That a sum not exceeding £6,998,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1987, for the salaries and expenses of the Department of the Taoiseach, including certain cultural and archival activities and for payment of certain grants-in-aid.
It is necessary that I should avail of this debate to give the Dáil and the general public a progress report on the Government's performance since we assumed office in March last.
Even before I came into office I had been able, by courtesy of the out-going Taoiseach, to receive a comprehensive briefing on the state of the economy and the public finances. The story that unfolded then and subsequently was an intimidating one and the state of the public finances was clearly a cause of deepest concern. Worse still, the general state of the economy was such that there was no immediate prospect of increased economic growth providing additional resources to help solve the problem.
By the beginning of this year the country's national debt had risen to £25 billion and was continuing to rise steadily and inexorably. We were heading in 1987 for the addition to the debt of still another £2 billion. This process of going further and further into debt could not continue without threatening the future viability of the State. Action could not be postponed. The realities had to be confronted. I would like to emphasise as strongly as I can that this was not a matter about which there was room for debate or disagreement. There was no scope for compromise or temporising. Remedial action of a major kind was urgently required. It is not legitimate for any Deputy in this House to deny that reality; to try and gloss over the stark facts of the situation, to suggest there was some alternative or that we could simply go on as we were. We could not.
A few key figures give the picture clearly.
In this year almost one-third of all tax revenue will have to go to service the public debt.
In this year after all the cuts that have been imposed the State will still borrow over £1.8 billion. That is not much less than the cost of servicing the national debt.
It is now essential in the national interest that Government action succeed in continuing to reduce the current budget deficit and that within a limited period the national debt should not rise any further relative to GNP. If we are to achieve this, the total level of Exchequer borrowing for all purposes in any year should not exceed and preferably should be less than the total of estimated growth plus inflation, in other words nominal growth in GNP. In this year growth is conservatively estimated at 1 per cent and inflation at 3 per cent. Exchequer borrowing therefore needs to be reduced to less than 5 per cent. In fact in this year it will be 10.7 per cent. These figures clearly show that we have a long way to go to get on top of the problem.
This Government have firmly set for themselves the following policy objectives which are interdependent and related to each other: to restore the public finances by reducing overall Government expenditure; to reduce Government borrowing and to stabilise and then reduce the growth of the national debt as a percentage of GNP; to restore confidence, bring down interest rates and maintain the stability of the Irish pound within the EMS; to stimulate and encourage economic growth, investment and employment in every possible sector of productive activity; to reduce the overall burden of taxation and in particular the level of direct personal taxation, and to reform the tax system to make it more equitable and to improve the cost-effectiveness and equity of our social services.
With regard to the first objective, the Government in formulating and implementing this year's budget had by force of circumstances to resort to the process of reducing Government expenditure right across the board, coming down more heavily on those areas which accounted for the greatest level of expenditure. There was no alternative to that approach. Having been compelled, however, by the urgency of the situation to start the process of corrective action in the budget we proceeded immediately afterwards to set about tackling Government expenditure in a much more thorough and selective manner. All expenditure is now being examined thoroughly and in detail during the remainder of this year. In this way we hope to achieve further reductions in expenditure during the current year. But the primary purpose of the exercise is to enable us, well in advance of 1988, to have taken decisions on a prudent and realistic basis on the estimates of expenditure for 1988. This will represent a significant improvement in the administration of our financial affairs. A high level committee in the Department of Finance are now undertaking this task with the full co-operation of the accounting officers in all the different Departments of State.
With regard to the stimulation of economic activity, I would like to refer Deputies to the comprehensive Programme for National Recovery which Fianna Fáil published in advance of the last general election. In that programme we gave an outline of specific measures which we intended to take in each different sector of the economy. Since assuming office we have been following through on that programme in all the areas outlined.
With regard to taxation it is obvious that the current state of the public finances has allowed little immediate scope for reductions in taxation. However we are quite clear in our minds that two things are essential to get economic growth under way again, firstly a reduction in interest rates and, secondly, a reduction in personal taxation. If we can succeed in our efforts in getting public expenditure down to a sustainable level it should be possible for us to start looking realistically at reductions in taxation.
The budget introduced by the Minister for Finance in March is central to our approach. The limits set for expenditure and borrowing are fundamental to our policy. The discipline imposed by these targets is being and must be adhered to. Circumstances this year do not allow any room for slippage. Budget limits are being carefully monitored. So far, the signs are that the targets will be met, but the balance is a fragile one, and, as the Minister for Finance has pointed out, if further action is required it will have to be taken. I believe that the firm action we have taken and the discipline we have imposed is receiving widespread support. The belief that there is now leadership and control is bringing back confidence. One beneficial result is that the disastrous outflow of funds from our economy has been reversed.
The high interest rates of recent years have been preventing investment and inhibiting the growth we need to provide jobs. Of course, further downward movement will be strongly influenced by the trend in international rates as well as by the extent to which confidence at home builds up in our ability to solve our problems. This confidence in turn depends on our success in curtailing and reducing Government spending and borrowing. We have made a start. Current Government expenditure had climbed in 1986 to 56.2 per cent of GNP. This year it will be reduced to 55 per cent of GNP and that process must be continued. There is no other way. For too long we have been living at a rate we cannot afford, enjoying a standard of living we were not earning by our own efforts. Until the time comes when we can generate greater growth in the Irish economy we must reduce State spending right down to the actual level of resources available.
The whole tradition of Fianna Fáil Governments back to the early thirties is one of active intervention to promote economic and social development in accordance with the resources available. Since the late fifties much progress was achieved on the basis of economic plans or programmes, with increasing involvement and participation by the social partners. The philosophy behind The Way Forward, the reduction of Government borrowing to a sustainable level on the one hand and active sectoral development policies on the other remain at the basis of Fianna Fáil policy and was at the heart of our Programme for National Recovery.
Substantial reductions in current expenditure were recognised as necessary by the last Fianna Fáil Government in The Way Forward in 1982. The Coalition Government in 1983 took the wrong turning. They relied instead on massive increases in taxation in an attempt to avoid the necessity of expenditure reductions. We criticised this in Opposition. We also criticised the one-sided emphasis on the public finances which was not accompanied by any serious effort to promote economic development.
The principal initiatives we are now taking as a Government are based on the policies we elaborated in Opposition and which we put before the electorate in our Programme for National Recovery, which took into account the circumstances in which this country found itself at the beginning of this year.
As far back as 1985 I promised in my Árd Fheis speech to bring forward a major programme of national economic recovery. Many of the important policy initiatives we are now implementing, the setting up of the Department of the Marine, a science policy for development with a Minister of State in charge, a horticultural development board, a Department of Agriculture and Food to build up a food processing industry, were first announced by me at successive Árd Fheiseanna in the years 1984-86 and in many cases were later elaborated in full-scale party policy documents.
At the Fianna Fáil business conference on 18 January 1987, before the election, I set out our policy for the public finances. I stated:
We see the level of interest rates as of crucial importance to our central programme of economic recovery... There is no doubt that the persistently high current budget deficits which the Coalition has incurred are a major factor in causing the present high level of interest rates.
In the stringent financial framework set out at the front of our programme we were the first political party ever to place a firm ceiling on Government expenditure, and we committed ourselves both to the progressive reduction of the current budget deficit and the slowing down and halting of the growth of the national debt-GNP ratio in line with the NESC report of last autumn. At the press conference to launch our election programme I stated that the estimates for every area of public expenditure would be examined rigorously and in detail "and reduced to the irreducible minimum". We made no spending promises, and made it very clear that there could be no question of increased net public expenditure. The approach we have adopted as a Government is, therefore, firmly based on our published election Programme for National Recovery, which summed up all we had argued for in Opposition.
That approach has as its other aim positive and determined action to stimulate growth and investment in every sector of the economy that offers scope for development. Development in all such areas is the positive corollary to financial discipline. It is vitally important that the dynamism and ability in all sectors in the Irish economy be harnessed to produce growth and jobs. The Government are at present engaged in incorporating this approach in a medium term economic programme designed to tackle the problems and develop the opportunities.
In formulating this medium term programme we have decided to seek a realistic consensus with the social partners and to avail fully of their expert knowledge and experience in the preparation of the plan. The NESC study on A Strategy for Development provides the basic framework for this work.
The establishment of a constructive dialogue with the social partners representing the main economic and social interests in our community, with a view to developing a programme for national recovery has been one of the most important endeavours of this Government. As stated in our election manifesto, a consensus with the social partners is in our view an essential element in planning economic development. Such consensus is all the more important in the face of the acute economic and social problems we face, problems probably unprecedented in the history of the State and problems whose gravity few other countries in the Community face. The appalling level of unemployment — almost the highest in the European Community — must, alone, unite us all in a major combined effort to put our nation back on the road to economic and social recovery. In fact this kind of spirit exists among all the social partners. The social partners, through the National Economic and Social Council, had already by an exceptional and determined effort, agreed on the principles of a strategy for national recovery. The Government have accepted the broad thrust of those principles and the process we are now engaged in is to turn these principles into a practical detailed programme of decisive action by the nation as a whole over the next three to five years.
A special impetus has been given to the discussions by a request from the Irish Congress of Trade Unions to the Government to prepare, through discussions and consultations, a development programme which would balance the various requirements for economic growth and social justice in a fair and equitable way and which would launch a new period of economic recovery.
Working groups have been established on employment and development measures, taxation, social policies, and the environment for industry, agriculture and construction. These groups will examine proposals tabled by the social partners and by Government and will bring forward agreed proposals for policy initiatives which can be incorporated into our Programme for National Recovery.
No programme of national recovery can be easy which tries to tackle the fundamental causes of the lack of growth in the economy and to bring order and stability to our public finances and to bring about a better and fairer distribution of the resources and the opportunities in our society. It is clear that the social partners understand the difficulties and are prepared to examine and discuss, in the interests of all, how Government and social partners together can formulate such a programme.
The objectives of the medium-term programme are fourfold, covering macro-economic policy; development of the economy with particular reference to new employment; tax reform and tax equity; and reform of our social policies. These four elements are interdependent and interactive and the programme will contain specific measures and commitments in regard to each element.
As regards macro-economic policies, we must succeed within the time-span of the programme, in first stabilising and then reducing the GNP-national debt ratio. Otherwise interest on the national debt will continue to grow, as it has been doing, at a pace which consumes an ever-increasing share of our resources.
Unless we halt that process, we will have less resources each year to spend on new activity. The corrective process will not be painless. We, and the social partners, consider, however, that such a corrective process alone is not sufficient and needs to be accompanied by measures to bring about greater growth in the economy and in employment. In fact, such measures will also contribute to restoring the public finances. The more people we can put back to work by our development measures, the more tourists and exports we can generate, the faster the economy will grow and generate greater buoyancy of revenue even at lower tax rates. By bringing about a better balance in the public finances we will also bring down interest rates which in turn will reduce the burden of the public debt service.
Our macro-economic policy also envisages maintaining the stability of the Irish pound within the EMS. This stability will also help to reverse last year's outflow of funds. This will increase the liquidity of the money markets here, again helping to bring interest rates down.
These macro-economic policies are already working. Interest rates have come down and the haemorrhage of funds out of the country has been effectively reversed. I would recall in this context what we said in our election manifesto —"A major priority will be to use all policy instruments at the Government's disposal to reduce the level of interest rates so as to encourage investment. In this context Fianna Fáil will seek by establishing trust and confidence in Government policy and intentions to attract back funds that have gone abroad recently". That has been happening.
Inflation is now down to its lowest level in 20 years, and has dropped below 3 per cent per annum. Only excise duty increases and other price increases imposed at the beginning of the year have prevented it from being much lower still. This year's budget with its emphasis on expenditure reductions instead of tax increases has contributed to this low rate of inflation.
Our inflation rate is now lower than in most OECD countries. Inflation is around 4 per cent in Britain, the United States and Italy and at over 3 per cent in France. There is no inherent reason why we cannot bring inflation down close to zero, as is the case in Germany, Japan and Switzerland. Our level of inflation can no longer be used as an excuse for lack of competitiveness. Our present low rate helps to underpin the stability of the Irish pound exchange rate, and should help regain some competitive edge. It is helpful also for those on social welfare who will be getting a 3 per cent increase next month.
An inflation rate of under 3 per cent is something very valuable and important. It is of significance for those involved in wage negotiations or arbitration. It fully justifies the firm guidelines on pay which the Government will be strictly adhering to. We must aim at a situation where annual pay negotiations to compensate for inflation are no longer necessary, and where pay increases come from improved productivity and result in real income increases.
In the public service many employees received substantial annual increments of between 2½ and 4 per cent. We will not succeed in containing public expenditure as long as the public service pay bill, which is £2.8 billion this year, in spite of restrictions on numbers, continues to increase by several points more than inflation, as has happened in these last three years. Agreements this year concluded by the previous Government have been honoured by us but we cannot again permit the public service pay bill to increase by double the rate of inflation as it did this year.
It has been a notable failure of industrial policy to date that it has not succeeded in developing our indigenous manufacturing companies particularly those using our own raw materials. All the other small countries of Europe have been able to develop their own manufacturing capacity, as distinct from the valuable input from overseas investment. So much so that it is clear that our manufacturing sector is significantly smaller that it should be if we were to succeed, as they have, in developing our own resources and abilities. We believe that Ireland has the skills, the raw materials and the ability to develop much further its own domestic-based manufacturing capacity and our industrial policy must be directed to that end. State support must be concentrated on the Irish companies that have a clear potential to increase exports and employment. The development of our horticultural, forestry and marine resources which are now under way are other examples of this basic policy orientation and, what is more important, of the capacity and the determination of the Government to put it into action.
The whole strategy for industrial development, the institutional arrangements for industrial development and the thrust and effectiveness of industrial policy are being reviewed. Detailed discussions with the IDA are taking place. We have had many notable successes in terms of industries brought into this country. We have also had some major failures, and we must learn the lessons taught by both the successes and the failures.
When all the existing grants and tax incentives are added together the overall annual cost to the State is a formidable figure and it must be acknowledged that the matching results particularly in recent years have been fairly disappointing. On the other hand, it must also be realised that the international scene in this regard has changed dramatically. The competition for mobile international investment between countries is now intense and other European countries and even individual cities are offering very attractive packages. The IDA are now paying close attention to the Far Eastern market, to which resources have been reallocated where important opportunities are now seen to be arising.
However, it is very encouraging that the first major industrial project to be approved by this Government, and the first large project to come along for some time has been launched by an Irish firm and is based on the produce of Irish farmers. I refer to the decision of the Goodman Group to invest £260 million in new meat-processing facilities throughout the country.
The underdeveloped state of our food processing industry has been apparent for quite some time. In the early days of EC membership the continuous price increases and availability of intervention storage meant there was no great pressure to develop more sophisticated food products. The main emphasis was on increased production. Recent trends in the CAP have made it very clear that this heavy reliance on intervention must end and that we must process our agricultural produce into quality foodstuffs and find markets for them.
In our Programme for National Recovery we stated that Fianna Fáil would lead a market-driven approach to food-production, creating new opportunities for adding value. We outlined our plan to integrate the entire agricultural and food sectors so that we can quickly adapt to changing patterns of consumer demand, and we expressed our ambition to make Ireland, “a quality food producer of international importance”.
In Government we have taken the necessary action in accordance with that concept. The Department of Agriculture have been expanded into the Department of Agriculture and Food and a Minister of State appointed with special responsibility to fully develop the potential of the food processing sector. The new Goodman project involves an investment in our beef industry of £260 million in 11 centres around the country and covers all the main regions. It is the intention of the promoters to put our beef into world retail outlets as the premium market leader. The grass-based methods of cattle production used here, the quality of our environment are factors we can capitalise on, by producing meat to the highest technical standards. It is an early and welcome sign of that return of confidence which is needed for investment to start again.
We have identified the financial services sector as an area where we have advantages. Those countries in Europe which have made conscious efforts to develop their financial services industry have seen a major return in terms of jobs and economic activity. We have the necessary ingredients in Dublin for a financial services centre — a prime city site in the Custom House Docks, an educated computer-literate young work-force, a favourable time zone location, and an excellent telecommunications system of international standard.
The arrangements for the development of the Dublin Financial Services Centre has been entrusted to a top-level committee representative of the financial services industry, the IDA and CTT. A special unit to market the centre has been set up in the IDA. The passage of this year's Finance Bill will put in place a package of incentives. It is now clear from the level of inquiries we have received, both from domestic and international interests, that the demand to locate at the centre will be such that we may have to enlarge and extend it.
This kind of illustration of this Government's capacity to make decisions and to implement them quickly and effectively is beginning to restore confidence in the management of the economy among the business community at large and to generate new investment and new business initiatives and enterprise generally.
On another front we took swift and effective action to stop the abuse of the cross-Border travellers allowances. Some £300 million annually was leaking out of our economy in artificial travel generated by these travellers allowances. Our view was very simple and sensible. It was unacceptable that these allowances should be allowed to cause a distortion of normal trade. That this trade was entirely artificial and generated solely by the travellers allowances — which should properly be only a concession for normal travel — is proved by the fact that day shopping expeditions have now virtually ceased. The economic importance of the measures we took is self-evident and highlights the determination of the Government to get to grips with problems and solve them.
Export performance so far this year has been strong. A 5 per cent growth for 1987 is now being forecast, compared with very weak growth in 1986. Last month for the first time ever Irish exports exceeded £1 billion. Because economic growth must be export driven however we are concentrating on improving our export performance still further. The new export trading houses which are being encouraged by tax incentives are designed to help small firms to export which do not have the resources or the expertise themselves. Nearly all the development measures we are initiating, in financial services, forestry, food-processing, horticulture are export-orientated.
We must constantly try to improve industrial relations. A bad industrial relations situation in an area or an industry kills investment in that area or sector. It is tragic to see a town or locality devastated by the closure of a thriving business or factory because of some dispute that goodwill and commonsense could have resolved. Jobs today are too precious to be gambled with. Everyone, on the factory floor, in the office, in the boardroom must face the realities of the fiercely competitive world we live in today.
We regard the semi-State sector as providing an important strategic resource for growth and development of the economy. We will restore to the State companies their role as development corporations. I have already met the chief executives of all State-sponsored bodies and I would comment that they, together with their colleagues in each agency, constitute a formidable bank of talent, ability and expertise. We propose to harness these resources as part of the Programme for National Recovery now being elaborated with the social partners.
The State-sponsored bodies, therefore, have been asked to submit to their relevant Ministers by end-August any development proposals they could undertake which would increase employment and earnings. These will be considered in the context of the programme. Where legislative changes are necessary to enable such development proposals to be undertaken, consideration will also be given to these.
The corporate plans of State-sponsored bodies will be given a new focus so as to ensure that these plans become the basis for constructive dialogue on policy and development between the bodies and their parent Government Departments. I propose to continue with these meetings so as to ensure that the full potential of the semi-State sector can be realised, their difficulties understood and any obstacles to their full contribution to the economy removed.
Our failure to date to develop and implement a full-scale science and technology policy has been a serious deficiency in our economic development strategy. It greatly inhibited investment in industry in particular. This Government are determined to make good that defect.
We need innovation, new products, applied research. Science and technology must be consistently applied to natural resources, to produce new marketable products; third level institutions must be brought into an increasingly close working relationship with industry. Spending on science and technology and on research up to now has been spread over a number of different Departments and agencies. To ensure a new kind of central direction and co-ordination we now have a Minister with special responsibility for this area. We have provided him with a budget of £2.5 million for the remainder of this year by re-allocating funds within the Department of Industry and Commerce. This modest budget has been prudently allocated to endeavour to get the best return and includes the key areas of bio-technology and micro-electronics. I recognise this is only a modest beginning, but it is our intention that the science budget should be a permanent feature from now on. The whole area of science and technology will occupy a central role in our plans for economic development. The Programme for National Recovery identified our national resources as a major source of development.
We are putting a new emphasis on horticultural development, an industry which is labour-intensive, and which is far too import-dominated at present. Following on the appointment of a Minister of State an interim non-statutory board, An Bord Glas has been set up, which will help to organise the industry. The decision to extend the gas pipeline through north Dublin to Drogheda and Dundalk will be of great assistance to the horticultural industry in that catchment area. Our target is to replace £37 million of imports and to generate £23 million in exports, which should create significant additional jobs.
We plan to greatly expand production from our forests and to increase planting levels. The Government have decided to set up a semi-State body on the lines of An Bord Post and Telecom Éireann to manage our forests along fully commercial lines, and legislation will be introduced in the autumn session. There is enormous potential in forestry for import substitution, for exports to the rest of Europe for the foreseeable future and for further development in wood-processing. Our aim would be to increase employment in forestry and timber processing by several thousand between now and the end of the century. Ireland has very real natural advantages, in particular, space and climate, we have the fastest growing trees in Europe, and there is a market for everything we can produce. The aim of this Government is to give the whole sector a new commercial dynamic. This year State and private planting will reach an all-time record of 11,000 hectares, 1,000 hectares in excess of the target set out in our election document, Forestry — A Programme for Development.
Another area to which we propose to give a new priority is our marine resources. In accordance with our 1985 policy document a new Department of the Marine has been set up, and we are actively planning the setting up of a Marine Research Institute. The wealth potential off our coasts has never been properly exploited. We envisage a major expansion in mariculture to enable Ireland to catch up on our principal competitors.
The Government will endeavour to have the question of Ireland's quotas reopened at Community level. I am particularly disturbed by parliamentary evidence that fishermen of one member state of longstanding have been over-fishing their quotas with Government connivance both in Irish waters and elsewhere, and that false returns have been made to Brussels. The implications of this and any appropriate action will have to be considered carefully.
Ireland was left in a vulnerable situation following the liquidation of Irish Shipping. To help re-establish an Irish shipping fleet we have extended the business expansion scheme and the 10 per cent corporation tax rate to the shipping industry.
We have authorised the extension of the natural gas pipeline from Dublin to Dundalk. As part of the Valoren Programme adopted by the EC we have approved a number of important peat development projects in the midlands and west, as well as a number of small hydro-electricity schemes. No contribution that can be made by our natural resources, however modest, to an economic development, should or will be neglected.
The Government are also concerned about the price of energy, especially electricity and oil products, which is higher than in most other European countries. The agreement recently entered into between the management and the work-force in the ESB, for instance, contained a range of measures to improve productivity. The Government wish to see these implemented and translated as soon as possible into lower prices for the consumer.
1987 will, I believe, achieve a major breakthrough for Irish tourism. The industry has now been given the priority which its enormous potential warrants. International tourist travel is expanding rapidly. West Germany, the United States, the United Kingdom and France are in that order the most important countries of origin of international tourism in terms of the total number of nights spent abroad. Because of our links with the United States and our geographic location we are in a strong position to exploit these markets. For some time, however, we have not done so and we have actually lost market share in key markets. Immediately on coming into office this Government took action to reverse this trend. We set up the new Department of Tourism and Transport and instituted a crash programme to boost this year's tourist season. The central thrust of that programme was to reduce the price of access transport, accommodation and petrol. Early indications are that in the first four months of this year, traffic will be up by about 17 per cent. We are aiming for 20 per cent for the year as a whole.
We intend to introduce later this year a major development plan for Irish tourism. The objective of the plan will be to achieve a major increase in net earnings and employment. Four hundred thousand visitors bringing in an extra £100 million in revenue and creating 5,000 new jobs is what we are aiming at. The initiatives which we have already implemented as well as a long-term development plan which we are preparing will ensure that this sector is enabled to make its full contribution to our economic recovery.
The Government are proceeding with extensions to the runways at Dublin and Cork airports. We have also given a subvention to the Cork-Swansea Car Ferry, which was long demanded by the tourist interests in the south-west region. We have continued to give support to the B&I company despite its financial problems and the prospects of a good tourist season will not be jeopardised by any lack of that service.
In relation to infrastructure, a special priority must be given to road improvement where the pace of modernisation is still painfully slow. Where private investment can be involved the whole programme can be speeded up. The East Link Bridge was given the go-ahead in 1981 during my first Administration and it has been a very significant amenity. A second wholly private financial project is going ahead, the West Link Motorway at a cost of £31 million. The completion of a Dublin ring-road will have major priority.
The Government have reviewed their decentralisation programme. Within a month of resuming office we announced the decentralisation of sections of Government Departments to Ballina, Cavan, Galway and Sligo. This is only a first phase. The programme makes both economic and social sense. Offices will be built by the private sector and rented at lower cost than offices in Dublin, and will help young people to find office work in their own home areas.
The Irish film industry has yet to achieve its full potential. To facilitate the development of the industry, the Government have brought forward section 35 of the Finance Act, 1987, to complement existing tax incentives, so that it will in future be possible for corporate investors as well as personal investors to secure taxation relief on significant investments by them in the Irish film industry. The Government have thus created for the first time a suitable framework for substantial investment by the private sector to help Irish film production become a genuine business activity and thereby facilitate a continuing process of production of a wide range of film projects.
The Government have decided that this new provision for a tax incentive for corporate investment in film-making — an incentive long sought by the industry — should replace the support given by Bord Scannán na hÉireann and that, accordingly, that body should be wound up from a current date. As it happens, the mandate of the present board of Bord Scannán na hÉireann is due to expire on 5 October, 1987. The chairman, Mr. Muiris MacConghail, tendered his resignation as chairman on 10 June with effect from end July. The contract of the chief executive of the board is due to expire in mid-August and he has already indicated that he is not seeking the renewal of his contract. I would like to acknowledge the distinguished work done by the chairman, members of the board and the chief executive and to thank them for the services they have so capably rendered.
The Arts Council, which has a statutory function in relation to the promotion of knowledge, appreciation and practice of the arts, including the cinema, has expended close on £1 million in the period 1981-87 on film-related projects. The council will be able to continue that work out of the increased funds being made available to it.
The other essential element in the Programme for National Recovery will be tax reform and equity which we came into office pledged to achieve. The programme will progressively reform and improve the equity of our taxation system. We are currently engaged, in the programme discussions with the social partners, in ascertaining and articulating the necessary measures.
We have already taken definite steps toward tax reform and tax equity since coming into office by establishing a special task force as a separate and additional arm of the Revenue. This force is now making a significant contribution to collecting the arrears of taxes. Further administrative action in this area is being considered, particularly the possible introduction of self-assessment. Initially this will include corporations and the self-employed.
We have brought to an end the interminable dispute about farmer taxation. Farmers will now be taxed on the same basis as everyone else and pay their proper contribution to the administration of the State. The new withholding tax on professional fees paid by public bodies is a step towards bringing the tax treatment of those affected into line with the treatment of the PAYE sector. Our most important objective in income tax is to bring two-thirds of taxpayers down to the standard rate. This will be a major reform of the tax burden and will be achieved under the programme we are now elaborating.
This is an example of the comprehensive and complementary approach we are adopting to putting the economy back on the path to growth and expansion. While, on the one hand, we must reduce Exchequer borrowing, priority must also be given to reducing the burden of taxation on income tax payers so that greater discretionary spending power can promote growth, pay increase expectations can be moderated and a greater incentive to enterprise and work generated.
The other element in the Programme for National Recovery will be reform of our social services to bring greater equity into their application within the constraints of the public finances. There are a number of problems with the social services which impede their efficiency and equity. We must ensure that all services are operated in a cost-effective manner since the total spent by the Government in the health services, the educational system, social welfare, housing and on subsidies, amount to nearly £5.5 billion.
We must also ensure that the access and opportunities these services provide must have full regard to the needs of those served. In particular, the needs and requirements of the disadvantaged, economically and socially, must have priority. We are now at a stage in our economic and social development where we have built up in health, education, social welfare and housing publicly financed services which are very large and very costly. It is clear that there are inequities in the application of and the access to these services which we now propose to remedy in the context of the programme. By remedying these deficiencies we can contribute to the general acceptance of the adjustments that may be necessary in these and other areas of public expenditure.
This Government see themselves as an economic management team with the primary objective of managing the national economy back to recovery. To ensure that we can do this effectively and expeditiously we have carried through a major reorganisation of the machinery of Government. Government Departments have been restructured so that they can be more directly aligned to the needs of economic management and in a position to respond effectively to the economic priorities we have set. Ministerial duties and functions have been similarly reallocated for this purpose.
To give a new priority to the development of our maritime resources we have set up the new Department of the Marine. The tourist industry's nomadic departmental existence has been ended and the industry given the status it requires at Cabinet level. The reincorporation of the Department of the Public Service back into the Department of Finance has been carried through. The Department of Agriculture has been restructured to become the Department of Agriculture and Food, reflecting the vital importance of food processing to the further prosperity of our agriculture.
Several Ministers of State have been given strategic responsibilities through the creation of special offices. They have a special role and status as an integral part of the Government team. There are Ministers of State with special responsibility for forestry, the food industry, trade and marketing, science and technology, and horticulture. The results are already becoming apparent.
A new board to develop the horticultural industry has been set up and a similar one for forestry is on the way. Export marketing, science and technology and food processing are receiving urgent attention.
Our main concentration as a Government has been on the economy. From every point of view that is essential. A Government that is successfully managing the national economy and the public finances will have the ability and the confidence to confront all its other problems.
Fianna Fáil's basic position and long term aim in relation to Ireland as a whole continue to be as set out in the report of the New Ireland Forum. As far back as 1980 at the Dublin Castle Summit, the Irish and British Governments clearly identified the Anglo-Irish framework as the basis for political progress towards peace, reconciliation and stability on this island. We are continuing to use that framework including the more recent Anglo-Irish Agreement to try to achieve political progress and reform in the interests of all the people of Northern Ireland. We made it clear long before the February election that, whatever our reservations, international agreements would be honoured, and could only be changed by mutual consent.
The Tánaiste and Minister for Foreign Affairs has already co-chaired a meeting of the Intergovernmental Conference in Belfast, and the mechanism of the conference and the secretariat will continue to be used by us as an instrument to seek reform and to clarify problems and difficulties as they arise.
We will through the conference strenuously pursue the achievement of equality of opportunity in Northern Ireland and the elimination of discrimination in employment there. We see this as a fundamental issue, which arouses legitimate concern among Irish people both here and abroad.
We will also be seeking meaningful reforms in the administration of justice so that the whole community there can have confidence in the impartiality of the courts, the laws and the police force. We will be giving special attention to economic co-operation between North and South, particularly in areas which will help to alleviate the unemployment problems being faced in both parts of this island, and we appreciate the assistance being given to a number of projects by the contributors to the International Fund.
People, North and South, must be given hope that a climate of moderation can be realised so that the search for peace and agreement can take place in an atmosphere free from hatred, violence and suspicion. The recent electoral success of the SDLP is a very welcome development and an encouraging sign that there can be no return to the failed structures of the past.
I promised some time ago that this Fianna Fáil Government would be an environmentally conscious one. In this, the International Year of the Environment, the Government can point to its continuing record of concern and action to ensure the protection of our environment and heritage. In dealing with the Kowloon Bridge threat and the rape of the oak woods at Coolattin we became very keenly aware of some glaring deficiencies in our legislation for dealing with environmental problems of this kind. We will be proceeding expeditiously to remedy those gaps, and there are a number of Bills dealing with oil and maritime pollution which will be introduced in the Seanad over the next few weeks.
The Minister for the Environment is establishing a special working group to make recommendations on whatever legislative, administrative and organisational action should be taken. This working group will have representatives of all the Departments and offices concerned as it is particularly important that the provisions in both the Planning Act in this regard, and the Forestry Acts are considered together. The House can be assured that this review will be carried out as expeditiously as possible.
My colleagues and I in Government are very conscious of the fact that in many areas legislation is urgently required. While our efforts in the months immediately ahead will, of necessity, be concentrated on dealing with the public finances and promoting economic development, we intend at the same time to pursue to the greatest extent possible a comprehensive programme of legislation.
Even though the Dáil will be in recess it is our intention to press ahead. For this purpose we intend that the Seanad will sit well into the summer and deal with as much legislation as possible. A great deal can be achieved if legislation is introduced in the Seanad and subjected there to detailed and thorough examination, and to the greatest extent possible, difficulties teased out and any deficiencies or anomalies eliminated. Legislation dealt with in this way by the Seanad during the summer can be available to the Dáil in the autumn and we could expect that because of the manner in which the legislation would have been dealt with in the Seanad, it could receive a reasonably expeditious passage through the Dáil. The Government would hope to have the following measures dealt with in this way: the Adoption Bill, the Companies Bill, the Family Law (Protection of Spouses and Children) (Amendment) Bill and the Children Bill; the Agricultural Credit (Amendment) Bill, a Bill to improve the standards of hygiene of local abattoirs; the Customs and Excise (Miscellaneous Provisions) Bill, which proposes to give additional powers to customs and excise officers to tackle drug smuggling; the Restrictive Practices (Amendment) Bill which deals with the issue of supermarkets seeking unwarranted contributions from suppliers and outlaws below cost selling; the Air Navigation and Transport Bill to promote greater security at airports; the Oil Pollution of the Sea (Civil Liability) Bill, the Sea Pollution Bill, which will enable the ratification of important international conventions and give us better protection from disasters like the wreck of the Kowloon Bridge, and the Shipping Investment Grants Bill, the Criminal Law Bill, the Video Recordings Bill and the Data Protection Bill.
I have outlined the progress we have been making in many difficult areas. I invite Deputies to look at this stage at our document published in the general election, Programme for National Recovery. They will, I believe, be surprised to see the remarkable progress that has been made already in undertaking the programme outlined. In virtually every area our policies are being actively implemented. In many of the strategic development areas, international financial services, tourism, food processing, science and technology, exporting, shipping, the film industry, decentralisation, to name but a few, this Government have already made key decisions that will give a major impetus to the sector or programme in question. I do not think that anyone can point to a Government in recent times which published such a comprehensive programme in a general election and which followed through on that programme so thoroughly and expeditiously.
This Government since elected to office have shown a firm and resolute determination to confront the financial realities and tackle the fundamental problems in the economy. On assuming office we saw clearly what had to be done and we decided that we would not be deterred from doing it by any political or electoral considerations.
It is the duty of a national political organisation like Fianna Fáil to face up to the task of the day; to recognise what is the national priority; to identify the problems and set about solving them. This duty takes different forms at different times in the nation's affairs. The challenge to this Fianna Fáil Government was to tackle head on the crisis of confidence which had arisen, to combat the sense of failure which had developed and which manifested itself most clearly in the queues of young people outside foreign embassies. Economic collapse was at the heart of the national malaise. We saw this clearly and decided to act urgently and decisively. We have demonstrated that our financial problems can be overcome with the necessary political will. We have shown that there are initiatives that can be taken by Government to promote new wealth and create employment.
Political leadership must be concerned about the real problems of the nation and developing the will and capacity among all concerned to tackle and overcome them. The difference between good Government and bad is often not so much a matter of different outlook as of relative determination. The very best policies are of no avail if they are not implemented. We are beginning to get things moving in the right direction both on the economic and financial fronts. Anyone, who for their own party political purposes, seeks to deflect us from doing the job that must be done will bear a heavy responsibility.
Only a few months ago the leader of Fine Gael, the former Taoiseach, said at the outset of this Dáil: "We are going to find it difficult at times to offer the degree of support which will be necessary for the Government to carry out their functions effectively and to overcome the great problems that face us and to take on the vested interests which are strangling this country. It will not be easy for an Opposition to support some of the measures the Government will have to take. Yet we will do so".
We have made visible and tangible progress in our first three months in office. In practically every area determined action has been taken. Confidence has returned and some of the basic economic indicators are exceptionally good. Money has flowed back into the economy, interest rates have been reduced, and there is a new and healthier climate for investment. If ever a Government acted solely in the national interest this is such a Government. Our only concern is to restore the Irish economy to sound good health and to take all the measures necessary for this purpose. The Irish people have a deep and long term interest in seeing the Government succeed. They have a profound hope that we will succeed. The sooner we can put our fiscal difficulties behind us, the sooner we can create new employment opportunities and commence a new era of development. We have still a long hard road to travel but we have made a brave start and I believe that the revival of national pride we need to carry us on to complete recovery can already be emerging.