asked the Taoiseach if, in the light of statements in the Central Bank Report that the current budget deficit will exceed 8 per cent of GNP in 1985, the highest ever experienced, that growth in GNP is now forecast to be only 1 per cent this year, and that as a result of a larger decline then previously forecast in employment in industry and further declines in employment in the building sector and in the Public Service, an overall fall in non-agricultural employment is forecast, he still maintains that Ireland is one of the healthy economies in Europe and that a turning point in employment and living standards has been reached.
Ceisteanna — Questions. Oral Answers. - Central Bank Report
2.
The Deputy has been careful to quote selectively from the Central Bank Report. In the very first paragraph in the report the bank states that it is encouraging to note that with some exception, stability is being restored to many areas of the economy. The Central Bank Report goes on to note the improvements which have taken place in inflation, in the current balance of payments deficit and in interest rates.
I have dealt with these matters fully in my reply to the Deputy on 23 October. On that occasion I also dealt with the question of the Exchequer finances which the bank notes is the major exception in the trend towards stability. I need hardly elaborate again on the reasons why there is such an intractable problem in this area.
It is clear from the evidence now emerging in relation to unemployment, where the rate of increase has slowed considerably, and in relation to personal consumer expenditure where the slide in retail sales which had been going on since 1980 has been reversed in recent months, that a turning point has been reached.
Recent EEC estimates indicate that in terms of GDP Ireland had a higher growth rate than any other country in the EEC in 1984. For 1985, the EEC are forecasting a GDP growth rate for Ireland which is higher than the Community average and ahead of all other member countries except the United Kingdom and Italy.
It is very difficult to have any sense of reality in dealing with this matter with the Taoiseach. First of all, may I ask him if he would agree that the current budget deficit this year will be either £1,300 million or £1,350 million, or perhaps even more, and that this will be — both in volume terms and as a percentage of GNP — the greatest single current budget deficit ever recorded in this country? Lest he thinks I am alone in this view would he refer, in replying, to the statement in the Central Bank Report to the effect that the position now is that the current budget deficit will exceed 8 per cent of GNP in 1985, the highest ever experienced? Would the Taoiseach give me his view, if he does not agree that it will be somewhere between £1,300 million and £1,350 million, as to what it will be in amount and as a percentage of GNP?
The current budget deficit this year, in so far as it is possible to estimate it at this stage with what is always a certain margin of error, will, we expect, exceed 8 per cent of GNP and, therefore, be of the order of magnitude of £1,300 million, possibly somewhat less, possibly fractionally above, as best as we can estimate at present. The figure is higher than in any other year recorded. It is two-fifths lower than the figure in 1982 that would have occurred had we not taken drastic action in the budget of 1981 and January 1982.
(Interruptions.)
Order.
We have since held it around or close to the level to which we brought it down. Total borrowing has similarly been reduced to two-fifths below the level it was likely to be at had we not taken the action we took in 1981 and 1982.
Promise of government.
Leaving aside all the little fairytales which the Taoiseach has the habit the bringing into this matter, the fact is that the Taoiseach now admits to me across the House that the current budget deficit this year, after three years of his Government, will be the highest ever recorded both in volume terms and as a percentage of GNP. Would he also agree with me that, by the end of this year, the national debt will be well over £20 billion as against £12.8 billion when he came into office at the end of 1982 and that this represents the highest ever amount of borrowing by any Government in this country in their periods in office? Would the Taoiseach simply acknowledge that fact and then we shall be able to get somewhere?
I am not quite sure where the Deputy intends to get. The facts are that the level of borrowing, although significantly reduced as a share of GNP, nonetheless remains high. The facts are that the increase in the volume of public spending of 38 per cent between 1977 and 1981 pre-empted the resources available, at present growth rates, for 15 years ahead. Unless we can accelerate growth rate significantly it would take 15 years to undo the damage done by Fianna Fáil during that time——
It would take a change of Government.
——and to get borrowing and taxation as a share of GNP down to the levels they were at in 1977 when we left office, in which year the level of foreign borrowing was actually reduced.
The Taoiseach has now acknowledged by not contradicting and by implicit agreement that the total national debt is now well over £20 billion as against £12.8 billion when he took office and that this represents — no matter what fairy tales he may build around it — the greatest single amount borrowed by any Government in the history of the State. Will the Taoiseach refer to the statement in the Central Bank report, which I mentioned in my question, in regard to employment? Does he accept the statement in the Central Bank report to the effect that with further declines in employment in the building sector and in the public service, offset by some improvement in private service employment, an overall fall in non-agricultural employment is forecast? Given a continuation of the long decline in numbers at work in the agricultural sector, a further increase in the labour force and a rise in the unemployment rate of around 17½ per cent on average for the year as a whole in prospect, does he agree that in the view of the Central Bank — and he can run around the world looking for other quotations if he wishes — there will be an overall fall in non-agricultural employment this year? Answer yes or no, do not waffle.
That could be the case. It is not possible at this stage to forecast it precisely. The rate of increase in unemployment in the last 12 months at 13,300 is two thirds lower than the level at which the Deputy left it——
(Interruptions.)
The figures are there.
We have gone two thirds of the way towards halting that increase which started when he was in office. Does the Deputy think he is advancing his cause by reminding the people of the damage done in those four years and the length of time it will take to catch up?
(Interruptions.)
I do not think he is doing himself any good.
A final supplementary, please.
It will not be the final supplementary. This is a very important question by the Leader of the Opposition to the Taoiseach on the condition of our economy, finances and unemployment. It is worth a little investigation.
There will be other opportunities to discuss this matter. We cannot debate the economy at Question Time.
In view of the fact that the Taoiseach had the audacity to tell us last July that this is one of the healthiest economies in Europe——
The Deputy must confine himself to a question.
Does the Taoiseach agree that the level of industrial employment as a whole is expected to show a larger decline this year than anyone forecast? In view of the fact that three years into the Taoiseach's administration we have the highest ever current budget deficit — by the end of this year the Government will have borrowed more money than any other Government in the history of the State — and employment will decline, does the Taoiseach agree that those three elements alone make total nonsense of his frequent statements that there is light at the end of the tunnel, that a turnaround is coming——
That is argument, it is not a question.
The Taoiseach said that we are one of the healthiest economies in Europe but, if he wishes to retain any credibility, will he please acknowledge the basic fact that his total economic and fiscal policies are a shambles?
That is argument.
The Deputy purported to quote from something I said in the Dáil. Did he check what I said?
I did and I have it here.
Good, so have I and I will read it out. I said:
This is now one of the healthy economies in Europe in financial terms with a growth rate higher than anybody else.
That has been proved correct. I also said that we had an inflation rate which I believed was the fourth lowest in Europe. That is what I said in respect of those two matters. They are correct and the Deputy cannot contest them. He should stop misquoting me and deal with facts although they may be unpalatable. There has been a reduction in interest rates and inflation and the level of borrowing today is two fifths lower than the figure which we were faced with in 1981. I know the Deputy will not face these facts but it will take a very long time to get borrowing back to the level at which it was when he left office in June 1981——
That is three years ago.
That can only be achieved by cutting expenditure or increasing growth and we are choosing the latter path. By doing that we can shorten the period of 15 years and get the economy back on course. It was in a healthy state, as your predecessor described it, in the debate in December 1977.
Deputy Haughey rose.
This is the final supplementary.
The Taoiseach has talked about quotations and I should like to direct your attention to the quotation which he just made from the Official Report. He said on 11 July — and it is difficult to believe that he said it — that this is now one of the healthiest ecomomies in Europe. The Official Report strangely records that the Taoiseach said that this is now one of the healthy economies of Europe which is a bit different from what most of us recall the Taoiseach saying at the time. There must have been incredulity among economists when he said this but I physically heard him say it. After three years of the Taoiseach's administration does he not admit that the facts which I have given are incontrovertible and that the fiscal targets and economic policies which he set out are now in total ruin? Can he offer any suggestions to the House as to how he will repair the catastrophic state of public finances, the level of borrowing and the current budget? I also want to ask the Taoiseach if the IMF wolf is at the door. He will know what I mean.
That wolf was at the door on 30 June 1981 when I took over. We got him away from the door and we have kept him away since then. He will be kept away as long as the Government are in office and as long as the party opposite do not return to office. I repeat that what we achieved last year was the joint highest growth rate in Europe starting from a position of financial chaos four years ago. The Deputy is not willing to face that. Our inflation rate is lower than that of our neighbour; interest rates are lower than those of our neighbour for the first time in history and we have a basis for development and growth. Only through the acceleration of growth can we have any hope of getting back to the levels of taxation and borrowing of 1977. It is because of the 38 per cent increase in the volume of public spending which he and his predecessor in those disastrous years imposed on the country that we are in our present position.
I am calling Question No. 3.
Does the Taoiseach not recall that the level of borrowing engaged in by the Coalition Government in 1973 to 1977 started the present trends in our public finances?
I have called Question No. 3