I move:
That Dáil Éireann condemns the Government for their failure to honour specific undertakings in the Joint Programme for Government to halt and reverse the growth of unemployment and reduce the proportion of tax taken under PAYE from the wages and salaries of employees.
Fianna Fáil have put down this motion because of the widespread wish that exists among the general public to see an end to this incompetent, discredited and intensely disliked Government.
This motion provides every Deputy in the Dáil with the opportunity to vote in sympathy with that overwhelming public feeling. Every Deputy in this House will have the opportunity to express dissatisfaction with the economic performance of this Government and to indicate by their votes that they want either a change of policy or a change of Government. The choice facing Deputies is clear: they can either vote to condemn the economic policies of this Government or else they can, by their votes, acquiesce in a continuation of permanently high unemployment, taxation and emigration. They cannot dodge the issue. This is no time for escape clauses or phony amendments or making speeches one way and voting another. Deputies can either, for their own narrow, party political reasons, vote to condone disastrous economic and social policies, or they can bring them to an end now. We want by this amendment to show the voters who is responsible for the present situation dragging on, why this Government are able to hang on to office; and what groups and individuals are keeping them in office when a very large majority of the voters wish to see them gone.
The two parties in this Government, after the last general election, bargained and negotiated for some time and finally put forward a programme of Government which was the basis of their agreement to form a Coalition Government. It set out what this Government promised to do during their term of office. In particular, it secured the support of the rank and file of the Labour Party because it contained specific undertakings about social and economic policy. That document is now in shreds; it is politically irrelevant. It represents a litany of broken promises and unfulfilled undertakings. At this stage it is only of importance to political historians.
In our motion we have only selected two of the items in that programme for attention. We could have included many others, but we wanted to make the issue as straight forward and direct as possible for Deputies and the public by concentrating on these two specific promises which three and a half years after the Government were formed have not been fulfilled.
This Coalition Government took office on the basis that they would seek to halt and reverse the growth in unemployment and reduce the proportion of total tax being paid by the PAYE sector.
According to the OECD, late 1982 represented the bottom of the international recession. That also happens to be the moment at which this Government took office. While in many other countries there has been a significant recovery, Ireland four years later is still as deeply as ever in recession.
When this Government took office unemployment was at a high level, 170,000. Since then it has risen steadily and is still rising. It has increased by 30 per cent; and that figure, of course, takes no account of emigration. If emigration, running now at 30,000 or more a year, were taken into account, it would be seen that there has not even been a significant slow down in the growth of unemployment. The promise was to halt the growth and reverse the trend so that we should now be well below the 170,000 figure. That has not happened. If emigration were taken into account it is clear that the rate of growth has not been halted.
The rise of 3,100 in the seasonally adjusted rise of unemployment in May of this year shows that the growth even in visible unemployment has not been halted let alone reversed.
This Government are acting in a disgraceful manner in not revealing the actual extent of emigration at present. We all know from our personal experience and observation — we only have to go to one of our airports or seaports — that emigration is running at unprecedented levels. Deputies will tell of different parts of the country where parishes are no longer able to field a full team because so many young people have emigrated. It is almost certainly about 30,000 a year. In this connection I am talking about permanent emigration — people who have left this country for good — and not the seasonal movement of young people looking for temporary employment.
This Government will not come clean on this serious issue. They will not give the true picture even though they know what it is. Were it not for this haemorrhage of emigration, the figure of 230,000 now given as the number of unemployed would be far greater. It is true to say that the real number of persons unemployed at the present time must be somewhere between a quarter of a million and 300,000. If everything is taken into account — the registered unemployed, the level of emigration and those who are artificially taken off the live register because of schemes of one kind or another—in the region of 300,000 people are being denied the opportunity to find permanent employment in their own country. That figure in itself is a total condemnation of this Government, their economic policies and performance. By itself and without taking into account any of the other ghastly mistakes, blunders and misjudgments of which they have been guilty, it would justify this Dáil in ending the term of office of this administration today.
This Government were formed on the basis of halting and reducing unemployment. That was probably the most important single undertaking they gave and the most clearcut reason why they were able to form a coalition. They have failed to do that and, therefore, they are no longer entitled to the support or confidence of Dáil Éireann.
It would be bad enough if this Government were honestly trying to reduce the levels of unemployment but were being prevented by circumstances from doing so. But that is not the case. The policies which this Government are implementing are actually hostile to employment. Time and time again they have, either by deliberate action in pulling the plug or by refusal to act when they should have, added to the level of unemployment directly by their behaviour. The last three and a half years present a picture of economic devastation, of close-down after close-down, bankruptcy after bankruptcy, redundancies and more redundancies, dole queues lengthening, while an aloof monetarist Government stood back as a matter of deliberate policy and let it all happen without lifting a finger.
The programme of Government also specifically undertook to reduce the proportion of total tax which is paid by the PAYE sector. That it has completely failed to do. During their term of office over the last three and a half years personal taxation has been savagely increased. There was no reduction, as promised. They did not make any positive move to reduce the burden on the PAYE sector — in fact, they have done exactly the reverse. They have piled more and more burdens onto wage and salary earners to the point where they are now by far the most heavily taxed group of taxpayers in the entire European Community.
The proportion of tax taken in income tax and levies rose from 36.8 per cent of total tax in 1982 to 40.5 per cent of tax in 1986. Within the income tax category the estimated proportion of tax from PAYE as opposed to income tax from farmers and self-employed has risen from 87 per cent in 1982 to 90.3 per cent in 1986. They are not my figures, they were given in an oral answer by the predecessor to the Minister for Finance on 20 February 1986.
Income tax from PAYE as a proportion of total tax has increased from 31.3 per cent in 1982 to 32.3 per cent in 1986. There was no reduction in the proportion there. These figures do not however, include levies deducted at source. If these are included, with the same percentage in each year attributed to PAYE, then income tax, including levies, has risen from just 32 per cent to over 34 per cent of tax revenue in the four years, all of this in the context of a substantial increase in the overall tax burden.
Many people would have taken the pledge in the Joint Programme for Government to mean an absolute reduction in the amount of tax under PAYE. It would have been fair to read that assumption into it. In fact, when it is adjusted for inflation the amount of tax to be taken under PAYE in 1986 is about 25 per cent higher than in 1982. Whatever way one looks at it, whatever basis for comparison one uses, the result is that this Coalition of Fine Gael and Labour have not fulfilled their tax pledges. The opposite is the case. There has been a massive increase in taxation, including a substantial increase in the tax paid by those on PAYE.
This motion deals with these two major planks in the Coalition's programme for Government on which they have reneged. If, however, any Deputy might not be totally convinced on the basis of those two issues alone, let me give a brief outline of other areas of that infamous programme in which promises have not been fulfilled either.
The current budget deficit, far from being phased out, was at its highest level ever last year, £1,284 million, or just over 8 per cent of GNP. The second chapter of the programme states that the Government will concentrate upon the achievement of recovery at the outset of their period in office. Four years on there is still no sign of recovery. There was also the promise of an additional £100 million to be spent on areas of defective infrastructure. I am certain some Deputies will have forgotten that the Government were to allocate an extra £100 million to areas where the infrastructure appeared defective. Instead, the whole capital programme has been cut by one third. Far from the undertaking that indirect taxes would be minimised, they have been greatly increased. VAT, in particular, was savagely increased on a number of occasions. Many of the other undertakings on tax were not implemented, such as, "all income taxation to be on current year basis" or "expansion of full PRSI to the Civil Service". A tax on derelict sites has not been implemented. We were promised that 30,000 houses would be built each year. I heard the Tánaiste reiterate that promise; but, in fact, output has fallen to less than 24,000 per annum. The Book of Estimates has not been produced and, obviously, will not been produced in September as promised. There is no longer time to make good these pledges, many of which are far out of reach. Clinging on will not improve the electoral prospects of the parties in Government or those who keep them there — I note I am addressing empty benches at the moment — but only accentuate popular anger and resentment. The stated basis on which Fine Gael and Labour agreed to govern no longer exists. Surely, it is time to recognise that clear and simple fact.
I want to avail of this debate to once again nail the untruth which is constantly repeated by the Government and, in particular, by the Taoiseach about the history of the public finances of this country in recent times. The Taoiseach is consistently dishonest and deceitful on this issue.
Recently, on a carefully stage managed television phone-in, with all the trappings suitably provided by the faithful RTE, he again sought to distort the truth. The figures clearly show that an overwhelming portion of our present national debt was borrowed by Governments of which Deputy Dr. Fitzgerald was either Taoiseach or a prominent and influential member. I have, on a number of occasions in this House, quoted from statements by the Taoiseach when he was a member of the 1973-77 Coalition Government in which he advocated budget deficit financing and foreign borrowing to meet the budget deficits. He has never denied these statements. Nevertheless, he has the audacity to continue to mislead the public about the position regarding borrowing and the national debt and the real history of what has happened. Those statements, which he has not denied, can now go on a par with his famous statement, recently unearthed, that in fact he is against divorce.
Though there has been a massive campaign to conceal the fact, the truth is that our current financial difficulties had their origin in 1973. It was then the major upsurge in the national debt and foreign borrowing began. The total foreign debt is now £8.4 billion and Coalition Governments have been responsible for 63 per cent of that amount; nearly two-thirds of it.
Of the increase in the total national debt by borrowing that took place in the period 1973 to 1985, the two Coalition Governments accounted for 59 per cent, while 41 per cent was borrowed by Fianna Fáil Governments.
In three years of this present Coalition to the end of 1985 the national debt has increased from £12.8 billion to £20.4 billion. That is an increase of over £8 billion in the last three and a half years, which is the equivalent of the entire national debt incurred under all Fianna Fáil Governments put together. Each year, the Government is borrowing about £650 million, one third of the annual total of £2 billion, just to pay unemployment benefit alone. That is some sensible economic policy. The cost of unemployment payments and of disability benefit has increased by 44 per cent since 1982 in real terms, discounting inflation. If the growth in unemployment had been halted as promised, the payments saved and the extra revenue would have brought down the current budget deficit to £700 or £800 million or 4 per cent of GNP instead of £1,250 million as it is this year.
Not content with distorting the position about borrowing, the Taoiseach in his radio interview claimed that the reason taxes were so high was — and I quote "because between 1977 and 1981 you had an increase in the volume of public spending of 40 per cent. Once a Government gets into office and literally goes mad like that, as no other Government I've ever heard of in any democracy had done, the clearing up of that mess takes a very long time".
The Taoiseach's figure of 40 per cent is accurate. The increase in current day to day expenditure on supply services for the period between 1977 and 1981 was 40 per cent but, what the Taoiseach did not say on that stage managed TV programme was that day to day public expenditure grew by 43 per cent 1973 and 1977 under a Government of which the Taoiseach was a member, though he now talks as if he never heard of such a Government. The present Minister for Finance was not a member of that Government but I am sorry to have to tell the former Taoiseach, Liam Cosgrave, and all the upstanding men who were members of that Coalition from 1973 to 1977, that the Taoiseach today has forgotten all about them — they never existed.
Mistakes of economic management may have been made at different times by different Governments, but in the 1977-81 period there was a substantial increase in employment of 68,000 under the Fianna Fáil Government, a stark contrast with today when this Government borrow to pay unemployment benefit, not to invest. If the Taoiseach considers that the level of current expenditure is too high, why has he not availed himself of the last four budgets to cut it? The fact is that current expenditure has increased in volume terms by a further 7 per cent since this Government took office.
This Government, when they came into office, published their bogus Programme for Government and immediately discarded it. Having brought the Labour Party into the position of support, they proceeded to subvert that support into supporting totally different policies. The world has been in the economic recession for a long time and nobody would expect this country, which has a small open economy and is very dependent on international trade for its prosperity, not to suffer from the effects of that world economic recession. But I believe it can be clearly and categorically demonstrated that the effects of that recession in our case were grossly exaggerated by the unsound policies pursued by this Government.
In their obsession with the budgetary position, they discarded and threw aside every other economic objective and social consideration, and the formula that they applied to deal with the public finances was basically wrong. They sought to correct the imbalance by imposing higher taxes. That policy, as we pointed out at the time and can now clearly be shown, was self-defeating. It started a downward spiral which has fed upon itself consistently since and brought us now to this appalling, dreadful state of permanent mass unemployment, high emigration and high taxation.
The latest OECD outlook shows that in 1985 Ireland experienced the worst growth performance in the entire OECD, with a drop in real GNP of 0.7 per cent. We had the distinction of being the only country with a negative growth rate. Despite a major propaganda campaign — this should influence Deputies in how they vote — there is no indication that this year will show any significant improvement, despite the windfall drop in oil prices. We all know where the information came from on which the OECD reports are based. How far out the OECD forecasts are likely to be, can be shown by reading out a couple of sentences from their May 1986 Bulletin:
Private consumption growth may accelerate to 3½ per cent, buoyed by lower inflation and a projected recovery in agricultural income. Investment is also expected to display more strength, primarily as a result of a pick-up in construction.
Projected recovery in agricultural income, a pick up in construction? According to the chief economist of the IFA there will be at least a 5 per cent drop in farm incomes this year with milk production to the end of May already down 11 per cent. As for the pick-up in construction, the CIF are forecasting an 8 per cent fall in building activity this year, with current sales falling for the fourth month in a row. Add to that a significant drop in tourism. A drop of a quarter in the number of American tourists means a 5 per cent drop in total tourism revenue.
The benefits of lower inflation have not been passed on either to the productive sector or the consumer, because interest rates, despite today's reductions, remain extremely high. The average rate of inflation is likely to be 3 per cent in 1986 and the real interest rate for productive borrowing will still be 8 per cent or 9 per cent and for the private borrower 12 per cent. Three times under this Administration rates have risen sharply: in the spring of 1983, in the spring of 1985 and the spring of 1986.
The Government's vacillating exchange rate policy, about which there is still a lot of confusion and uncertainty, has contributed to these periodic sharp rises in interest rates, which have led to an even wider divergence between the rate of inflation and the rate of return of investment required to cover borrowings. Let us not forget the economic growth of the sixties was fuelled by low-interest rates. Factors contributing to persistent high interest rates today are the rise of the current budget deficit which pushes up the price of domestic funds, the DIRT tax, and uncertainty about exchange rate movements. It is very well to have glowing headlines about a reduction in interest rates, but that is not what matters. It is the competitive aspect that matters, and if real interest rates in Ireland are 8 per cent to 9 per cent how can Irish industry and the Irish economy be expected to compete with nations whose rates are infinitely lower?
Evidence at the moment does not support the contention that there will be an upswing in manufacturing output this year. The latest quarterly figures to the end of February show stagnation. Our OECD friends talk of the "expected recovery of the high technology sector" but exports of office machines and automatic data processing equipment showed only a 3 per cent increase in the first four months of this year. If we look at retail sales, the latest figures show a negligible 0.1 per cent increase in volume compared with the preceding three month period.
It is difficult, no matter what the national handlers and their sympathetic commentators in the newspapers say, to see any real upswing in the Irish economy this year. Expectations of a slight increase in employment do not seem to be justified in the light of what is happening in the different sectors. What we have at the moment is an economy that is completely failing to respond to favourable developments in the external environment, because the policies of this Government are wrong and are giving us the worst economic performance of any country in Europe. That precisely is why this motion is before you. We need to change those policies before we get anything worth while going. I hope that when the Minister intervenes he will not again claim credit for lowering rates of inflation, because the Minister knows as well as I that he has nothing whatever to do with the lowering of rates of inflation. Rates of inflation are declining internationally and Ireland is following suit. I hope the Minister will not have the audacity to claim any credit for falling rates of inflation.
