Dáil Éireann díospóireacht -
Wednesday, 27 Jan 1988

Vol. 377 No. 1

Financial Resolutions, 1988. - Financial Resolution No. 2: Excise — Hydrocarbons

The Taoiseach

I move Financial Resolution No. 2:

(1) THAT in this Resolution—

"the Order of 1975" means the Imposition of Deputies (No. 221) (Excise Duties) Order, 1975 (S. I. No. 307 of 1975);

"the Order of 1987" means the Imposition of Duties (No. 285) (Excise Duties) Order, 1987 (S. I. No. 19 of 1987).

(2) THAT the duty of excise on mineral hydrocarbon light oil imposed by paragraph 11(1) of the Order of 1975 shall, in lieu of the rate specified in paragraph 5(1) of the Order of 1987, be charged, levied and paid, as on and from the 28th day of January, 1988, at the rate of £29.47 per hectolitre.

(3) THAT—

(a) for the purposes of this paragraph, mineral hydrocarbon light oil shall be deemed to be unleaded if it contains not more than 0.013 grammes of lead per litre or, where such oil is delivered for home use before the 1st day of April, 1990, if it contains not more than 0.020 grammes of lead per litre,

(b) the lead content of mineral hydrocarbon light oil shall, for the purposes of subparagraph (a) of this paragraph, be established in accordance with the provisions of Council Directive No. 85/210/EEC of 20th March, 1985¹, and

(c) subject to compliance with such conditions as the Revenue Commissioners may think fit to impose, a rebate of the duty of excise imposed by paragraph 11(1) of the Order of 1975 on mineral hydrocarbon light oil shall be allowed at the rate of £0.80 per hectolitre in respect of such oil (not being aviation gasoline within the meaning of section 73 of the Finance Act, 1984 (No. 9 of 1984)) which is deemed to be unleaded by virtue of subparagraph (a) of this paragraph and on which the said duty is paid on or after the 28th day of January, 1988.

(4) THAT the duty of excise on hydrocarbon oil imposed by paragraph 12(1) of the Order of 1975 shall, in lieu of the rate specified in paragraph 5(2) of the Order of 1987, be charged, levied and paid, as on and from the 28th day of January, 1988, at the rate of £22.31 per hectolitre.

(5) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

¹O. J. No. L96, 3.4.1985, p.25.

I have pleasure in moving this resolution which is the resolution dealing with hydrocarbons. The purpose of this resolution is to give effect to an excise duty increase of 8p, including VAT, on a gallon of petrol and a 4p increase, including VAT, on a gallon of auto diesel. These increases, which are intended to take effect from midnight tonight, will result in the following additional Exchequer yields: petrol in 1988, £14.8 million and in a full year £16.6 million; auto diesel in 1988, £3.7 million and in a full year, £4 million. The resolution also provides for an excise duty differential of 4½ per gallon including VAT in favour of unleaded petrol. The Minister mentioned that matter in his speech. The present higher trade costs mean that unleaded petrol is 4½p per gallon dearer than its leaded equivalent. The present measure will therefore equalise the price of leaded and unleaded petrol at the point of sale and thus remove a considerable disincentive to the use of unleaded petrol. Again, virtue is triumphing over base monetary considerations.

Mr. Dukes

I know the Taoiseach speaks as a reformed smoker of some standing. I would not take too much issue with him about what he said in regard to the duty on cigarettes, although his tongue was firmly in his cheek but I must say that when we come to petrol it is a different matter. While we must commend an effort by the Government to make a move in favour of unleaded petrol, the matter should be put in context lest the Taoiseach does what he says he never does which is to claim too much virtue for a particular measure. There are 13 outlets in this country where you can buy unleaded petrol and I do not know whether that number will increase as a result of this measure. I do not know how many motor vehicles there are in the country that use unleaded petrol and I would be very grateful if the Taoiseach could give us some information on that. If the Taoiseach has the information, I would also like to know whether there are any plans to encourage the importation of vehicles with engines capable of using unleaded petrol and whether side by side with that there are any plans to increase the number of outlets where this is available.

I can see that this is a factor which might have a marginal effect on tourism since an increasing proportion of car fleets in continental European countries are equipped with engines that can take unleaded petrol. Perhaps the wider availability of unleaded petrol here would make a marginal difference in the number of people who would be prepared to come here on holidays using their own cars. We would need a good deal more information from the Taoiseach on what he expects the effects of this change in duty on the volume of sales will be, first of all, from the point of view of the price elasticity of the demand which underlies the forecast of expenditure. Secondly, I would like to know whether the Government have given any consideration to the effect this increase will have on the competitiveness of petrol sales here as compred to those just across the Border. As the Taoiseach knows, for a very wide band of country along the southern side of the Border it is now virtually impossible to run a petrol retail operation because of competition from the other side and ease of movement.

The Taoiseach should also give us some indication of what the Government's expectations are in relation to the development of retail prices of petrol. A 4p increase per gallon is certainly something which would be felt. It is, as I am sure the Taoiseach and his colleagues on the other side would know, particularly on the basis of their protestations over recent years on similar occasions, something that has a differential effect depending on what part of the country you are in. Those of us who represent rural constituencies know that the price of petrol is a much bigger issue for us than for many of those who represent urban constituencies. In my own case, for example, my family car now does around 20,000 miles a year and the only time I ever drive it is to go to Mass on a Sunday. That is a result of living in a rural constituency and one, indeed, which is not very far from where we are now, 35 miles at most.

When you get out past the area which is served by a relatively frequent public transport service the only means of moving about is by having a car or a motorbike and therefore the price of petrol becomes a substantial item in a family budget. With that in mind, it would be useful to know what the expectation is as to the volume of sales. In relation to the forecast of prices, are we seeing here an anticipated clawback by the Government or a clawback by the Government in anticipation of a change in petrol prices, or will this 4p be further added to in the coming months through an increase arising from a movement in crude oil and petrol prices internationally?

Finally, could the Taoiseach indicate to us what the trend in the volume of sales of petrol here for 1986 was and what the forecast is for the volume of sales post-budget in 1988?

Mr. McCartan

The Worker's Party are implacably opposed to the provision contained in this resolution. First, we are amazed that the Government are seeking to impose increases as proposed and outlined by the Taoiseach in moving the resolution and, indeed, by the Minister for Finance, Deputy MacSharry, in proposing the budget earlier today. In January 1986 this issue was debated at length in the context of the budget which was then being proposed by the Coalition Government of the day. It is worth noting some of the arguments which were then presented by the present Government who were then in Opposition in opposing an increase of similar proportions to deliver similar revenue to the Government's coffers. The Taoiseach, Deputy Haughey, who was then Leader of the Opposition, said and I quote from the Official Report, volume 363, column 1083:

We are opposing both these resolutions which propose additional taxes and an extra burden on the unfortunate motorist. There are many arguments, social and economic, which can be advanced against both the increases proposed.

An Ceann Comhairle

I hesitate to interrupt the Deputy but he will appreciate that on a Financial Resolution of this kind long speeches are not in order, nor is it appropriate to go into detail that can be reserved for the budget debate proper. The debate at this stage should be used in the main for elucidation purposes. Long speeches are not in order.

Mr. Desmond

No embarrassing detail is allowed.

An Ceann Comhairle

Detail should be reserved for the debate on the budget proper.

Mr. Desmond

Behave yourself.

Mr. McCartan

I am obviously subject to the ruling of the Chair and I do not wish to be in any way lengthy on this——

Mr. Howlin

Or embarrassing.

Mr. McCartan

——but all I can say as a new Deputy looking at the Official Report for 1986 is that all of the contributions then were in a similar vein. As I have said, my first point——

An Ceann Comhairle

Speeches were brief on that occasion also.

Mr. Desmond

You were not here. You were on our side.

An Ceann Comhairle

I was here.

Mr. McCartan

Deputy Wilson, who is now Minister for Tourism and Transport, made strong arguments and pleas as did his colleague, Deputy O'Hanlon, who is now Minister for Health, for the Border areas. Clearly the arguments they made at that time would apply to the proposals which are being made in this resolution. There have been two recent decreases in the price of petrol. That was a good trend and good to see. The vast majority of motorists in this country who are working people paying PAYE were relieved at having to pay less for their petrol and it was seen as one way of inducing trade back to the Border areas.

An Ceann Comhairle

The Deputy is making a speech which would be more appropriate to a debate on the budget.

Proinsias De Rossa

No, he is speaking to the motion.

An Ceann Comhairle

I assert again that on resolutions of this kind long speeches are not in order.

Mr. McCartan

I certainly will not be long and I may not be——

An Ceann Comhairle

They are used in the main for elucidation purposes.

Mr. McCartan

What astounds us is how in such a short period of time the arguments forcibly advanced in January 1986 against a similar proposal can be turned around, as the Taoiseach did a few months ago. I should like to ask the Taoiseach, and the members of his party who spoke against a similar proposal in 1986 when in Opposition, to explain how matters have changed so dramatically since then to warrant such a U-turn? How have matters changed for the beleaguered motorist, for the tourist and traders in the Border areas?

The Workers' Party are surprised and dismayed at this change in attitude by Fianna Fáil. We are opposed to the resolution for all the reasons advanced by Fianna Fáil when in Opposition such a short time ago. We consider this to be an attack on working people. Deputy Seamus Brennan, when in Opposition, told us how an increase in the price of petrol would affect the lives of young working people with a family. He told us that at the end of the day such people, even allowing for improvements in the tax system, would suffer a net loss when one takes into consideration the increase in the cost of running a car to and from work, to and from church and to and from local shops. This represents an attack on the living standards of working people. It is a cute piece of work which represents a negative contribution to the relief promised for so long to the PAYE sector.

Mr. McGahon

As a Border Deputy I should like to tell the Taoiseach that this represents yet another nail in the coffin of the few retailers still in business in Border areas. I do not often find myself in agreement with any member of The Workers' Party but I must agree with Deputy McCartan who spoke of the crocodile tears shed by Fianna Fáil members when in Opposition about a similar move. This increase is a charter for more smuggling. Does the Taoiseach realise the extent of the smuggling along the Border? The amount of money lost to the Irish Exchequer is hard to estimate. I can assure the Taoiseach that he would need a diviner to find a petrol retailer in Border areas. I hope he does not run out of petrol in the vicinity of the south Armagh border because it will be a long way back to Kinsealy.

The Taoiseach

I could always go to Swatragh.

Mr. McGahon

The Taoiseach might not be too welcome there. In the budget the Minister, by increasing the price of petrol, has ensured that the profits from smuggling will rise still further.

Miss Flaherty

I share the views of my party leader in regard to the concessions on unleaded petrol. I hope that as a result many car owners will adjust their cars for use of that petrol. On one occasion I was about to put the nozzle of the unleaded petrol pump into my tank when an attendant informed me that there might be disastrous consequences for my engine if it was not modified for the use of unleaded petrol. I welcome the concession in the budget and we should try to ensure that more of our cars are converted for use of unleaded fuel. Will the Taoiseach explain how the Government decided on the balance in relation to these duties because it seems to me that they got it wrong. In the course of the debate on Financial Resolution No. 1 the Taoiseach said that he could not state categorically that we had reached a point of diminishing returns in regard to tobacco products. Indeed, he indicated that health considerations had played a minor role in regard to the decision to increase the duty on cigarettes.

The decision to increase petrol by 8p per gallon will have a great impact on the average person and on industry. To increase the excise duty on cigarettes by 8p would have yielded as much but would not have affected the average person to the same extent. Will the Taoiseach accept that the Government have got the balance wrong in this case? My colleagues from Border counties have indicated the damage such an increase will do in their constituencies. In recent months the differential between the price of petrol North and South has narrowed considerably and that has proved of great benefit to traders in the South. However, this hike in the budget will change that. Will the Taoiseach agree that the Government did not give this matter sufficient consideration and that they got the balance wrong?

Mr. Boylan

I should like to compliment the Taoiseach on reintroducing the exemption for young farmers from tax when they inherit farms from their fathers or close in-laws. Of course, the concession should never have been dropped. I should like the Taoiseach to take my two criticisms of the budget seriously. I regret the decision of the Government to transfer to the Department of Health the operation of the scheme whereby indirect taxes on motor vehicles adapted for use by disabled persons may be refunded. I am opposed to that move because I believe that that money will be swallowed up in the Department of Health who are in a critical financial state. It is my belief that the £3 million, the full year cost of the existing scheme, will not be forthcoming. Those who are concerned about disabled drivers, the Irish Wheelchair Association and the Spina Bifida Association, have expressed the view that the disabled will lose out.

I am disappointed at the decision of the Government to increase the price of petrol by 8p per gallon particularly when I consider that three senior Ministers in the Government are from Border counties, two from the constituency of Cavan-Monaghan, and one, the Minister for Finance, from Sligo-Leitrim. Those Ministers must understand the problems petrol retailers in Border counties are encountering. Traders in the Border counties who attended a meeting in Monaghan before Christmas of the Border Traders Association were happy that as a result of the fall in oil prices the difference in the price of petrol had fallen. It had reduced to a difference of 53p per gallon.

They calculated that a 10p to 15p additional reduction would mean that it would not be worth one's while travelling a distance to fill one's tank. They had hoped that that would have been the position following on this budget. But, lo and behold, the Minister announces today that the price of petrol is to be increased by 8p per gallon — and that on the part of the people who were shouting on this side of the House less than 12 months ago about what was happening in Border areas. They well know and realise the position but obviously have decided to close their minds to it.

I am strongly opposed to this increase. It constitutes a sell-out of those people. The Government have reneged on them. I should like an explanation which will be awaited by these people in tomorrow's papers.

Mr. McCartan

Will Deputy Boylan's party be voting against it?

Mr. Boylan

Yes, strongly.

The Taoiseach

I might give some pieces of information Deputies have been seeking. First, many Deputies who spoke about this matter are ignoring the very important, significant difference between now and 1986, that is, that the price of petrol——

(Interruptions.)

The Taoiseach

——an objective difference apart from a subjective one is of course, that the price of petrol is now on the way down. By this we are not really putting up the price of petrol at all as was the case in 1986. At that time——

(Interruptions.)

The Taoiseach

On this occasion all the Minister for Finance is doing is taking the benefit into the Exchequer of a major reduction in the price of petrol. My information is that another decrease in the price is on its way. Deputies might please compare like with like. The imposition af excise duty in 1986 resulted in a direct increase in the price of petrol whereas, in this case, taking one week with another, the imposition of this excise duty will not directly increase the price.

Mr. MacDowell

Will the price go down north of the Border as well?

The Taoiseach

I am somewhat disappointed at the two Border Deputies. Both of them should know that this Government acted very positively, efficiently and decisively as soon as coming into office to help traders along the Border. That was one of the most effective actions taken for a long time whose results were dramatic and immediate. I do not know that this imposition on the price of petrol, in itself, will disadvantage people along the Border.

Mr. Boylan

The 48-hour restriction was of no immediate benefit in Border areas.

The Taoiseach

Not a lot. Let me come to the question of fact posed by Deputy Dukes. First of all, we calculate that one third of motor vehicles can use unleaded petrol and, of the remainder, some would need a slight mechanical adjustment to use it. Over the years the volume of sales discloses that petrol has gone down considerably in volume and that diesel has gone up; diesel has become much more popular over a decade.

Though not strictly relevant to this, one Deputy raised the question of the change in regard to disabled drivers. It was I who introduced that concession for disabled drivers in the first instance. I will be very determined to ensure that the change in the system of administration does not in any way disadvantage disabled drivers. I can give the Deputy a very solemn assurance on that. I know a lot about that. I assure him that this change is being made not to save money or disadvantage anybody but simply to have a more effective and efficiently administered system. Like the Deputy, I will be maintaining a very careful eye on how the position will unfold. As the Deputy will know also, the Minister, in the course of his remarks today, said that the new scheme will be devised in consultation with individuals and organisations representing disabled drivers.

Those are just a few facts sought by Deputies. I will endeavour to get any further information people seek. I want to make the point again that, whereas this will mean more money for the Exchequer — and perhaps many people would have preferred if recent decreases in price could have been retained for the benefit of motorists — on the other hand it is not all that unfair or indeed unexpected that the Minister would take advantage of the decrease in prices to gain some benefit for the Exchequer.

I have to be a little aghast at the crocodile tears of Deputy McCartan in this regard. I too represent a working class constituency. If the people of my constituency had to choose between getting revenue from petrol, from income tax, from VAT or anything else, I think the vast majority of them would opt for getting that extra revenue from petrol.

Mr. McCartan

We will talk about that whenever they get the option. They are not being given the option in this budget.

The Taoiseach

It is a bit nauseating for me to listen to Deputy Mac Giolla weeping for the PAYE taxpayer, going on at great length about the vicissitudes borne by the PAYE taxpayer, the hardships imposed on the PAYE taxpayer. Then, when we propose a change of this kind to help to finance considerable concessions for the PAYE sector, this other member of The Workers' Party tells us that he is passionately opposed. It is a rather funny and peculiar sort of cause for The Workers' Party to be adopting, to be fighting to the death for a small, relatively insignificant increase in the price of petrol which, in the context of the overall arithmetic of the budget, will go ultimately to the benefit of the PAYE taxpayer.

Mr. McCartan

There is no benefit for the PAYE taxpayer in this budget and well the Taoiseach knows it.

Mr. McGahon

On a point of information——

An Ceann Comhairle

I cannot hear the Deputy. He has already spoken. I can facilitate the Deputy on a question.

Mr. McGahon

I just want to dispel some of the illusions——

An Ceann Comhairle

A question, please, Deputy. You have already spoken.

Mr. McGahon

The Taoiseach appears to be unaware of the effects of the 48-hour restriction. I acknowledge that it was a positive move but it did not help people in the Border area. It prevented people from his constituency coming across the Border——

An Ceann Comhairle

I am sorry. I understood the Deputy wished to put a question or was seeking information on the subject. I cannot hear the Deputy; he has already spoken.

Mr. T. Fitzpatrick

I intervene to add my voice to the claims made already by Deputies McGahon and Boylan on behalf of the immediate Border area. I concede immediately that the 48-hour condition was a help to the country in general. As Deputy McGahon has said, it deterred people from travelling long distances in busloads, from comparatively distant parts, on shopping sprees to the North. But it has done nothing whatever for the towns from Blacklion to Emyvale right up to Dundalk, nothing whatever. They are ghost towns at present. I am thinking particularly of towns like Clones and Belturbet, very close to me. Within a few hundred yards of the town of Clones, in Northern Ireland a huge petrol filling station has been built with ancillary shops selling everything and anything. Within a mile of the town there are two or three of these petrol filling stations. The result is that there is wholesale smuggling to the complete disadvantage of the immediate Border areas about which I speak.

It is really very difficult to believe that the Taoiseach, the Minister for Tourism and Transport and the Minister for Health would allow this to happen. We were told last year and the year before that because there was no Border voice in the Cabinet these things were happening, and that if there were a Border voice in the Cabinet — my own name was mentioned — it would not be allowed to happen. Now we have reinforcements in the Cabinet and this disgraceful performance is taking place and it is really putting these unfortunate people out of business, I do not know how this will be received in the areas I am talking about.

I and the other two Deputies who have spoken are members of a committee in Fine Gael for Border areas and have been asked to go to Castleblayney to meet the people there who have this problem. We have been asked and have gone to Monaghan where we meet the same problems. In that area people were expecting VAT to be removed from videos and colour televisions which, I understand, are being bought now on a professional basis by professional smugglers; they are being sold now from door-to-door in a professional way which did not happen until now. These people were expecting that something would be done there and I myself made representations to the Minister for Finance on behalf of a large business in Monaghan and another in the town of Cootehill about this very problem. What are these people going to say, when the Government campaigned at the last election to put an end to this and got votes on the strength of it?

I would say they got Deputy Leonard's seat on that campaign — it is no wonder he has left the Chamber. They promised to fix up the people on the Border and put and end to this smuggling and put the people in Monaghan town, Clones, Belturbet, Ballyconnell, Swanlinbar, Blacklyon, Emyvale and Dundalk back in business again, and that the cash registers would be ringing in the old traditional way. What will they say when they find this evening that instead of things improving under this Government they have been deliberately made worse, because the petrol is what brings people across the Border, and when they go there they fill up the boots of their cars with items that can and should be bought on this side of the Border.

I appeal to the Taoiseach to have an in-depth study made of the situation along the Border with a view to introducing some remedial measures to relieve the problems of business people along the Border. I know that if I had made the promises the Taoiseach indirectly made and the promises his Cabinet Ministers and Deputies made directly in the last election I would be ashamed of my life to be seen in any of those towns. I appeal again to the Taoiseach to make an in depth study of the whole situation and do something about it.

Mr. Desmond

I wish to make three brief observations. On the question of petrol I agree with my colleagues on this side of the House that the matter has been dealt with in a rather hamfisted way by the Government. There was a recent reduction of a similar amount. Had the clawback been in operation at that time and had the reduction not been conceded to the consumer the revenue yield would have been higher because the Minister would have had at least two months additional revenue and there would be no negative buoyancy as applies now on an 8 per cent increase.

The second point I want to make is that we really must strive to have an equalistion because the knock-on effect of increasing the price of petrol on the other Border commodities, notably beer and spirits, is considerable. As the Taoiseach knows, the general estimate for one major company is that currently there are between 5,000 and 6,000 kegs of beer a week being imported illegally into the Republic. That is accentuated by the petrol situation. It should have been handled better.

Now we have the prospect of a further increase in the immediate future. It would be interesting to know how much that will be. All Governments should be interested in bringing about an equalisation. Things were going that way and I think the yield should have been foregone on this occasion. After all there was no increase in the price of beer in this budget or in the price of spirits. The Minister and the Taoiseach were correct in that decision in terms of equalisation. If we could bring it down to 40p or even 30p to 35p we would have been on the road to improving the overall Exchequer yield. I put that very strongly to the Taoiseach.

The second point is one raised by the Taoiseach himself in regard to the scheme for disabled drivers. The Taoiseach knows the reason for the policy change. He is aware of the particular abuse that had arisen, albeit on a minor scale, but sufficient to mention and require a change in policy. I am gravely concerned that the onus for this measure is now being transferred from the Revenue Commissioners to the health boards. I would not give the health boards, at this stage, £2 million to provide incontinence pads for patients because they would not give them to the patients. To suggest that one should given the health boards some £2.3 million with a view to the health boards, the Minister and the Department of Health bringing in a scheme of subsidy the equivalent of the excise remission makes me fearful for the prospects for that scheme. My colleague, Deputy Brendan Howlin, recalled £180,000 being made available to the Southern Health Board for a paediatrician in Wexford General Hospital, and when the money got there it was made quite clear there was no way that money would be spent on that measure. So if, for example, the Eastern Health Board get——

An Ceann Comhairle

The Deputy is surely over-elaborating in entering into the area of the health boards. Let us keep to the financial resolution before us.

Mr. Desmond

I always seem to suffer from over-elaboration when I face you, a Cheann Comhairle. I notice your colleague, the former Ceann Comhairle, was not in any way interrupted when he elaborated——

An Ceann Comhairle

He did not advert to the health boards.

Mr. Desmond

——but I accept your ruling. I am very concerned about these new health board measures. I do not believe for one minute that they have the administrative intention to get embroiled with the Irish Wheelchair Association or the Association for Disabled Drivers in developing a bureaucratic scheme of assistance for those who wish to purchase motor vehicles within that framework. It will be a shambles. That is not a criticism of the competence of the Department of Health. The Department of Health, having lost 16 staff in the last fortnight, cannot even keep up with the redundancies, never mind keeping up with the disabled drivers' scheme. This is a transferred scheme in that the money being saved — how much I do not know — is being transferred to the Health Vote. I believe we should have been less pedestrian as regards people buying petrol across the Border. I would not have imposed that increase. We will be calling a vote on Resolution No. 2, not because we are opposed to taxation — like the Taoiseach, I am in favour of taxation for essential public services — but because I have strong reservations about this increase. We will not be supporting Resolution No.3 which is tying VAT on farmers with VAT on electricity charges. That proposal is too far-fetched to be bought by anybody in the House.

I am very worried about the disabled drivers' scheme which is supposed to be brought in by the Minister for Health who is under so much pressure at the moment that he would nearly spend that money trying to keep Barringtons Hospital open.

Mr. Noonan

(Limerick East): I wonder if the Minister of State at the Department of Finance was expecting a reduction in home heating oil and deferred purchasing oil for this House. I ask the question because the heat has been turned off tonight and it is pretty cold in this Chamber.

There are a couple of questions I should like to raise. I notice that this imposition applies to all transport with the exception of scheduled passenger services. I presume that means CIE and other smaller companies will be exempt from the increase in the excise duties being introduced here tonight. I wonder if this is the proper way to subsidise CIE. If we are subsidising the State transport company we should do it in an obvious way. To disguise this subsidy by increasing the excise duty on all other forms of hydrocarbon using transport and not apply it to CIE, is not a transparent move.

The Taoiseach

This is the traditional way of doing it.

Mr. Noonan

(Limerick East): It is a hidden subsidy and should be looked at——

The Taoiseach

It has been done in this way in almost every budget I can remember.

Mr. Noonan

(Limerick East): I am raising this issue because I do not believe this is the way to do it. This increase should apply across the board. This is particularly true at present when the concept of competition in access transport and internal transport is being introduced. In Kildare Street every Friday night we see queues for buses that are run by the private sector bringing public servants to destinations all around the country. These companies will be at a competitive disadvantage now. I am not objecting to a subsidised State transport scheme; all I am saying is that it should be up front.

Against the background of my remarks today, this measure disimproves the terms of competition. If we are simply looking at the internal economy, we see that the increase in excise duty of 8p on a gallon of petrol is cancelled by a prospective reduction in the price of petrol at the pumps. The consumer pays the same price per litre or per gallon and is no worse off. But that argument does not stand up if we look at the competition between this country and our western European neighbours, and especially at competition between this country and the United Kingdom.

I gave a figure today — it was open to correction by the Revenue Commissioners and the Department of Finance and it has not been corrected as yet — that the cost of transporting a metric tonne by lorry in this country is 60 per cent higher than in the United Kingdom. If the basic economic argument is that we must improve the trading sectors of the economy, that our growth should be export led in internationally traded goods and services, and that increases in internationally traded services would pull the rest of the economy forward, we cannot afford any loss of competitiveness. If the price of diesel is increased by 4p a gallon in real terms, vis-à-vis the United Kingdom — and I am particularly interested in the situation in the United Kingdom which is still our largest market and is our primary competitor — then the terms of trade are shifting to our disadvantage.

That is one of our big problems and will remain even though the debt is being attacked in a very resolute way. If we did get growth of 3 per cent or 4 per cent in 1989, there is the prospect of harmonising the debt/GNP ratio. All the optimistic projections say we cannot do that without growth. The argument is often presented that we must get the debt right by cutting and then we must get growth, but we cannot get the debt right unless there is growth.

The medium term study by the ESRI published in December is based on the proposition that this year we will have a minus growth rate of .2 per cent but that next year we will have a positive growth rate in real terms of between 3 per cent and 4 per cent. My argument is that while the terms of trade and the factors of production are not competitive on all fronts with our nearest neighbour and largest competitor, we will not get those growth rates.

The Taoiseach, if I understand his economic policy and I think I do, is of the view that if we cut the debt interest rates will come down, and that as interest rates come down resources will be released. That is true and we all agree with it. New investment is created and this one factor on its own will give some growth. He couples that with strategies in different sectors and talks about the tourist industry, aquaculture, forestry, financial services and so on, but if we are not competitive and if the structural problems in the economy are not corrected the Taoiseach's sectoral policy will not work.

The Minister introduced a package for the tourist industry which cost£4 million. He took £8 million out of the Estimate and now he has brought it back. I understand an element of this package will be petrol vouchers for tourists. The concept of petrol vouchers was introduced last May and petrol vouchers were being issued in London. As I understand it, at the end of the tourist season, members of Bord Fáilte were almost going around the pubs giving out petrol vouchers like somebody giving out tickets for a badly attended disco. The voucher system does not work. When visitors come to this country they get very bad value.

The Taoiseach will be aware from the recent forum on the tourist industry that a survey taken last autumn showed that 48 per cent of foreigners who took holidays in this country thought they got very bad value, or bad value, for their holiday. The main reason for the bad value was the cost of a holiday here. They talked about the price of drink and petrol and the cost of car hire. I know the Taoiseach has a very strong interest in the tourist industry, which I share, and a strong sectoral policy for it, because it is one of the potential areas for growth. It is also an area where growth can be distributed to the most remote parish because the tourist industry not alone can create wealth but acts as its own distributor which is a very effective means of distribution in an economy such as ours with a small population in a fairly large area. If the tourist considers that he or she is getting bad value in this country, elements such as this in the budget will make a bad situation worse.

Mr. McCartan

On a point of order, I am slow to interrupt anyone speaking from the Opposition benches but a previous ruling by the Ceann Comhairle restricted the time in which Deputies would make interventions at this stage. The ruling was that our contributions should be confined to an interrogatory form in regard to the proposals. We do not have much time left and I want to ask the Taoiseach a question regarding a point he made to me. I understand that other Deputies also wish to ask questions.

Mr. Noonan

(Limerick East): This is my first intervention in the debate but I will not hold up the House.

Mr. McCartan

I do not want to censure the Deputy but I wonder if the same conditions might apply to all.

An Leas-Cheann Comhairle

If Deputy Noonan had been out of order I would have reminded him of that fact. However, I was conscious of the constraints of time and I would have indicated to him that other Deputies were offering and that the question must be put at 11.05 p.m.

Mr. Noonan

(Limerick East): I appreciate Deputy McCartan's concern and I will proceed in an interrogatory form so as to allow other Members to contribute. Is the Taoiseach aware that the price of a litre of petrol in the United States is the same now, almost to the cent, as a gallon of petrol here? Is he also aware, from his consultations with the tourist industry, particularly at the recent tourist forum, that the most cost effective and beneficial type of tourist to attract here is the one who flies in, hires a car at the airport and travels freely around the country? Getting the major advantage of added value in the tourist industry is not a question of packing aeroplanes with chartered passengers and taking them in coaches on pre-packaged holidays to hotels where a bed is offered at $15 a night.

The real money-spinner is the person flying in independently, hiring a self drive car with two or three companions and booking into guesthouses and hotels. The Taoiseach has already replied to the point I raised regarding CIE and I should also like him to comment on what I said about the cost of internal transport in this country and how it compares adversely with the cost of internal transport in the United Kingdom. I am sure he will agree that the price of diesel and petrol is one of the major elements in these costs.

The Taoiseach

In regard to CIE and their exemption, it is important to state that all the private bus operators can get this exemption also.

Mr. Noonan

(Limerick East): I thought this only applied to scheduled passenger services and I understood that that definition was CIE, the Swilly railway and some transport unit in Waterford.

The Taoiseach

No, 25 to 30 private companies can also benefit.

Mr. Noonan

(Limerick East): Well, that is progress.

Deputy McCreevy rose.

An Leas-Cheann Comhairle

Will you bear in mind that other Deputies wish to contribute?

Mr. McCreevy

The Leas-Cheann Comhairle has been most generous in allowing Deputy Desmond to speak about disabled drivers and I just want to make a few brief points. In that regard I hope that when the refund of VAT, excise duty and the duty on cars is handed over to the health boards they will not adopt a miserly attitude in how they determine the people who are eligible. I would not like to think that people who benefited from this scheme in the past will not be eligible under the new scheme. I can understand why the scheme will now be under the auspices of various health boards but, unfortunately, it has been my experience that these boards have a more stringent policy in determining eligibility for any type of scheme than Government Departments.

It is not possible to get excessive growth in the economy and at the same time to reduce the burden on the public finances. The Government's primary concern should be the reduction of Exchequer borrowing. Growth is only possible in very limited areas. My analogy is a man who owes £500,000 to the bank, who runs a business and comes up with a brainwave which, as he tells his bank manager, will make them a fortune. The bank manager says that may be so but, as the businessman is up to his ears in debt, he cannot advance any more money. That is what happened to our economy over a long number of years. The Government's strategy in trying to control the national debt is the proper course. This is an astute and excellent budget and it proves that the test of its formation was many months ago when the expenditure side of the Estimates was decided. It is like a successful shopkeeper. If he can control his overheads he can sell more competitively than anyone else. When this Government came to power——

An Leas-Cheann Comhairle

I am sorry, Deputy, economic theorising is not appropriate to this resolution.

Mr. McCreevy

Deputy Desmond indulged in economic theorising.

An Leas-Cheann Comhairle

You need not necessarily follow Deputy Desmond's example.

Mr. McCreevy

The key to this budget is that the decisions made then determined the budget today and I hope the same considerations will decide the 1989 budget.

Mr. Noonan

(Limerick East): Will the Taoiseach be given an opportunity to reply to some of the questions raised?

An Leas-Cheann Comhairle

The order of the House says that the vote will be taken at 11.05 p.m. Other Deputies have indicated that they would like to ask questions. The Chair will be tolerant with them and I am calling on Deputy Cullen.

Mr. Cullen

I have a few questions for the Taoiseach. Surely, the Taoiseach would agree that there are an amazing amount of inherent contraditions contained within this resolution because identified in the Minister's speech today — particularly in the area of tourism — he said:

The Programme for National Recovery recognises the existence of considrable potential in tourism...

What I want to weigh up against this resolution is that this Government, last summer, identified one of the major problems in the tourism area as the cost of petrol in this country, not alone that but they went out and did something about it in terms of the voucher scheme which they operated within the UK which is a very big potential market in this country. It is probably one of the biggest potential markets that we have in terms of motoring on the ground which Deputy Noonan quite rightly said in the context of the added value in our tourism. Now the Minister for Finance and the Government impose another penalty of 8p on the price of petrol. It is already a serious problem and it is being compounded and made worse.

I should also like to say to the Taoiseach that it is strange that he imposed this increase when we have a company like B & I suffering so seriously — they have identified the huge drop in passenger traffic on the sea routes — and one of the reasons is the drop in the car family holiday into this country. Again, we are penalising them when they are on their backs trying to do something about it. Surely, that is an incredible contradiction contained within this increase. It is wrong to identify it as just an 8p increase in itself. It is a serious problem which is being made worse. The loss has been identified by the non-repeat tourism business. When they get here and find it so expensive they do not come back; they were not doing that at the lower rate and I can assure the Taoiseach that they certainly will not do it at the increased rate for petrol. I am extremely puzzled and baffled at the contradictions in that area.

The Taoiseach said, and I was interested to hear this, that the increase in diesel will apply to all the private hire bus companies operating on scheduled routes and even to those operating on non-scheduled routes. He knows that CIE operate a lot of non-scheduled routes including bingo buses. The Taoiseach has now informed the House that they will also get the benefit of it. The Taoiseach should also bear in mind that there are many areas in this country which CIE do not service and which are being serviced by private companies. They are providing a much needed social service. I hope that those companies will be looked at on their merits as well because this whole area is extremely important for the future development of the bus companies. As the Taoiseach has rightly said, we have seen what the Minister for Tourism and Transport has done in regard to deregulation in the airways. The Minister could also take a leaf out of his book in the deregulation of the busways which is so badly needed, because with the expansion within the EC we have a serious problem.

Finally, could I say that this 8p increase is a total contradiction and goes diametrically opposite to the present needs of tourism. The extra £4 million that they have made available for tourism will probably end up being used to fund a voucher scheme in the UK because of the 8p increase. It is a complete balancing of money and it is not a real incentive at all.

Mr. McCartan

I have two very brief points which I want to put to the Taoiseach on the earlier discussion which we had about what PAYE workers should expect. At present they pay 90.3 per cent of the income tax collected and get nothing but cutbacks from this Government. Why should they expect anything by way of return by paying extra costs in petrol prices? The second question I want to ask the Taoiseach is whether he would at least agree that as a form of indirect tax it discriminates against working people in so far as it does not have regard to the capacity of the person to pay. Paying 8p extra on a gallon of petrol is far more onerous for a working man than for someone who is much better off and in a far better position to pay. On that matter alone would he agree that there is an inbuilt inequity in the system?

An Leas-Cheann Comhairle

A final question from Deputy Taylor. Deputy McGahon is also offering.

Mr. McGahon

I want to ask——

An Leas-Cheann Comhairle

Deputy Taylor has not been in yet.

Mr. Taylor

I want to ask the Taoiseach three very brief questions. The first one is the same question which the present Tánaiste put to the then Taoiseach on 29 January 1986 in the context of increases in hydrocarbons. In other words, have the Government made an analysis of the increase in industrial costs arising out of this obvious increase in distribution of transport costs vis-à-vis our competitors and what is the result of that inquiry? Second, what has become of his much vaunted quotes on that and other subsequent occasions on this self financing selective tax cuts question? Third, does he agree, as was indicated by the present Tánaiste on that occasion, that this method of raising taxation is a lazy way for any Government to go about taking in revenue?

The Taoiseach

The only thing I can say at this stage is that our time is up and I will be speaking on the budget and I will try to deal with all these various points and questions which have been raised.

Mr. Noonan

(Limerick East): A Leas-Cheann Comhairle, would your tolerance extend to allowing the Taoiseach to produce the trailer here tonight in advance of the big film. Just give him two minutes to take up the main points we raised here tonight.

(Interruptions.)

An Leas-Cheann Comhairle

Trailers to films are not in order now. The question must now be put.

Question put: "That Financial Resolution No. 2 be agreed to."

The Dáil divided: Tá, 79; Níl, 18.

Tá

• Abbott, Henry.
• Ahern, Bertie.
• Ahern, Dermot.
• Ahern, Michael.
• Andrews, David.
• Aylward, Liam.
• Barrett, Michael.
• Brady, Gerard.
• Brady, Vincent.
• Brennan, Matthew.
• Brennan, Séamus.
• Briscoe, Ben.
• Browne, John.
• Burke, Ray.
• Byrne, Hugh
• Collins, Gerard.
• Conaghan, Hugh.
• Connolly, Ger.
• Coughlan, Mary T.
• Cowen, Brian.
• Daly, Brendan.
• Davern, Noel.
• Dempsey, Noel.
• Dennehy, John.
• de Valera, Síle.
• Doherty, Seán.
• Ellis, John.
• Fahey, Frank.
• Fahey, Jackie.
• Fitzgerald, Liam.
• Fitzpatrick, Dermott.
• Flood, Chris.
• Flynn, Pádraig.
• Foley, Denis.
• Gallagher, Denis
• Gallagher, Pat the Cope.
• Geoghegan-Quinn, Máire.
• Haughey, Charles J.
• Hilliard, Colm Michael.
• Hyland, Liam.
• Jacob, Joe.
• Kirk, Séamus.
• Kitt, Michael P.
• Kitt, Tom.
• Lawlor, Liam.
• Leonard, Jimmy.
• Leyden, Terry.
• Lynch, Michael.
• Lyons, Denis.
• McCarthy, Séan.
• McCreevy, Charlie.
• MacSharry, Ray.
• Mooney, Mary.
• Morley, P.J.
• Moynihan, Donal.
• Nolan, M.J.
• Noonan, Michael J. (Limerick West).
• O'Dea, William Gerard.
• O'Donoghue, John.
• O'Hanlon, Rory.
• O'Keeffe, Batt.
• O'Keeffe, Ned.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Rourke, Mary.
• Power, Paddy.
• Reynolds, Albert.
• Roche, Dick.
• Smith, Michael.
• Stafford, John.
• Swift, Brian.
• Treacy, Noel.
• Tunney, Jim.
• Wallance, Dan.
• Walsh, Joe.
• Walsh, Seán.
• Wilson, John P.
• Woods, Michael
• Wright, G.V.

Níl

• Bell, Michael.
• Blaney, Neil Terence.
• De Rossa, Proinsias.
• Desmond, Barry.
• Gregory, Tony.
• Higgins, Michael D.
• Howlin, Brendan.
• Kavanagh, Liam.
• Kemmy, Jim.
• McCartan, Pat.
• Mac Giolla, Tomás.
• O'Sullivan, Toddy.
• Pattison, Séamus.
• Quinn, Ruairí.
• Sherlock, Joe.
• Spring, Dick.
• Stagg, Emmet.
• Taylor, Mervyn.

Tellers: Tá, Deputies V. Brady and Browne; Níl, Deputies Howlin and Pattison.

Question declared carried.