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.)

The manner in which this budget was introduced to the House was unprecedented. Quite clearly the Government have carried out a series of discussions and negotiations since major features of the budget were presented to the House. The fact that this has been done clearly indicates to the public at large that the Government had not a clear and decided opinion as to what was best at the time the Minister for Finance made his speech. It is also clear that in proceeding to have negotiations and to alter major financial features of the budget, which alter the arithmetic of that budget, they are setting a precedent by which pressure and pressure groups can at any time after the introduction of a budget alter the course or direction that the Government propose to take in that budget.

It is tragic that two very important areas and two very important bodies of people central to that budget were not consulted and the necessary negotiations and conclusions to those negotiations finalised before presentation of the budget to the Dáil. There have been a series of meetings with the builders and construction industry people. As a result a decision has been taken since the introduction of the budget to defer increased VAT rates on the building industry. This is in the opinion of reasonable and concerned people a very serious departure. Certainly, it is welcomed. The decision to defer increased VAT charges is one that should have been considered and recognised as desirable and important in the first instance, having regard to the fact that many contracts were entered into and many conditions had been decided upon by builders in relation to contracts and engagements that were in existence at the time of the introduction of the budget and the particular provision within it.

Of course, the increase in VAT on the building and construction industry has levelled another devastating blow at an already crushed industry. I cannot see, for the life of me, nor can 10,000 others, how this country is expected to make any recovery from its present serious financial plight. One of the major economic growth areas of our economy is devastated by taxation. We have witnessed prior to the budget, and had a recognition in the budget of what crucifying taxes have done to other industries. Nonetheless we proceed once again to impose a brutal tax on a vital industry to the extent that any prospect of recovery has been destroyed. We have learned nothing about the crushing effects of taxation on tourism are unable to reinvest in it. This age tourism and the people engaged in tourism are unable to re-invest in it. This has resulted in major losses and the closure of hotels. Having witnessed that situation develop in the tourist industry it is extraordinary that we failed to recognise the impact that extra taxation would have in an already penal situation.

Last night we had the welcome announcement that building society rates for borrowers will not be increased to the extent originally thought. However, the increase allowed is a horrendous blow to mortgage holders at a time when everybody recognises the difficulties that many people are having in making their repayments. For many months throughout last year building society representatives were heard on radio and television acknowledging the problem that was developing for mortgage holders and suggesting that mortgage holders should call to the building society offices and discuss any difficulties they envisaged. The building societies, by this clear decisive action recognised the problem; they recognised the effects of the recession, job losses and the rise in the cost of living for mortgage holders. Mortgage holders are deva-stated by this 1¼ per cent increase and by the total abandonment of social consideration in the budget for mortgage holders. It is well known that Irish people place a huge value on the possession of their own homes and in the light of that knowledge I would have thought that we would not proceed down this road.

The budget has failed to take account of the necessity to create productive jobs. The budget with its tax measures has seriously damaged job prospects in areas that could have given hope to the unemployed. Because of the increase in VAT rates and extraordinary charge has been added to the cost of housebuilding by local authorities, to the cost of road construction, road repairs and road maintenance. These are labour intensive areas and work in those areas should be intensified so that our roads network will not collapse. It is widely recognised that the restoration of roads, particularly country roads which are mainly financed by local authorities through rates, will suffer seriously because of additional VAT charges. The budget has failed to recognise that the building industry offers wide scope for jobs creation. The development of infrastructure such as water and sewerage facilities, amenities for tourism and so on have been seriously affected by what I can only describe as a penal taxation.

The budget does not recognise the crisis in Dublin, a city that is badly planned, seriously over-populated, a city that has found itself in an irretrievable position in relation to crime, a city that needs vast injections of finance to meet the minimum housing requirements, a city that has transport problems, a city that will stagnate unless serious policies are formulated and pursued. There was a great opportunity for the Minister for Finance and Government to acknowledge that a contributory factor to the social and economic crises that exist in Dublin as well as in other towns and cities could have been stabilised if regional policies were pursued in order to attempt to return the many thousands of men and women to the other provinces, particulary the west from which many people migrated to the east coast during the years. Now they find themselves without houses or jobs, victims of the many social ills that best this city and the unwitting cause of those social ills.

There has been a lack of any regional policy and of recognition by this Government of how tragically the west has suffered during the years. This suffering has denuded the west of its population which, in turn, has transferred their problem to the east coast. In Dublin now they are worse off than they were originally and their position is irretrievable. Massive investment of Government finances is necessary and if the Government are borrowing anyway let them do so for productive purposes and ensure that places like the west will attract back those who left during the years.

With the type of proper productive investment I am speaking about we could stabilise the drift eastwards and even attract many thousands back to their home countries. There are roads to be built, water and sewerage schemes to be completed and tourism is crying out for investment. Because of taxation we see hotels lying almost derelict. Because of lack of finance their owners have been unable to be competitive and to make their facilities attractive.

We must seriously consider the job creation element in food production and processing. We all know the tragic figures of an agricultural country importing almost 70 per cent of what we eat and juxtapose that with the vast quantities of undivided good land lying idle because the Land Commission are no longer pursuing a policy of acquisition and division. The State is paying enormous amounts of money for the importation of food used in our institutions such as prisons, hospitals and educational institutions.

I cannot understand why the Government, recognising the need for new jobs can stand by and see vast areas of land lying unused because of bad recent decisions. I do not understand why the Government do not appreciate that and try to accommodate even on an interim basis the people now without work. At least it would give our people the right and the dignity attached to productive employment and at the same time we would do much to improve the economy of the State. Anything is better than the dole system and the tragic psychological effects and domestic problems it presents for our people, individuals and families. The economic plight of homes throughout Ireland, is incidentally, one of the most serious threats to marriage and the family.

It is hard to imagine that a Government which recognised in some small way the desirability to move from their original policy have not been able to provide productive gainful employment which would attract back to their home counties many of the people now living in Dublin who, through no fault of their own, are contribution to the dire social problems in this city. They came here in pursuit of jobs and if these were now provided in their native environment they would gladly return there.

In my constituency £25 million of taxpayers' money lies in a bog in Ballyforan at a time when commitment and sound judgment indicate that there is productive work there for at least 400 people in the manufacture of beat briquettes. Last week and for a number of weeks it was impossible to purchase peat briquettes anywhere in Ireland. Reclamation work was carried out there in a vast area of bogland which originally had been intended for afforestation. As many as 16,000 young trees were removed to make way——

The Deputy is getting away from the matter before the House.

It all relates to Government policy which has been denying job opportunities——

For obvious reasons I have allowed you much latitude but what you are saying now is not in order.

I must emphasise that the budget takes no account whatsoever of the fact that serious job losses will occur in many areas which were already badly off. It is only right that I should emphasise the fact that the Minister for Finance and the Government in regard to this budget could have taken U-turns in other respects as well had they the courage to recognise that through sound Government management there are ways and means of creating jobs and better job opportunities. Having spent so much already the failure of the Government to proceed with the Ballyforan project is a clear demonstration of their negative, foolhardy policy in regard to the development of job opportunities.

In regard to our housing stock perhaps I could revert to local authorities for a moment. I cannot understand why the Government in this budget did not take account of the fact that local authorities have highly skilled administrative, technical staff — a sound structure capable of providing enormous job opportunities in the restoration and improvement of houses in our cities, towns and villages, not alone ensuring productive employment but restoring our housing stock, which is so badly needed. This would also have provided a means of training, in co-operation with other State agencies, giving, at the same time, an opportunity for the development of skills and employment opportunities.

We now know our difficulties; they have been identified. At this late stage the Government must recognise the truth, take their courage in their hands and proceed with corrective policies regardless of the political cost to themselves in the short-term.

It was commonplace for political commentators in the sixties, when our economy was expanding very rapidly, when after the introduction of large scale indirect taxation Government revenue was increasing very rapidly and, in consequence, Government budgets could be expansive and generous to pity the Opposition spokesman. In those days for a long period, it was Deputy T.F. O'Higgins on our side, now a member of the European Court after a distinguished career as Chief Justice. It was the commonplace thing to say: "What a job the Fine Gael spokesman has, faced with a budget which is relatively mild"— because the continuing expansion of the economy, like all other economies in the sixties, permits it. It was contended that the most he could do was to bleat about what the Government were doing as being "too little too late". That must have been monotonous enough.

I have been a Member of one or other of these Houses for nearly 16 years now. I have been a Member of this House for just 12. I have been here in particular since the first oil crisis struck. Since then the pattern of budget and general economic debate in the House has been somewhat different. It has not been the case that a Government in power for a long period — and reaping the benefits of a world boom under a rising tide which in the late Seán Lemass's phrase "raised all boats"— have been able to produce mild budget after mild budget, being able to spread happiness and sweetness all round. That has not been the case. Neither has it been the case since 1972, even before the oil crisis — when the State observed the simple maxims of housekeeping which were taken as axiomatic in the days of William T. Cosgrave, Éamon de Valera and Seán Lemass, the idea that one must not spend more than one earned, that revenue must not fall below what one paid in current expenditure. Those days also disappeared in the seventies. Since then we have seen our economy, like many other Western economies, in difficulties, originally because of the oil crisis and the extravagant reckless borrowing this State undertook, perhaps unavoidably as it reeled under the first impact of the oil crisis but then afterwards, unfortunately, towards the end of the seventies, for pure political reasons. It has not been the case that Governments since then have been able to hand out much sweetness and light.

Budget debates have developed a somewhat different character. They have now developed a certain stale routine, a certain dreary, predictable monotony, whatever side is in Government or whatever side is out of Government. Everybody who has been in the House as I have been for 12 years — and, in your own case, Sir, a good deal longer, and many other Deputies longer also, who form part of a diminishing minority of membership of the House — listening to budget debates here despite four or five changes of Government over the last 12 years, must have noticed this awful, predictable, routine ritual exchange of abuse and recrimination between the two sides. It is reminiscent of the blows exchanged by seaside Punch and Judy figures in those old fashioned booths on the sands when I was a child, during which time, of course, the tide came in and went out according to its predestined course regardless of them. Without taking partisan sides one could transpose the names on Budget Statements here over the past 12 years as between the Minister who presented them and the Opposition Member who replied. It would take some ingenuity some historical understanding and knowledge indeed, it would be quite hard to spot who belonged to which party.

One thing which characterises Opposition performances — and the budget debate of this year has been no exception — is the wisdom, the certainty, the scorn they show towards the efforts of the Government facing them across the floor of the House, the confident stridency with which they predict that as soon as they can get the leavers of power everything will change for the better. I am not going to do what I have sometimes fallen into doing, go through Fianna Fáil speeches. I must say I have become somewhat weary of that, particularly in the budgetary context. I will just give as one single example of the kind of thing I am talking about, something which Deputy Haughey said in his budget speech last week — and I do not purport to quote him verbatim; everybody in the country, he said, outside this monetarist, book-keeping-crazed Government knows exactly what should be done with the economy. That is a very proud thing to say. But it does not differ in essence from what Opposition spokesmen on all sides have said down the years since I have been here at least. Surely we have sufficient experience behind us to get away from that form of debate?

Let us examine even Deputy Haughey's own record. I am going to go through that now in a dispassionate way because I do not want it to appear that I am going back on what I said a moment ago and suddenly going to concentrate on attacking the other side instead. When Deputy Haughey became Taoiseach at the end of 1979 inflation stood at 15.9 per cent, unemployment at 98,000, which was thought be to be a terrible figure, and the current budget deficit at 521 million. When he left office in the summer of 1981 inflation had risen to 20.1 per cent, the deficit, as it turned out at the year's end, was £819 million despite the efforts that the Government that you and I, Sir, had the honour to work in made to rein it in, almost 60 per cent wide of the target. Unemployment, despite the favourable seasonal factor and the massive public sector recruitment, was virtually unchanged, whereas on the projections which Deputy O'Donoghue's 1977 election manifesto had contained it should have been eliminated altogether. There should have been a labour shortage in this country by that date, instead of the unemployment figures remaining unchanged.

When Deputy Haughey returned to office in early 1982 inflation stood at 18.7 per cent — slightly improved as a result of the efforts of the Government in which you and I, Sir, had worked — unemployment stood at 126,000 and the deficit budget was £678 million. The result of the efforts of himself and his party when they left at the end of the year was that, while inflation had continued to fall and had then reached 12 per cent, unemployment had risen again to 133,000. The actual 1982 deficit turned out to be almost £1,000 million, or almost 50 per cent wide of the target.

In case the Deputy opposite thinks I will not acknowledge failures on our own side, I admit that, despite a very rapid improvement in the inflation rate since the present national Coalition came into office at the end of 1982, unemployment has continued to climb steeply. The inroads made on the deficit and the associated borrowing requirement, in spite of the most politically painful economies, in spite of economies which undoubtedly have cost the Government thousands and perhaps tens of thousands of votes, such as the abolition of 50 per cent of food subsidies, despite these gruesomely painful, in the political sense, economies, paring off a couple of million pounds here and another £10 million there, the overall impact on the deficit on the borrowing requirement has been disappointing. It has been very disappointing when measured against my party's initial hopes of eliminating it altogether.

Looking at these facts dispassionately and without partisan bias — and I hope Deputy Fitzgerald will be able to acknowledge that I have done that when I have finished — one is driven to the conclusion, or at any rate to the suspicion, that we are making a mistake in attributing that much importance to the budgetary instrument, that most of the problems we have of high unemployment, high taxation, the unstable currency and trade situation are probably outside the reach of the budgetary instrument altogether. Instead of this annual set piece, as I said before like one of those ritual Japanese battles in which people buffet one another with padded swords, perhaps we should stop assuming that the budget can do very much to change the economic difficulties we find ourselves in, and have been in chronically, and look at some of the underlying factors which are irremovable and unarguable and, whether it is a Fianna Fáil speaker or a Fine Gael speaker addressing the House, will be there when Fine Gael and Fianna Fáil have passed away if something is not done to change them. If the two parties disappeared from existence tomorrow morning they would still be there.

These factors are something like a sub-soil which would require a governmental form of deep ploughing to reach, and which the budgetary instrument cannot reach. Juggling with taxation, with incentives and with little bits of investment here and disinvestment there, and subsidies here and little grants-in-aid there, no matter how cleverly organised, can do no more than worry the scraw off the soil. It will scrape the scraw off the top, but the main problems we have lie buried, like large hunks of bogwood which wreck machinery, six feet or eight feet below where that instrument is capable of reaching.

If we could face up to the fact that the budgetary instrument and all instruments which have been used conventionally by Governments are not capable, no matter how cleverly operated, of reaching down that far, we might begin to get somewhere. If we could look dispassionately at what has passed here for economic debate for the past 12 years and recognise that no party have really succeeded in making things much better and very often — and I am sorry to strike this partisan note now but I honestly believe it — as in the case of the 1977 Government have made things a great deal worse by reckless spending at a time when the economy was improving anyway, we might begin to get somewhere and Governments, of whatever colour, might finally come up against the necessity to invent new mechanisms, to devise new forms of control, new forms of encouragement, to mobilise new allies for themselves and not to depend simply on the cleverality of the transference of a few million pounds here and there through taxation, or social welfare benefits, or subsidies, or State investment.

These fundamental bogwood factors, if I may so call them, which lie far below the reach of an ordinary budgetary plough, are not new. I have not invented them, or thought them up. They are familiar to anybody who listens to what economists and business people say. Some of them are intractable in the sense that nothing can be done about them. We just have to live with them. Others are not so intractable.

A well-known one is that we have a substantially higher ratio of people in dependent age groups than any other EC country and, in particular, we have a very much higher proportion of very young people below working or production age, people aged less than 14 years. Our proportion of the population in that age group is 50 per cent greater than the EC average. If we were to exclude a couple of the other countries in which children are fairly numerous like Italy, the difference between ourselves and the others would be far greater. If we were to compare ourselves not with the EC average but with the northern European average — in other words, the average in countries with similar climatic and other conditions to ourselves—the disparity would be far greater.

That implies a huge burden on the economy which cannot be disposed of. We cannot get out from under it. That implies a huge extra burden on our economy in regard to health expenditure and education expenditure in particular, both for people who are very young and for people who are older than the working age group. We have to carry that huge disproportionate burden in the European sense although we are, in fact, almost the weakest, and if we are to exclude Greece certainly the weakest, of all the European economies. That is a rock bottom fact which no amount of political rhetoric or budgetary juggling can get away from. I do not see any way of getting away from it. That is a fact we have to live with. That makes it the more urgent for us to see whether we can countervail that fact and neutralise the disadvantages which it contains for us by doing something more radical on other fronts also in the bogwood category.

We have a public service which is as numerously manned and in general as well equipped, heated, housed and supplied with expenses and plant of all kinds as our partner countries. I know there are sections of the public service which are ill-housed in draughty old offices. Some of the people who work in our police force are in poorly equipped, rundown stations and sections of the Army are in barracks which are nearly 200 years old, and so forth. But, by and large, the people who work under the Irish State flag and who draw their salaries at one or two removes from the State are as well equipped and as well looked after and as well paid as their European equivalents, and better than some.

Although I spend much of my time criticisng public service numbers, if we were to examine it in numbers alone it is not an extravagantly large public service for our population compared with other EC states. That has to be admitted. The point about the the public service is that, indispensable though its functions are, it does not produce wealth. It simply consumes the wealth others have to produce. If we relate public service numbers to the resources available to pay for them, with the exception of Greece, Ireland carries far the heaviest burden with far the lowest figure of gross domestic product available to support each member of the service.

I do not know why the Greeks have what seems to me a grossly inflated public service. I would not wish to speculate about that. It would be an impertinence if I were to do so. If we exclude Greece, we have far fewer dollars or ECUs or pounds — I do not care which unit is chosen — in gross domestic product to sustain each member of our public service than any other European state. The Netherlands have about one-third more of gross domestic product per public servant they must carry than we have. The French have about 50 per cent more gross domestic product for each public servant they have to carry than we have. The Germans have almost twice as much gross domestic product for each public servant they have to carry. These facts suggest the imperative necessity of trying to get the same value out of a smaller number of public servants by way of better office methods, better organisation or better management of one kind or another.

The public service position here is complicated by the fact that although we are a very small State in numbers and in wealth — the smallest in numbers in the EC, except for Luxembourg, and the smallest in wealth on many indexes — we have the diseconomy of carrying the entire panoply of a modern State. No one, I hope, will misunderstand me when I say that. I am not suggesting that we should shed any of the duties which having an independent State entails. I am not suggesting that we should do what the Luxembourgers do and let the country next door manage some of our foreign affairs or other aspects of our administration. I am proud to have this chance of running a State of our own; but it is only fair to point out that this is another of these bogwood factors. We have a very heavy diseconomy in that we have to run a complete defence establishment, and a complete diplomatic establishment, we have to meet the cost of things like State visits, the Presidency of the EC, travel around the world for public servants and so on. These costs fall just as heavily on us as they do on the Germans. That is a burden which it behoves us to try to counteract by more Scrooge-like management in the public service than we ever got around to.

I read figures in an article recently about the amount of money spent by office holders on journeys around the world. I have a certain sympathy with that kind of criticism because in my view office holders do far too much travelling. In some cases I cannot believe their duties could have involved these journeys. I felt the same about Fianna Fáil Ministers. Many office holders are accompanied by an entourage wherever they travel. When Deputy Haughey was Taoiseach he went to the United Nations to make a speech on how Northern Ireland was a failed political entity — I have forgotten what the theme was but no doubt it was one of his few themes which are well worn and wrong — and he had an entourage of 12 persons, a cavalcade. Where was the need for that?

We all love a trip abroad. I have had many a free trip and I would not pretend that I did not enjoy them. The Minister for Agriculture, Deputy Deasy, whose frankness I admire above nearly any of his other qualities replied devestatingly here last year when somebody accused him of having missed a food fair in Munich, "Do you really think I would rather be here than in Munich?" I admire that kind of frankness. I like a trip abroad as much as anyone, and if I do not have to pay for it so much the better, but these trips abroad and the accompanying entourages of civil servants are over done. I said that when I was in office, and I say it out of office. I give this as an example because questions are always being asked about the relatively up-market way our public arrangements are conducted. That is a built-in diseconomy and we have to see if we can do anything about it. Public service numbers are part of it but the way the public service do their business, or are even encouraged by office holders to do their business, shows very bad example.

We have a population whose rate of increase is extravagently out of line with the general EC picture, again an intractable problem. I have no suggestions to make about this. Irish people like big families. I have five children which by continental standards is an insanely large family. I make no complaint about this, and I have no suggestions to make about it. That is an intractable factor which is equally outside the reach of a budgetary instrument. Between 1973 and 1982 the overall EC population increased by 2 per cent; but the Irish population increased by 13 per cent. That implies a constant influx into the lower age group cohort with the consequence that if that rate of increase continues, the proportion of the population below 25 years, or any other young age, keeps growing, with increased pressures on the educational and social services and increased pressure on the jobs supply. These are relatively intractable rock-bottom, bogwood factors which a budget like ours cannot do anything about.

Some of the things which I hear mentioned as advantages are hidden disadvantages. Only a few minutes ago I heard Deputy Doherty speak about the state of the county roads. We all know roads are a necessary part of the infrastructure, but there are limits to that proposition. For historical reasons Ireland has the largest length of metalled roads per 1,000 acres, or any unit you like to take, in Europe; and that means in the world because I do not think there is any country outside Europe which could come into this category. During the last century local authorities got involved in road building as a form of relief but these roads have to be maintained. Anyone who travels by train or car in Europe will see that the road network there, although perfectly adequate according to their standards, is in no way inhibiting their development of a fine transport infrastructure, but it is nothing as elaborate as ours. There are little link roads in Ireland leading basically from nowhere to nowhere which have to be maintained and if they are not, the scattering of people who live near them feel they are being ill-governed. I am not recommending that any road should be let go back to grass; but this feature which we think of as an advantage is not necessarily so. Quite likely a smaller length roadway but a better planned and maintained roadway would be far better.

These factors, some of them fundamental and others more marginal which I would not have thought of mentioning, for example, the roads, co-exist with a number of other features of our economy which far from tending to alleviate their impact makes them that much harder to overcome.

I have been hearing since childhood that our greatest asset is our land. Most people either in the human scale or in the scale of their own talents, are brought up to make the most of their assets. You put your best foot forward, you lead with your strongest card, but if land is really our greatest asset then God help our other assets.

This is the situation with our greatest asset. The value of our agricultural production per hectare of land in use is little more than one-quarter of the value produced per hectare in Denmark. I mention Denmark because since childhood traditionally, because of the climate, because of the nature of the soil and certain geographical disadvantages and because of the size of the population, it was looked at as the country most nearly comparable with us in terms of agricultural potential. The Dutch are even further out of sight. They have hardly more than one-third of land in agricultural use that we have but they achieve a production nearly four times the value of ours. Deputy Mac Giolla and Deputy De Rossa are not here and would not be interested even if they were here, but let us pretend they are here. I would like to emphasise for Deputies like them that that degree of development and achievement was reached by the Dutch and the Danes without State intervention. Those patterns existed when State intervention were bad words in those countries. In Denmark, if I understand correctly, it was achieved very largely by a co-operative effort and, to some extent, the same applied in Holland even though the co-operative effort there was not as developed as in Denmark. It was not the State which raised agricultural production in those countries, it was their own farmers, their sweat, planning and seriousness.

Something like that could be said about the associated food industry here. Since I was a student I am sick and tired of hearing about the need for Irish agriculture to concentrate more on high labour-intensive things like vegatables and fruit. Not all vegetables or fruit do well here and obviously there will be times of the year when some items have to be imported. I am sick hearing about standards in vegetable production and of reading articles every year about dirty bags of crudely packed, diseased potatoes with half the field stuck to them. Is it the Government's job to wash and grade potatoes? Are the Government supposed to invest money in telling people what their common sense should tell them needs to be done if they are to compete successfully with something which they can see with their own eyes in the shops? Have we to do that as well as maintaining sexual morality? That feature is not accessible to a budgetary instrument; it is accessible only to the serious combined efforts of the industry and of the people who work in it and depend on it. To thrust the responsibility of that on the Government is the sign of a diseased industry.

Irish industrial productivity has, undoubtedly, improved over the years but is still far behind the European norm and the problems associated with industrial relations are compounded by an insane proliferation of trade unions which often compete for members by outdoing one another in militancy. That was recognised by the Fianna Fáil Government — for which I honour them — as long ago as 1941 after a prolonged dock strike here in the middle of the war which looked like leaving a country which was badly supplied anyway likely to grind to a halt. Mr. McEntee who was then Minister for Industry and Commerce because Mr. Lemass was in charge of the Department of Supplies at the time introduced a Trade Union Bill which had the object of limiting trade unions — I am speaking roughly — to one per trade. The trade unions did not like this and challenged it in the courts. It was shot down by the Supreme Court in 1945 in what, speaking as a lawyer and not as a politician, I say was one of the feeblest and most poorly argued judgments which the Supreme Court ever delivered. Anyone who is interested can examine it and compare it with the very fine judgment given in the High Court by Mr. Justice Gavan Duffy which was over-ruled. The case to which I refer is the National Union of Railwaymen v Sullivan which is reported in the 1947 Irish Reports.

No effort was subsequently made to regulate the proliferation of trade unions. It is natural for people to compete and if there are two trade unions to a trade of course they will compete for members. I do not blame trade unionists for not being more than flesh and blood. I would do the same myself if I was in their business. However, when the public interest visibly suffers there is a case for the interests of the people to prevail over what might otherwise be a completely acceptable freedom of association for anybody to form as many unions as he liked when and where he liked.

The picture in industry here, particularly in an era of closing industries, is bad enough without us getting into the business of masking unfortunate realities. I wish to refer to an article in Industry & Commerce for January 1985 by Deputy Flynn regarding the closure of Travenol in Castlebar. I do not expect 100 per cent frankness or ingenuity on this or any other matter from Deputy Flynn, who is a well-known Haughey freak. It is too much to expect dispassionate, or self critical, analysis of anything from that quarter.

I ask Deputy Kelly to withdraw that remark.

Perhaps Deputy Kelly could rephrase his description?

Deputy Flynn is a supporter of the wing of the party led by the leader.

That description is acceptable.

Although I admit that Deputy Flynn's article is not over-contentious or over-partisan, it reads as follows:

What influence such things as unit cost of production, productivity levels, wastage levels, energy costs, transport costs, labour relations, absenteeism levels, etc., had in the formation of the decision is difficult to quantify but one thing is certain — sentiment for job protection in Ireland played no part.

In the name of God when did sentiment for job protection play a part with any industrialist, Irish or foreign? One does not expect sentiment for job protection from an industrialist, any more than one expects sentiment from a tiger for a lamb. That is not meant to be insulting to industrialists — they are in the business of industry and they want to maximise their own and their shareholders' profits. They want to do business and the whole point about encouraging industrialists is not because we are under any illusions about their motives in setting up here but that benefits necessarily must flow from their activities in terms of employment and revenue buoyancy. You do not expect the bees to flit their little lives away and fly their little wings to rags to put a pot of honey on your breakfast table. They do not do that out of altruism. But those who keep bees know if you house them warmly and feed them a certain amount of sugar, or whatever else they live on, they will produce a huge excess of what they need to keep going, and the rest of us can live from the excess. That is what industrial development is all about. I do not want to make too much issue of this because Deputy Flynn does not do so either but to insinuate that sentiment for job protection should have countervailed all these other factors, which he does not want to quantify, is insane. That, unfortunately, is — I do not want to use a word which will bring the Chair down on me again — the kind of approach to the world which is peculiarly characteristic of one wing of the party to which Deputy Fitzgerald belongs. Although he may disclaim such a compliment from me, I do not believe he belongs to that wing himself, at any rate, in this sense.

I know very little about the closure of Travenol but I know that absenteeism was a major feature of the operations of that plant. I also heard — if I am wrong about this I will withdraw it willingly because I do not want to say anything offensive, least of all to people in the county from which I am half descended — that when that plant was trying to slim down its workforce some time before it closed and asked for 50 voluntary redundancies, they got 300 applications. That is the sort of thing we want to know about. Why are the Government supposed to run around the country wiping up milk which the people have deliberately spilled?

The terrible industrial history of Cork city and surroundings in the last couple of years — although I am going by shreds of rumour and hearsay — was in some cases heavily contributed to by the workforce themselves who for the sake of getting their hands in some cases on large sums of redundancy co-operated and collaborated in the closing down of their own factories. No Government could deal with a population that works that way. Neither can the IDA countervail such a thing when it happens. I do not wish to make any more specific allegations because I do not have the detailed knowledge to do it, but the rumours and scraps of information that one picks up at a distance, which may be wrong and unjust — and if they are I will withdraw them — suggest that there is a large degree of substance in a proposal which was made about ten days ago in a column where such things are extremely rare. It was in a column which John Healy writes in The Irish Times. I do not see much to agree with as regards the general trend of his political beliefs — although these are very erratic; he could, for equally little reason, be on your side in another few weeks — but there was a lot of merit in a proposal which he made very much off the top of his head. It was an inspired proposal, and is something that is not often done by a political columnist. I have reason to find fault with a lot of what he writes but I acknowledge this proposal.

He suggested that instead of rows in the Daíl and occasional sworn inquiries being set up there should be a permanent inquiring authority to investigate every closure which is not a straightforward decision by management to close — for example, if the owners are getting too old and there is nobody else to take over the business. It should be in permanent session, and would perform much the same function as is performed by a doctor who is not immediately able to give a death certificate stating that his patient who was suffering from cancer or whatever died from natural causes.

It is an excellent idea and we should have such an authority. It should publish its findings. There should not be a panoply of solicitors or counsel. I am talking about a simple mobile inquest, so to speak, which would go around the country and come to conclusions rapidly about the features which contributed to a closure. If it identifies features in the workforce or management which contributed to the closure it should say so. It would leave us with more knowledge about what is responsible for industrial decline.

In his article Deputy Flynn stated:

To provide a proper environment which will continue to attract prestigious foreign investment, the Government have to face up to the level of essential industrial costs. We are out of line with our competitors in the cost areas of energy, transport and communications. Our interest rates and personal taxation rates are an active disincentive. These matters are Government controlled. It is futile for the Government to be preaching competitiveness to the private industrial sector when it is not contributing by an enlightened and realistic basic costs policy.

Those words could have been penned by the director of the Confederation of Irish Industry during the tenure of any Government over the last 12 years. These points could have been made with the same degree of validity about any Fianna Fáil Government since I entered politics. We all know this. What I am protesting about is the impression which this article reinforces: that the Government somehow have a lever in their hand, not only to induce a fit of altruism in an industrialist, but to introduce budgetary mechanisms to give industry, apart from any other considerations, a road to success which would otherwise be denied it. That is simply not true. Even if the Government had stood on their head they could not have changed the facts about Travenol or the Cork closures.

Politicians are not doing any service to the people they serve by concealing these facts. It is disagreable to say these things or to make allegations about management or the workforce being in large part to blame for the position they are in.

But people are paid salaries in politics to say things which are disagreeable when necessary. If we went through life plámásing everyone we would not be worth the money we are paid.

The Irish are fatally isolated by geography and tradition from the knowledge and influence of any part of the world which is not England. We have a fair enough knowledge of England and English standards, which are not all that great. The English economy, but for the fact that they have a great deal of oil, would be in a desperate condition. That isolation deprives us of an understanding of what the rest of the world takes as normal as regards standards of quality, performance, work, punctuality, marketing expertise and so on. We do not have a clue about these things, not because we are less intelligent or more ignorant but because we are isolated and have done nothing to counteract that. A dejected party of Irish food producers came back from the Food Fair last year which Deputy Deasy would have preferred to have been at had he been able. They said in dismay, having had a look at the Irish products on display there, that "we had not even arrived at the fair". They had at last got an insight into the kind of things which foreign agricultural sectors take for granted and are anxious to explore every day in terms of what the market wants and would buy. I do not want to appear to belittle something with a single phrase which is always the danger when one puts something in graphic form. It is a doorstep I am always tripping over; but effectively, the Irish food industry's difficulty could be condensed into the following proposition: they are only interested in producing hunks of cheddar in plastic corsets, and hawking them pathetically around the world, while the rest of the world are selling delicacies which presumably could be produced here but which nobody has got around to investigate the market for or costs behind. Everything I have said — I may have said it in more ignorant form but I hope not offensive form — has been said before. The Minister who is present, with the bluntness which I said before he came in was the characteristic I most admire about him, has said it several times.

We are shut off from acquaintance with these standards, with what our competitors can deliver and what our potential markets can expect. We are unable to communicate linguistically with most of them. We are a blindfolded economy grouping around in a world-sized game hoping that by luck, we may grab something. Now and again we have a bit of luck. A sector is grabbed here or there by dint of devoted operations by isolated industrialists, or by the very thinly spread resources of CTT. These problems require a radical reorganisation of Government policies which will get away from the idea that we can do everything with a budget.

We will have to put the spade right down into the soil and grapple with the educational training our young people get. If they are literate in English and half literate in Irish they are lucky. Most of them have no ability to communicate with anyone outside of the English speaking world. Some of them do not have even a well developed ability to communicate with those inside it. Any mention that they might go away for a few years to work and learn something about the outside world is greeted with: "That is Deputy Kelly's solution again — the emigrant ship". If I was to leave politics this minute that is the misrepresentation I would complain about most. I have been a victim of it for the past three or four years but I will keep on saying it. Any Irish person who can get the chance to go away for a few years should do so for his own sake, not just to take the load off the dole-queue but for his own sake.

Go around the captains of Irish industry such as they are — lance-corporals though they may appear in the world's industrial army — and see how many of them have spent their entire careers at home. The answer is not one of them. Every single one of them has spent instructional formative years abroad. Instead of encouraging the old granny attitudes of "Wisha, take care, do not stray outside the door or you might catch a chill" or "Take care not to go beyond the end of the boreen or the bogeyman may get you" or "Take care not to go as far as Belgium or the púca might fly away with you", we should be encouraging our young people to go away. Naturally there is the danger they may decide to stay away. If a man marries a foreign wife and wishes to stay abroad that is tough on the parents, but it is his life. It is wicked of Irish politicians to keep up this fetish about the emigrant ship; it is wicked to keep whinging about someone who has to fly for one hour and a half to Frankfurt and who earns very good money in Germany. That person may come back in three or four years with expertise, and knowledge about the world that he would never get at home. It is wicked for politicians to act as though they were at a Queenstown wake. I will keep on saying this until I resign or lose my seat here.

I have got two grown-up sons, one of whom is in America doing a university graduate course and I have to take a chance that he may decide to stay there. I do not want him to do that, as I should like him to come home, but it is his life; I think he intends to come home, but it is is his decision. I have seen fathers weeping at the wedding of their daughter, but I have seen other fathers when their daughters did not marry. The world is not all about protecting the emotions of parents. We should try to give a better chance to the generation who follow us. I am not trying to parcel up the population and send them on the emigrant ship but I am saying that one of the things we need more than anything would be for every member of the population to get first-hand knowledge of the outside world, although I accept that target is unreachable. Every citizen should have the opportunity to bring up his standards materially to what the outside world expects because we depend on that world. The attitude that the Government should put a factory at the end of every boreen so that the children can come home for tea is childish. No country would attempt to do that.

The Greeks and the Italians are as proud as us, they are as old a people as we are and there is absolutely nothing we can teach them. They do not think it shameful or a failure on the part of their Governments when their children go to the northern part of Europe where work is more plentiful and better paid. Their Governments do not whinge and whine about the emigrant ship. It is wicked of politicians to behave like that and it is wicked of people outside politics and of teachers to back them up on that. Parents have to be forgiven because of their natural feelings regarding their children, but anyone who contributes to maintaining this fetish that keeps Irish people inside their own backyard is doing a serious national disservice.

There are huge markets that linguistically are completely closed to us. There is an enormous market in Japan and for the four times larger market in China which is only now going to open up. Think of the opportunities in that enormous country, particularly when they allow an admixture of the business economy into their society. Think of the opportunities that Africa will offer if it can get itself on its feet. We must remember that Africa is not all English-speaking: a huge proportion of that continent is French-speaking. There is also the Arab world, the richest region in purchasing power. We are ignoring all these possibilities.

We should have some State initiated policy of making sure that a certain proportion of our school leavers are inducted, and if necessary supported with scholarships, into a third level system that will give us a reasonable force of marketing executives capable of selling our goods in the languages of the markets we are trying to reach. We cannot whinge that the Japanese market is hard to penetrate when the Japanese have had to learn English to understand what we are trying to sell them. It is not rational for a small country that is so dependent on trade to behave like that.

I have suggested to a member of the Government that it would be worth while having an institute that would not have any academic potential but would be entirely geared towards the material job of marketing and of having commercial and industrial contacts with the outside world. Perhaps it could be attached to the NIHE in Glasnevin or in Limerick or to any of the universities. However, I think it would be better if efforts were not made to pretend that it had a largely academic content. Such an institute could concentrate on developing a knowledge of languages that are not taught outside very small university departments. I see nothing absurd or ridiculous in that. By such methods 150 years ago the Japanese dragged themselves by their bootstraps into the modern western world that they now dominate.

The Government will make a serious mistake if they allow whatever kind of local government reform they have in mind to go through without incorporating a new tier in local government. I am not talking of people doing the kind of functions we have associated with local government up to this but I mean a tier that will be there only at the option and on the initiative of the population of a particular locality. It could be called a District Development Council or something of that kind. Such councils would not exist or function within areas predetermined by statute, but it would be open to a population anywhere — outside the cities where the same possibilities do not exist — to organise co-operatively and to present a petition based on a proportion of the electoral register. It would be supported by a subscription to show they were putting their money where their mouth was, unlike the airport development in Mayo up to recently. The subscription could be, say, £20 or £50 per head for the signatories and it would require the adhesion of a certain percentage — perhaps 30, 40, or 50 per cent of the people on the electoral register — who required the formation of such a council, by which time a considerable amount of capital would have been collected. I would envisage that the Government would match that collection pound for pound, but no more. When that council were established and elected it would have a function that had nothing to do with maintaining roads, running libraries or any of the other services provided by county councils but would have everything to do with assessing soberly the economic performance of that district and seeing how it could be raised at district level, in an area small enough in number so that individual contributions and performance could be acknowledged. Human spirit thrives on acknowledgement and recognition. The institute could be supported by a team of advisers living on the spot, drawn according to the economic facets of the neighbourhood. They would be supported by a team of experts, pioneers, drawn from a range of appropriate services now under State control, and quartered in there among the people, not flying up and down by the day or the week, whose job would be to see whether the agricultural production of that region could be improved year by year, to see whether year by year more employment could be given, to exploit, on the ground and under the direction of the people who knew the place best, every possibility in afforestation, fish farming and tourism that the district offered. That would call on an asset, perhaps the only asset which Irish people have in huge heaping measure compared with other European people, namely, the capacity and instinct for voluntary service.

I would not envisage that the councillors in a Development District Council would be paid anything, even expenses. They would not go on junkets; but they would be a tier of genuine local government with an economic cutting edge and no other function whatever. They would be optionally instituted, in no way forced on the people and, therefore, occurring only in a district where the people had enough local leadership and initiative to take themselves in hand and put their money where their mouth was. It would be up to the Government to co-operate and collaborate with them to do something at a level where individual input would be recognised and understood and individual knowledge exploited, so that there can be an end of looking to Dublin for everything and particularly of expecting that the Government through a budgetary mechanism was suddenly going to put things right.

I have left myself no time for speaking about the individual budget provisions. I recognise that the Government have had to mark time somewhat in their efforts to phase out the deficit and to haul down the borrowing requirement. I said at the outset that it must be acknowledged that the progress has been disappointing. On the other hand I recognise, not simply in the electoral sense, that a case was to be made for the sake of national morale for some slight improvements and for giving people a sense that their burdens had to some extent been eased.

I have listened with interest to Deputy Kelly's contribution and I would like to refer to a number of points in it. I must confess to granting myself a certain licence to engage in the flair and articulation which is so much Deputy Kelly's hallmark. Readily I confess to admiring that aspect and also his frankness and bluntness which are characteristics of him that I find commendable. However, having granted myself that aesthetic licence to be carried away sometimes with these aspects, I must then stand back dispassionately and ask myself whether I am really being objective in my judgment. It is a very attractive to listen to a person who is articulate, who has a great flair for words and who seems to be analytical and logical in his reasoning and his approach and who seems to be frank, honest and open. However, one must stand back and ask oneself if this is looking at people, analysing people, a serious, logical, reasoned attempt to get people to work together, to co-operate and to get the country—which is people—moving in the direction in which Governments decide. I acknowledge that Governments must decide, sometimes unfavourably and unpopularly, that the best long term interests as well as the best short term interests of the people are to go down a particular road. However, when we make decisions, when the mechanisms are being used they must be used as fully and comprehensively as possible in trying to achieve that objective.

Deputy Kelly made the point that the budget as an instrument is incapable of dealing with our overall complex problems, that it is inadequate. He chose, for reasons that became clear as he went along, to ignore to a great extent the content of the budget and the features of the Financial Resolutions passed through the Dáil by the Government of which he is a member in the sense that he is a member of one of the parties in that Government. He chose to ignore the content of that budget, the resolutions that were passed and the debate that has since ensued, a debate taken up by the Taoiseach, the leader of his party, by the Tánaiste, a party to that Government, and by other Ministers as well as backbenchers on his side of the House. I find it disappointing that a person of his ability for whom I have respect for the reasons I have outlined — his bluntness, his flair and his analytical abilities, — should choose to ignore so fully this instrument and how it was applied in this case by the Government. It would appear to be a form of escapism, and I would not lightly accuse him of that. I have listened to him, I read his statements even before I entered politics, but it seems today as I have sat here listening to him and looking through this budget that he has chosen to put it aside and say that he would deal with the real issues. This budget does not deal with the real issues.

Budgets in general are incapable of dealing with the real issues in our economy. They are inadequate, therefore we must look for other mechanisms. Deputy Kelly thinks honestly that that is the situation, but I have a niggling doubt about it because of the let-off it gives. I believe that he does not believe fully in this budget. I believe he has serious misgivings about the direction it is taking and about what would seem to be inconsistencies between the 1983, 1984 and 1985 budgets. That is my interpretation of the direction he has taken in this debate. Another disappointment is that he made no reference to the diversionary tactics used by the Government in relation to the Finance Bill which has come before this House. I am not saying that we should pin everything on tradition and custom, but traditionally and customarily a budget is brought into the House by the Minister of the day, the resolutions are decided upon, changed, amended or whatever, and then we give an opportunity to everybody in this House to debate, tease out, analyse and discuss openly within the confines of the House all the implications of the budget, all the instruments, all the advantages or disadvantages as he or she perceives them. It is a very democratic way to go about our business. If we were to stifle that debate in any way that would be a very serious blow to democracy.

I must allow that my years here have been very few, but let me say that, while the kind of system that has been allowed to operate over the years here by way of drawn out debate on Second Stage may not have been ideal, in that perhaps many things were said that were absolutely meaningless, inconsistent and contradictory, perhaps on both sides of the House irrespective of who was on what side, and perhaps a great deal of time could be deemed to have been wasted, in the interests of democracy a very important principle was inherent in the practice adhered to in this House. That was the principle of permitting every Member elected to this House and representative of a certain section of the people outside the House to come here and make his views known and to allow his views to be judged by others here. That is a very important principle but I would hope that what we witnessed on the Order of Business today is not an attempt by the Government to obliterate that principle. In this second week of the budget debate they saw fit to bring before the House today an issue which is not of serious public concern and one that has not been lobbied for.

A passing reference only to that Bill is in order.

I am trying to illustrate the point that we are in the process of a budget debate, that we are dealing with the economic and social problems. That is what the purpose of the budgetary instrument is and I submit that each Deputy should be goven the opportunity of expressing his point of view so that the totality of the consensus can be clearly perceived by people outside the House. The introduction of another measure at a very early stage in this debate would appear to be a deliberate and calculated attempt to stifle that budget debate.

I have indicated that only a passing reference to that Bill is in order.

We must allow freedom of expression in the House on as adequate a basis as possible——

——for Deputies to analyse the budget but there is a deliberate deflection of attention.

For the third time I am asking the Deputy to confine himself to the budget. You have made your point twice and that will be sufficient.

I accept your ruling. I was glad to hear Deputy Kelly say he is disappointed with the development in the past two to three years in relation to budget management, to current budget deficits and to the servicing of our foreign debts in respect of international and domestic borrowing. At least we can say that his admission is an indication of the honesty I acknowledged earlier in so far as the Deputy is concerned. I was somewhat sidetracked on the question of the diversionary tactic.

By whom was the Deputy sidetracked?

By myself. Deputy Kelly has referred to the inadequacy of the budgetary instrument. I had hoped he would be more forthcoming with ideas that should have been used by the Government to focus on the economic and social problems and on the need for the development of our economy and services, that he would have brought to the attention of the Government prior to their launching of the budget other instruments that could have been brought into play, that he would have indicated for us, if he is so aware, that there are mechanisms which in the future will deal more adequately with the kinds of complexities and difficulties to which he referred and in respect of which he expressed concern.

However, no such references were made specifically. Therefore, I find Deputy Kelly's decision to ignore the content of the budget surprising and, secondly, I must point out to him, to the Government and to anyone else who might be inclined to take that line that in the absence of other mechanisms we must use the budget as the primary instrument to deal with the enormous problems facing us.

The budget is a disaster primarily because it has little or nothing to offer as solutions to the real ills in the economy. It is clear that the budget was framed deliberately as a piece of political expediency with cynical disregard for the real issues. The Government are made up of two parties but these two parties, whatever about the reality, are poles apart ideologically. They were faced with the dilemma of how to placate the increasing disenchantment within their respective ranks at tha abysmal failure of the Coalition to make even one worthwhile contribution to the frightening dismantling of our economy, the falling apart of some of the basic structures, both semi-State organisations and private sector enterprises. That dismantling is unfolding before us daily.

The budget will be remembered primarily for a number of reasons. It is antiemployment but there is little point in quoting figures to illustrate that. The budget is anti-worker though it proposes to do much for those who are employed both in terms of tax and in terms of incentives for employment. The budget is anti-family. I am very disappointed that one party to the Government would permit such a budget to come before the House because of the extent to which it is anti-family. The budget is anti-social and it is very much anti-builder.

Regardless of the struttings or the posturings the handlers engage in, no matter how much they talk about this being the kind of recipe necessary for economic reconstruction and no matter how persistently the Taoiseach decides to babble on about the economic upturn being at hand, the package meted out by way of the budget is being perceived quickly for what it is. The public will no longer be conned by these self-appointed lords of credibility. I must use that term because it has been the keynote of the Government's term in office. We were told that everything they would do would be in the interest of credibility, that despite harsh and unpopular measures having to be taken the Government would retain their credibility. Many people believed that. Obviously, at the general election in November 1982, not a majority but a significant proportion of the people believed those pronouncements. But the face masks are falling off. The veneer is cracking and the real incompetence, insincerity, conmanship and deceptions are rapidly being exposed.

The public did not have to wait for the recent budget to demonstrate what they think of this bungling Government. They had done so already, as was indicated in the outcome of opinion polls. However, since the publication of the budget the public have even more unequivocally demonstrated their dissatisfaction, distrust and downright disillusionment with such gross mismanagement. There is little doubt that, if the people were given the opportunity in the morning to demonstrate their opinion of this Government, the overwhelming majority would hurl them out of office and would be only too glad to see the backs of them for the rest of the century. That is a belief that has grown out of the sentiments and views being expressed in local communities, expressed so vehemently, so enthusiastically and in some cases so bitterly against the performance of the Government in the past two years.

The figures presented in the budget are wrong. They are deliberately distorted and grossly misleading. For example, 217,000 is the figure used to represent the average number of people who will be in receipt of unemployment benefit and assistance in the coming year. Surely, with 234,000 unemployed at present, this is totally unrealistic and gives a deliberately false promise. The PAYE earner is told by the Taoiseach and by the Minister for Finance that he will be better off by from anything between £17 and £600 this year. This is rubbish, absolute nonsense. The PAYE workers will be paying an additional £160 million in tax this year. I know that the Taoiseach, on the night of the budget, explained that away by saying that reflected the buoyancy which would take place in the economy. I think his expression was that nearly all of it could be accounted for the in that way.

We all agree that over a number of years the tax burden carried by the PAYE earner, both as a percentage of total direct tax and as a proportion of tax revenue, had become most unacceptable and disproportionate. Urgent reform of personal taxation, it was agreed by all, was essential in the interests of equity. Very serious inequities are there, which needed to be addressed. These have grown into the system over the years. Even as far back as 12 July of last year Minister Bruton was quoted in The Irish Press as stating that the Government definitely intended to introduce indexation in the next year's budget and that it would be the first time since 1981 that income taxpayers would not be worse off. A Minister who preaches credibility, honesty and frankness made that statement then. I know that he got his wings clipped shortly afterwards for making it. However, that is the background against which the public approach this budget.

One would have to admit readily that the budget simplifies the tax code by reducing the number of bands from five to three. Income tax payers will in future be paying income tax at 35 per cent, 48 per cent and 60 per cent. At the same time the bands have been widened. Any attempt at simplification of the code must be welcomed, but the big question is: is this exercise meaningful reform? Because of the abolition of the 65 per cent top rate and the widening of the bands, in gross terms the high income family will benefit, according to the calculation of one accountant, to a greater extent than the low income family. This is a very important aspect of these changes which we must take into account.

There are implications right down the line, for social policy among other things. For example, the calculation given to me was that a married couple with three children and one spouse earning £30,000 would be, under certain circumstances, likely to save £503 next year whereas a similar family with one spouse earning £15,000 would save only £160, or perhaps slightly more. That is in certain circumstances. However, all analysists who have seen the figures now agree that these savings assume that earnings will be static in the coming year. If, for example, earnings keep pace with inflation, there will be no real tax saving — in fact there will be a real loss, although slight. This is because the budget changes have not reduced the rate at which income tax is charged. Instead they ensure that basic wage increases are taxed at more or less the same rate as for 1984-85. From the figures which I have already used, it is quite clear that that would be the case.

If the intention was to improve the situation, very obviously the gains will accrue to those on higher incomes. Again, that the greater hardship, in relative terms, is on those on lower and middle incomes is a very obvious, immediate deduction which it is possible to make. Surely the gains should have accrued to those in need and surely, if involved in this simplification exercise was an intention to reform with equity in mind, that is how it should have been done. I agree that the reduction from the top rate of 65 per cent imposed by that Government to 60 per cent was a wise move because there were implications for investment and for incentives. There was a very definite fall-off in these areas because of the existence of that rate.

It is commendable that the top rate was reduced. However, if one takes the lower and middle income family and looks at how these would be likely to suffer on the basis of what is perceived as the ostensible intent of this instrument, surely the measure is anti-social. It is giving the greater benefits to those who least need them and the lesser benefits to those who need them much more. There is a big lie exposed in this income tax adjustment situation. There will be no gain, but a real loss for taxpayers in this budget. They will pay over £160 million more in 1985-86 than in the previous tax year because of the absence of any real reform or meaningful adjustment other than a simplification exercise.

The house buyers are told that they are getting a grant of £1,750 for the purchase of their first homes, a 75 per cent increase, while the Government through the back door increase the price of the average house by VAT to the tune of £1,800. That is keeping a low average price for houses in the Dublin market at present. The Minister for Finance and the Taoiseach did the best arithmitic exercise even when it comes to buoyancy. To balance the budget and provide for a £58 million shortfall of what was granted for public sector pay increases but not allowed for in the budget, they very neatly, conveniently and, one would have to admit, inspirationally come up with the exact sum in revenue buoyancy. What an extraordinary piece of arithmetic mumbo-jumbo. The importance is that the sums add up in the end, that the figures come out exactly right. I wonder how many members of the public, if they appreciated what was meant by that, would believe it.

Our poor and unemployed, our sick and senior citizens are told that they are getting enough by way of this budget because their increase benefits, in the words of the Tánaiste in this House on 31 January, 1985, Volume 1321 "at least match inflation over the period they are intended to cover".

He goes on that the Government can make this claim "in respect of last year and the previous..." That is very important. I suggest to this House that these statements are grossly inaccurate and the Minister knows that. His party have simply treated the unemployed and the disadvantaged with derision. His party's actions and attitudes are nothing short of immoral in this respect.

The Labour Party have betrayed the legitimate aspirations of the voiceless and defenceless among us. They are clinging to power on the backs of the unemployed. Whatever Deputy Kelly thinks about it, this budget is callously driving thousands onto the emigration ships. Deputy Kelly went to great lengths to point out that he had been misunderstood in the recent past because of his sentiments in relation to emigration and he conjured up images of greatness, importance and great significance, the wonderful experience, insight and broadmindness in the idea of taking that trip across the Irish Sea or the Atlantic, where horizons could be broadened and where all disadvantages that could be put down to emigration could be so overwhemingly overcome because of the gains that would ensue. I refuse to go along with those sentiments. I wonder if the Government go along with them. Quite frankly, the decisions and the effects of the budget seem to coincide with that point of view. If that is the case we have taken a very sad turn.

Last year was an extremely harsh year for all those on social welfare benefits. The miserly increase of 7½ per cent was not paid out until July, giving an annual increase of 3½ to 4 per cent from that budget. This was the second time that the Coalition had left this sector to suffer all the other increases that came on board for a full six months before, giving them a meagre increase. Then came the halving of food subsidies, the curtailment of supplementary benefits through the health boards, the alteration in the guidelines for eligibility for assistance for school uniform grants, the almost total abolition of assistance to the poor, the unemployed, the widowed and the sick with the payment of ESB bills while at the same time the price of fuel increased substantially. This is the scenario that the weak section of our community had to endure last year. That is the nightmare with which they were faced. Anyone who tries to deny that is flying in the face of reality.

All these things happened in 1984 because of the Government's massive cutbacks in the health and social welfare services. The most unsavoury feature was having to listen to the present Minister for Health repeatedly passing the buck last year for his callous decisions and the callous decisions of the Government in regard to the defenceless local officials manning the health boards in an attempt to administer a scheme and meet guidelines for which there was inadequate funding. The Ministers denials ring hollow when compared with the realities. The Minister must be aware of the queues of people outside health boards and the sitins that took place on various occasions and of the deputations that went to his Department and were not given a fair hearing and of the calls and appeals to him to meet groups. The Minister refused on nearly all occasions. The Socialist element in the Government must be terribly embarrassed by these realities. They must be wondering as to their purpose and as to whom they represent if they are prepared to ignore all these hardships and turn a blind eye by way of policy to what has happened to our economy. These people do not want to know about the embarrassment felt and the hardships endured by the most defenceless section of our community. The experiences of these people will not be forgotten.

The 1985 budget is consistent with the Coalition's other budgets in at least one respect. When it comes to the poor and the unemployed it appears that anything will do. We have again all the worst features of the previous budgets. There is only an annualised increase in social welfare payments of 3 per cent and 3½ per cent respectively to the long term and short term recipients and again the increases are deferred to mid-July when these people will have borne the increases from other budgetary measures for nearly six months. That is a scathing indictment of the budget and a terrible reflection on those who profess any kind of care or concern for the weakest among us. There has been no increase in children's allowances, and footwear has been taxed at 10 per cent VAT. To say that it is only adult footwear does not exonerate the Government. Tax on clothing has been increased from 8 to 10 per cent and fuel, except electricity, is now being taxed at 10 per cent. Each of these increases will hit our senior citizens, our unemployed, our widowed and our sick people and there are no compensatory effects. There is no provision to ease the burden on the least well off. It is a terrible indictment of the Labour Party that they committed the poorest to shoulder the most. That is the real result of the budget.

On the night of the budget when discussion was taking place on Financial Resolutions and when elaborations were being given, damaging effects for certain sections were pointed out to the Taoiseach and he was quick to point out that bouy— ancy in our economy, reform of the tax system and other aspects of the budget would compensate for losses in certain areas. I must confess to an inability to get in on the debate on that night but when I put it to the Taoiseach — and I know he heard what I said — that he might be able to point to compensatory effects for many sections but that he certainly could not point to compensatory effects for the category of persons I have just mentioned and I asked the Taoiseach to explain why there was no compensation there, the reply I got was a deafening silence.

From 1980 to 1982 Fianna Fáil gave increases of 25 per cent towards those on social welfare. We always ensured that payments would not leave those people less well off in real terms. The decision in the 1983 budget and in the two consecutive ones to defer payment until July is most unjust and extremely harsh. Rather than deferring payment from the traditional April date it is fair and reasonable to suggest making these payments available to these people to coincide at least with the date of increases in costs caused by budgetary policy.

Another feature of the budget, of which great play has been made, is the miserly increase of £5 in the fuel voucher scheme. It does not in any way compensate for increases, direct and indirect, in the cost of living of social welfare recipients in the past three years. The prices of a bag of coal and a cylinder of gas have been increased and are likely to be increased further during the year. A bag of coal now costs nearly £7.50 and a cylinder of gas nearly £8, yet a £1 increase has been given this year to make up for a three year gap — we are talking about the 1983, the 1984 and the 1985 budgets during which there was no increase of any kind in the fuel scheme. The £1 now given is totally inadequate in a system which is outdated and meaningless. I would have considered a £7 or an £8 voucher as necessary considering the other unfavourable aspects of the budget. That would have been a minimum requirement.

To leave the fuel voucher scheme there in its present form except for this meagre increase is unfair and wrong. The scheme should be scrapped altogether and the equivalent of £5 given in some other way. It is mere pretence to say that giving £5 in the fuel scheme on a limited time basis to certain categories will make a substantial contribution to their fuel costs. I would prefer to see the scheme scrapped altogether and to have an equivalent increase given to eligible persons in other ways.

The cost of education for families has increased greatly over the past couple of years and because many families are operating extremely restricted family budgets, decisions to withdraw children from second level schooling are more frequently being made on the basis of inability to meet the costs of bus fares, school books and other school expenses. The Minister for Education — I am sorry she is not here — has done a hell of a lot to ensure that the concept of free education has become irrelevant.

If we take a husband, wife and three children on short duration unemployment assistance, they are in receipt of £76.50 a week whether their children are in primary or second level schools. The Minister for Health and Social Welfare must know only too well that families in this and similar categories are flocking to health centres in the cities and country looking for supplementary benefit. Nobody in this House will deny that, because any Deputy who makes himself or herself available to the public and listens to what is going on — sometimes in a disagreeable way, sometimes in a critical way — must be well aware of the position in the past couple of years. People go to health centres looking for supplementary benefit, for school uniform allowances, for assistance to pay their ESB bills or rent, only to be turned away because the Minister concerned has simply robbed the health boards of funding for very necessary services.

This morning two widowed persons came to me to inform me their local health centre had told them that although they had been in receipt of £5 per week each to enable them to pay off mortgages on their homes the money would no longer be payable. When one of them called to her health centre last week for a £25 cheque — she was letting the amount run up for five weeks — she was told by an official that before being paid she would have to get a statement of the interest she was paying on the mortgage. She went away, got the statement and came back yesterday, but she was told she did not need the money. He told her "You are better off than many other people in receipt of social welfare benefits". No reasons were given for that. When she queried the decision it seemed to her that the decision had been handed down from on high.

The second widow yesterday had the same experience. The only difference was that she was not asked for a statement of the interest paid on her mortgage. Earlier, when she called in about something else she was told the money was there for her, but she asked that it be held until this week, that it would be more convenient for her because the date of payment of the mortgage fell due this week. When she went in yesterday she was told she did not need the money, that she was better off than most others in that category, but they offered her a little help with her ESB bills from time to time.

We know of the difficulties faced by people who genuinely have not got money. In such cases electricity has been cut off on many occasions. Here we have widows being denied callously assistance that was available to them in 1983 and 1984. Though there might be some validity in the statement that this category of people might be better off than others under the social welfare code, nevertheless if they were eligible for assistance in 1983 and in 1984 what changes have taken place or decisions issued from the Department to the local health boards to the effect that those people are no longer eligible? I have no evidence to suggest that things are better now than they were in 1983 and 1984, and I would not agree with anybody who tried to convince me that that is so. Last year the Eastern Health Board were left short by £3,500,000 and all the Minister for Health and Social Welfare would say was that there was no shortfall or any change in guidelines issued from his Department. The people will not accept this verbiage any longer from the Minister.

The effects of the budget in real terms will leave the families of the unemployed, the sick and our senior citizens anything from £10 to £30 per week worse off in real terms than last year. That is a frightening prospect for those people. It calls for an unequivocal condemnation of the Government and the Minister for Health and Social Welfare who is obviously so uncaring as to permit this to happen. If he has any conviction he would resign from the Government in protest at the manner in which the poor, the unemployed and the sick are being so derisively treated. I call on him to resign as a protest against the Government and as a mark of respect to all those so callously ignored by this budget.

The Government came to office in November 1982 and promised that they would get rid of the legacy of irresponsible borrowing and mismanagement of the economy and State finances by their predecessors. Day after day, week after week the public were treated to a profusion of outpourings about how the Coalition would pursue a policy of financial rectitude, bring the finances of the country back into line, wipe out deficits and thereby diminish the enormous strain being imposed by the servicing of our foreign debt. Borrowing was supposed to be immoral and the public were reminded that only through such a policy could our young people face the future with hope. The previous Government, they said, had mortgaged their future for votes. Credibility had become synonymous with a policy of deflation and austerity. To say otherwise or even to start to think of people as people was simply living in cloud cuckooland. All decisions had to be taken in Government within the framework of stringent controls of current budgeting and debt management.

What is the reality? Beginning in the 1984 budget, and continued through this one, the Taoiseach has thrown all of this conviction out the window. If it was so important before he took office, when he was canvassing for votes early in 1983, why is it not still so important?

The national debt, taking the effects of this budget into account, will have increased by £10 billion during the short term of office of this Coalition. The foreign debt has been increased by almost £3½ billion in the same period. The current budget deficit has increased by over £350 million over the past couple of years, from £988 million in 1982 to £1,234 million in 1985, although that figure is still being questioned today in this House. The Government are refusing to up-date the figures on the basis of changes that have already taken place, changes that have not been brought before the House for approval. I am convinced that before the effects of this budget are fully seen throughout the year, there will be an additional £50 million to £60 million on top of what has been very optimistically allowed by the Minister. When one looks at this scenario, where is the so-called responsible management, where is the diminution of our foreign debt or the reduction in the cost of its servicing? Where is the rhetoric now about taking on the current budgetary situation? How can the Taoiseach have had the effrontery to tell the people a couple of months ago that our finances had been restored to an acceptable level of normality, that the economy had been turned around and that we were now heading for better times? Does the Taoiseach not realise even at this late stage, that the plot has been blown, that the web of intrigue has been broken and the truth is really out? Surely he must now accept that all the handlers in the world cannot put his fairy castle together again? This pillar of integrity, and that is what the Taoiseach was put up as being — the pillar of integrity, truth, honesty and reality; he was built on reality — should come clean and admit to the people that he has been downright dishonest and deliberately misleading. He should admit also that he has simply lost control of the ship of state, that he never really had control. He should state that he does not know where he is going or what he is doing.

Let us take the example of their new commitment that by 1987 the current budget deficit will have been reduced to 5 per cent of GNP, despite having strayed already by a significant amount from the commitment in their national plan. Is there the slightest hope of effecting a few hundred million pounds reduction in this deficit over two years? Perhaps the Government contend there is but nobody on this side of the House believes them. Therefore one must ask do they really believe it themselves?

When one takes into account that the Taoiseach and several of his Ministers, not least the Minister for the Public Service, on a number of occasions towards the end of 1984, right into this year, were adamant that there would be no increase in 1985 in public sector pay, how literally on the eve of budget day they so rapidly and suddenly capitulated, then it takes a frightening and unbelievable degree of naivety to hope that the public at large have not seen through their charade. It must be seen that the Taoiseach, the Minister for Finance and this Government will never be believed again. No matter how long they remain in office they simply cannot hope to rule effectivly because they have lost the trust and confidence of the people and any Government that does not have those, simply is not a Government.

Speaking in this House on 31 January last the Tánaiste had this to say at column 1317 of the Official Report:

The budget, considered as a package of measures, is designed to promote enterprise and employment and protect the living standards of those on low incomes or in receipt of social welfare payments to the maximum extent possible. Budgetary policy is one major instrument in seeking employment creation,

That is the view of the Tánaiste, not necessarily that of Deputy John Kelly and, if it is the view of the Tánaiste, then it must be considered to be that of the Government. Through a deft sleight of hand the Tánaiste omitted to mention how the provisions of this budget would operate by way of going anywhere near creating a situation in which the average number of unemployed for the year would be 217,000. How one can explain that is beyond me. The Tánaiste forgot to illustrate how even one job could be created by virtue of this package.

Speaking in this House on the same day the Minister for Industry, Trade, Commerce and Tourism had this to say:

It is desirable that we should try to set up new industries but that would be of little value if we cannot preserve the industries we have.

Those remarks appear at column 1430 of the Official Report of 31 January 1985.

There would appear to be a certain degree of honesty implicit in that statement of that Minister although he does not attempt to quantify it. First of all, he appears to acknowledge the fact that the Government's failure to prevent the closure of over 400 companies last year was clearly a disaster. Neither does that Minister get involved in the ridiculous posturings of the Taoiseach, the Tánaiste and other Ministers that this constitutes an employment-creating budget. Admittedly his long preamble on the absence of price competitiveness in Irish industry vis-à-vis our competitor nations, the role it plays and has played in the recent past in dismantling our industrial base, seems to be a rather obvious exercise in buck passing.

When the figures are broken down one must ask what is in this budget for industry and jobs? Where are the great incentives about which we hear so much? What grand plan is designed to take on the greatest social evil of all, namely, the unprecedented high level of unemployment? There are now 234,000 people unemployed, approximately 50,000 of whom are from the building sector. Any Government worth their salt must realise that the construction industry is one of the biggest employers, offering potential for alleviating to a great extent this disastrous unemployment situation. Economists the world over, although rarely agreeing on many issues relating to economic management, agree that, right across national divides and frontiers, the building industry has a greater multipler effect in terms of employment creation than has any other industry. Yet this very industry has been forced into rapid decline over the past two years.

It is an unfortunate and sad feature of Coalition rule that it manifestly hits this industry and that any time they come to power, the construction industry must dive for cover, investment decisions are shelved and, in many instances, moneys available are invested outside the country. In the past year an inordinate number of builders, large and small, have crashed into industrial oblivion. Plasterers, carpenters, bricklayers, plumbers, electricians, semi-skilled and unskilled labourers daily call to our clinics asking when this stupid Government are going to get out, indicating that if that does not happen very soon they will have no option but to join thousands of their comrades who have already jumped aboard the emigration ships.

The latest increase in VAT from 5 per cent to 10 per cent on new houses represents a final attempt to dismantle the house building industry. When, on the evening of the budget, the Taoiseach was asked in this House by Deputy Calleary to justify this increase he had this to say at, column 1223 of the Official Report for that day:

... but there is clearly no way that we can arrive at a simplification of the VAT structure without some going up and going down.

That is what the Taoiseach thought or cared for the plight of the house building industry, that it would simply have to fit into the figures he wanted to employ — forget about people, about jobs. The Taoiseach continued to say, at column 1225 of the Official Report of that day:

Taken overall, the net effect on the construction industry is positive.

I accept that he juxtaposed a mumble, jumble of figures against the 5 per cent VAT increase but I do not accept his conclusions. One element in his reply was that there was a reduction in VAT on cement blocks. The reality seems to elude the Taoiseach, that blocks constitute a minimum component in house building.

Let us now consider what this Government decided to do to the new house building sector. In their press release they told of a 75 per cent increase in the house purchase grant, that first time buyers of new houses would receive an increase in this grant from £1,000 to £1,750. What a generous gesture on the part of this Government to young newly weds. It was implied that thousands of young couples would now be able to rush to the nearest builder, bringing forward their decision to buy a new home on the strength of this increase. Of course, builders are always seen to be the bad boys. It is contended that they will now increase the price of a new house by 5 per cent. What a bunch of rogues. But it is not the builders who are doing this at all, rather it is the Government. But the unsuspecting house buyer is not supposed to know that. After all, is it not the builder who charges the price? No matter what may be his protestations his action is seen as a greedy response to this increase in the grant. One must ask did it not all happen before, anyway? That is how this Government hoped to put across the net increase in the price of a new house to the innocent public but it simply has not worked. Their devious little scheme simply has not worked. The Minister for Finance, in an attempt to run for cover — when questioned on television last week or the week before about the effects of his budgetary decisions on the building industry and new house buying — tried to fudge the issue by stating that the increase was not on the gross price. However, everybody should be fully aware of what this budgetary measure means. I should say in relation to VAT that all builders will admit and anybody who does a costing of it will agree, that when the VAT was increased by this Government from 3 per cent to 5 per cent almost invariably the builders absorbed it because there was no future in their doing otherwise. Take a new house costing £30,000, inclusive of 5 per cent VAT — incidentally one will find very few houses on the Dublin market at that price and anybody who knows anything about it will agree with that — its price from 1 March 1985 will not be £30,000 but £31,429.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.