Economic Situation: Statements.

The Tánaiste

I welcome the opportunity provided by this debate to identify the problems that face our economy, to indicate the Government's approach to these problems and to give to the Opposition the opportunity to present their own analysis and approach to the economy.

I would like to quote at the outset a key sentence from the Programme for 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.

This sentence highlights in a critical way the twin dimensions of the task facing the Government. First, there is the dimension of control — control which is vital if we are to continue to exercise discretion and choice at national level in the management of our economy, and to sustain the social progress already achieved. We have already exercised that control. On assuming office we had to take a series of measures designed to begin the long and difficult task of restoring order to the public finances. We will need to continue to exercise that control in the months and years ahead.

Second, there is a major need for a creative dimension in national policy that will help to create the large numbers of sustainable and worthwhile jobs that are required by our people in the years ahead. I emphasise the need for creativity for many reasons. Not the least of these are the major constraints and limitations on policy that already exists, arising from the recession and from the burden of accumulated debt both domestic and foreign.

We cannot pretend that there are instant solutions or bogus remedies.

Before elaborating on these themes, I would like to emphasise the impact of the recent recession and the problems it poses for us. In general, in the post-war period until 1973 the Western World experienced strong growth with minor cyclical movements. Ireland shared in that experience from the late fifties onwards. However, from 1973 we have had two major recessions with one major recovery in the 1976 to 1979 period, with the most recent recession now turning into a gradual recovery.

The Irish people chose by Referendum in 1972 to participate fully in the international trading economy. Our performance is therefore linked to it, and there can be no long-term answer by OECD countries seeking to be more competitive with one another by currency realignments or other means. The OECD themselves clearly recognise that there is no long-lasting solution possible without a great degree of international co-operation. In their July 1983 report, they make the point that, in the absence of a coordinated approach, there is the risk of the emergence of policies whose effects are quite different from those intended by the policy makers.

As an open trading economy Ireland has been subject to the recession and stagnation of recent years. This can most clearly be shown by putting before you the increases in total unemployment and in unemployment amongst those aged 25 or less that have taken place in certain Community countries between October 1979 and June 1983. These were in terms of percentage increases:

	Total Unemployed	Age 25 or less
Germany	+ 189	+ 162
Italy	+ 57	+ 61
U.K.	+ 118	+ 119
Netherlands	+ 282	+ 231
Denmark	+ 88	+ 70
Ireland	+ 128	+ 212
EEC(average)	+ 90	+ 71

These rates of increase show that many European economies, however strong they might have been regarded, were not in a position to insulate themselves from the impact of the international recession.

The recent OECD "Employment Outlook" put the international argument well in commenting that:

The general magnitude of the task of dealing with unemployment can be illustrated by the following simple calculation. 20,000 extra jobs will be required every day during the last five years of this decade if OECD unemployment is to be cut to its 1979 level.

It continues:

Sustained economic recovery is obviously vital to reversing these trends. There are clear signs that the long-awaited recovery is now under way, but it does not seem likely to make inroads into unemployment for some time and even when it does, a sizeable unemployment problem will remain, particularly in Europe.

I have referred to these aspects of the international environment to show a general context for policy consideration. I now return to the two themes mentioned at the outset in relation to domestic policy namely, the continuing need for a control dimension and at the same time the need for an approach in the years ahead whereby the creative talents and organisational capacities of our people can be harnessed to the national task of sustainable job creation.

It is clear to everyone that we could not continue, in the management of our economic affairs, along the lines followed generally in recent years. For example, at the end of 1982, foreign debt was £5,200 million; in 1971 it was £90 million. The interest charges which represent a real transfer of resources outside the country were £5 million in 1971, and £516 million in 1982, excluding interest on the debt of semi-State companies.

It is essential for the moment to continue with the policy of borrowing abroad but the rate of increase of such borrowing has been slowed down and the rate of increase of new additional foreign borrowing, as distinct from refinancing, has got to be slowed down further, in the years immediately ahead. This has nothing to do with any economic theory. It is a realistic judgment on balance to ensure for the Irish people the maximum degree of choice and discretion in economic and social policy.

This year, for the first time for many years the broad overall budgetary targets will be reached. This does not mean that we are seeking to "balance the books" for their own sake. It is necessary to get the public finances under control so that our credit rating can be sustained and limited flexibility created for the years ahead. The Programme for Government (December, 1982) stated:

The phasing of the elimination of the current budget deficit between now and 1987 will have to be undertaken with due regard to prevailing economic conditions, and in particular to the importance of achieving economic growth and dealing with unemployment.

This does not mean that the current budget deficit must be phased out equally over a five-year period, nor does it imply that other magnitudes such as the size of the Public Capital Programme or the level of the Exchequer and public sector borrowing requirements are not important. It means that we as a Government have to be serious, not cavalier, about certain financial targets because otherwise the level of correction that would ultimately be required would be such as to damage all prospects for growth, decimate the social services and threaten the democratic cohesion of the nation.

After an improvement in 1982, the balance of payments is improving sharply again this year to a level around 2 or 3 per cent of GNP, compared with about 14 per cent in 1981. Some of this is related to favourable price movements in oil products, to a fall off in import volumes due to the recession, but also is directly related to an exceptionally strong performance in manufactured exports which this year are expected to increase by 12 per cent in volume terms.

It is clear that there had to be a major adjustment by comparison with 1981 when we were overspending abroad to the extent of one-seventh of our national output. The balance of payments situation is crucially important because it means that when we get back to the growth required to reduce unemployment, the balance of payments should not re-emerge as a major constraint on Government action.

I should like also to underline the sharp decline in the rate of price increase which started in mid-1982, and which has reflected the general decline internationally, the strength of the £IR during the winter period, and the more moderate wage movements in recent times. There are now very good grounds for believing that with a constructive response from everybody — and I accept that this has to include Government action in the indirect tax area — we will move in the future back towards the type of single figure price increases experienced in the sixties. A reduction in inflation will help to make us more competitive, and will make more real for pensioners, unemployed people and other social welfare recipients the impact of the 10 per cent and 12 per cent increases last June, and the additional 5 per cent payable to the long-term unemployed since early this month.

As we all know, improvements in various indicators have been occurring at a time of little or no growth in the economy when major job losses continue to occur with the numbers unemployed rising sharply.

As I have said, the options for dealing with these problems in the immediate budgetry context for 1984 are limited by the constraints arising from the policy choices of previous years. In this context, the level of current expenditure and its targeting, the level and distribution of taxation and the level and composition of the Public Capital Programme have to be seen in the context of both what is feasible and prudent to borrow, both at home and abroad next year.

The House will have many opportunities to debate these matters in the months ahead. I wish at this stage to make some general remarks.

The facts dictate that we must have a careful and planned approach to public expenditure. By far the greater part of public expenditure in practice is committed in advance in any given year; for example, the payment of interest to service existing debt, expenditure on essential services and on necessary transfers for social welfare and other areas. I do not hold the view that a high level of public expenditure is of itself socially or economically undesirable: public expenditure is vital to secure certain key economic, social and redistributive objectives and will remain so. What must be an issue is the efficient management of existing public spending programmes, the elimination of waste, and the phasing down of programmes that serve no necessary economic or social objective.

It is necessary to distinguish between the legitimate views of interest groups of all types in public expenditure programmes, including both those providing and receiving the various services and the overall resource cost and economic and social impact of individual programmes.

In the area of taxation, the widespread demand for tax equity in the years ahead must be translated into a series of concrete actions including the widening of the taxation base. It is, however, important to remember that a large proportion of tax revenue will be pre-empted each year to service the national debt, and any prospects of a reduction in overall taxation must take account both of this and of the need to maintain essential public services.

The same constraints apply to capital expenditure as to the current side. Selectivity and careful targeting of limited resources by reference to economic, infrastructural and social needs will be of prime concern to the Government.

I referred earlier to the need for a creative dimension in policy approaches to the issues we face. I think, having outlined the context of these problems, that no Deputy will disagree that only radical and bold initiatives will help us to overcome them.

For the purposes of debate, I want to encapsulate those problems in two words. The first of those words is unemployment, the second is equity. And I want also to start from the point that as far as I am concerned, there are no sacred cows, immune from critical examination, that can be allowed to stand between us and solutions.

To turn first to the question of unemployment, we are in grave danger of allowing the emergence of an alienated, frustrated and bitter population, young and not so young, for as long as we fail to redress the scourge of unemployment. The economic effects of unemployment are obvious, not only to the individual but to the community as a whole, both in terms of human hardship and an ever-increasing drain on smaller and smaller resources. We have now a human emergency in this State and we do not have the capital resources available to us to deal with it. Given that that is the case, how do we begin to approach the solution?

Firstly, we argue strongly that a medium-term economic plan, prepared on the basis of independent expertise and setting out the options and decisions that are open to us, is vitally necessary. Such a plan, which will also spell out the benefits of decisions in terms of improved employment prospects, is now in the course of preparation by the National Planning Board, which was established by this Government, and it is expected to be ready for submission to the Government early next year.

Secondly, since they came into office, this Government have continued with the task of ensuring that each of our industrial sectors is planned in accordance with a long-term strategy in order to realise the full potential of each sector. We are now well advanced in this work. Already over two-thirds of industry is the subject of searching analysis by tri-partite committees representative of industry, trade unions and Government. Already two reports have been completed — on the clothing and textile industry and on mechanical engineering. These reports and the others to follow shortly on electronics, beef, marketing, chemicals and pharmaceuticals, plastics, fishing, construction and the dairy industry will be the basis of a series of radical decisions by the Government to accelerate the growth of these industries. The recommendations being made reflect the considered views of all concerned with the industrial sector in each case and, therefore, will provide a solid base for action. Among the actions that we intend are that the training funds and agencies will be able to contribute more directly and effectively to the needs of progressive and enterprising companies. We also intend to ensure an infusion of management, marketing and technological skills where that is necessary.

Thirdly, by examining and encouraging measures to improve the competitiveness of our goods and services. All of us accept competitiveness as vital, although I regard it as a wider concept than often discribed. For instance, it does not necessarily follow that low wages will produce efficiency, quality, and predictability of supply, and it is these attributes which in many cases are the key to competitiveness. There are many areas where there is a need to bring a high level of commitment to bear on the realisation of excellence in terms of quality; the marketing and delivery of products; and on essential research and development, both in the area of new products and new methods of production.

Ways of improving this commitment through greater involvement and participation in real decision-making, need urgent debate, and the relationship between wages and productivity needs greater study before simple conclusions can be drawn.

I do not intend, in making this point, to deny the truism that in the short-term, and with a given technology, movements in money wages greater than those of our competitors will tend to reduce competitiveness and increase unemployment. It is also true that there are other factors that affect competitiveness, such as increases in the costs of social insurance, energy, transport and telecommunications, and in many of these areas the Government have a key role to play in controlling costs.

Fourthly, my party have always believed that there is a strong case for significant State involvement in job creation. The Government will shortly have before them for consideration a draft White Paper on industrial policy, setting out the decisions that need to be taken for a revitalised approach to industrial development. The National Development Corporation will play a substantial role in that revitalisation, and will contribute to the creation of viable jobs in the years ahead.

Fifthly, it must be recognised, that we have a special problem here in Ireland. We have the highest growing population in Europe, and we have the highest proportion of young people in our population in Europe. If that means nothing else, it must be seen to mean that the emphasis of policy must continue to be towards the young, both in terms of training and work experience on the one hand, and the creation of sustainable jobs on the other. The agencies that we have created and charged with this task have worked well within the limited structures available to them. Great demands will be placed on those agencies in the years ahead. To date, for instance, more than 100,000 young people have participated in youth employment and training programmes under funds set aside for this purpose — 47,000 in 1983 alone.

Sixth, there are many things which we as a community can do in relation to the problems facing us. I do not believe there has been adequate public debate about the changes in attitudes that may be necessary, and the sacrifices that must be countenanced, if we are to make inroads in a real way into the despair of many of our young people. It may be that a great deal of research is necessary into these areas. For my own part, I believe that they need to be exposed to the light of public view, so that the whole community can exercise a choice.

What sort of areas am I talking about? Let me list several that I believe would benefit from full and open discussion:

—the ending of restrictive practices, including many that may operate in the professions;

—the relationship between shorter working hours, increased leisure, and income;

—the limiting of overtime;

—earlier retirement;

—later entry to the work force through increased emphasis on the transition from school to work.

All of these, and more, are subjects which have something to contribute to the question of employment. How much they have to contribute is a question that can be answered only by research and debate. For many reasons including this; I welcome the willingness of the social partners to engage in dialogue with the Government in the coming weeks.

Seventh, since the adjournment of the Dáil in July, there has been reassuring news on the mineral exploration activity off the Waterford coast. Pending the emergence of information from further essential tests, it is necessary for us all to be just cautiously optimistic. The basic framework relating to the development of hydrocarbons has been in place since the mid-seventies, and the Government are determined to ensure that any commercial finds are developed to the maximum national advantage.

If Ireland were to become a major energy producing economy, there would be greater flexibility in the long run in the management of the national economy. It would be foolish to assume, however, that the discovery of oil, even in large quantities, would necessarily secure major continuing growth in national wealth or in employment.

I want to turn now to the question of equity, particularly in relation to our taxation system. I have already stated my view, well-known to Members of this House, that real equity in our taxation system can come about only through a broadening of the tax base. I want to make some general remarks on this subject.

Before doing so, I would like to remind the House that the 1983 Finance Act contained within it a greater degree of commitment to this principle than any recent such measures. The numerous provisions of that Act aimed at stamping out evasion, together with the introduction of the income-related residential property tax, were clear evidence of the Government's determination to move as fast as possible to a situation where people could be content that the level of tax they were paying, if high, was no more than on par with what was expected from everyone else in proportion to their means. There remains a great deal of work to be done in this area. Over the next few years we will have to move to ensure that wealth is taxed in a visible, measurable and substantial way.

I recognise that there will be many in this House who will find such discussion unpalatable. However, there can be no escaping the reality that a disproportionate share of our burdens are now being carried by the PAYE sector and that simple justice demands that the load be shared more evenly.

I would like, now, to refer to issues relating to the construction industry. The Government inherited major problems in this important sector at the commencement of 1983. Employment had dropped by 18,000 and output was down some 18 per cent from the peak years. Efforts had been made to sustain and increase the level of public spending, but there had been a drastic fall off in private investment which was down some 50 per cent from 1979 levels. Heading into this year, therefore, the Government were faced with a building industry in steep decline and a crisis in our public finances which severely constrained the Government options relating to the public expenditure component of investment demand.

The task of Government was to find a balance between the necessity of control in the public finances and supporting a building and construction sector that had become over-dependent on public spending. The level of public investment was planned at the highest sustainable level, but the inherited financial constraint meant that public sector investment could not be undertaken at a level that would offset the substantial fall that has occurred in private investment.

In so far as major programmes under my Department's control are concerned, output and employment in housing, roads and sanitary services are likely to show an increase in real terms over 1982.

Housing now represents 42 per cent of the total output of the building industry. As the provision of housing for the community is also an area of prime social concern, it is encouraging to find that the output of the housing sector is holding up well despite the adverse economic environment and the decline in construction output generally. Completions this year should not be far short of 26,000 — about 6,000 on the local authority side and the remaining 20,000 or so on the private side.

The relatively good performance of the house building sector is due in no small measure to the massive scale of Government investment in housing this year. Between capital and current the total provision for Government expenditure on housing is £500 million. Of this £208 million has been allocated to the local authority house building programme and this provision has allowed local authorities generally to increase activity under their programmes. As a result the number of dwellings completed by local authorities will show a marginal increase, average employment on the programme will be up 7 per cent to 6,300 and the number of dwellings in progress at the end of August was 8,067, compared to 7,318 at the same time last year.

The relatively good outturn on the private housing side is due to the availability of mortgage finance and to the level of Government incentives to first-time owner-occupiers. The building societies are, at the present time, doing very well as the main suppliers of mortgage finance. It now appears that their loans to house purchasers this year will come to about £375 million — a very substantial increase on the £292 million lent last year. This sum is complemented by a further £125 million provided in the public capital programme — £75 million through the local authority loans scheme for persons in the lower income bracket and £50 million through the Housing Finance Agency catering for those on incomes of £10,000 or less. The sums provided under both of these schemes will be fully utilised. It is particularly gratifying to note that the agency is proving attractive to house purchasers and, by drawing on institutional funds that may not otherwise be invested in housing, is proving to be a real bonus to both the house building industry and to purchasers alike.

The fact that house building has to a large extent weathered the worst of the current economic recession gives grounds for confidence that an improvement in general economic conditions will be reflected in increased output. The recent fall in building society mortgage interest rates, which are now at the lowest level for over five years, is another factor contributing to confidence in the future of the housing sector.

The main improvements required to bring the road system, and especially the national routes, up to a standard adequate to meet our economic, social and environmental needs have been set out in the Road Development Plan for the eighties. We are now four years into the term of the plan and I have had a major review of it completed in my Department which I am about to submit to Government as an updated framework for road investment throughout the rest of the decade.

Some £260 million is being spent this year by local authorities on road transportation and safety. This includes grants of £115.5 million from my Department's Vote for road improvement and maintenance works, an increase of 14 per cent relative to 1982.

As far as future strategy for the building industry is concerned the Government will have a number of aims:

firstly, to return the industry to a pattern of sustainable growth underpinned by sound economic policies;

secondly, to restore stability and to avoid the undue fluctuations that have caused so much damage in the past by prudent use of the public capital programme;

thirdly, to ensure that investment meets reasonable economic criteria in regard to return and effectiveness;

fourthly, to devise new means of broadening the scope for private investment in construction and in particular to bring new sources of private funding to the provision of infrastructure.

I am hopeful in addition that the steps I have taken to streamline the planning process and to remove other unnecessary constraints to development will make their own contributions to the improvement of prospects for the industry.

In conclusion, then, it is clearly the Government's job to accept the primary role in leading the nation to recovery. This is not to say that unemployment can be reduced or reversed on a continuing basis by Government action alone. National co-operation and understanding for the measures that we are and will be taking will over time reverse the trend in unemployment. Dialogue and communication with the social partners will be a critical part of this process. To succeed in the major task ahead will require an entrepreneurial and organisational capacity far in excess of what we have shown in the past in the public, private and co-operative sectors.

If we want increased living standards and are seriously striving for the goal of increased employment, we must honestly accept the disciplines and risks involved. I believe that as a nation we can rise to the challenge.

Mr. Haughey

As the collapse of the economy continues and unemployment rises to unprecedented levels it is becoming increasingly clear that the policies being followed by the Coalition Government are the wrong policies: They are turning the country into an economic wasteland and they are doing this without achieving even the objectives they are supposed to achieve. Practically every indicator points downward. Crushing taxation, factory closures, rising unemployment, collapse of investment, falling consumer spending, devaluation, high interest rates, a sour industrial relations climate all demonstrate the failure of the Government in their management of the economy. The fall in the balance of payments deficit would be welcome if it could be attributed to an improvement in the economy. Unfortunately, it is the reverse and mainly reflects the decline in the general level of economic activity.

It is instructive to examine the Government's economic and social policies from the point of view of their own stated objectives. Government Ministers and spokesmen have pontificated about these at great length. We are told that the main requirement of policy at present is what is euphemistically referred to as restoration of the public finances and adherence to the principles of financial rectitude. These are translated into the specific objectives of reducing the current budget deficit, reducing exchequer borrowing and in particular foreign borrowing, lowering the rate of inflation and making the economy more competitive. Everything must be subservient to these objectives, and in pursuance of them this Coalition Government have imposed widespread hardship on the Irish people, particularly in the form of crushing taxation and rising unemployment. These burdens have caused direct and substantial hardship and deprivation throughout the community, and the tragedy is that they have been inflicted in vain because there is nothing to show as a result. They are not succeeding in doing what they set out to do. The current budget deficit is not being reduced. In fact, it will not be much different in 1983 from what it was in 1982. The level of exchequer borrowing is not being reduced. Inflation is not falling. It is almost certain also that there has been a deterioration in national competitiveness rather than an improvement. The overall depressing outcome is that none of the things that the economic policies of the Government were supposed to achieve is in fact being met, while the ruthless attempt to achieve them has depressed the economy to the lowest level for decades.

The general economic indicators add up to a very depressing picture. The building of houses and homes is one of our most important economic and social activities because of the need to rehouse large numbers of families and the employment the construction industry provide. But housing completions, according to the latest Department figures, will be 25,000 at most this year, compared with nearly 27,000 last year. Housing starts this year will be down to 15,000, which represents a drastic reduction. Unemployment in the construction industry is 73,000, down 32,000 on the level of 105,000 when we left office in June 1981.

There has been a general slump in consumer demand, with a fall in the volume of retail sales of 6 per cent in the second quarter compared with 1982. Motor registrations from January to August are down by 8,500. Investment will fall by almost 11 per cent in 1983. The imports of capital goods, which was fairly positive in 1982, is down by 5 per cent in the first half of 1983, compared with a growth of 1 per cent in 1982. That fall in our investment rate is probably the most detrimental factor in the whole picture because for many years, no matter how bad our overall economic position was, we could always point to the highest rate of investment in Europe. That picture has now suddenly, dramatically and drastically changed.

Growth in GDP will be down to ¾ per cent compared with 1¾ per cent last year. Growth measured in terms of GNP will be zero. Inflation is actually rising, not falling, according to the Central Bank's latest report, largely due to devaluation. The bank states:

The year-on-year increase in the CPI, which was 10 per cent at mid-August, is expected to rise to over 11 per cent by mid-November.

Last year we reduced the rate of inflation dramatically from the Coalition peak of 23.3 per cent in mid-November 1981 to 12.3 per cent in mid-November 1982. Now we are told by the Central Bank that this Government will have succeeded in reducing inflation from 12.3 per cent in mid-November 1982 to 11 point something in mid-November 1983.

The one positive feature on the horizon is the continued growth of industrial production and of exports, particularly in the new high technology sector. But these new industries were brought to Ireland by Fianna Fáil between 1977 and 1982. Between 1977 and 1980 we increased the number of people at work by 80,000 and created a wave of industrialisation which will stand this country in good stead for many years to come.

Coalitions invariably create unemployment. When we left office last year unemployment stood at 169,000 or, seasonally adjusted, at 171,000. Today, with the autumn and winter months still ahead of us, unemployment stands at 193,200 or, seasonally adjusted, at 197,600. The Government maintain that the increase in unemployment is slowing down. The figures do not bear that out. Between September 1981 and September 1982 seasonally adjusted employment rose by just under 33,000. Between September 1982 and September 1983 unemployment seasonally adjusted rose by exactly 33,000. The unpalatable fact is that the rate of increase in unemployment is not slowing down, as the Government suggest, but that it is rising steadily.

It is an open secret that the Government are now deeply divided on general economic policy, on the phasing out of the budget deficit, on levels of expenditure and on capital taxation. There is now no longer any attempt to present a united front. The Tánaiste and leader of the Labour Party is no longer taking issue with the Minister for Finance. He has taken issue with the Taoiseach himself and demanded that, from the Taoiseach down, Ministers must not speak in public about fiscal policy and budget matters. What type of leadership can we get from muzzled Ministers at a time of national economic crisis? Because the Government cannot agree on the basis of economic policy, each month's rising unemployment statistics are accompanied by nothing more than banal cliches about competitiveness.

I have recently called on the Taoiseach to stop distorting our recent economic history. I want to do so again in this debate. It may be a convenient political alibi to blame someone else for the present disastrous state of the economy and to attribute the failure of his own economic policies to historical causes. It may be politically expedient for him to do this, but it certainly will not contribute to solving the problems of today or to alleviating the hardship that exists. In fact, by giving a distorted picture of our recent economic history and putting forward a false analysis of the root causes of our present problems, he can only make the solution to those problems all the more difficult.

The Taoiseach has made this distortion of our recent financial history, this lie, the central plank of his present political platform, and the excuse for the failure of his own policy. He has given his distorted version so frequently that there is now a danger of its being accepted as valid. At the Fine Gael Ard Fheis on last Saturday night, the Taoiseach said:

You all know the heritage of overspending and debt that we found facing us when we came into Government. One sentence will suffice to describe the situation then facing us. Next year alone, we shall have to pay £900 million, that is an average of £1,000 per family, to bankers outside this country in interest on and repayments of foreign borrowings incurred to finance increases in spending over the 1977 level in the years from 1977-1982.

There you have it. The big lie. The great distortion. A dishonest attempt to suggest——

An Ceann Comhairle

I would prefer if the Deputy did not use the word "lie".

Mr. Haughey

——that all the interest payable on foreign borrowing next year can be attributed to something that happened between 1977 and 1982. Up to now we have refrained from what seemed to us to be pointless and sterile argument about who was to blame for what, insofar as our economic and financial history is concerned. However, when we find this constant reiteration of these lies that somehow or other Fianna Fáil are to blame for our present financial problems——

An Ceann Comhairle

The Deputy cannot go on reading into the record the word "lie". It is out of order.

Mr. Haughey

These untruths. I had to sit in this House when the word "lie" was used constantly and repetitively about myself.

Mr. Lyons

For six hours.

An Ceann Comhairle

I am responsible for the Chair now.

Mr. Haughey

If the Chair wishes to go on precedent, it is there. When we find this constant reiteration of these untruths that somehow or other Fianna Fáil are to blame for our present financial problems and that all that interest payable abroad in 1984 can be attributed to the past foreign borrowing by Fianna Fáil, then it is time to state what the actual position is.

Sizeable current budget deficits and major recourse to foreign borrowing first became a feature of our public finances here during the period of the 1973-77 Coalition Government in which Deputy FitzGerald, the present Taoiseach, was a major and influential figure.

Mr. Lyons

That is no lie.

Mr. Haughey

In fact, the general impression at the time was that he was the economic guru of that Government. When Fianna Fáil left office in 1972 the current budget was £3.8 million, or 0.1 per cent of GNP — in other words, it was negligible. The economic and fiscal policy of that 1973-77 Coalition Government was to stimulate an economy which already had a growth rate of 5 per cent. Mr. Richie Ryan, the then Coalition Minister for Finance, maintained, presumably with the full agreement of his colleagues including Deputy Dr. FitzGerald, that:

A higher rate of growth could be achieved without causing serious difficulties.

He went on to boast that he had brought in the largest budget in the history of the State. By 1975 exchequer borrowing had been increased to 16.5 per cent of GNP and the budget deficit outturn in that year was more than double the original estimate.

For the period 1973-1977 the foreign debt of this country increased eight-fold — from £126 million to £1,040 million. In 1974, Minister for Finance, Mr. Richie Ryan, said in his budget speech:

This is the second year in which I have used fiscal policy to stimulate the economy by presenting a deficit budget. This policy has involved increasing public expenditure at an exceptionally rapid rate which, if unchecked, could pose problems for the future. Taken in consideration with the expansion of the public capital programme, it involves a very large increase in foreign borrowing.

Lest there be any doubt about the clear policy adopted by that Coalition Government, I wish to quote from an address given by Brendan Corish, Tánaiste in that Government, to his Annual Party Conference in November 1975, in which he also praised the support that the Labour members of that Coalition had been getting from all their Fine Gael colleagues, who included Deputy FitzGerald. That quotation, which is a classic, is:

We have insisted in Government, and let it be said, have had willing and full support from our Fine Gael partners, that everything possible must be done to support the greatest number of jobs and that those in receipt of social welfare payments must be protected against inflation.

With that in mind the Government has had recourse to a conscious policy of large budget deficits. Put very simply, the Government has spent more on social welfare and health, on education and housing, on farming and job creation and on the rest of the Government services than it raised through taxes. The difference between current expenditure and income has been financed by borrowing.

When we were in opposition the Labour Party and the entire Labour movement besought the Fianna Fáil Government to follow a policy of budget deficit, principally to stimulate employment, but these entreaties were contemptuously rejected. And in fact, the last budget of George Colley had a current deficit of only £6 million. It is estimated that this year we will have a budget deficit of £180 million.

So when we are asked what is Labour doing about the crisis, what is the Government doing, I reply, that is what we are doing. We have swept aside the restrictions of conservative economic policies so beloved of Fianna Fáil, and have replaced them with the most progressive economic policies ever pursued by an Irish Government ...If I might put it more dramatically, the Government is borrowing more money this year than the entire revenue raised by VAT.

And lest there be any doubt as to whether this enthusiasm for borrowing and budget deficits was fully shared by Fine Gael, let me quote from the last budget speech of Mr. Richie Ryan in 1977. He said — and I quote:

In 1974 and 1975 successive injections of public expenditure had been necessary to stimulate economic activity and support living standards and employment at a time when little could be expected from the private sector. It is undeniable that the heavy borrowing to finance growing current deficits as well as capital spending was the correct economic response to the economic situation then facing us.

Let there be no more distorting of history. Massive Government spending, financed by borrowing, began under the 1973-77 Coalition Government of which the Taoiseach, Deputy FitzGerald, was an influential member. An important part of today's public debt is the result of the massive borrowing undertaken between 1973-77 and an equally important part of the interest payable in 1984 to which Deputy FitzGerald refers, also applies to that borrowing. The build-up of Government expenditure and Exchequer borrowing began under the first Coalition Government in 1973-77 and large current budget deficits have been a feature of economic and financial policy in this country since then. Whatever about subsequent years in the period 1973-77, the formula of running large current budget deficits and engaging in massive Exchequer borrowing was not accidental or something that was arbitrarily imposed by circumstances on the Government. It was, as the quotations I have given clearly demonstrate, deliberate Government policy, enthusiastically embarked upon, by a Government in which the present Taoiseach, Deputy FitzGerald, occupied a dominant position.

I would like now to direct the attention of the House and the general public to the situation in regard to foreign borrowing and foreign indebtedness. Again, the facts of what has happened are totally at variance with the impression which the Taoiseach and Coalition spokesmen are endeavouring to convey.

We are indebted to Eddie Collins, TD, Minister of State at the Department of Industry and Energy, for a rather intriguing speech which he made recently in London when he disclosed that our foreign debt would amount to approximately $8 billion at the end of 1983. When we translate this into Irish pounds at current exchange rates that is, $1.19 to the Irish pound, our foreign debt at the end of 1983 will be £6.723 billion.

Now, according to the Central Bank, our total foreign debt at the end of 1982 was £5.29 billion. Accordingly, our outstanding foreign debt will have increased by £1.433 million during 1983 under this Coalition Government. The corresponding increase in foreign debt in 1982, under Fianna Fáil, was £1.497 million. The real picture therefore, is that our foreign indebtedness rose by almost exactly the same amount in 1983 as it did in 1982. It may, depending on the fluctuations in the dollar rate of exchange, be £60 million less, but it may not even be that. Hardly a picture of "remarkable progress" which is the phrase used by the Taoiseach last weekend. The reality is, and the Taoiseach and the Government must face it, that despite the massive deflation imposed by their budget this year, the reduction in living standards and the rapid rise in unemployment it has caused, foreign indebtedness went up this year by almost the same amount as it did in the previous year.

The picture in regard to the budget deficit is very much the same. It now appears that this year's current budget deficit, because of the general slump in economic activity, will be in the order of £950 million, a level not significantly different from the year before. This outcome again indicates the failure of the Government's economic and financial strategy. That strategy involved the phasing out of the current budget deficit by 1987. The reduction in the deficit from £988 million to £950 million in the first year does not represent a very impressive start. In fact, it can hardly be regarded as a start at all. We have recently been informed that the target for 1984 is £855 million, in other words, a mere £39 million below this year's original budget target. The reality again is, in regard to the current budget deficit, that no real progress was made in 1983 and nothing of any great significance can be expected in 1984.

It is now valid to ask if the Government any longer have any real intention of phasing out the current budget deficit by 1987. The Labour Party never really believed in that aim anyway. The target of £855 million for next year must be taken as a clear indication that the 1987 target will not be achieved. It now appears that it is the massive deflation of the economy, brought about by this year's budget and the consequent rise in unemployment and fall in consumer spending, that is making the prospect of phasing out the current budget deficit by 1987 very unreal.

If this massive dose of deflation inflicted on the economy has put the elimination of the current budget deficit out of immediate reach, should we not now be looking at the alternative of a prudent and cautious stimulation of economic recovery?

Neither do the figures substantiate the Government's claim to have established control over Government expenditure.

This Coalition Government came into office in July 1981 and for the remainder of that year exceeded their own targets of £85 million. In this year, 1983, latest estimates are that current Government expenditure will be about £80 million — £90 million above published targets. In 1982, however, we kept Government current expenditure £50 million below the budget estimates.

The overall picture, therefore, is that claims by this Government to achieving success in the management of our public finances do not stand up to examination. The claims they are making are a myth. They are not succeeding in reducing current Government expenditure to any significant extent. They are not making any real progress in the elimination of the current budget deficit, they have achieved nothing in so far as reducing our foreign indebtedness is concerned. I hope that in this debate, Government speakers will face up to these harsh realities and acknowledge what is the real outcome of their financial and economic policies. The misleading generalisations about progress and success in achieving policy objectives are not in accordance with the facts which do not sustain these claims. They are bogus claims and they reflect seriously on the integrity and standing of those who are making them.

The main thrust of our argument in this debate is that despite the hardship, suffering, deprivation and general depression which the economic and fiscal policies at present being implemented are causing, they are not achieving their objectives in regard to the control of Government expenditure, the reduction of our current budget deficit, the reduction of our foreign indebtedness reducing inflation and that in these key areas they have failed. On the basis of this assessment, therefore, a review of current policies with a view to their revision has become urgently necessary. There is a very real possibility that the present downward spiral in the economy may continue to feed on itself and that our industrial base will be dangerously eroded to the point where any prospect of ultimate economic recovery will be endangered.

We are proposing that prudent and cautious stimulation of the economy in selected areas be undertaken. The blunt instrument approach has clearly failed. Our economy clearly cannot absorb that type of approach because of its small scale and its comparatively underdeveloped state. Skilful sensitive management should now be brought to bear with the object of generating economic activity in key areas.

I believe that monetarist policies, which have caused devastation elsewhere, are not acceptable to the majority of our people. They are alien also to Labour Party philosophy and if the present Labour Party continue to embrace them they are finished as a political force in Irish life. Let them be under no illusions about their role. They are not softening the impact of monetarism, they are making possible the implementation of monetarist policies.

What is needed is a clear vision of the future which will seize new opportunities and which will foster a job-creating environment. At present, there is no support for the productive sectors of the economy. This year the farm modernisation scheme, the loan subsidy scheme and the four-year plan for agriculture were all suspended. State support for the development of our marine resources has also been cut back. The Government have failed to reopen the Clondalkin Paper Mills, which could use our forestry products. It is a shameful reneging on promises that the Government have refused to proceed with any attempt to re-open Clondalkin. The Minister for Industry and Energy now apparently wants to close down our peat-fired stations.

What we now need more than ever is a progressive approach, which while leaving more freedom to the productive sector also actively encourages and promotes it. There is much that requires to be done in the development of our national resources, our small industries, our amenities and our physical infrastructure. We have the people to carry out the tasks. We cannot tolerate a situation where unemployment creeps steadily over the 200,000 mark and towards a quarter of a million, while the Government stand by and do nothing.

We in Fianna Fáil have recently proposed that the question of selective reductions in taxation in specific areas be examined. The objective would be to make reductions in certain areas where they would not result in any diminution of the return to the Exchequer while at the same time stimulating employment. One such area which could be looked at is the drink industry. The figures here are very interesting. They suggest that the law of diminishing returns has been operating. Between 1979 and 1983, the excise tax on alcohol increased by 20 per cent in real terms while sales declined by more than 25 per cent. This suggests that revenue may have been foregone by setting duty levels too high. At the end of the first week in October with more that three-quarters of the year gone only 71 per cent of this year's target has been raised compared with 74 per cent last year. To some extent this falling off in revenue may be due to decreased consumption but it can also be traced to other factors including a switch in consumption from taxable to non-taxable areas. These would include smuggling, the increase of duty-free supplies and some increase in home brewing.

A reduction in the level of duty could have the effect of bringing these purchases back in to the taxable area of expenditure. I believe it is perfectly legitimate to argue that a combination of factors would bring about a situation where a reduction of the rates of tax in the drink industry would not result in any loss of revenue, but would, on the other hand, be very beneficial from the point of view of the tourist industry and employment in the drink industry, particularly at the retail end. As an experiment, I suggest that a reduction of somewhere between 5 per cent to 10 per cent in the excise duty be implemented.

I want to make it absolutely clear that I am not confining myself exclusively to the drink industry. I merely give it as an example which may be typical of what is happening in other areas. For instance, I would like to see the same sort of examination carried out on the electrical goods industry with a view to a similar type of experiment being undertaken there.

The Government have concentrated solely on the public finances, and on the doubtful assumption that economic recovery will come of itself once balance in the finances is restored. The fact, however, is that demand is acutely depressed. Rationalisation and improvements in efficiency and competitiveness will not bring about recovery or stop the rise in unemployment, so long as demand remains depressed.

The Government know very well what methods can best be employed to increase demand and to create jobs. The construction industry has been decimated. A further substantial real cut in the public capital programme from £2,135 million in our estimates last November to £1,890 million in the February budget — the outturn will be even less — will of course severely depress output and employment in the construction industry. If the objective in The Way Forward were being followed of increasing the capital programme by 2 per cent in real terms in 1984, we would have a capital budget of £2,366 million or some £460 million above the level that is apparently proposed by the Government next year. Such expenditure could be used to improve our roads, restore farm investment, carry out our decentralisation programme, prevent factory closures, and permit progress on a host of essential capital projects. I am not of course saying that, after the way the economy has in fact been mismanaged this year, such a level of capital expenditure would be possible in 1984. There is no doubt however that the further fall in investment next year will have a seriously depressing effect on jobs and on the level of economic activity.

I described the speech of the Minister of State at the Department of Industry and Energy, in London recently, as intriguing. The following excerpt from that speech is one of my reasons for that description:

The Government's foreign currency debt will amount to about eight billion dollars at the end of 1983. Although this is a relatively high level of foreign debt, its maturity structure is well balanced with no large bunching of repayments in any one year. Borrowing for the most part has been in medium and long-term loans with very little utilisation of short-term credits ... While access to foreign capital markets has posed no undue problems for us, we have recently tapped the US prime market and the Swiss, German and UK capital markets.

Not exactly what the Government have been preaching at home for the last twelve months. Apparently, you say one thing to the people in the dole queue at home, when you are telling them that there is no capital available for job creation, but you say something totally different when you are mixing with European corporate planners in the Savoy Hotel in London.

The other thing the Government must consider is to revive demand by increasing the spending power of low income groups, especially pensioners and other long-term social welfare beneficiaries and the lower paid worker. I would urge the Government also to reconsider their harsh decision to deprive old age pensioners of their double payment at Christmas. Next year the Government must provide some tax relief for the lower paid. Those on lower incomes in general terms have a greater propensity to consume home-produced goods, and therefore social equity also makes sound economic sense.

Government economic policy is totally and disastrously misdirected. This Government seem to confuse the state of the public finances with the state of the economy. It is, of course, possible to have the public finances in perfect order and the country in a state of deep economic depression. In fact, it can be argued, the first is very often the logical outcome of the latter. At present, we have the worst of both worlds. We have a deep deflation of the economy without any improvement in the public finances. This Government completely ignore, in formulating their policy, the fact that this country has a major development task facing it. Our labour force is growing at 1.4 per cent per annum, in addition to a current unemployment figure of nearly 200,000. In Government circles there are many commentators and spokesmen who preach a new doctrine of economic fatalism. Their cynical message is that we must never again speak about full employment and that we shall have to live with high numbers of unemployed in our society.

I challenge their right to say these things. They have no special insight into the world of the future. Neither have I, but I do know that the whole structure of western industrial society is changing rapidly and I believe that, if we take the right decisions and go for the right options, we can fully occupy our relatively small labour force in a new world where the very concept of employment has changed. It is not correct, for instance, to say that a new electronic and information-technology revolution is coming; it is already here. In the USA 66 per cent of all workers are employed in services; in the UK, 59 per cent and in Japan, 55 per cent. What we need is an entirely new approach towards industrial development. We must go for industries which are based on high technology and capable of high productivity. The world around us is changing rapidly and fundamentally. The time to fit into these changes is now. This will involve changes in education, training and research. It will involve selecting, shrewdly and carefully, the growth areas we are going to go for. Some of these are already manifesting themselves in the electronic and computer industries, health care, engineering soft-ware and in information-technology service industries.

Even in the present world recession a great deal is possible for a small country like ours with a highly educated, flexible work force. But nothing is possible, nothing can be achieved, until we succeed in getting a complete reversal, not alone of Government policy but of Government thinking.

The Taoiseach has stated that his policies require "steady nerves and strong will". In fact, all his policies require is a hard heart. To be able to implement policies that cause ever rising numbers of unemployed, with all the human misery and tragedy that that entails; to look upon great numbers of young people wandering aimlessly through our streets; to see urgently needed health and welfare amenities abandoned or postponed; to see widespread hardship and deprivation needlessly inflicted on one's own community — these things need only a cold and uncaring outlook. To deny an old pensioner a little extra at Christmas does not require an iron will, only cold unconcern.

The policies of this Government are not alone hard-hearted in the extreme but they are failing to achieve even their miserable bookkeeping purposes. It is time for a change; if not a change of policies, then a change of Government.

Mr. Mac Giolla

The lack of interest displayed by the Government in this debate here today is extraordinary. The Fianna Fáil Party have at least scored in showing their interest in the debate by their attendance in this House. Apparently the Government side have allowed the House to debate the economy but are not interested in listening to what the House has to say and have no intention obviously, whatever we say here, of even examining their policies in order to see if they are going on the right road.

As Deputy Haughey said, the policies of the Government are not working, no matter what they say. The objective is to cut back as much as possible, and damage the economy thereby, in order to get money here and there, scrimping and saving, to pay back the national debt; but the national debt is not being paid back and the economy is going down and down. As it goes down, less new wealth is being created, less is available to pay back the debt, and so there is less and less possibility of paying back the national debt in the future.

Recently the Government accused Deputy Haughey of making a U-turn on policy. It is time the Government made a U-turn and had the guts and courage to do so when it is obvious that the whole thrust of their policy is failing. Next year, as a result of the continuing downturn in the economy—which they are engineering; it is not accidental but deliberate policy in the whole area of the economy — the possibility of balancing the budget or repaying the national debt will be less and less. Therefore, the Government should listen to this debate on the economy today and should seriously consider a U-turn on this issue, because it is obvious that the more production is increased, the more new wealth is created, the greater will be the possibility of paying off the debt in the future. If they will stop considering the vital necessity of paying off debts and instead would consider the vital necessity of building the economy, of injecting more enterprise by both State and individuals into wealth creation—which can be done in so many ways—the possibility of repaying the national debt would be far greater in the future.

There is no planning. There is no government plan before us on agriculture or industry. The Government should consider when the problems started in this country. They did not start with the recession and they will not end with the recession. Our problems are much more deep-seated than that. Our problems are that industrially we have been relying on an IDA strategy, but with the best will in the world the IDA can no longer succeed in "producing the goods" they produced over the past decades. Now we have so many competitors in developing countries all over the world who can give far better incentives, lower wages and so on for the type of assembly line low-wage industry which the IDA to a great extent were depending on and which is not available to them any more. The whole IDA strategy was very successful in bringing new industry in when our own industrial base was collapsing, with all the closures in the shoe and leather industries and the textile trade which were not noticed too much because so many new industries were coming in and new jobs were being created. Nobody worried too much about the closures then, but now we can see that the continued closures are a greater and greater threat because they are not being replaced by anything. What is the Government's industrial strategy? They have no industrial strategy whatsoever. They have no alternative to the old IDA strategy, which cannot now succeed as it did before. To blame the recession for everything is very bad policy on the Government's part. When the recession ends in Britain and in America it will be found that the lack of any policy here will ensure that the recession does not end here.

Another factor which the Government should consider is that they have been dependent on the EEC for their agricultural policy and have no strategy or plan for agriculture other than what the EEC suggests or dictates. The policies are decided in the EEC, not by the Department of Agriculture or the Minister for Agriculture. Therefore, we battle away against the collapse of the EEC Common Agricultural Policy, the super levy and so on without any new policy of changing production or attitudes to agriculture or development in that field. There is nothing new.

Therefore, the Government should listen very seriously to the debate which will take place here and should consider whether they themselves should make a U-turn. As has been pointed out, full employment obviously has now been accepted by the Government as pie in the sky, impossible. No other country is looking for full employment. We should not even consider full employment. There are major problems in the big industrial countries which have very advanced technology. They realise that they can maintain the same productivity as before in various areas with a lesser work force and will have problems in the unemployment field. However, that is not our problem. We have the type of problem associated with developing countries, which is lack of industrialisation. We still have the possibility of full employment in an industrial economy if we develop a new strategy of building our industry on our resources and working towards full employment in that area.

Even if the Government do not consider full employment, at least they must consider employment of some measure. The construction industry, in particular, is one sector with the highest unemployment — 50 per cent of its work force are unemployed at the moment. Government policies have contributed enormously to that situation, in their taxation policies, their VAT and their cut-back policies. This is true particularly of the cut-backs made by the Department of the Environment on local authorities for roads, harbours and houses. Everything is cut back to the limit in an area where, almost overnight, thousands of new jobs could be created, at the same time building the infrastructure and houses to supply the needs of the economy. This would provide employment with very little loss to the Exchequer.

It has been estimated that the total real cost — not just the payments to the unemployed, but the cost of administration of these payments and so on — to keep a person on social welfare is in the region of £7,000 a year. If that figure is correct, the cost of our present unemployment would be in the region of £1,350 million annually. When one thinks of those enormous figures rising, one realises that allocating money from the Exchequer to capital projects which would quickly take people off the unemployment register would be an aid to the Exchequer in many ways and would also increase productivity, enabling the country to pay off its terrible national debt much more quickly.

The construction industry, an area in which employment can quickly be created, has been in crisis for the whole period of office of this Coalition Government. Despite warnings from unions, the Construction Industry Federation and others that the situation would get worse, no action has been taken. Far from helping the situation, Government decisions have militated against the industry. The reduction of the capital programme by £120 million and the increases in VAT on building materials have contributed to this decline in the last eight or nine months. In addition, the recent planning legislation announced by the Minister for the Environment has failed to tackle the real problem facing the construction industry and has done nothing to speed up the process of planning applications so far.

This Government promised that there would be 30,000 house completions in 1983. It is now clear that this figure will not be reached. All that our most important industry has got from this Government are broken or unfulfilled promises. It is totally unacceptable that the Government should blame the international recession for this sorry state of affairs. The well-being of the construction sector is almost totally influenced by domestic factors, particularly Government monetary and fiscal policies. This Government, in particular, have shown a total lack of foresight and planning and have failed to streamline the various agencies involved in the construction industry. It is a scandal at a time when so many are in urgent need of housing that unemployment in the building industry should be approaching 50 per cent. There are at present 36,000 families on the local authorities waiting list, which represents more than three families waiting for every local authority house to be built annually. There are 15,000 families living in unfit or overcrowded conditions throughout the whole State. Despite this, the number of local authority houses being built this year is falling and for next year the projected numbers are fewer still.

The figures published recently by An Córas Tráchtála indicate that our export sector is doing well. There is a need for the Government to see that profits made in this area are used for job creation. The country is crying out for houses, hospitals, roads and so forth and while exports are of vital importance there is a need for the Government to ensure that the domestic wealth-generating potential of the country is also developed.

Until 1979 the number in the employed work force was increasing and so was the level of investment. Since that year investment has fallen. In 1982 it came down with a very severe bump by 45.3 per cent in volume. Certainly we would not have had native investment in the Celtic Sea oil, for instance, if Atlantic Resources were left to their own devices. In their efforts to raise money they had to be underwritten by the State in the form of the Industrial Credit Corporation. Private investment is just not capable of developing our economy.

The numbers of unemployed between the ages of 45 and 54 amounted to almost 30,000. These are experienced workers who in a normal society would expect many more years of earnings but they are being told that they are on the scrap heap. In the 34 to 44 age group — these are mature, experienced workers and people with various family commitments — there are well over 35,000 unemployed at present. The highest number — over 50,000 — are in the 25 to 34 age group. This is the most active productive age group who obviously have a big contribution to make to our national output. Not only are they unemployed but, apparently, they are without hope of employment in the future. That is not to mention the 60,000 in the under 25 age group many of whom have never got jobs.

It is foolish to talk about our national debt while Government policies are robbing people of their self-respect by refusing to allow them to work and forcing them to live a life of poverty at great expense to the Exchequer. It is Government policy to spend borrowed money to pay people to be idle. That is precisely what they are doing. The Government have recently proposed to make £500 million cuts. These cuts will put even more building workers on the dole. About 70 per cent of the money spent on the building industry comes from the State.

Unemployment will also be created in many other industries. I referred to the need for the development of industries based on our own resources. The leather industry is a good example. Unemployment in the leather industry began before this recession started. It is continuing because we will not reorganise the industry to ensure that raw hides go to Irish tanneries rather than abroad. In 1981, 31,946 metric tonnes of raw undressed cattle and horse hides were exported to the value of £17 million. In 1982 the figure was 32,561 metric tonnes of raw hides to the value of £22.294 million. In addition we exported 32,213 metric tonnes of sheep and lamb skins with wool on them, and a further 11,000 metric tonnes of sheep and lamb skins without wool.

We had leather imports to the value of £5 million in 1982 and imports of footwear to the value of £55 million. When we are exporting over 60,000 metric tonnes of horse, cattle, sheep, lamb and calf hides and skins every year and importing over £60 million worth of leather goods, that sort of economics is absolutely crazy. The Government do not appear to have any policy to ensure that our leather industry is made viable. We should be providing all the leather for our own shoe and leather industry, and we should also be in the export business.

We raise more live animals per head of the population in this little country with a population of three million people than any other country in Europe and possibly in the world. The number of animals we raise is of a very high order and the vast majority of our hides and skins are exported. These are our native raw materials which should be used as the basis for our industrial development. We have no plans for that sort of thing.

At the same time our land is under-used. This year cattle numbers have come back to the level they were at when we joined the EEC in 1973. Where is the development? Where is the great productivity? Where is the expansion in our agriculture? Some farmers have expanded. Others just sat and took the money and the handouts, with a handful of cattle roaming on their little patch of land. Overall our agriculture has not expanded. Productivity has not expanded. Our land use has not improved. We continue to depend almost totally on meat and milk. That is where the money is in the EEC. That is drawing to a close. The pressure is on and the writing is probably on the wall.

We have our co-ops which are supposed to be co-operating together and trying to help everybody. They are not supposed to be competing against each other and building up their own little empires. They are fighting against each other, competing against each other, taking court injunctions against each other, trying to grab farmers here and there to build up their own little empires. To make money for whom? They are not co-ops. They are private enterprise developments ripping off people, ripping off farmers, workers and consumers, putting up prices, putting up the price of milk. What type of co-operation is that? They see the problems coming and are trying to grab what they can while business is good. These co-ops have not advanced one whit since we joined the EEC in their productivity and the material they produce.

They are still in the hard cheese business for which there is a decreasing market. They are not in the soft cheese business for which there is a greatly expanding market. Does the Minister for Agriculture know that? Is he concerned about that? Has he asked any questions about it? Have we any plans for the use of our milk? Have we any plans for changing over from milk and meat production to other areas such as vegetable production and processing, and poultry and egg production?

Last year we imported £10 million of eggs in the shell because our farmers cannot produce eggs. They have no hens any more. They produce milk and meat, and that is it. We also imported £13 million worth of potatoes. Farmers have their milking parlours and their cattle roaming the fields, and they will not even dig a patch of ground to grow potatoes for themselves.

Dáil Éireann díospóireacht - Wednesday, 26 Oct 1983

Economic Situation: Statements.

Dáil Éireann díospóireacht -
Wednesday, 26 Oct 1983