Deputy Dukes is in possession.
Financial Resolutions, 1989. - Financial Resolution No. 8: General (Resumed).
When listening yesterday to the Minister for Finance delivering his financial statement, I was reminded of that famous creation of Gilbert and Sullivan — I suppose it was very appropriate for the Minister for Finance — the wandering minstrel, a thing of shreds and patches, because that is about what we have in this budget. It has been very carefully packaged and the careful packaging has shown up in the media treatment of the budget so far. It had to be very carefully packaged because it is empty, and my guess is that by the weekend the media treatment of that budget will have changed very substantially. It will have been rumbled and it will be seen for the rather empty collection of bits and scraps that it amounts to. It does nothing, in particular, to address any of the fundamental economic or social issues that face us; it points to no new developments in any major policy area and it does not point in any particular direction at all.
The main economic and social issues that face us are all facets of the one problem — low growth. The issues are economic development, unemployment, emigration and poverty. Economic and social policy in this country today, whether it is announced on budget day or at any other time, should address these issues. This year's budget does not.
In my view the Government have completely misread the mood of this House, and what it is possible to do in this House. I believe there is a real willingness in here to put aside much of the old political mythology and nonsense, to accept that the expansion of employment is what we need above all, and to step outside the straitjacket of the old traditions and dogeared ideologies to achieve this. I believe there is a real desire to look at our tax system with fresh eyes. There is an acceptance that, if we were now to put a tax system in place starting from scratch, it would most certainly not be the one we have now.
There is in this House a conviction that if we were to design a social welfare system to deal with today's needs, it would be vastly different from the one we have. I suspect, a Cheann Comhairle, that there are even a few Deputies on the Government benches who would share those views, but they are not in Government. The Government are trapped in a certain set and in a prison of old confrontations. We saw this again yesterday. They are caught up in the tired old system of pulling strokes, and of putting as good a face as possible on yesterday's solutions. They are either afraid or unable to engage in a real political debate — or perhaps they are both afraid and unable. This is so because they have no real sense of direction and certainly from what we heard yesterday, this is a Government who do not believe they have any particular mission. The result, of course, is a budget which, measured against any real political yardstick, misses all the targets.
For example, we need tax reform, but what have we got? In round terms, we got income tax reliefs of £138 million for 1989. For the ordinary taxpayer, these are accompanied by excise duty increases and reductions in allowances amounting to £53 million, and this has to be paid by that same ordinary taxpayer. The net result is a net relief in taxation of £85 million — hardly a significant move.
One of the curious parts is that in spite of the fact that they have spent, God knows I suppose four or five years, parroting that one of the main objectives of tax policy must be to get two-thirds of taxpayers onto the standard rate of income tax, the Government came along yesterday and said: "It is not actually two-thirds; it is 63.5 per cent, give or take a few thousand." Even to the extent that this Government had a specific objective in terms of taxation, they have discarded it. They have found out, of course, that it was largely irrelevant.
In getting to this meagre result on taxation, a net distribution of £85 million in total, a whole series of small steps have been taken in a number of different areas. I find that to be very unwise and very ill judged, because what the Government have done is to tinker with a number of areas in ways which are not going to be particularly congenial to a great number of people and the more they tinker in that way, the more they sour the climate for real tax reform, which is a job which needs to be undertaken quickly.
We need reforms that really tackle poverty, but what have we got there? We have a gross increase of £59 million in a range of social welfare supports and payments in 1989, but how much have we got more than we expected? The answer is £7 million, not even a token gesture, because the Government have saved £52 million on the Estimates they presented last October for social welfare. We can only wonder whether this was set up in advance whether the Government did not deliberately artifically inflate the Estimates last October to enable them to add a net £7 million today to their provision for social welfare and claim it is £59 million. That is not a radical attack on poverty. We need vigorous action to restart economic development on a self-sustaining basis, but what we have is a convoluted, incoherent set of hopes and wishes and a non-supported assertion by the Minister for Finance that we can prudently expect an increase of £75 million in commitments for Ireland for 1989 from the European Regional Development Fund.
The Minister would have done well to set out for the House the basis on which he is exercising that prudence and expecting a commitment of £75 million, because my information on very reliable authority is that the four Ministers and the Minister of State who went to Brussels at the beginning of last week got no such commitment at all. What they are doing — the Minister finds a few different ways of not saying this — is saying they hope that if the national plan to be put forward at the end of March and the accompanying sub-national plans to be put forward around the same time meet the bill in Brussels, they can then put forward enough actions under these programmes to attract an extra £75 million. Mind you, the Minister, having prudently expected £75 million, goes on to talk about a so-called development plan, a so-called supplementary development budget. They are two different things apparently, although using the same money. He concludes that it is not £75 million we will get; the Exchequer take this year will be £48 million higher than it otherwise would have been. What happened to the £27 million in the middle? Did the Minister just forget it or does he expect he will not get as far as £75 million, and does £48 million represent his prudent, realistic expectation of what we will get? Here we have a development plan, a supplementary development budget, using funds we do not yet know we have but which are expected, hey presto, to produce additional revenue buoyancy. We will get an extra £48 million, says the Minister, from the European Development Fund, and that will require us to put more public money, taxpayers' money from here, into the development process. The Minister says there will be buoyancy out of all this which will offset the extra expenditure. I am not sure how much that accounts for of the £60 million in revenue buoyancy that is included in the final budget table.
Looking at the individual pieces in this very impressive pink document we find a great deal to comment on. It is an eloquent expression of where the bits of strategy are in this whole budgetary exercise. Look first at the Government's macro economic forecasts. The Government forecast that private consumption in 1989 will increase by 3 per cent. How much will be contributed to that 3 per cent increase by a net £85 million give-back in taxation? Not a great deal, I suspect. The Government then forecast that our exports will grow by 6.75 per cent but our imports will grow by 7.75 per cent. Could the Government indicate what they expect that to be in terms of our trade balance and our balance of payments?
The Government are forecasting an increase in the rate of inflation from 2.1 per cent in 1988 to 2.75 per cent in 1989. Would the Government have the goodness to tell us where that increase in the inflation rate is to come from? The Government forecast that the live register average figure for 1989 will be 232,000 instead of 241,400 in 1988. That is a reduction of around 9,500. Could the Government indicate whether they are all going to be emigrants or is this net of the 13,000 people who they say are to get jobs, taking no account of any redundancies we might see during the year? What is the basis for that forecast?
There have been a series of measures in relation to various social welfare schemes and payments. Each one of them is sorely needed, eagerly awaited, and there are a number of moves here which I welcome because they tend to bring a little more coherence into the system. I am very glad to see a measure being brought in to deal with the situation of widowers and deserted husbands with dependent children. My colleagues and I have wished to see that measure for quite a long time. While a little tidying up is done on the balance between different payments in our social welfare system, there is no strong move to unify the way we help people who are unemployed and in serious difficulty. There is no real effort to take out the wide range of different payments in our system, different not because they address specifically different needs but because they were simply thought up at different times. It is time at the very least to rationalise the whole series of different payments in our social welfare system, and a very small, unadventurous step was taken in that connection in this year's budget. What is here does not amount to reform. It is tinkering. Certainly it is going in the right direction but it is far too timid and much less than is required.
On the other side of that balance sheet we find the Government have had a change of heart since they published their Estimates last year. The increase in the employer's PRSI contribution ceiling is to £18,000 and not £20,000 announced with the 1989 Estimate. I am glad to see there has been movement. The single most important thing we all want to see is an increase in employment, and to load on another £4,000 as the employer's portion of the PRSI contributions is nonsensical. It could not have been better directed if the objective was to choke off any increase in employment. It has been partly redressed but it has not gone far enough. The Government have redressed only half of the mistake they made last October.
There is a section in Principal Features of the 1989 Budget called “Sectoral Initiatives”. You would expect to see there a number of things dealing with main or substantial sectors of the economy, an indication of action the Government thought could be taken in order to increase the contribution of those sectors to economic activity. What do we find in the budget? We find a number of projects that are certainly worthy in themselves but the only place I can find anything that looks like a sector is a tourism data base for Bord Fáilte. We admit that that is a sector and £250,000 has been allocated for it. I have no doubt that it will be valuable but it does not amount to a huge initiative in terms of the tourism sector. The agricultural sector is represented and under the heading of “new technology in agriculture” we are told that a pilot scheme to encourage farmers to use calf-twinning techniques currently available will be introduced. That is a very worthwhile operation in itself.
It will apply to a maximum of 1,000 cows.
A subsidy of £20 per cow will be paid up to a maximum of 1,000 cows. The Government are taking a hugely innovative step in that regard, risking £20,000 in the development of new technology in agriculture during 1989. There is nothing else in relation to agriculture in terms of sectoral initiatives. As I have said, there are a number of intrinsically worthy projects included but none of them is very big. An allocation of £500,000 has been made for a special programme of amenities at beaches. However, I wonder if we need all of that to be decided at central Government. Will local authorities do that work? I am quite sure that they are in a position to do it better than anybody else and they will pick the beaches better than anybody else. Indeed, I hope for the sake of many Irish holidaymakers that prior work will be done to make sure that some of the beaches in the south-east remain in such a state that amenities can be put on them.
The Minister has also included a scheme for the recycling of waste material and we approve of that. There is also a scheme headed "urban environmental upgrading" of public works directed at upgrading the general environment in designated areas. Who will designate the areas? Will it be left to local authorities or the Minister for the Environment? On what basis will the areas be designated? A project has been included in relation to King John's Castle in Limerick. That is a grand project but what it amounts to, as far as I can see, is the Government attempting to band-wagon on a private sector operation. It may be that it is intended to redress a little of the image of the Government in that city and to get the Government a bit closer to one of their erstwhile collegues in that city. In my view it amounts to bandwagoning on a private sector project that is already well founded.
There are other projects included that are worthy in themselves. For example, I am glad to see that the Racing Board will be able to continue refurbishing certain racecourses. We are told that special steps will be taken by all relevant State agencies to encourage the merger of existing businesses which can benefit from the ensuing economies of scale. That is grand but why is it being announced in the 1989 budget? I would have thought that all State agencies should have had that as part of their general culture and thinking up to now. Is it that the Government have said to themselves, "we have to have something in the budget that shows that we are looking at the structure of small indigenous industries"? I wonder what kind of quid pro quo have the Government given to the banks in relation to the scheme of £10 million at preferential rates to support the development of business opportunities. Is there a quid pro quo involved? If so, what is it?
We find that the business sector will be invited to launch an initiative which will promote community development projects but I have news for the Government on that. All Members on this side of the House have news for the Government on that issue. The business sector already does a lot of that. Have the Government never heard of Junior Chamber, chambers of commerce, rotary clubs and development associations in our towns and villages? They are doing exactly what is set out in the budget; the business sector launch initiatives which promote community development projects. If the Government are including that proposal because they think that in 1989 for the first time it is a worthwhile way to go, then they are far more out of touch than even I would have thought.
We have been given the various adjustments in non-capital expenditure compared to the published 1989 allocations. There is a lot of detail involved in that and it would be tedious to go through all of it. However, one that meets the eye is the increased allocation for DION, grants for emigrant welfare services. There the Government have increased the allocation by £250,000. They have done what my colleagues and I have been urging them to do for quite some time now, they have doubled the amount of funding to assist those organisations in their work.
I am glad they have taken our advice on that; the additional help is sorely needed. I am advised that even that increase — in all conscience the total amount is still rather small — will not make it possible to give any assistance to Irish organisations working with Irish people in the United States, those who are there undocumented. I should like to urge the Government, and the Ministers concerned, to have a look at this to see if we need changes in the rules in order to allow some assistance to be given there. I recognise the fact that our consular service is providing some assistance but there is a need for more focused action in that area.
Many of the items in Table E of the Principal Features of the Budget are part of the supplementary development plan which I will deal with later. There has been an increase under the heading of Defence which is mainly to reflect the £12.5 million cost of the Defence Forces pay award. There has been some discussion about that in the House and there will be more. I hope the Chair is going to decide, in his wisdom, that Deputy Connaughton will have an opportunity of addressing this issue on the Adjournment this evening. I most heartily recommend that to the Chair. That issue has been badly mishandled by the Government.
I agree entirely with what my colleague, Deputy Noonan, said yesterday. I am speaking of the real Michael Noonan of Limerick East, not that pale shadow who hovers over the Defence Forces like an avenging angel. When the Army spouses come out to make the case for their husbands all he can say, in a wooden fashion is, "Not a penny more". He has never said convincingly, as far as I am aware, that the Army spouses have a perfect right to make their case and a perfect right to know they can make their case without their husbands being intimidated or told that their wives should not be quite so vocal. That whole issue has been hugely mishandled.
Those of us who are in contact with members of the Defence Forces know that if the recommendation of the committee that considered this issue had been accepted and implemented when the committee produced their report, while it was less than had been asked for and was less than many of us would have liked to see, it would have been the end of the matter. I have no doubt about that, but what happened? The whole issue was allowed to drag on and on, week after week, month after month, and then just before Christmas, when the House was in recess, an announcement about pay was made. A day or two later we found that the announcement which we all accepted as being an extra payment was not, in fact, an extra payment. It was supposed to include what the members of the Defence Forces were to get as part of the public service pay agreement. That is utter ineptitude and grossly irresponsible mishandling of something that need never have got to the point of heat it is at now.
Under Health there is a rather mysterious item called an additional allocation arising from deferment of measures to increase income for agencies in the health sector which amounts to £8 million and a special allocation towards the restructuring of the Dublin Rape Crisis Centre. What does this relate to? How will it be effected? How will it affect the incomes and the operations of the health agencies?
The fact that £100,000 has been allocated towards the restructuring of the Dublin Rape Crisis Centre is another example of an issue that has been allowed to drag on for far too long. This problem has been bubbling over for quite some months although it is not a very complicated issue. This agency meets a need which is not being met by any part of the public service and many people feel that that need should be met. The agency is strapped for money because the demand for service is greater than its resources. The agency have attempted to meet that demand and in doing so they over-stretched themselves. This is a very simple question. Do we or do we not give a little more public assistance? Instead of giving assistance we have allowed this business to go on for weeks with people not being paid and not being sure whether there will be an office to go to the following week. It is only now that a decision has finally been made to grant the huge, princely, magnificent budget-bending sum of £100,000. Why could that decision not have been made last November, which would have spared all this unnecessary aggravation and uncertainty for the people providing that service?
Vote 47 provides for special pay increases other than those for the Defence Forces and a sum of £30 million has been allocated for 1989. We all know this is just the tip of the iceberg. This House deserves to know how much more is building up behind that £30 million. How much more is waiting as a result of suggestions or half agreements to defer the next phase of some special award until July 1990, with the final portion of it being paid in April 1991? How much is building up there, and can we project the flow of those payments that will be required over the next couple of years, and the effects they will have on budgetary arithmetic? That is a feature of a great many things in this budget. We see allocations for 1989 for areas and activities which of their nature will have an impact over several years, and there is no reference at all to how these things will either build up or tail off over a period of several years.
I come now to Table F — details of adjustments to Capital Expenditure, including Supplementary Development Budget Proposals. This is where the Government account for this £75 million they prudently expect to be committed and the apparent £48 million they expect to get. There are a number of items here that we are glad to see. We have had the extraordinary entry here of a £1 million reduction in the provision for house improvement grants reflecting the expenditure brought forward to 1988. That is amaxing because in 1988 the impression most of us on this side of the House had was that house improvement grants expenditure was not being brought forward to 1988 but was being deferred to 1989.
We ought to know, with this final saving of £1 million in the provision for house improvements grants, if they would all have been paid by the end of this year. I am glad that the Minister of State, Deputy Connolly, is here. Can he tell us if the pipeline is empty now or will it be empty at the end of this year? Will all the people whose grants have been approved and who have been waiting for payment in some cases for two or three years, have been paid their grants, and will we see the end of this totally unfair juggling with people's entitlements to grants just because it happens to suit the cash flow position of the Department of the Environment? Will they all have been paid at the end of 1989 or will they have been paid even sooner? Does this represent the end of that perfectly good scheme which this Government rushed to abolish?
We have, curiously enough, in Table F the only straightforward, clear and honest presentation I have seen yesterday and today of what the Government are actually doing in relation to county roads. The first announcement is that there is £150 million for county roads. The second announcement is that is is £150 million over three years, and the third announcement is that it is £47 million this year. The first announcement should have been that there was £37 million allocated in 1989 anyway, and that the actual change, the thing that should have been announced in the budget, is that an extra £10 million is being made available in 1989. Of course this is welcome, but as I observed to a constituent of mine this morning, if County Kildare was to get anything like an average share of that £10 million for county roads in 1989, I am sure the potholes in front of the Church of Ireland in Yellow Bog, Kilcullen, will stay fairly big for the rest of this year. What the Government are now attempting to produce as a new programme over three years with an allocation of £150 million for county roads, is an extra allocation of £10 million this year, which is dramatically less than a £150 million programme.
We have an additional provision of £3.5 million for the IDA to be used for a special development plan for Tallaght. I am very glad to see movement on the development of Tallaght. It has taken a lot of effort on the part of colleagues of mine and me, and a Private Members' Motion a few weeks ago where the Labour Party came fully on board with Fine Gael policy, to get the Government to the point where they are actually moving to do something in Tallaght. When the Government actually get moving and get these developments in Tallaght under way, they should watch them very carefully because the developments in Tallaght will have to be repeated elsewhere. I hope the developments will be successful.
I know we have extremely good community organisations in Tallaght who are well equipped to advise on how to use the money. Tallaght is the biggest, but it is not the only outlying area of Dublin where there is a lack of facilities, services and large scale unemployment and deprivation. The Government should watch the developments in Tallaght very closely because they will have to be repeated in other areas.
One of the things I find most extraordinary, which deserves explanation, is that we have an additional provision for a new scheme of assistance for the tourism sector. This is part of the supplementary development plan. The Minister's presentation is that Bord Fáilte will get £14.5 million directly from the European Regional Fund without the requirement of any input from our Exchequer. If that is the case we should all be very happy, although I would like to see some evidence on the part of Bord Fáilte that they have got the message that we need a different kind of promotion from the one now prevailing. I should like it to be explained to the House how it happens that there is £14.5 million straight into Bord Fáilte from the Regional Fund without any accompanying requirement of national funding. Is there private funding here about which we have not been told? We need to know what is going on. Is there a potential liability for the State building up here in terms of funding it will have to produce at a later stage? We need a lot more information about this than has been provided.
Incidentally I see that the Government have decided to purchase the Brussels residence of the Irish permanent representative there. Why, after all these years, have they decided to buy it? Perhaps it is a good bargain, as it comes on the market, but the House should know a little more about this. After all when we decided — as I had occasion while in Government to do — to buy a building, I found it took a fair deal of explanation. My colleagues wanted to know why, after all the years, instead of renting the building, we bought it. They needed to be satisfied that that constituted a good way of using, I think, £15 million on that occasion——
They wanted to sell embassies last year.
Indeed, yes, although the permanent representation in Brussels will be there for a good while because, luckily, that Government did not accept the advice that Commissioner MacSharry tried to give us when he was a Member of the European Parliament and renegotiate the whole business. However, that is another day's work.
(Limerick East): It is for the next time the five Ministers and 26 civil servants go out and have to stay overnight; that is what it is for.
It would be cheaper to buy it than meet the hotel bills.
They might not be asked again.
If it is going to happen so often that they get a flea in their ear over in Brussels a comfortable pied á terre would be a nice place to which to retire to lick their wounds.
We have then the supplementary development budget, Table G, which lists a whole series of things the Government intend doing. There is an overall total of £60.5 million, £14.5 million going directly to Bord Fáilte from the Regional Fund and, surprise, surprise, we end up with a figure of £75 million. That now appears to be the figure that the Minister prudently expects will be committed. First, we had £75 million; then he says he expects to get £48 million but then, bingo, we have a supplementary development budget which, whether by accident or design, adds up to £75 million. This is what I mean by saying, as I did at the beginning, that we have this supplementary development budget and programme that are confused and incoherent. It is impossible to ascertain exactly what the Minister is at in making these various provisions. I shall not comment on each one of these except to say that I hope they all happen because, if the experience of Ministers at the beginning of last week is anything to go on, there is an awful lot of homework to be done before any of these things will actually see the light of day.
On the tax side there is one matter only to which I will refer briefly because I am quite sure my colleagues will have much more detailed comments to make about other issues here. There is a proposal — which is not a very big part of this — that small scale employers and traders will be allowed the option of remitting and accounting PAYE, PRSI and VAT on an annual basis rather than as obtains at present, monthly or bi-monthly. I do not know why the Government felt moved to introduce that proposal. I can tell the House this much, that from any discussions I have had with small scale employers and traders in my own or any other constituency I would advise them to adhere to the present system even though its administration is difficult. I say that because, for a great many of them, it would be sheer folly to decide that they would wait until the end of the year to remit PAYE, PRSI and VAT. Without the slightest intention on their part of misusing their money, or of not applying it properly, very many of them would find themselves, coming up to the end of the year, without the full amount available with which to remit payments to the Revenue Commissioners and they will get themselves into trouble. In the nature of things there are many small business, and particularly small traders, who — if they do not keep up-to-date with their tax liabilities in the way they do now — will find that they will run out of cash flow when the time comes for such payments to be made. That is something that the Government, on reflection, could decide to omit from the provisions of the Finance Bill.
As I said at the beginning of my remarks, I believe that this budget will be rumbled by the weekend, it will be seen for what it is, a collection of a whole series of disparate pieces of activity in relation to taxation, social welfare, development, with no real, central thrust. The Government have funked making any real decisions. The fact of the matter is that, if one wants to effect a substantial change in the tax climate here, if one wants to effect a substantial change in the way we deal with poverty, if one wants to effect a substantial change in the way our economy grows — using our own and EC resources — one has to be prepared to change some parts of the system very substantially and have the courage to face up to that challenge. One must set behind oneself this nonsensical, totally conservative idea that one can change little pieces at a time and that the overall effect will add up to something bigger, because it will not. This budget will be an example of that. If this budget meets financial targets that this House can accept it will be something of a miracle. My colleague, Deputy Noonan, pointed that out yesterday. There is an awful lot of sticking plaster and string keeping the various pieces of this budget together. If it does that, and meets those financial targets, that will be a miracle in itself but this budget will not do anything more than that.
Before calling on the Minister let me say that normally I would be calling on a spokesperson for the Progressive Democrats at this stage but I understand that an agreement has been reached to hear the Minister now and that the spokesperson for the Progressive Democrats will be called after the Minister.
(Limerick East): Are they rejoining or something?
Deputy Dukes seems to be floundering in the face of a budget that is economically sound and developmental, is financially responsible, socially conscious, well directed and indeed tax reforming. He knows that the direction is right in this budget, that the Government have got the economy right and will keep it right. I can understand his frustration, looking at a situation in which the Government achieved so much in such a short time.
Deputy Dukes referred to poverty and our package of £71 million to tackle it and complained, almost, about the management savings which have been achieved by my Department in particular. Is the Deputy suggesting we should not have management and control, that we should not have savings that arise from such controls? Of course we need those savings and can take those savings. Of course they have an impact on what can be done in this budget, and they have been directed to those who are least well off in our society.
What Deputy Dukes ignores is the fact that the rates for everybody on social welfare go up by a minimum of 3 per cent and the personal rate for those on long-term unemployment goes up by 12 per cent. What matters to the recipient is getting money in the hand, not all the confusion that can be created by the detail of national statistics. They will get their money into their hand and that is what this budget means to them.
This budget, is designed to strike a balance between the need for continued control and improvement in the public finances and the need to stimulate employment opportunities, reduce the burden of taxation and devote extra resources to those who are most at risk in our society. It is economically sound and developmental, financially responsible, socially conscious and tax reforming. The Government have succeeded, in less than two years in office, in lifting the country out of depression. We have moved into a new phase of growth and development, based on confidence in our ability as a nation to succeed and to provide hope for the future.
We see the practical effects of this improvement in low consumer price increases with inflation at only 2.1 per cent, which is among the lowest in the European Community; we see it in reduced mortgage rates of 8¼ per cent as against 12½ per cent when we took up office. This has been achieved at a time when the Government reduced the Exchequer borrowing requirement by almost two-thirds reducing it from 12.9 per cent to 5.3 per cent of GNP, and cut the current budget deficit in half, from 8.4 per cent to 4.1 per cent.
It is extraordinary that the leaders of Fine Gael made no comment about this tremendous achievement when just a few years ago that is all they would talk about. Now that Fianna Fáil have got that under control and have done so marvellously in reducing our borrowing to date, there is no comment. Consumer spending has now started to grow after many years of stagnation and we are beginning to see a sustainable growth in employment. These developments are very encouraging and are a sound basis for further significant progress in the coming year.
The social welfare measures provided in the budget show that the Government are determined to improve the position of the less-well off in our society. For the second year in succession the Government have more than maintained the position of all on social welfare and have singled out those on the lowest payments for special increases.
The very significant advances outlined in this budget, when taken with the considerable progress made last year, represent a major initiative in tackling poverty. Low income families and the long-term unemployed will receive substantial increases in income. The personal rate for the long-term unemployed is being increased by 12 per cent which, when added to the increase of 11 per cent given last July, brings the total increase since last year to almost 25 per cent. In the same period, a long-term unemployed husband with a dependent wife and five children will have received an extra £26.80 per week bringing their total, including child benefit to £145.90 per week.
As part of the social welfare package, the Government have also tackled the problems faced by families of workers on low incomes through a special scheme of tax exemption, together with improvements in child benefit and family income supplement. In addition, for the first time ever, a Government have recognised the special difficulties of widowers and deserted husbands on low incomes by introducing an allowance scheme for them.
The cost of the overall package is £71 million in 1989 and an estimated £155 million in a full year, including the tax exemption for low paid workers. The main elements of the package are:
a minimum 3 per cent increase in social welfare payments generally. This is well ahead of the rate of inflation of 2.1 per cent.
a special increase of £5 per week (12 per cent) in the personal rate of long-term unemployment assistance from £42 to £47;
a special increase of £3 per week (8 per cent) in the personal rates of short-term unemployment assistance and supplementary welfare allowance;
a new scheme of tax exemption limits for families at work on low pay, of special benefit to those with children;
the introduction of a social assistance payment for widowers and deserted husbands looking after children, equal to that available to widows and deserted wives. This means an increase of £29 per week for a widower with four children on supplementary welfare allowance;
streamlining the rates of adult dependant allowances for unemployment payments involving special increases in the lower allowances. There will now be two rates of allowances — a long-term rate and a short-term rate — instead of five;
an increase to a minimum of £10 per week in the child dependant allowances payable with weekly social welfare payments. This mainly benefits families on unemployment assistance;
further streamlining of the rates of child dependant allowances. The number of child dependant allowances will be reduced to 12 instead of 20 at present and 36 up to last July;
the payment of child dependant allowances up to 19 years of age for the long-term unemployed, old age and invalidity pensioners, where the child continues in full-time education;
the higher rate (£21.75) of child benefit (children's allowance) to be paid in respect of the fifth and subsequent children rather than the sixth as at present;
an allocation of £1 million for improvements in the family income supplement scheme, including increasing the income ceiling and the number of children in respect of whom FIS can be paid;
a review of the definition of urban and rural areas for the purposes of unemployment assistance to remove existing anomalies. This review will be completed before the budget increases are paid in July;
a change in the payment arrangements for spouses on separate payments to increase the payment to the spouse looking after the children;
an extension of the national fuel scheme to households where the long-term unemployed person is living with a pensioner or with another long-term unemployed person;
an improvement to the free electricity scheme to allow pensioners carry forward unused units from one billing period to another within the year;
the extension of all the free schemes to EC pensioners and persons on certain long-term occupational injuries payments;
there is no increase in the rate of PRSI. The ceiling is being increased from £16,200 to £16,700 for employees and the self-employed and £18,000 for employers;
an allocation of £500,000 to the Society of St. Vincent de Paul and £100,000 to the Samaritans for major development programmes to be undertaken in consultation with the Minister.
With inflation at just over 2 per cent, many commentators expected a general increase of 2.5 per cent. The Government have gone further than this and provided a minimum increase of 3 per cent for all social welfare weekly rates from July next. This will more than maintain the position of all claimants.
Unemployment assistance is being increased by £5 a week for all long-term recipients and £3 a week for those on short-term rates. This will bring the personal urban rate to £47 per week representing a 12 per cent increase. These increases are fully in line with the commitments given by the Government to the social partners in the Programme for National Recovery. They represent a further substantial achievement in improving social welfare levels in a period of economic restraint. I mentioned a further step. We took a major step last year and this is the second major step taken to direct and target resources to those who need them most.
There are two sets of rates of unemployment assistance at present — one for persons resident in urban areas and the other for people living elsewhere. The definition of an urban area for this purpose has existed for a long time and is now outmoded due to the expansion of many cities and towns in recent years.
At present this is creating serious anomalies. There are, for example, many parts of Dublin like Tallaght, and of Cork, such as Douglas, which are not within the city as legally defined. No one, however, could regard them as other than part of those cities. The cost of living for families in these areas is no less than it is for families within the existing city boundaries. Nevertheless people living in these areas are paid at a lower rate (rural) than people, often in adjoining streets, who come within the city boundaries. This is happening in many other cities and towns throughout the country as well. Furthermore, the higher rate also applies in certain large towns, but not in others which, in population terms, may be similar or even larger. I am arranging for a complete review of the urban-rural differential in payments and I will have new arrangements in place before the budget increases become payable in July. The Government have provided a sum of £3 million in the budget for this purpose.
The very significant advances outlined in this budget, when taken with the considerable progress made last year, represent a major initiative in tackling poverty. The focus of our efforts this year is concentrated on the family, especially large families on low incomes.
In addition to the increases in the personal and adult and child dependant rates, I am also providing for increased child dependant allowances to a minimum of £10 a week for all families on social welfare; the introduction of payments for widowers and deserted husbands with children; the payment of child dependant allowances for all long-term recipients up to 19 years where the child continues in full time education; streamlining and improvement of adult dependant and child dependant rates; improved arrangements for wives on separate payments and the higher rate of child benefit to be paid in respect of the fifth and subsequent children rather than the sixth as at present. Table 1, which has been circulated to Deputies, shows the combined effect of these improvements on families of the long-term unemployed, involving an increase of almost £13 per week for a family with five children.
The Government are also conscious of the position of families where the bread-winner is employed and on low pay and we have taken a number of important and novel steps in this budget. The tax changes announced yesterday by the Minister for Finance, as part of the measures to tackle poverty, will significantly improve the position of many families on low pay. Here I want to stress the fact that we are bringing together the tax system and the social welfare system in the interests of those on lowest pay. If we want to help those at work in particular, this is one very effective means of doing so and is part of our poverty package.
There will be an increase from £5,500 to £6,000 in the tax exemption limit for married couples, together with a new special tax exemption of £200 in respect of each child. This means that a married couple with five children can earn up to £7,000 without paying any tax. At present a couple earning £7,000 would pay almost £635 in tax and this represents a net gain of £13 per week. There will be a reducing gain for this size of family up to an income of £9,000. This is one of the advantages of the tax system; you can have this tapering or marginal release which is a very effective way of spreading the relief and in this case it operates between £7,000 and £9,000. The full impact of these improvements which will cost £11.9 million this year, is given in Table 2 which has been circulated to Deputies. The table shows the increasing effect for the lowest income families and the benefit of this new tax exemption.
The purpose of this measure is to direct extra resources to those who need them. A sum of £11.9 million is being directed to those on the lowest incomes. The Minister for Finance also mentioned yesterday that the Government are considering ways of directing resources expended on child benefit principally to those who need them. This question will be considered fully during the coming year.
In addition to these special tax measures for low paid workers, the Government have provided an extra £1 million for FIS. The family income supplement is designed to lessen the disincentive to work caused by the narrow gap which can arise between low take-home pay and social welfare benefits.
The Government undertook, as part of the Programme for National Recovery, to carry out a detailed examination of the scheme. The review has just been completed. The additional £1 million will bring total expenditure on the scheme to over £6 million this year. The money will be used to improve the scheme by increasing the income ceilings for receipt of the supplement and by paying in respect of a greater number of children. The detailed measures involved will be drawn up in the next few weeks and will come into effect with the budget increases generally in July. The extension of the higher rate of child benefit to the fifth child will also benefit families on low pay. The combined effect of these measures on people at work on low pay is shown in Table 2, which has been circulated to Deputies.
I have been very concerned for some time at the special difficulties of men on low incomes left to rear children on their own. In many cases they are dependent on the lowest level of social welfare payment, supplementary welfare allowance. My concern in this area was borne out by contributions made during the Pre-Budget Forum which I held last November. As Deputies are aware, entitlement to payment of unemployment assistance is conditional on a claimant being available for work and proving that they are also genuinely seeking work. In many cases it is not possible for a widower to satisfy that condition when he has to look after young children on his own. For many the only fall-back is recourse to supplementary welfare allowance. In such cases, there is a marked difference between the treatment of a widower with dependent children and that afforded to a widow.
The Government have approved my proposal to introduce a new social assistance scheme for widowers and deserted husbands with dependent children. This assistance will be on the same basis as that available to women in similar circumstances. The rates of payment will be the same as the rates which apply to the widows (non-contributory) pension scheme. In addition, the more favourable rates and treatment of dependent children will also now apply to widowers.
As a result of this measure, a widower with four children will get £101.80 a week as against his current entitlement of £72.80 on supplementary welfare allowance. This is an increase of £29 a week and I know that it will mean a lot to those families. They are clearly among the most needy. I will be introducing the necessary legislation in the forthcoming Social Welfare Bill.
Another category of social welfare recipient about whom I am very concerned is spouses in receipt of separate payments. These payments arise in cases where the claimant does not provide his spouse with sufficient money for ordinary household expenditure because, for example, of personal problems such as gambling, alcoholism or drug addiction. Currently, at the request of the claimant or of the spouse, the spouse can receive directly the increases payable in respect of the adult and child dependants while the claimant is paid the personal rate.
I propose to amend the existing provisions in the forthcoming Social Welfare Bill to enable the spouse to receive a greater proportion of the overall payment including the increases in respect of the adult and child dependants. There are a number of options here and I am examining the best way to proceed in this sensitive area.
There has been criticism over the years about the number of different social welfare rates and calls have been made for some rationalisation. Deputy Dukes called for the same here earlier this morning. I started this process last year by streamlining the child dependant allowance rates. I am glad to announce that I have continued the process this year.
I am bringing in a minimum rate of £10 a week for dependent children. This goes a long way towards implementing the recommendations of the Commission on Social Welfare and represents a substantial increase for larger families. As a result, the rates payable in respect of children have, over two years, been reduced from 36 to only 12 rates. I am also introducing another improvement in the adult dependant allowances payable with unemployment payments. There are currently five different rates for adult dependants. These will be reduced to two rates — one payable with short-term unemployment assistance and the other payable with unemployment benefit and long-term unemployment assistance.
The Government have decided to extend the child dependant allowance for long-term recipients to children aged 19 years where they continue in full time education, as a first step towards extending child allowances to 21 where the child is in full-time education. I know that this will be of great assistance to families of the long-term unemployed and to old age and invalidity pensioners. Widows and deserted wives already receive an allowance for children up to 21 years of age in full time education and this will now apply also to the widowers' scheme, so that widowers will now, by virtue of the new scheme, benefit from the "up to 21" clause. On the continuation of equal treatment alleviating payments scheme, these payments were introduced on a temporary basis in November 1986 to lessen the effect of the European Community Directive on Equal Treatment for Men and Women in social security matters. The previous Government had intended that the arrangement would cease in November 1987. However, in view of the hardship that would have resulted to families from the abrupt ending of the payments, Government decided that they should be phased out over a longer period. Last year we reduced the rates to take account of the budgetary increases and they will be reduced again this year on a similar basis.
I now want to turn to the various free schemes administered by my Department, such as free electricity, free travel and free telephone rental. I know that these schemes are much valued by those who avail of them, and I am pleased to be able to announce that a number of improvements to the schemes have been provided for in this year's budget.
The free electricity allowance, which is paid to certain pensioners living alone, covers the cost of standing charges and an allowance of up to 200 free units of electricity in each two-monthly billing period in the summer months and up to 300 free units in each billing period in the winter. At present, people who do not use up their full allowance in one billing period do not get any credit for this in the next period. The Government have decided to make arrangements to allow people to carry forward unused units to the next billing period within one summer to winter year. So, for example, people who use less than their full entitlement during the summer months will be able to carry it forward to the winter when their need will be greater. My Department are discussing with the ESB the precise mechanism by which this will be achieved. This is very important, particularly for elderly people.
I am also extending the free schemes to cover two groups of people who do not qualify under the present arrangements, but whose circumstances are similar to those covered by the schemes. These are European Community pensioners living in Ireland and people in receipt of certain occupational injuries benefits.
With the exception of free travel, which is available to all residents in the State over the age of 66, the free schemes are confined to people in receipt of social welfare or certain similar pensions in respect of old age or permanent incapacity. Generally pensioners from other EC countries are excluded, although certain categories of UK pensioners can qualify. The schemes are being extended to cover all EC pensioners resident in this country who satisfy the general conditions for each of the schemes.
Beneficiaries under the occupational injuries scheme who are receiving payments in respect of permanent incapacity for work by way of unemployability supplement or workers' compensation have not been covered up to now. The free schemes will be extended to cover recipients of these payments who have been in receipt of the relevant payment for at least 12 months and who satisfy the general eligibility conditions for the schemes.
As Deputies will be aware, over the past two years I reorganised and standardised the fuel schemes. As part of this major reorganisation I extended the scheme on a nationwide basis to cover an extra 30,000 persons on long-term unemployment assistance living alone or with dependants. The new arrangements are operated by my Department as part of the existing social welfare payments. The conditions which applied to the unemployment assistance recipients were more restrictive than those applied to other schemes in that where two unemployed assistance recipients were living together no fuel allowance was payable. I promised to review the situation as soon as possible. I am happy to inform the House that the living alone condition for the long-term unemployed will be relaxed so that from the next heating season, commencing in October 1989, where two people who would qualify individually are living in the same household, a single fuel allowance will be paid. I estimate that some 18,500 households will benefit from this extension at a cost of £2 million. This has been provided for in the budget.
Last year I allocated £100,000 to the Society of St. Vincent de Paul to enable them to undertake a major nationwide programme of home management and personal development courses. The society, as a result of this assistance, were able to run these very worthwhile courses in every region of the society. Courses have been run in major centres of population such as Dublin, Cork, Sligo, Galway and Limerick, as well as in other centres such as Ballina, Listowel, Drogheda, Naas, Tuam and many towns throughout the country.
Arising out of the success of this programme, I met with officials of the society to examine other development opportunities. In the light of the worthwhile development work already done by the society the Government have decided to allocate a special sum of £500,000 to the society in 1989. This money will be used to allow the society to undertake, in consultation with my Department, a major development programme aimed at creating employment opportunities, continuing the programme of home management and personal development courses, and undertaking various other projects. I am undertaking similar discussions with the Samaritans.
I have placed great emphasis on the effective management of the resources devoted to social welfare. As a result, I introduced a range of management and control activities to eliminate fraud and to prevent abuse of schemes. The savings achieved over the last two years have assisted the Government in maintaining and protecting the genuine recipient. Those savings have also contributed towards the improvements announced in this budget. I intend to continue to pursue vigorously the anti-fraud measures already in place through, for example, the external control unit and the joint investigation unit, both of which have been expanded.
Towards the end of last year I introduced regulations compelling employers in the construction industry, contract cleaning, forestry work and security work to notify my Department when they take on new employees. The security industry welcomed this step. The Construction Industry Federation who had earlier expressed concern about the implications of the regulations are now happy that these regulations are simple to operate, are in the interests of legitimate employers and will help to root out those who cheat the taxpayer and so undercut their competitors. These regulations will be rigorously enforced by my Department.
Social insurance was extended to the self-employed last year in the Social Welfare Act. Following initial reluctance, there has been a great response to the scheme with more and more self-employed persons realising the benefits of social insurance coverage for themselves and their survivors. Most eligible self-employed persons have joined and contributed to the system.
The £22 million received from the self employed in 1988 was almost 50 per cent higher than originally expected. This is in part due to the success of the new self-assessment tax system and to average incomes being higher than estimated.
By providing people with a basic income for their old age and for their survivors, the Government have also reduced the risks of poverty for the elderly in future years. Until their inclusion in the social insurance system, up to 70 per cent of all self-employed people had to fall back on means tested assistance payments in their old age.
Public servants in permanent and pensionable employment, who number approximately 160,000 have hitherto been excluded from full social insurance cover. There are, however, 140,000 public servants who are insured at the full rate. For those who do not have full PRSI cover it means that should they wish to leave their public service employment to take up employment elsewhere in Ireland, or in other countries of the European Community, they do not have the protection of a comprehensive basic level of social security cover which other employees enjoy. Problems have also arisen for persons who enter the public service having been previously insured at the full rate or, while in the public service, change from cover at the full rate to the modified rate on promotion. Many such persons, through no fault of their own, fail to obtain the benefits of the contributions they had previously paid at the full rate, particularly in relation to retirement and old age pensions.
The Government have now taken the decision in principle to extend PRSI cover to the public servants concerned, with effect from April 1990. This was announced in yesterday's Budget Statement. The Government intend to have discussions with the public sector unions concerned so that the extension can come in on an agreed basis.
I am confident that a satisfactory outcome to these discussions will be achieved. This will enable this remaining segment of the workforce to be integrated more fully into social insurance in a way that will enhance the general level of their overall social security protection.
In conclusion, a great deal has been said and written in recent months about the question of poverty in our society today. It is true that poverty exists, but it is also true that this Government took a major step last July to transfer significant extra resources to those on the lowest social welfare incomes. We have gone further with this process this year, giving priority to families, the long-term unemployed, widowers and those at work on low pay.
I am pleased that the Government have allocated £71 million this year for a well directed package of support for those on low incomes. Larger families, who were seen to be at greatest risk, will find a great deal to assist them in this package. Widowers and deserted husbands, in particular, will now for the first time get substantial assistance in recognition of the difficulties they face in bringing up children. The resources being allocated to people on low incomes through this package amount to £155 million in a full year. This is on top of the £101 million provided last July.
We all know that the most effective way in the long run to be of assistance to the unemployed is to create more jobs. The progress the Government have made to date is already having a beneficial effect. The number at work has increased for the first time since 1980. Job targets have been exceeded. The live register is down and is falling further. Against this improving background, the Government's package of job creation measures announced by the Minister for Finance yesterday will accelerate the growth in jobs in 1989.
We have protected all who depend on social welfare and significantly improved the position of the least well off, including those at work on low pay. We can now look to the future with renewed confidence.
Is it in order for the Minister to supply me with information?
The Minister has concluded. His time is up so it would not be in order to give him any more time.
I am seeking information on a detail——
If the Deputy had been here at the beginning of my speech — I know he came in very shortly afterwards — he would have heard my comments on the effects of saving from management and control generally and from additional income in PRSI for the self-employed——
When will the detail be available?
The Minister and the Deputy will appreciate that we are working to very definite time limits. This is not a Committee Stage and the Deputy will have to be patient until all the details are available. I am calling Deputy Des. O'Malley.
I have noticed in recent years with budgets and the immediate aftermath of the reaction to them that, almost invariably, reaction is good and positive and that everyone is full of a certain amount of bonhomie because they think they have done very well. A few weeks later they begin to have some doubts and a few months later they realise just how badly the whole thing has worked out for them and for the country as a whole. It is my confident forecast that that is precisely what will be the fall out from the budget which we heard yesterday and which we are discussing today. I will go into more detail in a few minutes why that is so but, as in the case of earlier budgets, its presentation and the public relations involved are superb but the substance is a very different matter indeed.
In commencing an analysis of this year's budget, the Minister's first and the Government's third, there is no better starting point than measuring the key yardsticks which the Minister himself said, namely, maintaining confidence in the economy, creating more employment, reforming the tax system and helping the less well off. However, in trying to be all things to all men, he suffers from the classic dilemma of being a jack of all trades and a master of none. In terms of cuteness, the budget scores well and gets the Minister and the Government over the immediate hump of pre-budget expectations. This budget reveals the considerable bankruptcy of ideas of the Government in their failure to reveal any root and branch analysis through which a genuinely more prosperous and caring society could be created.
Let me elaborate. I want to begin with a cautionary tale. In the context of last year's tax amnesty bonanza and the consequent benefits to the Exchequer, there was a growing mood, detectable from a large volume of pre-budget submissions to the Government, which appeared to suggest that we are over the worst in terms of our debt problem. It is true that the GNP ratio has been stabilised at the previous year's level but the debt GNP ratio was reduced at the end of 1988 from 132.9 per cent of GNP to 132.4 per cent of GNP. Notwithstanding the huge and unexpected influx of money to the Exchequer, it still remains one of the highest in the world and the highest perhaps in the First World, if I may suggest that Ireland is in that category.
It is worth drawing attention — apart from that figure — to one of the most significant single figures in yesterday's budget which has virtually been ignored in all the post-budget commentaries, the amount of £2,244 million which has been set aside this year to service our debt. To put this in a colder perspective, that is more than ten times greater than the total amount of money spent on higher education and five times greater than spending on primary education.
In sticking to the straight and narrow path in terms of the overall budget figures, the Government are to be commended. However, in the light of the stark reality of the cost of debt service to which I have alluded on this matter, they had no choice. Indeed, if you go beyond the economics and consider the politics the House would simply not permit this minority Government to deviate from that essential national task. However, the question that arises is whether in achieving certain global and desirable targets in relation to the debt GNP ratio the Government's room for manoeuvre is limited. It is our view that the Government's room for manoeuvre in relation to employment, taxation and poverty was indeed very limited yesterday but, unfortunately, it was limited principally due to the lack of imagination, perspective and courage which the Government should have brought to bear on these vital social and economic questions. Indeed, the real poverty exposed in this year's budget was the poverty of ideas, initiative and innovation displayed by the Government in confronting the demands of mass unemployment, poverty and emigration.
There are 240,000 people on the dole and some 40,000 more on various job schemes which are often little more than a respectable way of getting a social welfare payment. Annual net emigration was 32,000 last year according to the official figure given in the House. However, as the gross figure considerably exceeds 40,000, it means that over 300,000 of our people in each year are either consigned to economic extradition, with no safeguards whatever, or to internal economic exile in their own country.
The extent to which the budget would put in place radical job creation programmes to give these people some hope has to be a fundamental criterion by which yesterday's exercise stands or fails. In this regard, yesterday's exercise has been a dismal failure. Incredibly, you can scour the lengthy, 56 page document of the Minister for Finance searching for some kind of employment initiative aimed at the long-term unemployed who, through no fault of their own, are locked into a cycle of deprivation and poverty, whose talents lie wasted and whose families have to live hand to mouth, but you simply will not find anything there.
The welfare increases for the long-term unemployed are indeed most welcome and in line with what we urged in our pre-budget statement last week but it is a disgrace of almost scandalous proportions that, on close scrutiny, you will find not one single new initiative that seeks to bring even some target number of the long-term unemployed in from the cold. In relation to the social employment scheme, there is an extra £1.8 million supplied for increased allowances to be met from savings elsewhere in the FÁS budget. That amount of money in relation to the scale of the problem and the necessary direction of funds towards families who live in the greatest poverty does not even rank as a spit in the ocean. The hopelessness of the current policy in relation to the long-term unemployed derives from the depressing acceptance by Government that these people are all condemned to remain recipients of welfare, to lack the dignity of human and economic participation in the workforce at some meaningful level. Their only recourse for that dignity remains the emigrant boat or plane.
The formula in yesterdays's budget buys time and buys acquiescence but it condemns over 110,000 people to continued marginalisation and continued internal economic exile. I have expressed my keen disappointment at the lack of any real initiatives to target employment opportunities for specific deprived groups and the real telltale sign of the Government's own view of the net effect of their strategies for the unemployed is given away, as so much is in any budget, in the Principal Features of the 1989 Budget. I refer to Table E, Vote 42 on Social Welfare where subsection (e) says that the published pre-budget Estimates allowed for a 1989 average of 236,000 people on the live register. After all the trumpeting about incentives, development, growth and extra funding, what must one think of the Government's own view of all these so-called major initiatives in terms of the live register? This table tells it all. Before we get to the story it tells, the Government presume that the haemorrhage of emigration of at least 32,000 will continue unabated this year. After this year's budget the Estimates show that the Government are planning as part of their social welfare policy to pay the dole on average for the whole of this year to 232,000 recipients. The net difference pre and postbudget is a mere 4,000. If the 40,000 or more supposed to leave the country did not do so, there would be an increase of almost that number in those unemployed. To put this in its true perspective, out of every 100 estimated to be on the dole prebudget, the Government are officially planning that 98.3 will stay precisely as they were. So much for the sham and the empty claim made on the Government's behalf that this is the budget that will tackle unemployment.
During his statement yesterday the Minister spoke of special income tax assistance which, he said, will play a major part in our co-ordinated drive against poverty. This, too, is a sham and a lie which must be nailed for what it is.
I am sure the Deputy has the competence to replace that little word "lie" which is not acceptable.
Let me say "untruth". I am afraid it will not make it any more true.
The Deputy is aware of the sensitivity of the House to that word, for whatever reason.
Welfare increases for those on long-term unemployment are welcome but since they are not accompanied by any special employment-related schemes the formula adopted by the Government and all the conventional measures used will still ensure that those people will remain in poverty. What should be our attitude to the special income assistance scheme for those on low incomes? The answer is that it is not the major initiative the Minister pretends. It is a necessary and inevitable consequence of the increases given in welfare to the long-term unemployed to avoid creating a perverse incentive which would make it more profitable for those working on very low rates of pay to opt out of the workforce and settle for welfare because they would be better off. The Minister has introduced a scheme which will do no more than offset for the low paid the deeper poverty trap which would have arisen from the welfare increases. This budget is not a poverty fighter — far from it. What it manages to do is to mark time for those who are chronically unemployed and to make sure that the position of those on low incomes is made no worse.
It would have been far better to have adopted a proposal of the Progressive Democrats which we have advocated since our foundation, namely beginning the abolition of the most perverse of anti-employment taxes in a country of mass unemployment, PRSI. Last week we advocated that PRSI should be removed this year from the first £2,000 earned by everyone. That would have had a greater benefit for the lower paid. It would have enhanced the prospects for unemployed people of taking up any job which became available and it would have made it more attractive for employers to take on extra labour. Let me give an example of how perverse PRSI is for the lower paid. For a married man earning £150 a week gross and who is deemed by all recent studies to be living in poverty if he has two or more children, the cost of PRSI is £11.25 per week.
The single most disgraceful failure of this budget arises in the area of tax policy, both direct and indirect. In the area of direct taxation the Government have run away from even the slightest hint of radical tax reform. There are massive areas of economic activity which have a much greater ability to pay a reasonable and fair level of taxation than has been demanded of them. The whole corporate area lies untouched. We put forward in the past two months proposals which could have engendered some reasonable level of return from the corporate sector in its broadest sense without doing any real damage to our economic prospects or progress. In particular we put forward a proposal that a form of minimum corporate tax should be introduced, something of the order of 10 per cent, which every company making profits would have to pay on their profits, irrespective of whatever allowances or reliefs they would have. A system like that operates successfully in the United States and other countries and in view of the extra-ordinarily low return from corporation tax and the prospect, according to the budget tables, that the return from corporation tax in 1989 will be even lower than in 1988, that is something which clearly should have been done.
If this were a pro-employment budget, which it is not, it would have massively overhauled the penal, unjust and lunatic levels of taxation levied on work and enterprise. It costs an employer £3.30 to give an employee an increase of £1 a week in take home pay in the case of a single worker on the average industrial wage. It costs an employer over £2 to give a similar increase to a married worker. This wedge which exists between the potential for employment and the actual level of employment has been driven by successive Governments. The tax wedge in Ireland between an employer's payroll costs and his employees' take home pay is the worst of all OECD countries and nothing in this budget will alleviate that sorry picture. Indeed, in some respects it will become worse for people at certain income levels. It is perverse and anti-employment in an economy which is crying out for a pro-employment policy. This budget delivers neither on the employment nor on the tax reform agenda. Indeed, it goes on to make a number of claims about benefits arising to families in the budget which clearly are bogus.
To a married couple with two children, earning £14,000 a year, there is, the Minister claims, a tax saving of £264 but when the losses to that couple, which are comprised in (i) mortgage interest relief, (ii) life assurance relief and (iii) extra VHI charges this year are taken into account, that family will probably be worse off. With qualifying mortgage interest relief of £3,000 their mortgage interest allowances will fall from £2,700 to £2,400. With a standard rate of tax of 32 per cent they will pay an extra £96 by reason of the loss of mortgage interest relief. If they have an endowment mortgage they will lose even more because of the curtailment of life assurance relief. If they have a life assurance policy they will lose more. If they are in the public service they will pay full PRSI from January 1990 and increased VHI charges will also bite deep into their income.
These measures will mean that an ordinary hardpressed family, on ordinary taxed earnings and with ordinary outgoings, will be worse off as a result of this budget. It has not been made clear whether such a couple will also lose all or some of their child benefit. How can the Minister stand over his claim that everyone will gain from this budget when an average family may well lose and when a single person, earning a miserly sum of £58 per week, is supposed to gain 3p per day? The Minister's failure to index the basic personal tax allowance means that in real terms people on the lowest incomes will, after inflation, pay the State a higher proportion of their income. This is not tax reform but a cosmetic pretence at tax reform. It will fool some people for a few weeks but in a matter of months its emptiness and futility will become apparent to all.
There are signs that the Government have decided to gradually end mortgage interest relief. If that is their plan, they owe a solemn duty to the ordinary man and woman to spell out their long-term intentions. People who are intending to invest in a 20 year or 25 year mortgage are entitled to know where they stand taxwise. They might not be hoodwinked into making tax based investments of a lifetime by the pretence that their mortgage interest relief entitlement will be continued into the future. The Government must come clean on the long-term future of mortgage interest relief. It is wrong and dishonest to suppress a long-term strategy, to deceive ordinary men and women into making commitments beyond their means. The failure of the Government to spell out a long-term strategy for mortgage interest will weaken confidence and create uncertainty. It will further erode the building industry's precarious position. A little honesty would go a long way. The same applies to child benefit.
Tax allowances for children were scrapped because child benefit was to be paid to all. Now child benefit will be taken back from those on larger incomes. We are left in the dark as to the income levels which will determine whose child benefit will be removed. Whatever income level is chosen, whether it is £12,000 or £15,000, the fact will remain that without child tax allowances or child benefit, families of, say, five children, at certain income levels will be taxed on the same basis as a childless couple. We have got to ask ourselves if that is just.
The extension of PRSI is also tax by stealth. It is noteworthy that the Government are happy to spell out in detail the good news but are vague and ambiguous on the bad news. The tables supplied by the Government do not show the effects of reduced mortgage interest relief, of increased PRSI and its extension, of the reduction of life assurance relief, of the additional VHI charges or of the removal of child benefit for many families. If they did the media and the people generally would see a very different picture.
There is nothing, for instance, in this budget that will stem the flights to tax havens, such as the Isle of Man, where ingenious tax avoidance schemes are hatched to continually depress the level of taxation that should otherwise legitimately fall on the corporate sector and on the upper levels of the personal sector.
On the matter of funding pro-employment tax cuts, the Progressive Democrats are gravely disappointed at the absence of even a signal or a declaration of intent to sort out our system of local government and its financing or to begin, however tentatively, to realise the worth of State assets to the taxpayer through the proceeds of privatisation. My colleague, Deputy McDowell, spoke on privatisation last night, on the opportunity that is now there, on how regrettable it is that the Government have failed to take any steps in regard to it and the enormous opportunity that is lost in respect of it. So far as I can see, we appear now to be the only country in the world that is not seeking to dispose of State assets and companies, either that it does not need or that can be sold appropriately for the benefit of the Exchequer. Even in communist countries nowadays a process of privatisation has begun and it is absolutely taken for granted in socialist, as opposed to communist, countries throughout Europe and the remainder of the world. For some extraordinary reason this country remains aloof from the commonsense which surrounds it. It remains aloof even in respect of companies like the Irish Life Assurance Company where the staff at all levels are crying out for this step to be taken. A valuation of £400 million has been put on the company recently by a stockbroking firm in Dublin. Irish Life would be improved by not being owned by the State and the State would benefit by the sale proceeds which would have the effect of reducing, by approximately £40 million a year, the extraordinarily high figure of nearly £2,500 million that we have to pay out each year in interest on the public debt.
I want now to comment briefly on a number of aspects of this budget which I find staggering. One party in this House are currently engaged in a very expensive marketing campaign in the media in relation to a phrase they have coined for themselves under the heading "the new politics". In this budget the Minister for Finance, like a good soap powder salesman, has opted for something even more dramatic and more empty of content, the newer politics. The Minister's innovation is now to make no long-range planning where it counts, such as tax reform and job creation, but plenty of long-range politics when it comes to being able to stir up a storm of protest and lobbying against measures, while at the same time appearing to be bargaining. For example, he tells the country's civil servants that they will have to pay more PRSI, but not yet. He needs to reflect for a year, but I wonder what they will do in the meantime? He sets aside £30 million for special pay increases in the public service this year, but expresses fears that this could be as high as £150 million next year. Is there any chance in this newer politics that the Minister's fears may become the public sector unions' expectations?
The newer politics really come into their own in relation to the preparations for tax harmonisation and 1992. Less than two weeks ago, five Ministers and a bevy of civil servants headed off to Brussels, led by the Minister for Finance. Like many suitors he was over to see what his European partner might give him, and again like many suitors, he wanted as much as he could get. He got, in his own words, no formal commitment from the Commission. In other words, he got a kick in the pants. However, and I quote from yesterday's budget statement, he said:
we can prudently expect an increase of not less than £75 million in commitments for Ireland in 1989 from the European Development Fund.
On the basis of a nod from this Euro partner being as good as a wink, the Minister could not resist spending this money in advance on various capital projects. However, the object of his desire also has a price. The Commission wants us to move towards tax harmonisation, from which yesterday our suitor ran like a scalded cat. This only leaves three budgets before 1992 to accommodate this massive process of fiscal adjustment, cried out for by many sectors, like the motor industry. It is an act of gross fiscal irresponsibility to have neglected to begin that task yesterday. Even though the Minister disclaimed it in his speech, it seems that the real thinking underlying his failure to do anything yesterday is that he is thinking in terms of derogation from what would happen in respect of indirect taxes from 1992 onwards. If that proves to be the case, it will be absolutely disastrous for this country.
By not utilising the opportunity which he had yesterday within three years of 1992, and by taking no step whatever in relation to indirect taxes, he clearly will find himself faced fairly soon with a choice between two alternatives, neither of which is in my view acceptable: one is derogation and the other is an absolutely chaotic situation in the last 12 months leading to 1992 with the most traumatic consequences for many people engaged in business here, who will find that they will have to make enormous adjustments in a very short period.
We have made the suggestion, for example, that we should start by trying to harmonise our levels of taxation with the United Kingdom as being the only Community country with which we have a land border. Not alone was that process not started yesterday, but indeed the very opposite was done, with the various increases in excise duty on different commodities which increase still further the price differential as between the Republic of Ireland and Northern Ireland. The one that I particularly find objectionable is the further increase in the price of petrol, which I think is so extremely damaging to this country from so many viewpoints.
There is a danger, as I see it now, with the very welcome and fortunate advent of potentially very substantial sums from the Structural Funds of the European Communities, that we will see 1973 and its immediate aftermath all over again. That distresses me. From 1973 this country suddenly became the recipient of a bonanza of large sums of money increasing each year in respect of agricultural supports and prices. The agricultural income of this country increased drastically in the years after 1973 and I have to ask myself what great benefit had we from it? What use was made of it from a long term point of view? Did we use the money to improve our competitiveness? Did we apply the necessary discipline that is needed to make this country more efficient and more competitive? Did we improve the infrastructure in the ways that are so clearly needed? I am afraid we have to answer that question one way only and that is that we did not, and that we misused in a very short term and consumer type of way, the funds that suddenly became available to us from 1973 onwards. They will be relatively small when compared with the funds that may become available to us in the 1992 context, but I see no greater sense of preparation, and I am afraid that yesterday's budget underlines that very clearly.
The kind of planning that has been going on is totally inadequate. Very few people seem to know what is really happening. There is very little public input into the planning. The whole thing will be completed apparently by 31 March, and from what I can ascertain, the plan will not be submitted on an annual basis. What will be submitted by March of this year will be submitted for all time and we may not be in a position to make major amendments to those plans. Those plans will leave this country with very little input other than from the Department of Finance and a limited number of civil servants. I think that is not adequate, is not sufficient, and is something the Government will have to tackle most urgently in the two months now remaining. The plans will have to be fully published and discussed before they are finalised. They will have to be published for this House and for the country as a whole.
The notion of secrecy that is going on is incredible. The sort of secrecy used in relation to yesterday's rather unexciting budget is only one example of it. I do not think it would have mattered to anybody, nor would it have made any material difference if that budget had been given out a week before it was delivered.
In so far as these plans for the Structural Funds are concerned, it is vital that there be an informed national debate on them rather than what we have. We are in a time of considerable change, and over the next two or three years a great many things will begin to happen which would have seemed impossible before.
I want to take this opportunity to express my approval and my welcome for something that has happened within the last week within the trade union movement, that is, the proposed amalgamation of the Irish Transport and General Workers' Union with the Federated Workers' Union. These are the largest two unions in this country and they realise in the light of declining numbers at work, declining numbers of members and so on, the need to amalgamate for their own benefit, that of their members and of the country. If that need is perceived by the largest two unions, how much greater is the need for amalgamation and rationalisation on the part of the dozens of smaller unions of which there are a total of about 90 holding negotiating licences from the Minister for Labour? I would like to see at the end of a three year period from now about five or six unions. It would be a sensible number.
The Minister for Labour, who happily is not overworked in other respects at present, should bring in all the unions and suggest that many of them — perhaps up to 20 — amalgamate into one union, rather than these piecemeal, one-by-one amalgamations which take place at the rate of about one or two a year which make no material difference. Those unions would be a far greater benefit to their members in the changed situation their members are now facing and would be of far greater benefit to the country. Unions structured in that way could make a contribution as do unions in the US and on the Continent of Europe to their respective countries. Unfortunately, it has not been a tradition in this country because slavishly, in trade union matters as in so many others, we seem to follow Britain and not just follow them in respect of union matters but follow the worst of their practices in that regard. It would make an enormous difference to mentalities and attitudes generally if what I suggest were done and it would make an enormous contribution to the country.
I want to finish by making reference to a small part of a statement we issued last week, and we laid some emphasis on it. We said in that statement: "Tax reform is not a matter which can be expected to come on the heels of recovery. It is an integral and necessary part of the process of recovery." That was said last week. Needless to say, it is equally true this week and will be equally true in two or three years time. It marks one enormous difference between this party and the Government and, indeed, other parties. It marks an enormous difference also between us and much of the economic commentary one reads in the newspapers and elsewhere. It is assumed widely that tax reform is some kind of bonanza that can be achieved piecemeal and gradually as a sort of reward for getting macro-economic indicators into a healthier state. That is not the case.
This country labours under many difficulties, impediments and disadvantages, but the greatest of all its impediments and disadvantages is the tax system we have. Yesterday was a great opportunity to do something about it but unfortunately, I say with great regret, it was not done. Some things were done that clearly are moving in the right direction. They are things we suggested two and a half years ago. We had them in our manifesto at the last election, and we were derided for making such suggestions. However, if we are going to continue as the Government have indicated in the three budgets they have now produced here, if we are to continue putting the cart before the horse all the time, we will not give this country the opportunity to get itself up out of the difficulties it is in. We are going to continue to drive away the best of our young people and to keep those who stay at home unemployed in very large numbers.
We must realise that tax reform does not come on the heels of a recovery. It has to be part and parcel of the process of that recovery, and we will not get that recovery until we realise that. That is why I found yesterday so disappointing. When I read some parts of that budget as I was handed the document I thought that at last we were on the right road. Then as I listened to the statement and read the document in full, as I saw all the appalling drawbacks in it and the continuation of this obsession we seem to have of trying to raise taxation from every possible source and in particular from work, I knew the day I had hoped for had not dawned. However, that is not going to prevent us preaching the message that it will have to dawn and it can dawn only if what I propose is done and it is seen that our tax system is holding back this country and giving us no opportunity.
Minor changes are made but it seems incredible that, in a country that has vast unemployment, huge and tragic emigration and severe underemployment of people who are nominally employed, we should be increasing the most direct tax on work, PRSI, and extending it still further as far as employers are concerned to higher and higher levels. We are preventing our own success in this attitude. We have paralysed our own thinking in relation to it in the belief that it cannot be attained. That is a serious error, and there will have to be a fundamental new approach to the whole thing. The Government seem unwilling to attempt that, and it distresses me that all they had yesterday in 56 pages was a horizon that does not extend beyond the next budget. The furthest into the future we heard about was what might or might not be done in 12 months time.
What was done yesterday might in part have been accepted and successful in trying to turn round the feeling of depression and hopelessness if it was seen clearly as stage one of a multi-stage programme, but it is not seen as that. There is not a word in that 56 pages which suggests it is the first stage. It simply is little tinkering adjustments in 1989; we will think about 1990 when 1990 comes and about 1991 when 1991 comes. You cannot manage any country, particularly this country, if you are going to have such short-term horizons as that, if you are going to accept as inevitable our awful tax, fiscal and welfare situation. The Government will have to take a longer view. They will have to set out a whole series of stages where we can get down to a 25 per cent lower tax rate and a 40 per cent higher tax rate. The debate that is going on at present within the British Government is whether it would be appropriate in their budget of March or April of this year to reduce the standard or lower rate of tax still further below 25 per cent. Some people, like Mr. Lawson feel they should do so while others feel the British Government should not. Somebody will win that debate but it is important to bear in mind that they are talking in terms of aiming at a figure like 20 per cent. We cannot wash our hands of this and say that it is irrelevant to us. The United Kingdom is 60 miles up the road from this House and tens of thousands of our people are going there and to the United States where the tax rates are even lower.
Young people today, unlike the Government, have the world as their horizon. They are free to move anywhere they like and they move wherever they like. They will continue to do so. They owe nothing to this country if it is going to penalise them in the way it does when they try to enter the labour market. The sooner we begin to realise that the better and stop running the country as if it was some isolated place with a big barbed wire fence around it, a place where we can run things in our own way irrespective of what is happening elsewhere. Unless we can get that realisation firmly into our minds, in particular unless the Government can get that realisation firmly into their minds, then we are going to have a continuation of the misery we see around us today. That is something I find hard to stomach.
Over the next few days, we will hear the budget described in different ways. In my view it is historic, caring — it cares for people and for the environment — and developmental. This budget is a turning point in our economic and environmental development. The Government have, in two short years, successfully piloted the economy from a disastrous course onto a level plane from which economic activity has begun to grow.
The budget contains several elements to assist this growth. Those are: further reform of the taxation system; measures to improve the main physical infrastructure; measures to improve the business environment and measures to help those on low income or who are dependent on welfare payments.
Finally, I am happy to say, it contains measures to improve the environment.
The Government's enormous success over the past two years is clearly visible. Most of the key indicators of performance demonstrate this fact. Even the high unemployment figures are beginning to respond positively. It is against this background that the Government are moving to a new phase in their Programme for National Recovery.
It is generally accepted that we cannot achieve our targets for employment and growth overnight. Progress has to be well ordered so that we can build on our progress. Rash expenditure increases or tax reductions could jeopardise our achievements and damage the confidence in the economy we have restored over the past two years. This confidence, lest it be forgotten, has led to the lowest inflation in over 20 years and the lowest interest and mortgage rates for nearly two decades. To demonstrate the benefits to the individual, the reductions in the mortgage rate since the Government took office represent a saving of £71 in gross monthly repayments to the average house purchaser, a substantial saving.
The increased capital expenditure provided in the budget will benefit the construction industry and will lead to a growth in employment. Much of this increased expenditure will qualify for assistance under the revised Structural Funds from the EC. The Government are progressing well in finalising the national plan which will be formally submitted to the EC not later than 31 March next. The Minister for the Environment has responsibility for the co-ordination of infrastructural projects and he will be monitoring progress to ensure that the targets set out in the plan will be met.
I am pleased that the budget has largely met the twin objectives of easing the personal tax burden and also providing assistance over the expected inflation rate for those depending on welfare payments and other State services. The increases in social welfare payments are generous and exceed the expected inflation rate. The Government have kept to their commitment to social equity. The large increase in payments to the long-term unemployed means that, when this year's increase is added to last year's 11 per cent increase, the cumulative increase is over 20 per cent for this group in two years.
While we have made special provision for those depending on State assistance, we have at the same time been able to provide some relief for PAYE taxpayers. It is accepted that those on PAYE have borne an undue proportion of the tax burden over recent years.
In conjunction with the social partners, the Government undertook in the Programme for National Recovery to make reforms in the tax system. Building on the action taken over the past two years I am happy that the Government are again able to introduce worthwhile reforms. They include measures to give an impetus to further economic growth and development, including tourism, which will help reduce unemployment. The budgetary measures will go a long way to making this a historic year, particularly so far as employment creation is concerned.
Is it in order if I hand over to the Minister for the Environment who was delayed at a very important meeting?
I am filling in for Deputy Spring.
I am waiting for all Members to conclude.
As happens in respect of these matters, if the House agrees to any speaker sharing his or her time that may be done but I must remind the Minister of State that the Minister for the Environment will be confined to the balance of time remaining. The Minister for the Environment would not start off de novo with 30 minutes; he will have the balance of time remaining to the Minister of State. If the House agrees to that, it is in order but the Government side of the House must be confined to 30 minutes in all.
I agree to that. If Deputy Michael Higgins is called next, will I be called after that because we have had two Government and two Opposition speakers?
We could not have that. The nature of the debate is that it must move within the limits agreed from the Government side to the Opposition side. Is the House agreeable to the Minister for the Environment continuing until 1.20 p.m.?
I should like to thank the House and my Minister of State for filling in. I understood that Labour were to offer and that I would not be called for some time yet.
Labour were interested in offering but the Progressive Democrats contribution was shorter than anticipated.
The spokesperson for the Progressive Democrats did not take his full time.
I should like to thank the Minister of State for being here to hold the fort for me. In my own area of responsibility this has been a historic budget in two major respects. These are: additional provisions for major infrastructural works and major initiatives on the environment.
The following list of provisions for my Department's functional areas, over and above the provisions already made in the published Estimates and Capital Programme for 1989, is impressive by any standards: £34 million extra for national roads; £10 million extra for non-national roads as part of a three year programme totalling £150 million; £10 million extra for water and sewerage works; £1 million extra for accomodation for the homeless; £2 million for the new scheme of amenity and environmental works in designated urban areas; £0.5 million for the new scheme of amenity developments at major beaches; £0.25 million extra for a grant scheme for recycling waste products and a lower excise duty on unleaded petrol than on leaded petrol. This impressive list will enable me, my Department and local authorities to contribute to the process of stimulating growth and development throughout the country.
Our roads at all levels are deficient to cater for the amount of traffic using them. The provision for Exchequer road grants in 1989 will be £194 million. This is the highest annual provision ever made for road grants and it is an increase of £44 million over the published estimate of £150 million — £34 million extra for national roads and £10 million extra for non-national roads.
The increased provision will permit a significant acceleration of the programme of major road improvement works, allowing 14 schemes costing a total of some £210 million to start or restart this year. Under the new arrangements for funding from the EC Structural Funds, grants will not only be available for State funded road improvement projects but will also be available for revenue generating projects, including toll roads. Such developments will certainly provide a welcome boost to private sector investment in our road network. The extra provision for road grants should result in 1,000 extra direct jobs in grant-aided road works, apart from the spin-off employment that is inevitable as well. The question of the improvement of minor urban roads will be addressed in the blueprint for road developments.
In particular, the prospects for private investment in the Dublin ring road look very promising. Last year, my Department commissioned a study of the potential for tolling the Dublin ring road. Within the next couple of weeks, I intend to invite bids from Irish and foreign firms for a franchise for tolling the ring road. All the construction work on the remaining sections of the ring road will be carried out following public competitive tendering.
The Government, at my initiative, have agreed to a three year programme, costing £150 million, for works on county and regional roads. I have been very conscious of the deterioration in the condition of these roads in recent years. I increased the road strengthening grants for county roads from £5 million in 1986 to £15 million in 1987, provided £15 million in 1988 and I increased this amount to £20 million in the Estimates for 1989 published last October. I am happy that the Government have agreed to provide another £10 million in 1989.
The Government recognise that county and regional roads are extremely important for all aspects of rural development including tourism, especially agritourism, industry, agriculture and forestry. The three year programme of £150 million of which £47.4 million is to be provided this year, is a clear recognition of this. I will be writing to local authorities shortly informing them of their allocations so that work can begin as early as possible on the programme.
The present level of motor tax evasion at between 10 per cent and 14 per cent is costing the Exchequer about £17 million per annum in lost revenue. The Garda Síochána will be asked to intensify road-side checks of tax discs in 1989 and to pinpoint "black spot" areas using computerised data furnished by my Department relating to non-payment of tax. My Department will continue to issue arrears reminders to vehicle owners who fail to renew their tax discs. These reminders yielded about £225,000 per month in tax revenue in 1988.
I also propose to introduce legislation to counter evasion of motor tax and motor insurance. I am considering recommendations in this area made by the Inter-Departmental Committee on the Enforcement of Roads-Related Legislation. At this stage, I favour the Garda impoundment of uninsured vehicles. Impoundment should also apply to unregistered and unplated new vehicles, which are all too evident on our roads. In 1987 and 1988 the gardaí noted the names and addresses of many of the new car owners involved. Such owners are being asked to pay motor tax arrears or risk prosecution for false declarations regarding the date of first use of the new vehicles. I am considering what further steps should be taken to stamp out this abuse.
The budget provides an extra £10 million for public water supply and sewerage facilities over and above the figure in the abridged Estimates published last October. This brings the total provision for public schemes this year to £62.5 million. The extra funds will be welcomed by those communities who will benefit from the new or improved facilities as well as by those involved in the construction and related industries. Worthwhile additional employment will be generated directly in the construction industry and the employment situation for materials suppliers will also improve.
At this stage, I cannot give details of the particular schemes to benefit from the additional funds. However, I am determined to get as many new schemes underway as quickly as possible. Projects selected for financing must meet very specific objectives and must represent good value for the investment involved. Relevant objectives include preventing or abating water pollution, complying with regulations on drinking water quality and serving new development areas.
I have been concerned, since taking office as Minister for the Environment, that more attention should be devoted to caring for our environment. I have taken a number of initiatives over the past two years and I am taking more this year. Last year's budget was the first budget to include specific measures to improve the environment. This year, the Government, at my initiative, have agreed on further measures in this year's budget, namely preferential level of excise duty on unleaded petrol, special scheme of grants for environmental works in urban designated areas, special grants to promote recycling of waste products and special grants for amenity and environmental improvement works at selected beaches.
Will Rosslare beach protection work be included?
As well as improving the environment, these measures will also aid our tourism development programme. The Deputy's area will not be forgotten.
Thank you. I will take that as an assurance.
Getting the lead out of petrol must be a priority for us because lead is poisonous and, at certain concentrations in the blood, has been found to cause brain damage in young children. In areas subject to heavy traffic, up to 90 per cent of atmospheric lead pollution is attributable to vehicle exhaust emissions. Yet despite the health effects, the removal in the 1987 Budget of an earlier price disadvantage, and the launch of an information and awareness campaign sales of unleaded are currently less than 1 per cent of total petrol sales. I must compliment the oil companies for setting up a distribution network of outlets which allows many motorists to exercise the choice to use unleaded petrol. This network is expanding all the time. The society of the Irish Motor Industry have also produced a list of cars which can use unleaded petrol without adjustment and this list is widely available. However, motorists have not responded as well as expected.
In order to further encourage increased consumption, the Government have agreed, at my request, to a preferential level of excise duty which will allow unleaded petrol to be retailed at 5p a gallon less than the top grades of leaded petrol. There is now a direct financial incentive to use unleaded petrol and I expect many motorists to respond positively and start buying it. All sectors of the motor and oil distribution trade must intensify their efforts to provide and promote this product.
The designated areas scheme of urban renewal has reached an important stage. With only two and a half years left before the scheme expires, developers will have to decide soon if they will participate in the reconstruction of these designated areas. While the scheme has had marked success in many centres, progress in others has been slow, mainly because some parts of the designated areas are environmentally unappealing and, despite the incentives available, are not perceived as attractive locations for development.
In order to overcome this difficulty, the Government have approved an allocation of £2 million to finance environmental projects which would complement proposed private sector developments within the designated areas. The types of projects which I have in mind are pedestrianisation-paving, attractive public lighting, creation of walkways and other urban landscaping.
In order to maximise the impact of these funds on generating new development, it is intended that projects will only be undertaken in areas where there is already demonstrable interest in development. Thus the scheme will serve to copperfasten existing proposals and encourage and accelerate private sector development which might not otherwise take place.
Experience in other countries has shown that urban redevelopment cannot be left wholly to the private sector and that selective public expenditure on environmental upgrading is an essential and effective element in promoting urban redevelopment.
For some time we have needed a positive national policy in relation to the recovery and recycling of such consumer waste materials as glass, cans, paper and plastic. This would not only conserve our national resources but also control and prevent pollution. The special budgetary provision of £250,000 will make it possible to give a major thrust to increasing the recovery potential of waste materials.
While I have not yet decided on the detailed form or level of financial assistance to be given, there is a case for tackling the problem on a number of fronts, including assistance for both public and private sector projects as well as promotional and other appropriate measures.
The EC environmental programme places great emphasis on the need for member states to encourage materials recovery and recycling as an important element of waste management.
The proposals I have in mind should help to develop an awareness of the importance both to the environment and to the economy of maximising recovery potential.
Recycling saves energy and raw materials. It reduces waste disposal costs and import bills. It can reduce the amount of unsightly litter. Recycling can also, of course, generate additional employment in a small but worthwhile way.
A provision of £500,000 is being made in 1989 for a new programme of major amenity and environmental improvement works at some of our larger beaches, including those frequented by large numbers of visitors. We are undoubtedly the envy of Europe for our fine, safe beaches. Most coastal counties can boast of many unspoiled beaches. However, these beaches often have no basic amenities and facilities. Lack of facilities can lead to haphazard and indiscriminate car parking, resulting in damage to sand dunes and the surrounding land, and litter and other pollution problems. There is often insufficient litter bins, picnic facilities, toilets and so on. In some cases, too, the areas adjoining the most popular beaches need proper landscaping and other environmental improvement works.
It is against this background that I sought this special programme to make our larger beaches more attractive to beachgoers and encourage additional visitors. I intend to make a grant of up to £30,000 available for works at 15 selected beaches. This will be supplemented by a further £20,000 per beach from the local authority, bringing total outlay under the programme up to £50,000 per beach. I will be inviting the coastal local authorities, in the next few days, to nominate suitable beaches and to submit work proposals. It will be an express condition of the grant in each case that the bathing water quality is of a high standard and that proper monitoring of water quality is arranged to comply with the bathing water quality regulations which I made last June. It is my intention that the beaches chosen will compete for and meet the standards required under the European Blue Flag for beaches scheme. All in all, I expect this programme to result in a much better deal for beach-goers this summer and to create some additional local employment.
There is now clear evidence of a recovery in the construction industry led by increased private investment brought about by lower interest rates and specific Government measures such as the reintroduction of section 23 relief and the extension of the designated area incentives.
What about the lowering of the mortgage interest relief?
Economic commentators, including the ESRI and Central Bank, are forecasting the first increase this year in building investment for seven years.
The extra public expenditure announced in the budget will increase employment while at the same time improving our physical infrastructure before 1992. The increased activity in the Public Capital Programme will complement the increased activity in private investment. With the increased investment, output could increased this year by up to 5 per cent with a corresponding increase in employment of about 3,000.
In relation to housing the Government have undertaken a number of major initiatives including, the Housing Act, 1988 and the new arrangements for the accommodation of homeless persons; the expansion of the voluntary housing programme to facilitate a broader response to special housing needs; the provision of mortgage finance for low income house purchasers in co-operation with the commercial lending agencies; the publication of the Building Societies Bill, 1988; additional funding for the local authority housing remedial works scheme, and the 1988 tenant purchase scheme which is making home ownership a reality for many thousands of local authority tenants.
In last year's budget, the Government made specific provision for the most disadvantaged category of housing need by committing a sum of £3 million over three years to help voluntary housing organisations provide additional accommodation for homeless persons. I also increased the maximum grant aid for the provision of accommodation for homeless persons to 95 per cent subject to a maximum of £20,000 per unit of accommodation.
The response from the voluntary housing sector has been remarkable and the £1 million allocation for 1988 was fully expended. Two major projects in Dublin, involving 124 units of accommodation, got under way as a result of the Government's initiative and one of these projects is now almost complete. Other projects in Cavan, Cork, Sligo and Longford are in progress or about to start.
Because of the achievements of the voluntary housing organisations in 1988 and the continuing need to respond to the acute form of poverty represented by homelessness I have been able to secure Government agreement to a supplementary provision of another £1 million for the provision of accommodation for homeless persons in 1989.
Last year was a good one for home loan borrowers. Interest rates were reduced to their lowest level in 20 years; mortgage finance was, and remains, in abundant supply. Total mortgage lending was almost £900 million which represents an increase of 37 per cent over 1987. It was also a year which saw building societies regain their pre-eminent position in the housing market where they accounted for almost 60 per cent of all mortgage loans advanced. The Government's decisive economic and fiscal policies have been crucial in paving the way for lower interest rates. One of the best examples of our success is mortgage rates for house purchasers. These are over 5 per cent below the rates in the United Kingdom a situation which would have been unthinkable even two years ago.
The intense competition between the banks and building societies, together with the increasing interest of the insurance companies, should ensure that mortgage finance remains in adequate supply in 1989. So far as interest rates are concerned, the Government will press ahead with policies conducive to the lowest possible rates.
I want to touch on the budget changes affecting income tax relief on both mortgage interest and life assurance premiums.
The mortgage interest relief is by far the biggest element of Government support for the private housing sector. It costs over £165 million a year in revenue foregone and has become a significant factor in the income tax structure. The Government's decision to reduce from 90 per cent to 80 per cent the proportion of interest on which tax relief is allowed will help to counteract inflationary pressures on house prices which, if allowed to go unchecked, could have implications for the wider economy and, ultimately, push up interest rates.
There is also concern about the regressive impact of mortgage relief: the higher your tax rate and the bigger your mortgage the more it was worth to you. The 10 per cent cut in the relief introduced in 1987 and the lowering of the interest ceiling have already helped to reduce the degree of regressivity that had existed and the further changes now proposed will make it more equitable still and generally better targeted.
The new interest ceiling of £3,200 will not affect the generality of first time purchasers since it will come into play only at a loan level of £38,800 in the case of a married couple taking on an annuity-type mortgage at the current building society mortgage rate.
The restriction in the income tax relief on life assurance premiums will have some effect on endowment mortgages. However, so far as possible, taxation policy should treat all mortgage types equally. The budget represents a move in this direction. Despite the restriction on the tax concession on endowment mortgages premiums, I have no doubt that they will continue to account for a substantial share of mortgages in the future.
Despite the constraints on public expenditure generally, capital totalling £15 million is being provided to fund major refurbishment works to local authority dwellings under the remedial works scheme. This sum which was set aside in my Department's Estimate last October is an increase of £5 million over the 1988 provision and reflects the importance I attach to improving the quality of the existing local authority housing stock and the quality of life for tenants. This increased allocation will allow for a programme of work to be undertaken in some 80 housing estates throughout the country, including two major schemes in Dublin at Oliver Bond House and Ballymun. Tremendous interest has been shown by local authority tenants in the 1988 tenant purchase scheme. It is estimated that about 30,000 tenants applied to purchase their houses by 31 December 1988. The scheme will lead to significant improvements in the maintenance of local authority estates in general and will provide local authorities with valuable capital resources to improve the standards of their remaining housing stock. The scheme will bring our rate of owner occupation up to about 80 per cent of the total housing stock.
We must keep a proper balance as we move into a new phase in our policy for economic growth. I am confident that the budgetary measures announced yesterday will serve to reinforce confidence and low interest rates which stem from the firm policies of the Government in the last two years. At the same time, the increase in welfare payments will protect the most vulnerable sector of our society, while the tax reliefs will act as an incentive for a greater work effort.
Mar fhocal scoir sa cháináisnéis seo táimid ag bualadh ar aghaidh le céim nua den pholasaí le haghaidh borradh eacnamaíochta. Táim cinnte go neartóidh an t-airgead breise atá curtha ar fáil anois an mhuinín agus na rátaí úis ísle a d'eascair onár bpolasáithe daingne sna blianta seo thart.
I want to take up more or less where the Minister left off. One of the last phrases he used was that the proposals in the Budget would create a greater work ethic. Such a sentence as this will ring particularly hollow with those who are unemployed, all 19 per cent of a registered workforce. It will also ring some what hollow with the projected 40,000 people who will leave the country for lack of employment next year, the 40,000 who left last year and the 30,000 who left the year before.
It could be 70,000 who left last year.
Deputy Higgins without interruption, please.
Deputy Doyle has a valid point, and I take it. I am deliberately sticking to the more conservative end of the estimates, the ones acknowledged by the Government yesterday at Question Time in reply to Questions Nos. 6 and 7.
When one strips away the ritual of Budget day, what the public were looking for was some activity in the four main areas of unemployment, emigration, poverty and taxation. We must remember that this Government are in power, implementing policies for which they did not seek a mandate from the public but which were rather laid down, as it were, by the other more straightforwardly honest right wing economic theories that were available from Fine Gael and the Progressive Democrats. They are now operating as if they had no need whatsoever to go to the public. The assumption is that everybody is happy.
In preparing for this Budget, I was interested to see what precise investment policy they would now put forward. The basic principle of the voodoo economics that now prevails in this House or, as I have called it year after year, the tenets of the climatological school of economics, argues that our purpose is to create an economic climate. From this economic climate investment will come and from the investment jobs will bloom, and from the blooming jobs there will be such a scent that poverty will be impossible. That is how the theory goes. We have heard the Taoiseach expressing it. Ministers stand up week after week, saying in the opening paragraphs of their statements "in these difficult times in which we find ourselves". It is like a mantra, a kind of an opening prayer, to this climatological school. Interest rates are low, export figures are high, the balance of trade is ever more favourable, productivity levels as assessed by different surveys are extraordinarily high, everything has gone right. What more could one want?
There is an unending stream of State supports to industry. The State has been pared back. The question that anybody is entitled to ask is where the jobs are. They are particularly correct in asking, at the time of the budget, where the investment strategy for the jobs is. We should stick to facts, and when the Minister has finished amusing himself he can look back at his colleague's speech yesterday. The only definite information about jobs in the speech are that 9,500 people left the public service last year and it is projected that another 3,000 will go this year. We know for sure that there are 12,500 fewer jobs in the public service.
Let us be clear about this if we want to be strict about accounting and unemotive about it. In most countries there is an acceptance that if, like us, one is not going to discriminate between the areas which deliver services to the public and those which are involved in simple administration, every public service job involved in any one of the caring services that is quenched — as it is called — is a reduction in the amount of services available to the public. So we can be certain that jobs were lost and that jobs will be lost.
We then come to look at where these jobs that are to come out of the climate of investment that is being created are. We might first ask where is the evidence of real investment levels. A very interesting feature here has been the totally artificial structure of the economy in recent years. Kieran Kennedy, Thomas Giblin and Deirdre McHugh in their book The Economic Development of Ireland in the Twentieth Century published by Rutledge last year, made two very telling points in relation to Irish exports. They say at page 190:
The other major factor responsible for the change in investment flows was the emergence of a large outflow of what are described as "profits, dividends, royalties". They rose from £128 million (2½ per cent of GNP) in 1977 to £1,321 million in 1985 (10 per cent of GNP), and are mainly associated with the rapid development in the last decade of the so-called "sunrise" industries — notably pharmaceuticals and elecronics.
At page 241 they mention:
By the same token, these plants also relied heavily on their overseas affiliates to provide the market for their products, one study found that 55 per cent of the exports of the new foreign enterprises were sold to affiliates of the same company abroad. The Irish branches were often little more than production platforms which had few linkages with the rest of the economy.
I am offering that simply as the acceptance by outside thinking that one can have a bogus inflation of the export figures without any necessary linkages or the creative transfer of technology or the creation of jobs directly or indirectly through the economy that might have had links established to it.
The importance of this in relation to the employment issue is crucial because for the creation of jobs the reliance is entirely on the private sector at present. One of the most interesting features of this list of programmes for the Structural Funds of the European Community is that it follows the same deadly logic. The schemes — not only the ones listed by the Minister but those listed by different local authorities around the country — could be summarised as falling into three categories: projects for which no money was available in recent years: projects for which we have been told we will not have the money in a few years to come; and any good idea that anyone might have been able to come up with. It is a kind of European slops bucket. The idea was that you take this great bucket of slops, throw it at the Community and hope that it will come back in a bigger barrel, that what was 25 per cent will come back at 100 per cent.
The last thing the Government comply with is any concept of regional planning. I was a founding member of the Regional Studies Association in Ireland. We discussed the reasons for having regional planning. They were basically that you wanted to increase the capacity of a region to create productivity and jobs and participate in growth or else it was that you wanted to relieve urban diseconomies, where there was a greater concentration of population and it made more sense to retain population where you had infrastructure. A third reason was a more ethical one, to give everybody their equal rights to participate in the economic growth of the Community and so on. We agreed always in the discussions that the elements of regional policy were that there was a plan, an institutional framework for implementing that plan, that it was monitored and there were targets that could be assessed. None of this procedure has been followed in drawing up these schemes and thus it is no wonder that people who take even the technical aspects of regional planning seriously more or less let the Irish Government know what they thought of this rather unusual approach towards seeking European funding.
The most sinister aspect — and I draw public attention to this — is that the European funds are being used to subsidise the further privatisation of many public facilities in Ireland. I have examined a number of projects and have found that in regard to much of the property that was owned by the public, that leisure facilities to which the public had access such as Leisureland in my own constituency which has a public swimming pool, it is now hoped to get from the private sector proposals which will be put forward in Europe. The local authority and the Government then use their clout and decide to get in the name of Ireland 75 per cent of funds to prop up the privatisation of what were public facilities here in Ireland. There is no conclusion to be drawn from that other than there is a comprehensive anti-State philosophy behind the kind of economics we have now.
Speaking as I do for the Labour Party and speaking in support of those ideas that have been already put forward by my colleagues on the left of the political spectrum in terms of employment, tax, poverty and emigration, I would draw attention once again to what the record is in relation to job creation in Ireland. In 1985 there were 17,260 employees in Telecom Éireann, a company built on State investment, on technology sponsored by the State and operated by State employees. There were 15,000 employees in the public transport system, then CIE, a transport system established by the State. There were 12,454 employees in the ESB, a company not only established by the State but opposed in its day by the right-wing people in this House who now make up 90 per cent of the membership of this House. They had interesting things to say. Elements of the private electricity suppliers in the twenties opposed the ESB and farmers' representatives said it would never catch on. That was the thinking at the time. The ESB was established not only without them but in the face of their opposition. In 1985 there were 8,871 employees in An Post, 5,900 employees in Aer Lingus and 5,850 employees in Bord na Móona. The development of the bogs is a technology developed by the State and to this day sold outside the State by public service employees.
It would be a very good thing to do if you want to cut through the madness that circulates in this House every now and again, when all the wind and huff and puff is gone, to ask, while the State was creating all these companies that might now be developed and that could trade abroad by purchasing technologies and establishing niches in the international trade and economic world why are they uniquely being stopped from development and creating jobs and why are they not allowed access to the Regional and Structural Funds? What is this, as I have described it, lame, dried up cow of Irish private enterprise that everybody keeps kicking for milk and that produces no jobs? I challenge the people on the right of this House to tell us what the comparative achievement by the private sector has been in regard to job creation.
The truth is that this Government of would-be republicans, converted as they were, struck down by the missives of the right on their way to power, and the super-republican who presides over them, are perfectly willing to have a 19 per cent unemployment rate, to accept the emigration of 40,000 people and to accept the high levels of poverty. The Minister for the Environment, whose language means nothing to me at present because it is delivered at such an altitude that it has no circulation in the realms of reality, described this budget as historic.
What is in this budget about taxation? What evidence is there that there has been any shift of the burden of taxation from the PAYE sector either to the corporate sector or to capital taxation? There is no evidence whatsoever. The tax bands within the PAYE sector have been shifted. If we look at the accompanying document to the Budget Statement we will see that a couple earning over £30,000 with two children, are beneficiaries two and a half times the extent of a couple who are on the lower incomes. The pattern of transfer is one that massively benefits the people who happen to be on modestly higher incomes. There is no taxation achievement in the budget.
While I am on the subject of taxation I would like to ask where is the Minister's response to the glaring abuses in relation to capital taxation? In this regard it is relevant to refer to the case McDermott versus McGrath which came before Miss Justice Carroll in the High Court. The Revenue Commissioners asked the High Court to nullify a scheme of tax avoidance where a company was created with the explicit intention of creating artificial losses. The company had been created outside this jurisdiction. There had been requests to the Minister prior to the budget to close off this tax loophole. Those great radicals, the British Law Lords, in an historic decision, referred to — and I quote from their judgement — the “apparently magic result of creating a tax loss that was not a real loss”. Lord Diplock who delivered the judgment on that occasion took it upon himself to warn people in British industry that those who were intent on establishing a business to avoid tax in this way or who were involved in designing tax avoidance schemes would be punished. He said the judiciary would adopt a hard line against what he called the “pre-ordained series of transactions into which are inserted steps that have no commercial purpose apart from avoidance of a liability to tax which, in the absence of those particular steps, would have been payable”.
Our republicans, however could not face up to the scandalous situation created by the McGrath family decision to avoid paying tax by setting up shell companies, and establishing losses which could not be judged by any other measure than as being highly artificial. There is no shift from the PAYE sector to capital and corporate tax. There is no significant shift within capital taxation, either, to create any strategy against avoidance or evasion. The converted republicans do not want to touch that — which makes me think about the character of what they have stood for, any how, in relation to having any guts at all with regard to social equity.
In the budget there is not only an opportunity but a necessity to do something about job creation. There are all the old clichés again about the private sector and an announcement that there will be fewer jobs in the public sector. No State role is indicated for the creation of employment. There is hardly a reference to emigration, except that it got half what the Minister wants to spend on modernising racecourses. That is a fair old indicator of the philosophy, also. Keep them moving out of the country. But what about those who are stuck at home, the 19 per cent? We had that charming little phrase of the Minister for the Environment a few moments ago about creating a greater work ethic. We had the Minister for Finance wondering yesterday about the delicate balance, about giving just so much social welfare because if they get an extra few bob they might suddenly find their moral fibre collapsing and they would become wasters on the State. What a disgraceful kind of logic.
I recall the debate about poverty in Ireland from 1971 onwards. In 1971 at the Kilkenny Conference on Poverty, everybody was concerned. In 1974 I worked to produce a document for my party on poverty in Ireland and in 1975 Combat poverty was established. However, because that agency were asking questions about authority and the structural basis of poverty and making a case for greater equality, they were, of course, threatened and disestablished in 1981. What people needed was a panoply of compassionate, caring organisations that would pick up and deliver the crumbs. They did not want all that fussy stuff of people asking who had power, whether people should have the right to participate in decisions about themselves, or have a say in the running of their affairs and so on. That was all very messy. Was it not better to help the really decent people who were helping the really decent poor? Thus we had, in 1982, this Community Development Authority which was established and, thankfully, collapsed quickly. That was one of the benefits of the collapse in Government, I suppose. Back came Combat Poverty. But we are back to before 1970 with this notion, well fed into different Minister's speeches, that the causes of poverty lie within the poor themselves. This is what we used to call case explanations; poor individuals, poor families, poor districts, poor areas and so forth and the argument that the causes are not structural.
Those who believe in a structural explanation of poverty would tell the different Ministers that if you create decent housing and jobs and provide education and prospects you are intervening structurally in the sources and causes of poverty. But that has now become unfashionable and people here stand up and speak about getting a consensus on these issues. There is no consensus in this House. There is a consensus between the Government, Fine Gael and the PDs and I wish to God that the press would get that right. There are those of us who see all this bogus claptrap for what it is, very few of us I must admit, but nevertheless we have the right to differ as we have differed over the years and to establish those differences.
I listened to the speeches from the PDs, from Deputy McDowell, for example, who feels that we have not gone far enough with what he calls privatisation. Let us have a little sanity about privatisation. What is it, in politically moral terms? It is robbery. Let me use the word because I want it to be very clear on the record. It is robbery and often robbery assisted by those who are making the case for it. What do I mean by that? If the public, through their taxation, have developed, let us say, a State company and have established assets and if in the course of the evolution of the company's development there are a growing number of people who have left the country, people who have been poor and others, there are equally a number of people who have become rich. What right have the minority of those who have become rich to cast their eyes on publicly created and developed facilities and say "These should be mine as well"? Where is this entrepreneurship which is to be unleashed like mushrooms from that half-soggy, humid kind of fertiliser from which mushrooms come? Why is not this entrepreneurship creating new technologies, new inventions, new starts of companies, buying in patents? Why are they so bloody miserable and greedy that the only thing they can look at is what the public own, and claim that they have the right, by the privilege of wealth, to put their arms around public assets? It is robbery, robbery from the public, little less.
I insist on the word "privatisation" being examined in such terms before this budget debate is over — the idea for example, of this kind of anti-State philosophy that is being developed. Not only must the State be stopped from creating jobs and cutbacks, but what is held by the State for the public must be given over to a bunch of hucksters who have not the ability to create new concepts, new patents, new technologies and trade internationally abroad. This is the atmosphere. There is a consensus on that, as there is a consensus among thieves, to steal from the public and that is, in the end of the day, what privatisation is. That is why we in the Labour Party oppose it.
There are a number of matters that I would have liked to comment on in the brief time that I have left to me. This budget is, by any standards, a socially regressive one. It offers small amounts to individual categories of people and they are welcome, but it does not attack the basic sources of poverty in a structural way. Let me give one other example of that. There is £2 capitation fee into the primary level of education but there is £5.8 million missing for school transport for the next year and the amount of money that CIE have available to run school transport for 1989 will be exhausted in about the month of September. Even after CIE have replaced buses from their own resources, bailing out the Department and so on, the Government are giving £1.2 million to the primary sector with the glorified notion that it is, as it is indeed, the most general aspect of education, but they are taking out £5.8 million. There is no indication of the shifting of the taxation burden away from the PAYE sector towards those in the corporation and the capital sector.
The budget reveals uniquely the present total shambles over the question of taxation in the agricultural sector. This Government, in an effort of unique philistinism, destroyed the data base upon which any true projections for farm income might be established. They have done nothing to close off the tax avoidance loopholes. One of the most glaring examples to which I have referred was the creation of artificial shell companies to create artificial losses against which one could write off capital gains within the domestic economy. That is a scandal and let this Government know that they have not had the guts to do what the musty old Law Lords of Britain were willing to do, because they would upset somebody, the new huckster model republicans.
There is another scam involved which is a gorgeous one, called turning sin into virtue. That is where in the name of the State, VAT and PAYE are collected from employees, and employers have lapses of memory about sending them on to the Government, as one award after another in the courts show. The good news is that it is no longer a sin. It is like eating meat on Friday not being a mortaller anymore. The money can be put aside for 12 months and nobody will be bothering about it. That is historic, as the Minister for the Environment could tell us. It is historic in terms of sheer neck, people taking money from employees and keeping it for 12 months before paying it to the State. It is outrageous.
There is also the question of children's allowances and whether those allowances should be cut back. A point was made from this bench that in many families it is the only money to which women have access. There are a lot of thick males who do not give their wives the money they should. If the Government are concerned that the rich should not get money which could be given to somebody else, the child benefit should be made a universal allowance and clawed back through progressive taxation. That is the way it is dealt with in every other country in the OECD. But that would be too good. In keeping this populous nightmare going it is nice to be able to create a few horrendous images, saying that the money was taken from those people down the road in order to give you a few pence more.
There is everything in this speech which smacks of that awful notion that people are not entitled to the essentials of life as a basic right. There is an appeal to the business sector to become involved in community development. The idea is that when the economy has been left in all its failure exactly as it is they will get an attack of compassion.
The Minister for the Environment could say he is proud of giving money to the voluntary agencies to house the homeless, yet he has failed to issue orders under the Homeless Persons Act which would have given rights to the homeless. He is presiding over a situation where in some areas no local authority houses are being built while the building programme has been savagely cut in other areas. The housing stock is being sold off and for those which are left there are fewer public service workers to provide essential repairs.
Is Deputy Higgins the main speaker on behalf of his party?
There is some confusion and the Whips are having discussions at the moment. Subject to the Whips, I hope to speak next.
I am nominated speaker for my party.
Then you are entitled to continue until 2.23 p.m.
To facilitate contributions I will conclude shortly. I began my speech by saying that the people wanted some action on unemployment, job creation and investment. There is little evidence of it in this budget. The question of emigration was not seriously addressed. The question of poverty has been approached in a kind of concessionary way which is mildly compassionate at best but does not tackle the structural problem.
Regarding taxation, where the tax base is too narrow and too many people escape, where tax relief is often based on assets rather than on family circumstances and where the system is complicated, there has neither been reform of the tax system nor has there been a shift in the burden. I will have the opportunity of returning to these topics during the year but I must confess my great disappointment that a great opportunity has been missed.
During the coming Dáil session we should not give any more credence to the notion that there is a consensus in this House. There is not. There are those of us on the Left — the Labour Party, The Workers' Party and some Independents — who oppose these economic policies and will consistently vote against them because that is what we were elected to do.
The Minister for Labour, Deputy Ahern.
There has been some confusion and we will be registering our protest through the Whip's office. This is the fourth Government contributor this morning. We have had one.
Two years ago on taking office we faced a truly daunting task. We had to take the really tough steps necessary to lay the basis for economic recovery. The budgets prepared in 1987 and 1988 represented this foundation. The realism of these budgets has been amply demonstrated by two facts. Firstly, we have brought public expenditure under control. Secondly, the beginning of economic recovery is well on the way. The negotiation and ratification of the Programme for National Recovery represented a further very vital step towards restoring the country's economic health. The Government are still holding firm on their policy of problem solving through consensus and co-operation.
As a representative of a Dublin inner city constituency, I have long been aware of the reality and the dimensions of poverty — I meet it every day of every week, not just in the weeks before the budget. Hopefully everyone will continue to work towards its elimination as this Government have been endeavouring to do. But, as I have said before on a number of occasions, the real solution to the problem is to continue the economic regeneration of the country and, more specifically, the creation of viable jobs in greater numbers.
As we look back over last year, we can see 1988, and indeed 1987, as a milestone on the road to economic recovery. The core of the Government's strategy has been control over the national finances. The target was clear and the Government have been remarkably successful. Within two years the Exchequer borrowing requirement has been brought down from about 13 per cent of GNP to 6 per cent in 1988, even excluding the once-off effects of the tax amnesty last year. This year the requirement will be reduced further to 5.3 per cent.
Other economic indicators are also very favourable. Inflation is at its lowest for nearly 30 years. Interest rates have fallen by 6 per cent in two years and remain steady despite the huge favourable differential with the United Kingdom. The balance of payments has been in surplus for two years running for the first time in 20 years. International exchange rates have been stable. Widespread adherence to the Programme for National Recovery has led to wage moderation.
The optimism engendered by these financial factors is borne out elsewhere. Manufacturing and agricultural output are growing. Our exports have been booming, in both traditional and high technology sectors. We have seen a recovery in personal consumption and private sector investment. These are both expected to grow further this year. There has also been considerable progress in reducing the costs to industry of such essential services as telecommunications and electricity. The economy is set to grow this year at twice the rate achieved during 1988. The normally cautions report from the Central Bank contains a striking indication of the success of our policies.
Despite these improvements we cannot release the tight rein we have placed on public expenditure. We have to continue the corrective action on the public finances. This is essential to maintain the level of confidence in the economy. Nevertheless, we have been very concerned to tackle three interlinked priorities: alleviation of poverty, promotion of employment and greater equity in the tax system.
Major improvements are being made in social welfare payments for the second year running. These have particularly benefited the most disadvantaged. The weekly payment to a single person on long term urban unemployment assistance had risen in two years from £37.80 to £47, about 24 per cent. Child benefit allowances have been increased in recognition of the greater incidence of poverty among the unemployed with children. The increase in allowances for widowers and deserted husbands to the level available to women in the same position remedies a long standing anomaly and will be of considerable benefit. Free schemes and national fuel schemes will be extended.
We have also been particularly concerned at the plight of those in low paid jobs. We have introduced a package of measures to help them. We are increasing the general exemption limit for income tax and introducing an innovative tax allowance for those within the exemption limit who have children. In addition my colleague, the Minister for Social Welfare, will be announcing adjustments to the family income supplement.
I am confident that these measures will improve the incentive to stay at work rather than on social welfare, and will overcome anomalies in their relative values. I fully believe that from all points of view it is better that people have jobs rather than languish in unemployment.
Last year employment began to respond to the economic strategy set out by the Government. The preliminary labour force survey results to April 1988 show employment growth of 6,000. Almost 20,000 new jobs were created in manufacturing industry and international services alone. There was a satisfactory distribution of these jobs in all sectors and parts of the country. Small firms set a particularly encouraging record, achieving over 4,000 jobs in 1988. Surveys by the CII of their small firm members revealed that the majority had increased employment or had firm recruitment plans. The Government's forecast of increased employment in 1989 is supported by the Central Bank and other commentators. This employment growth is contributing to a drop in unemployment. For the first since 1979 the yearly average number on the live register has fallen. For 13 successive months there has been a year on year fall in registered unemployment.
From the expected increased commitments from the European Regional Development Fund in 1989 announced yesterday by the Minister for Finance and the increased allocations set out in the Financial Statement for infrastructural development alone, an increase of 3,000 jobs is expected.
The successful economic and budgetary strategies introduced by this Government over the past two years and continued in this budget has created a climate of confidence. I fully expect that net job creation in 1989 will increase substantially over the 6,000 achieved between April 1987 and April 1988. Indeed, the net increase in jobs outside agriculture is extimated at 16,000 with a fall of 9,000 in the live register.
Other features of the budget impinging on employment promotion are: the reduction in levels of personal taxation, the scheme agreed by the banks to aid young entrepreneurs and the general and particular measures to enhance the environment and to aid tourism.
In my own sphere the reduction of the employers' contribution to the redundancy and employers' insolvency from 0.6 per cent to 0.4 per cent will reduce labour costs to employers by £10 million. All these should further contribute to the creation of jobs.
Of course, it is the overall effect of policies, rather than the immediate results of individual policies each considered in isolation, which creates the circumstantes for large scale job creation. Any objective observer would acknowledge our efforts to bring those circumstances about.
In our approach to the use of the enlarged structural funds in the period up to 1992, we shall be endeavouring on a planned basis to create the infrastructure and to bring about the standards of skill which will enhance our competitiveness and our potential for expansion in industry and services — and, therefore, in viable jobs — in the years ahead.
Over the past two years the Government have made major progress regarding restructuring and reform of the tax system. The administration and collection of tax have greatly improved. The burden of personal taxation has been reduced. Nevertheless, we all agree that more needs to be done. In particular the high rates of personal taxation are still acting as a disincentive both to job creation and to the take up of employment opportunities. Life on social welfare or emigration has seemed a better option than a lower paid job. Indeed, much lower personal taxation rates abroad have proved an attraction also to some of our best qualified and scarcest talents.
The Government have now moved further to reduce the personal tax levels. It has been claimed that the gains to the average income earner are illusory. The figures clearly demonstrate the falsity of this claim. The total cost to the Exchequer of the income tax measures will be £109.7 million this year, and over £180 million in a full year. Proper analysis of the figures demonstrates that all taxpayers will benefit. Those on low incomes will particularly gain. The marginal tax rates faced by over 600,000 taxpayers will fall. The effect of these measures will be to increase the reward for initiative and hard work.
As Minister for Labour, my major responsibility is to ensure that the labour market can contribute to and respond efficiently and equitably to the country's employment needs.
In the years ahead the activities of FÁS and CERT will play an important role in ensuring a highly skilled workforce adapted to the most modern technology. This is crucial in helping us to meet the challenges and the new horizons of 1992. One of the first actions I took to facilitate this was the establishment of FÁS.
Early last year I gave the new board of FÁS very clearly defined priorities. I asked them to concentrate on early school leavers and the long-term unemployed. Both of these categories are in need of special assistance to enable them to benefit from the "rising tide". I also asked FÁS to develop a client-centred, locally responsive approach to their activities. I am pleased with the progress that FÁS have made with these goals.
In 1988, 34,000 completed FÁS training courses and a further 21,700 participated in employment schemes. Over 11,000 took part in the special Jobsearch courses. The greater efficiencies possible within the new body have already yielded cash benefits. Despite a reduction of just under £7 million in their allocation, I am confident that FÁS will do their best to maintain the same overall activity levels, while providing a better service and more targeted assistance. In particular, FÁS will emphasise assistance to those over 25 years of age. This reflects the greater percentage of long-term unemployment in this age group. It has been facilitated by funding changes, particularly in the European Social Fund. Greater targeting inevitably entails some losers. I have been concerned, however, to protect the more disadvantaged.
I will be increasing training allowances payable on FÁS programmes in line with the social welfare increases announced yesterday. I am also glad to be able to increase training allowances for those under 18 by 3 per cent. I have been especially concerned to secure an increase in the wage payable to participants on the social employment scheme. I am, therefore, very pleased that both the basic rate and the additional allowance of an adult dependant are being increased. The basic rate will go up by £5 to £65. Those with an adult dependant will receive a total of £92. This is a practical expression of our concern for the long-term unemployed. These measures will cost just over £1.805 million which is being met from savings within FÁS.
I asked FÁS as well to streamline their services to industry and to modernise and reduce the cost of the apprenticeship system. I am confident that the results will benefit industry and apprentices alike. These developments are also in line with the Government's policy to encourage employers to fulfil their primary responsibility for training.
I am also pleased with CERT's continuing contribution to the development of the tourism sector. The Government have targeted this sector for ambitious growth, in view of their real prospects for expansion and their proven history of employment creation. The value of CERT's services is clearly recognised by the industry, which employ virtually all those who complete their training programmes, and which now make a significant contribution to the cost of CERT's services. In this academic year they have been able to expand their intake of school leavers to 1,320 and unemployed persons to 820. I am confident CERT will maintain their level and standards of training and advisory service within this year's allocation.
Both FÁS and CERT have prepared a five year development plan for overseas marketing. FÁS have established a subsidiary company to handle their overseas activities. Both organisations are enjoying considerable success in generating overseas income. Indeed the FÁS subsidiary worked on 16 contracts in 1988 including some previously handled by AnCO, with a total value of over £4.5 million. Prospects for securing further contracts this year are very favourable for both bodies.
My primary concern was to improve the assistance available under Department of Labour training schemes to the long-term unemployed. While long-term unemployment appears to have stabilised, the numbers involved are still disturbingly high. A new programme, Youthreach, started this month. It will help early unqualified school leavers to get jobs and will reduce the high risk of their becoming long-term unemployed. I also set up last May an interdepartmental committee to examine the overall problem of long-term unemployment and to assess existing provisions. I expect to receive the committee's report in the near future and will give their recommendations priority. The report is particularly opportune in view of the strong emphasis placed in the regulations for the EC Structural Funds on the problem of long-term unemployment and on the development of cohesive plans to tackle the problem.
I would like to mention the contribution of Jobsearch to assisting the long-term unemployed. The programme, which is primarily the responsibility of the Minister for Social Welfare, has been in operation for almost two years. Over 51,000 long-term unemployed persons have benefited. FÁS have placed them either in jobs or on Manpower programmes, including the special short Jobsearch courses. Jobsearch will continue this year at the same level as 1988.
In concentrating on our responses to the challenge of unemployment, we must not overlook the need for protection for the majority in the labour market who have jobs. In particular we must ensure that a safe environment and reasonable working conditions are provided.
Hitherto, almost alone in the European Community, we have not had a comprehensive statutory system for occupational safety and health. Last month, to remedy this, I introduced the Safety Health and Welfare at Work Bill, 1988, to the Dail. This will extend legislative protection for the first time to all employers, employees and the self-employed. The Bill, and the National Authority for Occupational Safety and Health which I propose to set up, will facilitate a more active role for all concerned in preventing accidents and ill-health at work.
Apart from a safe working environment, workers are also entitled to adequate statutory protection regarding conditions of work. In this area I gave priority to reviewing the legislation on the payment of wages, employment equality and unfair dismissals. I am glad to say that work in each of these areas is well advanced and I expect to have the necessary Bills ready later this year.
The extent of statutory protection of part-time workers has recently been criticised. I am urgently reviewing their situation. However, part-time employment is a complex area where over-simplification must be avoided. I will be anxious to ensure that any proposals I develop strike the right balance between over-regulation and under-protection. I will be equally concerned to ensure this balance in my current review of the out-of-date employment laws dating from the thirties.
The present very favourable industrial relations climate has implications both for job creation and the working environment. As Minister for Labour, I have been particularly pleased to see that the Programme for National Recovery has made a very important contribution in this area — 1988 was the best year for industrial relations for 25 years. There were only 72 strikes, involving a total of 130,000 days lost. This compares with a yearly average since the beginning of the eighties of 127 strikes and 368,000 days lost. The average of 40 strikes on pay dropped to only six last year. The very favourable outturn is due in no small way to the pay agreements associated with the Programme for National Recovery which have reduced the potential for conflict over pay increases.
The pay situation is not, however, the only factor contributing to the decline in the number of industrial disputes. It is clear that a climate of realism now exists in the Irish workforce, as well as a growing realisation of the need for efficiency and flexibility. There has also been an improvement in communication between management and employees. I hope that with the goodwill of all sides we can look forward to a continuation of relative industrial peace for some considerable time to come. This will remedy our previously poor industrial relations image, particularly abroad, and increase Ireland's attractiveness for investment.
The Programme for National Recovery committed the social partners and myself to discussions about industrial relations reform with the intention of bringing about changes which would provide a better framework for collective bargaining and dispute resolution. Last year I had detailed negotiations with the FUE and ICTU on industrial relations reform. I have, as a result, prepared proposals representing a balanced package of desirable reforms and I hope to be able to introduce a Bill in the House shortly to give effect to them. I am confident that the proposed measures will make a significant improvement to the legal framework within which trade unions operate, will contribute to a better industrial relations climate, and will lead to better employment prospects as indicated by the finding of every report and survey carried out.
It has been one of the cliches of our time that there are far too many unions in this country — 74 with a total membership of 484,000. I therefore, welcome recent indications of a number of important amalgamations and, in particular, the projected amalgamation of the ITGWU and the FWUI with a combined membership in the Republic of 200,000 or 41 per cent of total union membership here. This is a development of great historical significance for the trade union movement. I know it will contribute in a major way to improved and more effective industrial relations and to the development of the economy. I have already taken practical steps to facilitate the process of this amalgamation in every way possible. The trade union movement has been criticised for having far too many unions for the number workers in the workforce but the House should note that as, a result of this amalgamation, which we all hope will be successful, over 40 per cent of the workforce in the country will be represented by one trade union and that this is in keeping with the position in other countries. At present another 15 amalgamations are at various stages of negotiation.
The nature of work itself is changing and becoming more highly skilled and more technologically advanced. The workforce is also becoming more sophisticated and better educated. The trade union movement must, perforce, change and there are ample signs that they are indeed changing in this country as elsewhere. The new approach is more co-operative and less confrontational. The interest of their members in the success of an enterprise is readily recognised. Their service to members is expanding and improving. The partnership between employer and worker in business, in which both jointly contribute to its success, is increasingly acknowledged. There is no doubt that the rationalisation of the trade union movement will greatly facilitate this process of change. I am glad to see that management are also adopting a similar more co-operative approach.
The calibre of our managers is a crucial factor in the performance of our economy and the creation of jobs. I set up an Advisory Committee on Management Training some 18 months ago to make recommendations to me on how management training can contribute more effectively to economic performance and last week I had the pleasure of publishing their report, entitled "Managers for Ireland — the Case for the Development of Irish Managers". In their report the committee state categorically their conviction that management is the single most important determinant of business success or failure; yet, the report shows that all too often the development of our managers' skills is left to chance. Clearly, if we are to be able to cope with keener competition, we must generate a considerably greater commitment to the training and development of our managers.
Unlike other similar reports, responsibility for action on many of the recommendations falls directly on employers in the public and private sectors. I am studying the report in detail and I shall be consulting my colleagues about its recommendations. However, I intend to impress on businesses, the public sector and organisations providing management training the need to create a more structured approach and a higher commitment to the overall development of our managers' skills and abilities.
Over the past year we have all become aware of the increasing impact which the development of the Single European Market is already having in Ireland. Its completion by 1992 will present us with both unprecedented opportunities and unprecedented challenges. The greater efficiency of the single market will in the long run encourage job creation. However, it is generally recognised that the less industrialised countries, particularly those on the periphery, will not be able to benefit fully without additional supporting measures. The reform of the Structural Funds takes account of this. The aim is to strengthen economic and social cohesion and to promote employment and economic growth.
As part of this strategy, the Social Fund, for which my Department have the primary national role, has recently been extensively reformed. The new fund will come into operation on 1 January next year. The higher level of assistance which it will provide will help our training agencies to meet the inevitable new skills needs without expanding their already substantial demands on the Exchequer. In the new Social Fund, special priority will be given to helping the long term unemployed and young first time job seekers. Increased assistance will also be available for social employment schemes and for helping people to set up their own businesses. Workers in threatened jobs can be assisted to retrain for new skills or new technologies. In the visit last week which several of my colleagues and I paid to the Commission, we were very satisfied with the commissioners' response to our preparatory work to date. I welcome the commissioners' support in this.
Apart from the economic aspects of the Single European Market, the wider "social dimension" of market integration will be of great significance for Ireland. The underlying essence of this aspect is the establishment and protection of minimum standards in relation to employment across the Community. This will prevent the development of unfair competition based on the exploitation of employees. Measures to improve the working environment and to protect the safety and health of workers have been given considerable prominence. My Department have been actively involved in these developments and are also participating in the preparation of measures in other areas of social policy.
As part of the new integrated market, we have to face the reality of greater labour mobility. Freedom of movement of people is one of the fundamental features of the Single European Act. Obviously our top priority is to bring about a situation where jobs will be available at home for our own people, but for those who choose to emigrate I have asked FÁS to improve and upgrade their pre-departure counselling and advisory services for intending emigrants. I hope this will succeed in dissuading people from emigrating without careful advance planning and preparation.
The plight of those who go abroad without such preparation has been well highlighted over the past year. I am particularly glad, therefore, that we have been able to double the allocation of DÍON, the Committee for Emigrant Welfare. This will enable DÍON to give enhanced assistance to voluntary organisations providing emergency services to emigrants in Britain. It will facilitate these organisations in providing more professional services and help to improve their responsiveness to the changing nature of emigrant welfare concerns. The Government's concern about emigrants in need is fully shown by the increases in the grant, despite the difficult Exchequer situation, from a level of £155,000 in 1986 to £250,000 in 1988 and a doubling to £500,000 for 1989.
When all is said and done, it is by its impact on employment, unemployment and emigration that success or failure of any economic or political programme, at this time, ought to and will be judged. What has been done by the Government on the budgetary and general economic front is a necessary preliminary to sound progress in the employment area. What we have done to date is what we knew was necessary and it accords with the thrust of advice we received from economists and businessmen alike. We now call on leading employers and businessmen — indeed on all employers and businessmen, actual and potential — to do their utmost to deliver on new jobs, to think first of expanding or setting up here at home and certainly not to fall out of the habit of doing so.
In passing, let me say that I do not agree with those armchair pundits who say that, having turned the economy around and created a culture of enterprise and a climate favourable to business, the Government must now create all the jobs as well. If there is anything calculated to lead this country back to where it was a few years ago it is that type of thinking. Private enterprises have been given the opportunities, the climate and the circumstances to generate jobs, factors which they have sought for years, and surely they have an obligation now to deliver on those opportunities.
Of course the Government will encourage and assist the creation of new employment in every way they can, as they have been doing, through the use of the enhanced Structural Funds. Their priority will be to assist the creation of employment in a way which will not increase taxation or borrowing so that private enterprises can flourish and create jobs themselves. That is the challenge facing the Government and this budget and the two previous budgets will be judged on that. As I have said several times, 1989 will show whether we are achieving this. We had minimal successes in 1988 and I hope the target figures for increased employment in 1989 which were set out yesterday by the Minister for Finance, Deputy Albert Reynolds, will be exceeded. The onus is on private enterprise to deliver on those targets and I hope that is what will happen.
The budget before us did afford some relief, small but indeed welcome, to certain sectors and individuals, but the critical issues of unemployment — the major cause of poverty in this country — and emigration got scant attention. Perhaps the most shocking figures to come to light yesterday were in relation to the arrivals and departures from this country during 1988. Seventy three thousand more people left this country last year than arrived back on our shores; there were 73,000 more departures than arrivals. We cannot be given the definitive figure for emigration in 1988, I think it is judged from April to April, if I recall correctly the answer which was given. According to official statistics 30,000 people emigrated in 1987. When one compares the numbers who left our shores in 1987 with those who arrived back the figures are frighteningly similar. In 1987 32,000 people departed from this country over and above those who arrived back. On that basis it is totally unjustified for the Government to perpetuate the myth that only 40,000 people emigrated last year. Tragically it would appear that the emigration figure for 1988, drawing the parallel from the arrival and departure figures, will be in the region of 70,000: 70,000 people left and did not come back. During the last general election Fianna Fail had a ditty "Arise and follow Charlie" but I think it is time to rewrite the second line of that ditty so that it reads something like this "Arise and follow Charlie to the train, boat and plane". That is the reality of what they were talking about.
This has been a budget of lost opportunity, a creative opportunity missed with the consensus available in this House. There is no evidence at all of integrated or forward planning towards harmonisation of indirect taxes or other structures that now act as technical trade barriers between ourselves and our partners in the Community. There has been no start at all in relation to the reforming of the basic structures of social welfare and our taxation systems which have been added to bit by bit, budget by budget, over the years. Confusion still abounds about our strategy for increasing the draw-down from the doubling of the Structural Funds to allow us to compete on equal terms for free market access from 1 January 1993. We need a coherent approach, an approach that is programme-based rather than project-based. We need investment that can be translated into jobs, and, as one economic commentator put it recently, investment that will light economic fires.
Our entry to the EC was sold to us on the basis of the benefits to our farmers and the economic benefits which would accrue from direct access to a market of 320 million consumers. There was also a commitment to removing the economic and social disparities, particularly in the more peripheral regions. Today the relative disparity in economic and social standards between this country and mainland Europe is as great as it was in 1973. Farmers' expectations were shattered after the initial honeymoon period of a few years, particularly when we joined the EMS and the Green Pound failed to be sufficiently price responsive and compensatory. The advent of the single market in 1993 will be our last chance to get it right and the Delors package of the doubling of the Structural Fund aid, the Social Fund, the Regional Fund and FEOGA guidance, or the farm development fund, for the most backward regions will be a once-off offer. It will only be judged a success if after four years we in Ireland no longer qualify to be classed as an Objective 1 region, that is, among the most peripheral and disadvantaged of EC states. As a legislator standing in this House today it is a sobering thought that our partners in Europe consider us, as a nation, as backward. Fine Gael are committed to removing from Ireland the tag of a backward nation. I do not like that tag.
It has often been said to me since I became agricultural spokesperson, and again in recent days with the dose of post-budget analysis which we are all either indulging in or are subject to, that farmers are always complaining, that nothing is ever right. If the weather is dry they want rain, when it is raining they need the sun and, dare I say, given the land tax they want tax on accounts and when they have tax on accounts they want land tax. Let us analyse the situation. Could it be because farmers have seen their sons and daughters leave the land in droves during the past decade: 25,000 of them have gone during the past four years? Could it be because, as the analyists predict, 60,000 farms will disappear in the next decade, before the turn of the century, and that even Brussels is concerned about the desertion in remote rural areas of this country? Could it be because the deprivation and poverty of large sections of our rural population is really critical? Combating poverty is a rural as well as an urban issue and must be clearly recognised as such. Could it be because of the ever-widening disparity in incomes between the dairy farmer with a viable quota and all other farm enterprises? Could it be because of the declining margins in beef and pig production or the bleak future for our cereal and tillage farmers? Could it be perhaps because 66 per cent of our farmers have an income of below £5,000 or that 15,500 of our farmers qualify for farmers' dole?