Vol. 351 No. 2
I have been given a timetable for this evening's business which I will read out: 7 p.m. to 7.20 p.m., a speaker on behalf of Fianna Fáil; 7.20 p.m. to 7.35 p.m., a Government speaker; 7.35 p.m. to 7.55 p.m., a Fianna Fáil speaker; 7.55 p.m. to 8.10 p.m., a Government speaker; and 8.10 p.m. to 8.30 p.m., a Fianna Fáil speaker. Is that agreed?
Agreed.
I move:
That Dáil Éireann declares that, in view of the revelation that the 1984 budget was falsely based, it no longer has confidence in the Minister for Finance.
We are pressing this motion tonight because we believe in one of the most fundamental democratic principles, the principle of ministerial responsibility before Parliament. The Minister for Finance is responsible not only for his own actions, but for the actions of officials of his Department. We are not talking about some minor administrative or executive error by a junior official, which can occur under any administration. We are talking about a major blunder, which undermines not only the Government's but the country's financial credibility, and demolishes completely one of the pillars on which the Government's whole budgetary strategy was based.
Up till last week we were led to believe by the Government that the balance of payments deficit on current account had been reduced in two years from almost £1,400 million to £350 million, in other words, that it had been reduced to a quarter of what it was, since the effects of the second oil crisis were at their height. Now we learn that in fact the reduction, from almost £1,600 million to £863 million, did not even halve the balance of payments deficit.
For months now the Government have been desperately pointing to the dramatic reduction in the balance of payments deficit as evidence of a success resulting from Government policy. This claim was never an honest one. The Taoiseach, speaking in this House on his nomination on 14 December 1982, after a year in which we also had effected a significant reduction in the balance of payments deficit, indeed a part of the reduction the Government are now claiming credit for said and, I quote, "certainly the improvement in the balance of payments reflects particularly the depth of that recession", Volume 339, column 49 of the Official Report.
The Government, this Minister and this Taoiseach came to power originally in July 1981 on very specific promises. They presented themselves as the apostles of a new and superior fiscal rectitude. They juggled with figures, they extrapolated them. They left the electorate worried, confused and demoralised.
The principal qualification the Taoiseach and the Minister for Finance tried to present to the public is their alleged capacity as the people who get the sums right. Not everyone in this State, to put it at its mildest, understands fully the balance of payments deficit, the current budget deficit, the level of borrowing and a host of other important economic variables. They understand however that these things are important to the nation's financial standing in the world and to our ability to undertake necessary borrowing. They were brainwashed up till last week that this Government understand finance, and that when the Minister for Finance stands up and says that the balance of payment has been reduced from 8½ per cent of GNP to 2½ per cent of GNP in a year that he is speaking the truth and that he knows what he is talking about. Unfortunately, this is not the case and the Minister not merely got his sums wrong, but went on misleading the public long after senior officials in his Department and the Central Bank knew the truth. The Minister is forced to admit that his estimate of the balance of payments deficit is £500 million out, and that it is 6½ per cent of GNP, not 2½ per cent of GNP.
There is now an attempt to suggest that a mistake of this magnitude does not really matter, that it is just a reclassification of accounts. The balance of payments mattered, when the Minister tried to boast about his spurious success in reducing it to 2½ per cent of GNP. It mattered when seeking to justify the budget. This Minister will not succeed in persuading the House or the country that now you have got your sums wrong it no longer matters.
The balance of payments is along with the borrowing level, to which it is connected, a key indicator as far as the international business and banking community and foreign governments are concerned. The Minister will not persuade the OECD, the EEC, or the IMF that the size of the balance of payments deficits does not matter. They will hardly be impressed that they too will have to revise what they have printed about Ireland in recent months, and admit on the basis of information supplied by his Department that they too published misleading information. It is bound to raise serious doubts in these circles about the competence of the Government and of this Minister for Finace and of their management of the economy.
The shortest explanation of why the balance of payments deficit matters is given by Dr. Antoin Murphy, the economist who originally highlighted the "black hole", in the Sunday Tribune this week. I quote:
Some commentators, as well as a variety of unofficial spokespersons, have attempted to create the impression that the country is no worse off as a result of the shifting of a large part of the unexplained outflow from the capital account to the current account of the balance of payments. These people imply that there has been just some reshuffling of the overall balance sheet. Is this a correct interpretation?
The answer is unequivocally no. There is a fundamental difference between money leaving the country on the current account and money leaving through the capital account. Money that goes on the current account side leaves the country permanently. There is no possibility of it returning. Money leaving the country on the capital account side is invested outside the country and may be repatriated by its owner in the future. It may be brought back into the country when the investor decides to use it domestically.
During times of severe recession the balance of payments tends to correct itself, as imports are squeezed. In 1975 the deficit dropped from 10 per cent of GNP to ½ per cent. However, in times of growth, as experience of the years 1979-81 show, the balance of payments can prove a real constraint, as the imports are sucked in. A base of 2½ per cent or less of GNP should in theory provide more room for manoeuvre, when the economy picks up. A base deficit of 6½ per cent of GNP however provides very little room for manoeuvre at all. That is the fundamental difference between the two figures.
Certainly the weekend press did not accept the specious explanations of the Taoiseach and the Minister for Finance. The Sunday Tribune called it “a major error” and said “the Government simply must take responsibility”. It went on:
It is simply not good enough for the Government to say that the discovery of the "Black Hole" makes no difference to economic policy. To say that the Government would have framed the same budgetary strategy confronted by a balance of payments deficit of £350 million or £850 million, is either an indictment of a do-nothing Government or of a Government who failed to grasp the nature of economic policy. The balance of payments deficit has always been a major constraint on economic policy in Ireland and as a result has always been a central policy target.
The Sunday Press called the £500 million mistake “one of the biggest blunders in the history of the State” and “furthermore it is a scandal”.
The Minister for Finance is attempting to present two fronts at the same time. In public he is maintaining that nothing has happened to cause concern. However, in press briefings the Government and the Minister are attempting to pass the blame onto departmental officials, to the Central Statistics Office and the Central Bank. I would like to quote again from the Sunday newspapers. First, the Sunday Tribune's political correspondent said:
The Department of Finance, it is now claimed by senior Government sources——
Note this great new word "sources". You never name people. They masquerade under the handles——
Ask Brian about that.
Order, please.
——knew the seriousness of the situation a long time ago, but those working on the problem allegedly kept this information to themselves because it conflicted with earlier assessments to Ministers.
That is a feedout from the Government, from the handlers, trying to put the blame on officials. The Government should be ashamed of themselves. The Sunday Press goes even further. They say that an official of the Department of Finance is suggested as having given advice to the Minister on the basis of which he misled the Dáil on 7 February of this year. Again, this is an attempt to blame officials of the Department of Finance. Now we have a rather peculiar comment from the political correspondent of the Sunday Independent. He claims that the withholding of information, the cover-up if you like, was deliberate. He states:
In the earlier months of this year, the Department of Finance was negotiating its borrowing for 1984 and also renegotiating some existing loans to take account of falling international interest rates. The Government then identifying a problem to which as yet they could offer no solution, would serve only to raise fears, reduce international confidence and prejudge the terms on which borrowing could be secured.
This argument of political expediency was presumably put to him by some Government source but in effect means that the honesty and credibility of the Government's figures will inevitably be suspect in future. It is a strange standard of journalism to suggest that it is all right for a Government to mislead the country and the world about the budget and the balance of payments deficit provided they are doing it for some peculiar purpose of their own.
I regard it as scandalous that the Government should, as a matter of policy, seek to blame officers for ministerial error. It is an attempt by the Government to subvert the principle of ministerial responsibility on which parliamentary democracy is based. Is the Minister for Finance accountable or not accountable to Dáil Éireann for the budget, for the information he gives in reply to questions in the Dáil, for the speeches and statements he makes? Or should we invite officers of the Department of Finance to answer this debate, and to present the budget in future? Is the Minister just a cypher, a mouthpiece for his Department, without independent judgment? Is the Minister or is the Minister not in political control of his Department? If the Minister for Finance is not responsible for the nation's finances, then he should not be Minister for Finance. That is why we are expressing no confidence in him and that is why he should resign. I want the Minister, first of all, here this afternoon to state publicly that he accepts responsibility for the error, and to repudiate the aspersions that have been cast on his senior officials — something never done in this House before, as far as I can recall, by any Minister for Finance.
We in this House are going to hold Ministers accountable for their actions. The functioning of democracy requires Government accountability. We cannot allow blame for misleading statements by the Minister for Finance to be passed on to individuals or institutions not directly accountable to us.
It is clear from what I have just quoted that the true situation was known for a considerable time. The Minister presented a budget based on information known to be false. That is quite sufficient cause for demanding here tonight that the Minister should resign.
In condemning the Minister who is responsible to this House for his Department, I am not implying that other institutions are free of blame. The information that would explain the "black hole" that grew enormous in 1983 was apparently available in the Central Bank. The Central Bank's latest report published last week was written as if the now discredited figures were still valid. I would accept, too, that the operational methods of the Central Statistics Office require examination and updating. But I reject imposition of the form of political control by means of a Government appointed Statistical Council as the correct way of doing this. The liaison between the Department of Finance, the Central Bank and the Central Statistics Office definitely has been shown to be in a lamentable position.
I want to point out to the House the trick which this Government are now attempting to perpetrate. Day by day, week by week and month by month the statistics going out from the Central Statistics Office make it abundantly clear that their economic and financial policies are a disaster and that they are leading this country into economic ruin. Now they decide that perhaps they should have a say in these statistics. Up to now in this country we have always had totally objective, impartial statistics produced by a completely independent office. Now the Taoiseach proposes to appoint a politically appointed board, or council — call it what you will — to supervise the Central Statistics Office. We reject that. That is not acceptable to us and I believe that it will not be acceptable to the country. Whatever else we may argue, dispute or debate about in this House, at least we should have totally reliable statistics from non-political sources.
This episode is the second major blow to confidence for which the Minister for Finance has been responsible this year. His Budget Statement, you will recall, brought the Stock Exchange to a standstill. As a result of that he had to go and do the very thing that he had been preaching against since he became Minister for Finance — borrow abroad. He cut off from himself, by his own stupidity, the resource, access to domestic borrowing. As a result, in January to March of this year he has had to rely to an unprecedented extent on foreign borrowing and, as I pointed out last week, in the first three months of this year alone he borrowed about 80 per cent of last year's total foreign borrowing.
The sad reality is that the Government have not succeeded, even by the crushing taxation which they have imposed on the country, any worthwhile improvement in the public finances. The current budget deficit is now into four figures for the first time, and as far as ever from being phased out. The national debt increased by a record £3 billion last year, and the foreign debt by a record £1.7 billion. Since June 1981, indeed, the foreign debt has grown from less than £3 billion to £7½ billion.
Last year's budget came, by the Minister's own admission on budget day, as a "shock to the economy". What did it achieve? The Minister's Budget Statement, if he were honest to this House, should now be amended and the crucial sentence in that Budget Statement should now be amended in the light of the facts which have been disclosed to the following: "While inflation has come down somewhat — not significantly — and the balance of payments problem has been slightly alleviated — not greatly — consumption has declined, investment has fallen, unemployment has risen and growth has been stifled". This treatment had all the primitiveness of mediaeval medicine. Bleed the patient to death, if you call it a cure.
In my view, the recent reduction in the unemployment figures reflect increasing emigration. I do not think there can be very much doubt about that. A reduction in unemployment achieved by increased emigration is the hallmark of failure, not of success. One of the achievements of which we can be most proud over the last 20 years was that not merely did we halt emigration, but we actually made it possible for thousands of Irish people to return to take up jobs in this country. I remember being in Donegal when a teacher of a class pointed out to me with pride that one out of every five children in that school was the son or daughter of a returned emigrant. Is it Fine Gael strategy now to deal with unemployment by means of emigration? Is that what it has come to?
Lack of confidence in the Minister for Finance is not confined to this side of the House. On a number of occasions last year the Labour Party and their Leader showed that they had not confidence in this Minister for Finance, in relation to the size of the deficit, in relation to tax reform and in relation to expenditure cuts. There is virtually no group in this country, be they the farmers, the trade unions or the employers, not to mention those on social welfare, who have any confidence in the Minister for Finance, as shown by their comments following the presentation of his two budgets. The collapse in private investment last year and the size of the profits repatriated in 1983 show that investors have no confidence, either, in the Minister for Finance.
In conclusion, I want to return to where I started. The Minister for Finance, misled this House in his Budget Statement and in reply to a question by Deputy O'Kennedy on 7 February 1984. He made statements which were known at the most senior levels in his Department — and as far as we know, by the Minister himself and the Taoiseach — to be false. He not merely made misleading statements, he actually made claims which can now only be regarded as fraudulent, not once but on several occasions. He has undermined trust and confidence in the national finances. The principle of ministerial responsibility is fundamental to the operations of parliamentary democracy.
His attempt to deny or to sidetrack that responsibility cannot and will not be accepted by this House. That is why we have no confidence in the Minister and that is why we are calling upon him to resign. Before this debate ends, the Taoiseach and the Minister for Finance must deal with one very important issue — that is their credibility in this matter. I point again to the document published before the budget "Economic Background to the Budget, 1984," on page 8, of which it is stated:
The coverage of the statistics for the national balance of payments is being reviewed and the results which may be available later this year could require the estimates of the current accounts deficit for recent years to be revised. However, the revisions are unlikely to alter significantly the improvement in the trend in the period under review.
The key word there is "current" and I want to direct the House's attention to it. They knew before they brought in the budget that there was something wrong on the current side. I want to suggest that if they knew it was on the current side that the mistake was, they must also have had some very good idea of the size of the mistake. I want the Minister to come clean with this House in the course of this debate——
The time of Deputy Haughey is almost up.
——and state did he know when he put that sentence into the economic review, as apparently the Central Bank and officials in this Department knew. Can he tell us now that he did not know or at least have a fair idea of the size of that deficit on the current account? We have mass unemployment, we have crushing taxation, we have a balance of payments deficit which is not being brought under control, we have a current budget deficit——
The Deputy must conclude now.
We have a current budget deficit the phasing out of which has been abandoned on every front. Everywhere you look, this Minister for Finance is a disastrous failure and he should go now and let somebody else in to do the job which he is totally incompetent and incapable of doing.
Hear, hear.
I move amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
"reaffirms its confidence in the Minister for Finance".
I do not intend to speak on this amendment because it is not my practice, contrary to that of the Leader of the Opposition, to speak at length on motions which congratulate me. I shall leave that to other people. This presentation which we have had here this evening——
Come to grips with the situation.
There is a motion of no confidence down against the Minister for Finance and I think in all fairness——
The three musketeers.
——he is entitled to a hearing.
Not when he makes that sort of remark.
He is entitled to a hearing. Deputy Lenihan will have an opportunity——
This presentation this evening by the Leader of the Opposition seems to me and to anybody listening to him to have been culled very largely from last Sunday's newspapers. I am bound to say that it was a statement that was delivered without any particular appearance of passion or conviction one way or the other. It is not surprising that should be the case because the Opposition know perfectly well that it is playing games with the matter which is now under discussion.
Some games.
I intend to say a few words about the history of economic policy, since Deputy Haughey raised the matter, over the last couple of years and compare performances. I assure the Chair I have no difficulty whatsoever in standing over anything I have said in the House, published or carried out in terms of economic policy in the last two and a half years. Let us look back over what has been happening. The Opposition have criticised budgetary policy in 1983 and 1984.
This is a limited debate. The Minister should be allowed speak without interruptions.
They have had remarks to make about planning over that period. I would like the House to reflect on what has happened and, in particular, on the role of the Leader of the Opposition in economic policy over the last four years. In 1980, when the Leader of the Opposition had a majority of 20 seats in this House and when he actively identified the problems facing us, he walked away from them in the same way that he is walking away from this debate this evening.
He had an opportunity then that no Government had in the years immediately preceding or immediately afterwards to deal with the problems which he had identified. He did not take that opportunity. As far as planning is concerned let us look at the immediate record of this Opposition in relation to planning, a Government which produced a plan in October 1982 and repudiated it within a matter of a few weeks.
This is a limited debate and the Minister should be allowed to speak without interruption.
That is the comprehension this Opposition have of what economic planning is all about. We have heard criticism during the course of last year and this year by the Opposition, as we have heard this evening, of the level of the current budget deficit, the Opposition criticising the level of the balance of payments deficit and the level of borrowing. I would like to know — I have not been able to discern it since December 1982 — which way the Opposition are facing on any one of these issues. The discussions we have heard since December 1982 and on this matter we are discussing tonight have shown the Opposition facing several different ways at the one time.
The Opposition would have us believe, for example, that they would like to make more progress against the current budget deficit, yet they would have us believe that we should not reduce expenditure. The Opposition would have us believe that we should make an even greater attack on the balance of payments deficit, yet they would have us believe they are against deflationary policies at a domestic level. That is an example of an Opposition who do not know which way to face on economic policies and who have produced no single proposal since December 1982 aimed at dealing with any of the problems in relation to which they have criticised the Government, with the exception of one: Deputy O'Kennedy claims to have found overspending, or what he thinks is overspending, in relation to consultancy services. It is the only area on which we have had any specific indication from the Opposition in relation to what they would do in terms of policy.
This is disgraceful. A vote of no confidence has been put down on a man who has been on his feet for ten minutes to speak on it and he will not be allowed to speak. I appeal for common decency.
The Leader of the Opposition claims that this years's budget was based on information which was known to be false. He has asked me specifically if I withheld information from this House and from the public. I want to say categorically that I have not withheld information. In fact, if the Leader of the Opposition were only to reflect for a moment when he read that passage from the Economic Background to the Budget, he would have understood what we knew at that time, and I repeat that I stand over everything that was said in that document. We knew at that stage that a revision of the balance of payments figures would be required. We knew at that stage that the revision would be on the current side. We did not know at that stage what the size of the revision would be.
I told the Minister on 7 February last.
I forecast at that stage that it would not show a major change from the underlying improving trends in the balance of payments deficit. That has been borne out by the revised figures published by the Central Statistics Office. Deputy Haughey obviously did not listen the other evening and he raised again the question of the level of foreign borrowing during the first quarter of this year. I ask the Opposition, and Deputy Haughey if he were here to hear me, to think a little longer before shouting about a matter like that. In the first quarter of this year and since then it has been a prudent and necessary thing to do to arrange as much of our foreign borrowing programme in the early part of the year as we could.
Before they found out.
I will get back to the Deputy in a moment. Anybody with half a head on his shoulders looking at the international banking and credit scene today would realise that was the proper and most prudent policy to follow this year. That is why we have followed it and I believe it has been a very good experience and has paid off. I want also to say that the international banking community have understood perfectly well what is involved in the revision of our balance of payments statistics because we have had no adverse reaction whatsoever from the publication of the figures. I could not put it better than a phrase which came to me the other day when speaking to somebody in Laois-Offaly about what was going on. He asked me: "What is all this about a black hole?"— the greatest misnomer that was ever put on it. I told him: "It is like waking up in the morning with your nose blocked, your throat feeling sore and pains in your knees and elbows. You do not know what is wrong so you call the doctor. He comes sometime after and you explain the symptoms to him. He says ‘Yes, you have the flu'. You are neither worse nor better off for knowing that you have the flu". That is the best parallel I can draw to this.
Why do we have the flu? It is because the party over there failed, when they had the greatest opportunity ever, as I have just said, to take the action that was required and which their own leader indentified in January 1980 as being required.
Order. The Minister should be allowed speak without interruption.
We have heard this evening some fairly extraordinary allegations from the Leader of the Opposition about what was going on here and some curious definitions and allegations as to what was being said about civil servants. I will not accept a single allegation from anybody on the other side about what I have said about people working in the Central, Bank, the Civil Service or the Central Statistics Office because I have not made any comment about them. It is very interesting to see that in the same newspaper article to which Deputy Haughey referred, based on whatever winds of rumours could be gathered, we have a direct quotation from a front bench Member of the Opposition party. We have the disedifying spectacle of Deputy Ray MacSharry now shifting the blame for the revenue shortfall in 1982 by claiming that what happened then was not that the figures were got wrong by the Government but that the Revenue Commissioners were getting so much stick for understimating the revenue figures that they decided to overestimate them. That is the comment he is reported to have made. That is the kind of dance in which I have not engaged and will not engage.
The Opposition and some commentators have been referring to this matter — the infamous "black hole", to use the buzz word — in terms that show very clearly either that they do not understand it or do not want anybody else to understand it. It has been referred to, for example, as an unrecorded outflow. It is nothing of the kind. It is an outflow that has been recorded for quite some time and my concern and that of the Government has been to find out the explanation. We have done so and it has been published by the Central Statistics Office. We now know exactly where the outflows arose. Now that the explanation has been furnished, for which the Opposition have been asking since earlier this year, we have the spectacle of the Opposition kicking up because the explanation does not conform with their hopeful prejudices. We have the extraordinary spectacle of an Opposition, who claim to have been active in inviting foreign industry to come to this country, criticising the very same industry for doing the thing we want them to do, that is, to make profits.
That is merely an outline of my reaction to this Opposition motion. It has been put forward by an increasingly desperate and directionless Opposition because they have no particular course to put before the people in terms of economic policy. This Government have never made any secret of the direction of their economic policy and I have never made any secret of my determination to carry on in that line because those are the policies which will deal with the problems that face us.
I thought we were waiting for a plan.
They are the policies that will get us back the freedom to use the resources our people produce every year for the benefit of our own people.
What poplicy?
That is what this main argument is about. We have had statements from the Opposition about the central importance to budgetary policy of the balance of payments deficit. I had occasion to remark the other evening that if Deputy O'Kennedy and Deputy Haughey ever based their central budgetary strategy on the absolute level of the balance of payments deficit it is no wonder they were so far out in the policies they pursued.
This is a very serious motion put down with serious intent because the balance of payments is the basic barometer on which we can base our financial and economic strategy. I take it that statement would find acceptance within financial institutions at home and abroad. The fundamental error by the Government in completely misreading our current balance of payments position represents a high degree of irresponsibility on their part and must lead to a loss of confidence on the part of financial institutions both here and abroad. There is no point in having a blustering debate.
The Minister for Finance, in introducing the 1984 budget only a few months ago, made a substantial claim in regard to the balance of payments position. He stated:
While inflation has come down significantly and the balance of payments problem has been greatly alleviated...
These are the words he used in the major economic speech on behalf of the Government. At this stage it appears that "alleviated" was hardly the correct word. The balance of payments position has been exacerbated by at least £500 million and that is only what can be ascertained on the basis of the repatriation of profits from industries here on current account. It does not account for further possible substantial leakages of money by reason of the erosion of confidence in other investor areas. On the single ground of export or repatriation of profits in certain specified and ascertained industries, the figure at bottom line is £500 million more than anticipated by the Minister for Finance in his budget speech. In view of the seriousness of this motion, the Minister owed it to this House to explain the situation where, on the one hand, he claimed that the balance of payments problem had been greatly alleviated while, on the other hand, it now appears to have been exacerbated by at least £500 million.
It was explained last Thursday.
My reading of the position, in which certain economists will bear me out, is that apart from the easily explained repatriation mistake we are talking about the disappearance of other funds in the region of £800 million. This is surely a matter to be taken in a far more serious light.
Nothing of the kind.
The Minister in his budget speech went on to state, in regard to 1983, as follows:
The balance of payments deficit was reduced from over 8½ per cent of GNP in 1982 to about 2½ per cent in 1983.
That was the specific claim on which the budgetary strategy was based, the premise that there was a substantial improvement in the balance of payments.
Which there has been.
I do not want to engage in cross-talk but I would suggest that the Minister could hardly stand over the balance of payments deficit relationship of 8.5 per cent of GNP in 1982 to 2.5 per cent in 1983. Does he still stand by that relationship of 2.5 per cent?
Down from 15.5 per cent to 6.5 per cent.
The budget statement issued by the Minister for Finance is provenly wrong. There cannot be a relationship of 2.5 per cent in 1983 between balance of payments deficit and GNP. The claimed reduction is untrue. It is obvious that the relationship mentioned of 2.5 per cent in 1983 is blatantly wrong. There is no point in the Minister dodging the issue and stating merely that it will have to be revised. The Minister has been wrong with regard to two fundamental elements in the area of balance of payments. Essentially that is the reason we put down this motion. We are a trading country and our balance of payments is the basis on which economic and financial policy can be decided. It is far more important than the budget deficit about which there has been so much public debate. The Minister for Finance has been blatantly wrong in his assessment of our balance of payments position as it stood a few months ago.
The serious aspect is the way this will be interpreted by financial institutions at home and abroad. If we cannot read our balance of payments right, then we can do nothing right. As a trading country we should be able to read our balance of payments position. We have the statistics available or we should be able to have them available. There is no point in the Minister saying that mistakes were made in the CSO or in the Central Bank. The most elementary application to the job should have ensured that at least the balance of payments figures were right, because in a country like Ireland they are very uncomplicated figures.
As has been borne out by economists who have made contributions on this matter, the Government have pursued a negative policy in curtailing capital expenditure on the capital budget side. Because they have regarded the balance of payments situation as presenting no problem, they have allowed themselves to be deluded into thinking that they could benefit only from this form of investment while ignoring home investment if they did not have this albatross tors could provide immediate employment if they did not have this albatross around their necks with regard to the capital budget.
Instead of dealing with the current budget and with the balance of payments problem, as they should have done, the Government proceeded to take the easy option for ideological reasons. The easy option was to curtail capital expenditure but the main sufferer was the construction industry. That industry does not cause any balance of payments problems because 75 per cent of the requirements of the industry come from the home market. It provides the greatest spin-off but it has been neglected in the past two years.
This Government are pursuing the wrong economic objectives and are following the wrong economic indicators. They have ignored the construction industry and other enterprises by Irish enterpreneurs that would not have involved any repatriation of profits as happened. This Government must be severely indicated. They could not see the wood for the trees and they misread the range of economic options open to them. One such option was to stimulate Irish industry at home, such as the construction and the tourism industry these industries employ Irish labour, they depend to a far lesser degree on foreign inputs and they are free from any danger of repatriation of profits.
It is important that the Government should come clean on the matter. I am thinking of the economy and of the future of this country and I am not interested in scoring political points. We are concerned about the level of employment and where employment can be placed. We can only do that if we have our balance of payments position right and if we concentrate on industries that interfere as little as possible with the balance of payments. The tourism and construction industries, instead of receiving maximum support from the Government, have received minimum support from them.
In my view the £500 million represents only the bottom line in respect of the repatriation of profits. I said before, and I stand over it, that the figure will be in the region of £800 million eventually. Because of the ideological conflict between Fine Gael and the Labour Party there has been a serious outflow of funds.
The Deputy has no evidence of that.
These funds could have been available for investment here. Further amounts are in danger of following the £500 million. We have taken the extreme step of putting down a motion of no confidence in the Minister for Finance to ensure that there does not develop a complete and total lack of confidence in our country. Part of the Government are advocating steps that are totally unacceptable to Irish society. There is no point in chasing hares, for example, the National Development Corporation or the nationalisation of banks or in hinting about such matters as the Tánaiste has been doing recently. That is all nonsense. If this Government wish to encourage employment they must devise a range of taxation incentives to encourage employment. In particular, they must encourage small and medium-sized operators and entrepreneurs at home in a whole range of services and manufacturing employment. That is the kind of positive action the Government should take. People with enterprise and initiative — those traditional Irish characteristics — are holding back. They are not making the decisions necessary to provide employment.
They are investing abroad.
There is a positive incentive to invest abroad because of the climate created by this Government and by the ideological tug-of-war that exists between the two parties in Government. As long as that exists we will have this Minister for Finance boasting about bringing in neutral budgets. We do not want neutral budgets. We do not want neutral positions which can be built up into a "cosmetic halo" by a few handlers who are professionally employed to organise this. Politics are about serious business and not about a Government submitting themselves to the massage of the national handlers. If the Government want to take that soft option, they can do so, hire them and pay them well from the public purse. It is one area of public purse activity that has increased enormously in the last 12 months.
This country ultimately depends on its economy being properly run and managed.
I am glad the Deputy realises that.
The Government again got their priorities wrong in this area because, for once, the Minister for Finance got his script printed, published and read in the House without any assistance from his ideological friends in the Labour Party. There was not a single mention in the budget speech about the grave social evil of unemployment which is the major problem facing us. The Government have all their priorities upside down and, instead of looking after basic matters such as the reduction of unemployment, job creation for our young people, spreading taxation as equitably as possible, ensuring that there are incentives available to small and medium sized Irish industrialists and people in the service industries to give employment, they ignored all these matters and chased hares of an ideological kind which will go nowhere and succeed in running this Government into the ground. From talking to a number of people at all levels in society in recent weeks I can assure the Minister for Finance that the universal feeling at present is that he has failed. The final nail in the coffin is his performance in eroding confidence in what was a respected institution of the State. The advice given by a Minister for Finance in his budget speech and the behaviour of the financial institutions in the State were the basic strengths of our economy over the years and the credibility on which we were able to establish a creditworthiness to raise the necessary funds essential for economic developments. These fundamental aspects have been very seriously eroded and damaged by the Minister for Finance and by the Government.
Our creditworthiness is in excellent shape.
There is no way in which the Minister for Finance — who has engaged in a very debating society type of speech here which did not do his office any credit — can dodge this one and the handlers cannot enable him or the Government to dodge it. The handlers are good at specious matters but no use when it comes down to serious politics involving the credibility of the State and our creditworthiness with international financial institutions all over the world. This involves our credibility to run our affairs properly. It is real and serious politics and the Government should fire the handlers prior to letting a real Government into office to run the country properly with a clear majority.
That is the old Brian we know so well.
I should like to compliment Deputy Lenihan for introducing a note of seriousness into the debate. He has displayed his numerous talents and shown that he is, in political terms — I hope he will take it as the compliment which is intended — a man for all seasons in relation to any kind of attack which Fianna Fáil want to make on any issue. He has managed to touch all the appropriate buzz words, the construction industry, an appeal to nationalism and solidarity, without addressing himself to the fundamental issues which have already been answered but which I will attempt to answer again.
In Revisions to the Balance of International Payments and the National Accounts the Central Statistics Office said:
A review was begun by the Central Statistics Office in 1982 of the various data sources and estimation methods used for the annual estimates of the National Accounts. This included in particular the Balance of International Payments Statement, where the existence of a relatively large residual was calling into question the consistency and coverage of the constituent items. While this review is ongoing it has reached the stage where it is possible to take account of important revisions. Revised estimates for the Balance of International Payments and for the main aggregates of the National Accounts are presented for the years 1979 to 1982. The first preliminary estimates of the main items of the 1983 Balance of International Payments have also been prepared. While the review to date has concentrated on the period since 1979 it is expected that some revision will be found necessary to the estimates for earlier years to ensure comparable time-series.
I put it to the House and to the sole remaining Front Bench member of Fianna Fáil and to his Donegal back bench colleague that, if we are going to have a motion of no confidence in a Minister for Finance, we should go back as far as 1979 and bring in all previous Ministers for Finance since that period if we are going to address ourselves to what the Opposition would like us to do.
I will quote again from the same document. It says:
The main conclusion to emerge so far is that for recent years there was a higher outflow on current account than had previously been estimated. The increased current debit estimates arise mainly in the case of trading and investment income and in purchases of certain services. These had previously been under-estimated. Because of the changes on current account and changes in presentation there have been consequential revisions to specific entries on the capital side.
It is not just the balance of payments figures that have been changed, other figures have been changed as well in a positive manner to the benefit of the economy. I should like to give them because the Opposition, in their selective and frenzied attack on the Minister for Finance, have studiously chosen to ignore them. The original estimates for the growth in our gross domestic product at constant 1975 prices were that in 1979-80, a period of Fianna Fáil rule, was an increase of 3.7 per cent. The revised estimate is down to 3.4 per cent. In 1980-81 the estimate was 1.6 per cent; the revised estimate is 2.3 per cent. In 1981-82 the original estimate of 1.2 per cent was revised upwards to 1.8 per cent. The figures I have given prove that the statistical basis upon which this Government were responsibly acting and making policy decisions has proved to be inaccurate over a whole matrix of figures, not just one set of figures.
The fundamental charge the Opposition are attempting to make in relation to the Minister for Finance and, by extension, to all the members of the Government is that we were manifestly dishonest in the way in which we presented our argument in the budget. What we have argued consistently is this, that there has been a basic improvement as shown in the downward figures of the balance of payments and in the overall performance of the economy, that the economy was on the mend; that by a variety of indices — whichever one cares to choose — there was an overall improvement that could be quantified. We argued that the overall figures in relation to the balance of payments and the current budget deficit were downward and positive, that the figures which we received from the Central Statistics Office — which the Minister for Finance and the Government used as the basis for policy-making — had not been revised at the time.
Our analysis in general terms has been correct. None of the arguments advanced here by Opposition speakers, in particular those advanced by Deputy Lenihan and his leader, Deputy Haughey, challenged that point. Perhaps Deputy Noonan, or some other speaker from the Opposition benches — in response to the specific motion of no confidence — would use the entire set of revised figures the Central Statistics Office have published in order to justify their argument and their endeavour to pin on the Minister for Finance the kind of charge articulated by Deputies Haughey and Lenihan, that this Minister for Finance has been patently and clearly dishonest in the presentation of figures. That is the issue of no confidence which brought Fianna Fáil into the House this evening and to lay that charge against not alone the Minister for Finance but, by extension, the remainder of the members of the Government. I refuse that charge entirely.
The Taoiseach's statement in relation to this whole phenomenon attempts to set the record fairly straight in relation to what is meant by the overall revisions and what they mean to the economy. In the course of his speech to the House on Thursday last he said that there was no "missing" £500 million. Secondly, he said that a flow of money from this country which was thought in 1981-82 to be capital has now been identified using aggregate exchange control information as (a) repatriated profits and royalties, (b) payments to international consultants and (c) trade with Northern Ireland. He said there remains a still unidentified amount, equal to about one quarter of the original unidentified total, a residual which is at a level normal even for countries such as the United Kingdom and the USA with more highly developed statistical sources than Ireland.
It is quite clear — though the Leader of the Opposition attempted to muddy the waters in this respect — that there have been difficulties encountered in relation to the accurate estimation of financial statistics in this complex area. It is quite clear also that that dates back to 1979, a period when, with our joining the European Monetary System, our currency, for the first time since the Act of Union, if not before, stood as an independent currency. Therefore capital outflows and money inflows of one kind or another which had previously been measured by the Central Statistics Office in a way which was untouched by any Government since the foundation of the State, that kind of published, returned data — this is not secret data found under the counter or somewhere else, these are properly filed returns available in a statistical sense — had not been properly or fully analysed. It is quite clear from the point of view of the Central Statistics Office that our entry into the EMS in 1979 created a new situation in which they themselves subsequently revised estimates based on the totality of data available to them. The Government were not involved in that revision. The Government are not now proposing to change or alter in any way the operations of the Central Statistics Office ——
The Minister has five minutes remaining.
——in a way that would impinge on their impartiality.
The second charge Deputy Haughey attempted to level at my colleague, the Minister for Finance, and, by extension, the remainder of the Government was that in relation to the action the Government have taken under the 1924 legislation, to set up a Statistical Council to advise the Central Statistics Office. There was an implicit suggestion that somehow or other this administration, by setting up that council of academic experts — renowned in their own right and recognised as being independently-minded people — were attempting to nobble the books in the future. That is a totally reprehensible accusation. It is significant that Deputy Haughey is not in the House to repudiate it. On behalf of the officials who work not just in the Central Statistics Office but in the public service generally I would hope that it will be repudiated particularly by a party like Fianna Fáil who spent so much of their time in government and who recognise the complexities and difficulties, indeed the strengths of the public services. To suggest, as did Deputy Haughey, that that would be the effect of the establishment of that council is reprehensible and should be withdrawn. As the Taoiseach has already indicated, what that council will do is assist the Central Statistics Office, in an objectives, non-party political manner, in seeing that statistics which are available and published are properly presented and interpreted. It is quite clear from the way in which the Central Statistics Office have reacted that they would welcome such action, that such revision and analysis of our statistics is rendered all the more pressing because of the economic difficulties to which both Deputies Haughey and Lenihan referred.
Deputy Lenihan attempted to turn his contribution — which centred on one quotation from the budget speech of the Minister for Finance and his estimate of the balance of payments at that time as a percentage of GNP — into a general all-purpose Fianna Fáil type speech. Predictably he ended up with the old reliable, the construction industry, as being the salvation of our economic growth. I work and did work in the construction industry. I am aware of the enormous damage Fianna Fáil did to that industry between 1977 and 1981 when they totally overheated it, to an extent that existing suppliers of raw materials of building products were given totally false pictures of the level of demand and embarked on capital investment programmes, with the aid of capital grants or loans, for a sustained, anticipated level of demand in the industry totally artificially generated.
The result has been that we now have surplus capacity in nearly every major building product. Indeed, so overheated was the building construction industry there was net importation of building materials from third countries which seriously damaged domestic producers and distorted prices on the home market. There was similar distortion of market prices in relation to wage levels with disastrous effects. I want to nail the lie about this Government not doing sufficient for the construction industry: seventy pence of every £1 spent on a building site in Ireland is put up by the Irish Government, through taxpayers' money. The fall-off in investment in the building industry, with the consequent decline in employment, has been in the private sector which had done very well in previous years. I make that point in particular to nail the lie that Deputy Lenihan so typically wanted to introduce into this discussion.
I reiterate the need for an accurately-based set of statistics. I repudiate what the Opposition had to say in this discussion.
(Limerick West): Having listened to the Ministers for Finance and Labour for the past hour or so, I am still convinced that this motion should be put to the House. Nothing I have heard has made me change my mind.
The Minister for Labour tried to twist what Deputy Lenihan said about the building industry. Irrespective of the gloss the Minister might try to put on it, the building industry is in a very serious situation. Seventy pence out of every £1 of taxpayers' money is being spent in the building industry. This did not happen today or yesterday. It has happened down through the years. I do not see any reason why the Minister should take credit for it.
I want to deal with the Minister's approach to agriculture and to outline how the Government have downgraded the potential of agriculture for the development of the economy. If we are to rise swiftly and steadily out of the recession we must utilise every resource we have, human and natural. Despite rumours of oil finds and the growing importance of natural gas, our farm land is still our greatest resource. Over the years the prospects in agriculture have been a barometer showing how the economy was faring.
Successive Governments have introduced schemes in an attempt to enable the industry to reach its true potential. The fact that we joined the EEC gave us an enormous boost and took a great deal of pressure off our own financial resources. We had to ensure that the industry moved in the right direction. To this end various EEC and national schemes were implemented. Farming is more important to us than it is to any other EEC country. One in four of our workforce is employed in farming, and agricultural exports account for one-quarter of total exports and because of their low import content this latter figure underestimates their net benefit to the economy.
Looking at these figures I cannot understand the attitude adopted by the Minister for Finance. He does not appreciate the vital role an expanding farming sector could play in leading us out of our current difficulties. We could help to solve the terrible problem of unemployment by keeping as many workers as possible on the land and by providing many thousands of new jobs in an agriculture based industry. This in turn would greatly improve our balance of payments deficit. With this in mind we should gear ourselves towards increased productivity with a maximum yield for farmers, Government and European agencies.
The Government continue to put very large sums of money into creating jobs through the IDA and youth employment schemes. Yet our most productive industry is being downgraded by the Government. Is it because the industry is home based? Is it because it is agricultural? Why is the Minister for Finance prepared to turn a blind eye to it? We must increase employment in the productive sector and so increase exports. Increased agricultural exports would be of great benefit to the economy. It is hard to understand the cuts in the promotion of agricultural output which seems to have been singled out. Investment of money in any scheme must be fully investigated and be able to show its worth in a cost benefit analysis. This has been done very positively so far as agriculture is concerned.
Irish agriculture cannot be considered as an isolated industry because of the enormous volume of agriculture related business. It is an Irish industry and yet the Government are not prepared to give it the priority needed. Their approach demonstrates the chaotic mess they have made of the agricultural industry. The two parties who make up this Government have removed agriculture from their economic thinking.
What about the good deal the Minister for Agriculture brought back from Brussels?
(Limerick West): Their arrogance and contempt for original thought or advice led them to ignore the report of a committee which we set up when we were in Government to consider a four year national plan for the agricultural sector. The country was clamouring for such a four year plan and shelving it because its origin is not acceptable. The four year plan for agriculture has just been published. It was delayed since last October for reasons best known to the Government. Last October it was available for publication. Now we are told by the Minister for Finance that it will be part of an overall plan for economic development. This is a further downgrading of agriculture by the Minister for Finance.
I want to quote from a report made by the Minister's representative in the working group who produced this plan. I suppose this minority report was put into the report at the behest of the Minister for Finance. On page 131 we read:
The purpose of a plan for agriculture is, or ought to be, to determine the most effective manner in which limited resources can be used to achieve a high level of development. This objective involves the establishment of priorities and the resolution of the conflicts necessarily involved in the allocation of available resources to serve those priorities.
Any report which fails to tackle such issues becomes merely a list of desirable measures rather than a plan.
This report puts forward recommendations involving substantial public expenditure and, while it indicates a number of areas where expenditure reductions might be made, the overall effect of the recommendations is a significant net additional burden for the Exchequer. The report fails to establish priorities consistent with available resources and does not take due account of the present grave difficulties in the public finances.
The following is the important sentence in the report:
Thus it tends towards a list of desirable measures rather than a plan.
Although the report issued carries the word "plan" in its title, the Minister for Finance does not consider it a plan but a list of desirable measures. It is difficult to understand the thinking of the Minister for Finance as far as that four-year plan for agricultural development is concerned.
Cattle and beef production are the most important agricultural enterprises here but that sector has been dealt two further serious blows by the Minister. The valuable calf premium has been substantially reduced with a loss of £23 million to the country. That premium was won at EEC level against difficult odds. We had intended to have the premium granted by way of interest subsidy rather than a straight grant. The second blow, which followed as a consequence, was that the national beef cow herd which we had built up to more than 700,000 head has been allowed drop to a disastrous low of 400,000. We all realise the damage done to our balance of payments by that move and the unemployment that has resulted in our meat factories.
The A1 and lime subsidies developed by Fianna Fáil have been dropped by the Government.
Fianna Fáil were catering for that before they left office.
(Limerick West): Those schemes were dropped because the Minister for Finance was not prepared to give Exchequer support. I should like to reveal to the House how the Minister for Finance, and in this instance the Minister for Agriculture, misled the farming community. I understand that at a recent meeting with the EEC Agricultural Commissioner a Fianna Fáil delegation was told that he had not been approached by any person on this matter. The Fianna Fáil delegation were the first people to raise the matter with him. He told the delegation that the matter could have been dealt with in the context of the agricultural prices discussion.
I should like to remind the Deputy that the motion concerns a vote of no confidence in the Minister for Finance and not the Minister for Agriculture.
(Limerick West): I accept that but the Minister for Finance is the person responsible for giving finance to agriculture.
The Deputy should bear in mind that the motion concerns the Minister for Finance.
(Limerick West): The Minister for Finance is not prepared to support those schemes with Exchequer funds with the result that they have been discontinued.
Fianna Fáil had proposed to remove them in October 1982.
(Limerick West): Another reason why the house should support our motion is the Minister's lack of interest in the agricultural sector. The performance of the Minister has affected farmers in western countries and other disadvantaged areas. In recent years the priority accorded to farming in those areas has waned. Many of the schemes introduced by Fianna Fáil for those areas have lapsed completely. That has happened because the Minister is not prepared to support those areas.
He is trying to pay the debts accumulated by Fianna Fáil.
(Limerick West): It must be appreciated that farmers in those less favoured areas must take the brunt of any EEC cutbacks and, in this instance, the cutbacks at national level.
What have the Government done for the small farmers in the west?
Deputy O'Keeffe who has just arrived in the Chamber should allow the debate to continue without interruptions.
I am concerned about the future of the small farmers in the west.
The Deputy is more interested in the ranchers than in the small farmers.
(Limerick West): Those interested in farming appreciate the importance of increasing our cattle herds and sheep flocks, increases which can mean a great improvement in our balance of payments. However, because of the actions of the Minister for Finance, those numbers have dropped dramatically. A lot of State investment seems to find its way into the pockets of large multinationals and the bank balances of foreign firms. It is a national disgrace for the Government to be singling out our farmers to bear the brunt of reduced State expenditure. Fianna Fáil have always appreciated the importance of the small family farm. However, the Coalition appear determined to remove people from those farms. They should not be permitted to dash the hopes of a big sector of our population in their pursuit of a policy of so-called fiscal rectitude. As far as agriculture is concerned we have lost all confidence in the Minister for Finance.
Will the Government side tell the House about the co-responsibility levy?
(Limerick West): The Minister for Finance has failed to produce the goods and I support the motion.
Debated adjourned.
