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Dáil Éireann díospóireacht -
Wednesday, 8 Apr 1987

Vol. 371 No. 9

Financial Resolutions, 1987. - Financial Resolutions No. 3: 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.)

Earlier today I was pointing out that Ministers when they took office on 10 March were the sad inheritors of empty cupboards.

A visitor from a distant and remote planet would have been forgiven, having listened to the contributions from Labour and Fine Gael spokesmen, and most notably the Leader of the Opposition today, for believing that none of those spokesmen, or their parties, had anything to do with delivering the nation into the sad state in which we find ourselves. As we all know, the parties opposite are not the blushing innocents they have attempted to portray. They are as guilty as sin with regard to the difficulties of the nation.

Deputies opposite during the course of the debate chose to introduce an historical note. Their contributions, and in particular the contributions of Deputies Noonan, Desmond and Dukes, took us on a grand and highly selective tour of the economic events of the nation over the past couple of years. The dissertation of Deputy Dukes this morning focused on a special interpretation of the most recent economic history of the nation. Those contributions were careful to skirt around actuality. The contributors did not see fit to advert to the economic destruction of the nation in which their parties had participated. Contributors from the last Coalition were in their own way seeking to reiterate and re-establish myth as the basis of their economic analysis.

The mythology about Ireland's public finances which they have sought to peddle here is the same mythology that the parties opposite have been peddling to the nation for some years. Repetition has not improved the story's telling or improved its truthfulness.

It is well, therefore, following the contribution by Deputy Dukes, to attempt to re-establish the truth because the basis of the measures which have of necessity been taken in the budget is to be found in the economic history of the country over the past 15 years.

The difficulties for which we are all now paying started as far back as 1973. Deficit budgeting then became the order of the day. The Svengali who promoted the development, and later so successfully distanced himself and his party from all blame, is still with us although in a considerably less prominent position than heretofore. Between 1973 and 1977 there was a major rise in the nation's indebtedness. Foreign borrowing on a grand scale had got under way. Between 1973 and the beginning of the current year Ireland entrusted its affairs for the majority of that period to Coalition Governments. Throughout their periods of office the debt grew. For only a relatively short period of the 14 years mentioned was office entrusted to Fianna Fáil. During the 15 years in question the national debt grew by more than £20 billion. More than 60 per cent of that borrowing was made by a small handful of Coalition Finance Ministers. Deputy Dukes, who spoke so eloquently this morning, was one of those Ministers and it ill behoves him now to wave the mantle of fiscal rectitude in this direction.

Through the life of the last Coalition all economic observers came to one conclusion, that we simply could not spend ourselves rich. All agree on the damage being done by the level of our borrowing. In public the leaders of the last Government, including Deputy Dukes, illustrated an acute awareness of the nature of our problems. In Government, however, Fine Gael and Labour failed to act. They never succeeded in addressing the problems and by the time they left office earlier this year the national debt had effectively been doubled. While accepting the analysis with regard to borrowing Deputies FitzGerald, Dukes and Bruton, with the compliance, the support and the encouragement of all in Fine Gael and Labour, borrowed at a reckless pace. They are the facts and there is little point in the Deputies opposite seeking to portray a different picture. The evidence of their handiwork now faces us. If debt is our problem, and nobody here or elsewhere doubts that debt and the attendant drain on the nation's limited resources is one of the primary difficulties we face, then we know where to lay the greater part of the blame. Saying that the case is different does not make it so.

Debt, of course, is not the only thing that grew during the course of the last Coalition's term of office. So, too, did taxation. This time one short year ago the Coalition planned for a tax increase which was three times as high as the level of economic growth. The relatively modest proposals on the tax side in the budget now produce a great wringing of hands from the benches opposite. When we think of the taxation crisis we now face it is worth reminding ourselves that the leader of the last Coalition entered the election campaign in 1981 with a specific promise to reduce personal taxation to a standard rate of 25 per cent. When this policy was dusted off more recently by an emerging party of the far right that party, and their members, had visited on their heads the derision of all in Fine Gael. We know what happened on the taxation side during the life of the previous Government. Personal taxes were permitted to rise to the point where they have inhibited economic recovery and have punished initiative. In Roosevelt's words, "taxes are what we pay for the privilege of membership of an organised society". Sadly, in our society one segment of the community has more than paid its dues. Our taxation levels are rightly numbered among the nation's woes. The Leader of Fine Gael cannot and must not be permitted to try, as he has tried today, to shirk his and his party's responsibility in this regard.

A frightening national debt, a taxation system which has run riot and empty coffers were not the only problems which the Minister for Finance and the members of the new Government faced when they had to prepare the budget. They had to face an even greater problem, the mass unemployment which has resulted from the specific failures of the Coalition to implement anything approaching an effective employment policy. Historic levels of unemployment bring with them high social costs for society. They bring also high economic costs for Government. Like the burgeoning national debt, an equally unproductive high unemployment level lays an excessive claim on the nation's limited resources.

They are not the only calls on the nation's finances. There is no shortage of calls on the demand side. The shortages appear on the supply side. When we, as a nation, turn to the sources of the nation's revenue we become too acutely aware that the well, having been drawn on so frequently and copiously, has long since run dry. Every Deputy is familiar with the analysis.

I should now like to turn to the Government's response. The fact that the Government have responded so rapidly to the crisis they inherited is commendable in itself. More commendable still is the nature of the Government's response. They have held the line. Although this is a difficult and hard budget, it has sought to give priority to the protection of the interests of those who are marginalised in our society. It has sought to help those who must of necessity depend on the State. It has sought to cushion the weaker members of society from the cruel blows which arise from the economic mismanagement of the past couple of years.

It has been said that a hopeful disposition is not the sole qualification of a prophet. However, examining the budget I am filled with signs of hope. The budget which has been introduced is, indeed, a financially stringent one. This is appropriate at this time. The stringent measures which the budget takes are long overdue. I would suggest that in this budget the Government have done in three weeks what Fine Gael failed to do in four and a half years. Had these measures been taken in the past there would be less need for severity now.

At the same time as being stringent, however, the budget is humane. Some of the more anti-social measures proposed by the recently departed, not much lamented Government have been avoided and others have been diminished. Both for its economic rationality and its humanity the budget is to be welcomed.

As the main provisions of the budget have been well covered by other speakers, I will confine myself to remarks on issues which I feel are more important. The most important issue is the matter of public expenditure. A long time ago Voltaire proposed that "in general the art of Government consists of taking as much money as possible from one section of the citizens to give away to the others". Would that things were that simple now. Rightly the Minister for Finance identifies public expenditure as being the major issue for attention. A secretary of the Department of Finance who has long since passed on once commented that, sadly, "Ireland is a Republic with a republican purse, quite unable to afford either civil servants or politicians with imperial tastes". The common sense of that civil servant is given political expression in the decisions taken in relation to public expenditure in this budget. The Minister rightly says that we can no longer afford the existing levels of public service spending. The money is simply not there to pay for these services.

Reviewing this part of the budget, Deputy Barry Desmond, the great hand-wringer of the 25th Dáil, spoke at some length of the road to Damascus. I am a new Deputy and I had not realised until I came into this Chamber that Deputy Desmond was a biblical scholar. Deputies will, of course, recall that St. Paul was blinded and disoriented outside the city walls. It would seem that outside Government Deputy Desmond is suffering from the same symptoms. The glaring evidence of his own dismal failure in office has left him both blinded to reality and somewhat disoriented. It has already been noted in this House that Deputy Desmond's reconversion to the path of convenient social concern came at the 11th hour and the 59th minute of the 24th Dáil. In the preceding four years the same Deputy had, without any qualms, participated in the destruction of food subsidies, cuts in education, the devastation of remedial teaching and had dealt with alacrity in cuts in health expenditure as well as cuts, in real terms, in social welfare. Whatever about the road to Damascus, the prospects of an electoral hanging clearly did great things for Deputy Desmond's long-slumbering social conscience.

The Government in their work on this budget have conducted the most stringent paring of public expenditure programmes ever undertaken in this State. While all commentators agree that this is welcome, inevitably there will be some who will argue that the cuts affect too deeply their own areas of special interest. While there have been inevitable protests from special interest groups, the courage of the Government in their original approach to expenditure has been widely acknowledged. This is rightly so, I would submit.

In Government Fine Gael's commitment to those on social welfare was at best lukewarm. Their compassion was really nowhere to be seen. Deputy Dukes during his period as Minister for Finance said — I think it was in January 1983 — that social welfare recipients should accept that they could no longer expect as a right to be granted an annual increase in social welfare payments. That Deputy's erstwhile partners in Government, the Labour Party, recently claimed that Fine Gael in Cabinet fought originally for a zero increase in social welfare this year. Whether we can accept what Labour said I really cannot say, but knowing the previous Minister for Social Welfare as we do in Wicklow, it is not difficult to give some credence at least in this matter to what that party have claimed.

The Labour Party argued that there should be an increase of 4 per cent in social welfare payments from July. Like every Deputy in the House, I too would like to see the families and individuals who eke out their living on the margin being given an increase in benefit well beyond the level of inflation. The problem is not any shortfall in goodwill. Goodwill exists in great abundance. The problem is a frustrating shortfall in means.

There is a divergence in the Labour Party's expressed desire here while in Opposition and their most recent action while in Government. When they were in power, they had power to put their wishes into effect and they did not do so. Last year a 4 per cent rise in welfare payments was given in July. This level of increase coincided exactly with the 4 per cent rise in the inflation rate recorded in 1986. The increases in social welfare which are being proposed now are, like those agreed last year, equal to the level of inflation.

There are few in this House who would choose, if they had any choice in the matter, to live on social welfare payments. Those who must do so, without any choice in the matter, must have all of our sympathy. That said, it is worth while putting on the record of this House that social welfare payments, at this time, compare favourably with those of our closest neighbours. In January of this year, an old age contributory pensioner with a spouse was in receipt of £93 here, compared with £65 across the water. In addition, old age pensioners here are entitled to benefits in kind, such as free travel, free fuel and free telephone rental which are not available to their counterparts elsewhere. This is not to say that the levels of payment are satisfactory, nor is it to say that the levels of payment are at what we would have them were the funds available to be more generous. The point I am making is simply that, when compared with that which pertains elsewhere, the benefits which exist here are reasonably high.

A second positive step taken by the Government is the decision not to shorten the duration of entitlement for unemployment benefit from 15 months to 12 months as had been proposed. The outgoing Government had proposed that the maximum duration for unemployment benefit should be reduced from 15 to 12 months starting next July. In the budget the Government considered that this saving would have been achieved at the expense of the most vulnerable sections of the community and in recognition of that will not be implementing that proposal. This is welcomed.

Another welcome improvement in the budget is in the family income supplement scheme. This is an important scheme in that it provides a buffer for those marginal cases who are most injured by means-tested services. The budget provides for increases from July in the family income supplement. It also provides for an increase in the prescribed income limits for those qualifying for FIS, bringing them into line with increases in social welfare benefits generally. This is a positive measure. It will increase the maximum amount of earnings which a person may have while qualifying for FIS assistance.

I am not sure that the Minister for Finance will thank me for this, but I would encourage the Minister for Social Welfare and his Department to ensure that the public are made better aware of the FIS scheme in the future than they were in the past. The scheme is a good one. People who are entitled to benefit under it should be made aware of its existence and of their rights.

A most welcome welfare provision is the decision to extend from October next treatment benefits to the dependent spouses of insured workers. This is a costly provision, but a worthwhile one. It will be of great benefit to women. Allied to the other positive welfare provisions made in the budget, it poses the question in my mind whether the spokes-person for the Council for the Status of Women, who reacted so sharply to the budget, was familiar with the actual detail of the budget's provision at the time that the council's reaction was recorded.

The job search proposal which is introduced in this budget is also a worthwhile initiative. As the Minister for Labour pointed out in his contribution, the scheme is designed to tackle the problems which keep people out of the active workforce for months rather than for weeks. Every Deputy in this House must be familiar with the plight of people who are unemployed, and who have, either because of the period of their unemployment, or because of a lack of personal skills, lost the capacity to argue their case for employment effectively. The scheme is a good one and every Deputy in this House should wish it well.

I suppose I would be accused of being selective were I to deal with social welfare and not refer to the changes in pay-related benefit. Under the provisions in the budget PRB is being reduced from two phases of reckonable earnings to a single rate. This reduction will apply to new claimants only. These are similar proposals to those made by the outgoing Government. It is of course, regrettable that the modification of the PRB scheme should be forced upon us at this time by economic circumstances. However, it is worth while pointing out that, in the light of rising unemployment, other countries have had to take more drastic steps. Indeed, in the UK the pay-related benefit scheme has effectively been wiped out. In other European countries there have been significant reductions in benefit.

It is worth reminding Deputies that the Government have not gone along with the proposal by the outgoing Government to reduce the duration of PRB by three months for persons on benefit. On the contribution side there are changes too and again these arise from economic circumstances. Again they are less harsh than was proposed by the previous Government. Under the present budget proposals a person will now require four years' contributions instead of an increase up to five years.

On the education side there are cuts and again it is regrettable that this should be the case. However, in that regard there is one item of progress we should all welcome, and as a person involved in education I welcome the decision to overturn the action by the previous Government with regard to career guidance teachers. The decision taken by Fine Gael Ministers in this regard was ludicrous. For a relatively trivial saving those socially conscious ladies and gentlemen were prepared to put in jeopardy the future of a whole generation of young people. The Government's decision not to proceed with this is very welcome.

On health, the charges introduced for outpatients have attracted a great deal of attention. It is worth pointing out that this is not entirely new. A £5 charge was introduced in 1982 and subsequently abolished. The £10 charge being introduced is not a novel idea. It is certainly not the swingeing measure it has been misrepresented as being in the press and the media generally and from the benches opposite. The charge will not be a recurring one for subsequent visits related to the same illness. In effect, this charge will discourage the abuse, particularly in the larger urban areas, of the outpatients' and emergency services provided by our hospitals.

The £10 per day hospital charge has also been grossly misrepresented. As the Minister has made clear, there is to be a very strict limitation on the operation of this scheme. There will be a limit of £100 per year, for example. In addition the VHI have been instructed to introduce a scheme whereby families will be covered for costs arising from the new charges. Clearly, it will be prudent for families who are outside the GMS to seek cover under this scheme when it comes into operation.

In addition to the limitations mentioned, the impact of the charges will be further mitigated by the fact that the charges will not apply to GMS cases, maternity cases, infants under six months or hospitalisation arising from certain infectious diseases. Further, as the Minister has made clear, traditionally no family in Ireland had been denied necessary medical treatment because of lack of money, and this will not be changed by these measures.

However, there is some confusion within the population as to the system of charges being introduced. This confusion has been fanned by Opposition speakers both in their contributions here and in broadcasts. In the circumstances it would seem that it would be no bad thing if the Minister and his Department were to take advertising space to advise the public as to the very limited nature of the charges being introduced.

The most stunning hypocrisy has been evident in the reaction in this House from the benches opposite to the decisions with regard to the house grants scheme. Nowhere has this hypocrisy been more evident than in the contribution on the first day of the budget debate from Deputy Noonan who, with all the charm of a spoiled child being parted from a loved toy, spoke of grand larceny by this side. He seemed to lay claim to being the only one present with the welfare of this nation at heart. Much of what he said in his speech was humbug.

Deputy Noonan's concern for the building and construction industry would ring that little bit more sincerely were it not for the fact that the Government of which he was a Minister had overseen the virtual decimation of that industry. It is worth reminding ourselves that in the summer of 1982 close on 100,000 people were employed in that industry. By April 1986, four short years later, employment in the building and construction industry was just 75,000 persons and, certainly it did not increase in the last year.

Ministers in the last Government have extolled the success of the grants that have been terminated in this budget. The question arises: success by what criteria? Deputy John Boland boasted from time to time during his occupancy of the seat in the Department of the Environment that the number of applications was one such indication of success.

In the case of the home improvement grants there has been a phenomenal response to the grants scheme. We are told that the Department of the Environment have in excess of 115,000 applications approved or on the point of approval at a total cost to the taxpayer of £230 million. The question arises as to whether the taxpayers or the building and construction industry achieved anything like £230 million worth of value from the scheme. Spending £200 million should produce very significant expansions in employment. That in turn should relieve the burden of unemployment on the Exchequer, in turn relieving the burden on the taxpayer. None of these benefits has come through.

An equally clear fact is that the improvement grant scheme was poorly conceived. No economy in the world could introduce and sustain an absolutely open ended, nondiscriminatory grant scheme, as all Members of this House know well. Ministerial boasting that the quantity of applications denotes success of the scheme are about as sensible as a supermarket owner deciding to hand out prime beef free, gratis and for nothing and then boast about the increased throughput of his butchery department. Expenditure volume is not a measure of the success of any public programme.

As for the improvement grant scheme it cannot be said either that the key surrender scheme or the £2,250 builder grant scheme was a success. Both, and in particular the former, created a temporary and clearly finite jump in one part of the house building market. However, as each key surrender meant a return of a housing unit to the local authority housing stock, depressing the need for new house building in that area, it is not clear whether taken overall the scheme will have been of any real benefit to the building and construction industry. Of course, it cannot be denied that the schemes in question were popular but popularity itself is no proof that the schemes were good.

Another major issue which has attracted a good deal of public comment is the budgetary provision with regard to public service pay. The public service pay bill in 1987 is estimated as running in at £2,840 million. The pay bill in the public sector is determined by two factors, on the one hand wage rates which are largely the subject of negotiations at national level, and on the other hand staff numbers. I am not one of those people who subscribe to the view that Ireland's public service serves only as a burden. That is not true. Our public servants have contributed much to the development of this nation and it is wise from time to time to record that fact. That said, it cannot be denied that our public service and its cost have grown in recent years at an alarming rate. Attempts to restrain that growth have not been successful. The approach being adopted by the Government here is a tough one, but then this is the time for tough measures. There will undoubtedly be murmurs from within the public service about the measures being taken. It is hoped that those flames that may exist will not be fanned by contributions from the far side of the House. In this regard I welcome some of the comments that Deputy Dukes made today.

The Government commitment in the Budget Statement and in subsequent statements to limiting the cost of Ireland's public service is a welcome one. Equally welcome are the direct efforts being made by Ministers and by the Government to create an unprecedented level of mobility within our public service. These measures are taking place in the context of a redistribution of ministerial responsibilities. The mobility which the Government are attempting now to achieve within our public service is commonplace in European public services generally. The public service must be seen as a bank of talent, not locked into immovable bureaucracies but a bank of talent that can be deployed or redeployed by the Government of the day to address the problems of the day as they see fit and appropriate.

A second change brought into effect by the Government on the public service side was the amalgamation of the Departments of Finance and the Public Service. Members will recall that the separation of the personnel and organisation functions from the finance and economic functions of the Department of Finance was recommended as far back as 1969 in a report of the Public Services Organisation Review Group, the Devlin report. The Devlin report considered at that time that the personnel functions were being overshadowed in the Department of Finance by the economic functions of that Department. The Devlin team provided a detailed and very subtle framework in which the economic functions of the Department of Finance and the personal functions could be carried out under the control of a single Minister, the Minister to be designated both as Minister for Finance and in law as Minister for the Public Service.

When the Coalition Government took power in 1973 they put through a Ministers and Secretaries (Amendment) Act which created a new Department of the Public Service. The Act departed fundamentally from the Devlin blueprint. While it was not observed at the time, the admonition made in the Devlin report that the critical issue of public service numbers, which is fundamentally a budgetary issue, should be left with the Department of Finance was ignored. That view was swept aside in the Amendment Act of 1973. The legislation that was implemented introduced a Department of the Public Service that was responsible for numbers as well as for all personnel issues.

The control of numbers in the public service became an issue for the Department of the Public Service from day one of its creation. The Department of the Public Service created in 1973 became, as a result, inexorably a control agency rather than a creative agency which was what was initially intended. The change in emphasis meant that the creative side of the Department of the Public Service was quickly buried in its identity as a control agency. From its very inception, the Department of the Public Service was locked into a conflict relationship with the other Departments of State. The Department of the Public Service, intended to become initially the motor of public service reform, became from the very day of its creation a major impediment to public service reform. Try as its personnel did to achieve reform, they could not do so. They could not do so because in spite of their best efforts they were viewed by their peers in other Departments as instruments of control rather than as the heralds of change.

I welcome therefore the decision to realign the Departments of Finance and of the Public Service. I welcome, in particular, the manner in which this realignment is taking place. As outlined in the Taoiseach's contribution this morning, the Secretary for the Department of the Public Service will retain responsibility for the personnel and organisational issues within the Department of Finance. The other public service changes made by the Government are equally important and equally welcome. I shall not attempt to deal with all of them here, but would mention a few for the record.

In particular, the creation of the Department of the Marine is to be welcomed. All sides have recognised now that one of the greatest national assets which we have in this country is our offshore resources. It is astonishing that we as an island nation have not identified this fact before. Up to the time of the creation of the Department for the Marine, responsibility for marine affairs lay in up to a dozen different Departments and a dozen different agencies. It is clear that, given that type of organisational framework and confusion, a marine industry could not really prosper.

I welcome also the suggestions being made in this budget and in the statements issued accompanying the budget regarding tourism. The additional emphasis on tourism at departmental level is very welcome. It is very clear that tourism is an area which can grow and prosper. It is also very clear that this is an area where we can create very considerable employment in the years ahead. I come from a county which is abundantly provided with natural resources and which would, obviously, be a haven for tourism, so I look forward, in particular, to the realignment and re-emphasis of tourism in this Department having an effect, not just on the economy of the country as a whole but on the economy of my constituency.

Another issue which is related to the affairs of my constituency and which is welcomed is the creation of an Office for Forestry. We as a nation yet again have overlooked the importance of this resource for far too long. The job potential in the forestry area is phenomenal. As was said this morning, forestry and the industries related to forest products cannot but prosper. We face in Europe a situation where there is and will be over the foreseeable future a shortfall on wood. Clearly an office which is geared towards furthering the development of the forestry industry is very welcome. Forestry is not just an economic benefit but it can also be a benefit in the amenity sense. I would hope that the new office will lay as much emphasis on the amenity aspect of forestry as the Forest and Wildlife Service have done so well over recent years. In this regard I should like to mention something which is dear to all of us in Wicklow and that is the position in Coolattin. We have seen, in the confusion that reigns in regard to the saving of Coolattin Woods, something of the problem of having too many ministries and too many agencies and not giving primacy in one agency to a particular task.

Another welcome change in departmental structures is, the change which is coming about on the science and technology side. In this regard I should like to mention to the House an initiative which was proposed some time ago by NBST and the IDA to the Coalition Government. This is the bio-technology initiative. It is very clear that bio-technology offers at this time the same prospect for growth as the micro-electronic industry offered a decade ago. It is equally clear, when one looks around, that we have in Ireland the resources on which a bio-technology based economy can grow. Sadly, the initiative which was proposed to the Coalition Government some years ago was let die for want of ministerial interest. The creation by the new Government of an office with specific responsibility for science and technology is a very welcome move forward.

When I talk about departmental structures I should like to refer to the emphasis in the budget on decentralisation. I do not need to go on at length about this. The reality is that we possess one of the most extraordinary centralised administrations in the world. It often seems that all virtue and knowledge reside in a very small area of inner Dublin and that for some reason or other we simply cannot adjust ourselves or cannot trust public servants based outside of the inner city area of Dublin to take decisions about the welfare of this State. Huge costs arise from the degree of centralisation we have. I would argue that the degree of administrative centralisation has not only affected the lives and well-being of each and every citizen but has helped to pervert political developments in this nation. I see Deputy Michael Higgins smiling — he knows that to which I refer — there can be no doubt that the political treadmill of constituency work and the excessive degree of concentration on the settlement of constituents' small problems is contributed to in some considerable measure by our level of centralisation.

Of course decentralisation is not just something of importance in administrative or political terms. It has very considerable importance in economic terms. The last Fianna Fáil administration had hoped to take some relatively modest steps with regard to decentralising part of the administration. Sadly the wisdom of the measures proposed by that Fianna Fáil administration was not seen by the incoming Coalition Government who terminated the decentralisation proposals that had been suggested. Therefore, I welcome the indications in the budget and in contributions by Ministers that a decentralisation policy will be reactivated. There is a modest amount laid aside for decentralisation in the budget. Hopefully this constitutes the beginning of a major move in the right direction.

That is the main thrust of what I have to say about the specific provisions of the budget. Other issues have been well covered in the debate. I would say this about the budget. This is an appropriate time to think of our future, to pose the question to this House: what of the future of this nation? This is not a time for wringing of hands. This is not a time for proclaiming our misfortunes. This is a time for us, as a nation, to take control of our destiny. This is a time for leadership.

More than ever before, leadership is what this nation needs in 1987. The budget has shown, at least in my eyes, a very welcome assertion of leadership within Government. The Government were faced with difficult decisions and, in only three and a half weeks in office, showed they had the leadership capacity so obviously lacking for the past couple of years. I contend that the Government, in this budget, have shown not just great leadership but great courage.

Any budget will have elements which are praiseworthy and others we can fault but, when one takes this budget as a whole, difficult and hard as it is, one must contend that it is the right budget for this time. It gives me pleasure to commend it to the House and to congratulate the Ministers and, in particular, the Minister for Finance who introduced it.

Tá áthas orm páirt a ghlacadh san díospóireacht seo faoin cháinaisnéis. Bhí sé thar a bheith suimiúil bheith ag éisteacht leis an Teachta atá díreach tar éis críochnú, an Teachta Roche.

I should like to begin my remarks by taking up some of the points made in the panegyric we have just heard. I might do so by immediately welcoming what I regard as fairly good news in this budget, the decision to bring back the guidance teachers. I am glad to see the Minister for Education in the House. I hope she will be able to exert her influence to an even greater degree in saving some of the other posts in the Education Vote proposed for cut and which we shall have an opportunity of debating. I welcome the decision not to postpone such benefits as had been proposed for deferment until November.

That having been said I want to take up immediately the challenge in the question posed by the previous speaker as to what kind of country we live in and what kinds of problems we face. The thing that strikes me is the sheer unreality of the Budget Statement with which this debate began and of so many of the other speeches. It would be tedious and boring were one not dealing with such an immense human tragedy as that with which we are dealing at present.

For example, looking back over the Official Report of Budget Statements, one noted that, in good times, there was an element of mystique, the Minister for Finance being photographed arriving at Leinster House with a briefcase, whether or not he had anything in it. Equally, in bad times, he would be photographed with a briefcase, when people would imagine there was bad news in the bag, or whatever.

That very illusion, the suggestion that in a single day in a year, in a speech by a Minister, one's economic destiny is decided is part of the enormous exclusion in this country of ordinary people from any knowledge of the economy under which they are ground at present or within which they are forced to work or are taxed. It is part of a complex illusory process. I am as committed to Parliament as anybody else. We know that part of the economic decisions are effected by the budget, many others are not and more and more, year after year, the economic decisions affecting Ireland are taken outside of Ireland altogether, as we know to our cost, a point to which I shall return.

I said there is an air of unreality in the speeches and I feel I am under some obligation to justify what I have said. What people asked us during the election campaign which preceded this budget, at every single door, was: can you do anything about unemployment? I have sat here throughout a great number of speeches on the budget. One would imagine that we did not have an unemployment crisis in which one person in five available for work, registered, is at present unemployed; for those who want to be exact, 19.2 per cent — a scandalous, shameful statistic.

It is equally true that emigration is recurring in ever rising numbers. I want to raise some questions about this. Why were people asking about unemployment? Why are they so worried about unemployment? It is because they realise that, with unemployment, come stigma, poverty, deprivation and exclusion. Is there anything in the budget for the unemployed? Is there anything for those who fear unemployment or for people who are worried about their children who are likely to be unemployed? These are very reasonable questions one might ask. With regard to what is in the budget I marked some phrases in the Minister's statement and in the Taoiseach's speech this morning. The Minister's speech was very interesting. It opened with what has been shrunk back to a single aspirational paragraph which I will quote:

It is time to give a new sense of direction to the economy and to harness more effectively the resources that are available to us. People are dispirited because the economy has been on a downward path. There have been too many failures, too many missed opportunities and a prevailing lack of confidence in our ability to achieve progress.

The first priority of this Government on coming into office has been to prepare a budget for 1987. At the end of that second paragraph the Minister lists three main aims, the first being:

public finance targets must be consistent with good management of the economy,

In there, the cat is let out of the bag because all of the speeches are relying in one way or another on one of or a combination of four different documents recently published. The first is a document from the Economic and Social Research Institute, Employment and Unemployment Policy for Ireland. The second is the National Planning Board's proposal for a plan from 1984 to 1987. The third is an NESC document for 1983, A Strategy for Development 1986-1990 published in November 1986 and the most quoted document in the debate so far. The fourth document comprises the different election manifesto statements.

People have been settling around the NESC document but there is an interesting difference between the first document mentioned and the third. Despite all the criticisms I have made of the kind of economics that informs the Economic and Social Research Institute, they placed unemployment-employment as the principal economic aim that had to be addressed in the years ahead. By the time one came to the ultra-conservative document of the National Planning Board, employment had faded down the list and the NESC document which has been most discussed so far puts employment at No. 4. The fiscal imperatives were the ones that were given priority. It is that document that is informing most of the Minister's speech. That approach towards the economy is dull, unimaginative, derivative, jaded and failed. It is all of these things because it uses language in a way that is absolutely meaningless.

I will give examples of what I mean. It arises in the Taoiseach's speech this morning where he says:

Firm action in controlling Government expenditure and borrowing are vitally necessary if we are to create a general climate of initiative, enterprise and to inspire confidence in our ability to overcome our economic difficulties.

Since I was a student, I have been influenced in listening to the notions of what I call the climatological school of economics. It runs like this — a climate for investment must be created. The only thing we know about this theory is that it involves a transfer from high taxation mainly paid by the PAYE sector to an industrial policy with unknown results. Another formulation refers to creating an atmosphere for investment. I have drawn an analogy between this and literature on the growing of mushrooms which argues that if one gets soil and darkens the light and throws the seed around, in time little white things begin to pop up. That is the kind of nonsense in all of these speeches. Where is the evidence that if we manage to bring down interest rates, investment will take place? If interest rates were to drop, and investment took place, are we to assume that it would lead to job creation? What of the increasingly capital intensified nature of investment? The job, with which I began my speech and which was mentioned on the doorstep of every other house in Ireland, is about four levels of assumptions away, in these economics theories.

We have had two or three stabs at economic policy in our history since we became independent. We had a period of protectionism. For a mixture of economic, social and cultural reasons people voted against that policy. A million of them left the country and the country that proudly called itself a Republic was marked by the fact that people were flying out of it in their tens of thousands. There was a change in tack at the end of the fifties and sixties and we were to have export led job creation and export led growth. It was called a policy even though nobody in the Department of Finance had yet discovered the courage to use the word "plan". "Plan" was regarded as too directive a word. It smacked of State intervention and it offended the normative ethos of the State. Therefore, people used the word "programme" until the end of the fifties and sixties. Planning smacked of socialism and we would not want that.

When the two oil crises came in the seventies and growth disappeared, we had our population massively expanded and no clear economic thinking. The only thing we were sure about was that nobody was willing to allow State led investment to take place. The argument was that the State could exist and be involved in some kind of atmospherics. One could rather envisage the situation where the State had some kind of bag of manure around its neck into which it was throwing money right left and centre to different things through about 20 agencies in terms of everything from marketing, to training, to depreciation and so on, and to this rather dead thing called Irish private enterprise. Private enterprise having shown no spark of life, the idea was that we must have industrialisation based or formed investment, irrespective of the from in which it came.

Thus it was that no questions were asked as to whether the proposed establishments were labour-intensive or capital intensive, whether they had or had not linkages in the region, or whether the money would be retained in the country or exported. It took the Telesis report to point out all of these things. In 1982, the NESC responded to the Telesis report and still the old game goes on even after amending legislation in 1986. Plain people asked questions. From where are the jobs to come? Politicians like myself ask: "Will we ever debate the adequacy of our industrial policy, an industrial policy that is patently failing?"

I regret the tenor of the previous speeches. Our problems in the economy are not ones of styles of management. That is the latest bogus rubbish, the idea that because there is a new team leader, the mushrooms will start popping ahead of their time, that the mere fact of new leadership will mean that people will start investing and creating jobs, and that there will be spirit, atmosphere and so on. That has all the symptoms of some well known illness, all of them relating to different forms of delusion. People ask simple things. Who will invest? In what, and what form will the investment take? They are entitled to see an investment strategy in the major speech made on the budget once a year.

Is there anything in this document about banking policy, about credit policy, or about where the flow of funds is to come from? There is not a single reference to the fact that not only is there an outflow of funds from the multi-nationals located here but that they are, in fact, borrowing 60 per cent of their requirements in many sectors within the Irish credit system, soaking up Irish credit and moving it out of the country. I searched the Taoiseach's speech with interest to see what he had to say about that. Early in his speech he told us that £1.5 billion left the country last year. Later he told us he did not know where this money is going or what is happening to it. He said:

I have referred to the flight of capital out of the economy. The astonishing fact about that outflow of funds is that there has been no precise information about its composition or cause.

The Taoiseach knows £1.5 billion went out of this country but he does not know where it went, why it is going or what is happening to it. Is that not a wonderful piece of inspirational leadership in itself?

I believe people looking at this budget will ask themselves a number of questions, for example, what does it do for employment-unemployment? Will the budget make our society more equal or less equal in terms of the equality I speak of? What will be the effects of taxation? Will taxation as restructured by these proposals make life more equal or less equal in terms of the equality I speak of? What will be the effects of taxation? Will taxation as restructured by these proposals make life more equal or less equal, more equal in the sense of housing, more equal in access to the health services, more equal in access to education or more equal in terms of the removal of the stigma of unemployment and social welfare? I believe people can answer those questions for themselves but the answer is no, this budget will not make society less unequal.

I do not blame the budget speech for that because I want to say — and I will continue to say this as long as I am a Member of this House — that there is no commitment in this country, or in any of the other three major political parties to the reduction of inequality in Irish society, an inequality which is reflected in the ownership of wealth. Interestingly, none of the speakers from this side remarked on this point, but there is less tax on wealth in 1987 than there was in 1975. We have, as has been pointed out, the same income distribution as Bangladesh in terms of the bottom quintile of our population, in terms of proportions of real and disposable income, the top fifth and so forth, a society that is massively unequal. The pattern of transfers of the State are regressive in many cases and grossly unequal in terms of access to health, education social provisions and so on, with one-fifth of the PAYE taxpayers paying £78 each per third level student while at the same time people in the unskilled category have one-sixteenth of the chance of attending third level education as a professional person. You can pay democratically for third level education but you will not get access to the third level institution, a point to which I will return.

On this question of equality the budget had to be phrased at a time when there was not only no commitment to equality, but when there has been, as has been repeated here year in and year out, no clear framework on social policy.

We had the old Irish hypocritical attitude to welfare. The idea was you had a welfare state in neighbouring Britain, sinful England. The late Dr. Lucey once said when some measure was proposed that the State would soon be the father and mother of us all. He was protecting us from the welfare state. The Irish emigrants went for their glasses, dentures and medical tests to Britain and sometimes they came back, but we never had the courage to say, as brave people did in England, that we should have a general health service with basic standards which would be available to all sections of the population.

I found it very hard to sit here and listen to the statement of Deputy Roche without getting upset. He said that traditionally nobody in Ireland had ever been refused medical treatment because of lack of income. Is he not aware of the difference between someone who has the money to pay for an orthopaedic operation and someone who has to wait four years, or somebody who is waiting for orthodontic treatment in the Western Health Board area? I spent seven years looking at the distinctions between the private and public consumers of health care. The Deputy mentioned special interest groups. Parties like his, and other parties on this side of the House, feel it is very easy to wrestle with people who are poor, but it is not easy to wrestle with the professional groups who have looked after their medical interests. It is a scandal that in a country like this there are two medical systems, private and public, two educational systems to some degree and two different levels of the legal profession with no commitment to the general principle that there should be a basic level of health, housing, care, welfare and education to which everybody would have access.

Lest people think I am inventing all this I will give one example. I was looking through the budget speech and trying to work out the new welfare provisions. Under this budget a child living with a widowed mother, in the view of the State costs £12.40 a week to keep. A child living with a widowed father costs £8.65 a week to keep. A child living with a deserted mother costs £12.40 a week to keep. A child living with a deserted father costs £8.65 a week to keep. A child living with an unmarried mother costs £11.25 a week to keep. A child living with an unmarried father costs £8.65 a week to keep. A child living with a mother while the father is in prison costs £11.25 a week to keep, while a child whose father and mother are in prison costs £8.65 a week to keep. The Department's approach to social policy is incoherent and a thing of bits and pieces, because even in relation to single provisions, it is broken into many different bits that are a matter of confusion and are creating enormous hardship and bureaucratic delays.

What about the treatment under taxation of people with child dependants? We get the same panoply of different structures. What do those figures reveal? They show that there has been consistent opposition to having a basic income for people to meet their needs by replacing a panopoly of social welfare provisions, a conclusion, scarcely radical, which the Commission on Social Welfare came to. Will we acknowledge that children need a certain degree of maintenance or that people have the right to go to school?

There is less taxation on wealth in 1987 than there was in 1975, as well as less capital taxation and reduced corporation profits tax. As a result of all those hostilities in tackling the wealthy and tackling people who are being irresponsible in relation to capital, we slap charges on left, right and centre. The notion that these charges are modest is a most horrific proposition in itself. Each health board have received a communiqué from the Minister for Health about the new health charges. There is one interesting health charge which is not mentioned in the Minister's speech but which is mentioned in item 5, page 3 of the communiqué. It says that a charge of £10 will be introduced from 1 May 1987 in respect of hospital out-patient attendances and referrals from general practitioners and that the Health Act, 1970, was being amended accordingly. The part that was not in the budget speech mentioned referrals from general practitioners. This particularly affects the aged and is an additional cost on many of those who live in outlying areas and have to pay for transport to get to hospitals and attend at clinics. People in the medical profession tell me that the high cost of tax is in parts of the constituency I represent means that people are already breaking their appointments. This additional charge is an added burden.

I will not fault the existing administration for the inadequacy of these proposals. It has been informed by a bankrupt thinking for a very long time. When the State was founded — I will say this for the last time — it is well known that the British Treasury officials stayed on for a number of years. When you look at the State papers in Britain you find they reported they were satisfied that nothing would change, that there was a high level of good conservative financial performance from the Irish Department of Finance. I am not criticising just the Department of Finance. I am simply saying that there was a stable of economic thinking from which all of this comes: the idea of the de-peopled economy. There were people in other countries and a few brave exceptions in this country who argued that the economy was an instrument to be used to enhance people's welfare. You used economic resources to create and enhance the right to work, to provide social services, to structure your society and to pay for it.

What is the thinking in this type of budget speech? It is that you will get whatever is left over. We will allow people attend schools and we will give education in as much as we can afford it but after our fiscal imperatives have been met. Meanwhile our fiscal imperatives have to be met. They could be met by taxing wealth, capital and a whole series of neglected aspects of asset development. Every Deputy talks about our greatest national asset. Depending on where or what day of the week they are speaking that may be our young people, or the sea or the land. In relation to land, the 130 people who were involved in an evaluation that would have updated the old Griffith Valuation of 1859 are now under notice. They were doing more than preparing the tax liability of people involved in land. They were doing survey work which could have been used to get information about the neglected asset of land. The farm tax was abolished. It was defeated on the basis that its yield was not high in relation to the cost of its administration. The most productive farmers, those not in the lowest group but with under 70 acres, welcomed the farm tax because they could see it was directly related to an incentive to productivity.

There is a reluctance to tackle the fact that we are not using land properly. Because the land is not being used properly, it is not developing all the job potentials we could get from it. For example, sometimes less than 10 per cent of the agricultural produce exported from the different regions is in finished form. In this way we are losing the value added that could create jobs. Does anybody think that somebody will suddenly spring into existence and start providing all the jobs in the food industry? We need State companies to do that and they should be used to do it. Why not say you are going to expand a State company and employ people to put investment packages together to create jobs in some aspect of the food industry? Instead we are creating an atmosphere in which investment decisions will be taken by somebody and that somebody will have the consequence in their actions of creating jobs. The people who want employment in this economy deserve better. That is not inspirational and it has no leadership potential or anything else. It is evasive waffle the likes of which I have heard again and again.

The question of the economic theory I mentioned that has this hostility to the State at its centre is very interesting. It has some economic origins in terms of the structure of ownership in this country. It has others such as the particular kind of social philosophy which prevailed in the thirties, forties and fifties but there is now an increasing hostility to the State. People speak about rolling the State back from our lives. The people in the new party, the Progressive Democrats, are not in favour of the demolition or the destruction of the State. They want the State to stay in existence in its present form, gathering general taxation, £75 per PAYE tax-payer, and subsidising their children's education out of that money. That State is fine. It will reproduce a class-divided society with all its status and privileges.

Equally, in relation to the private sector of industry with its £1.3 billion every two years, with 20 agencies and with thousands of civil servants working for them, that State is fine too. What State do we not want? We do not want the State that is producing social goods. We would not want to hire extra nurses, doctors, teachers or anybody who provided care that could be consumed generally. The Progressive Democrats want a frozen version of the State that is taking money in tax from the public and giving it to them and their children. We see more of these people, generation after generation, in the Irish Republic that will have exported most of its unskilled people and that will have kept this lot going again and again. All the parties are the same and that is why they are not concerned about unemployment. They are operating within categories that cannot bring an analysis to bear on our unemployment crisis. Maybe I am a pessimist about all this but I want to ask these people where is the evidence? Where is the investment specified? Where are the activity and the jobs? Their idea is that the problem is simply a set of managerial defects. Can they not steady themselves for even a minute and read the NESC report, No. 83, which states:

Total employment declined by 82,000 between 1980 and 1985, that is at an average rate of over 16,000 per annum. This sharp fall in employment coupled with an increase of 52,000 in the labour force meant that the number of persons unemployed, on a labour force basis, was 134,000 higher in 1985, at 225,000, than in 1980.

The test of all our speeches is what effect they will have on the facts that are in that paragraph. They will fall, far short of what we need in job creation. Inevitably, then, there will be more emigration. In that regard we are quite scandalous in our neglect of one of a new group of people who are at risk in our society, those between 16 and 18 years of age. They do not qualify for provision under the Irish Social Welfare Acts. They do qualify in Britain. I visited some of those people in London. They are living on the edges of society. They take the boat leaving overcrowded houses where parents are unemployed and where they are not wanted. Some of them had to live rough after arriving in England. We have not amended our legislation to plug that gap for the 16 to 18 year olds. We pretend emigration does not exist. People say there is a new atmosphere.

Jobs continue to be lost in agriculture. Our population figures continue to produce numbers of people on the unemployment register every year. Our industrial job creation has not been a fraction of what is required. In its best year it was 30 per cent of the number of jobs created in that year. We lost jobs in agriculture and in the traditional manufacturing area, indeed we have fewer people working in some manufacturing sectors than there were in 1926.

We have lost jobs in a whole series of other areas, including the service sector and in this budget of joy an embargo has been placed on public service employment. A message was sent to the chief executive officers of health boards that as and from 1 May trainee nurses will have to pay for their training. When I was a young person in County Clare people in one social class got their nursing training in England and people in another social class went to hospitals — charity prevents me from naming them — which were finishing schools, part of the marriage market. The idea was that one met nice people while training in these hospitals and, of course, it worked for some people. That is exactly what will happen now when nurses have to pay for their training. Very few of the thousands of young, dedicated girls who wish to enter nursing will be taken on. They will get an inadequate amount of money to help towards the cost of training.

In Galway this week, I was told that there will be a freeze on employment of people in medical care generally. One nurse and a first year probationer are looking after 27 patients in a female surgical ward on a 12-hour shift. That is health care in the Republic which is in league one in the international league of development, which it needs in order to have its super, private health care to impress people. I wish that Deputy Roche would visit some of the hospitals in my area and he might change his tune.

It is an illusion that anybody who really needs care is ever denied it. The Institute of Public Administration published a document entitled Poverty and Social Policy in 1982 compiled by Laraine Joyce and A. McCashin. It gathered all the statistics in equality in terms of the different indicators which I mentioned. It examined Irish social policy and asked if we were creating more inequality or progressing. It concluded that we were not reducing inequality in relation to housing policies, health and so on.

The old notion from the fifties of the deserving poor and of those really looking for work is again fashionable. The notion of the deserving poor is propped up by the idea that of course we should have compassion for them but nine out of ten people are not in this House to try to implement a radical restructuring of society. They are there to practice compassion. The survey in the document to which I referred showed that 70 per cent are in favour of treating the poor compassionately but only about 12 per cent believe that differences in society are due to anything other than bad luck, drink, nature and things like that. The national view of the Republic of the equals is interesting because people are now talking about categories that can be protected.

I heard the Minister's eulogy on the Jobsearch programme. The only original thing about it is its title. The Taoiseach gave the game away — God bless him, in many ways he has a charming directness at times — when he said that the idea had been tried in the United States and France. It failed in the United States where it is regarded as a morale boost for the long term unemployed. If you really want to help the long term unemployed a proportion of public service posts should be reserved for them, which would be practical news for anyone in that category. In the scheme, Workfare, people were interviewed, they worked for a while and were psychologically boosted only to find, after a while, that the job only lasted for a very short time and they were thrown back on the unemployment heap. We intend to invest £11.5 million in this new safari for the unemployed.

Recently, in answer to a question on social welfare fraud, the Minister of State replied that the figure amounted to £1.4 million. We intend to expend all this money in searching for the small number who defraud the Department of Social Welfare. Of course, I will be told that it is not really about that, it is about running seminars, having little psychological groups, bringing people for interviews and motivation.

Unemployment can cause psychological collapse and I commend anyone who brings in schemes to tackle the problem. It is equally true that among the one out of five who are unemployed, there are enormous numbers of people who are not short of motivation, they are simply short of any prospect of a job. They are asking for job creation and investment which will give them some kind of hope in relation to employment. In one country where these lookalike schemes have been tried it is estimated that unemployment figures have been reduced by 10 per cent. In Ireland, there will be an interesting result because there is no basic level, no floor below which you cannot fall in terms of need. Many people supplement the 150 different kinds of allowances or benefits by partial involvement in the black economy. There is a nice tradition of people writing to the Department every now and again and some of them, when called for interview, will head for England. It will be an emigration-producing measure. Even if they earn some money in the black economy in England they will be able to return with it, tax free, as a result of the provisions in the budget. There is an inducement to do so. I will watch this Jobsearch programme but I can only judge it by the previous incarnations——

How will it encourage emigration?

If people did not want to face an interview in case information might be produced in relation to their status, they might dodge it by going abroad. It is not such a fanciful idea.

Are those people defrauding the system now?

The Deputy has missed the point. A sum of £1.4 million was lost in social welfare fraud last year.

I should like to remind Deputies that this is not Question Time and if they wish to ask questions they should please address them through the Chair.

Those remarks were put through the Chair.

Acting Chairman

If they were, I did not hear them.

They are all very cosy over there and I am feeling left out of it.

Acting Chairman

I would like to remind Deputy Higgins that this happens to be the Government side of the House, not that side.

Thank you for your protection.

It is sometimes hard to distinguish.

I have been trying to find out what the precise employment effects of the budget are. It is suggested that this type of budget statement will create an atmosphere in which investment will take place and jobs will come from that. In the meantime we are going to cut jobs in the public service, remove grants in the construction industry, enforce a pay freeze in the public sector and remove 130 people from the farm classification office. The atmosphere for investment had better be good to make up for the jobs which are lost directly as a result of the budget. How much time have I left to conclude?

Acting Chairman

You are due to conclude at 5.35 p.m. which means that you have 12 or 13 minutes left.

I should like to deal with the tax implications of the budget. In 1984, 36,000 farmers paid an average of £744 each in tax. In the same year 90,000 people in that sector were not classified and did not pay any tax. There were 138,000 workers in the PAYE sector in 1956. By 1983 there were 792,000 in the PAYE net and in 1984 they paid an average of £1,875 each in tax. An interesting fact to emerge from the 1986-87 figures was that some of the people paying tax in the agricultural sector were paying about a half to two thirds of the amount to their accountant to make sure they did not pay any more tax.

This is because the Deputy insists that the books——

The Minister can draw his own conclusion. Some people are being treated very favourably in relation to the tax burden — those who have been the beneficiaries of the decimation of wealth and capital taxation since 1975. There are other people who have not been classified and who have yet to come within the net. I am not saying these people are not willing to pay. However, one thing we are sure of is that the people who are caught within the net, the pay-as-you-earn workers, are paying an excessive amount at a high rate and they are carrying a disproportionate part of the yield.

Looking at the budget, has tax equity been advanced one whit by this budget and has there been a restoration of capital and wealth taxes to any degree? Of course, we could not have this in the present atmosphere because the suggestion of taxing wealth would change the atmosphere so much that all the latent entrepreneurs in Ireland would flock out of the country and never return. They would lose their incentive to invest.

If we are to take the Taoiseach's remarks seriously the only thing they are investing in at present is speculation. At the start of his speech he knows that £1.5 billion is gone but later on in his speech he did not know where it was going or what was happening to it. He seems to have felt that money was leaving the country and going into what is popularly called the black hole. This speculative character of the economy is something that not only socialists refer to, but other orthodox economic commentators have referred to it also. The Irish system of incentives is such as to promote as much a reward for speculation as it is for genuine investment and thus people looking for a simple return on capital are not automatically moving into the productive area.

What we are left with, therefore, is another speech that purports to be about the economic management of this country, but it leaves the basic structural problem of unemployment practically untouched. Why should a market lead recovery solve our problems between 1986 and 1990 when it has not done so in any other country in Europe, or has never done so in any period during which the population has expanded in Ireland.

What about Russia?

Is it the power of prayer, or do we simply say that maybe it will happen here. This is the logic used. What we are being asked to do by the people who elected us is to think again about the assumptions we make about the economy. We now have to decide to be the Parliament of the people who stayed at home. Like our predecessors we will represent only some of the people in our constituencies in future. The people who have gone away have no representation here. One might argue that the pattern of Irish politics has reflected that fact. What needs to be specified is that jobs could be created in all of the areas which have been mentioned, the State companies who could lead that investment and that this would release the energy and the capacity which exist there among our educated workforce to make it all happen. We have, curiously, a most profound ideological Dáil, a Dáil that continually says that we are all practical when, in fact, what we mean is that we will move Heaven and earth to make sure things remain the same.

In all of the indicators there is an unequal society producing a slum set of conditions for the average citizen and which is now beginning to export its people again. I often ask myself if there is any hope that people who claim to be radical and republican would say it is a basic right for people who do not want to emigrate to be able to find employment at home. When emigration returns, society will become more unequal because there will be a narrower range of opportunities. Children will be paying more on the bus to get to school. Universities will be decimated by further cuts in addition to the Fine Gael cut of £3 million. There will be another cut of £1 million to the RTCs in addition to what was proposed in 1986 and a further additional cut of £100,000 in adult education. The people who come out of third level institutions will be the sons and daughters of the professional classes who will stay at home to debate the joys of the society they live in — a conservative, economically enfeebled society. This will happen because we have an ideological opposition to the planning process.

At budget time it is reasonable to ask what principal economic problems has the budget addressed. To its credit the ESRI report put employment first. It remarked that an incomes policy cannot be confined to wage and salary earners. Whose income has been frozen and reduced in the speeches by the Minister and the Taoiseach — those who earn their incomes. Those who earn their income from any other source are not touched by the budget because there is no wealth or capital taxation. A number of evasions are still possible and a number of people are excluded altogether.

The second point the report of the ESRI made was that there should be a more effective tax system for farmers and the self employed. Can anybody say that that aim has been advanced by the budget? The third point made was that there should be a reorganisation and a reconsideration of so-called productivity deals. These were the special awards the report was addressing itself to at that time.

The principal problem was the one of unemployment. This has been neglected. I equally think that the analysis which has been brought to bear on our economic problems is now a kind of a technicist thing. It has become a technical problem. Even the media have reflected this in quite interesting reproductions of an old way of dealing with the budget. I mentioned their managed illusion about it earlier but their so-called financial discussions are interesting. Their approach is to wheel on a so-called neutral technical expert on the economy or on fiscal matters and interview him first. They ask him what are the real problems and he will say that the national debt servicing requirement has to be reduced as a proportion of GNP. These people rarely mention employment and unemployment.

Next, they turn to three or four ordinary TDs. They will start by asking the three conservative ones what they think of that truth which has been expressed by this so-called neutral person. Finally, they turn to a left wing person and they say to him that there are people like him in the country and ask him if he would like to tell them all his rubbish again about State investment and so forth. The nature of this country is so ideologically diseased in relation to the thinking about human problems that people in a dreamlike trance wander through it accepting as natural that children born the same must grow into different experiences, that people with the same illnesses must be treated differently, that people of the same age must or not be allowed to go to school, and that people who have basically the same needs, housing, shelter and food, must be different. They must never think or question that. You just dream through society and present its perfect reproduction in an analysis as if its only problems were temporary adjustments to straying and all the time having these deep structural inequalities in it.

If I might sound theological, these are appropriate reflections at this time on the budget. I am very sorry that I have not been caught up in the general euphoria that is supposed to be sweeping the land and that we will have jobs created in my constituency before we go home.

Acting Chairman

If I may interrupt the Deputy, he has two minutes left.

I mentioned unemployment because I feel we are now moving towards a situation where we are accepting high levels of unemployment as natural. We are accepting it as not constituting a crisis. I see a situation where people who have been on the long term unemployed list will be regarded as the equivalent of abandoned pieces of productive machinery. That is what is happening. People are saying that there is no work for them.

What we need is a people-orientated version of economics. I will say this about the Taoiseach; there are times in his political history when he has seemed to be in favour of such a view. I will not stand up in this House like other Members on this side of the House and say: "We have managed to convert the Taoiseach, are we not lucky?" I hope this conversion is temporary. What is very necessary at this time is that we ask ourselves deep questions between now and the remaining budgets that are to come, and they are the questions I mentioned earlier, as to what kind of society we want to live in. This is one of the rare opportunities we have of commenting like this. As I have said, what we are witnessing is a bankrupt intellectual tradition. Behind all of this useless thinking, as I said, is a stable of orthodox economics which disapproved of the independence of this country and which at the very beginning wanted to run this country in a grocers way in terms of counting pennies.

Acting Chairman

I ask the Deputy to conclude.

Give him more time.

I repeat that what we need to tell ourselves is that maybe it is not a matter of one party or another, that maybe we are losing the moral and intellectual capacity, through our trained indifference to suffering, poverty, inequality and emigration, to produce alternatives. If we fail to do that the answers in the end will not be in this House, but is likely to take place in several other countries as the unemployed are neglected.

Before I begin on my contribution on education I would like to congratulate the last speaker on his appointment to the front bench of the Labour Party and indeed any Member in this House who has been elevated to a similar position within their own respective parties. Again, before I commence my speech I would like to say to Deputy Higgins that as his remarks, exhilarating as they were, are on the record of this House, it falls on me to rebut the main one. He stated that our budget did not mention the word "unemployment" and did not address itself to the issue of unemployment and that the Taoiseach and the Minister for Finance did not take account of it. I want to put on the record that the thrust of our budget and all our statements and policies in that regard are geared to meet one thing, which is our recognition of the threat of unemployment and our commitment to alleviate that threat. That is why we have taken the measures we have taken, difficult as they have been, because we have seen in the taking of those measures a drop in interest rates with a resulting economic upturn. Like Deputy Higgins, I share in the strong feelings and assumptions that the economic climate of the country will improve. It is too facile to dismiss all of this as one of the new isms or ideologies or the one he spoke about, climatology. I, in my simple way, thought that related to the weather.

That is what it is.

Atmospheric.

I now think that it is, dare I say it, socialist type of talk which we hear from time to time but which has in essence no effect on anything. I do not share Deputy Higgins's trepidation and sense of despondency and gloom with which he has infected this Chamber and I do not share the sense of depression and gloom with which he has endeavoured to infect all of us in place of his natural sense of exuberance. I hope he will drop the mantle very soon and resume his cheerful and outgoing self.

I am pleased to be here at this time representing the Government at this particular stage of the debate.

What about the cuts?

We are looking forward to this.

I am sure you are.

You did not want them last year when you were on this side.

(Interruptions.)

Acting Chairman

Deputies, please.

It is all right, Acting Chairman, I will keep them all at bay. I wish to state at the outset that this Government are committed to introducing policy measures and reform in the education sector. Such measures which my Department will implement with the co-operation of management authorities, teaching interests, parents and other interested bodies will be aimed at making the education system a more effective one by way of quality; a more egalitarian one by providing a more equitable distribution of resources and a more cost effective one.

At present this country is faced with most serious economic and social problems. There are over 250,000 or over 20 per cent of the labour force out of work and almost one-third of these is under 25. Unemployment occurs on an unprecedented scale for those who say we did not mention it. Our total national debt is almost 150 per cent of GNP at over £24 billion. The opening Exchequer borrowing requirement is in excess of £2,028 million. This is at a time when the performance of the economy is unsatisfactory — the economy has shown no growth.

The difficult position of the public finances, in particular the level of borrowing to sustain the public services and the cost in real terms — the opportunity cost — of servicing the national debt must be tackled. Solutions must be found for the major obstacles to our development as a country.

It is clearly evident to virtually everyone that in regard to reducing the national debt, GNP ratio requires a substantial reduction in public spending and a reduction in the level of public services that many people have come to expect as of right. In the recent report of the National Economic and Social Council, November 1986, it has been argued that "unless the balances in the public finances are resolved, it can be expected that the evolution of domestic interest rates and of the exchange rate will continue to exert pressures detrimental to the competitiveness of the internationally trading sectors of the economy, and injurious to the prospects for overall output and employment growth in the medium term".

This Government recognise that in order to encourage and foster economic growth and recovery it is necessary to take courageous and radical measures. It is necessary to contain the level of public expenditure and to reduce this country's dependence on borrowing. As the Minister for Finance stated in his budget speech, we simply cannot afford our present level of services, and measures were then announced which indicate the firm commitment and resolve of this Government to tackle earnestly the task of getting the country out of the present economic crisis.

In the areas of education-the Government reappraised fully and comprehensively the Education Estimates which were published on 20 January by the previous Government. As a result of this reappraisal the Government have decided that for non-capital services the total gross provision in the five Educations Votes, plus the youth levy for 1987, will be £1,152 million approximately, 82 per cent of this is required to meet salaries and pensions. Coming at a time of severe economic difficulties for the country these allocations are a clear indication of the significance and importance that this Fianna Fáil Government place on education.

That is £11 million less than the figure provided originally.

The Deputy should wait until it is his turn to make a contribution. He is not the spokesman on Education for the Labour Party.

Taking into account the existing financial difficulties which face this country it was possible to identify a number of areas where it would be possible to achieve some savings without adversely affecting either the quality or the quantity of the services. None of the measures which the Government have taken in the Education area will in any way restrict entry to education or limit educational opportunities.

Time will tell.

It is just 20 years ago since a Fianna Fáil Minister for Education, the late Donogh O'Malley introduced free post-primary education. Since that time we have witnessed an unprecedented expansion in our education system at all levels which placed heavy demands on educational administration and management. However, the personnel involved proved worthy of the tasks which confronted them at the time and we continue to prove worthy of the task.

We now have almost one million young people receiving full-time education in our schools, colleges and universities and these are taught by over 42,000 teachers and lecturers. In the current year there are at primary level approximately 578,000 pupils. This is an increase of over 73,000 since 1966 and corresponds to a percentage increase of 14.5 per cent approximately. The increase in enrolment at post primary in the same period is even more striking — in 1966 there were about 143,000 pupils enrolled in second level education programmes whereas the current enrolment in these programmes is 345,000 pupils approximately which corresponds to an increase in excess of 145 per cent. The corresponding figures for enrolment in third level programmes are 20,700 and some 55,000 students respectively which represent an increase of over 165 per cent.

The population of our schools and colleges is now at an all-time record level and the education sector is a large consumer of public funds. While 20 years ago the public funding of education represented almost 14 per cent of total public expenditure, this year we will be spending 17.2 per cent of total expenditure on education. On any international comparison this is well above average and is an indication of the importance the Government, and the Irish people, place on education and on the need to ensure that the education system produces well-educated, well-qualified individuals.

By way of further comparison, I was impressed by some statistics in relation to our second level examinations. In 1967, a total of 21,800 pupils sat for the intermediate certificate examination whereas in the current year it is expected that some 60,500 pupils will take the examinations. The corresponding data in relation to the leaving certificate examination are even more impressive. Almost 13,600 candidates sat for the leaving certificate examinations in 1967 whereas this year some 57,400 candidates have entered for this examination — this corresponds to an increase of over 322 per cent.

The figures I have given clearly indicate that the education system has grown and expanded significantly during the past two decades. It is unlikely that overall in the coming years there will be more than a very modest increase in total numbers in the education system. In fact indications are that enrolments at first level will decrease annually from now to the end of the century when enrolments are expected to drop to below 500,000. This is due to the declining birth rate in recent years. There will however be continued growth at second and third level for some years to come. Enrolments at second and third level are still increasing at the rates of 2 per cent and 3 per cent approximately and it is expected that enrolments at second level will reach maximum in 1995-96.

Due to changing circumstances, on account of demographic factors and the need to contain public expenditure without adversely affecting educational outcomes, it will be necessary in future to make greater efforts to develop managerial and administrative expertise and skills. Greater attention, too, must be placed on educational planning than was done in the past when it was largely confined to the identification and setting of goals. Not enough attention perhaps has been paid to the various means whereby these goals could be achieved, to the development of systematic cost-effectiveness and cost-benefit studies.

Reform and development measures taken in the education area must be based on comprehensive economic, social and demographic data and financial constraints as well as on educational and political considerations and must be taken into account. In addition reform measures in the education system must be soundly based and be supported where possible by research programmes and experimental projects. Modern management and educational tools need to be fully applied to develop relevant models for reform and to evaluate the outcomes of research and development programmes.

At a time when financial resources are very limited and are likely to remain so for some time, it must be accepted that, at best, resources for education are likely to be maintained in real terms at the existing level. It is essential that the very best and most positive use is made of those resources which we have available. Planning the education services assumes greater importance, and it is my intention that even more emphasis then heretofore will be placed on the planning function. I am sure that will appeal to Members on all sides of the House. I want to see future educational planning take the form of a continuous macro plan.

It is my intention, that, within its framework, every sector of the education services will be covered — first level, second level, third level, further education and youth, sport, cultural, scientific and international activities. Provision for co-ordination of educational planning with other sectors of the economy, for example, labour, health, agriculture and so on, will also be planned for.

At any particular stage, the plans will focus intensively on the immediate period ahead and review critically the performance in the recent past. From year to year, the focus will be extended a further year ahead, and adjustments will be made, depending on such factors as the changing needs of the individual, the community and the economy, the resources available and the effectiveness of previous practices. Particular emphasis will be placed on areas which are seen to require most attention, while ensuring that no area escapes consideration and review. A feature of educational planning which is not widely recognised is the long lead-in time for the introduction of new initiatives and their realisation, in terms of graduation from a particular level of education, or a particular course.

Before new initiatives can be introduced, it is necessary to provide the infrastructure to support them — facilities, equipment and accommodation, textbooks, trained teaching staff, whether by redeployment or by provision of additional facilities. It may be necessary to initiate a pilot scheme, to discuss new proposals with school managements and staff and when new courses are finally introduced, the first cohort of students must complete the course — which usually lasts for a number of years — before its impact can be fully assessed and evaluated.

In evaluating any project measures of quality other than examination results must be applied, such as, the relevance of the education services to the needs of the individual pupil, to the community and to the economy; the acceptability of educational standards; equity of access to education and equality of opportunity and the cost-effectiveness of the inputs. It is not easy to devise standards for evaluation of these features but we must be continuously attempting to assess them.

Sometimes we tend to lose sight of this basic time-span and the public perception frequently is that little is being done towards reforming a system, while the reality is that reform is going on, albeit in what might be perceived as a slow fashion.

To assist in forward planning a group in my Department are working on a strategic plan for an information technology system. The first stage of the plan is nearing completion and the planning team has been careful to ensure that the information requirements of all areas will be incorporated into the plan. I attach great importance to the introduction of the new technologies in my Department as quickly as possible. With more detailed, accurate and up-to-date information available quickly when required, it will be easier to analyse the effectiveness of the services, assess our arrangements for redeploying our resources, and consider alternative options.

Research and experimentation in education has been a little unco-ordinated and diffuse in the past. It is my intention that the research capacity in education should be strengthened and developed. This in turn can contribute to better educational management, to greater educational efficiency and improved educational outcomes by clarifying issues and evaluating results of pilot studies. A number of research projects conducted in the recent past or currently in progress are particularly interesting and may ultimately have a significant impact on school curricula. The research project on junior cycle English, recently completed, and the project to investigate the effectiveness of various teaching strategies for teaching Irish in primary schools, both of which were initiated by inspectors in my Department, are examples of research programmes that need to be undertaken. Other worthwhile projects which are funded from the research allocation include studies into the use of the new information technologies in teaching science-based programmes, the development and testing of computer-based courseware for teaching a number of second-level programmes, the evaluation of a number of pilot intervention and EC educational projects and the funding of research activities in the area of adult education and literacy programmes.

An increased provision over that period in 1986 has been made in order to promote equality of educational opportunity for girls and boys during the current financial year, Both international and national activities are envisaged.

On the international front contracts have been signed by my Department with the Commission of the European Communities whereby the Communities will contribute 50 per cent of the cost of implementing two programmes. The first one is a European Community poster competition — this is a new initiative of the European Community Action Programme to promote equal opportunities for girls and boys in education and has as its theme "Equal Opportunities for Girls and Boys in Education". Prizes involving travel will be awarded by the European Commission to the four winning entrants from Ireland. The second programme is an action-research project designed to stimulate the interest and encourage the participation of girls in school activities related to the new technologies. This project will involve four schools, representing the main kinds of second level schools in Ireland, secondary, vocational, community and comprehensive.

At the national level I have agreed to an extension of a pilot project to encourage more girls in senior cycle second level education to study the physical sciences. The Minister of State with responsibility for science and technology, speaking in Limerick at the weekend, placed greater emphasis on this project. Shortly after I went into the Department I asked for the file on this matter and I was struck by the imbalance in regard to girls and young women taking these courses in second level schools. I hope the project will unearth the reasons for this and point the way towards a remedy. It is a matter of concern to me that the number of girls participating in the physical sciences, in particular physics, is still relatively low. In view of the growing importance of science and technology and the need to have well qualified personnel in the physical science area, it is important to encourage more boys and girls, but especially girls because so few of them are at present in this area, to take up the sciences. The scheme which is currently operating in four regions will be extended to include six regions as from September 1987. I hope it will then be further extended. The project will be evaluated and steps will be taken based on the results of that evaluation which will have long-term implications for the career opportunities of young women.

The background report, in preparation for the OECD review of the Irish education system, by a national team which began work in 1986 will be completed towards the end of this year. It is currently in operation. The report will identify a number of major issues relating in particular to teacher supply and training. The report will be submitted as a brief to an international team of examiners who will be nominated by the OECD and who will visit this country early in 1988.

I am indeed pleased that the exercise will focus on the quality of the educational service delivered by our schools, both the present position and the possible strategies for maintaining and improving it in the context of falling rolls and rapidly changing social and technological needs. In addressing itself to the important issue of quality it will complement the other main developments of the past 20 years, that is, the quantitative expansion of the system and the reform of school curricula. We should be very glad that such a report is being compiled. I look forward to the results of that report and to facing into the challenges which will be presented.

And the resources?

What about the cuts?

We must await the report. It is my expectation that the work currently being done by the national team and the findings of the OECD examiners will provide material for a constructive debate on relevant educational issues and will indicate policy options for Government.

A number of issues will need to be addressed in the near future in the context of the provision for primary education. I will mention some of them briefly here today.

The declining birthrate of recent years is just now becoming a factor of importance for primary education. It is intended in the near future to work out guidelines for coping with developments in this connection, so my remarks today will merely refer to selected aspects of what is clear right now.

Many commentators regard declining enrolments as simply an opportunity to improve the pupil-teacher ratio, an objective which is indeed high on my priorities for primary schools but there are other issues which must also be taken into consideration.

Falling enrolments are not to be seen as having a simple arithmetical dimension only; a drop of, say, 10 per cent in numbers has quite different implications for urban as compared with rural areas, for large schools as against small. Declining enrolment in an individual school reduces the income from capitation and makes difficult the maintenance of the numbers required to support transport services or other schemes that require fixed minimum participation: heating, cleaning and similar costs, per pupil on roll, tend to rise. From a slightly wider perspective, reducing numbers in urban areas or in large towns results in empty classrooms and even in empty schools, giving rise to a need for careful scrutiny of proposals for new accommodation in adjacent areas.

I have described some of the problems which are arising from falling numbers. This situation, however, will also present us with new challenges and opportunities. It is widely accepted that the quality of learning experiences at primary level has a profound effect on future success of individual pupils in the education system. The changing circumstances may enable strategies to be developed which will enhance the quality of the teaching-learning process in primary education.

Within the overall allocation of resources to my Department, I propose to give a particular priority to the needs of primary education. I have absolutely no doubt that Members on all sides of the House, no matter what philosophy they profess, will agree with me that the primary focus of any education authority or any education Department must be on the first level.

Will the Minister cut the pupil-teacher ratio?

It will be necessary to examine areas of special need and to target resources especially to meet those needs. With regard to pupil-teacher ratios, significant improvements have been made in the past and it might be argued that these improvements have had their most notable and beneficial effect in the smaller schools. The situation in some of the larger schools is still less than fully satisfactory and it would be my hope to use the phenomenon of falling numbers to alleviate this position. Even within the larger schools a greater proportion of teaching resources might be directed to the classes catering for the youngest children.

It will be necessary to examine the support services available to schools and to consider diverting some of the resources which will be released by falling numbers into these areas. I cannot be more specific on these questions just yet as they have to be examined fully in consultation with the various interests involved with primary education.

Before the election they were specific.

I said I hoped to work towards them. I am not a woman of empty promises. The present curriculum was introduced in 1971. Since then various sample-scale and medium-scale reviews of certain aspects of its implementation have been held. These have included work by the Educational Research Centre and work commissioned both by the INTO and the Conference of Teaching Sisters. The Department's own curriculum unit has conducted a number of surveys on national samples of children on levels of attainment in various curricular areas and some of these reports have been published.

One of the recommendations of the Interim Curriculum and Examinations Board has been that a major review should be undertaken of the whole of the primary school curriculum. Having considered the matter carefully it has been decided that there should be a rolling review of the curriculum having regard to the resources available to the Department and to the curriculum board. It will involve co-operation between the officials of the Department and the Interim Curriculum and Examinations Board. All research work conducted up to this by the Department's curriculum unit will be studied and drawn together in formulating a detailed strategy for the review.

As I am discussing activities at primary and second level I turn to the matter of school discipline which has exercised greatly the minds of everyone concerned, particularly teachers within the schools. The recommendations of the Committee on School Discipline have been under consideration in the Department for some time past and extensive consultation has taken place with the managerial bodies and the INTO. I have grounds for believing that the necessary rule changes can be made in the near future, to the satisfaction of all parties.

It is important, however, to keep this problem in its proper perspective. All the evidence points to the fact that the majority of teachers and pupils in primary schools enjoy harmonious and happy relationships. The modern world has seen many changes in the patterns of child rearing and particularly in the manner in which children interact with each other and with adults. This change is reflected in primary schools and it is to the credit of the primary teachers of this country that they have been able to adapt so readily to the changed social environment. The changes to which I refer have implications not only for teachers but for all others who come into contact with children in schools, including representatives of management, inspectors etc. I have set aside funds from the allocation for inservice training for special one-day seminars in the autumn of 1987 on the theme of relationships and discipline in primary schools. As a preparation for these seminars, the members of the primary inspectorate are at present briefing themselves fully on the issues.

I recognise that certain pupils are causing problems for the teachers and for other pupils in classrooms. In this regard the importance of parental involvement in school discipline cannot be overestimated. As a general principle, I want to state that parents must in the last analysis consider themselves to have a responsibility for their children's behaviour and be willing to co-operate with school authorities in resolving problems. Any rule revisions which will ultimately be sanctioned will focus especially on the crucial role of parents.

A very small minority, I stress, of primary school pupils are so disruptive that they seriously interfere with the working of schools and deny other children their right to education. It will be necessary to devise guidelines for dealing with the special problems created by these children. In formulating the guidelines care will be taken to ensure that such children continue to receive appropriate education, even if they have to be removed temporarily from their present teaching environment which, in the vast majority of cases, can be taken to be the class grouping but in extremely rare cases will be the particular school itself.

It is a truism that, in any system of education which provides for all pupils, many different levels of attainment will be evident. The major challenge of the modern primary school is to provide suitable learning experiences for children of differing intellectual endowment and of many diverse backgrounds. In order fully to benefit from the educational opportunities currently available, minimum standards in literacy and numeracy are required. The problem of under-achievement in school is not unique to this country; it is a matter of great concern in other developed countries also. To some extent the concept of education to meet individual abilities and requirement is diametrically opposed to that of minimum standards. However, modern independent living requires minimum standards and much of the efforts of our schools are directed towards helping children to reach acceptable levels of literacy and numeracy.

In any randomly selected sample of children, different levels of ability and attainment are to be expected and it is not unusual to find, in any class, groups of children who are attaining levels far above and far below the average for their class, as Deputy Howlin knows. The modern primary school with its emphasis on response to individual needs and group teaching strategies, can accommodate many of these differences and does so successfully. The teaching of reading, in particular, has undergone revolutionary changes in the past 20 years.

Since 1964 when standardised tests were first used on samples of Irish school children there has been a steady overall increase in average levels of reading attainments. However, there are children whose attainments fall so far short of average that they need special help. For the past 25 years additional posts of remedial teacher have been recognised and there are now some 850 such remedial teaching posts. Many of the very large schools have been allocated two additional such teachers. A small additional number of such posts in the current year will be recruited from the panel. Because of the scarcity of our resources we must ensure that such posts are used to best effect. In some of the schools which were allocated special posts in the past, the numbers on rolls have decreased, again due to falling birth rate or changes in demographic structures. That is very welcome because again it means that those schools have had very special treatment. It is reasonable that such schools should now be willing to share their remedial allocation. I find it highly amusing that Deputy Yates is sitting there——

That is not very polite.

——when his Government introduced the remedial allocation which removed that. It is reasonable that such schools should now be willing to share that additional resource with other schools which have a strong case for such resources but which cannot be funded at present. I am very pleased to report that my Department are receiving word daily that such schools are willing to share resources with adjoining schools within their area.

Why the cutbacks?

In response to repeated requests from schools, again showing where the teachers and the management structures have taken the initiative, recently my Department prepared a draft set of guidelines on remedial education and these have been submitted to a number of organisations for their observations. I hope shortly to authorise their dissemination. These guidelines will focus on the central role of the class teacher and will suggest various alternatives which will increase the effectiveness of remedial teaching in schools. I am very pleased to state that all educational interests are ad idem in this very desirable objective and I feel there will be support from all sectors of the community when this discussion document is released.

I am happy to continue the work of fostering the position of the Irish language in the educational system and hope that the pace of progress in this area, which was accelerated recently, is maintained. The State is prepared to purchase sites for all-Irish schools and to fully finance their building costs. An additional teacher, over and above the number warranted by pupil enrolment, is sanctioned for these schools and each member of the staff is paid an allowance for teaching through Irish, which at present amounts to £430 per annum. Such schools are awarded an additional 50 per cent of the normal capitation grant. Free transport is provided, subject to the usual conditions to the nearest all-Irish school for children whose parents wish them to pursue their primary education through Irish.

A programme of special measures for primary schools in disadvantaged areas has been in operation since 1984. To date a total of 155 schools, catering for approximately 50,000 pupils, have been assisted through the programme which is to be continued this year. The special measures from which the schools benefit include special grants for the purchase of books and materials, the sponsorship of particular home-school-community liaison initiatives and special in-service training for teachers in the schools concerned.

In addition to this, funds have been provided for the relief of school debts in disadvantaged urban areas. In selecting schools to participate, regard has been had to pupil teacher ratios which seriously hamper effective schooling; poor environment (play space, building); unemployment in the area and vandalism; poor school attendance of children and inter-related disciplinary problems; and lack of community support.

A new initiative has been taken in connection with the professional development of teachers in these schools with the co-operation of the teachers centres. Again, this is one area to which I have given close attention since I came into the Department and one that I intend to follow up rigorously.

At this stage, I would like to comment briefly on the school transport service.

More cuts.

I notice that when good things come Deputy Howlin is totally silent.

Consent.

However, whenever there is any mention of an economy of any kind he perks up into life again. This is very much in line with Labour ideology which seeks the whole time to decry anything which might be to the benefit of the pupils.

Silence is not a crime.

I should like to comment briefly on the school transport area. This very valuable service has served the people of this country very well since its introduction by Donogh O'Malley in the late sixties and has been successful in its main aim of bringing pupils to and from school who, without the service provided, could not have ever got to school, or would suffer undue hardship in doing so.

There are 156,000 pupils who are eligible for school transport benefit under the school transport scheme. About 70,000 of these are primary pupils who continue to be carried free. No hurrahs? Of the 86,000 or so eligible post-primary pupils who are carried, over 39,000 are carried free by virtue of their parents being in possession of a medical card. The remaining 46,000 post-primary pupils pay charges.

No hurrahs.

About 13,000 pupils who are not eligible for school transport to the school they attend use special school transport services in getting to and from school. The vast majority of these, over 12,000, are at primary level. It has been found necessary to impose a modest increase from September next on post-primary pupils who are liable for the charges, far below that which the Coalition Government under Deputy Hussey imposed for the past four years, and remember she was the Minister who brought into this country school transport charges.

Is the Minister remembering the Private Members' motions she brought in?

(Interruptions.)

Minister, gabh mo leathscéal. I am at a loss to know whether you are just tantalising the two Deputies to make you better than you are, or whether you have some ulterior motive.

I would never have an ulterior motive, a Leas-Cheann Comhairle.

You are enjoying the interruptions.

Perhaps I am, a little. Should I not do that? I see, I am sorry.

The Minister to continue, without interruption.

When one considers that the average cost of providing school transport is about £245 per annum for each eligible pupil, as against the transport cost to the parents, the benefit to the parents is enormous. The total yield from the charges still constitutes less than 10 per cent of the total cost of the service. The school transport system is a complex one involving, as I have already mentioned, about 156,000 eligible pupils each school day. About 2,500 vehicles are engaged in the system. They operate over 6,200 routes to 335 post-primary centres and 1,490 primary schools.

Because of the complexity of the system which involves such a massive outlay by the State, it will be appreciated it is necessary to keep it under constant review to ensure that it is operated as cost-effectively as possible. It is my intention to take any action which will secure the most economic operation of this very valuable service.

Are we getting new buses?

I am not allowed by the Leas-Cheann Comhairle to answer the Deputy. I have already referred to our strategy of organising our educational system in the manner most likely to ensure a maximum return on investment. In the primary sector, we have long operated a policy of centralising smaller schools into larger units, where feasible. This policy was more than an exercise in reducing costs; very often, it entailed expenditure of considerable proportions by way of capital costs of new buildings and recurring costs of providing transport services, so that any financial savings were never realised except in the long-term. The cornerstone of the amalgamation policy, which counted for more than financial savings, was the improvement in the quality of the education we give our children by the concentration and optimum use of teaching manpower and resources. That was the raison d'être of the policy and it will continue to be its guiding principle. Recent developments have provided fresh scope for the operation of the centralisation policy, for example, the merging of separate boys' and girls' schools into co-educational units — I am sure there is no remorse at that — and the declining enrolments of schools in urban areas where there are shifts in population.

In relation to the national schools building programme, a provision in 1987 of £30,010,000 has been made. Compared to the original 1986 provision of £28,234,000 for national school building it represents an increase of over 6 per cent. Wait until I come to what Deputy Yates's Government did.

However, 40 contracts were authorized in January 1987 by the previous Minister of Education to proceed at the earliest possible date this year subject to——

I hope the Government are not going to pull back from that?

——compliance with the usual rules and procedures. Funds are available to service these contracts in 1987. The national schools building programme for 1987 was fully committed in January of 1987 and it is not envisaged that further major projects for permanent accommodation can proceed to placement of contracts this year.

Shame, Minister.

What I am saying and saying very clearly is that in January of 1987 the then Minister of State contracted the moneys for 1987 in an extremely short space of time. The Deputies do not need me to spell out any more clearly than that the implications of what was done and the political reasons for that.

Very prudent.

They spent the money. The money was spent before it was allocated. I shall be talking at length about this in another forum and the facts are quite horrific. I want to spell out very clearly again that £30 million which has been provided had already been contracted before I came into office and I hope that is made very clear and to every Deputy on the opposite side of the House who puts down questions to me——

An indication of need.

——asking that such and such a school be allocated immediately I will continue to emphasise that very important factor. It pains me utterly that that is the state in which I found the primary school building and the post-primary school building programme when I came into office.

Those were genuine cases.

The national schools building programme is a complex one. It is concerned in the main with the provision of new schools and extensions in developing urban areas, and the replacement of obsolete and unsuitable buildings in rural areas. A substantial annual sum must also be reserved out of each yearly allocation for essential works to existing schools — for example, replacement of windows, roofs, sanitation, heating systems and similar improvements. These works do not usually involve the provision of any extra floor space as such, but are nevertheless an important feature of the national schools capital works programme.

It is my intention that capital allocations to individual national schools will be made with a view to achieving the maximum impact over the widest possible number of schools and in accordance with genuine needs and orders of priority. I am conscious of the fact that with the existing staffing levels in the Primary Buildings Branch of my Department and given the present level of capital provision, it could take perhaps seven to eight years to work through the backlog of projects which are seeking to be funded. However, some recent initiatives by my Department's Primary Buildings Branch have been directed to improving the situation. Certain schools which urgently need new classroom accommodation and whose schemes have included major and expensive re-modelling of existing accommodation have been advised that they should first proceed with the new classroom accommodation and follow on at a later stage with their re-modelling plans. A number of schools are also being asked to consider, where appropriate, the merits of system building where it is not possible to firmly establish their overall long-term accommodation needs but it is sufficiently clear that some extra classrooms are needed in the immediate future.

Pre-fabs.

Oh, boy, the Coalition Government operated some system of pre-fabs for four years. System building represents significant economy and speed of approach. I am assured that, with suitable specification of basic performance requirements, system-built classrooms will provide a satisfactory educational environment comparable in every important respect with traditional forms of building. In this way it will be possible to reduce the waiting time for the provision of the most urgently needed national school accommodation.

Sop to the backbenchers.

It is proposed to continue the policy of not providing new accommodation where it is evident that sufficient suitable accommodation is available in existing schools within a reasonable distance. I am sure Deputy Yates would agree with that.

Of course.

I am very pleased that it was possible for me to reverse the decision to impose further cutbacks on the guidance services in our schools. This was one of the matters raised by the many parents, pupils and teachers who contacted me in recent months and weeks. I know something of the contribution which our guidance services have made toward helping schools to adapt and adjust to face challenges brought about by rapid advances in science and technology. The guidance personnel in our schools have contributed greatly to the process of curriculum change and to the entire process of opening up the school to the community. I know I can look forward to co-operation from schools and from guidance teachers to ensure that there are effective links between schools and communities, to ensure that those support services we provide for young people are provided in an effective and co-ordinated way. Here might I thank the Deputies from all sides of the House who, since the general election, came and spoke to me personally about this matter. I should say that I took their representations very seriously.

I am aware that guidance and counselling services provided in schools are not concerned solely with purely economic matters. I know that an important aim of guidance is to help young people toward independence, to use personal initiative and to help them toward maturity in the context of their overall education. Such an aim is in keeping with the good of the community as a whole. We must avail of every opportunity to encourage individual initiative and wellbeing. I hope that my decision to preserve our guidance services will assist schools to continue to co-operate in developing practical programmes and services for their students.

In seeking to continue to support and, if possible, to improve services I will have special regard to the needs of weaker sections of the community. I shall have particular regard to the needs of the early leavers from schools, about which Deputy Michael Higgins spoke so movingly in his contribution earlier. We must give serious consideration to all means of ensuring equality of opportunity and a full education for all. We owe it to individuals, their families and society to continue to make our best efforts to develop our educational provision for the benefit of all, especially for the benefit of those who need special support and care. In making these remarks I must re-emphasise that I am not thinking only of economic aims, important though these are.

It is very important for anybody involved in educational structures and for myself, in this portfolio, that economic aims are not seen to be the be all and end all. I am thinking of the full personal development of young people. If we are to do justice to young people and to society then we must think in those terms. Therefore I shall pay very close attention to programmes of personal development which are becoming such a welcome feature of many of our schools. The potential benefits and worth of such programmes must be realised. Seen in the context of a sound philosophy of education, implemented wisely in harmony with the curriculum as a whole they can help young people to develop self-confidence, to have respect for themselves and for others, to be sensitive in their relationships with others and to look to the future with hope. In particular I shall be anxious to ensure that parents are fully informed of such developments, that their primary rights are recognised and that they are given opportunities to participate with schools in the work of education.

I should like to refer briefly to the question of curriculum reform. I regard the whole question of curriculum reform as a challenging one and central to our developmental policy in education, subject to my overriding tenet, that curriculum reform be allied to the maintenance of standards of excellence. I make absolutely no apology for saying that all of my ideas and developments vis-à-vis curriculum reform will be based on that tenet, that they must be carried out in keeping with the basic standards of education. For this reason I intend immediately to undertake a study of all initiatives in curriculum changes, pilot schemes and so on, which have taken place over the last 10 to 15 years. Here I want to pay tribute to all of the units who have been working so steadily over the last 10 to 15 years on curriculum reform, whose efforts all of us are inclined to overlook at times. One could be forgiven for thinking that the phrase “curriculum reform” had appeared within the last three to four years, that it was new jargon. I know from my many years in second level education that there have been many worthwhile initiatives taken in second level schools throughout the country regarding curriculum reform, particularly as a local environment impacts on the educational system. It is my intention to have all of that information compiled, to study it and to have it published.

In this area I welcome the work undertaken to date by the Curriculum and Examinations Board, including their most recent initiative, a proposed review of the primary curriculum.

The next bit will be good.

The Minister should not mind the boys of Wexford.

Indeed I should not. In relation to funding of voluntary secondary schools it was not found possible, because of budgetary constraints, to sanction an increase in the capitation grant. Neither did the outgoing Government find that possible. It was also found necessary to make reductions in the allocation for vocational education committees proposed in the January 1987 Abridged Estimates Volume. There has been a reduction also in the allocation for non-pay expenditure, proposed by the previous Government, for community and comprehensive schools. Therefore, let nobody say I am not up front with my proposals. I realise that secondary, vocational, community and comprehensive schools are operating under tight financial constraints but further economies were unavoidable. However, I am confident that the achievement of greater efficiency and cost effectiveness — both of which were strongly advocated at all of Deputy Yates's committee meetings — will make a major contribution to the smooth running of the education system in 1987.

What about the Minister's care for the pupils, though?

The pupils will be cared for very well. As already indicated, teachers' pay and pensions account for 82 per cent of all expenditure on education this year. Might I stress that I consider the teachers are well worth it. In general public service terms the actual financial provision for these purposes normally represents approximately one third of the entire pay bill for that sector. In view of the magnitude of that figure it was necessary to look to the area of teachers' costs in order to achieve some savings in education expenditure.

The previous administration had made certain decisions which would have affected teacher numbers in the post-primary area. These decisions were that vice-principals and guidance teachers be brought within quota in all schools. Such measures would have had the effect of reducing the current number of teachers by 850.

Since taking office we have reviewed those decisions and have considered other measures with a view to modifying the 1987 financial requirement for post-primary teachers' pay. As already announced, we have decided not to proceed with the implementation of the proposal in relation to the quota position of the guidance teacher.

We have also decided to implement the proposal to having the post of vice-principal within quota in all schools. Since 1983 under Deputy Hussey a previous Minister for Education the post of vice-principal has ceased to be reckoned on an ex-quota basis in schools with enrolments below 250 pupils, that is, in the smaller schools and we have now decided that it will be necessary to extend this restriction to the larger schools for the present. It is my wish, and perhaps it will be realised, to this year study urgently how the vice principal position could and might be reversed in the years ahead.

The new measure will of course only be introduced as the occurrence of vacancies enables it to be done. It has come to my notice that this decision has been interpreted as somehow reflecting on the position of the vice-principal and some people have even suggested that it entails the abolition of the post. Such interpretation is of course totally erroneous. I am hopeful that schools will be able to cope adequately with this measure and in the small number of cases where particular transitional difficulties may occur, the authorities of those schools may rest assured that my Department will deal sympathetically with their problems.

I have referred earlier in this speech to the fact that the numbers of pupils seeking post-primary education continue to grow and this growth will continue for some years yet before the impact of the falling birth rate — already evident in our primary schools — begins to be felt. While the needs of the present school-going population must be met, it is incumbent on all concerned to ensure that, in years to come, there will not be a proliferation of empty classrooms. I am sure that is something to which all would aspire.

It seems that my script is too long for the length of time I have at my disposal so I must compress it.

The capital provision for third level education is proceeding according to plan and the development of regional colleges and third level institutions will proceed with the greatest possible haste. We have been enabled to keep within the previous Government's budget with regard to the indexing of the third level grants in line with inflation. I have met with the vested interests and started a round of consultations. I agree that the way to avoid confrontation is by meeting with those who have been helped and those who have been cut back to try to explain the reasons and to ensure that any hardships which could occur can be successfully offset by ameliorative measures. I hope that greater autonomy can be accorded to the regional colleges and that this can be done within the framework of the existing Act. I am committed to the idea that these colleges will play an increasing role in the industrial life of their region. That is one of the reasons for which they were set up.

My Department have practically completed a very important study on admission procedures to third level education. We hope to publish this later in the year and I hope it will provide much food for thought. I have spoken about the industrial and higher educational links which I hope to expand at a future date. I look forward to many fruitful debates in this House with Members on the opposite side. Within the financial constraints imposed I have managed with the consultations of my collegues in Cabinet and with the greater participation of the opposing parties to preserve the fabric of education to ensure that education services continue to be openly accessible to all who need them. I am pleased that we have been able to maintain the existing teacher ratio at post primary level. I am pleased, too, that we have been able to implement many measures which I had thought we would not have been able to implement. I am conscious that hard decisions must be taken but I am conscious also of the extreme co-operation which I have already received from the various interests. I look forward, during the Easter period when other Deputies will be enjoying the Easter recess, to going to the four major teacher conferences to speak and to listen to views and I will in turn translate their views into my policy in education. It is a great honour for me to be in the House today for the first time as Minister for Education and I thank the Members for their courtesy.

I congratulate the Minister on her appointment. This afternoon was most entertaining. First I listened with interest to a very colourful academic daydream from Deputy O'Higgins and then we were treated to a rare insight of acrobatics and somersaults from the Minister in her elevation from this side of the House to the far benches.

Did I not do well, Deputy Yates?

The Minister did so well that if she is ever out of the House, Duffy's, Fossett's or one of those companies will easily find a home for her.

And you will be the ringmaster.

The Minister will be well equipped to deal with such a post. I note the Minister's promise in relation to the vice principal——

Not a promise, a hope.

I hope it is not as nebulous as some of the other things that were in the programme for Government.

How did the Deputy remain under a Government that did away with the vice principals?

As the Minister is starting off with a lot of good intentions, I wish her well. It has not been recognised by the Government that Fine Gael are extending far more goodwill to them in one week than they showed in the past four and a half years to the previous Government. Perhaps this will be a lesson to them in future should they find themselves on these benches.

It is the Opposition's role to critically scrutinise any budget. While I have a small sneaking regard for the Minister for Finance in his courageous attempts to rectify the public finances and resolve the difficult problems, this budget will not resolve the major problems of unemployment, stunted growth in the economy, the lack of confidence and the lack of development. The great tragedy is that in 1980 and 1981 we had Exchequer borrowing requirements which were 20.3 per cent of GNP. Admittedly the Government succeeded in bringing down substantially in this budget the Exchequer borrowing requirement as a percentage of GNP. The figure has been reduced to 6.9 per cent. It is most disappointing that we have had to experience errors in the 1980-1981-1982 period which were responsible for the hardship inflicted on so many people.

Fianna Fáil's electoral dishonesty is one of the most prominent features of this budget. I remember canvassing not so long ago and a lot of angry and irritated people were upset by much of what we put forward. For the past four and a half years I have listened to the likes of Deputy O'Kennedy whining on these benches in terms of the better way they would put forward. In their programme they promised to bring two thirds of taxpayers down to the standard rate of tax. They derided the DIRT tax and blamed it for the outflow of capital funds of £1.5 billion. They promised to abolish that tax and to abolish the residential property tax. They promised 57,000 additional jobs.

I remember calling to one gentleman's house during the election campaign and being told that the out-patient charge was a tax on cancer. That was before the in-patient charge was suggested. Where now is the £200 million for the construction industry? Where is the VAT reduced to 5 per cent from 10 per cent for the construction industry? I remember during the election campaign Fianna Fáil, and in particular the Taoiseach, Deputy Haughey, refused to discuss the term "cuts". He found the word "cuts" objectionable. We have now seen a phenomenal somersault.

I do not criticise the content of the budget in itself to any great degree, although there are some aspects which are badly thought out and hastily cobbled together, but I take grave exception to the fact that my party should have substantially fewer seats in this House because they were honest while that party are in Government because they told the people what they intended to do only after the election. There was no mention of the witholding tax.

I remember Deputy Haughey standing here and talking about the last Government's cavalier attitude on pay. I remember specific promises made week after week in Private Members' time. In my constituency people lay down under buses when school transport charges were introduced. I remember the Irish Shipping debate and the difficulties those employees were suffering, but they are not heard of now. I remember seeing the public Gallery filled with teachers who were expecting great things from Fianna Fáil when they got into power. There was no mention to farmers that anything they gained through the abolition of the land tax would be lost by sleight of hand in terms of a change in the VAT refund system.

I remember listening to labels of monetarist Thatcher, the new right and other different insults. I remember that in a television debate Deputy Ray Burke, in the new era of moving forward with confidence in the economy and growth, specifically said one of the things they would not do was to cut back in the marketing area of Bord Fáilte. Not only in this House and in the media, but at every urban council, county council, local health committee, VEC and county committee of agriculture, members of my party had to listen to a lot of rhetoric over the past four and a half years, a great deal of which, has proved to be electorally dishonest.

The Fianna Fáil Party have done a great disservice to Irish politics and not just to themselves but to all politicians for the simple reason that they have set a new standard in public hypocrisy and it will take a long time for us to escape from that. It could all have been so easily avoided if they had taken up the offer made by the outgoing Government to see the books, scrutinise the figures and then make their real choices and present them to the public, but they were too cute by half.

I turn now to the economic strategy in the budget which is necessary to restore growth, confidence and investment in the economy. One of the valid and reasonable criticisms of this budget is that it does not give a direction to the economy. It has a narrow strategy, which is, that if interest rates fall due to decreased Exchequer borrowing requirements, that will ease the pressure on lending and credit, interest rates will fall, people will invest and business will expand. That is a reasonable strategy but it is not an overall direction to the economy. In the same way the 1986 budget, introduced by a Government which I supported, gambled to some extent on growth in the economy but that did not come off. I believe this Government have gambled on interest rates falling.

If we take a close look at the gilts market we will see that it may be a gamble which will not come off. In January 1986 the rate of return on gilts was 12 per cent; in April 1986 it was 8½ per cent; then, due to a number of different factors relating to the instability of our currency and notwithstanding some very unhelpful comments from members of the Fianna Fáil Party in relation to outflows of money and the DIRT tax, in September 1986 gilts rose to 13.75 per cent. In March 1987, with the election of a new Government, there was an expectancy that there would be an improvement in the public finances and gilts fell to 10.85 per cent. But today and at the end of last week when we saw the first sign of the U-turns, and the first sign of wilting under real pressure, the gilt rate rose to 13.8 per cent. If this strategy does not come off the Government will have inflicted a lot of hardship and misery for very little.

There has been a lot of talk about the capital outflow of £1.5 billion. I have no doubt that that is the single biggest reason Irish interest rates are 4 per cent higher than in the United Kingdom. There seems to be a great deal of mystery about these outflows. The single most important factor which will keep Irish currency stable and keep interest rates down would be if Britain went into the EMS. We should prevail upon the European Economic Community, the Commission, the Council of Ministers and the Council of Prime Ministers to ensure that Britain joins the EMS because most of the outflows of currency are, in my view, strictly trade related and speculative vis-à-vis the value of the punt v. sterling. People feel Irish Governments will come under pressure to devalue, and will devalue, thus allowing a windfall gain to those who speculate in sterling, and that has led to the outflows. It is very important that this Government should put down a long term clear marker that they will not entertain currency policy other than strict stability, despite trade pressures.

I hope the trends which took place at the latter end of last week and the beginning of this week in relation to the rate of return on gilts and the wholesale money market which have become exceedingly nervous with the increasing symptoms of agility by this Government, will not evaporate because the country will stand to lose a great deal.

The best way to attract investment back to this country is to show investors that there is an environment where they will get a return on their investment, that there are investment opportunities and that people will know if they are clever, shrewd and prudent enough to invest in sectors that will give a return, that return will not be taxed out of existence.

I believe this budget does not provide those investment opportunities and, therefore, it puts at risk the possibility of succeeding in the narrow strategy it has attempted. One of the reasons for this failure is that I believe the budget arithmetic is fundamentally flawed and in a number of areas is incorrect. I should like to spell out a number of areas where I think the outturn for 1987 will be different from that predicted by the Minister for Finance. I may be one of the youngest Members in this House but I remember 1981 and 1982 when Fianna Fáil were in office and each autumn we were treated to the delight of every Department having a Supplementary Estimate to provide more money for Departments which had been under-provided for because they could not hold the line of public expenditure.

The current budget deficit will be about £138 million higher than that which has been predicted. I will give some specific details of how I believe the figures are wrong. First, a detailed estimate of £2,813 million has been made for public sector pay. That provides a 2 per cent increase from 1 May covering the existing pay round to the end of June. Every 1 per cent extra in public sector pay in the next round will be equal to £28 million. I remember only too well, as a backbencher supporting the previous Government, that we provided no money in any financial year for the period beyond the expiration of a pay round. That is a sound and reasonable pay negotiating stance. You should not show your hand as to how much you are going to give. I have very serious doubts that the Government will be able to hold the line. I certainly hope they hold the line in terms of the zero pay increase beyond 1 June. There is under-provision for this area and there is an accepted practice to deal with that.

The second area where there is a fundamental under-provision is the social welfare area. The forecast for unemployment for the year is 242,000 taking into account the Jobsearch programme and the people who allegedly are going to be removed from the social welfare system. Those assumptions are incorrect and social welfare expenditure will be about £12 million higher than expected. There are 7,000 or 8,000 people employed in the Revenue Commissioners and to imagine that an extra 25 people deployed from the Department of the Public Service will collect an extra £10 million is simply fallacious. If 7,000 or 8,000 people cannot do that work, I do not see what an extra 25 people will do. If you work it out it means that those 25 people will have to collect £1,600 for every working day for this whole year in order to collect the £10 million. I would be generous in saying that that figure is £5 million on the wrong side: it could be £10 million on the wrong side.

I welcome the 48-hour travel allowance change. It is a novel idea and is certainly worth pursuing. There is a projected saving of £20 million in terms of Border savings but I believe there will be a shortfall of £10 million. The U-turn on the housing grants will cost an additional £10 million. The Government will not completely hold the line on the jobs embargo across the board, particularly in the health services. They will not be able to do so in certain critical services. A saving of £11 million has been provided for there but that saving will be nearer to £6 million. There will be a £5 million differential there.

If you look at the first quarter returns in terms of revenue and expenditure, you will see that the position is quite strongly out of kilter. In the past number of years it has always taken the financial returns for the last quarter for the position to rally. There is a negative buoyancy factor at work. If the overall provision of taxes is to rise by 6.4 per cent in this budget there has to be a negative buoyancy. A change is required there.

The clouds have started to lift a little and they will lift a little more when the Finance Bill is introduced. When it is seen that companies who can prove they do not have tax liability for the 35 per cent confiscation that will take place for a year will be entitled to an interim refund, it will very quickly appear that the majority of smaller professional services that are provided will be eligible for that refund, resulting in a substantial shortfall of £10 million of the estimated revenue of £25 million. In those projections I have not gone into obvious areas where I recall, as a backbencher, our Government ran into acute difficulties of extra expenditure such as the double Christmas bonus for pensioners and other social welfare recipients. What will happen when the compensatory payments introduced under the EC equality directive expire on 17 November? Many people will call to the clinics of Fianna Fáil, Fine Gael and Labour TDs saying they cannot take this cut of £20 a week. I am not saying the Government should cave in. My prediction, knowing them of old, is that they are likely to cave in to some of these pressures and, therefore, the budget arithmetic in my view does not hold water.

There are many other different issues that will arise: I have seen examples such as the PMPA and the ICI, although they are not good examples. Other matters will arise such as the Kowloon Bridge incident and so on. There is a very grave danger that at the end of the day the current budget deficit will be somewhere between £100 million and £150 million on the wrong side of what is predicted. If I had to pick a specific figure it would be about £130 million. That will shove the Exchequer borrowing requirement over £2 billion and will set awry the overall financial targets of the Government.

This budget is unfair in its treatment of a particular section of the community — the PAYE taxpayers. These people are very bitter. I called to many housing estates during the election campaign and met factory workers who earn £130 a week and people next door on social welfare benefits. The employed people were extremely bitter that they get nothing for nothing and have to pay for everything. That low to middle income group have been savagely hit in this budget. PAYE receipts are due to rise by 9.5 per cent. The 820,000 people on PAYE comprise many low paid people who are trying to rear families in difficult circumstances, people who are just over the medical card limit and people who are in real hardship. The extra £333 million that will come in from PAYE will come out of their pockets. They will pay extra PRSI; they will be directly affected by the in-patient health charges; they will be affected by increased school transport charges; they will be affected by increased local authority charges; those with children in third level education, most notably in RTCs, will be affected by increases in fees; they will lose 10 per cent of their mortgage tax relief; they will have to pay more for their life assurance and, overall, their average household costs will be increased by about £10 a week. It is very hard to generalise or to pick averages. If people are in the VHI their fees will undoubtedly rise.

There is no doubt that the people I am speaking about desperately require an incentive to work harder. They are the new poor. They are not eligible for anything. They have to get up earlier in the morning and work harder. The more overtime they work, which is the only way out of that situation, the harder they will be hit. In certain cases we could be talking about a 10 per cent cut in their disposable incomes as a result of this budget. It would have been a lot better to go to town on the black economy, on wasteful State bodies in the industrial and training area where 3,500 people are employed and £400 million a year is spent. It would have been better to put the boot in there or to deal with the very wealthy rather than to go for the soft target of the easily collectable income of the low to middle income group. They have every right to be bitter and resentful of the changes that were made between the January presentation of the budget and this budget when they see how their incomes will be hit.

Debate adjourned.
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