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Dáil Éireann díospóireacht -
Wednesday, 13 Feb 1985

Vol. 355 No. 11

Financial Resolutions, 1985. - Financial Resolution No. 9: General (Resumed).

Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance.)

Deputy Liam Fitzgerald moved the adjournment of the debate. He has three minutes left.

A new house costing £30,000, inclusive of 5 per cent VAT, will have a new price, from 1 March 1985, of £31,429, an increase of £1,429. The builder will be collecting £1,850 for the Government in VAT. A new house costing £40,000, inclusive of 5 per cent VAT, a very ordinary house, will cost £41,905, an increase of £1,905 — almost £2,000, one might say. Let us not forget that this is being imposed by the Government, not by the builder. It does not require a mathematician or an economist to determine the widespread and damaging effects which these measures will have on all areas of the housebuilding industry. Let me bring to the attention of the House some of the most up-to-date figures in relation to 1984, as presented to me by the Construction Industry Federation, which I am informed will stand test by any accountant or any analyst in the Department of Finance. In 1984, 170 builders stopped trading. In the first five to six weeks of 1985, vis-à-vis 1984, there was a 50 per cent decrease in the number of houses registered with the CIF. The reaction of the building industry in general is one of absolute and total incomprehension at what the Government have done and proposed to do. They ask how the Government's budget could reduce VAT on Japanese hi-fis and at the same time increase VAT on the Irish building industry, which uses between 90 and 95 per cent home produced materials. Some of the effects of the 5 per cent which have been worked out most recently are as follows.

The first effect is that it is going to increase the price of new houses. In net terms — that is, taking all the effects of the budget which might be considered to be favourable and, indeed, given a value and a significance by the Taoiseach which they certainly do not deserve — there will be a net increase of between £900 and £1,600 per house. There are two options available to the purchaser or the builder. Either the purchaser pays, or the builder absorbs. Anybody who knows anything about the construction industry over the past couple of years will agree that the margins in the industry are nonexistent at present. There is absolutely no room to absorb this increase. Therefore, the second effect is coming into play. There will definitely be fewer people buying and more couples going on to the public housing list.

We come now to the third effect. It has been conservatively estimated that there will be 3,000 fewer new houses built in 1985vis-à-vis 1984. It is again conservatively agreed that this means that 5,000 more people will be unemployed as a direct consequence of this budget. There are 5,000 people working now in the construction industry who will not be working there in 1985.

The Deputy should speak to the motion.

The effects, in terms of pushing builders into the black economy, are quite frightening. I call on the Government now to withdraw this 5 per cent. We have a Minister in the House. Perhaps he has been given authority to make this announcement, but it should be made immediately, before further harm is done.

I call on the Minister for Agriculture.

I welcome an opportunity to contribute to this debate. While the overall industrial output in 1984 increased by over 7 per cent by comparison to that in 1983, the volume of net agricultural output in the same period increased by 8½ per cent. Following on the gains in 1982 and 1983 agricultural incomes improved again in 1984 and the volume of agricultural exports increased by some 14 per cent. These were very significant improvements indeed.

The Government believe that continued agricultural expansion requires as a first priority policies to achieve stability and certainty in the national economic environment and, in particular, policies to reduce the level of inflation. The benefits to agriculture of a reduction in the level of inflation can be seen from developments in recent years. Inflation has been reduced from over 20 per cent in 1980 to an expected 6 per cent or so this year. Following increases in farm incomes in real terms in 1982 and 1983 there was a further increase of about 3 per cent in real terms in 1984. In fact real family farm income per head increased by as much as 5 per cent last year. Despite the rise in the past month or two interest rates are appreciably lower than they were in 1982. This has been of particular benefit to farmers — both those who had already borrowed heavily and those embarking on new investment.

A further priority of both agriculture and economic policy is that of improving the economic efficiency of production. Increased farm production and incomes are determined to a major extent by the level of efficiency achieved at farm level. It has to be recognised, however, that recent changes in policy at EC level will affect the output pattern of Irish agriculture. Accordingly it is important that spare capacity resulting from the application of the milk super-levy should be used for other enterprises.

As regards EC developments it is just over a month ago that we relinquished the work and responsibilities associated with handling the Presidency of the European Communities. We carried out the presidency duties in an assiduous and responsible way, and I believe that the goodwill we built up in that exercise will be a solid support for our future efforts. During the six months that I held the chairmanship of the Agriculture Council, I was able to bring about agreement on several important pieces of Community legislation. Many of these concerned Mediterranean products and as such were not of direct concern to Ireland. However, they settled some difficult questions in the operation of the complex Common Agriculture Policy.

The major point at issue in the Dublin Summit in December was the proposed accession of Spain and Portugal. The ground work for that involved reaching a conclusion as regards the future wine regime within the Community. In the preceding six months the Agriculture Council did their ground work for such a common wine regime and as a result it proved an easy enough task to reach a conclusion at the Summit. That was probably our greatest achievement during our presidency of the Agriculture Council. We got the wine situation into perspective and we got the countries to come to a degree of understanding as a result of which the Summit was a huge success.

The Commission's proposals on agricultural prices and associated measures for 1985-86 have just been presented. Of course, these proposals do not represent the final outcome, but rather the starting point for long and difficult negotiations at Council level. I would not wish to comment on them in detail at this stage. Nevertheless I can say that I do not see them as adequately meeting the needs of the farm sector in this country and I will be making determined efforts to have them improved in certain respects. Of course, some other Ministers will also be seeking to have them changed — and perhaps in the opposite direction. Some people will be looking for reductions in prices — but that is what the protracted negotiations will be all about.

These negotiations usually last for a month and sometimes for as long as three months. They are due to start in less than two weeks. The Commission's proposals are for a reduction of 3.6 per cent in the price of cereals. They also propose a reduction in commodities which do not concern us very much, Mediterranean fruit and vegetables. A major item of concern to us is the proposal to increase milk by 1.5 per cent. There is also a proposal to reduce the co-responsibility levy by 1 per cent which in fact is a net 2.5 per cent increase. That is not sufficient and we will be looking for a greater price increase. We will certainly not agree to any reduction as is proposed in the price of cereals. The Commission propose no change in the price of commodities like beef and lamb. It is very much in the melting pot. The Commission's proposals are an opening ploy. I would expect an improvement on their original offer at the end of the day.

We have to look not just at the specific price levels proposed but also at other measures accompanying them. We have to consider the mechanisms used to support price levels as well as the various premiums and measures which operate to increase farm income and promote change and improvement in agriculture.

I will comment on a statement made by Deputy MacSharry, one of our Euro MPs, in the last couple of weeks. Deputy MacSharry questioned the continuation of our membership of the EC and whether it was economically worthwhile. I know that the Minister for Foreign Affairs has taken him up on this point and I am categorical in saying that we certainly will remain members of the EC as it is of tremendous advantage to us economically. I have just referred to the support mechanisms within the EC. Approximately half the price which farmers here get for their cattle is dependent on the support mechanism or the export refunds. If a beast is exported the price is £700 to the farmer. Half of that comes from the support mechanism system. The EC are subsidising our exports by doubling the price which we would otherwise get. It would be a calamity for farming if our membership of the EC were put in question or terminated. The question of being an associated member was raised by Deputy MacSharry but if we were an associate member we could be sure that we would not get the benefits we are at present getting. It is out of the question that we should cease to be members of the EC.

We cannot ignore in our assessment the important revisions proposed for the agricultural structures policy, which have been before the Council for some time. During the Irish Presidency, we made considerable progress on the difficult and complex structural issues and I believe that a final decision is not now too far away. The revised structures policy will have an important influence on the development of Irish agriculture in the medium and long term.

In looking at the 1985-86 price package we have to bear in mind that the opportunities are severely limited by the financial constraints on the Community, by the existence of surpluses in a number of important sectors, and by past Community decisions on co-responsibility measures for products such as milk, cereals and sugar. All the member states have to recognise these constraints and operate within them. But even within that rather tight framework, there will still be important options for the Community. It will be my task to ensure that to the greatest extent possible those options are exercised in a way that will maximise the real benefits to the Irish agricultural sector.

In the milk sector the issue which dominated the past year was, of course, the super-levy. Inevitably there have been teething problems, some of them quite substantial, in implementing the agreement of last March. Many of these problems have already been overcome and we will be striving to resolve the remaining ones in the coming weeks. The new system has not been easy for producers, especially those in special situations. In this regard the milk cessation premium scheme which I announced in November last should be of considerable benefit. The purpose of the scheme is to free quotas in order that a national reserve can be set up to cater for producers whose deliveries in 1983 were substantially affected by disease or certain other exceptional factors.

The scheme has received a considerable response from producers throughout the country and has been well over-subscribed. The quantity of milk covered by it is limited to 7 million gallons and a ballot will take place to determine the successful applicants. The results of this ballot will be announced shortly. Over the Community as a whole the indications are that both producers and national administrations are coming to terms with the new situation. As they do and as milk deliveries stabilise or even fall further, I would hope that, in our special circumstances, there could be prospects for some further expansion in Irish output.

I might add that the amount of milk offered was approximately 17 million gallons. We had money to cover only 7 million gallons and, as I have said, a ballot will take place to determine the successful applicants. We had a reciprocal response from other vested interests in the dairying industry, notably the co-ops who could bear the cost of funding the remaining quantity of milk offered. I hope they will do this.

Do we have the 7 million gallons?

We have 17 million gallons on offer.

Have we got 17 million gallons for distribution?

It is only a matter of which will be successful in the ballot. As regards the problem relating to the actual figures of our 1983 milk output we are taking all necessary steps to press our case. I have pointed out to the Council of Ministers that the amendment I am requesting is clearly justified by the Council's own agreement on the super-levy. Ireland has instituted legal proceedings against the EC Commission in the Court of Justice. The Commission has lodged a defence and Ireland must furnish its comments to the court by 25 February. When this has been done, we will press for the case to be heard so that an early decision can be obtained. In the meantime, I will continue to press vigorously at the Council of Ministers for amendments to the super-levy regulations to include a solution to this problem.

I do not want to sound optimistic. It is unlikely that extra milk, or loose milk, will become available in 1985 because of the cutbacks in other countries. This year they will have to cut back by one million tonnes. They took a very heavy cutback last year, going back to the 1981 figure. Therefore, it is unlikely there will be any further release of milk this year. During the term of the super-levy it is unlikely that extra milk will become available for Ireland but it is possible that additional milk will become available as the scheme progresses through the five years. It is not possible to predict accurately how much.

Certainly the new system is already having its effect on the market. In the current milk year Community deliveries have fallen by some 4 per cent. Combined with a 3 per cent drop in the United States this development gives grounds for some optimism about the prospects of strenghtening international markets for dairy products. Community stock levels also have come under control. This is particularly the case as regards skim milk powder stocks. These exceeded a million tonnes only a few months ago but they now stand at fewer than 600,000 tonnes. The Community has also succeeded in disposing of some 200,000 tonnes of intervention butter to the Soviet Union and, even though butter stocks remain high and are likely to increase further in the year ahead, this sale, coupled with the drop in production, should help the market considerably.

Will our farmers have to pay for the mistake?

There is no question of a mistake. It was on the part of the Commission and we do not agree with it.

So the farmers will not be penalised.

If the super-levy system had not been there last year milk production within the Community would have been approximately 106 million tonnes. It is now less than 100 million and it will be reduced by another one million tonnes this year. Accordingly the world situation will become somewhat easier as time goes on.

There are, however, some fundamental problems which continue to inhibit the development of our milk sector. I refer to matters such as our increasing dependence on intervention products, our failure to diversify into new products, and the lack of tangible progress as regards seasonality of supply and milk composition. These inherent weaknesses leave us vulnerable to the vagaries of international markets and to changes in EC policy. The super-levy has focused our minds on the dangers of our present situation, and there is a new awareness that the milk sector needs to come to grips with its difficulties as a matter of urgency. In this regard I was greatly impressed by the decision of the industry to support the Bord Bainne market development fund. An important start has now been made and I see the decision to support the fund as recognition of the urgent need for greater market expansion and diversification.

I should like to give a few illustrations. Members of the council were here in September and the German minister asked me what was the price per gallon paid to Irish farmers. When I told him it was 75p he found it difficult to believe because in Germany it is approximately £1.15 per gallon. Seeing that it is a common market one would expect a uniform price to obtain throughout the Community. Instead, in Holland, Denmark and other Community countries the price per gallon is well in excess of £1. The reason is that they produce milk which can be put into highly saleable products such as a variety of cheeses, many of which are imported here.

To illustrate the point further, in conversation with the Danish minister some months ago he told me that farmers in his district of northern Denmark were seeking permission to import milk into that region, that they did not have sufficient milk to make the products they manufacture at present. Ten per cent of the milk produced in this area is used for consumption locally — in other words, liquid milk. The remaining 90 per cent is converted into cheeses; and there are a whole variety of cheeses processed in that locality, all of that cheese being exported to the USA. They wanted more milk because their cheese enterprises were not working at full potential and the cutback because of the super-levy meant that they could not operate as efficiently as previously.

Therefore the message is quite simple and clear: dairy farmers in this country should look at the proposal put forward by An Bord Bainne for this research and development fund. We need to produce dairy products which can be sold on the world market at the top price, not at give-away prices to the Soviet Union, Cuba or the Middle East. Eventually we sell off these intervention products, whether it be fodder or skim milk powder at approximately half the cost to the Community, 50p a pound for butter or whatever. Therefore, we are up somewhat of a cul-de-sac in that regard. Unless we can produce products which sell freely at a premium price then the price of milk will never be as good as it should be. An Bord Bainne have the right idea. I am glad to see that the response has been good. It was not that good initially when they proposed last year to establish a fund twice as much as they are seeking at present. I think the original proposal was for about £5 million, which was met by somewhat of a cold shoulder on the part of the various interests. It is essential that we produce commodities which can be sold on the open market.

Turning to beef, on the whole 1984 was a very good year. Many other member states did not fare as well because they had to contend with the depressing effects on the market of unusually large quantities of cow beef. In other words, countries slaughtered hundreds of thousands of heads of cows because there was no alternative under the super-levy arrangement. They did not have the opportunity to produce not only extra milk but what they had produced in previous years. Therefore they had to kill off a huge amount of cows which had an effect on the overall beef market. This was due to a high level of cow slaughterings as a direct consequence of the super-levy. Our cow slaughterings were at a more normal level with good export out-lets being found for them.

While EC average prices were relatively depressed our market prices were reasonably buoyant. Anybody in the cattle trade will vouch for that. Indeed, steer prices rose so high in the weeks preceding and following Christmas that under Community provisions intervention here had to be suspended for the first time since 1973, an indication of how strong was the trade. This involved no particular hardship since we were buying hindquarters only at the time and the intake was quite small. In the past couple of weeks prices have eased a little from the high level reached and intervention buying has recommenced.

The beef classification grid finally came into operation for intervention purchasing last April. However, we have been using that system for quite a few years now. I would expect that, in conjunction with the meat factories, people will be enabled to get a better price for their cattle by using that grid system. One of the more remarkable features of the beef market in 1984 was the success of the EC scheme of aids for private storage of beef which ran from July to December. I have no doubt but that this had a considerable bearing on the very strong market for beef in that period. When the scheme closed at Christmas contracts for approximately 72,000 tonnes had been taken out, which is substantially more than our total intake into intervention in the whole of 1984.

I should like to see this type of measure become a continuing part of the market support arrangements. It reduces our undesirably high level of dependence on intervention, which for many years has been treated by some elements of the beef trade as an outlet to be filled automatically before even looking for commercial markets. I cannot emphasise that sufficiently: intervention should be used, whether for milk products or for beef, only as a last resort. Too many enterprises here are using intervention as if it constituted their lifeline. They are actually processing for intervention, which amounts to economic suicide. It is an abuse of the intervention system. My warning is that they would be well advised to steer clear of that practice because, with the financial constraints, we can never be guaranteed that the conditions now pertaining will continue as far as support prices for intervention are concerned. It is a dangerous area on which to be relying too heavily.

In recent weeks the beef export trade has been hit by unilateral import restrictions imposed by Canada. An annual quota of only 2,700 tonnes has been provided for the EC as a whole by Canada for 1985 whereas Community exports in 1984 were well over 20,000 tonnes, three-quarters of that from Ireland. This is an unacceptable situation. We have made our views known to the Canadian Government. The matter is under negotiation between the Community and Canada. I have left the Commission in no doubt as to how strongly we oppose the action taken by Canada and how urgent is the need for a satisfactory settlement. Our agreements with the Canadians in this respect and in many other trade negotiations come within the terms of GATT agreements. We are at present talking to them on the basis of those GATT agreements. After all, what is good for the goose is good for the gander: if they think they can cutback our exports to them there is always the possibility that we can do likewise in the opposite direction, but we do not want to enter into that type of situation. Certainly the action of the Canadians has placed a number of our firms in jeopardy. We have told the Commission as much and we expect the Commission will be able to talk reason into the Canadians in this regard. It constitutes a most discriminatory action on their part: that they should cut back our exports from well in excess of 20,000 tonnes last year to 2,700 tonnes this year is not at all acceptable.

As I said earlier, there will be spare capacity in other enterprises as a result of the milk super-levy and the capacity will be found particularly in beef and sheep production. As announced in the national plan, encouragement for the necessary growth in the beef cow herd will be given by raising the beef cow rate under the disadvantaged areas scheme — that is the headage payment — from £32 to £70 commencing on 1 January 1986. The increase is subject to EC clearance and this is being pursued. It means that a farmer in a disadvantaged area from 1 January next will be able to get a maximum of £2,100 in beef cow or cattle headage payments instead of the present maximum of £870 — well over twice what he is getting at present.

When will that begin to have an effect?

From 1 January next.

When will it have an effect on the national herd?

Deputy H. Byrne should remember that Question Time finished at 3.30 p.m. but I will answer another question, seeing that he is——

The Minister is not answering the questions we would like answered.

A final supplementary.

(Interruptions.)

The Deputy is only there to look after Deputy Gerry Collins — poor old Gerry has no chance and he is not going to be given one.

I have been here half an hour and I have not yet heard mention of the budget because there is nothing in it for agriculture.

There is no need for the Deputy to worry; I will incorporate it. The maximum headage payments for a farmer in a disadvantaged area will rise from £870 to £2,100, a collossal increase for farmers in those areas. Ths increase will cost an extra £11 million a year, an enormous injection into the deprived areas.

Deputies will be aware that in his budget speech the Minister for Finance announced that the existing stock relief arrangements for farmers would be extended for a further year at a cost in 1985 of £3 million. This is a significant concession to permit farm stock to be built up without incurring a liability to an additional tax burden. Also in 1985 a number of measures are being taken to improve the genetic merit of our livestock. The national livestock breeding programme is operated by my Department in conjunction with the many interests involved, particularly the artificial insemination bodies and pedigree breeders. In this programme traits of economic importance are measured and recorded in order to identify the best breeding stock. The subsequent widespread usage of this stock can assist in improving the quality of our cattle and products with consequential benefits for farmers and our exporters. An expansion of the programme is timely and desirable and so additional funds are being provided this year to expand the progeny testing programme carried out by my Department in co-operation with the artificial insemination stations and to ensure the maximum usage of the central bull performance test station at Tully. Under the EC common measure for the development of beef cattle production in Ireland, my Department spent upwards of £500,000 on restructuring and re-equipping this station. We now have a first class modern performance test station and it is important that its increased capacity should be used to the fullest extent.

The low productivity of ewes is a major constraint on profitability in lowland lamb production. I referred to that in debates on agriculture. The low level of fertility in ewes is a cause of major concern. Fertility in our ewes is as low as 1.1 whereas in Britain the level is almost 2-1.8 or 1.9. It is obvious we must pay particular attention to breeding. It is important therefore to increase the supply of prolific hill-cross ewes for use by lowland sheep farmers. My Department initiated a project in 1983 to encourage production of such hill-cross ewes. This project has been very successful and we are now providing some additional funds for the project which will enable it to be expanded with consequential benefits for our lowland sheep producers. The total amount for the sheep improvement and cattle progeny and performance testing measures is £100,000 and this will be found within the overall allocation for my Department in the current year. This will be of particular benefit to sheep farmers in places like Bunclody, Kintealy and surrounding areas. We might even spread it across the border to the Blackstairs near Carlow.

Turning now to the disadvantaged areas schemes it was announced in December last that the off-farm income limit is being raised from £3,500 to £6,400 per annum, which is the western comparable income used for the purposes of the farm modernisation scheme. Many farmers, county council road workers, forestry workers and other low paid workers, together with seasonal workers, will now benefit under the headage payment scheme. That was a cause of great discontent in recent years. It will often be found that these are the thriftiest, the hardest worked and the best type of small farmer one could meet. This is a tremendous boost to those people because they will once again qualify for headage payments. On the other hand, professional and business people with farms will continue to be excluded because of the level at which the new income limit has been set.

To pay for the concession and still keep within the Vote allocation for 1985 it has been necessary to make a reduction of £1 per head in the sheep headage grants for 1985. While the decision to raise the off-farm income limit has been generally welcomed, the same does not apply to the reduction in sheep headage grants. That is understandable. The alternative, however, would have been to increase taxation to meet the cost of making this desirable improvement which had been sought by the farming organisations. We opted for a small cut in sheep rates because the payments per livestock unit for sheep were almost double those on cattle. In fact, the maximum grant to sheep farmers this year will still be £1,550 whereas the maximum for cattle producers will be £872. Also under the disadvantaged area scheme the grant aid will be increased from £32 to £70 per beef cow. We have a little bit of good news to offset the reduction in the sheep headage grant. As late as yesterday at a special committee meeting in Brussels it was announced that the EC ewe premium will be increased in respect of the 1984-85 marketing year from £13.13 to £14.50 per ewe. This will more than offset the reduction of £1 in the headage grant. Everybody should be happy irrespective of whether their income is under the £6,400 limit or not.

I should like now to refer to the subject of bovine disease which constitutes a very substantial element in the expenditure of my Department. Following the successful inroads against bovine tuberculosis in the early years of the eradication scheme, the stagnation and lack of progress in recent years has been a source of concern. Something has to be done. In the national plan we announced that we would increase the amount of money spent under this scheme by £10.5 million over the 1984 figure, but we qualified that by saying there would have to be rigid conditions invoked. The most rigid condition is that from now on the farmer will not nominate the vet, but I, as Minister, will do so. That has caused some controversy and I do not wish to refer too much to the debate which is going on at the moment because negotiations are at a very delicate stage, as everybody will appreciate.

It is imperative that we get this disease under control and eliminated because the amount of money being spent on it is enormous. The taxpayer is contributing, the farmer is a contributor through the medium of the disease levy and the Exchequer also contributes this money. But the farmer is the person who suffers most at the end of the day because it is a very traumatic experience to have a herd wiped out because of tuberculosis. The frequency with which this is occurring is not decreasing despite the huge amount of money being spent on the scheme.

It is my responsibility as Minister to see that this disease is eliminated and I have to take tough action. Nobody will thank me if I do not. We have to grasp the nettle. We are going to tighten up every aspect of the scheme within my Department as well as in the field. I have laid down a condition for the early removal of reactor animals. Leaving reactors on farms for a long time after diagnosis is a major cause of the spread of the disease. Other conditions laid down by the Government are tighter controls at marts, resolute prosecution in all cases of breaches of the rules, and the setting up of a central epidemiology unit to co-ordinate and assist in disease out-break investigations at local level. I want the testing to be done quickly and in blocks. I do not want the testing done sporadically. I want it done within a matter of weeks. This will take a lot of co-operation and goodwill and that is why I do not want to cause any problems by dwelling on the subject here today.

I know that the new system of direct nomination is a departure from existing procedures but it is the best way to tackle the problem. We have a particular difficulty in this country in that cattle on average during their lifetime are moved five or six times from one location to another. On the Continent, cattle are moved once or twice at most during their lifetime but we have a trading tradition whereby cattle move at different stages from one part of the country to another which promotes the continuation of the disease.

I hope that the proposals made by the EC Commission for future agricultural structures will be finalised fairly soon. The debate on new agricultural structures has been going on for the past year in the Council of Ministers. The new structures directive will replace Directive 159 which is basically the farm modernisation scheme as we know it. We have almost reached a conclusion in that debate but the big stumbling block is a disagreement between the Danes and some other countries with regard to grant aid for pigs. The Danes are looking for grant aid for almost an unlimited number of pigs in a piggery and the other countries say that there must be a limit of about 450 or 500. That may sound like a minor issue but it has turned out to be a stumbling block.

When the new measures are introduced we will be catering for a wider band of farmers than under the present directive since the Community funding will no longer be restricted to farmers able to show by means of a development plan that they can achieve the comparable income on the completion of the plan. The new measure also includes provision for assistance for young farmers who take over a farm for the first time. We call it an installation grant and it is intended to help them towards meeting installation costs. There is also a provision for higher investment grants for young farmers who take out improvement plans. Both as Minister and as President of the Council of Ministers, I have consistently pressed for an early agreement on these measures for farmers even in the face of opposition by some other member states but I am hopeful of a successful outcome to our efforts. Some countries do not want to grant any aid to young farmers in the new structures and we have been foremost in leading the assault in that regard. We want an installation grant to be paid. I am not saying that future investment aid will be available just for the asking. The new scheme, like the old one, will be aimed at the full time farmer who is able to satisfy the necessary conditions to abide by the rules. This will involve drawing up a plan for the material improvement of the holding, keeping accounts and satisfying certain criteria as to the existing income levels and vocational skills. It has many attractive features but there is always the problem of the cost of its implementation.

It is great to have magnificent schemes coming from Brussels but we are not always able to meet the cost as other countries are. In other countries, farming is a tiny percentage of their overall economic situation so they can afford to boost farming and the more they boost it the less they have to import, which solves their balance of payments problems. Countries which are industrially rich can afford to give fantastic aids and match everything the EC has to offer. We are not as prosperous although we do our best. If we spend a sum of £2 million on an EC scheme this year we can, in some cases, get back half that amount. However, we have to wait a year before we can recoup it. As 50 per cent is the most that we can recoup, many of these schemes, especially the new structural directives, will only yield a 25 per cent recoupment. To get a sum of £1 million back, we have to spend £4 million and wait for a year to get it, so it is clear there is a financial problem in that regard.

The western drainage scheme and the western package, a relatively new scheme, are not going as well as we would have wished. However, the western drainage scheme has justified itself beyond all doubt with approvals issued for the field drainage of some 165,000 hectares or 330,000 acres. In 1981 we received so many applications that we could not deal with any more but I am glad to say that we are providing £3 million for that scheme in 1986 and the same amount for 1987 so drainage work can start again. We are reviewing the western package in conjunction with the farming organisations and we hope that we can come up with a new system which will work more effectively. We will take all views into consideration.

What about the Eastern package?

We have the best land in the country.

The Minister does not know a whole lot about it.

I do indeed as I come from the most progressive farming county in the country.

On the budget, Minister, please.

Farming has never done better than in the past two years although all other sectors of the economy are in recession. Even taking inflation into account, farm incomes have jumped. Volume increase last year was 14 per cent greater than the previous year and income levels were as high as 5 per cent in real terms.

I was in Waterford recently and I did not get that message.

The Deputy could have been speaking to people wearing blinkers and there are a few down there like him.

I am looking at one now.

Over the past year or so there have been expert studies by groups such as the Horticultural Development Group and the Interdepartmental Committee on Food Imports. The findings of their reports can provide the basis for the adaptation measures that need to be taken by the industry. A number of financial provisions are being made in 1985 to assist progress. These will be met from within the overall provision already made for my Department.

The glasshouse industry uses mainly fuel oil as a heating medium. I intend to give grants for people to convert from oil to solid fuel. We are awaiting sanction from Brussels in this regard but we do not anticipate any difficulty. A sum of £300,000 is being provided for this type of conversion in 1985.

It is apparent that there is a gap in co-ordination between producer and trade interests in the fruit and vegetable market. This results in periods of over supply and under supply and sometimes unnecessary imports which could be avoided with proper planning. Last year, we initiated financial aid towards improved market co-ordination for glasshouse products and this year the aid is being extended to other horticultural crops. A sum of £50,000 is being provided for this purpose.

There is also a need for more co-operation between growers to ensure that the production and marketing of horticultural produce is better organised. Aid is already available for the setting up of producer groups and I am providing a further £50,000 to help with the formation of co-operative enterprises. This should assist the horticultural industry to modernise and revitalise their organisational activities.

With regard to land policy, a decision was made last year to abolish the Land Commission which had been comparatively inactive for the last five years. Very little if any acquisition took place in that time. Very few estates were available for acquisition and the price of land in the late seventies and early eighties was prohibitive as far as the Commission were concerned. We will be getting rid of the land on hands which amounts to 40,000 acres. If we cannot do it by the conventional method we may have to introduce a tendering system. We will continue a series of activities where the ownership or management of agricultural land is concerned. We will be promoting the long term leasing concept, group purchase of land, commonage division and rearrangement of fragmented farms.

The Land Act passed shortly before Christmas was the first Land Act since 1965. It was small but fundamental legislation. What we are trying to do is promote long term leasing and displace the 11 month letting system. Under that system about one million acres of land are tied up. We would like to see that land utilised through long term leasing.

We encourage long term leasing in the budget by bringing in income tax concessions. The first £2,000 of leasing income will be exempt from tax liability. The lessor must be over 55 years of age or incapacitated. The lease must be for not less than seven years. Arising from the Government's commitment, the social welfare code is being examined to see whether there are any ways to encourage landowners to release land for leasing. Last year social welfare legislation provided that the means of a farmer who leased his land would be assessed on the same basis as a farmer who let his land under the 11 month system. This provision changed the system of assessing income for social welfare purposes, which previously discriminated against leasing and was an obstacle to its adoption.

We have continued the exemption from stamp duty which is another welcome relief. It gives people an incentive to transfer land to their sons or daughters. I mention "daughters" because of you know who.

Thank you.

Sons, daughters, nieces, sisters, brothers and nephews. We have the lowest rate of land mobility in the EC. Only 3 per cent of our land changes hands each year and most of that is through inheritance and not sales. Reference was made in recent times to the rescue package which has been in operation for the last three years. No specific mention was made of the continuation of the rescue package by the Minister for Finance but when I was speaking on radio on the day of the budget I said I would bear in mind the movement in interest rates when I was considering any future action on the rescue package. I am not giving any commitment or saying anything. The rescue package is due to come to an end in two months time but the position will be viewed in the light of the success of this scheme over the last three years and also in the light of prevailing interest rates. I am not dismissing, confirming or saying anything else. We are reviewing the situation and that is as much as I want to say on that issue. It has been very beneficial and got many farmers out of financial difficulty. If the Government regard its renewal or continuation for a limited period as being necessary and desirable then that will be given very serious consideration. Deputy Taylor-Quinn knows what that means.

Over the past two years the Government have taken a courageous and firm line on expenditure, taxation and borrowing. The results are clearly evident in the level of inflation which has been successfully reduced to about the average level for the EC as a whole. We used to be top of the league, with the Greeks and the Italians a close third but now we are in the middle of the bunch. That is considerable progress. As far as agriculture is concerned, the budget is aimed primarily at ensuring an economic environment in which the industry can prosper. We are determined to maintain the agricultural progress and the increases in real farm income that have been achieved over the past two years. This involves sustained efforts not only by the Government but also by those involved in agriculture, at production, processing and marketing levels. For their part the Government have been making strenuous efforts to ensure that farmers are able to operate in economic conditions that are conducive to expansion and development. This budget provides the framework within which the maintenance and improvement of those conditions can continue in 1985. There is nothing but positive elements in the budget for the farming community. There are no resource taxes or 2 per cent levies irrespective of income. The budget is positive and progressive.

A very weak defence.

I am glad to have an opportunity to contribute to the debate. In his summing up, the Minister said he hoped this budget would ensure an economic climate in which agriculture could prosper. I regret to say that not only agriculture but no other industry could prosper under the budget.

This budget was born out of political expediency and has nothing to do with economic necessity. The budget is antiemployment. It does not do anything for the 243,000 people who are on the dole. I ask any member of Fine Gael or Labour to point to one concrete piece that the Minister for Finance announced last Wednesday week that does anything for the unfortunate people who are unemployed. It does not do anything either for employers. There is no incentive for them. Industrialists are trying to perform in a climate where there are extraordinarily high VAT rates, astronomical electricity costs, huge transport costs due in part to the poor condition of the road-ways, high postal and telephone charges and crippling PRSI rates at 12 per cent which is a taxation on employment.

Real interest charges over the past year have been 8 per cent, whereas in the UK it was 5.1 per cent, in the United States it was 4.5 per cent and in Germany it was 3.7 per cent. All these things have an adverse effect on industry and on attracting foreign industry. Another problem industrialists have to cope with is paying rates and service charges. In some cases planning permission conditions include the provision of finance for parking in our towns. The overriding concern of industry is to encourage the creation of conditions which will stimulate profitable industrial expansion at a rate which is sufficient to meet the needs of our community.

This Government are not doing anything to create those conditions. We should be in a position to reward risk. We should be supporting manufacturing industry. We must have a reduction in current public sector borrowing. One of the platforms on which this Government took office was the reduction of the current budget deficit by 1987. At least the Taoiseach has admitted now that the Government are unable to do that. What happened the commitment to halt and reverse unemployment which stood at 170,000 when the Taoiseach took office? The latest figures show that it is 243,000. What do the Government propose to do about unemployment?

I outlined the problems experienced by industrialists and manufacturers but the problem is no easier for those at work. Personal taxation does not give any incentive to work. There is an unwillingness among workers to accept promotion because it may put them into a higher tax band. There is unwillingness to work overtime because of the penal tax workers will have to pay at the end of the week. Workers are encouraged to opt out of employment and go sick, claim disability benefit and work the very lucrative black economy. Personal taxation must be radically restructured if we are to encourage people to work again. The incentive to work must be restored. In the long run, workers will be motivated only by more pay in their pockets at the end of the week. I know of industries where managers literally have had to drive out to their workers houses and plead with them to come to work because the workers decided that to work for February and March is unprofitable. That is a very sorry situation.

The high rates of indirect taxes have resulted in considerable losses to the economy as goods and services are purchased abroad. VAT at the point of entry on industrial raw materials represents an interest-free loan from industry to the Government. It reduces the capacity of industry to fund working capital and, therefore, employment with consequential losses to the State. The whole question of taxation has to be dealt with sooner rather than later.

Everyone knows that the construction industry is on its knees. However, in his wisdom the Minister for Finance decided he was going to take the head off the construction industry. The VAT increase from 5 to 10 per cent was sinful. Overall the effect of that increase on the output of the construction industry, excluding direct labour which is not chargeable, will be an increase in VAT of £75 million and that is based on figures for 1984-85. The cost on private housing, agriculture and industrial and commercial development will be £40.5 million. A sum of approximately £30 million will be taken from the public work carried out by the private sector such as local authority housing, schools, hospitals, roads, sanitary services and public buildings. A sum of £623 million is estimated to have been the output for new private housing in 1984.

The increase of VAT from 5 per cent to 10 per cent will result in an increased tax take of approximately £30 million. I give the following facts from a submission by the CIF. In respect of a house costing £36,000, the price will increase by £1,714. The Minister, with a fanfare, stated he was increasing the new house grant by £750. The price of all new houses will increase by 5 per cent and only first-time purchasers will be able to avail of the increased grant. A reduction of VAT on materials used in house construction will have no effect on house prices as building companies, being registered for VAT, are entitled to reclaim that VAT. There will not even be a cash flow advantage from these VAT reductions because the refunding of VAT is normally effected within the credit period that operates in the building industry, that is, they are able to get credit within two months.

The effect on the labour force in the construction industry will mean an increase in unemployment, which is a major problem. The effect of the VAT increase will add between £900 and £1,700 to every new house, and that is a net figure. This increase will have to be funded either by the builders or the purchasers and because builders have been going through a very lean time in the past two years they will be unable to carry this increase. Last year 170 building companies deregistered from the national housebuilding guarantee scheme. That is the only yardstick we can use and it is an indication of the problems faced by the construction industry.

The imposition and increase of VAT is self-defeating and counter-productive and I ask the Minister to reconsider the matter. The 5 per cent increase will only exacerbate the problems of the construction industry. There is no prospect of an increase in activity in that industry so long as this Government continue to follow the policies outlined by the Minister for Finance. How could any Minister justify an increase on a home industry while, at the same time, decreasing VAT on Japanese and German colour television sets, hi-fi systems and radios? Because of this increase in VAT, an additional 5,000 building workers will be put on the live register and that is not something to be proud of. It will have a consequential effect on the Exchequer because these workers will have to be paid unemployment benefit initially and then unemployment assistance.

It will also have the effect of putting more couples on local authority housing lists. Up to now young couples who could find a way to purchase their own homes did so, but the additional increase will put that prospect out of their reach. They will have to be housed by the local authorities. Incidentally, I suspect the Government have under-financed the current housing allocation for local authorities. After 1 May, when the new increase on VAT will be applied, more than 47 per cent of the price of a new house in one way or another will find its way back to the Exchequer. That is not good enough. Young people should be encouraged to build their own houses but what the Government are proposing will make that impossible. The increase in VAT will also have a knock-on effect in respect of employment in builders' providers, concrete manufacturers and woodwork establishments. The role of the construction industry in our economy is of vital importance but I am afraid this Government do not take it seriously.

The CIF have put certain proposals to the Government. One is that VAT should apply only to that portion of the selling price which constitutes actual building activity — that is, materials, sub-contracted labour and direct labour — and should exclude the site cost, financial contributions, betterment levies, collection charges, interest, legal fees, etc. This represents about 50 per cent of the selling price of a house. Thus VAT should be assessed on 50 per cent of the house only. Their second proposal to the Minister is that, recognising that the first proposal has implications for the Exchequer and that the Budget Statement announced an increase in the grant for first time buyers of £1,750, in no case should a first time purchaser receive in excess of £4,000 from a combination of mortgage interest subsidy and new house grant. The Minister would do well to look at those proposals.

It is interesting to note some statistics from the construction industry. Construction industry output in money terms in 1981 was £1,907 million. In 1984 in monetary terms it was £1.8 billion. That speaks for itself. In real terms the annual output for the construction industry is down by over 32 per cent in the four year period. The impact of the decline in the construction output over the past four years on employment is that some 24,000 building workers have lost their jobs. At the end of 1984 there were 79,000 workers employed in the construction industry. In 1981 the figure was over 101,000. One in two of the construction industry workforce is now unemployed. The official figure for unemployment in the construction industry in December 1984 was 45,000. This represents an increase of 3,500 on the December 1983 figure, which amounted to an increase in the level of unemployment of 8.5 per cent in one year, and with the Minister's proposals of an increase in VAT this will be increased by a further 5,000 people.

Our health services are in decline. Cuts in service are causing severe hardship all over the country. To say that the doctors are not on good terms with the Minister would be putting it mildly. In the South-Eastern Health Board region patients awaiting dental treatment must wait over six months. In some cases patients awaiting dentures must wait over a year. I know of a lady over 80 years of age who broke her dentures a year ago and is still awaiting a new set from the health board. Long delays in admission to hospitals are being experienced. But for some religious orders of nuns and the professional attitude and commitment of nurses and doctors many parts of our health services would have shut down long ago.

This Government should encourage industries such as forestry and fisheries. In the liquidations in the forestry business over the last year the biggest single creditor in most cases was the Revenue Commissioners. This speaks for itself. The Government are too much involved in industry and they take too much out of it. Because the Revenue Commissioners are secured creditors they will get their money, but the knock-on effect on the smaller businesses who have provided materials to these companies is that they are forced out of business. Again I ask the Minister to look more favourably on all manufacturing industry.

The fishing industry has been decimated over the past year. In 1984 BIM repossessed 12 boats out of a total fleet of 200 and it is rumoured that in 1985 they propose to repossess 40. In the runup to when Spain will take its place as a member of the EC one questions this attitude of BIM. They should be encouraging our fishermen who have not been making the best use of our fishing potential. If they do not make full use of it within the next two years then it may be too late to do so when the Spaniards arrive. The Spaniards will not hang around.

The question of employment agencies must be examined. We have a duplication in some areas here. I would like to see the National Manpower Service, the employment exchanges and the Youth Employment Agency all working out of the one office. At the moment the unemployed person registers with the employment exchange, then goes down town and registers with the National Manpower Service, and he may contact the Youth Employment Agency to see if they have anything for him. All of these agencies must be co-ordinated and there is no better place for that than the county councils, who have highly skilled and trained officials. At the moment county council officials are hamstrung by Department regulations. Over the years they have been seen to do their part under different administrations in very trying circumstances. I would like to see the offices and officials of the county councils used to co-ordinate the activities of the various employment agencies.

We listened with great interest to the Minister for Agriculture today. However, following on the debacle of the super-levy last year the morale of our farmers is at an all-time low. The industrious farmer who over the past five or six years spent a great deal of time and energy improving his holding now finds himself in very difficult circumstances. Such farmers deserve encouragement, and I hope that the Minister in his wisdom will give them all the assistance they need. I was glad to hear the Minister comment on the bovine TB eradication programme. It would be a severe setback to the Irish economy if negotiations currently in progress between the Minister and the Irish Veterinary Union were to break down. We saw the effects of that under a previous Coalition Government. Downstream agricultural industries must be promoted. It is wrong of Deputies on both sides of the House to stand up in this Chamber and criticise Irish people for buying imported produce. The Irish purchaser will buy a product that is presented properly and priced competitively. I see a role for some Government agencies in promoting the better presentation of our agricultural produce and also gearing the pricing so that it would be competitive by the time it hits our supermarket shelves. I know that our major supermarkets are only too willing to encourage Irish manufacturers, including our farmers. Every supermarket group represented in Ireland is anxious to buy Irish wherever possible, but they do not always do so. For people to stand up and criticise our major supermarkets for not displaying Irish goods is wrong. They are playing their part; it is for the producers to play theirs.

I am concerned about abuses in the social welfare system particularly in relation to disability benefit and unemployment benefit and assistance. The Government must tackle this problem. It is an area in which large savings could be made.

It is interesting that, having put the telecommunications area into a semi-private situation, the Government are saying now that the board should contribute to the national Exchequer. That is a shortsighted approach because all they are doing is ensuring that the board can only find the money by increasing costs to the consumer. Likewise, the rates bill which the ESB have to meet is passed on to the consumer in the form of increased charges for electricity.

The Government should give more thought, too, to the area of tourism, an area that is not competitive as a result mainly of excessive taxation in the form of VAT, PRSI and income tax. There is great potential in tourism but this potential is not being harnessed. How many times do we hear that it is cheaper to go on a continental holiday than to spend one's holidays at home in Ireland? This results in big losses to the Irish Exchequer. With the exception of the Dublin area, hotel bed accommodation is not booked to capacity. The only reason for the exception in the case of Dublin is that the city is the commercial centre of the country. Where possible the Government should endeavour to bring about a reduction in taxes in those areas relating to tourism so that we may encourage our people to holiday in Ireland while encouraging as many foreigners as possible to spend their holidays here.

There is nothing in the budget to help the 243,000 unemployed. Neither will it do anything for the industrialist or the manufacturer who wish to employ people here and it does not help in any way the overtaxed worker. The budget can be summed up as having no effect other than keeping the Coalition parties together.

I welcome the opportunity to speak on the budget, a budget which I am confident will stimulate the economy and which will give an impetus to the business sector for a positive approach to expanding in the years ahead. For the first time in years the complaints of the PAYE sector have been recognised. There are now to be only three rates of income tax and there is to be a reduction in the top rate. I doubt if anyone could disagree with the reduction in the higher rate. Some 220,000 people will benefit from the changes which, though small, are perhaps a first step in the direction of relieving some of the burden. It will be important that in future budgets people in the £8,000 to £11,000 income category will be recognised and be put within a single taxband because these are the people who are becoming the new poor. Now that the Government have shown their will to change the system I am sure they will work towards alleviating the burden on the group I have referred to. All parties have lacked the will to make a serious effort to change the inadequate and unfair systems but this Government have made a positive start in this regard. In the past ten years Governments have not shown any direct response to the need for change. They have simply continued to operate the system as they found it, merely adding more rates each year.

I welcome the reduction in the higher VAT rate to 23 per cent. This reduction will affect a wide range of household items and also some industrial materials. It should improve matters considerably for the electrical trade as well as leaving us more competitive. In addition it will help to stop cross-Border shopping. From his knowledge of a Border area the Ceann Comhairle will be well aware of the problems created for traders in that area by reason of the differences in the prices of various goods as between here and the North. This has had a serious impact on jobs in the past five years but I am confident that the measures taken by the Government will result in the restoration of some of those jobs.

The reduction in the number of VAT rates and the abolition of the 35 per cent rate is very welcome and should help to stimulate the tourist industry also. Opposition spokesmen have been telling us that we should do something positive about the tourist industry but we have taken such steps in terms of the reduction in VAT on hotel accommodation and on short term caravan and boat hire. That measure should improve considerably our competitiveness and should create a large number of jobs at peak times.

I welcome, too, the reduction in VAT on newspaper sales. This should benefit that hard-pressed sector who must contend with such severe competition from the English newspapers. The Government's action should ensure that jobs will be protected in the newspaper industry.

However, the increase in VAT from 5 to 10 per cent on the sale of new houses should be reviewed. Such an increase would do untold damage to the hard-pressed builders. Instead of an increase I submit that there should be a zero tax rate in this respect. The increase will add £1,500 to the cost of a house now costing £30,000. If the rate had been zeroed it would have been possible to abolish the £1,000 grant and in that way we would have been reducing the cost of new houses. It is easy for the Opposition to make the point that the rate should not have been increased and that something should be done about it now. I have not yet heard a proposal on how to make up the difference which the Minister intends to make up by the increase in VAT. I realise the severe hardship that increase will have on builders and on home buyers. However, there is no point in making comments about it and saying that it should not be done. When we had got to the stage of introducing two or three rates of VAT, it was inevitable that some area would be hit harder than others, which has happened in this case.

The Minister should consider an area where the money might be made up to reduce VAT on the sale of new houses to zero. He should consider the introduction of VAT on worm drenches and on veterinary fees. At the moment no VAT applies here to either of those items, but VAT applies in all other countries. This would mean that a large number of farmers would have to register for VAT, but that would not be such a bad thing. With the increased costs on diesel oil and other items, they would be eligible to claim relief. This proposal should be discussed in Government and the Government, in turn, should discuss it with the organisations involved to seek out a solution.

In other professional areas VAT is charged on fees and I see no reason why the veterinary profession should be any different. The profit on worm drench and other such supplies, I believe, is between 200 and 300 per cent. It could carry a VAT rate without any increase to the farmers. This business, I am informed, has a turnover here of between £60 million and £65 million in any one year. I am putting forward these proposals in an attempt to alleviate the serious problems in the building industry and the ever increasing cost of new houses to first time buyers. There is no point in making comments inside or outside this House about what could or should be done without putting forward concrete proposals as to where the necessary money will come from.

The CIF knew as well as everybody else that there would be two or three rates of VAT. They should have made more use of their politicians in ensuring that they were not affected by pointing out what would happen if there were increases. They have admitted that they did not do this. They may not be late again.

The reduction of excise duty on televisions shows the Government's determination to help in every way to stop cross-Border shopping. I recall the work and efforts of the Opposition spokesman on Finance around Christmas time in meeting the shoppers on their way to and from Northern Ireland, spending money which they had earned here. It is hard to credit that when these changes were made the spokesman had nothing good to say about them. All he had to say was that we had reduced the excise duty and VAT on imported goods. The main point of the exercise was to give some real, positive employment back to that industry which has suffered because of increased taxes over the years.

The increase of 20 per cent in social welfare payments is very welcome and more than generous, given that inflation has been brought down since 1981 from 20 per cent to under 6 per cent this year. According to people who have recently been in other European countries, we have one of the best social welfare services in Europe. This has come about by proper management of the economy, especially in the area of the control and increase of wages over the last three years.

When the Leader of the Opposition became Taoiseach in 1979 at every turn, no matter what increase an interest group looked for it was granted, without taking into consideration where any of that money was coming from and whether the businesses had the ability to pay. As a result a large number of businesses went to the wall because they were not able to compete with 20 per cent inflation and pay increases in salary of the order of 15 to 17 per cent over that period of time. With regard to the real increases in expenditure which took place over that period of time, we must give recognition to inflation now being reduced to 6 per cent. Very recently somebody told me that last year was the first time in five years that he felt he had a real income and that his money went further. That relates back to keeping inflation under control.

From September 1984 up to Christmas the Opposition have promised to reverse almost every Government decision to curb spending. These reversals would cost around £575 million. If the Opposition are going to fulfil those promises if returned to office, they should tell the people exactly where the money will come from and who will pay for it in the end. There are only two ways in which it can be done: either by borrowing and at the end of the day increasing taxes to repay the borrowing, or taking money off one end of controlled expenditure and spending it on others.

Deputy Molloy made the point earlier that they would do away with local charges. He has changed his attitude since then and has said that they would give the county councils the right to recommend their own charges to the people. We certainly know why the county councils are short of money and why our county and other roads are in a deplorable condition. When rates on houses and the tax on cars were abolished an enormous amount of money was lost to the Exchequer and to the county councils. Over that period of four or five years we were left short of income of between £700 million and £1,000 million. If we had that money today I have no doubt that we could be talking about a single rate of income tax of about 40 per cent compared with what the industrial worker has to put up with to pay for our interest on debt which has accrued over the last ten years. I do not say that Fianna Fáil are to blame for all of this. I should like to see the day when we would have a single rate of income tax, but there is no doubt that within the next 20 years we will not see our debt done away with.

As far as the farming community are concerned the continuation of the stock relief arrangement which will be extended for this year will cost the Exchequer an extra £3 million. That is welcomed by the farming community. The extension of the stamp duty relief which is to be continued on the transfer of lands to younger farmers is also very welcome. I am getting more worried about the monopoly controlling the cattle industry. The three people controlling the cattle industry decided that at the end of the year from September to December they would buy cattle and would then go out and get contracts to sell the cattle in Europe and the Third World countries. Today we have a situation where hundreds and maybe thousands of cattle are available for slaughter and the prices being quoted mean that the factories are not interested in killing the cattle. I would like to see the three people monopolising the cattle industry organising so as to ensure that there will be a market for the cattle that farmers are producing during the 12 months of the year.

Deputy Noonan recently suggested that the IFA were not being hard enough on this Government. That strikes me as strange because looking back over the years the IFA were really hard on the then Fianna Fáil Government when the farmers over a three year period took a 52 per cent decrease in their incomes and the response from the Government was the introduction of the 2 per cent levy and resource tax. I was one of those full-time farmers——

I suppose you still are.

I am a full-time politician today. Because of those proposals and the way inflation is running we will have a serious problem with farmers who developed. Farmers who had invested in the future and in improving their standard of living and their income felt that the Government at that time had ensured that their incomes would drop drastically. As a result we have a situation today in which farmers' incomes are as low as they were four years ago. Deputy Noonan's contribution is not true to form. If that is the type of slagging he got involved in, certainly the criticism at the time of the then leadership of the IFA was quite right because incomes declined over that period. I would make a special case for the continuation of the rescue package for 4,500 to 5,000 farmers who are in severe need. Because of the inflation rates and interest rates the introduction of the rescue package has been of real benefit to more than 8,000 farmers. The information that we have at present is that 4,000 of those farmers would survive without it in the coming year but the other 4,000 certainly require it for their survival. I hope the Government will be able to protect those farmers because it was the expensive money which started them into a decline from 1979 to 1981.

In relation to the overall policy of the Government on unemployment the reduction in the VAT rates should certainly produce a sizeable number of jobs in the tourist industry, in small firms and in the electrical business. The enterprise allowance scheme has been a success with over 5,000 people starting up their own businesses and receiving grants from the Government. With the State agencies we can go a lot further and ensure that people with ideas can set up in business. The social employment scheme will open up enormous avenues for the long term unemployed. About 10,000 people will benefit from this scheme in 1985 and if the scheme is worked properly it will be the first time any Government have been prepared to transfer money from the Department of Social Welfare to enable people to work without being cut off unemployment assistance. We all realise that there will never be full time employment but this scheme will certainly help to ensure that large numbers of people will get the opportunity to work even on a part time basis.

I would like to see something positive being done about the abuses of the unemployment schemes. We recently saw a report in the papers that more than 100 people were caught for social welfare abuses in a constituency in North Dublin. The real unemployment figure is way below the official figures. There are between 40,000 and 60,000 people who can work but who are drawing unemployment assistance. If these people were honest just think how much better off our country would be by not having to pay that money each week and on the other hand the amount of benefit and goodwill that would accrue from these people working within the system.

I welcome the tax incentive for land leasing. As a result, we should see many acres being transferred to young farmers in the next 12 years and this indirectly should help our exports. I was delighted to see the Government recognise the special olympics for the handicapped which will take place this year. There will be more than 2,000 participants. I welcome the decision to contribute £150,000 for training for the 1988 Olympic Games. I am sure that after those Olympics we will be proud of our athletics. I hope that the introduction of a national lottery will benefit our sports activities, particularly the training of thousands of our school children. We will have a much better country if we have better physically trained young people.

I listened with interest to some Opposition speakers on the budget and its effects. We have heard the criticisms but not any positive approach towards solving our problems. Even though they receive £250,000 towards the preparation of their policies, they have not come forward with a single positive idea for the good of the country. They should be telling the people what they would be doing if in office rather than continuing with their attitude of knocking everything done by the Government since November 1982. It is a game of power for power's sake. Deputy Power has said clearly that if there is more money to be borrowed it should be borrowed instead of telling our young people that all borrowings must be repaid with interest. Because of the proportion of the tax yield which we are using to pay interest on foreign debt we will have problems for years.

I was glad of the opportunity to be able to comment on the budget and its beneficial effects on the economy. It will do much to stimulate employment.

I first compliment the Minister for Finance. There are some good things in the budget, like the reduction in betting tax and the reduction in some of the tax bands. It will not cost a lot of money. Above all, I must compliment the Minister on his superb acting in the presentation of the budget. I have no doubt that if he were a candidate at a drama festival he would get 100 marks for presentation, though not for content. We must give him credit for his presentation.

The Minister knew the Coalition were at a low ebb and he had to play to the backbenches, particularly in the Labour Party, who were anxious to preserve some credibility and vestige of identity. He gave them something to enthuse over and he gave the media manipulators the chance they were looking for.

Admittedly the Minister had very little room for manoeuvre. He saw a light at the end of the tunnel but in the past few weeks it has not been glowing as brightly as it did and is now a mere flash in the pan. When the public sit back and look at the true features of the budget they will see it for what it is.

The show does not appear to be over yet because during every break in television we hear the public being admonished. I listened to Deputy Durkan here recently and I am sure he believed what he was saying. I compliment him on his acting when he was saying how the country would benefit from the budget. If those over there believe that they must be very naive because nobody else does.

The Minister for Finance has only succeeded in postponing the evil day. Building on Reality may look fine on a title page but the true reality is that the Irish people have made up their minds about this kind of Government. They have decided on the fate of the fourth Coalition already. The budget presentation this year can only be likened to a man about to be sentenced to death. When asked what he would like before being executed he said he would like to sing “Ten billion green bottles hanging on the wall”. If he could juggle with figures long enough he might just save his life, but reality is much different.

The last speaker referred to borrowing and about Fianna Fáil borrowing. I will refer to borrowing and the budget deficit. In the last general election campaign when we met Fine Gael propaganda-inspired people at doors we learned that the two issues on which they fought the election were credibility and the attitude to borrowing. The Taoiseach was portrayed as a clever, honest man whom the nation could trust. I, personally, have always expressed doubts on his ability to lead the country along the right road and I have the greatest reservations about him properly pursuing the unification of our island and preserving our neutrality as a sovereign independent state. In the past few months my reservations have been proved to be well founded. So much for leadership.

Let us look at the Government's attitude to borrowing. They set themselves the target to eliminate the current budget deficit and they nearly caused a Labour revolution in their early days when they said it might be done in three years. They adjusted that target to five years, subsequently to seven years and have given up the ghost altogether in this budget. The current budget deficit is £1,234 million or 8 per cent of GNP, an increase of £200 million on last year. As the previous speaker said, that is money borrowed which will have to be repaid. It is more than we ever borrowed.

If we look at the Exchequer current and capital borrowing for this year we will see that it is over £2,000 million or 13 per cent of GNP. That is an admission to me that they cannot do what they promised — I suppose an admission that Fianna Fáil were bad but that they are much worse. To make matters worse still they have nothing to show for it. We tightened our belts, donned our sack cloth and ashes for the last two years and it did not do one damned bit of good as far as the country is concerned. No wonder they now resent anybody referring to the term "fiscal rectitude." It is now a nasty word, something of which they should not be reminded. Perhaps we should now substitute the phrase "economic ineptitude". They have failed in their principal promise to the electorate: that there would be no more borrowing. They are now in Government on borrowed time.

The Taoiseach, speaking on television last evening, told what he would like to do for the next three years. I hope the next three years will not be like the last two because, if they are, they will cripple the country. I am convinced that the people will not accept a Coalition until 1987. It is unthinkable that we should be faced with a situation like that.

I might turn now to my priorities for the country and I will endeavour to be positive. The first thing any Government today should do is to think about jobs. After that in order of priority I would put equity of taxation. I do not know whether people in the benches opposite would share my view. I know people are worried about law and order, about the Six Counties, educational cutbacks, health cuts, super-levies, but I am positive that the top priorities today are jobs and equity of taxation. We have 250,000 people idle. The Minister for Finance referred to them as those who want to work. Ever since the budget the condition has grown worse, January being the blackest month of all. The figure we were given then indicated that the condition of unemployment was getting worse. The Minister must know this. He attends clinics in the same constituency as myself, where the people must tell him the truth. The Cabinet must know it, but they have not responded at all.

That is the task any Government today must tackle. Had there been provisions in the budget to help employment we would all have to say today that it had been a good budget, but there is nothing in it for the provision of jobs. In fact, it will even lead to job losses. We attended a meeting today at which it was pointed out to us that a conscious decision of the elected Cabinet to impose 10 per cent VAT on houses had already lost 5,000 people jobs in an industry already frightfully depressed. Not alone have they not preserved jobs but their actions have led to further losses. The only thing for which I could give the present Minister for Finance credit is for having provided one job in the Curragh Camp in the Corps of Engineers for a friend of his.

The Minister made constant reference in the course of his Budget Statement to the fact that the plans he was revealing were in line with their national plan. To my mind that plan exposed the thinking of the Government, when they said that unemployment would get worse in the next three years before it got better. That is not something that we in Fianna Fáil accept should happen and it is not something that the people should accept should happen. Only last evening the Taoiseach was indicating that the rate of job losses had slowed down. My answer to that is that when one is bleeding to death, near expiring, the rate of blood flow is bound to slow down; but that is no indication that the state of one's health is improving.

Emigration is rife again. I heard Deputy John Kelly say that emigration might not be a bad thing. He emigrated, he said, and it was nice to go abroad because one wanted to go. But what about the thousands of people today who go because they must, because there is nothing for them at home, there being nothing in this budget or in Government thinking to provide jobs for them? We were attacked on being negative in our approach when we asked how productive, sustainable jobs could be found. I believe they can be found in processing our natural resources, in giving the greatest amount of added value to our agricultural produce, with better marketing of our beef abroad, properly guaranteed prices for beef, pig and sheep meat for our farmers and a diversification of the normal activities vis-à-vis our milk and dairy produce, with proper utilisation of our land.

We should also look at import substitution, pondering on the question posed during the year: why do we import so much wheat for our flour and feeding stuffs for our stock when we could produce them at home? Why did the Government have to be pushed by us to instil into the ESB that it would be proper nationally to burn our native turf rather than imported coal from Poland or the USA? Perhaps that is what Deputy Farrelly meant when he spoke about this year making people's money go further. Definitely Irish money would "go further" had we to send it to the USA or Poland to buy fuel we have at home, which this Government would have left in the ground if the ESB had their way and closed the turf burning power stations.

Last week I had occasion to suggest to the Minister for Defence that possibly the Army would be asked to provide an extra 700 or 800 men for an extra battalion in the Lebanon rather than the usual replacements after six months. I asked him would he not consider short term Army training for our young people providing them with discipline, the nation with a corps of trained young people, a reserve of idealistic young people with whom we could well do—that this would be much better than having them remain idle. The Minister for Defence said it was not possible within the available resources—in other words, there was not sufficient money to do that. Therefore, we pay people to be on the dole when we could utilise their national spirit and idealism to better effect.

From my short knowledge of forestry I agree with everybody's sentiments that a lot of work remains to be done there. If things were properly managed after 50 years of self-government we could have an excellent forestry industry now, but we have not. There seems to be a reluctance to provide incentives and encouragement for private forestry to succeed; instead we have somewhat of a tug-o'-war between the two. There are millions of acres in the west waiting to be planted, but they will never be planted under the present programme of the Department of Forestry. We want to introduce private individuals and privatisation there. I visited one forester in Clare who has demonstrated what can be done higher up the mountain — more than the forestry people thought possible, nearer the sea than the forestry experts thought possible — and he has made a success of it. We have a lot to do to encourage investment by private individuals in forestry seeing that the State is not prepared or has not the resources at its disposal to plant all we need. Above all, we need a proper marketing system. I am convinced that the set-up in the Department of Forestry is not such that we can properly market our produce. We have a sure fire winner in forestry if we could pursue afforestation properly.

Were I asked for my opinion as to the next item after agriculture and the utilisation of our agricultural produce providing the best investment in this country I would have to say it would be tourism. We have great natural advantages in tourism and any money spent in that area would be well spent. It constitutes our second greatest potential, but some action taken by the Government recently can only be described as anti-tourist. I have seen countries that have not half our potential for being a marvellous tourist country, countries such as Austria, where they have made a success of that industry and built up a marvellous economy based on it. It we concentrate on the promotion of tourism, giving people a good deal, promoting our craft industries and the sale of specialised things we can do well, we shall be making progress.

I mentioned to the present Minister at some stage the possibility of a tax incentive to employers to provide additional employment. Most employers will tell one that there is now great difficulty in recruiting extra employees. However, if we said to them "If you take on an extra staff member next year we will allow you £1,000 a year on your tax bill"— that amounts to only £20 a week — that would provide extra employment. However, I have not seen any evidence of it.

With regard to equity of taxation the Minister has done something with the tax bands, some have gone up and some have come down, particularly the upper bands. The Commission on Taxation were set up by the then Minister, Deputy O'Kennedy. Surely this commission have reported by now but we have not seen any action on their submissions. Deputy R. Bruton gave reasons for the delay in implementing the recommendations. He said one reason the commission's recommendations could not be acted upon was that people who took on mortgages for 30 years felt they were getting an allowance and that we could not change the rules during the course of the game. When will we be likely to act on them? Many poor people paying mortgages find the rules are being changed because they are now paying £20 a month more than they paid previously.

I have already welcomed the first move to rationalise the tax bands but I believe most taxpayers will be worse off, and they will realise this before the year is out. There was a slight increase in allowances but this will not beat inflation in the coming year. It is obvious from the figures that fewer workers will pay more tax and everybody will pay more in VAT. This is not only my opinion. This has been borne out by the Wall Street pundits who gave their views on our economy and tax structures recently — and it was not a flattering view. They did not bear out the Minister's opinion of the tax changes. In his budget speech he said:

These changes which I have proposed in our income tax and VAT systems will unquestionably improve the climate for enterprise, effort and employment.

I like the use of the allteration, but from a tax point of view the situation can be classified as tough, terrible and tightening. The people we met today will bear that out.

The Minister is reputed to be a great man for his book-keeping. I would like to give some figures where he compares 1984 with 1985, page 18 of the blue book, Principal Features of the Budget. They tell the home truths. They tell us that customs tax revenue in the coming year will yield £12 million more than in 1984, £76 million more in excise duties, £165 million more in income tax, £122 million more in VAT, agricultural levies have gone down slightly by £2.4 million, motor vehicle duties will yield £10.3 million more and the youth employment levy will go up by £2.5 million. These are the facts. It is obvious that the Minister is taking more than ever before out of the economy and giving less in return.

The Minister showed a very helpful interest in the bloodstock industry. That is only natural since he represents Kildare. The reduction in tax on SP betting to 10 per cent will be welcomed. I predict that he will collect more at the 10 per cent rate than he did at the 20 per cent. The bookmakers appreciated this move and will respond and at the end of the year the Minister might even be inclined to reduce the rate to 5 per cent. One outstanding matter of great concern to bookmakers is betting bonds, which the Revenue Commissioners demand. This means that the bookmaker takes out a type of insurance policy that he will pay his taxes. In many cases when the policies expired the bookies have not renewed their insurance cover and now they are being asked to make large deposits with the Revenue Commissioners against the tax they are likely to pay. This penalises the honest bookmaker because the more tax he pays the greater will be his deposit. Tying up capital in this way can be a crippling blow for some bookmakers who often have a cash flow problem. This profession does not compare with other professions which are allowed a year's grace to pay their taxes. The bookie has to pay the deposit in advance before he takes in his first bet. I would like to know if the Minister has any suggestion as to how he can overcome this, or will he arrange to have insurance cover for bookies in that type of situation?

The bloodstock industry is going well from a money point of view. There is great investment in it from abroad, but racing needs to be helped and prize money needs to be increased if owners and trainers are to stay in business. The racing and bloodstock industries have a great employment expansion potential. It is an indigenous natural resource which has gained world acclaim for us. We should build on this and encourage further investment at home. We have come a long way from my young days on the Curragh. Three stables I know of, small employers in their own way, now employ 100 people in the stables and the spin-off business. This industry could be expanded and I hope the Minister will give them every encouragement, because money invested in the bloodstock industry will provide more jobs at home.

I heard bad news yesterday about grey-hound racing because six tracks are due to close. I do not know if the difficulties arise with Bord na gCon, with taxes or bookmakers, but I hope the Minister for Agriculture will help this industry. This is a good Irish industry which needs to be kept in a healthy state.

I cannot understand why the Minister singled out the motor trade for the treatment he has meted out in this budget. There is an increase of 10p per gallon on petrol and diesel, there is an increase in road tax, and VAT at 10 per cent, which shows a change of heart on the Minister's part. These increases in motoring costs will percolate to all items because this will affect the transportation of goods, tourism, and people travelling to and from work. I cannot understand why we continue to crucify this section of the community. This industry can provide a great deal of employment but every year they are affected by the budget. Old established firms have closed down and no new apprentices are taken on. The black economy and those doing "nixers" in back lanes are the only people doing business. When Fianna Fáil were in office we had a meeting with motor traders in the Keadeen Hotel in my constituency. Their plight was bad then but it is worse now. The present Minister for Finance was at that meeting but he was much more forthcoming when in Opposition than he is today.

Deputy Farrelly said there were 40,000 people drawing social welfare benefits who should not be drawing it, or who need not be drawing it. I do not know what he means. But I know that many people in receipt of social welfare benefits are asking why for the first time ever there was no increase in children's allowances in this budget. Some people mentioned the family income supplement. That will probably be taken into account in the husband's tax, but I never remember a time when children's allowances were not increased in the budget. It is usually paid to the mother. She holds the children's allowance book, and the money she receives belongs to her. Mothers will not thank the Minister for forgetting the children this time.

Much has been made of a 6½ per cent increase in social welfare pensions but it will not come into effect until 11 July. I know that is the anniversary of the signing of the Treaty but the old age pensioners would not have objected to receiving it on 1 April, 1 May, 1 July or even 17 March. The six months delay in implementing it means that the 6½ per cent increase will, in effect, be a 3 per cent increase by then. Judges received an 18 per cent increase in their pensions and they only have to serve five years to be eligible for them, so comparisons do not make good reading. Indeed, on the day the budget increases were announced — and they were paltry — coal went up by 80 pence per bag.

Other speakers referred to the building trade and those of us who took a walk at lunchtime can understand why. It is an industry which is capable of an instant response to encouragement and can provide employment if given the chance. It is at its lowest ebb and the budget imposed further restrictions on first time house buyers with the imposition of VAT and probably a mortgage increase as well despite the efforts to lessen the blow. When the Minister for Finance was asked about this he talked about the new grant to first time house buyers and said it would increase the price of houses by only £325. If he was buying a new house and finding it hard to make ends meet that money would be a big amount to him. The building industry has declined by 25 per cent in the last two years and these measures will only make it worse.

Despite a big show about capital projects, the truth is that £50 million less will be spent on capital projects in 1985 compared with last year. Building societies say that those borrowing £20,000 will pay £21 more per month because of this. Builders who signed contracts in June 1984 will be faced with a bill of £1,250 on a house costing £25,000 and £1,750 on a house costing £30,000. They cannot expect the people who have signed a contract to foot the bill but their profit margins are so small that builders will be unable to meet these extra costs. Many more will go out of business. It is no wonder there is outrage over this measure because the construction industry had been complaining even before the budget that VAT rates should be reduced. We were told that it had to go up to 10 per cent because the figure of 5 per cent had been done away with. There was a suggestion made that only half the cost of a house should be subject to VAT at 10 per cent but that was rejected. Any decision which puts 5,000 people out of work and causes fewer houses to be built in the coming year is wrong. If the Minister for Finance goes near a building site within the next few months he would be well advised to wear his helmet.

I should like to compliment the Minister for the Environment on the recent scheme brought in for remedial works on local authority houses. However, I cannot agree with his statement that the local authority housing programme is in its healthiest state for years. That is a very sweeping statement and it is certainly not true in the constituency which I represent because only 51 county council houses were built in Newbridge last year and 52 joint venture houses. If the money stretches that far, 54 new houses will be built in 1985. This is not nearly enough to meet the demand and it is the same all over the country. One can see the proliferation of caravans and mobile homes and we know that flats are very overcrowded. Even if nobody else went on the waiting list the present rate of building would not catch up with the backlog until 1988. By that time, many more will have joined the waiting list. In Kildare, we got £5.6 million for small dwelling loans last year and, for the first time, that money was not taken up because of the low income limit and because couples simply cannot afford to build houses.

Last year, the Housing Finance Agency allocation to County Kildare was a sum of £4 million. The county manager estimated that we will need £7½ million this year to cope with the demand for 1985 and last year's backlog. Kildare County Council are now approving loans but they are not sure if they will have the money to meet them. For the last few months of 1984, people whose loans had been approved earlier in the year received no money because the council got no money from the Exchequer. Those people were faced with paying bridging loans which is very expensive. People cannot afford to build their own houses and the local authorities cannot provide enough houses. On my reckoning, the Government built 7,000 local authority houses in 1984. The money they have allocated for housing this year will only build 6,000 houses which means that 1,000 fewer houses will be built. This is a recipe for crisis and the housing programme is in a disastrous state.

I should like to refer to welcome news in regard to the construction of by-passes. The Minister should adopt a sensible policy about local authority funding. At present when a TD writes to a county engineer seeking information the answer always refers to the limited funds at the authorities' disposal. This is because the Government did away with the statutory payment which was due to county councils. Fianna Fáil believe that this should be restored and we will restore it in line with indexed statutory payment each year to county councils to enable them to carry out the work which they should be doing. I again impress on the Minister, as I did on the Minister of State, Deputy O'Brien, at Question Time, that a monitoring system needs to be in operation to ensure that we get value for money in each individual county and that local authority funding should be set up for roads which will enable not only main and arterial roads, but county roads also, to be reopened.

Yesterday the Government announced that toll roads will be introduced. It is important that county councillors in the areas affected should be consulted and their views taken into consideration before any action is taken. Money for the Naas by-pass and others was made available by Fianna Fáil but we were not there to lead in the winner on the day the by-pass was open. Deputy Spring was Minister for the Environment at the time and he used that occasion, despite a strong motion by Kildare County Council that toll roads should not be introduced, to try to change their minds. What will be the effect of toll roads? Who will have to pay? The poor unfortunates going to work will have to pay 10p extra or a lorrydriver with a load of sand going to the odd building site which may still be open will pay a higher toll. In many cases travel on the toll roads will be reduced and towns like Naas and Newbridge will still be jammed.

I am not happy with the suggestions made. I refute the suggestion that we constantly tell the Government what to do but not how to do it. Suggestions were made by our party leader as to how the economy might be reflated and that duty on beer, spirits and electrical goods should be reduced. The Government scoffed at that in the early days but rather belatedly acted on it. We are glad of that because it is better later than never. We have constantly harped on the fact that there should be further capital investment in the building programme and that money spent on roads, houses and so on is money well spent.

As regards the proposed lottery this is a matter I have taken an interest in for some years and I have been in touch with the Minister about it. We should think big about this lottery. If properly handled, it is capable of bringing in £1 million per week and the Government would get a clear profit of £50 million a year. I have some knowledge of US lotteries particularly in the north east where they go well. They do not do well in the bible belts but I am confident that a lottery run on the same system as the Massachusetts State lottery would be an excellent one. The population and type of people would approximate to Ireland very well. If we adopt that type of policy and if it can be computerised and turned into a national effort it will be a success. We could have outlets in every supermarket. The charitable organisations who are worried about their future could be made agents and if the ailing Irish Hospitals Trust feel they are so good at selling and have a part to play they also could be incorporated as agents. If they can sell a little better than they have with their shamrocks and sweeps they could gain revenue for themselves. We would need a national professional body to run it.

I think I am talking to the right man when I address the present occupant of the front bench. Much or all of the proceeds should go to sporting and educational needs. If people know what the money is earmarked for they will support it. We will depend on the goodwill of the public to make this lottery a success. The money should go where it is earmarked for and not be like the youth employment levy where £7 million found its way to a purpose for which it was not intended.

Many of the provisions in the budget were ill thought out. They appear to have been thrown in as spot prizes at the last minute. Reference was made to dental, optical and aural care being available for all pregnant women whose husbands are insured. Did anybody think out how that would be implemented?

We in Fianna Fáil are often taxed with espousing the cause of white elephants but apparently the Minister has an interest in brown and black elephants with his grant to the Dublin zoo. I am sure it is needed and I hope it will be spent wisely there. Some of the things which appeared in the budget were inexcusable. Did anyone realise the frightful effects of the increase in VAT on the building trade or the effect on unfortunate mortgage holders or first time house purchasers?

We voted on financial resolutions until midnight last Wednesday week. Every day since we have heard a change of heart and the financial resolutions we are talking about today are not the ones we voted on. This is an obvious example of government by reaction. In our pigeon-holes today we received a memo from the Department of the Environment with regard to the new house grant of £1,750. It is a clear example of Labour giving a grant of £1,750 and Fine Gael putting on VAT which cancelled it out. There does not appear to be any co-operation there. It was stated at the end of the memo that "this announcement supersedes all earlier information issued on this matter". It is an obvious case of having second thoughts about something. It is also mentioned that the new house grant will come into effect on 1 May and that the VAT will not come into effect until 1 May.

No incentive is given in the budget to invest in projects at home. There is no encouragement given to people to put money into industry here or into projects which could create jobs. After two years of frustration and lack of success under the Coalition the country needs a lift and needs someone to boost morale and restore confidence. It needs someone to offer a glimmer of hope for the future. The Cabinet are unable to do that. People can see through the gaudy stage props to the reality behind the scenes. We have more borrowing and fewer jobs. We have more taxation and less real spending. If the Government left office today the country would breathe a collective sigh of relief and hope would replace the present despair. The greatest service the Government could do would be to steal quietly away. I am positive that if Fianna Fáil returned to office there would be an enormous sigh of relief and an immediate feeling of hope and confidence.

The attitude of the Minister indicated a typical Fine Gael attitude. It does more for the rich than it does for the poor. On television last night the Taoiseach was asked why the Government decided to reduce the 65 per cent tax band to 60 per cent. The Taoiseach did not answer but said that they had helped the poor section. My knowledge of Fine Gael is that they will not be remembered for helping the poor sections. I have not heard any excuse as to why children's allowance was not increased. Even if money was scarce they should have found some to increase that.

In the last line of the budget speech the Minister said: "People who want to contribute and want to work ..." That may well prove to be his swan song. The inference is obvious. He is convinced that many of those who are idle do not want to contribute or work. I am not naive enough to think that everyone who is idle is genuine but the vast majority are. There are the young people in despair and who have no hope. The youth employment levy was earmarked to create jobs for young people but we have had a robbery from the children's money-box to the tune of £7 million.

It is obvious that Fine Gael got their way at last. Adults' shoes and clothes will be now subject to VAT at 10 per cent. Heaven help the fine strapping lad or the well developed lass who needs adult shoes, because they will have to pay for them. It does not appear that any Labour voice was raised in anger. In fact there is an obvious lack of Labour input. There is no sign of Labour philosophy. Perhaps they too have been subsumed into the Exchequer. Are the four Labour Ministers making any impact or are they expendable? They could not be classed as spare tyres because they might be called into action at some future time. They would have to be classified as flat tyres. The wind has been knocked out of them today anyway.

I regret to say that this fourth Coalition Government saw the demise of the Labour Party as a grouping with any identifiable separate philosophy. To steal a phrase I heard in connection with a certain court case, there is no evidence to suggest they have a separate identity of their own outside Fine Gael. They have become an extension of Fine Gael, and that is not surprising. This Government have always been a loose type of federation. One could not refer to them as a coalition because by using the word "coalition" one means groups that coalesce or work together. A better description would be a condominium, a loose federation of states. Just as Mrs. Thatcher might be criticised for having "wets" in her Government, the grouping of "flats" we have is no help.

The Minister did the best he could with the resources at his disposal in 1985. I doubt if anyone else in Fine Gael or Labour could have put as good a gloss on it. However, when the tinsel wears off and the drabness appears the public will realise fully the con job that has been perpetrated on the nation. This is the third budget the Minister has presented and I suppose he can have claim to have brought off a hat trick, but I am convinced that if the Irish people in 1985 are given the say they would dearly like to have, he will never complete the last leg of his jackpot.

I should like to commence my brief contribution by agreeing with the Taoiseach when he said that, having broken the back of the problem left to the Government by their predecessors, we are able in the national plan and in the budget to launch the process of recovery. We are now on the road to recovery and the budget indicates how we are approaching the matter.

The budget will help to have an environment where jobs will be created and unemployment will fall. The budget maintains the rate of inflation at low single figures. It preserves the purchasing power of those on social welfare payments, it has made a positive start in reforming the tax system and it improves the position of women in a number of important ways. The fall in employment during the past four years is now being halted. More new jobs will be created and because of the general improvement in the tax position and the way this affects different areas of the economy, in particular tourism——

Did the Minister of State say unemployment is being halted?

It is slowing down.

It has increased from 217,000 to 234,000.

The unemployment trend is being reversed. The budget, together through the enterprise allowance scheme and the social employment schemes with the policies set out in the national plan, will lead to a fall in the numbers of unemployed in the next year or 18 months. In 1985 inflation is expected to be under 6 per cent, the lowest figure since 1968 and a far cry from the future of over 20 per cent in 1982. By avoiding any significant contribution to price increases, this budget has helped to keep inflation at its low level. In a practical way the VAT reductions will reduce the price of many household items from the beginning of next month.

What about clothes and shoes?

I am referring to domestic items, to infants' needs and washing powders. There has been a consistent call from housewives to eliminate what was called the luxury rate under which these items were charged. What the Government have proposed is most welcome.

On social welfare, the Government's commitment in the last two budgets to match such payments with the rate of inflation has been more than honoured. The increased social welfare benefits in this budget will more than compensate for inflation and it will protect the vulnerable groups such as old age pensioners, those on social welfare and the disabled.

I am very glad to see that an agency to combat poverty will be set up in the coming year. An increasing number of women are in the lower income groups and they have fallen into the poverty trap generally. This is a trend here and in other countries and it reflects the increasing number of women who are heads of households and who are mothers. I look forward to the funding of suitable projects here under the second EC combat poverty programme. One has to accept that dealing with poverty by way of weekly payments only partially deals with the problem: it does not address the real problem. We must identify the causes of poverty, whether it be education, environment conditioning or a combination of these things.

The budget proposals mean there will be a substantial improvement in the distribution of the tax burden and an improvement in tax allowances and exemption limits. All taxpayers will benefit and people will have more disposable income. The limit over which tax will be paid will be £2,650 for single and widowed persons and £5,300 for married couples. This will remove approximately 15,500 taxpayers from tax liability. Persons earning less than £5,300 per year will be exempt from the 1 per cent income levy.

A notable feature is the increase in the incapacitated child allowance. This has gone up by £100 and the allowance for a person employed to take care of an incapacitated taxpayer or spouse has increased by £500. Single parent allowances have kept pace with married person's allowances, with an overall increase of £200.

The proposed change in the tax relief for a certain amount on deposit will encourage older citizens to put their savings in safe keeping and it should be helpful to them. The majority of such people are women because their life span is on average five and a half years more than that of a man. Many older women are living alone and they seem to think it is safer to keep money at home, whether in a box, under the floor boards, or under the mattress. This makes them very vulnerable. I hope the information regarding this tax concession will filter through. I am glad the Minister for Health has issued thousands of leaflets setting out the savings people on welfare or on old age pensions can have while still claiming benefit.

No capital acquisitions tax will now be payable from 30 January last on inheritance from one spouse to another. This important aspect has not been highlighted very much but it is a matter that has caused much concern which has been expressed to me in my role as Minister for Women's Affairs. In today's terms, houses have a high value and many men have pensions that are capitalised on death. There is also life insurance, and the total value can very quickly reach and exceed the £150,000 limit. Many couples approached me during the year and asked me if something could be done about this. They thought that perhaps the ceiling could be raised. I am happy that this inheritance tax between husband and wife has been abolished. That abolition is welcomed by women. Particularly where couples are self-employed as in the case of farmers and shopkeepers, there was a risk that the source of their income would have to be sold.

I have pointed out that the budget improves the position of women in regard to VAT on a wide range of household goods, capital acquisitions tax, tax relief to widows, single parents and those who have incapacitated children and also social welfare and family income increases.

The introduction of dental, optical and oral benefit for pregnant women is welcomed by women, who have conveyed their appreciation of it to me and to other Deputies on this side of the House. After the broadcast of the budget speech a number of women asked me why the Opposition were jeering or cat-calling or cheering when the Minister read out that section in his speech. It was absolutely lost on them, as it was on me. I wondered why pregnant women should have brought that kind of jeer or cheer. Maybe the Opposition did not realise how it sounded, but it came over in that way.

In most health boards there is no longer an adult dental service because funds are no longer available for it. That was the reason we jeered.

It came over very badly indeed.

In the Southern Health Board there are no longer any adult dental services.

Perhaps the Opposition did not expect us to do this. Obviously, they did not think we were going to meet the commitment we made at election time. Deputy Geoghegan-Quinn said that it was discriminating between women. That was an extraordinary thing to say. Most women think that we made a relevant commitment in this matter which comes up again and again and they want action on it. They are very pleased that if we were to choose a sector or a group, recognising that the financial situation at present would not allow the scheme to be brought in as totally as we would like, we chose pregnant women who are wives of insured workers to benefit under this.

If there were such a scheme it would be ideal but such a scheme does not exist.

We will have to work out the administration, but there will be.

It is like the £9.60 the Coalition promised to wives.

Deputy Haughey said that a leading gynaecologist has pointed out that pregnant women do not tend to have active dental treatment and the cost of visiting a doctor to get a certificate of pregnancy would cost her too much. Deputy Haughey should look more closely at what happens for pregnant women. Dentists are very happy that this provision has come in. Women need dental care during pregnancy. The Deputy opposite may know of an ailment called gingivitis which is very common during pregnancy and women need treatment for this. Many of them do not go for treatment because they cannot afford the cost, but now they have an opportunity to have the treatment and other treatment that may be necessary and unrelated to their pregnancy. The health education booklet on the mother and child advised pregnant women to go to the dentist and that it is not dangerous, as has been said, or inadvisable for them to have an injection for a filling or an extraction. They may not have a general anaesthetic or be X-rayed. Very few people who visit the dentist regularly have either of these treatments. Seventy three per cent of the population have an entitlement to State funded dental services. The entitlement covers medical card holders and their adult and adolescent dependants totalling 1,025,000; pre-school and primary school children, 792,000; and contributors to the social welfare scheme, 700,000. On the basis of the total population of 3,433,000, 73 per cent have an entitlement under this budget. This budget provision, which introduces another group to dental benefit under the social welfare scheme, will mean that we will move that up a little further; not as much as I would like, but it is a start.

The additional £650,000 being made available for voluntary organisations is also welcome. In the last two years many of those who have been helped have been single parent organisations and day care facilities for deprived areas which are directly relevant to women, especially around Dublin, and the growth in these day care centres is noticeable. Small community groups to whom a few thousand pounds is significant are glad that that sum of money is available.

The introduction by the Minister for the Public Service, Deputy Boland, this year of free phone information on the budget, highlights the need for information on the part of the public not just at budget time but in the whole complex area of income tax, social welfare and grant schemes etc. as they apply to them. I am conscious of this need on the part of women. It is important that we have schemes, welfare legislation, policy programmes and so on, but there is not much point in having them if people do not know they exist. Many people who do not have access to telephones may not even get the newspapers and do not know what is available to them. I am interested in contributing to reducing the numbers of people who have to go to TDs for basic information. Perhaps I will put it to Deputy Boland that a free telephone system should be available on an ongoing basis. That facility on budget day was very widely used and welcomed by the public. I have had some experience of this in my Department. I have had requests throughout this year from widows for information on a number of areas such as income tax, social welfare, life insurance, etc. I put together a very simple booklet entitled Information for Widows which brought together all the information they could possibly need about social welfare, tax, banks and so on. We printed about 5,000 copies of that booklet and they were gone in three weeks. The result was that this sector, the widows, had, right away, the information they need.

I referred to the increase in employment. The opportunities are there and initiatives are being taken to help in that regard. Experience of the enterprise allowance scheme and the employment incentive scheme shows that people are prepared to act in a very practical way to get a job. Last Friday I saw a clear demonstration of the will to work and in many cases the will for people to make jobs for themselves if employment is not readily available. I sponsored a seminar on enterprise and women becoming involved in business. It had 200 places and was over-subscribed three times. It is obvious that many women are thinking seriously of setting up their own business or expanding existing businesses and are highly motivated about this. State agencies in the enterprise area, such as the IDA, CTT, AnCO and the Youth Employment Agency, should encourage women entrepreneurs and address advice and information to them. The theme that came through from the day's papers and discussions was that women were not convinced entirely that these agencies were directing their information or their marketing to them. The take up of many of the schemes was very low and indicated that they were not catering for the number of women who were applying. Deputy John Bruton, the Minister for Industry, Trade, Commerce and Tourism who contributed to the seminar agrees with me on this. He is asking the State agencies to examine this issue in detail and to develop programmes of specific relevance to women. The two activities I have mentioned, preparing information booklets and organising seminars on issues of specific relevance to women, are just two of those I am taking on my £170,000 budget in 1985.

This year also is the final year of the UN Decade for Women. That decade grew out of the UN Conference held in Mexico during International Women's Year 1975 which produced a plan of action with the objective of enabling women to realise their full potential and worth as human beings as well as equality in their rights, opportunities and responsibilities.

The specific areas outlined for action at national level include political participation, education and training, employment, health, nutrition and the family. The highlight of this year will be an international conference in Nairobi which will address the themes of employment, health and education. The conference will review progress made during the whole decade and will aim in particular at identifying obstacles to the realisation of the programme of action. It will go on to formulate priorities and strategies to overcome these obstacles and to implement the goals of the decade looking to the year 2000.

The liaison committee who are meeting in my Department and who represent such groups as the Employment Equality Agency and the ICA, are aiming to determine Ireland's priorities for this conference and to bring forward a national report. When we examine what has happened in Ireland in the past ten years we realise that the changes have been very real and definable and are far removed from many of the negative suggestions that tend to be made about women in Ireland. In legislative terms the changes have been sound and good. In such areas as family law, employment and rape legislation, we have had 15 Bills enacted since 1975. That is a very worthwhile achievement. I am hoping for a series of regional seminars which will focus on the objectives of the decade and also a North-South conference which will consider legal issues as they affect women in the North and in the South. All of these activities will focus attention on what is the meaning of the UN Decade for Women year but I am very concerned that small local groups in Dublin and elsewhere should participate also. I intend funding those small groups who are involved in a range of community projects so that they may organise their own projects as they consider best.

I hope this year also — I have begun already in this regard — to consider the facilities that are available to women throughout the country. In some parts of the country, noticeably the midlands and Galway, there is an extremely good health service in the area of preventative medicine. There are cervical smear testing clinics at various centres. This facility is very important because early detection of cervical cancer is of paramount importance in treating the condition but I have discovered that the smear testing facility is not available in many parts of the country. In trying to identify the facilities required by women, I shall be covering a wide range in each regional area and in that way we shall ascertain where initiatives might be taken and where extra funding might be helpful.

I have decided this year to involve my Department's work in two main areas, the needs of single parent families, particularly the unmarried mother and also the area of women in small business in terms of their needs and their interests as entrepreneurs.

The seminar that was held last week and the follow up to it by the State agencies represents a major start on the area of women in business, in identifying women with skills and talents in this field, who are anxious to set up businesses of their own and in that way to create jobs for others as well as for themselves.

The needs of single parent families have been examined in detail by an interdepartmental working party who have been meeting in my office. I trust that their report will be published shortly. It will set out the various areas of action needed in regard to the discrimination and disadvantage which operate against women.

The problem of the unmarried mother and the difficulties with which she must contend is one that we must be particularly concerned about. Perhaps the public attitude to the unmarried mother is the cause of the greatest pressure and the greatest difficulties. There are community agencies, and I commend all of them, who are doing excellent work in counselling and in helping the girls to find housing but I am not convinced that that attitude generally is as widespread or as caring as it might be. That is why we need to give an example and to create an awareness of the pressures that can be brought to bear on the young unmarried mother who is afraid to discuss her problems and who does not know what the future holds for her.

The area of housing for unmarried mothers has been identified as representing a big problem. Many women have approached me on behalf of their daughters who either had babies or were pregnant to seek my advice in regard to housing for girls. Dublin County Council have a very good policy in this area. It would be worth the while of other local authorities to follow that example. It is essential that single parents are not put into ghetto-like situations. They should not be put into low priority cheap housing areas where they may consider themselves abandoned and removed from the rest of the community. Ordinary housing should be provided for them and they should be given support in the community.

A noticeable feature that occurred to me recently in regard to housing in Ireland is that there are so many cases in which one person lives alone in a very big house. This contrasts starkly with the position in Holland, Belgium and the UK. When people in these countries have spare accommodation, they tend to think of renting it out as a business venture. They want to make money out of it. Also, it would relieve the stress and strain on public authorities and on women — and young couples, even — looking for accommodation in the private sector. Are we extraordinary in this area, that so many people who live alone in houses over a number of years would not think about sharing their houses and making some money at the same time?

With regard to unmarried mothers, it is worth noting that in 1983 1,500 of the 3,500 young unmarried mothers who gave birth in Ireland were in the age group of between 18 and 20 years. That works out as something like 30 young unmarried mothers a week. We should all take note of this. I am not going to call it a problem because then we make it a problem, but the reality is that we have young unmarried mothers in Ireland at present and need to address the problem which that indicates.

I am confident that this budget provides the hope essential to meet the challenges now and in the years ahead in finding jobs and achieving equity in our standard of living and, from my perspective, in taking positive action to improve the position of women in our society. Clearly, much remains to be done, but I am confident that his budget, set firmly in the context of the Government's national plan, provides a reasonable approach that as that economic activity shows through into people's lives, it will provide them with confidence to build on the framework which the Government have provided and achieve real advances, not just in the economic area but in relevant aspects of social development.

First, I should like to comment on the Minister of State's reference to the adult dental scheme. This side of the House, like the Government side, would be pleased if such an adult dental scheme were made available to pregnant women. They are lovely sentiments but, unfortunately, the reality is totally different. In the South-Eastern, Southern and many other health boards, no funds have been or are available for the adult dental services in 1984 or 1985. How can a pregnant woman avail of a non-existent service? One can talk about it in the same vein as the Coalition's 1981 campaign with regard to the £9.60 for the unmarried women. It is not a reality and nothing that the Minister says will convince me otherwise. As a member of the South-Eastern Health Board, I know the facts.

Like many of my colleagues, I am glad of the opportunity to contribute to this debate. The headline from this week's Sunday Tribune“They got it wrong again” says it all. After two years of falling incomes, rising unemployment, increasing bankruptcies and lack of investment, the net result of all this suffering is that the current budget deficit is reduced by a mere 1½ per cent of GNP, by forcing a decline of 3 per cent of borrowing share of national income. If all this leads to a 1½ per cent reduction, what burden of taxation will we have to carry and what spending cuts will have to be imposed to achieve the Government's target of cutting back another 3 percentage points within the next two years?

Both the budget deficit and the borrowing requirements will be larger this year, in absolute and relative terms, than in 1984. All this, despite a commitment of the Minister for Finance in his first budget speech in February 1983 to reduce overall borrowing requirements and reduce and control current budget deficit. He went on to say then that the Government were committed to achieving economic growth and higher employment. I had to read that sentence on a number of occasions to make sure that I got that right about higher employment. In the two years since this Government have taken over, the unemployment figures have risen by 90,000.

Even on the very week in which the budget came out, the unemployment figures, in spite of what the Minister says, rose from 217,000 to 234,000. That is an increase of 17,000 people. That did not take into account the loss of 800 jobs in Travenol in Castlebar, the 370 jobs in Clarkes of Dundalk, the 170 jobs in Arklow, or over 100 jobs in the building sector in Bray. That is a further 1,500 jobs lost in the past two weeks since this budget was announced — an increase of almost 19,000 on the unemployment register. And this Government state that they are committed to correcting unemployment and creating employment. In the now infamous document, Building on Reality, there is mention of unemployment peaking at 220,000 by the end of 1984, which would then fall back in the following year to something in the region of 210,000. Instead of heading downwards, this unemployment figure has gone up by another 19,000 in three weeks.

Despite all the sufferings, tax increases, spending cuts, many businesses going to the wall, many people being thrown out of work, five mile longer dole queues, we are now in a worse mess than we were. All the media hype and public relations and national handlers will not disguise that fact for very long. The Irish people are cleverer than the Minister or I think. About now, they have uncovered the outer layers of this budget and discovered its bitter heart, which means in effect that there is no change, but more of the same to come. This must be the greatest con job, the most gigantic hoax of all times.

Despite the apparent reform of the PAYE system, the PAYE sector will pay something in the region of £160 million more than last year, although 90,000 more will be unemployed. Once again we are asking the PAYE worker to carry the can. The Sunday Tribune again on 3 February, 1985 has a headline “Stuck on stony ground”. The article starts out by saying:

"The euphoria which greeted the budget last Wednesday did not last long".

It continues:

"If the budget demonstrates anything, it shows that the economy has slipped out of the Government's grasp."

Elsewhere in that article it is stated:

Despite the sleight-of-hand demonstrated by Mr. Dukes in his juggling of the tax bands and the tax rates, there is little or no relief for most income tax payers in this budget when the likely trend in pay and prices this year is taken into account. The only group to benefit unambiguously from the budget tax changes are the very rich.

How true that is. Let me give a small example of the figures quoted from the budget. A married man with four children, earning £10,000 per year, will show a net gain of £70 from the tax changes in this budget. To counteract that, the increase in VAT on clothing, shoes and domestic fuel, which the Minister of State omitted to mention when talking about VAT changes earlier, the raising of the PRSI ceiling by a further £800, the increased car taxation and the massive 10p per gallon on petrol which has been estimated by the motor industry as putting an additional £50 per year on the worker, will ensure that no worker is better off this year — not to mention the knock-on effect of the rising pressure on industry. We all know that these charges will be passed on to the consumer. One can expect that items such as bread, butter, milk and so on will increase in price during the year. I can assure the House that no worker will be better off from this budget at the end of 1985.

However, these people need not worry, because the Minister has found a solution in this budget. After all, is the Minister not going to increase the tax on cigarette lighters by 10p. That is a stroke of genius. Billions of cigarette lighters must be sold every year. That will be a massive gain to the Exchequer.

We have a match industry that might like to survive.

Will the Deputy move the adjournment?

Debate adjourned.
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