Dáil Éireann díospóireacht -
Tuesday, 6 Nov 1984

Vol. 353 No. 6

Private Members' Business. - Building on Reality: Motion.

Mr. Lenihan

I move:

That, pursuant to Standing Order 47, Dáil Éireann hereby rescinds its Resolution of 18th October, 1984 approving the policies set out in the document Building on Reality and in view of the mounting evidence that it is based on unreliable statistics and false assumptions and has been rejected by the Irish Congress of Trade Unions, calls on the Government to withdraw the document and to prepare a credible plan for economic development based on accurate figures and realistic forecasts.

This motion has been put down in order to emphasise in the Dáil, which we consider is the appropriate forum, that we consider that this document in which the Government have made a number of projections is based on what are manifestly a number of spurious assumptions and spurious figures. What has accentuated the point I have made is that since our last debate that point of view has been adopted by the Irish Congress of Trade Unions, the Central Bank and by a leading Government economist, Mr. James O'Leary, who is currently employed as a member of the secretariat of the National Planning Board. All of these important institutions and people have shown that as far as they are concerned this document is so riddled with inconsistencies as not to be credible as a basis for national economic and social planning.

In my view the Government do a bad service to themselves and to public life generally in seeking to parade this document around the country on a political party basis when their job as a Government is to bring forward a credible plan based on credible figures that can be accepted by such key institutions in our society as the trade unions and the farming and employer organisations as a credible base on which progress can be made.

I refer in particular to the basic flaw both in the major document and in the summary document, namely, the commitment to its first objective which is to increase employment. That is the keystone of the document but it is completely knocked in the major document where there is a real reduction in public capital expenditure over the years 1984, 1985 and 1986. There can be no increase in employment if, side by side with that, there is a positive decrease in public capital expenditure. That is basic economics and it is borne out in the report of the Central Bank that has come to hand since our last debate. On page 15 of the report there is the following comment:

The average level of employment in industry in 1984 is likely to be of the order of 2 per cent below the 1983 level.

There is a straightforward admission in the Central Bank report that far from increasing employment there will be a diminution of employment in the current year. This is borne out in the public capital programme of expenditure chart in the larger document produced by the Government and I made this point already in the previous debate. The main thrust of the document falls completely when one considers the real situation, not the spurious reality in the document, that with the reducing public capital programme there will be a diminution of employment of the order of 2 per cent in 1984 according to the Central Bank.

The whole essence of job creation is to raise the level of investment, both public and private investment. Here again the Central Bank are very specific. On page 11 of their report they state:

The volume of total investment is forecast to fall by about 1¼ per cent in 1984 compared with 1983. Building and construction investment is expected to fall by about 4 per cent.

Here we are talking about a major employer in terms of the absorption of labour and creation of jobs. Yet that major employment industry, the building and construction investment area, is seen by the Central Bank to fall by about 4 per cent in the current year. The Central Bank also speak about a significant fall in cement sales, a basic barometer of the construction industry. According to the Central Bank there will be a substantial fall in this area this year as compared with the 1983 level.

With regard to agriculture, another basic industry, the Central Bank report says that the volume of gross output is projected to rise by 3 per cent in 1984. This represents only a small increase in various aspects of production. Yet in the chart in the document Building on Reality there is a completely spurious claim of a rise of 10 per cent in growth over the period 1984 to 1987. This is based on a rise of 11 per cent in the period 1980 to 1983 which is not borne out by the Central Statistics Office. The whole policy of the Government, and indeed the policy announced by the Minister in his budget speech which is the key element in policy projection and preparation, was based on a spurious export performance which, as Mr. O'Leary points out, is there on paper but not in real terms in the sense of making an impact on the economy in regard to employment.

For the years 1984-1987 the projection, according to the plan, is for a 36 per cent real growth in manufacturing output with a growth in the rate of employment of about 4,000 people each year. The projected expansion in private service employment is of the order of 22,000. The whole basis of those figures is that there will be a spin-off effect in the services area as a result of a doubling of manufacturing output. In that respect the Government are relying entirely on the manufacturing performance of the high technology industries without any reference to the serious balance of payments deficit which they discovered at a very late stage this year and which was a misestimation on the part of the Government of the order of at least £500 million. Strangely, I am being less colourful in my phraseology than was the Government economist employed by the National Planning Board because Mr. O'Leary entitled his paper Black Holes, White Lies and Green-Field Investment.

Mr. Dukes

The Deputy's attitude towards economists depends on which argument he is making.

Mr. Lenihan

The Government are well aware that their presentation of the economic situation is based not on reality but on castles in the air. These economists who are part of the Government team are now offering trenchant criticism which knocks completely the basic assumption that export growth means automatically sustained economic growth. There is no equation between the two factors for the simple reason that, welcome as this high technology investment has been, it is not related to the basic economy to the extent of generating economic activity at home on the scale one would hope for.

As Mr. O'Leary says, recorded growth in exports and imports and in industrial production may be illusory to a significant extent and instead of export-led growth, we may observe export-led fantasy. It is a fantasy when a sector of industrial development is disjoined from the rest of the economy in terms of imports for further production here, matched by exports and, as Mr. O'Leary points out, also by a creative tax attitude. That is the most euphemistic way in which I have heard a tax fiddle described in a long time.

Mr. O'Leary points out that the black-hole figure may have to be revised upwards rather than downwards and he says that while this type of industrial development has its place in the economy, it is no substitute for real economic growth at home, that it is no substitute for the maximum utilisation of native raw materials in industrial production and in terms of generating employment. It has a segment of development to itself but to rely on it totally is a spurious and dangerous fantasy, a fantasy that has led the Government into the situation in which they find themselves.

This view, as expressed in Mr. O'Leary's document, should be taken seriously by the Government. They must recognise that the employment targets as set out in the plan are not realisable on the basis of thinking that relies solely on the single sector of industry.

The Minister and the Government must have regard, too, to the very important areas of the building and construction industry and to the tourist industry in particular. These two industries, with selective help in respect of tax, grants and loans can provide fairly immediate employment. They can be stimulated fairly quickly by a Government who take on the serious business of planning but that planning must not be based solely on figures relating to a segment of industry which, though important, is not the key to the sort of growth envisaged.

Further spurious figures have emerged in regard to employment. According to the Central Bank Report published last week, the figures for industrial employment are likely to fall by between 3,000 and 4,000 in the year. So far as the plan is concerned, the figure is in the region of 2,000. According to the Central Bank projections, we are talking about a doubling of unemployment vis-à-vis the Minister's figures. Similarily, in respect of the manufacturing employment figure I should like to hear from the Minister where these figures have come from. Is the figure 214,000 or is it not? The figure in the table states it is but the March 1984 figure from the CSO is 195, 700. Employment in manufacturing industry is decreasing but there is a total variation between the figures in the Government plan and the CSO figures. Why are there sets of figures in the CSO presentation of March this year different from those in the document?

There are certain assumptions underlying the thinking in this document which are also spurious. The trade union movement have highlighted this aspect. There is an assumption that there will be stable wage rates over the coming 12 months. Is there any basis for that assumption? There is an assumption that there will be stable interest rates over the next 12 months. Is there any basis for that assumption? There is an assumption that interest rates will fall. Is there any basis for that assumption? There is an assumption that the only problem facing the Government at present is unemployment when, in fact, there is a far more serious problem looming on the Government's table and no reference has been made to it in the document — the problem of emigration. Has the Minister any figures on the latest position in regard to emigration? Has any attempt been made to investigate the situation regarding young people emigrating to Britain, the Continent and North America? That is an area which can be ignored and forgotten by the Government. One can reach certain spurious objectives on the basis of ignoring a problem but that problem is there and it is very real.

The trade union movement will have to be accommodated in some manner over the next 12 months. The Minister is well aware that exchange rates have doubled in regard to dollar borrowings over the past 12 months to the serious detriment of the public finances. Interest rates are another area. All of these imponderables were ignored by the Government in the preparation of this document. The document makes assumptions——

Mr. Dukes

The Deputy has been saying that they are the subject of assumptions but he says the document ignores them at the same time.

Mr. D. Gallagher

Ná bí drochmhúinte.

Mr. Lenihan

These assumptions are not borne out in the Central Bank report. The Government could take positive action in relation to taxation. This is an area which requires Government decision making but it is studiously ignored, apart from generalised statements to the effect that there is very much that is interesting in the report of the Commission on Taxation. It is not a question of the Government regarding their report as interesting but rather of what the Government propose to do about it. The Central Bank report states that a major drawback in the Government plan Building on Reality is that the degree of fiscal adjustment being sought both immediately and over the period of the plan is insufficient. It states that the plan gives little recognition to the view that the present level and structure of taxation are detrimental to personal and corporate enterprise and that the whole taxation structure is a “discouragement to employment”. It further states that no effort has been made by the Government to implement in any way the recommendations of the Commission on Taxation.

I regard the Central Bank report statistics and general approach as a more reliable guide than anything in the Government's document. The thrust of that report is very critical of the basic assumptions on which the Government are working. I agree with the thrust of the trade union movement proposals that there should be a higher degree of productive capital investment both private and public and that it is only in that way, on a selective basis and with the appropriate incentives and aids from the State, that we can make real progress. If the level of investment is allowed to slide down, as it is at present, and the level of public expenditure is allowed to slide down and private investment continues to be static or leave the country as it does in many cases, there is no way in which the Government can achieve the targets they have set.

It is dishonest and fictitious to claim there is any way forward other than the one I have described. There is no way to promote job creation except through further investment requiring a capital input from the public and private sectors, however selective that may be. I grant it would have to be selective. That is important. I do not suggest embarking on an indiscriminate policy of investment for investment sake. On a selective basis there is ample scope for the Government to proceed, particularly in the major areas of building, construction and tourism. There is no point in the Government continuing to rely on the narrow segment which it has relied on up to now in order to produce export figures when, in fact, that segment of the economy is not making a positive overall contribution.

Mr. Dukes

Has the Deputy even read the Public Capital Programme?

An Ceann Comhairle

The Minister should not interrupt the Deputy.

Mr. Lenihan

What I have said is nothing new. It has been pointed out by Mr. O'Leary who is an economist and Government employee. He used the spectacular language of "black holes" and "white lies" in regard to Government investment. He rightly points out in this document that one can only have the overall investment and employment——

Mr. Dukes

On a point of order, is it in order for the Deputy to refer to someone who is not in the House and allege that that person has produced a paper with the colourful title the Deputy has alleged about Government investment when, in fact, the paper is not about Government investment?

An Ceann Comhairle

The Deputy is quoting from a paper and he has given the reference. I consider that in order.

Mr. Lenihan

I will quote it for the Minister. It is: "Black Holes, White Lies and Green-Field Investment: A Colour Supplement to the Telesis Report and the Revisions to the Balance of Payments Accounts". It is written by Jim O'Leary. It was a paper delivered to the Dublin Economic Workshop Seventh Annual Economic Policy Conference, Kenmare on 19-21 October 1984.

Mr. Dukes

It is not about investment. Read the paper first.

Mr. Lenihan

I am quoting from it. The author is currently employed as a member of the National Planning Board's secretariat.

Mr. Dukes

Has the Deputy read the paper?

Mr. Lenihan

I have read it in great detail.

An Ceann Comhairle

Deputies who expect an uninterrupted hearing should give one.

Mr. Lenihan

It states:

The content of this paper reflects the author's personal views and not those of the organisation with which he works.

There is nothing new in what he has said. All that was required was for the Minister for Finance and the Government to wake up and read the Telesis Report and adopt the recommendations of that report in regard to further IDA investment. The importance of having a more broadly based strategy in regard to industrial development policy and not rely solely on the multi-national segment is all in the report. I am not decrying the multinational segment but to solely rely on that segment and then proceed to parade the performance of that segment as being the factor that would keep our economy moving indefinitely and as a basis for the Government's economic performance is altogether wrong. It is an important segment but it is not the whole economy. There are much more important aspects in our economy from the point of view of job creation. The Government are not even getting that high technology investment at present because of the growing lack of confidence abroad in this Government and their performance. There will be no investment in the areas of high technology, construction or tourism as long as the Government continue with their present bi-focal policies which are ideologically opposed to each other. There is a complete cessation of real starts in respect of the manufacturing and services industries at present. That is not just in the areas of home investment to which I have referred, like tourism or the building industry——

An Ceann Comhairle

The Deputy must conclude.

Mr. Lenihan

——but also in the high technology area which has made its contribution over the years but which is now stuck because of lack of confidence in this country and the Government. Thanks to your revised view of the matter, we now have an opportunity to debate this important matter in this House which is where it should be debated rather than being paraded around the country and treated in a rag ball fashion——

An Ceann Comhairle

Deputy O'Kennedy will have much less time now.

Mr. Lenihan

This is the place to discuss serious economic matters.

Mr. O'Kennedy

Deputy Lenihan said that all that is required of the Government and the Minister for Finance is for them to wake up and read the Telesis Report. Much less is required of them. They only need to look around them and they will see the reality, not the reality they have presumed to build on. This document, Building on Reality, is based on assumptions in a whole range of areas that are mentioned throughout the document and which do not stand up, especially in relation to GNP growth. Even Dr. Honohan, economic adviser to the Taoiseach, as long ago as last February concluded in his paper entitled “Transfer Pricing in Ireland — a Cautionary Note” that something of the order of 5 per cent of GNP growth could be fictitious but the Government ignored it. Dr. Honohan was in good company because another very important, well informed institution, the EC, did not ignore the fictitious basis of our GNP data.

Ireland is the only country in the EC whose contributions to the budget are based on VAT returns. We are the only country whose contributions to the EC will not be accepted on GNP data because they are unreliable and the EC have clearly indicated that to the Government. As a consequence, for instance, of this exceptional position of our data being unreliable and upon which the Government are quite happy to rely, in the last few years alone we have probably contributed £50 million more to the EC through the VAT return basis adjusted by CSO data than we would if we were contributing on the basis of every other member of the EC GNP based data. The EC has come to the conclusion that our GNP data are not acceptable as a basis of contribution but it is good enough for the Government to enable them to live in fantasy, rather than build on reality.

Our statistical data are unreliable as a measure of our real growth which is the gross domestic product which can be seen on the ground in factories, employment and agriculture by anyone who opens their eyes to see. The Government may confine themselves to this export led fantasy. In real terms we are not experiencing growth and are not seeing the impact that the people would see if there was the kind of GNP growth which the Government claim there is. The Government are building on dreams and fantasy, not reality.

The Minister has been presenting his own dreams recently because he assured us publicly on the occasion of a recent debate, which we both attended and which the students of UCD were privileged to hear, that there would be no change in Government policies over those that have been conducted over the past two years. So when they tell us they will halt and reverse unemployment, there will be no change in the policies that increased unemployment by 50,000 over the last two years. When they tell us in the plan that they will reduce the burden of taxation, there will be no change in the policies that increased the burden of taxation in the last two years to over £6 billion total taxation. When they tell us that there will be no change in the policies that were going to reduce borrowing we see that State borrowing in the last two years increased from just short of £7 billion less than two years ago to over £10 billion now. There will be no change but we are still going to achieve a drop in taxation and unemployment.

Judging from their previous performance, their claims and promises mean there will be a very substantial increase. The students of UCD, to a man or woman, rejected this plan and they are the people who are looking for hope for the future, not the callous, self-righteous, calm, reassuring, sometimes arrogant attitude of the Minister who always gives the impression that the figures mean what he says they mean. If he says there is no black hole, there is no black hole. If he told us last year that the adjustments in the balance of payments deficit would not be significant then they are not significant even if we lose £500 million, because this rather modest Minister says they are not significant. However, the students and the world know that they are and the truth is that the black hole, the repatriated profits, the export led fantasy, as economists have described it, merely establish what people already know. This Government, and particularly the Minister for Finance, have plunged the country into a deep recession at a time of renewed growth in the world economy which is evident everywhere except here.

As Deputy Lenihan said, the CSO figures do not disclose the huge growth in emigration. The Government pinned their hopes on emigration to achieve a modest growth in current levels of employment because, if enough young people leave, maybe there will be fewer unemployed. Everybody knows that our top executives are leaving the country but statistics do not show this. Money is leaving the country and is not being reinvested. Why should anyone do so with our tax climate? However, the GNP figures upon which the Government base their projections will not show that because the figures will mean what the Government and the Minister in his quiet, calm and reassuring fashion say they mean. The rest of us, pupils, executives, farmers and the building industry cannot be expected to know the reality. The Minister says it is not happening here.

There is real growth in some countries. Japan produced a plan a few weeks ago but it did not end in 1987 because they know that they should plan as far ahead as 1990. When they make a plan they act on it. They did not tailor it for three years.

We are living in a world of unreality. This morning on a radio programme the Taoiseach described himself as an academic in abeyance. We cannot afford to put the hopes of our young people and the potential of our country in abeyance. Could I suggest to the Taoiseach and his Government that it is time for the Taoiseach to resume his old role?

Minister for Finance (Mr. Dukes)

I have rarely heard, even from the gentlemen opposite, a more transparent tissue of fabrications than we have heard here this evening. Deputy O'Kennedy does not appear to like my calm reassuring manner.

Mr. O'Kennedy

I do not find it reassuring. It is arrogant.

Mr. Dukes

Sometimes he appears to think that the proper role for a Minister for Finance is to rush around like a headless chicken and to be as inconsistent as Members of the Opposition are. I am sorry Deputy O'Kennedy has to leave the House because I have a few words to say to him. They will go on the record of the House. We heard from Deputy Lenihan and Deputy O'Kennedy a long series of very spurious criticisms of this plan. I can only view the motion before us this evening as a very vexatious attempt by the Opposition to recover the losses they suffered during our debate in this House on the Government's plan.

Mr. Lenihan

Why the road show then?

Mr. Dukes

It ill behoves the Opposition to suggest that any party, the Fine Gael Party, the Labour Party or even, God forbid, the Fianna Fáil Party should deprive themselves of the opportunity to talk to their own grassroots members. That may not be the habit of the Fianna Fáil Party and it may not be the habit of Deputy Lenihan when he is trying to reorganise the Fianna Fáil Party. I can assure the Deputy that it is a very good exercise. They should try it a little more often because it would bring them down to earth and bring them back to some notion of the reality of what is going on in the country. Some of the time it would show them how spurious their criticism of this plan is.

Deputy Lenihan quoted a number of passages from the Central Bank Quarterly Bulletin. He purported to find in that bulletin indications that the Central Bank believe that Building on Reality is based on what he regards as spurious and inconsistent figures. It does not really square with what is in the bulletin. I will quote now from the Central Bank Quarterly Bulletin, Autumn 1984, page 5. The first paragraph reads:

By specifying the Government's medium-term spending and taxation intentions, it contributes to a climate of stability conducive to recovery in private investment. It also contains a desirable emphasis on the need for pay restraint in the interests of improved competitiveness and provides a lead in that direction with its policy in relation to wage developments in the public sector. A major drawback, however, is that the degree of fiscal adjustment being sought, both immediately and over the period of the plan, is insufficient.

Mr. Lenihan

That is the real punch line.

Mr. Dukes

That is the view of the Central Bank. Let me remind the House of something Deputy Ahern said during our last debate on this matter in the House. I am qouting from the Official Report of 16 October:

Bad as the situation is it would have been worse if the Government had taken the advice of the Governor of the Central Bank and opted for eliminating the budget deficit by 1987 instead of reducing it to 5 per cent of GNP.

As always Deputies on the other side of the House have a breathtaking talent and an absolutely masterly ability to face in both directions at the same time. Here we have Deputy Lenihan criticising me and the Government for having been criticised by the Central Bank. Not many days ago we had Deputy Ahern congratulating himself on the fact that the Government had not taken in full the advice of the Central Bank. I value the advice of the Central Bank, but the Government are here to govern. We make our decisions.

Mr. Lenihan

We want more of that.

Mr. Dukes

We have made very clear in the publication of our plan just what our decisions are in relation to public expenditure, investment and pay policy, all areas which Deputy Lenihan had the effrontery to pretend were being ignored in the plan. I wondered whether he had even read it, and I wondered whether he had read any of the other documents from which he quoted this evening.

The previous debate we had in this House on the plan was marked by what I could only regard as ambiguous statements from the Opposition calling on the one hand for faster progress in reducing the current budget deficit and, on the other hand, for a reduction in tax levels, while at the same time criticising the public sector cash limits as set out in the plan for being too low. There was not one fresh idea or one positive alternative, because the Opposition have not got an alternative to the plan. It is a soundly based plan and it contains a coherent and balanced set of realistic medium-term policies set out in a clear and unambivalent manner.

If Deputy Lenihan had taken the trouble to read the plan he would have seen that most of what he referred to this evening is covered comprehensively in the plan, including a number of items which I intend to deal with in a few moments. The plan does not contain grandiose promises, as I said in the previous debate. It does not pretend to solve our employment problems by ignoring the very real constraints on public finances, or by making unwarranted assumptions about the growth rate achievable in the plan's period.

This evening we had a dose of what appears to be some dawning of reality on the part of the Opposition. The people on the Opposition benches who criticise the Government for not being ambitious enough, for not being hopeful enough, for not setting sights high enough, claimed this evening to find reasons for saying we cannot achieve what is set out in the plan. They said that what we put in the plan in terms of expected growth rates on the basis of the policies we have set out is not achievable. I wonder what happened to the messages of hope the Opposition have spent the past two years clamouring for. When they find it in a coherent set of policies in the national plan they turn their backs on it because either they cannot or they will not understand what the basis for the plan is.

The motion before us rolls out the now very tired contention that the plan is based on unreliable statistics. I presume the Opposition are referring to the revisions published last May to the balance of payments and the national accounts. At that time the Opposition made considerable play of these revisions. They sought to portray them as undermining the credibility of the Government's economic policy, and they tried to maintain that the substantial improvement which has been brought about in the balance of payments position in recent years was meaningless or non-existent. As I said on a number of occasions, this was a total misrepresentation of the position by people who, I am bound to say, appear to dabble in economics without having the slightest clue about what the foundations are.

As has been set out clearly by the Central Statistics Office and myself, the facts are that nothing was missing from the balance of payments statistics as the Opposition alleged. What did occur was that an outflow from the economy which was previously recorded in the balance of payments statistics as an unidentified capital outflow was correctly identified and re-allocated as an outflow on the current side of the balance of payments. Nothing was missing as I explained to the House. What we did was to put a name on flows which had previously been unexplained but which had always previously been recorded.

Mr. Wilson

We could hear them going over the Border.

Mr. Dukes

Despite Opposition claims to the contrary, the revisions did not alter the underlying improving trend in the balance of payments. Between 1981 and 1983 the current external deficit fell by almost 9 percentage points of GNP and the deficit at the end of 1983 was the lowest recorded over the five year period covered by the revisions. The contrast between the Opposition reaction and the response of the financial markets to these revisions could not have been more striking. International markets rightly understood the nature and impact of the revisions and, therefore, those revisions had no impact on our credit standing which, if anything, is stronger now than it was at the beginning of this year. The important point, as far as the plan is concerned, is that those revisions have been fully taken into account in preparing the underlying macro-economic projections. The revisions do not call for any change in policy. That deals with that canard on the part of the Opposition. One base of their argument is gone and gone since last May. I cannot honestly see why they go to the trouble of resurrecting that tired old rag at this stage.

I come now to the recent pseudo-controversy about the reliability of the CSO estimates for industrial output, productivity and trade. The recent spurt of attention to a question with which many have long been familiar resulted from the leaking of a confidential paper prepared by an economist who was working in the Central Bank when he completed the report and who is now the Taoiseach's economic adviser. We have been over this ground before in this House, but since the Opposition do not appear to have taken anything of that discussion we must again go over it this evening.

The paper was a tentative effort at putting numbers on the extent to which multinational companies which have a branch or a subsidiary operation in Ireland may be engaging in transfer pricing. I am bound to say that although the Opposition may now have found out about transfer pricing for the first time — and I suspect that is the case — it has long been a matter of discussion and debate by economists. The paper in question was confidential because the estimates were very tentative. The author acknowledged in his paper that the estimates involved very strong assumptions and were based only on circumstantial evidence and his paper was prepared and finalised before the CSO issued revised national accounts and balance of payments data for the period from 1975. The revisions to the balance of payments and national accounts data issued last May by the CSO provided us with an additional quantified measure of the impact on the economy of the overseas manufacturing sector, including corporate remittances. We now have a greater understanding of why the high output and export increases in the high technology sectors have been accompanied by slower increases in employment. We have always known that productivity in these industries was higher than for the rest of the manufacturing sector, but we can now quantify the extent to which the values for net output in industry include payments for costs incurred in other counties, such as research and development, marketing and distribution, as well as profit remittances.

The issue of transfer pricing has also been raised in the course of this pseudo controversy. The beauty of this phenomenon is that for the purposes of political debate it cannot be measured, particularly when it relates to internal company trade in high technology intermediate goods which it may not be possible to purchase in the free market. There is no arm's length transaction involved in any of these cases. So the problem is what you happen to say it is and, in the case of the Opposition, it is what they like to say it is for the purposes of an argument such as this.

The important question is whether the practice seriously distorts our national accounts or balance of payment statistics. The answer is no. Any distortions which may arise will be corrected in the estimate of net factor income outflows which is incorporated in the GNP and balance of payments calculations. The Opposition, in their mad rush to clutch one argument, have forgotten that there is another end to that straw. They have got themselves out on a limb and as far as I can see are busily sawing it off behind them.

Concern has been expressed that misleading data may give rise to bad policy. This is misplaced. The data revisions simply added to the information which we already had about the increasingly dual character of Irish industry and only served to reinforce the policy conclusions which were emerging from the review of industrial policy. The White Paper on Industrial Policy and the plan, Building on Reality, both underline the priority which the Government attach to increasing the proportion retained in this country of the value added in industry. I wonder if the Opposition can seriously argue that the date revisions require us to change that objective? If we are to take them at the face value of statements they have made recently, they do not believe that it requires us to change that objective, but again, for the purposes of tonight's pseudo argument they appear to be making that point. I wonder why, all of a sudden, when the Opposition have seized on this pseudo-controversy, as I call it, about transfer pricing, they have found that they distrust, or apparently dislike the high technology industry? Deputy Reynolds must have found it very strange listening to Deputy Lenihan and O'Kennedy criticising the very industries which that Deputy said he was so proud to have brought to this country during his period in Government. Deputy Reynolds should have a heart to heart talk with those Deputies and tell them what industrial development is really about.

Mr. Reynolds

If the Minister comes in here on Thursday morning, I will tell him what it is all about. He does not seem to know.

Mr. Dukes

He should bring them down to earth and show them that a pound's worth of output is worth a pound and that one cannot explain it away as transfer pricing. You cannot say to Mickey Joe who has got a job in a factory that the pound in his hand is a spurious one. There are many thousands earning their living from what Deputies on the Opposition benches now try to tell us is phantom money. Where is their vision of reality? Are they now saying——

Mr. Reynolds

There is a large deficit in the Minister's major priority plan and he knows it. There is in existence such a thing as location preferences and the Minister never seems to have heard of them.

Mr. Dukes

Where is their vision of industrial development? Deputy Ahern made it obviously clear during the last debate on this plan that if the Opposition had their way they would bring in higher taxation and less social justice. Are they now saying that they do not want high technology industry because they distrust it? Let them say that, if that is what they want.

Mr. Wilson

We want it. The profits in the high technology industries are invaluable to this country and what is needed is the creation of confidence so that that will happen.

Mr. Dukes

I know where the people of this country will decide where reality lies.

An Leas-Cheann Comhairle

Deputies, please.

Mr. Dukes

I come to deal with the reliability of data and to Deputy O'Kennedy's remarks about our contributions to the EC budget. I am very sorry that Deputy O'Kennedy is not present, because he has not got the message. One of my sotto voce remarks — I regret I was being a little disorderly but was provoked — was that in the remarks that he had made he had, in the words of the old saying, “really dribbled a bib full”. Deputy O'Kennedy says that Ireland is the only country in the EC whose contributions to the EC budget will not be accepted on the basis of GNP data because those data are unreliable. He has said that a few times before, on the Public Expenditure Committee and in the newspapers. What are the facts? In calculating the VAT related proportion of our EC contributions the Revenue Commissioners used traders' VAT returns as their principal data source. However, they are aware that these returns are unreliable in relation to zero rated goods simply because many traders do not make the effort to record the figures carefully because zero rated items have no impact on the size of their VAT bill. To ensure that our contribution is properly calculated and in line with EC provisions, the Revenue Commissioners had to obtain alternative data on zero rated transactions which are supplied by the CSO. While it is the case, as pointed out by the Comptroller and Auditor General, that our contribution to the EC budget in respect of 1981 was £17.8 million higher than it would have been if based only on traders' returns, this did not constitute an overpayment to the EC arising from erroneous CSO data. On the contrary, it arose from the necessity to correct the data based on traders' VAT returns by relying on the more comprehensive CSO data.

Deputy O'Kennedy, in claiming that the base for our EC contributions is the wrong one, has fallen neck over crop into a trap which he has dug for himself. In his anxiety to find some pretended reason for not relying on the data, he has got the thing backasswards. That is the only word that can be used.

I turn now to the reference in a motion to the response of the Irish Congress of Trade Unions to the proposals in the plan. This is the only worthwhile aspect of the motion which requires a detailed response. Despite the attempts by the Opposition to see themselves in a grand alignment with Congress against the plan, an alignment the existence of which I suppose Congress would deny, I point out that Congress in response to the plan published on 23 October stated: "However, the document marks a welcome departure from previous Government statements, including The Way Forward, concerning the rate of reduction in the current deficit.” Congress have always argued that policy in this area must have regard to prevailing economic circumstances and the need to give priority to any improvement in the employment situation. That statement contains very little comfort in terms of the motion that the Opposition have put down here. The document went on to say that Congress thought we should have regard to prevailing economic circumstances. That is precisely the approach we have set out in the plan document Building on Reality.

Congress have, nevertheless, criticised the plan in the area of employment on the grounds that it does not contain in their view an acceptable strategy for job creation over the years ahead, that its underlying philosophy is the same as in similar documents in the past and that it is dishonest of the document to include places in training, work experience and short term, part time employment in its job creation figures. I would like to respond constructively to those criticisms. A major objective of the plan is to increase employment and to halt and reverse the upward trend in unemployment. This is shown clearly by the figures and by the policy measures contained in the plan. The consensus of independent opinion is that the figures contained in the plan are realistic and not based on wishful thinking. Indeed, some commentators have suggested that the employment figures will be surpassed on the basis of the strategy set out in the plan. I hope that this will be so, but it would have been dishonest of the Government to have published optimistic figures in the plan itself.

The reality of the employment situation as shown in the plan is that increases in traditional jobs in industry and services will be insufficient to meet the growth in the labour force over the next three years. Our response to this was to take decisive action through a combination of special schemes to double the number of jobs which market forces alone could have given us. This would mean that, as stated in the plan, the level of employment would fall from about 220,000 at the end of this year to about 210,000 by April 1987. This is based on a projected increase in the labour force of 15,000 a year, which assumes net emigration of 5,000 a year. So much for Deputy Lenihan's contention that we ignored that element. He cannot even have read the section of the plan where that is dealt with. However, it is incorrect for Congress to suggest that the Government's projects show that as many people would be unemployed by 1987 as in 1984 and that tens of thousands will have emigrated. Had the Government assumed net emigration of 10,000 a year, for instance, which was the upper bound of a range produced by a group of independent demographic experts as an input to the plan, the unemployment figures by April 1987 would be 15,000 lower than those in the plan. Furthermore, that the Government were prepared to act to supplement the number of jobs likely to be created through market forces demonstrates that we are not tied to a philosophy which relies exclusively on private enterprise. Congress have stated that it is dishonest of the plan to include the jobs created through special schemes in its job creation figures.

We have two new employment schemes for the long term unemployed in that plan. The first is a social employment scheme which will provide part-time work on a half weekly basis for one year. The second is a training scheme run by AnCO which combines training for work in AnCO with placement in a public or private company. When they reach their planned capacity, these schemes will cater annually for 12,500 participants.

I want to stress that these schemes represent a new development in manpower policy in this country. The two programmes are designed specifically to help the long term unemployed. These are people who find it difficult to regain their places in what is now a very competitive market. Many of the training schemes already in place are concentrated on the young or attract people who have been out of work for shorter periods and whose motivation has not been affected by the problems which inevitably flow from unemployment. It is recognised increasingly that special measures are required to help the long term unemployed. With these schemes, the Government are moving to meet this real need. I cannot accept that measures designed to re-equip workers with the skills and motivation which will allow them to take up viable employment are dishonest, as Congress allege. I am confident that the schemes, when they are seen as part of the full range of economic and social policies presented in the plan, will have a positive and continuing impact on unemployment over the period of the plan. I want to emphasise that the parts of the plan that deal with the labour market, with these special schemes and with the overall change in employment over the period of the plan, take full account of the results of an independent, demographic study of the changes that are likely to come about in our population and in our labour force requirement over the period of the plan.

In October 1982 when the Opposition brought out their pseudo plan, most of which they have abandoned now anyway, they claimed as part of their bona fides for producing it that it was based on and took account of the advice of independent experts and economists. They do not seem to use that kind of advice except when it suits the argument they want to make. None is so blind, I suppose, as he who will not see. I doubt whether they have had the kind of basis for the statements they are making tonight that we have had for the population projections there which have been explained already on a number of occasions in this House, which the Opposition have not seen fit to analyse, criticise or take issue with. I cannot for the life of me see how they can refer to any of that part of the plan and claim that it is based on spurious figures. They do not even seem to have read the figures that are in the plan.

Congress have also criticised the taxation proposals in the plan. They stated that the proposal to prevent the burden on individual taxpayers increasing over the period of the plan is very modest, and argue that the relative tax burden borne by PAYE workers must be reduced. Given the exceptionally difficult budget circumstances, the Government commitment that the overall income tax burden on taxpayers will not increase over the period of the plan is a major advance. The Government would obviously prefer to have been in a position to reduce the tax burden, but the overriding need to restore balance to the public finances did not allow for this option. A reduction in taxation is possible in the short term only through further cuts in expenditure, and I doubt if this proposal would meet with the approval of Congress. Mind you, Sir, I must say that I found that the comments of Congress on the plan were far better argued and a great deal more consistent than the comments made by the Opposition. Congress made no bones about their views on taxation policy. On the other hand, the Opposition called energetically for reductions in taxation and complained energetically about any reduction in public expenditure. Not once in this debate, not once since December 1982 have the Opposition ever given any real indication of how they would go about reducing public expenditure in order to get to the kind of public finance targets which they claim to hold and in order to bring about the results in taxation which they claim they want to see. I may be doing the Opposition a little injustice in saying that; perhaps I am a little too harsh on them. To my knowledge three specific proposals have been made by Deputy O'Kennedy. One of them relates to consultancy studies carried out on behalf of various Departments of Government. As far as I understand his proposal, it would save a grand total of £35,000 this year, a major contribution to a reduction of taxation. The other night, at the debate to which he referred earlier, when pressed he said finally that there were two other major areas in which he thought we could make savings on public expenditure, in the administrative budget of AnCO and the Youth Employment Agency. He did not say what kind of reductions he had in mind but it is refreshing to see that at least we have two more little bits of proposals from the Opposition although they are not enough to bring about any substantial change in our taxation position.

Deputy Lenihan contends that the assumptions that underline the plan in relation to wage rates are spurious. What we have in the plan is a consistent coherent pay policy which if observed over the period of the plan will allow us to reach the employment targets. Deputy Lenihan knows well that if we do not pay attention to that side of the cost picture of Irish industry we will not get any of the increases in output no matter how airy fairy or phantom he may think they are in any sector whatever.

An Leas-Cheann Comhairle

The Minister has exceeded his time.

Mr. Dukes

I am sorry but I think I have a minute remaining.

An Leas-Cheann Comhairle

I do not think the Minister has. The Minister's time is up.

Mr. Dukes

Our discussion previously about the assumptions on exchange and interest rates have proven conclusively to me that the Opposition have not the slightest idea of what is going on in the real world and I, therefore, have no compunction whatever about opposing the motion and advising the House in the strongest possible terms not to entertain it for a moment.

Mr. Wilson

Despite the fact that he made several asides I notice that the Minister for Finance did not reach his comments on farm taxation or on taxation on capital and wealth and he did not deal adequately with the question of pay.

Mr. Dukes

The Deputy has the benefit of that before him.

Mr. Wilson

There may be some significance in what he did not reach. Perhaps there is as much significance in what he did not reach as there was in what he reached.

Mr. Dukes

The Deputy has already read it and he has the benefit of that wisdom.

Mr. Wilson

The motion before the House deals with the document Building on Reality and refers to the mounting evidence that it is based on unreliable statistics and false assumptions. It points to the fact that it has been rejected by the Irish Congress of Trade Unions and calls on the Government to withdraw the document and prepare a credible plan for economic development based on accurate figures and realistic forecasts. The motion refers to unreliable statistics and false assumptions but I do not intend to dwell very long on the question of statistics. The point has been made clearly from this side of the House, and by political and economic commentators. Suffice to say — the Minister mentioned taxation of farmers a few moments ago — that the Taoiseach and the Tánaiste in a purely political exercise claimed that the take from the farmer tax as proposed in the plan would double what will be taken in 1984. Professor Brendan Walsh, Professor of Economics at University College, Dublin, is on record as saying that having studied the matter it is his view that it will take in less than it will produce this year, not double as is claimed by the Taoiseach and the Tánaiste.

I do not wish to indulge in the exercise of hammering the Central Statistics Office but I believe Government Departments are very blithely accepting all types of figures. We have had examples throughout the year which shake our confidence in the statistics that are given. I had a telephone call from a man who efficiently farms a small holding in County Cavan after the blunder was made in the Department of Agriculture and he pointed out to me that as the co-responsibility levy had to be paid monthly every gallon of milk delivered was known by the middle of the following month. The Minister concerned fluffed off all responsibility for the error. He gave statistics here and then went to Europe and argued long and hard, in fairness to him, on wrong statistics and let the country down. Is it any wonder that this side of the House is dubious about statistics and sceptical about any plan that is based upon them?

It has been stated time and again, by Congress and others, that the assumption that US interest rates will not rise was a guess that no economist, nobody on the Bourses anywhere can verify. Nobody knows that. It is a gamble and that is a slippery type of path for the Government to be on. It is a very poor foundation on which to be building an economic plan. I have dealt with the effect of the dollar on European countries and elsewhere and suggested that our Government, however small our voice may be in international financial affairs, should aim at having a currency in Europe to be regarded as a petro-currency. We can plan as carefully as we like and do everything right but if the dollar, by direct action taken by Mr. Volcker or the US Executive, strengthens then we grow poorer by the minute. Although the path will be a hard one and the UK and Germany may be opposed to this view — I am sure France would not be opposed — I believe a move should be made, not an anti-US move, to see that there is a petro-currency in Europe. Let it be ECU, a development of the ECU system so that we can pay our petrol in that currency. If one adds the GNPs of the Ten together one will see that there will be a stronger GNP than that of the US.

I am aware that the UK would be reluctant to join in this for various reasons, not all of them economic. I know that West Germany would as of now be reluctant to embark on that course but we are in the position where, according to the most recent edition of The Economist, the best price we can get Arabian light petrol for is $27.98 or almost £27.98. All the dollar has to do is appreciate vis-à-vis the punt and we are out of pocket immediately. This is an intolerable situation and as a small country we should advocate doing something about it.

On the matter of jobs the Minister for Finance repudiated the suggestion that the number out of work at the end of the period of the plan would be as great as if not greater than this year. Statistics show, according to the plan, that the number out of work in 1987 will be greater than the number out of work in April 1984. I cannot for the life of me understand how anybody, in present economic circumstances, can stand up and say — judging from the kinds of stories being told to us at our political clinics all over the country by young people and others who have lost their jobs — that this plan is a worthwhile exercise. I do not advocate producing a plan which will promise the sun, moon and stars. I want a realistic plan based on a sound philosophy. I do not think that this plan or that this Government, influenced mainly by its Fine Gael sector, are using a sound philosophy to deal with our economic problems obtaining.

ICTU make a point in their document published in September last entitled "Confronting the Jobs Crisis"— Framework for a National Plan — to which I noticed the Minister for Finance did not refer but simply to ICTU's criticism of the plan. In that document very significant emphasis is laid on the fact that, in the White Paper for Industrial Development published earlier this year it was stated coldly that there must be a shift from job creation as an objective of industrial development to increased output; that is to be our industrial objective — increased production, output, rather than increased employment. I do not want to say that this is Stone Age economics, I do not want to call it Darwinism — which is what ICTU calls it in this document — but it is a most peculiar shift that has escaped the notice of the people and to which their attention should be directed. Remember: “I11 fares the land where wealth accumulates and men decay”— and men will decay, and decay fast if we in this House, if the Government in office in particular, do not concentrate on providing them with jobs.

In this document, which I consider to be a very good one, of course ideology obtrudes. As the dole queues lengthen ideologies have a very small role to play, whether it be the ideology of total State control or of total market economy. The people who are seeking jobs, who are educated, who are ready to work, do not care a tinker's curse for all the ideologies but they are anxious to get worthwhile jobs, to be involved in the development of the country and to be able to remain at home.

On page five of this document published by ICTU in September last — before the publication of the national plan — there is heavy emphasis laid on indigenous industry; I think the quotation I want to give is from Telesis. It is worth pondering what ICTU have to say here:

The sectoral distribution of the largest Irish manufacturing firms is far more typical of a less-developed country than an advanced industrial country.

It continues to say:

There is little sign of indigenous firms moving into the larger-scale high-productivity industries such as machinery, transport equipment, electronics, consumer durables, chemicals, technical instruments, or more highly-processed food products.

Later on in that same report they indicate that that sentence — although it is not within inverted commas — comes from the Telesis Report.

I have a very short time at my disposal this evening to go into an area about which I feel very strongly, that is the development of beef, dairy and forest products. Again ICTU mentions those as areas for development and, of course, for the creation of jobs.

I know there is some little nod towards the construction industry in the national plan. The Leader of the Fianna Fáil Party, Deputy Haughey, much earlier this year, did mention that a mild reflation of the economy in that area was desirable. He mentioned then also that a reduction in excise duties was something to be desired. The champions of fiscal rectitude raised their hands to the brazen image of Mammon and cried horror: there go the Fianna Fáil Party again irresponsible about money, irresponsible about our economy. Where do we find the two things implemented? Believe it or not, in the national plan. There there is an indication that the construction industry should be inflated slightly and, second, a reduction in excise duties on whiskey, vodka, gin, and so on. I say that in passing because the major crime of six months ago becomes part of sensible economic planning six months later.

I want to spend a few more minutes with ICTU and their document. There is there a very strong suggestion that State aid should be selective. That appears in a paragraph at the top of page seven with which I fully agree. I think the Government may be in agreement with it as well. But I do not think we are facing up properly — at Government level, at the co-operative movement level, or at any other level of planning in our economy at present — to the possibility of developing a very advanced added-value sector in the food and natural resources area. Until we do that the whole idea we had of setting up regional technical colleges so that skills would be available in regions, of decentralising, of making areas other than the east coast grow, all of our planning in one sector, the social sector, amounts to nothing while we do sweet damn all about it in the industrial sector.

There is reference also to the development of natural resources. I would make a plea that if natural gas is not going into the Six Counties at least the counties of Louth, Cavan and Monaghan should be thought of, which would mean it would then be sufficiently near the Border if agreement was reached later on that development.

I mentioned at the beginning that ideological commitment is something in which people in the dole queues are not interested. That debate is continuing and underlies a lot of economic discussion as of now, where there is a very strong commitment to — I shall not use the word "monetarism"— the market economy, and an attempt to denigrate the semi-State bodies. Their programmes should be watched, and any unnecessary fat they accumulate should be slimmed off. I am in total agreement with that view. I am a member of the Committee on Public Expenditure and I understand fully how important that is. But that does not detract from the importance of the semi-State companies in our economy, the role they have to play and the developments that can emanate from them, if properly motivated, if they feel they have the backing of this House, of the Government and of the community. Lemass's mix was about right — times have changed — and I know that the independence he gave many of the semi-State bodies may be now out of date in that some of them are not making a profit. If this House votes them money then we should examine their activities, but we should get away from this commitment, which seems to be a Fine Gael rather than a Labour one, to a total, across-the-board market economy and the devil take the hindmost. I do not think there are many Members of this House, perhaps one or two only, who are committed to a total State economy.

I am very sorry I have not much more time at my disposal. I take it I shall have ten minutes tomorrow?

Debate adjourned.