home owners. They will have to depend on public housing schemes which are already so overtaxed that they are a disgrace to this House and to the various Governments who have allowed the situation to develop.

Diminishing numbers of taxpayers are being asked to pay more so that more people can go on the dole and at the same time we witness the failure to provide all the services which will be needed by our young people. It will not be through dire necessity that they will emigrate but we will see them leaving because we will not have done enough to provide the essentials such as houses, decent roads and communications, adequate hospitals, schools and services such as water and sewerage. These are the things we have sacrificed and our young people will not stay long with us once there is somewhere else to find a job. We are not providing for them. We are not giving them any hope or prospect that they can get a job, set up home and rear a family.

On the question of job creation, apart from the construction industry, I accept that there is great difficulty for the State, or the State allied with the private investor, to find outlets for any great investment of capital. However, far from us heading in the direction of encouraging such investment in these difficult times, it seems that the strategy of the Government is brought about by the pressures of the financial masters abroad, the World Bank and the European Investment Bank. I can see the hand of those institutions in the strategy adopted by the Government in the budget. Should we bow the knee to such institutions and at the same time destroy any prospect for the future for our young people? We should give those institutions the picture as to why we should be aided, particularly in regard to the construction industry by an input that will help us over these difficult years. We should also explain that such help would provide much needed services which are a prerequisite to any recovery we may hope to see in the years ahead. We should be leaning in that direction instead of saying, we will do as you bid us, we will cut down our capital and current borrowing, put our people out of employment, depress our people and leave them no hope for the future so as to conform to the pressures.

I do not think the decisions by the Government represent the collective wisdom of the Cabinet. I do not believe the Minister for Finance devised the strategy that emerges in various colours in the budget or as depicted by those who have contributed from the Government benches. The Government, and the Minister for Finance, instead of bowing the knee should paint a picture of what is going to happen to us. They should ask the institutions I have mentioned to help us by temporary measures to help ourselves to put our people to work. We should be given help to do what has to be done today because if that does not happen those schemes will cost three times as much tomorrow. We should be aided in our efforts to reduce unemployment, give our economy a bit of a revival and our young population hope for the future. We should be painting that picture in addition to the one they have got about how the books do or do not balance, how much we owe and how much we are over-borrowing for capital and current spending.

The real situation is that the numbers unemployed are increasing. It must be remembered that it is not like the days when the cure for a recession such as this was to put the workers on the streets and let them starve. If they are put on the street now between all the various stages of bureaucracy it costs almost as much net to keep them on the dole as it would cost to put them into useful and gainful employment. Gone are the days of the twenties and thirties when that was the cure and when no other cure was thought of. We have reached the stage when we think of the folly of putting people out and letting them starve until the recession is over but we have not got around to considering that our unique position in Europe is one we should be working on day and night. We should be trying to put our people to work providing the things we need which other countries with their declining populations have a surplus of. They have too many houses and roads that will be good for the next 20 or 30 years. Those countries have services that are more than adequate for their needs. Their schools and hospitals are too large but the reverse is the situation here. Therefore, we should not trot out the usual thought that because all others are helpless in this situation we must also be helpless. The situations are different but the Government do not seem to think so and they are not acting in that way. We are going the way of the others.

It should be remembered that the other countries I am referring to, whether it is our nearest neighbour or those further afield in Europe, have the reserves to live through such a depression and come back. We do not and that is another reason why we should not stand idly by watching our people being shoved into unemployment while there is necessary work to be done. For that we do not have to sell a product abroad and the least possible amount of materials and components would have to be imported. We can do so much of that from within ourselves. It would make a vast difference and would result in up to 60,000 people being brought back, directly or indirectly, into employment over the next 12 to 18 months. They could be engaged in building houses and roads and all the things we must provide if we are to have any future.

Even at this late stage the Government should reconsider the idea of cutting the capital budget by £300 million and think in terms of directing it into the construction industry which is breathlessly waiting for such an injection of capital. There are many schemes awaiting sanction and we do not have to spend months planning them. When the Government came to office we were told about a £500 million development fund. Those of us who knew the score felt it was a bit of a laugh. Why set up new paraphernalia when we have adequate avenues for that sort of money? It could be put through the various construction projects that are held up for lack of money. Those schemes could commence if local authorities are given the go ahead. They have plans prepared and tenders accepted but no money to carry out the work. That $500 million development fund would add unnecessarily to the bureaucracy which is costing us so much. There are ample ways of spending that money on top of what was spent last year. To cut the public capital programme by almost £300 million is disastrous. Before the end of 1983 the Government, and the House, will see that bad as things have been in recent years and constricting as our economy has been it will not compare with what will emerge.

I should now like to deal with what can only be regarded as the tragedy of the Border counties in 1983. Tobacco, liquor and petrol prices here have so far outdistanced the prices on the other side of that unnatural divide that what is happening daily will be multiplied as the weeks go on. Weekly or daily everyone within 30 or 40 miles of the Border will cross the Border to fill up their cars with petrol. They will buy a few bottles at a cost 50 per cent less than the cost here. They will bring their wives with them and they will buy everything they need for the following week in the supermarkets immediately on the other side of the Border.

Think about our tourist industry that was. Think about the disincentive these prices have been to tourists even at their lower levels over the past few years. Think about the new impact of these increased prices on potential tourists from the Six Counties and from the North of England and Scotland. The tourists just will not come. They are not so flush that they can pay up to 80p per gallon more here in comparatively real terms than in the Six Counties. Think of the cost to people who come here for a weekend or for their holidays. Think of the cost of drink in our public houses, lounges and hotels. Think in terms of the hotel industry and the catering industry which attracted a large number of tourists in the past. We had a lucrative and employment-giving trade. People from the northern side of the Border found it more pleasant and even perhaps more safe to hold their functions, annual dances and weddings south of the Border. Now the trade is going the other way despite the fact that there may be more danger in holding your function north of the Border.

We have gone on blindly ignoring the fact that this country is partitioned. Ours is a unique situation. We are not free to do what we might do if we were a total island separated by the sea from everywhere else. We cannot afford to ignore price levels when we are talking about taxes on petrol, tobacco and liquor. Allied to the attractions of our country, the catering industry provided us with an industry which gave a considerable amount of employment. If these increased taxes and differentials continue, and if they should be increased by any action on the part of the UK Government with an election approaching, in 12 months' time there will not be a business inside a band of 30 miles on the Border from Louth to the north of Donegal. It is as bad as that, but the Government do not seem to accept that. They do not seem to be aware of it.

They told the hotel trade that the increase in VAT from 18 per cent to 23 per cent will not apply to the hotel and catering industry before 31 December of this year. Much good that will do them. They will not have much to tax if the differentials are maintained by Government action in imposing crazy taxes without having regard to the fact of Partition. We cannot ignore comparative prices on the two sides of the Border.

As if the building and construction industry was not getting enough of a hammering we have the residence tax. This has been mooted for some time. There are people in the Labour Party who appreciate the damage and dangers to the construction industry which are inherent in the present situation. It looks as if this residence tax is intended to placate the Labour Party because of some of the other things the Government have in the budget which no Labour Party worthy of the name would accept.

The Labour Party are now in for a pound or for a shilling and they cannot get out no matter what Fine Gael do to them. The Labour Party did not realise that when they helped Fine Gael to form a Coalition. In the present dire circumstances, once the Labour Party were in, Fine Gael could do as they wished. If the Labour Party leave the Coalition in the foreseeable future, they will be annihilated. The Labour Party seem to be giving an imprimatur to Fine Gael while, at the same time, trying to suggest that in the ordinary way they would have a very vocal influence. If the Labour Party were not in the Coalition Government they would be screaming this House down about the things I am talking about and the things other critics of the budget have been screaming about. Unfortunately the Labour Party are silenced by their marriage to Fine Gael in this Coalition.

The residence tax is another blow to the house building industry. It is another blow at the provision of houses for our people. People may say: "If they are worth over £65,000, what the hell?" We have come a long way from the time when all sides of this House were agreed that every encouragement should be given towards the provision of additional houses small or big. We are told the Government are now hitting at the higher priced houses. Indeed we are not even sure of that. It may be that they were built as low cost houses and now their market value is beyond anything like their replacement cost. If that is so, it is even worse than it appears at first. In taxing any residence we are taxing the right of our people to have roofs over their heads in a society which is drastically short of housing and now provides less housing due to the cuts in the public capital expenditure outlined in this budget.

There are some things we do not expect any more. On the question of income tax the Government may say: "We increased it for the big fellows at the top only. The 60 per cent band is going up to 65 per cent." We have had various crusades and protests on various aspects of income tax such as PAYE or the married or single allowance. The one thing that has gone down over the years is the dependant's allowance. I do not know how any Government could put those together and justify them. The harder the times the more should there be an increase in the dependant's allowance, particularly for families where the indirect taxation raked off from the breadwinners is immense. It is multiplied by the number of dependants in the household. No thought is given to that. These allowances have been coming down as compared with every other item you can think of and the general intention is to wipe them out altogether. It is all very well to talk about increases in allowances but the one that has been neglected by several Governments of all parties of different political hues is the dependant allowances, which have been whittled away to such an extent that they do not exist. I wonder if there is any possibility that the Minister and the Government in their dilemma of balancing the budget might give a thought even at this late stage to the plight of families and to the lack of proper tax free allowances for them. Indirect taxes, including VAT, are costing the breadwinner more all the time, but this fact is ignored and they are forced to pay more direct tax also.

Farming has also got a jolt. There will be people who will say that is no harm, but I am not one of them. I am not going to elaborate on the subject except to say that any diminution of input into the farming industry at present, in so far as farm prices are concerned, on top of a decreasing price structure which shows the farming community as being at least 16 per cent in real terms worse off today than they were a couple of years ago, cannot be justified. From 1978, in real terms, they are something like 26½ per cent worse off in their earnings than is projected this year. Anything that further adds to this by way of Government tax, taking away incentives or cessation of schemes, will have far worse consequences for the economy than the amount of money that the cessation of these things will save. Even at this stage there should be second thoughts about retrenchments made by the Minister in trying to balance the books. It should be remembered that when you are knocking the farming community you are knocking our greatest industry and that anything that hurts it, even if it seems to be a question of the farmer carrying his little bit as well as the rest of the population, hurts our greatest industry at a time of recession. That is a very dangerous policy and, on reflection, the game might not be worth the candle. It should be remembered that farmers' incomes have been declining since 1978.

There is also reintroduction of rates, although they are called service charges. I take my hat off to the Government for the clever way they are about to apply these by saying to the local authorities that they want £65 million and it will be for the local authorities, by utilisation of the powers given to them by the Government, to make the choice as to how it is going to be collected. It is a very neat ploy and may even convince some of the Government's most rabid supporters that this measure is restoring power to local authorities. I would love to hear the reaction of other Deputies when local authorities apply £65 million on their ratepayers.

One could go on harping and cribbing about this budget but I will finish by asking the Government to look at the construction industry. We need this industry more than any other since it is one that produces the goods which do not need an export market. It utilises materials which mainly do not have to be imported and, therefore, do not seriously affect our balance of payments. It is an industry in respect of which we have between 50,000 and 60,000 idle hands on our dole queues. They are costing, on average, as much as their net take home wages would cost if they were working. There must be something wrong when we do not employ these workers to build houses and provide what people are crying for. The building of houses has seriously run down and is far short of our needs. Our roads are breaking up and services generally are inadequate.

It is wrong to sit around moaning and crying about our plight and blaming the great big world outside for our ills when we cannot do anything for ourselves. Surely that is not the way for a growing population, growing faster than any other country in Europe, to act? Are we going to say to our people in the Six Counties "here is a land which is yours and ours in which there is a future for all of us"? Judging from the taxes that have been imposed we do not know that the Border exists and we do not seem to be concerned what they think about us, even if we are aware they are there. We could be a shining light, not only to Europe but to the world, if we could, in the midst of world depression, raise ourselves up, even at this late stage, by building the things we need with the hands that are idle today and put life into our economy and into our people again. The effect of 40,000 or 50,000 people active in the construction industry would be so immense in a year or two that the entire economy would be unrecognisable from the dire straits in which it is today. This is the most important aspect that the Government should reconsider and, far from cutting the capital programme and the construction industry to the bone as they are now proposing, they should be adding about £400 million or £500 million instead of a cut of £330 million.

As a Labour Deputy I am surprised at some of the criticism coming from the Opposition about the budget because it was agreed by the Opposition that if they were returned to power they would cut the deficit to £750 million. This Government have only cut the deficit to £897 million. If the Opposition had been returned to power I believe they would also have cut the deficit to £750 million. They could only have done this by removing the £100 million on food subsidies which was fought for so hard by the Labour Party. That would put the price of a loaf of bread up by 15½ pence, a pound of butter by 32.9 pence and a pint of milk by 4½ pence. I am proud that Labour are in Government and that the £100 million subsidy was held for the betterment of the poor and working classes.

It also grieves me to hear Opposition Deputies shouting about taxation. If they cut the budget deficit to £750 million they would have had to find another £147 million in taxation. I am surprised at Fianna Fáil spokesmen saying they are disappointed that the tax free allowance for workers is not increased this year.

As a Labour Deputy, I am also disappointed; but I will make the following point. In 1960-61 the allowance for a single man was £234 and the allowance for a married man was £394. Let us not forget that this was the situation in what Fianna Fáil refer to as the glowing 1960s when everything was going right. Yet, for eight consecutive years they failed to increase the tax-free allowance for the working class. Farmers did not pay tax in those years and the PAYE sector carried the burden of taxation. This happened during the years Fianna Fáil were in Government and when the Leader of the Opposition was Minister for Finance. It was not until 1969-70 that the allowance for a single man was increased to £249 and the allowance for a married man to £424. Now we know the sincerity of the Opposition with regard to PAYE tax reform. The glowing 1960s prove what some of their prominent spokesmen did when in Government.

I was amazed to see Deputy Woods on television recently claim that his Government gave a 25 per cent increase to social welfare recipients in April 1982. I would like to remind the Deputy that it was Deputy Eileen Desmond, a Labour Minister for Social Welfare, who gave that increase. When one considers the 12 per cent increase in June 1983 in addition to the 25 per cent, one sees that over two years social welfare recipients will get an increase of 40 per cent in benefits. That is much more than any other section of the community is getting.

There were cries from the Opposition about the 5 per cent VAT charges. I did not agree with this charge on fuel as possibly it will affect the old age pensioners, but I would remind the House that it was not until the period 1973-77, when a previous Coalition Government were in power, that the age limit for old age pensions was reduced from 70 years to 66 years. If that had not been done by the Fine Gael and Labour Government there would be 40,000 fewer old age pensioners. The Fianna Fáil manifesto of 1977 has been the cause of all the trouble and has destroyed our economy. This is despite all the give-aways in that budget such as no car tax and rates off houses. However, Fianna Fáil did not see their way to reduce the age limit for an old age pension from 66 years to 65 years. I would also mention that in the 1973-77 period we introduced the allowance for single women.

I welcome the provision in the budget for the family income supplement for the lower income group. This is the first occasion money has been provided for this section. I was a clerical officer in a local authority for 20 years. In my constituency in Meath there are hundreds of people who are earning only £100 per week gross and an increase in the tax-free allowance is useless to them. I am glad that this family income supplement for the lower income group is being provided in this budget. Such people are not eligible for income tax. I regard what has been done in this area as Labour Party policy. The agency to combat poverty has been reactivated and money has been provided for housing the elderly.

The Government have made increased allocations of expenditure in key areas. For example, a sum of £31.5 million is being provided for local authorities. I worked in a local authority for 20 years and it amazes me to hear the Opposition talking about the financing of local authorities. The 1977 Fianna Fáil manifesto, which removed rates completely-from houses, was the downfall of local authorities. From 1977 to 1981, when Fianna Fáil were in office, local authorities were given an average increase of 11 per cent but their costs were three times that amount. That is the reason local authorities are starved of finance.

Previous speakers referred to the condition of our roads. I should like to put a question to Members of the Opposition. Do they remember the lovely plan they printed which they called the road development plan for the 1980s? I remember when it was presented to the press by a Fianna Fáil Minister but somebody must have been at its funeral the next day because I have not heard of it since. Fianna Fáil promised to spend £1,000 million on the roads in the 1980s. They presented their plans in a lovely blue document — I was surprised to see the Opposition picking blue as the colour. That document was presented to the press but not one penny was spent.

The PAYE worker cannot continue to carry the burden. This Government have given a commitment about tax evasion and the Labour Party will see that that commitment is followed through. I will give a guarantee to the PAYE workers who voted for me that those who are evading tax will be caught, prosecuted and made pay their fair share. Generally people do not mind paying tax if the system is fair and if the money is put to proper use. The problem is that when PAYE and PRSI contributions are taken together there is little incentive to work.

This is our first budget. We have a programme of work for 1982 to 1987 and I hope that during the five years there will be some incentive in the tax system, something on the lines of a scheme used by private companies. For instance, in one company I know if workers do not miss any day at work in a year they are given a bonus of £300; if they miss one day at work they are given £270 and so on. If they miss ten days at work they do not get any bonus. In order to encourage people not to miss work, the Revenue Commissioners could bring forward a somewhat similar scheme, where if a person did not miss any day at work he or she would get a tax bonus at Christmas. Even if it were only £200 or £300 at the beginning it would be an incentive to the PAYE worker.

I am glad that some progress has been made in widening the scope of other taxes aimed at those who can afford to pay. The Opposition talk about property tax and tax on farmers and this leads me to believe that if Fianna Fáil were in Government the PAYE sector would suffer because there would not be a property tax or a tax on farmers. The 1960s prove that. People must be honest. The economy is in a mess. People were spending more than they were earning and we were borrowing too much abroad. In Government the Labour Party must accept the responsibility to tackle some of the problems. I welcome the increase in the levy on banks.

The Labour Party are deeply concerned about the number of people, particularly young people, out of work. I cannot understand the financing of Government bodies and this is something I hope to take up in my party. When I was working in a local authority we had men working for wages of £101 gross, which meant a take-home pay of £76 per week, and we would have to tell those men who wanted to work in the month of September that they would be let go, yet they could go to the Department of Social Welfare, sign for unemployment benefit and get as much on social welfare as they did while working. Therefore, I hope that this Government will look at the Department of Social Welfare's budget. If extra money is to be voted for local authorities in respect of young people, then labourers could be taken on and given work instead. Would it not make more sense to give this money to local authorities to enable them to employ men who want to work rather than pay social welfare benefits to them to be idle?

Some Opposition members have called on the Labour Party to leave Coalition. These people criticised the change in the school transport scheme. I remind the Opposition that it was they who compiled the Book of Estimates but they left it to us when we came into office because they had not the guts to take the decision. The electorate were well aware of the problems facing this country when they voted in the November election, and one reason the Opposition were not returned to office was that the people identified the leader as a man who came publicly on television when he was elected Taoiseach, identified the problems of this nation and then did damn all about them. In five years' time the present Government will be judged and if by then they have not faced up to the problem they will be dumped too. We will have the guts to face up to them and in five years' time things will be reasonably right.

I make a final plea regarding the financing of local authorities. I have mentioned the programmes published by Fianna faíl and their 1977 manifesto destroying the finances of the local authorities. I have worked with a local authority and I know that at the moment the local authorities are in a bad way for finance, particularly for roads. I was ruled out of order here by the Ceann Comhairle some time ago when I got up to ask a question about the local authorities, but I am taking this opportunity in my budget speech to put across the problem seen by the public in the financing of them. Each year the Department of the Environment give in excess of £2 million to Meath County Council to repair and improve national primary routes. A national primary route would be the Dublin-Galway road or the Dublin-Belfast road. We are given money to repair roads which structurally are in good repair while main roads and county roads are broken up completely. I am a public representative and the public come to me to say: "Why are you repairing a road which is in quite good repair while main and county roads are falling apart?" At this time of high unemployment moneys given to local authorities should be left at the discretion of the local authorities to spend, subject to proper technical advice from their engineers. Another reason why that should be done is that two-thirds of the money spent on by-passes on national primary routes and on major road-widening is being paid in compensation. If that money immediately went to the repair of main and national secondary roads and possibly some county roads we could create employment.

I want to speak about the Youth Employment Agency and environmental schemes which are dealt with by local authorities. I never could see the reason why money is given to local authorities for the purpose of giving work to young people, although I welcome jobs for young people. Why give money in the month of August to county councils to enable them to take on 40 or 50 young people for four months' work and then sack them? Why not decide to give the local authorities enough money to keep 15 men working all the time in permanent jobs? They could be put to work on the roads which are so badly in need of repair.

I intend to finish now because another Government speaker wishes to come in behind me. When I was standing for the last election I knew that our economy was in a mess, that too much money was borrowed from abroad and that since 1977 votes were bought here. Money was thrown around like confetti. Knock Airport is one example. Those days are over. We are in the EEC competing with other EEC countries for sales. Foreigners owe the Irish people nothing. The sooner the Irish realise that we must work harder the better, and that concerns workers, management, the farmers, everyone. We must increase our output otherwise it is Doomsday for us. There is nothing for nothing for anybody, and the sooner the public realise that the better. We must put our heads together and as Irishmen we will do that because when we were in trouble in the past we did so. If we work harder and pull together we will pull out of this recession, and we have a good Government now to lead us out of it.

When I first read this Budget Statement I could not help comparing it with an essay written by a leaving certificate business organisation student. I had the feeling on reading it that such a student could probably do a better job given the guidelines. The Department of Education advise their business organisation students that when answering a leaving certificate question each point should be expanded upon and developed to its logical conclusion, that answers must not be given just as stabs in the dark. However, I find on going through this statement that it contains many stabs in the dark. The Minister for Finance clearly was not sure of his ground in preparing his Budget Statement. For example, it contains many phrases such as, "examining the situation", "changes must be made", "I will welcome the views of interested parties".

This Budget Statement is full of ambiguities. It has the hallmark of budgetary decisions hastily arrived at, rather than properly planned and researched and a clear course of action decided upon. The decisions contained in this document are arrived at to satisfy two ideologies which are directly opposed. Reading between the lines one can see clearly deep divisions within the Government with regard to their budgetary strategy. Clearly a serious effort had to be made by the Government to try to achieve a balance between the policies of the two parties who make up that Government. In trying to achieve that balance we have ended up with a budget which will be a cause of disaster for our economy for the remainder of this year and for 1984.

The most important target undoubtedly which this or any budget set out to achieve was to bring about financial rectitude. This Budget is preoccupied with financial rectitude, but at the same time I am not satisfied that it goes far enough in this regard. Unfortunately the achievement of a proper fiscal policy is of no value unless it brings about economic growth, unless it can in time bring about an improvement in our GNP, unless it can improve our economic activities. The real disaster of this budget is that, rather than achieve those aims, it will have the effect of depressing seriously the Irish economy and of causing a tailspin towards the end of this year and early next year.

I want to compliment the Minister on some aspects of the budget. I welcome the family income supplement, the removal of VAT in part from imports, the reform of our financial procedures and the reform proposed in regard to the public sector. However, the real problems which face our economy at the moment are completely and totally left aside. Let me quote from the introduction to the Fine Gael-Labour Programme for Government. That introduction states at the first line:

The unemployment situation, with 170,000 unemployed, 50,000 of them under 25 years of age, and the state of the public finances facing a new Government taking office at the end of 1982, are alarming.

Both require firm and decisive action by such a Government. The dual task of halting and reversing the growth of unemployment while phasing out the current budget deficit poses a greater challenge than any Irish Government has faced domestically since the early years of the State.

I find, in reading through this document, no mention of the word "unemployment" until I get to the conclusion I find that in the Budget Statement the Minister for Finance said:

In our Programme for Government we are committed to achieving economic growth and higher employment, while exercising a disciplined financial management and placing special emphasis on competitiveness. This is a difficult target, but the measures which I will introduce today are a first step on the road to genuine progress.

I cannot find any measures to achieve economic growth and higher employment in the budget. That is the reason why I said that each point should be expanded to its logical conclusion. We find that many important points are made in the budget but they are taken no further.

The only reference in the budget to improving the employment situation is in relation to the National Development Corporation. I find, instead of the £20 million provided in the abortive budget of January 1982 this is being cut to £7 million this year. I hope the Fine Gael Party will get their way and that this is the trend which will continue in regard to the National Development Corporation because we might as well put the money down the drain as spend it on the National Development Corporation. The Minister for Finance agrees, because in the Budget Statement he describes State-sponsored bodies as follows:

In general the financial performance of such bodies has not been good and in some cases has deteriorated markedly in recent years despite major investment.

My view of the National Development Corporation is that it is designed to pump more money into the State sector. I implore the Fine Gael Party to ensure that the trend that has started, where the money allocated has been reduced from £20 million last year to £7 million this year, continues and that we have an end to this ridiculous suggestion of yet another agency which we do not need. We have been famous for identifying problems, publishing reports and setting up agencies but we tend to leave those reports on the shelves. It is about time we took some of them down, examined them and took the action that is required in so many areas.

The Taoiseach, speaking in Galway last Friday night to the Chamber of Commerce, made what I consider to be a very good speech. He referred to the requirements for building up employment and encouraging investment in the country. Unfortunately his speech flew in the face of this document. I felt, while he was speaking, that it was a pity he did not put some of his ideas, in relation to the stimulus that is needed in private enterprise, into creating growth and getting us out of the economic problems we are now in. It should have been stated in the budget that employment can be created given a climate conducive to investment, where hard work, initiative and enterprise are properly rewarded. Unfortunately the budget does nothing to bring about this climate. It should put the emphasis on improved productivity, good marketing, more competitiveness, more export-orientation, product research and development. Companies prepared to improve their performance in those crucial areas should be given tax incentives and other financial incentives necessary to do so.

The Taoiseach looked for some constructive suggestions as to what the alternatives were to the proposals in the budget. I am offering that suggestion as one which would have a great impact on the serious problems we have at the moment and which I believe would not cost a very large sum of money. There are others. For instance, employees in the production sector have no incentive to work harder and do better at present because of the tax system under which they operate. In the PAYE system if a person does overtime and increases his, productivity his tax free allowance is liable to go up and instead of paying 35 per cent on his earnings he will have to pay 45 per cent. This is a regressive form of taxation and provides a disincentive to greater output and greater effort.

That is a clear suggestion which should have been included in the budget in order to stimulate greater effort in the productive sector. Sadly, such a suggestion is totally irrelevant as far as the budget is concerned. With regard to the employer the incentive is to employ less people rather than more because the cost of employing people is increasing all the time. The Minister for Finance received many suggestions from various industrial groups on how he could improve the situation in this regard. I will make another constructive suggestion. In relation to the traditional industries, for example the apparel industry, rather than tax the company by having them pay the employees' contributions for PRSI, which is a cost on production and which, therefore, must be added to the selling price of the goods produced by that company, the Minister should tax companies on their profits instead of forcing them to pay PAYE and thereby making them less competitive and less export-orientated. This kind of initiative is totally lacking in the budget.

In regard to employment, the Government must have a serious re-think. With regard to the gaps that are missing in this connection from the budget I urge the Taoiseach and his Cabinet to have anther look and see if they can fill them. As far as the Government's income policy is concerned there is nothing in the Budget Statement about it. If the Government are proposing that there should be a pay freeze in the public sector they should come out and say so. I would fully agree with them if they decided to take that courageous decision which must be implemented in the current economic climate. They have failed to spell out what their policy is in this regard. It is of crucial importance that this should be done so that the country will be given leadership rather than the Government waiting for somebody else to make the moves.

With regard to our problem in relation to foreign borrowing the budget has attempted to solve this. While we are all concerned about the level of foreign borrowing and while we are all anxious to see as little as possible of foreign borrowing, the important point is that money borrowed should be utilised properly. I support the Government in their efforts to reduce the amount of money which we require to borrow from abroad. However, I am very disappointed at their pathetic effort to do something in the budget about foreign borrowing. After spending some time informing us of the need to reduce our foreign borrowing requirements the Government come up with what to me is a very silly suggestion where they are making improvements in the Post Office savings scheme, the idea being that if we can encourage people to save more we can reduce our dependence on foreign borrowing. That kind of conclusion, having stated that serious problem, is another indication of how far removed the budget is from the serious difficulties that face our economy.

I suggest that one of the ways in which we can improve our situation in this regard is by expanding our service industry. The Government should have included in the budget the extension to the service industry of export tax concessions which are available on profits to manufacturing industries who export. I am thinking particularly of such service industries as international re-insurance and international banking and finance. By way of indication of the kind of potential in this area, 0.1 of 1 per cent of worldwide premium income in re-insurance would equal our balance of payments deficit. If we create the right climate we can improve our position with regard to the amount of service industry located here. The kind of benefit that can be gained from that is set out clearly by way of the statement in the budget that foreign currency appreciation added £340 million to the Exchequer's total foreign debt during 1972. If we can attract service industry to this country, especially of the type to which I have referred, I am satisfied that we can attract also very large sums of money and that this would have a very good effect in terms of our foreign borrowing requirement. If places like the Isle of Man and Bermuda can do it there is no reason, given the will, that we cannot do it.

I turn now to the question of tax equity, a concept to which the Minister devoted some pious platitudes in his Budget Statement. The Minister tells us that he intends providing for jail sentences for people who either avoid or evade tax. One can imagine the smiles on the faces of the tax evaders on hearing that announcement when they know well that we have not the jail accommodation in which to put the real criminals, let alone the tax evaders. Even if we had the accommodation I doubt if we have the legislation to do so. Therefore, the Minister's announcement in this regard is bordering on the extreme.

Despite the Government's expression of anxiety in regard to having an equitable tax system, the fact of this budget is that £300 million extra will have to be paid by the PAYE worker. He is the one who must bear the brunt of tax revenue in terms of the 1 per cent levy and of the increases in VAT while at the same time there are people who are not making any contribution. The budget contains no evidence of any effort to ensure that those people make a contribution. The Minister for Finance need not go far from his home in Kildare to find people right across the spectrum who either pay no tax, or who avoid tax on a very large scale. If he had watched the "Today Tonight" programme on Friday last he would have heard spelled out clearly by a number of people the options available to him to collect the tax that is being evaded. Unfortunately, he has chosen to ignore that task which, though difficult, can be done. Instead he put forward the rather silly suggestion about jailing evaders.

With the exception of the 27p increase in VAT, I am not critical of the VAT increases because I recognise that the tax must be collected. However, one aspect of the the VAT increases that I am especially critical of relates to the increase from 3 to 5 per cent relative to the building industry. The least expensive house that one can buy today, at least in Galway, costs about £30,000. The increase in VAT in this respect means that for a young couple buying a house at that price there will be an increase of £600. This increase of almost 50 per cent in respect of what is the most vulnerable industry signals the death knell of many building firms and of many jobs in the construction industry. I appeal to the Minister to reconsider this backdoor method of collecting further finance from a construction industry which is already on its knees.

There is a section in the budget that deals with the question of duty-free goods and of smuggling. Again, as in the case of tax evasion and avoidance, there is very little action indicated in this respect despite the Minister devoting two pages of his statement to the matter. All he does is to make a big deal of reducing the allowances for visitors to the country from 1½ litres to 1 litre of spirits and from 300 to 200 cigarettes. The Minister went on to say that the Government will give urgent attention to combating the problem of smuggling and that he will be glad to receive any proposals on the matter. I find it difficult to accept that any Minister would include that sort of statement in a budget document at this time when we can read in the papers of lorryloads of spirits being smuggled in from Northern Ireland. The Minister has received proposals in regard to smuggling from many interested groups. To remind him of one, he received a submission in January from the Wines and Spirits Association of Ireland who also submitted a similar proposal to his predecessor in March last and to the Minister before him last January 12 months. In their submission the association state that after considerable discussion they confirm that the quantity of cases of smuggled spirits is in the region of 100,000 cases per year. They submit that that represents approximately £8.3 million by way of lost revenue to the State apart from the VAT and other taxes that would apply to the sales of that quantity of spirits. They submit that the VAT alone would be of the order of £2.07 million. That is an indication of the degree of smuggling in one respect alone. Despite this the Minister has the audacity to say that he will be glad to receive proposals from the various trading groups as to how the serious problem of smuggling might be dealt with. This is another example of his failure to deal with the problems facing the country. Another example was the Minister's failure to pick up an extra £8.3 million from the Wine and Spirits Association because he did not take the required action to stop the smuggling which is going on.

Debate adjourned.
Barr
Roinn