This debate concerns a very important subject. Undoubtedly, unemployment is the biggest single tragedy affecting the lives of our people. One would have hoped that in causing this debate to take place, the Government would have availed of the opportunity to place firmly on the record details of their plans and policies for dealing with what is a major tragedy. This evening, when 216,000 Irish people are unemployed, there are no real prospects in so far as the speeches emanating from the Government benches in this debate are concerned. This is a very sad indictment of the Government. It is a clear indication of their failure in the many months in which they have been in office to take advantage of the opportunities presented to them by their being in full control of the economy. An even sadder fact is that these thousands who are not being offered any prospects for the immediate future by reason of the lack of policy on the part of the Government are to be joined by thousands more in the months ahead.
The matter of greatest concern to us in Fianna Fáil is the continuing increase in unemployment, a trend that is evident from the regularly published statistics. Yet there is no indication from the Government of their having grasped the enormity of the problem. Huge numbers of young people will be leaving school and college shortly. They will all be seeking employment, but after 15 or 16 months in office it is a matter of great concern that the Government have not published a policy that would give hope to these young people and to all those confronted with the tragedy of unemployment. Because of this lack of initiative on the part of the Government there is a great danger of despair setting in among these people and that is a situation that could cause untold damage to the stability of our democrary.
In these circumstances it is the duty of the Opposition to remind the Government of their responsibility, to highlight for them the stark realities of the problems confronting the nation and to demand that some action be taken to deal with these problems. In proposing this motion we have given the Government the opportunity to put on the record their understanding of the difficulties and their proposals for dealing with them. Unfortunately, the contributions from the Ministers who have spoken during the debate have been dismal. Week after week we read the sad stories of closures and of increases in the unemployment figures. Another very serious situation is that many of those who have been made redundant are finding now that their pay-related benefit period is ending. Thousands more will find themselves in that position within a short time. This situation results in a massive drop in living standards. Parents of students are confronted with the realisation that their children will not be placed when their studies are completed.
It is interesting to hear the Minister advocate the necessity for young people to continue their studies but the sad fact is that we probably have the best educated unemployed people in the world because our people have been benefitting from the improvement in education facilities. Many thousands of them have qualified from the universities and from special courses followed in the regional technical colleges, but they are not being given any opportunity to put their knowledge and skills into practice. Therefore, it is very lame of the Minister to advocate further education as a solution to our future unemployment problems. There would not appear to be any strategy in what the Minister was saying. It may transpire that students will come to regard their studies as futile in that their expertise cannot be put into practice. If our youth lose faith in the ability of our democratic institutions to provide them with the opportunity to work and to develop and exploit their individual talents, they may not remain docile but may seek to influence events in an unorthodox way. The sacrifices of previous generations built this country. We have a duty to protect and support the progress which has been made. We should adopt the appropriate policies to restore growth in the economy.
I believe unemployment could reach 300,000 in a few short years unless firm Government action is taken to reverse the present trend. Unfortunately, high unemployment has always been associated with Coalition Governments. One only has to look back through the records to see the dismal failures of successive Coalition Governments in the area of job creation. Different ideologies at the Cabinet table create special problems. Decisions are delayed and the result is stagnation in our economy, with a rising crisis for those who are unable to obtain employment. We have not got the safety valve of emigration to allow these people to filter away. The problem is remaining on our doorstep, in our statistics, and increasing at an alarming rate.
The Government seem to be motivated primarily by the desire to keep Labour and Fine Gael together in the Cabinet. That seems to be the primary objective and primary motivation which keeps the Government together. The second motivation seems to be merely to keep Fianna Fáil out of office. Unfortunately, the economy, unemployment and the problems facing our people are taking a very poor third place in the priorities of this Government. If unemployment continues to rise to 300,000 as predicted on current Government policy, our credit-worthiness will suffer and eventually inability to borrow will inevitable lead to further massive job losses in the public sector, thus compounding the problem and bringing nearer the threat of undermining our society.
This country cannot afford to have Cabinet table indecision of Coalition partners delaying decision making on policies to deal with the urgent problems facing our people. Socialist type solutions will not provide answers. Already there is too much dependence on the public sector. There is a need to create a favourable climate for investment, a need to allow generous rewards for personal initiatives and effort. There is a need to allow generous rewards for capital investment, a need to encourage and reward excellence, a need to allow labour generous rewards for diligent work. There is a need for policies which would support and encourage private investment. There is a need to eliminate waste in the public and private sector.
We are hoping to see in policy from the Government specific indications as to how they would deal with these matters and bring forward the incentives which are so necessary. What we do not need is an abundance of bureaucratic control and theoretical socialist solutions. These have all failed in the past. This national development corporation is not the solution. If extra money is available, it should be invested in infrastructural services. Additional expenditure on roads and sewerage and water schemes and housing could be justified as a permanent benefit would result and the jobs effect would be immediate. A national development corporation has not worked anywhere else and will prove to be a costly failure if it is pursued here. The business expansion scheme has not worked in the United Kingdom and will not work here unless employees and management get an incentive in a reduction of tax or an option to get shares in the company.
The personal taxation level here is too high. Payment of higher wages is no longer an incentive because tax rates are so punitive. The marginal tax rate of 75 per cent plus the PRSI deduction is resulting in some workers bringing home less than 50 per cent of their gross pay. Our taxation levels are a disincentive to management and to workers. This 75 per cent marginal tax rate and PRSI deductions make Ireland a very unattractive place to live. Previous high tax bands were accompanied by well-known loopholes which have all now been effectively closed off. So far as income tax is concerned, Ireland has got very much out of line with other EEC countries in imposing marginal tax rates of 60 per cent or more on a relatively large number of taxpayers. The average and marginal tax rates on average industrial earnings are also much higher here than in neighbouring countries.
The National Economic and Social Council in a recent report recognised the intense sensitivity of the Irish public to the amount and incidence of taxes. They said that was very understandable in the light of the rise in the radio of tax revenue to gross domestic product from 33 per cent in 1979 to 41 per cent in 1983, a rise of over one-third in the space of four years. The only constant theme in Government statements on unemployment is their misplaced optimism that the situation with regard to employment was improving and that the only way forward was to keep wage increases to the minimum.
These views were repeated last night by the Minister for Finance when he said pay moderation would allow struggling firms to maintain employment. With unemployment at such a crisis level, it is pathetic to see the Government placing all their reliance on wage restraint, as if there were no other options available which could also contribute. To talk of merely maintaining present employment levels is defeatism. Too high a price has been paid already. It is time for the Government to adopt policies which would reverse the disastrous trends which are so clear in our economy at present.
The National Economic and Social Council in a recent report said that part of the lack of success in dealing with the problems facing the economy here has been due to the lack of a coherent, planned, national economic and social strategy. In my view, part of such a strategy should contain major alterations in present taxation policies. High levels of personal tax and low levels of tax on manufacturing profits have not brought the desired increase in job creation. Unless the individual is motivated properly, increased output will not result and real competitiveness will not be achieved. We have got our policy the wrong way around. It should be reversed to allow for low personal taxation and higher company tax on profits.
We had low unemployment when personal tax was low. We now have high unemployment while high personal tax obtains. Some workers bring home less than 50 per cent of their gross earnings. I have instances of workers bringing home 48 per cent of their gross pay, workers who are prepared to work hard. They are motivated to do their best, and they find that the State is taking over 50 per cent of their income in taxation. Surely that is the wrong way to tackle the problem. Surely we should be encouraging workers to work so that they can enjoy the fruits of their labour. But no. We want them to work hard, but we want the State to take the fruits of their labour. That just will not work.
There is no point in the Minister introducing a penalty on people who are absent from work through sickness or otherwise, and refusing to allocate grants to companies if the record of absenteeism is high. The Minister is adopting a negative approach. He should be positive. He should introduce incentives. He should allow the workers to enjoy the fruits of their labour. They will be motivated if they are allowed to enjoy their reward. Imaginative tax alterations would bring dramatic results and would lower unemployment. We have now reached the ridiculous situation where a £1 increase in a single worker's take home pay costs the employer £3.6p, with £2.6p going to the Exchequer and into the social insurance fund.
The Minister for Finance advocates wage restraint to improve competitiveness, while his own taxation policies are having the most serious adverse effects on our competitiveness through increasing the cost of employment, thus necessitating further wage increases to cushion the decline in employees' real disposal income as a result of the increased taxation which the Minister is imposing.
One of the greatest constraints on growth in output and employment is the penal taxation policy being pursued by the Government. If they reduce taxation, encourage initiative, encourage enterprise, encourage investment, encourage risk taking and reward hard work, they will get the result. That is the only way in which we can motivate our workers to increase production. Increased production will bring about increases in our sales. It will bring about new opportunities and expand employment. From some of his statements the Minister must agree with a great deal of what I am saying. I recognise that he has a difficulty in Cabinet to get some of his colleagues to agree to the introduction of the type of schemes I am suggesting. It is time we extolled the need to achieve profits. I support what the Minister said tonight in regard to profits. I wish that some of his colleagues in the Cabinet would make similar statements. If they did we might have some hope for the future. Policies should allow people retain the wealth they accumulate through their thrift, enterprise and hard work.
As Fianna Fáil spokesman on Environment I must express my party's alarm at the Government's neglect of the construction industry, the second biggest industry in the country. The crisis affecting that industry is a matter of serious concern to the nation, a personal tragedy for the thousands who have lost their jobs and the hundreds of building contractors who have been forced out of business. We have not heard one word from any Member on the Government side on those matters. The Irish construction industry was never in more serious trouble. In 1983 the gross output of the industry was estimated at £1,876 million. There was no growth in the industry last year compared to a decline of 1 per cent in 1982. When one recalls that there was an increase of 11 per cent in gross output in 1980 and a 21 per cent increase in 1981 it is easy to imagine the effect of the sudden reversal from growth to stagnation and of the continuing fall in output. When inflation is taken into account it can be seen that output, based on 1975 prices, has dropped from a growth of 4 per cent in 1981 to a reduction in the growth output of 12 per cent in 1982 and a reduction of 10 per cent in 1983.
Big fluctuations in output occur in the construction industry from time to time but what is now significant is that the current decline is sharper than at any time in the last 25 years. In the previous major recession of 1974-75 the drop in output was only half that experienced at present and hence the magnitude of the present position facing the industry can be realised. The share of the country's resources being devoted to construction activities had risen steadily from the early sixties. The percentage of gross domestic product going to construction was 9.4 in 1960; it reached a peak of 15.4 in 1979 but by 1983 it had fallen to 12.2 per cent. The reasons for this were the rapid development of the Irish economy and the necessity to improve infrastructure to meet the needs of a modern economy with a growing population. However, the current Government view seems to be that future growth of the construction industry will be kept close to the growth rate of the economy as a whole. The construction industry will, therefore, get a smaller share of the national cake as compared to the past position.
People in the industry believe they are not getting their fair share of the resources at this stage. Rather than being overfed the industry is on a Government enforced diet and the results are not very pleasant. Employment in the industry in April 1979 was 145,000 of which 101,000 were directly employed in contracting and the balance by building material manufacturers, merchants, plant hire firms and consultants. By April 1983 the numbers had fallen to 117,000, a drop of 28,000 or just 20 per cent and the decline persists. Particularly badly hit are the architectural, engineering and quantity surveying practices. Their respective institutes report a sharp cutback in work and a resultant increase in job losses. Estimates of total employment in private sector consultancy in 1982 was 8,000 falling to 6,000 in 1983 with a further decline to 5,000 in 1984. If and when an upturn occurs there will inevitably be some delay in getting major projects to the construction stage due to this rundown of the design sector.
To fully understand what is happening in the construction industry it is necessary to examine the individual contributions of the public and private sectors. Public sector investment is a direct decision of Government and private sector investment is largely determined by the success or otherwise of economic and monetary policies. The public sector has always played a major part in financing the construction industry. In 1979 the public expenditure on building and construction accounted for 55 per cent of the total expenditure. In 1982 and 1983 the percentage had risen to 75 per cent. The reverse of the coin is worth noting. The private sector share of expenditure fell from 45 per cent to 25 per cent.
There are three major elements in construction output, housing, which accounts for about 40 per cent, public funded demand on schools, hospitals, farm buildings and power plants, and private demand. Since 1979 housing has declined by nearly 20 per cent at constant prices. Output in the public sector has grown while there has been a dramatic decline in the private sector. In the two years between 1979 and 1981 output in the private sector has almost halved. This sector accounts for almost 90 per cent of the total drop in output although it only accounts for about 20 per cent of the total output. The current difficulties being experienced by the industry are mainly due to the lack of confidence by the private sector to undertake construction work which arises from a number of factors one of which is the world recession. Of course, that has now come to an end. The construction of advance factories has practically ceased and the picture I am painting in regard to construction is, unfortunately, a depressing one.
Many sectors of the industry feel, as a result of the long recession, a lack of confidence in the industry and in their own ability to survive. They cannot yet see the light at the end of the tunnel. There is a pessimistic view prevailing that the Government will not take any steps to halt the downward slide in the construction sector. Confidence, as the Minister is aware, is a frail ingredient and there is no doubt that the industry would survive although in what size and shape it is not clear. The responsibility lies with the Government. Indeed, we are constantly reminded by the Government that the health of the Irish economy is influenced by changes in the world economy. The worst recession since World War II has ended and the economies of the industrialised countries are starting to grow again led by the recovery of the United States. However, the decline continues at a very serious rate in the Irish construction industry. If further evidence is required of the continuing decline in output and employment in the construction industry one has only to consider the most recent statistics which show that cement sales in January and February of this year were down 12 per cent on the same months last year. Employment in the construction industry in January 1984 was 16 per cent down on January 1983. Compared to January 1982 employment is down 30 per cent.
The industrial analysis of the Live Register for 9 December 1983, published last week, shows that unemployment in the construction industry increased by 815 in the month of November to 42,000. It seems that 5,048 construction workers lost their jobs in 1983. The recent CIF-EEC survey of the construction industry of December 1983 shows that the decline in output in the industry is continuing at a disturbing rate. The surveys which have proved very reliable in the past also reflect employment trends under three main headings, civil engineering construction, residential building and nonresidential building. The summary of the survey is that the rate of decline in employment in the industry is expected to continue during the first quarter of 1984 at a similar level to that experienced during the last quarter of 1983 although there are indications that there may be a significant increase in the number of firms letting people go in civil engineering and non-residential building sectors.
What the construction industry needs most of all is confidence. First, they need confidence that the Government will continue to support and implement its published plans for public capital investment. Secondly, they need confidence that the Government will actively seek ways to promote private sector investment through the introduction of investment incentives. It was a shattering blow to the morale of the industry to see their worst fears confirmed in 1983 when the 1983 Public Capital Programme out-turn was published which showed that expenditure in 1983 was £142 million less than that provided for in the Estimates bearing in mind that the Government had already reduced the 1983 Public Capital Programme by £220 million on the levels detailed by Fine Gael and Labour in December 1982. That decision by the Government to withdraw £362 million from planned public capital investment in 1983 has, more than anything else, led to the present demoralised state of the construction industry.
It is clear that the present policy involving the highest rate of personal taxation levels in Europe, coupled with high levels of PRSI, levies, VAT, company and capital taxation are all resulting in a climate where personal initiative is being discouraged at every level, resulting in a lack of opportunities and hopeless unemployment. There is one area where the depressed state of the economy has not deflated demand and that is in housing. The housing needs of our people are not being met and the crisis will worsen in the immediate future due to the age structure of our population. To meet current demands we need to construct 35,000 houses per year. The Government have set a target of 30,000 and then proceeded to provide finance for only 26,000. They built only 26,000 houses in their first year in office and it is doubtful if they will succeed in building that number in 1984.
The national need is for 35,000 and we are increasing the problem and postponing the achievement of the targets while people are left without homes. I estimate that there are more than 130,000 people waiting to be housed by local authorities at present. If we are only building 6,000 local authority dwellings we will only house 24,000 people approximately at an average of two children per family. The waiting list is getting longer each year and the Government should take some initiative to deal with that vast human problem. As far as housing our people is concerned too many have been condemned to put up with unfitness, overcrowding, involuntary sharing and homelessness. A net figure of 28,000 dwellings in 1981 were claimed to be unfit beyond repair. It will take 16 or 17 years to catch up with the repair of those houses according to the rate of progress of the policy of this Government. Even though there has been some improvement due to public and private expenditure in housing, it is also true that the disparity between the majority of the population and those in poor housing has worsened. There is a need for a major increase in new house completions and improvements and extensions to the existing housing stock. Present policies will not meet the urgent demand.
With some justification I can draw the attention of the Minister to successful efforts made in the past to bring about dramatic increases in the number of houses built. In the period 1970 to 1973 there was an increase from 13,000 houses to 25,000 houses. If it could be done in the past it can be done in the future. However, it was not done in the past without a major effort, without special initiatives being taken and incentives being introduced. If the Minister and the Government had the will they would set about relieving the nation of this great social need and ease the difficulties and hardship of those who have no homes.
It would be easy to achieve the housing targets if the Government had the will. It would also create employment for thousands of people who have the skills and who are idle and walking the streets. It is clear that unless the Government are prepared to introduce major changes in the taxation policies they have been following, to introduce initiatives that will encourage investment and allow people rewards for their efforts, that will extol excellence and create a climate for investment, very little can be done.
The Minister spoke in broad general terms, but what we need are specifics, We want an indication from the Government of the exact policies they propose to deal with the unemployment crisis that is affecting our people. There is despair among young people. There is a threat to democracy and to the continuation of the peaceful, happy environment in which families have been reared. The State will be under threat if the Government do not take action to provide employment for our people. The unemployment figure is slowly creeping up to the dramatic figure of 300,000 that I mentioned earlier but there is no evidence of any concern on the part of the Government. They are unnecessarily preoccupied with matters that are secondary to the national problem, feeding the newspapers with stories about phone tapping and phone bugging. Half of the Government are touring America at enormous expense, accompanied by enormous entourages of civil servants and others, at a time when the country is faced with the most serious unemployment crisis. The country is faced with a major recession that is deemed to be continuing despite the fact that the world recession is over. Unemployment figures in Europe are below 10 per cent but here they are at a level of 17 per cent. In the United States they are in a situation of near full employment. The Minister spoke about the inability of the Government to provide jobs for all our people. I do not accept that policy of despair. The people want some hope, not despair from this Government.
