Dáil Éireann díospóireacht -
Wednesday, 1 Feb 1989

Vol. 386 No. 4

Financial Resolutions, 1989. - Financial Resolution No. 8: General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance.)

Mr. Durkan

Having listened to the various speakers over the past few weeks, and particularly over the last couple of days, one could be pardoned for coming to the conclusion that we were living in a country that had taken on a new lease of life, in the past two years, but particularly in the past few months. The impression has been created, for reasons best known to all concerned, that we have embarked upon a new era, that everything is running as was intended, that everything in the garden is rosy, also that the country is on the right course, that the people are happy, that there is sufficient to meet the needs of everybody and that there is nothing to worry about. When one looks at the various commentaries particularly in the business world, we see commentators coming forward — some the heads of State or semi-State agencies — and exclaiming in unison that the country is now on the right course, that good Government is in control, that stability has been achieved for the first time in many years, that great expectations are the order of the day and that great achievements are already well in hand. I am afraid reality is far from that very rosily painted picture.

I have found, as I am sure every Member of the House has found, that one issue that has received a great deal of public attention in recent times is poverty. As a public representative I would have to state that the true picture is far from the one we have seen painted from the benches of the Government over the last few days. Never, as a public representative over the past ten or 12 years, have I had evidence of hardship such as I am now having with individual constituents, in the past six months in particular. I am not talking about hardship within a particular income sector but about hardship right across the board. I am talking about people in middle income groups who have high mortgages and may be unfortunate enough to fall ill, or require medication, perhaps on a continual basis, and who await a refund of medical expenses under the refund of drugs scheme. Eventually they find that they are owed a considerable amount of money by the health boards who do not appear to have the money to pay out. The situation drags on, with ever-increasing hardship on them.

Great acclaim has been given to an alleged achievement but the national debt, on which so much attention has been focused, has not gone away. From being the responsibility of the nation, it has merely shifted onto the backs of the people. There are more people owing more money per head than at any time in my experience, certainly as a public representative. That is borne out by the number of individual cases each Member of the House must face up to in his or her daily life meeting constituents and dealing with their problems.

I have often heard it said that what this country needs is tough, stringent action to bring the economy around and that is quite true. However, in doing so great care should be taken to ensure that the country does not have its back broken in the process, like the old story of the ship trundling along and sudden action being taken which puts serious pressure on the superstructure. I am concerned and disappointed at the evidence that I see among the community. On the one hand we have the continuous barrage of publicity and public relations stating that everything is going well, but the reality we all know. I do not want to be too political but this House is a political arena.

Minister of State at the Department of Industry and Commerce (Dr. McCarthy)

The Deputy is not doing too badly so far.

Mr. Durkan

I would like to remind the Minister of State sitting opposite of the posters we all saw a couple of years ago. One of these depicted long dole queues. The implication there — although nothing was said, mind you — was that theses dole queues would be shortened. There is no question about it, the dole queues would be shortened in a particular fashion. The people who were in those queues, albeit not in the best circumstances. are now far away from these shores. They have long since emigrated to the United States, Australia, the United Kingdon and elsewhere, The 70,000 people who left this country last year are no longer part of those dole queues. The 70,000 people who will leave this year will not be in those dole queues, either.

Dr. McCarthy

The numbers queueing outside the Passport Office are less.

Mr. Durkan

The Government have achieved part of their strategy in a peculiar and perverse fashion. They have reduced their responsibility in that area by exporting our greatest asset, our young people. They now do not have to worry about them.

The Government are attempting to enhance the tourist industry by the same stroke. When these emigrants return at Christmas and during the summer season they are then called tourists and counted as such. They are welcomed at our ports and airports and are encouraged to spend their money here. This is a new kind of economics. I am truly amazed that anybody, any Government or party, could have thought up that strategy. It is unique and very neat and people do not seem to have copped on to it just yet. People have simply been transferred out of this island and are now counted among our visitors. This is a rather peculiar way in which to improve the tourist industry's achievements and, at the same time, reduce the unemployment figures. Of course, the actual figures have not been reduced at all. We have off-loaded a number of people but the figures are still high and are growing.

There is a peculiar problem about determining the actual number of jobs created over the past 12 months. Ministers have refused to answer this question about the net number of jobs created until it was dragged out of them in recent times. We now know there was a net loss, that there are less jobs in the country than there were last year. If that process continues we can only assume that there will be a repetition last year and, if the Government stay in office — hopefully they will not — the year after. This House of Parliament is being brought into a certain amount of contempt because we, as Members of the House, find it so difficult to get this information. It is the old three card trick job — now you see it, now you do not. We ask questions, for instance, about what particular Ministers intend to do in relation to job creation and to the development of industrial sites and so on. It is said that the Minister is not responsible to the House but, oddly enough, when the Minister wants to make an announcement about the creation of jobs he appears to have a particular responsibility then.

If this House is to be in any way relevant we should come quickly to the realisation that if Ministers continuously reserve their responsibility to the giving of good news then the people will not only have contempt for the institutions of the State and the people in them but contempt for everything for which we stand in this House. That is a serious development. I have repeatedly seen parliamentary questions being deliberately parried. When asking specific questions which this House has a right to have answered, the elected representatives do not get the answers to which they are entitled. The cloak and dagger and hidden stuff simply is not on. It is quite all right for other arenas but not for this House.

I refer now to specific areas where the budget has missed a great many opportunities. Let us take agriculture. I appreciate the improvement in relation to refund of VAT which is helpful to agriculture, but over the whole agri-business, agriculture and food, despite the great hoo-ha in the past year or so about the creation of extra jobs, the result has been sorely disappointing. With all the talk about the creation of jobs in the food idustry, particulary the meat industry, we find it ironic that probably half of the meat processing plants are closed at any given time. They are on a three day week, on short time, or shut down altogether awaiting supplies.

The Minister said not long ago that he could not create four-year-old bullocks in 18 months. It does not take four years to create beef. The Minister has been in Government for two years and it is time he had a look at those animals to see if they will soon be ready for slaughter. If not, we will have to shed slaughtering capacity, which is already grossly under-utilised. At the same time there are on-going indications of further expansion of slaughtering capacity. It is very fine to say we need slaughtering capacity but it is equally important to recognise the futility of wasting time, money and effort in creating extra capacity which will not be utilised. The underlying motives must be called into question.

The manner in which Teagasc have operated during the past 12 months is highly questionable because obviously they have not had the required resources. The decision was taken to axe a number of research stations to enable Teagasc to operate within certain financial limits. There were no questions about the degree of service the board would give, their responsibility to the community and the reliance of the farming community on Teagasc. The decision was simply based on lack of finance. I hope the chairman pointed out to the Minister well in advance the consequences of such a short-sighted policy and knocked often at the Minister's door, as he was wont to do in the past, to explain the likelihood of the complete disintegration of the research, education and advisory services if this process is allowed to continue. I hope the chairman trenchantly informed the Minister that the policies now in force will result in serious problems within a couple of years, having regard to the pivotal role of Teagasc in agri-industry. I hope the Minister in turn explained how he expects the chairman to run Teagasc in the future, given the financial limitations laid down.

When we are drawing up our budgets at health board meetings we must be aware of the various interdependencies and the danger of the domino effect if one thing goes wrong. The same applies in regard to the budget. If money does not come from Europe we will have a serious problem. The allocation for the running of the local authorities, for instance, is far short of what is required. Unless manna appears in the form of European money a far more serious problem will develop. The Minister for the Environment claims he has increased the money available to local authorities but it does not even skim the top of the problem. Each year the increasing needs of local authorities far outstrip the increased allocations, as the Minister knows. Every local authority has made a pre-budget submission to the Minister on which he should have acted. Given that he has increased the allocation last year, there is still no way it will meet requirements in 1989. Consideration has been given in some counties, including Kildare, to closing roads because they have become impassible. Kildare has one of the heaviest traffic volumes. County engineers are writing to public representatives telling them that lack of funds make it impossible to make any improvements in the road structure in the next 12 months. Everybody recognises that towards the end of the year the coffers are becoming bare, but that is an awful admission at the beginning of the year.

Regarding the allocation of funds to a local authority, the main criterion should not be road mileage but the volume of traffic and the number of persons using those roads. The two are separate but interrelated. The concentration of population in an area will naturally contribute to an increased volume of traffic but there is also the problem of heavy vehicle traffic. The fact that County Kildare is next to the capital city has a huge impact on the road network which is not experienced in other counties. There are main and county roads in Kildare which are in a dreadful condition and have a traffic problem equal to that of national primary routes in counties like Donegal, Sligo, Leitrim, Roscommon etc. I mean no disrespect to those counties. Nobody in a Government Department seems to have come to grips with the reality of the problem that those traffic volumes have a serious impact on the condition of those roads, which were never built to handle such volumes. As a result of short-term action in hard topping the roads some years ago to bring quick relief, those roads are breaking up. There has been little or no response from successive Ministers to our repeated requests to have something done about it. I listened with interest to the speech by the Minister for the Environment and I am very disappointed that we are still crying in the wilderness. The Minister must contact the managers in the local authorities who are worst hit, namely those adjacent to the main centres of population. Commuter traffic generated by that population is the cause of our problem. The biggest single issue anywhere in the rural areas of County Kildare is the condition of our roads and it is unacceptable to say that the local authority have been given more money than last year.

There is a great need to provide education for our young people to equip them with proper life skills so that they will be able to seek elsewhere jobs which obviously are not at home. Let us look a the educational system which is in place for them, for instance, the VEC system as it applies to most counties. I know how it applies in most counties. I know how it applies in County Kildare and over the past 12 months classes have been disrupted, cut out altogether and school hours curtailed. It is not possible to employ caretakers or maintenance people and to provide materials for the carrying on of particular classes in practical subjects in various schools. They are not isolated incidents; they affect every single VEC school in County Kildare. Parents and teachers have repeatedly made representations to us as public representatives about the matter. In order to maintain subjects in certain schools, teachers have to travel to four schools per day to take classes, as otherwise the class is disbanded, the subject is not taught and somebody loses out. The only way that things are kept going at present is that parents contribute and it has become increasingly evident that, in order to provide a reasonable standard of education in the VEC system, parents are expected to support the system financially.

For a long number of years we prided ourselves on the fact that we had a free education system. A few years ago there were very loud, strong and repeated complaints from the then Opposition — who are now in Government — about the alleged attempts to disrupt the educational system. It was said we were trying to downgrade or even strangle it and that was in response to a small move in relation to school transport which would have saved about £3 million. An awful lot of things have happened since then which are seriously detrimental to the system and there is now a growing trend of opinion that there is an attempt by stealth to downgrade or impoverish the VEC school system which as been the open avenue to education for everyone. It was a well known and recognised system whereby all children could aspire to getting a good standard of education, simply because the system was well financed and looked after for many years. That is no longer the case and there appears to be an attempt to downgrade it and to financially strangle it over a period of time so that people will no longer send their children to those schools. I ask the Taoiseach and the Ministers opposite to take note of that trend before it is too late. Practical skills are necessary if our students are to obtain employment at home and abroad. Greater emphasis should be placed on the VEC system so that there is some semblance of an attempt to give them the education they require.

Last night Deputy Carey said that inflation would increase over the next 12 months or so. It will increase much more quickly as house property seems to have taken off. That may be seen as a positive sign by the Government that the country is back on is feet. I do not accept that; the property market has stabilised simply because it is based on money coming in from the UK, America, Australia and elsewhere. Countless people living and working in London and elsewhere are buying house property here. Of course that is good but one should remember the kind of inflation that has assailed the property market in those countries and we may well import that inflation. If stability is to be based on imported inflation it is of little benefit to the economy and we will pay a very high price for it in the not too distant future.

Yesterday, the Minister for Finance was asked about harmonisation of taxes and excise duties in 1992. He said that if anybody could tell him how to get £40 million or £50 million he would be delighted to hear it. With that attitude prevailing, I do not know how we will survive in 1992 because nobody will do our work for us. It would be good policy to start putting something in train now and to gently slope towards the area it is intended to go. It would also be good policy for the Government to give some indication of what they intended to do to bring our VAT and other tax levels into line with those of our competitors because in 1992 we will either have achieved harmonisation or face the competition of those within the Community who will have brought their various systems into line. I strongly urge the Minister to think carefully about this matter, and there is no use in asking us to provide £40 million. He is the Minister and is in a position to do that. The Government have been in office for two years and it is long past the time when he should be blaming a previous administration.

Coming from the County Kildare constituency I could not let this opportunity pass without referring to the continued discontent within the armed forces. I do not know whether anybody on the Government side recognises the discontent. The recent announcement on pay increases has been greeted half-heartedly because it is regarded as a half-hearted attempt to resolve the problem.

An Ceann Comhairle

The Deputy will now bring his remarks to a close.

Mr. Durkan

I implore the Government, in the interests of security and the continued loyalty of the Army, which has never been called into question, to look very carefully at what is going on. There is demoralisation in the ranks and, for God's sake, do something about it.

The Taoiseach

The 1989 Budget has been formulated against a background of substantial economic progress over the last 12 months, and it is designed to maintain and improve that rate of progress. There is still a long way to go and we remain vulnerable to developments, financial and economic, outside our economy and beyond our control. Our overall priority must be to secure a steadily expanding economy, inherently sound and capable of absorbing adverse international developments.

The economic progress achieved in 1988 has nevertheless created a limited margin for manoeuvre in 1989, enabling us to take further steps towards achieving the objectives of the Programme for National Recovery. The core economic aim of Government policy is to bring about, and secure, the kind of economic growth which can be maintained over time. We can step up the rate of job-creation, our priority goal, only through accelerating the pace of economic growth on a sustainable basis. Accordingly, the Government policy objectives underlying this budget are, firstly, to continue the strict control of Government spending and borrowing, secondly, to improve the position of the deprived in our society and those on low incomes, thirdly, to lighten the burden of personal taxation; and fourthly, to promote increased employment to the greatest possible extent.

Even though the state of the public finances has been greatly improved, the Government had to approach this budget with great care. It is not unlike a situation where a forest fire has been brought under control but is far from being totally extinguished. Were we to become careless or give way to pressure, it could quickly flare up again and wipe out all that has been gained.

Government borrowing by the end of 1988, even discounting the effects of the tax amnesty, was halved vis-á-vis two years before, down from 13 per cent of GNP in 1986 to an underlying 6 per cent in 1988. In actual terms the borrowing level at 3.3 per cent of GNP was the lowest for 30 years. The dramatic reduction in borrowing has been achieved only because this Government imposed and followed through with substantial reductions in Government expenditure, which amounted to close on 5 per cent of GNP over three years. Those reductions have been absorbed without any major loss of effectiveness in essential public services and with special regard to the protection of the least well off.

Public expenditure here has now been brought broadly into line with the OECD average. The impact of these spending cuts has been partly offset by falls in interest rates and greater confidence. It has not prevented a significant recovery in economic growth. GNP grew at an average rate of 3 per cent over 1987 and 1988, after many years in which there was no growth at all.

The extra revenues enabled us to repay £443 million of the foreign debt last year so that it fell by 3 per cent to 51 per cent of GNP. Those who press claims for additional expenditures should keep in mind the fact that even in the exceptionally good circumstances of 1988 the national debt still rose by almost £1 billion. The debt ratio remained stable last year at 132.9 per cent of GNP. However, at £24.5 billion it is still relatively far above that obtaining in any other European country, and must be reduced to a lower and safer level.

Quite apart from the effects of maintaining confidence any reduction in the cost of servicing the national debt releases a greater share of revenue resources for other purposes, such as the improvement of social services, tax relief or capital investment. The fact is that debt service at well over £2 billion pounds a year constitutes almost a third of total tax revenues, a proportion which has not yet begun to decline.

The budget continues the process of reducing Government borrowing. The target of 5.3 per cent of GNP is only very slightly above the lower end of the 5 per cent-7 per cent target range that we previously identified as necessary to stabilise the debt/GNP ratio. It is 3 per cent below last year's Budget target of 8.2 per cent. We are in fact a year ahead of schedule. Even the most stringent commentator this time last year would have regarded a target of 5.3 per cent in 1989 as outstanding progress in so short a time. These figures show that progress is being fully maintained, and that the success of the tax amnesty in achieving an earlier stabilisation of the debt/GNP ratio has not deflected the Government from keeping up the momentum in reducing our indebtedness.

The current budget deficit at 4.1 per cent is also over 2 per cent below last year's budget target, and is well below the level of any time during the last ten years. The current deficit is now less than half the peak level of 8.5 per cent in 1986.

The suggestion that it will be a "miracle" if the Government achieve their financial targets is absurd. The record shows that the 1987 and the 1988 budgets both ended comfortably within target. This Government have clearly shown their determination not to tolerate a slippage in our targets, for whatever reason, but to adhere firmly to the limits of expenditure set out in the Book of Estimates. The unanimous view of expert financial and economic commentators is that the targets set out by the Minister for 1989 for the public finances can and will be met.

The reception from the markets for the budget was very positive. NCB for example commented:

Today's Budget has confirmed the stance of fiscal policy and will help to underpin the re-rating of Irish markets that has occurred over the past two years.

Some commentators such as DKM go so far as to suggest that the Government are on course for a budget surplus in three or four years' time. Davy, contrary to sceptics in the House, say that

Our analysis of the budgetary arithmetic suggests that not alone can the targets be reached but that the EBR will finish the year below target.

Coopers and Lybrand state:

The present Budget...is likely to be positive in terms of its effect on confidence, in that it continues the process of fiscal correction while simultaneously reducing personal taxes.

The beneficial fall in interest rates by 6 per cent since March 1987, and their stability over many months, despite a sharp rise in UK rates during the autumn, was a direct result of the improvement in the public finances and the stability of our currency in the EMS. With our low rate of inflation it has relieved pressure on family incomes and made investment plans much more attractive in all sectors of productive economic activity.

These developments enabled us to relax exchange controls ahead of schedule. The point has been made that our interest rates have essentially been realigned towards those of other EMS countries. We cannot, of course, make ourselves immune to interest rate trends world wide, but German interest rates are likely under foreseeable conditions to remain lower than dollar or sterling interest rates.

Our rate of inflation last year at 2 per cent was below the EC and OECD average, and about one third of the current level in the UK. The cycle of annual price increases, both by public utilities and in the private sector, has been broken. In fact there are notable examples of price reductions in electricity and telecommunications, for example. The moderate wage increases in the Programme for National Recovery over a three year period have been a crucial factor in bringing the rate of inflation down so dramatically and have created a climate of industrial peace. On both counts we have turned in the best performance since the early sixties. It is impossible to over-emphasise the beneficial effects of this situation and the importance of maintaining it.

All these developments have allowed us to improve our competitiveness. For the second year running the value of Irish exports has increased by 14 per cent to 15 per cent. This is a very high rate of export growth, and for the first time exports have exceeded £12 billion giving a trade surplus of £2.1 billion. The December monthly trade figures were particularly encouraging, as they showed an increased trade surplus compared with the previous year. The industrial production figures that appeared last Thursday were also extremely encouraging. Export growth is not confined to the multinational sector, but is also being experienced in domestic industry. For the second year running also we had a significant balance of payments surplus in 1988.

But the most important development of all is the recovery in employment which began in the year to April 1988, when the number in employment increased by 6,000 after a fall of 66,000 in the previous five years. With regard to any doubts about the standing of the particular figures, I simply wish to point out that the previous Government in their plan Building on Reality based their targets on the annual Labour Force Survey as the most accurate indicator of employment numbers.

Misleading attempts are made to compare the figures for job creation in manufacturing and related services, which were on target at 20,000 last year, with notified redundancy figures of about 23,000. This figure relates to all sectors of the economy — less than half even in manufacturing — and I understand that actual redundancies are lower than notified redundancies by about 7 per cent. The 20,000 figure of course does not include job creation in tourism, construction, horticulture, forestry and marine and the State agencies, and even these are by no means an exhaustive list of the other employment sectors. The progress report on job creation published in December by the Central Review Committee of the Programme for National Recovery gave an estimate for 1988 confined to the above-named categories that added up to 29,000. This would strongly suggest that the rise in employment continued through the year, and the Government are confident that this will be reflected in the 1989 Labour Force Survey.

The unemployment figures have also shown some limited improvement in 1988. In December, for instance, unemployment was 7,000 below the previous December. There has also been a continuous seasonally adjusted decline in unemployment since last August. We must accept, however, that unemployment and emigration are still far too high and that an enormous effort to reduce both these evils is needed. Significant improvements are possible if determined action is initiated in those sectors of the economy which have growth potential. This is the approach we are adopting in the national development plan to be submitted to the EC Commission and in the supplementary capital budget included in the budget.

A strong growth in investment of about 7 per cent is now predicted for 1989. It is estimated that the specific measures in the budget will result in the creation of several thousand new jobs. No budget for a long number of years has been more employment and development oriented than this one. Overall we expect employment to increase by some 13,000 in 1989. Ninteen eighty-nine should see a third successive year of positive growth. The 3 per cent forecast in the Economic Background to the Budget is the highest official forecast at budget time for many years. Taking the three years 1987 to 1989 together, it shows that we have succeeded in returning to a situation of economic growth after a long period of decline, notwithstanding the immediate necessity that we faced of making substantial reductions in Government expenditure. At the time of the last election, I proposed a target of 2.5 per cent annual growth. We now seem set to achieve an average growth rate for the three years 1987, 1988 and 1989 of at least 3 per cent which represents a major improvement over previous years.

It is difficult to make any sense of the criticism that the budget does not contain any proposals for tax reform. Those who make these sort of vague generalisations should understand that the principal tax reform that the ordinary hard pressed taxpayer earnestly wishes to see is a reduction in the excessive amount of personal taxation that he or she pays.

In recent years the burden of personal taxation in this country reached intolerable levels. It was inhibiting economic growth and employment and very definitely resulted in the emigration of large numbers of our talented, highly-trained young people. The 25 per cent reduced rate was abolished, levies were added to the standard rate, the 45 per cent rate was increased to 48 per cent, and for a period the top rate of tax went to 65 per cent and then to 58 per cent. As a result of inadequate indexation well over 40 per cent of taxpayers found themselves in the higher bands, and at one stage single people were paying at the top rate on incomes of under £10,000 a year. A significant poverty trap was created, that reduced the incentive to work, and at all levels of income people were discouraged from putting in any extra effort or undertaking new activities because of the high level of personal taxation.

Income tax rates in both the UK and the US were very low by comparison with ours and this exercised a very considerable attraction for many individuals here and it also affected our capacity to attract certain types of industry and services to Ireland. Of course we cannot, and should not, attempt major reductions immediately which could not be sustained by the state of the public finances. We have had enough of high budget deficits, high rates of inflation and balance of payments difficulties. We are not going to slip down that slope again. Tax reductions are needed, but both for economic and financial reasons they have to be moderate. Private consumer demand is growing satisfactorily with a 3 per cent volume increase forecast this year. The standard rate of tax has been reduced from 35 per cent to 32 per cent for the first time in over 20 years. It is a move of major significance — a milestone. This is the feature that has already attracted most attention abroad. The reduction will benefit all taxpayers.

This move clearly indicates the direction in which we intend to go, as circumstances permit, but it would be unrealistic and imprudent to try to pre-empt future budgets which must be framed in the context of prevailing national and international circumstances. Nothing demonstrates more clearly the emptiness of the criticism levelled against this budget than the fact that Opposition speakers have had to resort to attacking the Minister for not saying what will be in next year's budget. Radical tax reform has become a catchword for parties at a safe distance from the realities of Government. It completely ignores the very considerable amount of reform undertaken in this and last year's budgets.

In fact, over the past two years we have done much to improve the equity of the tax system. In our first budget we introduced the withholding tax. Last year the tax amnesty brought in large amounts owed by the self-employed. The system of self-assessment has also successfully been introduced. PRSI was extended to farmers and the self-employed, and the social insurance cover of public servants and public sector workers currently on the modified rate of PRSI will be extended, in accordance with the quite clear recommendation of the Commission on Social Welfare.

There has been some criticism that the corporate sector and property have not been asked to bear any additional burden. I would remind these critics that major changes in corporation tax were made in the 1988 budget, coming into effect this year. The yield from corporation tax will have increased by roughly 25 per cent over two years, and there will be a further increase in this yield when export sales relief comes to an end from April of next year. Thanks in large part to the tax amnesty the yield from capital taxes last year was up by over 50 per cent, and even this year's estimate is 12.5 per cent above the figure for two years ago.

Taking this year's tax concessions together with last year's we have fulfilled several times over the main pledges made in the Programme for National Recovery on taxation. The proportion of taxpayers on the standard rate was brought close to two-thirds last year, and remains at 63 per cent under this budget. It would not have been desirable to let the proportion on the standard rate slip back from the close to two-thirds level we have achieved.

The spread of the concessions is broadly equitable. They have been concentrated on the main body of taxpayers, though we have also been able to reduce the top rate by 2 percentage points. The modest curtailment of mortgage relief to help pay for some of the income tax reliefs has to be seen against the background of the dramatic lowering of interest rates since March 1987.

The new tax exemption ceiling and the exemption for children will be of help to farmers on low incomes, and I acknowledge that there are many in that situation. At the same time it is right that farmers who have reasonable incomes should pay the amount of income tax appropriate to those incomes just as other sections of the community do. The tax yield from farmers, contrary to what is generally asserted, has increased significantly in line with their incomes. The yield of £34.5 million in 1987 went up to £80 million in 1988 inclusive of the amnesty. This year it is expected to be very substantially up on the figure of two years ago, broadly reflecting the recovery in farm incomes. As the Minister for Finance indicated, the equitable system of farmers paying on the same basis as other sections is right and proper and should not and will not be changed.

I wish to direct particular attention to the new exemption limits provided in the budget, because I believe the importance of this particular reform for the lower paid has not been fully appreciated. The facts are that at present a married man on PAYE with two children and an income of £6,400 pays £425 in income tax. Under the change made by this budget his tax will be reduced to nil. When the improvement in the family income supplement scheme is added to this tax change, the position of lower income families will be considerably improved.

There has been much discussion about the Minister's proposal in regard to child benefit. The background to this proposal is as follows. This Government, like their predecessors, have received many representations about the wasteful element and indeed inequity involved in paying child benefit to very high income families. An examination of the records of this House will show that concern about this situation has been expressed at different times on all sides of the House. My pre-decessor, Deputy Garret FitzGerald, spoke about it on a number of occasions. The Deputy Leader of the Labour Party, Deputy Barry Desmond, when he was Minister for Social Welfare, was even more forthright. On 28 March 1984 he stated that he did not see any justification in very wealthy people across the board, without any reference to their income, receiving children's allowances. But he added:

However, it is almost impossible to talk politically about a rational, social policy on this issue. Automatically, every politician outside of those who wish to talk rationally takes immediate advantage and accuses one of being anti-mothers, anti-children, anti-family and anti-children's allowances.

Mr. Dukes

There are quite a few of them sitting behind the Taoiseach.

The Taoiseach

The reference in the Official Report, volume 349, columns 571-2. The Coalition's Building on Reality stated that `children's allowances are not well directed payments' and proposed that they should be taxed. There was, therefore, a measure of agreement that there was an anomaly in this situation that should be addressed.

One of the drawbacks at present is that because of the complete lack of selectivity Governments are inclined to give increases to better targeted schemes and give those schemes priority over child benefit. If the child benefit scheme is to be improved on a regular basis for those who really need it, there should be some element of selectivity. One way would be to give any new increases up to a certain level of incomes only.

The Minister for Finance has put forward a proposal for examination and discussion, the Government having decided in principle that all aspects of the suggestion should be examined, and in particular what administrative costs and difficulties would be involved. The income limits contemplated were never intended to affect low or middle income families, and the Government were thinking in terms of not less than £30,000 per annum. It was also the intention that any savings at the upper levels would be used to improve the benefit for those on lower incomes. I wish to state categorically that there was no specific decision taken to include this change in the next budget. This could only be done after all aspects had been fully examined and in particular the administrative difficulties and costs carefully assessed.

The Government are very conscious of the difficulties encountered daily by those who have to survive on low incomes. At the same time the cost of social welfare payments is one of the problems we have to confront in managing the public finances. The really acute social problems of 20 or 30 years ago, such as widespread housing problems and seriously over-crowded living conditions, have been largely eliminated. Much has been done to improve the situation of the elderly. The problems of today must therefore, be correctly identified and addressed on an up to date basis.

This Government have consistently, even at a time of severe expenditure reductions, taken action to protect the less well-off and those on social welfare. That cannot be honestly denied. There have been no significant reductions in any major schemes. From the beginning we ensured that social welfare increases were paid from the normal date, and fully covered the rate of inflation. We rejected the advice of some economists and international agencies to cut social transfer payments. Anything of that kind would be completely alien to our political philosophy.

But we have gone considerably further than just maintaining welfare payments at the same level. In both this year's and last year's budgets we have consciously targeted additional assistance to those most in need. We have in large measure followed the strategy and the priorities set out in the Commission for Social Welfare report, by improving the basic payments for the long-term unemployed, improving child income support and extending the free fuel scheme. For instance, from these last two budgets, a single person on unemployment assistance will have received an increase of 25 per cent or almost £10 a week.

We have also particularly concentrated this year on the problems facing low income families, whether any family member is at work or not. There are a number of measures designed to help with bringing up children. Low income families with significant numbers of children are being exempted from tax altogether, as a means of obviating the poverty trap. We have also given more money for the homeless, and for the direct relief of poverty by experienced organisations.

In general, there has been a good reception for these measures from most of those concerned and the agencies involved with their welfare. We accept that more still needs to be done. I want to give an assurance, in line with my political philosophy, that a fair share of any increase in national income will be directed by this Government to the least well off and particularly to those whose problems are most acute. We will make further improvements in the system as resources become available. It is only by increasing national output that we can safely and securely improve the situation of the least well-off in our community. To seek some other remedy will only bring worse deprivation on a wider scale ultimately.

The Programme for National Recovery ensures that social equity is a specific national objective. This budget advances this objective by direct action in the areas of social welfare and taxation and by initiating a major programme of investment and job creation. The most effective way of eliminating poverty is to steadily increase the number of persons in well-paid employment. It is also the way to bring emigration to an end.

The major external influence on the Irish economy in the years immediately ahead will be the completion of the Single Market in the European Community. Our economic performance as a nation will be deeply influenced by the extent to which we can successfully adapt to this new environment and exploit all the opportunities it offers. The Government are fully conscious of this reality and are actively and comprehensively engaged in planning for this new situation. No member state has done more, has made better arrangements or is more advanced in their preparations than we are.

Three weeks before we came into office, the Delors Plan outlining a Community programme to make a success of the Single European Act and establish the Single Market by 1992 was published. The far-reaching significance of that plan and the historic opportunity it presented for us to accelerate our economic and social development was immediately obvious. It matched our commitment to national recovery based on economic development and growth. The proposed increase in, and our access to the Structural Funds to improve our competitiveness and efficiency fitted exactly into our own plans for these objectives, as outlined in the Programme for National Recovery. Accordingly, we had no hesitation in quickly and enthusiastically endorsing and supporting the Delors Plan.

Following up that endorsement, we put in place as expeditiously as possible new arrangements to handle the detailed negotiations and follow-up action required to implement the Delors proposals in so far as they affected this country. To give these matters the highest priority at national level and to ensure the greatest possible degree of co-ordination of effort we established a committee of ministers and secretaries, under my chairmanship, to take control and direct our preparations for the Single Market and the Continuing negotiations involved at Community level. This committee is a new departure in Irish governmental organisation and is designed to ensure that our progress towards the Single Market in 1992 will be steadily, skilfully and smoothly achieved.

The next step was to secure the agreement of President Delors and the Commission to establish within the Commission a task force composed of Commissioners and Directors-General presided over by the President to match and relate to our Committee of Ministers and Secretaries. This working arrangement represents a new departure also in relations between the Commission and a member state. It enables the speedy and effective co-ordination of national and Community policies and measures which is essential since both the Irish Government and the Commission now have the same objectives — to raise the economic and social position of Ireland ever closer to the Community average until full cohesion is achieved.

In relation to Structural Funds, which under the Delors Plan are to be doubled by 1992 for the least prosperous regions, we obtained recognition of Ireland as an Objective I region and, specifically, as a least prosperous region within Objective I regions for whom Structural Funds aid will be doubled by 1992, subject to the submission of suitable programmes and plans. We will insist that the commitment in regard to the Structural Funds to a special effort for the least prosperous regions and to a doubling of the aid to Objective I regions ensures our full share of the doubled Structural Funds. For this purpose we will submit, before the end of March, the national development plan for five years which will be the basis on which the European Commission will enter into a formal commitment on aid from the Structural Funds. That plan will be one for development through growth, which is also the basis of the Programme for National Recovery. It will be a plan integrated around that objective, because faster growth is necessary if we are to achieve our national economic and social objectives and attain standards comparable with those enjoyed by our Community partners.

We have already identified in our Programme for National Recovery with the social partners the sectors of our economy whose development can lead to faster growth and greater employment. The major step forward in the meeting Ministers recently had with Commissioners in Brussels is that we have reached agreement with the Commission that these are the programmes they will support, when they are spelled out in detail in our national development plan.

The objectives and programmes which the Government and the European Commission will combine to achieve and implement through the plan now being finalised have been agreed by the Government and the Commission. These objectives and programmes have also been agreed with the social partners through the Central Review Committee of the Programme for National Recovery. The objectives of the plan are: to prepare the economy to compete successfully in the internal market when completed in 1992; to stimulate the economic growth needed to reduce unemployment and to raise per capita incomes towards average Community levels; to improve further the state of the public finances; and to accompany economic growth by a greater social dimension in our society.

Two types of programmes are now agreed. One set of programmes will be directed at improving our competitiveness by reducing the costs imposed on our economy by Ireland's peripherality, inadequate infrastructure and low population density. The second set of agreed programmes are directed to developing our productive economic capacity. The programmes to improve competitiveness are the following:

an efficient road and transportation network, including urban areas, must be built to reduce transport costs within Ireland;

adequate port and airport facilities and access to them and other means of transport must be provided to minimise transport costs to markets abroad and to minimise transport costs for imports of materials and components and for tourist traffic;

comprehensive, up-to-date and competitive telecommunications, and energy networks;

development of sanitary services to meet economic and social development needs as well as environmental requirements;

the protection and enhancement of the urban and rural environment.

The programmes agreed to develop the productive capacity of the economy are the following:

the provision of direct financial assistance for industrial projects and both direct and indirect support towards strengthening and expanding the technological and marketing capacity of the industrial sector including the public industrial sector;

the development of services industry particularly international services;

the development of tourism, particularly through the provision of a suitable tourism infrastructure;

the improvement of agricultural efficiency and structures and the development of agricultural-based industry;

the development of the fishing industry, including the aquaculture industry;

the development of the forestry industry;

the implementation of rural development schemes to stimulate fully the capacity for wealth and employment creation in rural areas;

the provision of training and work experience schemes, particularly for unemployed youth the long-term unemployed and other disadvantaged groups such as the mentally and physically handicapped;

ensuring that particular skill shortages are met by suitable training programmes.

They are the programmes and the objectives of the five year plan.

The plan will provide a framework for five years in which our development potential will be integrated for the first time with an agreed programme of strategic Community aid. That is the reality we are now bringing into being and is the fruit of carefully conducted, vigorous negotiations at European level over the past two years. The plan will concentrate on increasing the competitiveness of our economy and strengthening its productive capacity, so that we can take advantage of the opportunities afforded by the completion of the European internal market. This must be achieved in a way that is consistent with further improvement in our public finances and budgetary position. We have also successfully negotiated the acceptance by the Commission of suitable investment in the agreed programmes from sources other than public funds in projects and infrastructural facilities of public interest.

The European Commission have welcomed the thorough and comprehensive work presented to them by the Irish Government in the recent discussions between Ministers and Commissioners. It was clear to the Commission — and they so stated — that the progress made would enable the plan to be submitted by 31 March next, as required. The national development plan will be elaborated by sub-national plans for each of the seven regions into which the country has been divided. I want to emphasise that this was not a requirement by the European Commission. As far as the Commission is concerned, Ireland is one region, but the Government were anxious to mobilise the views and resources of all parts of the country for this national development plan and in particular to involve the local authorities. The Irish Congress of Trade Unions and the Confederation of Irish Industries have expressed in the Central Review Committee of the Programme for National Recovery their satisfaction at the opportunity being given to them both at national and at sub-national level to have an input into the plan and their satisfaction with the arrangements for doing that. The Government have in fact brought the maximum possible degree of democracy and local consultation into play in this process.

The working groups for each of these sub-regions will soon be in a position to finalise their documents setting out the development objectives and strategies for achieving them for their region. The advisory groups for the regions are being and will be fully consulted in the process. At its completion, we will, for the first time, have a clear statement of the objectives desired for each of the seven regions.

I believe that the general strategy of the budget and the specific measures to be incorporated in our national development plan provide a sound basis for growth in the years immediately ahead. No-one can be complacent about 1992 but I am satisfied that Government policy is providing the right conditions for investment and expansion and that this process will be supplemented effectively by increased support from the Structural Funds. There are a number of key areas to which the national development plan will endeavour to direct massively increased investment, both public and private. A major effort will be required to improve the efficiency of our transport infrastructure to maintain competitiveness in the single market.

When the Channel Tunnel opens, Ireland will be the only EC country without a land connection to other member states. Transport costs of Irish firms serving mainland Europe are some 75 per cent to 100 per cent higher than those on the mainland. A significant reason for these high costs is the deficient state of our national roads and the access roads to our principal ports and airports. Arising from the successful discussions in Brussels on 16 January, the Government have provided an additional £44 million for road works in the budget. This brings the total State provision for road grants in 1989 to £194 million which is the highest annual provision ever made for road grants in real terms.

Of the additional £44 million provided, £34 million will be spent on national roads and £10 million on county/regional roads. 1989 will be the first year in a strategic plan designed to bring Irish national roads up to European standards. The Department of the Environment have practically completed a blueprint for the medium to long term development of Irish roads. The total cost of road needs over the next 20 years has been estimated at £8.7 billion. This includes £2.9 billion for the improvement of our national and major urban roads and access roads to our principal ports and airports. We are confident that we can do this work within ten to 12 years on the basis of a partnership between the State, the EC, the local authorities and the private sector. The Minister for the Environment will submit to the EC an operational programme for national roads based on the strategic plan before the end of March. This will dovetail into the Government's national plan. He also intends to publish the Blueprint for Road Development by next June, taking into account the views of the EC Commission on the operational programme in the meantime.

Under the new arrangements for funding from the EC Structural Funds, grants will not only be available for State-funded road improvement projects but also for projects such as toll roads where revenue is generated. These developments provide a welcome boost to private sector investment in roads. In particular, the prospects for such investment in the Dublin ring road look very promising. The Minister for the Environment will shortly be inviting bids from Irish and foreign firms for a franchise for tolling the ring road.

The Government recognise that county and regional roads are extremely important for all aspects of rural development including tourism, especially agri-tourism, industry, agriculture and forestry. There has been a serious deterioration in the condition of these roads in recent years. For these reasons, the Government have agreed to a three year programme, costing £150 million, for certain works on county and regional roads; £47.4 million will be provided this year; this is an increase of £10 million over what would have been possible on the basis of estimates published last October. The Minister will be announcing details shortly.

The upturn in domestic economic conditions should ensure that the increase in total employment seen in 1988 will be repeated in 1989. With exports continuing to grow and improved domestic conditions in 1989, a rise in manufacturing employment is likely to be achieved. The priority objectives set for the industrial development agencies are the job creation targets agreed in the Programme for National Recovery. The business confidence which has emerged in Ireland has given new impetus to development and investment in the manufacturing sector, as clearly indicated by the year-end statements from the IDA and SFADCo.

The small business sector has become a critical feature of job creation with every indication that the new incentives and programmes implemented by the industrial development agencies have helped speed up the pace of development in this sector. An increasing number of small companies are responding to the need for high quality management and business structures as a foundation to grow into the large Irish firms for the future.

Irish-owned industries show signs of responding to the new growth in the economy and the potential of the Single European Market. Several major Irish companies are committed with the IDA to undertake significant investment in Ireland. In the dairy co-operative sector, strategic investments will lead to the internationalisation of a number of the co-ops. The major growth of IDA-backed investment in R and D projects in the food sector can, generate significant new production capacity in the coming year. The response to international market demands, for example, by the furniture and joinery sector during 1988 has already produced improved results and will continue to show growth in 1989.

The central objective of our development approach for Irish industry during 1989 will be to continue to encourage internationally competitive Irish industries to become European majors in the single market of 1992.

International investment into the manufacturing sector in Ireland will continue at a strong pace during 1989, with a substantial pipeline of projects in discussion with the IDA and SFADCo. The arrival of Fujitsu Isotec from Japan is an important development in this regard.

The key target areas, electronics/ engineering, pharmaceuticals, international and financial services and consumer products have yielded considerable jobs and continue to show good promise from the investment during 1988. These investments are represented by both new and expanding projects. In international services we continue to break new ground and the sector is becoming an increasingly important job creation area especially for graduate employment.

In 1989 a strong emphasis will be placed on promoting Ireland as a key location for US and Far Eastern companies investing in Europe in preparation for 1992 and the Single European Market.

Over £14 million has been invested by the Custom House Docks Development Company in the Irish Financial Services Centre site in 1988, and it is estimated that £35 million will be spent this year by the company in further construction work. Over 200 people are employed on the project at present. This is expected to increase to 500 over the next six months as new construction work is commenced. To date 55 companies with an estimated employment content of 1,300 upwards have decided to establish in the centre.

Irish tourism has had two successive years of significant growth. The targets set out in the Programme for National Recovery call for a doubling of foreign visitor numbers over the period of the plan, an increase in tourism revenue of £500 million and the creation of 25,000 additional jobs in the Irish economy. We are now well on course for achieving these targets.

Overall tourism revenue in 1987 exceeded £1 billion, an 18 per cent increase on 1986. This growth continued in 1988. In their end of year review, recently published, Bord Fáilte estimate that overseas visitor numbers in 1988 exceeded 2.3 million, 13 per cent ahead of the 1987 performance.

The progressive marketing approach successfully adopted in the previous two years will be maintained this year. Towards the end of last year the Government provided a further £5 million for marketing purposes, on condition that it would be matched by the industry, to further boost visitor numbers in 1989.

The industry agreed to match this allocation, and the resulting £10 million marketing programme is already under way.

All the indications are that there will be substantial investment in the tourist industry this year from both domestic and international sources. Indeed, significant investment has taken place over the past two years; new hotels in Dublin and in Adare, Waterford and on the Black-water. Bord Fáilte have approved marketing and development plans under the business expansion scheme in respect of 33 tourism projects involving planned investment of almost £45 million. A further 15 projects involving planned investment of over £14 million are under consideration.

We are confident that greatly increased funding will be available from the Structural Funds to support both public and private sector projects of public interest and access beginning this year. The budget provided for a new scheme of grant assistance costing £14.5 million which will be included in the national development plan to be submitted to the EC Commission. The objective of the scheme is to stimulate private sector development of new tourism products such as outdoor pursuit and activity centres, recreational facilities in resorts, marine facilities and cultural centres which are analogous to public facilities.

The tourism developments carried out under this scheme will be complemented by a range of other tourism-related works to be undertaken by State agencies, including a £1-2 million package for a programme of amenity and environmental works by the local authorities on some of our larger beaches. The Office of Public Works will undertake a major investment programme costing £3.5 million to enhance and expand facilities at their major visitor attractions.

Another sector on which we have been and will continue concentrating in the national development plan is forestry. It has been performing well during the last two years. National planting in 1988 had increased to 15,000 hectares from around 9,000 hectares only two years ago. This Government took the decision to step up planting when it came to office, and to reorganise the State forests on commercial lines, which it has now done by setting up Coillte. The opportunities and incentives for private planting have been well publicised and are being taken up. The special advantages in timber production that this country enjoys and the market opportunities will now be better exploited.

The prospects for the Irish economy following the budget are good. The process of recovery will continue and strengthen on a broad front.

Our supplementary development budget and our tax relief measures will give a boost to employment. We have addressed the situation of those in the country who need help. We can look forward this year therefore to a higher level of employment and some rise in living standards. This is a sound budget and a fair one. It has been accepted as such by the majority of the general public. We are steadily laying the foundations of a better country for all, and creating a more caring and fairer society.

Mr. McGinley

Sílim go raibh deis ag an Rialtas sa cháinaisnéis seo tabhairt faoi mór-dheacrachtaí eacnamaíochta na tíre, deacrachtaí a n-aontaímid go léir sa Teach seo in a dtaobh: an ráta ard dífhostaíochta agus ag éirí as sin an ráta ard daoine atá ag fágáil na tíre gach bliain, an bochtanas agus an ráta ard cánach. Bhí deis againn staidéar a dhéanamh ar an cháinaisnéis le seachtain anuas agus amharc go díreach ar cad atá ann, agus is beag atá ann chun tabhairt faoi na mór-dheacrachtaí thuas luaite.

Cad tá sa cháinaisnéis leis na deacrachtaí dí-fhostaíochta a réiteach. Ag labhairt san Dáil an lá sin d'admhaigh an tAire Airgeadais agus an tAire Leasa Shoisialaigh go raibh an ráta dífhostaíochta i rith na bliana thar 230,000 duine agus d'fhéadfadh sé bheith, fiú amháin, níos airde. Is uafásach an scéal é sin, mar cuimhnímid go raibh ceannaire ar Rialtas Fhianna Fáil ar an raidió Domhnach amháin roinnt blianta ó shin agus dúirt sé nach bhfeádfadh aon Rialtas cur suas le ráta dífhostaíochta os cionn 100,000 duine. Is mór an t-athrú é sin ar an rud atá ag tarlú i láthair na huaire.

Cad atá sa cháinaisnéis faoi choinne laghdú a chur ar an líon daoine atá ag dul ar imirce gach bliain? Bhí a fhios againn le cúpla bliain anuas go raibh idir 20,000 agus 30,000 duine i gceist ach de réir na bhfigúirí is déanaí atá ar fáil agus a luaigh mo chomhleacaí, an Teachta Michael Noonan sa Dáil seachtain ó shin, d'fhéadfadh an ráta imirce a bheith chomh hard le 70,000 duine sa bhliain anois. Ag dul trí óráid an Aire agus trí oráid an Taoisigh, anseo inniu, tá sé soiléir go bhfuil an fhadhb sin againn agus is beag atá sa cháinaisnéis chun tabhairt faoi. Cuireann oráid an Taoisigh díomá orm nach ndearna sé aon tagairt do na deacrachtaí atá againn sna ceantair Ghaeltachta faoi láthair. Tá na deacrachtaí atá againn ar fud na tíre le fáil sna ceantair Ghaeltachta chomh maith. Tá líon na ndaoine dífhostaithe chomh hard, nó go minic, níos airde sna ceantair Ghaeltachta ná mar atá i gceantair eile faoin dtír. In a theannta sin, tá an ráta imirce sna ceantair Ghaeltachta ag méadú agus ag treisiú gach uile seachtain. Tá oileán amháin i mo dháilcheantar féin, Oileán Árainn Mhór, a bhfuil beagnach 20 faoin gcéad den phobal tar éis dul ar imirce ó thosach na bliana seo. Bhí cuid acu sa bhaile arís i rith na Nollag agus don Athbhliain ar feadh seachtaine ach tá 200 duine de phobal an oileáin sin tar éis é a fhágail ón gcéad lá d'Éanair ar a dtriall go dtí an Bhreatain Mhór agus go háiteanna eile. Ní ansin amháin atá sé ag tarlú ach ar fud na nGaeltachtaí ar fad.

Chuir sé díomá orm nár luaigh an Taoiseach Údarás na Gaeltachta ina chuid cainte anseo inniú. Mar is eol don Teach, tá an jab céanna le déanamh ag Údarás na Gaeltachta sna ceantair Ghaeltachta agus atá le déanamh ag an IDA agus ag SFADCo i gceantair eile na tíre. Caithfidh mé a admháil anseo go bhfuil an obair deánta ag an Údarás ó bunaíodh é i 1979. Cuireadh airgead agus acmhainní ar fáil dó le linn dár bpáirtí a bheith sa Rialtas agus nuair a dhearctar siar ar na figiúirí feictear gur éirigh leis líon na bpostanna sna ceantair Ghaeltachta a árdú gach bhain. Nuair a chuamar as oifig i dtosach na bliana 1987, bhí 5,000 duine fostaithe i dtionscail sa Ghaeltacht ar thug an tÚdarás tacaíocht dóibh. Faoi láthair, is eol don saol Gaelach go bhfuil deacrachtaí móra ag an Údarás. Sílim go bhfuil athrú ag teacht air maidir leis an obair mhaith a bhí á dhéanamh aige ó bunaíodh é. Don chéad uair riamh i stair an Údaráis, tá gach uile chomhartha ann go mbeidh isliú i 1988 ar an uimhir daoine a bheas ag obair sna ceantair Ghaeltachta.

Má táimid dáirire faoin nGaeilge agus faoin nGaeltacht, ag iarraidh go mairfidh siad beo, ní féidir a dhul ar aghaidh lena leithéid seo do pholasaí. Cén fáth go bhfuil sé seo ag tarlú? Cad iad na cúiseanna atá leis? Tá cúpla cúis leis, i mo thuairim. Sa chéad áit, tá ísliú 13 faoin gcéad ar chaiteachas caipitil an Údaráis beartaithe do 1989. Is ionann seo agus an t-ísliú a déanadh sa bhliain 1988 sa chaiteachas caipitil. Fágann sé sin gur dearnadh ciorradh de 26 faoin gcéad ar an airgead a cuireadh ar fáil don Údarás chun fostaíocht agus slite beatha a chur ar fáil do na daoine a bhfuil cónaí orthu sna ceantair seo.

Is é an tarna cúis go bhfuil deacrachtaí móra ag an Údarás faoi lathair ná gur tugadh treoir dóibh i mí Meán Fómhair nó Déireadh Fómhair na bliana seo caite, a chuir cosc orthu a dhul thar 65 faoin gcead de chaiteachas na bliana 1988 maidir le haon deontas nó caiteachas i rith 1989. Tá sé seo ag cur bac ar an Údarás, i láthair na h-uaire. Is é an toradh atá air seo ná nár éirigh leis an Údarás oiread agus tionscnamh amháin tionsclaíochta a cheadú i gceantar Gaeltachta ar bith, ó mhí Bealtaine nó mí Meithimh anuraidh. Tá sé seo go léir ag cothú deacrachtaí uafásacha dífhostaíochta agus imirce. Níos measa fós, tá sé ag briseadh ar mhuinín muintir na Gaeltachta san Údarás, Údarás a raibh meas acu air ó bunaíodh é. Tá muinín an phobail san Údarás ag teip agus ag dul i laige agus dá bhféadfainn é a rá, tá féinmhuinín an Údaráis féin in ísle brí, i láthair na h-uaire. Tá lión na bhfeidhmeannach tar éis dul i laghad le bliain anuas. D'fhág beagnach 20 faoin gcéad acu an tÚdarás sa tréimhse sin; ghlac siad íocaíochtaí iomarcaíochta, chuaigh siad go dtí eagraíochtaí eile nó d'fhág siad an tír. Mar sin, tá rudaí in ísle brí. Cuireann sé díomá orm nár thug an Taoiseach aon chomhartha ná aon nod ina óráid go dtiocfaidh athrú ar an scéal. Tá súil agam go dtiocfaidh.

Ba chóir go gcuirfí na hachmhainní ar fáil don Údarás chun timpeall 50 tionscnaimh ar fad, atá ina luí faoi láthair in oifigí an Údaráis, a chur i bhfeidhm. Chruthódh na tionscaimh seo na ceádta post sa Ghaeltacht. Tá géarghá ann go dtabharfaí cead agus treoir don Údarás na tionscnaimh seo a scrúdú agus tacaíocht airgid a thabhairt dóibh más fiú iad chun tionscail a sholáthar a mhaolódh ar an imirce agus a chruthódh breis fostaíochta. Tá sé ag dul ar aghaidh ar feadh bliana, beagnach. Is eol dom go raibh cruinnithe ann idir an Údarás agus oifigí an Rialtais agus na Roinne Airgeadais agus tá súil agam, ar mhaithe leis an nGaeltacht, go dtiocfaidh feabhas ar an scéal sin go gairid.

Tá cruinniú ag an Údarás Dé hAoine seo chugainn, agus níl aon rud a chuirfeadh gliondar níos mó orm féin ná ar gach éinne a bhfuil suim acu sa Ghaeltacht agus ina bhfuil ag tárlú inti, ná go dtabharfaí a gcinn don bhord an obair a dhéanamh lena ceapadh iad: fostaíocht a chruthú agus cuidiú le tionscail ar fud na Gaeltachta.

Ceantair imeallacha is ea na Gaeltachtaí. Is beag a bhí sa cháinaisnéis chun deacrachtaí na gceantar imeallacha a réiteach. Dúradh go bhfuil sé ar intinn cursaí cumarsáide, boíthre agus mar sin, a fheabhsú, sa phlean atá ag dul go dtí an Eoraip, ach níl a fhios againn fós, go baileach, cad atá ann.

Measaim gur chaill an Rialtas seans iontach nuair nár ainmnigh siad an Ghaeltacht mar cheann de na ceantair arbh fhéidir cabhair a fháil ina dtaobh ón Eoraip faoi choinne infrastructure agus mar sin a fhorbiart iontu. Tá na Gaeltachtaí scaipthe ar fud na tíre. Tá an Taoiseach féin ina Aire ar an nGaeltacht agus tá Roinn na Gaeltachta agus Údarás na Gaeltachta ann chomh maith agus is mór an trua nár dearnadh ceantar ar leith den Ghaeltacht agus iarratas a chur chun na hEorpa ina leith. Ta deá-mhéin agus deathoil san Eoraip do cheantair ina labhartar mion-teangacha na hEorpa agus ceapainn go mbeidís an-bhaiúil leis an nGaeltacht dá ndeanfaí an t-iarratas.

In the budget introduced last Wednesday the Government had an excellent and unprecedented opportunity of tackling major economic difficulties facing us — unemployment, emigration, poverty and the high level of personal taxation. When one has had time to examine the proposals and measures contained in the budget, one notes there is very little evidence to indicate that these measures and proposals will have any positive effect on the underlying economic difficulties.

In the area of unemployment there is an inherent admission in the Minister's own statement that unemployment will remain at the unacceptably high level of 232,000 for the remainder of this year. This is a far cry from the figure of 100,000 quoted by a previous Leader of Fianna Fáil as being absolutely unacceptable and intolerable. The Minister has made financial provisions in the budget for an average rate of 232,000 people unemployed for the coming year. This may be on the optimistic side.

It is fair to ask what the Government could do to generate employment in the economy. Is it possible for a Government to adopt budgetary policies that would result in the creation of more jobs? I believe it is. It is significant that any progress made by the Government towards the stabilisation of borrowing and reducing the deficit has been achieved by cutting back on the capital programme, the very area where jobs can be created. The public capital programme has been decimated whereas the current programme has been more or less untouched. In other words, any progress made in the fiscal area has been at the cost of jobs.

There has been a drastic fall-off in infrastructural development that can have devastating consequences for further economic development. The national roads programme has almost come to a standstill. The development and extension of our primary roads network has been virtually abandoned. We all know the importance of having an adequate road network throughout the country. It cuts transport costs for industry and ultimately leads to extra employment simply because good roads enable our industries to be more competitive. There is an urgent need to extend our primary roads network particularly into the west, areas that are so far from ports and markets. Industries established in these regions are operating under severe handicaps and the cost of transport can often be prohibitive. There is little evidence in the budget that the Government understand the seriousness of the problem. There is less money for roads in 1989 than there was six or seven years ago. A major road building programme would be of great benefit not alone to industrial development but would also create much needed employment.

Another area where the Government have fallen down drastically is in the sphere of local authority housing. One of the proudest achievements of the last Government was their record in providing funds for local authority housing. Never previously in a four year period did we have as many houses provided in the public sector. Top quality homes were built in every part of the country. In my own county alone, well over 1,000 houses were built and progress was made in tackling our endemic housing shortage.

However, this Government have simply scuttled the public housing programme. Proposed housing schemes have been abandoned in every part of the country. Waiting lists are getting longer and we are again into the era of families living in inhuman conditions, in damp old houses and mobile homes. All of us as public representatives, know the extent of the misery these people are living in. What is the Government's response? It is simply to reduce the housing allocation, and depriving these people of any hope of being provided with proper homes in the future.

Are these the policies of a caring Government? Are these the policies advocated by Fianna Fáil in Opposition when they castigated the then Government for being right wing, monetarist and Thatcherite? Let me also add that the excellent scheme of house repair grants introduced by the previous Government through the Department of the Environment and Roinn na Gaeltachta mar atá fhios ag an Aire Stáit go bhfuil deireadh curtha leis na deontais freisin, deontais a chuir go mór leis an chaighdeán tithíochta sa tír agus a chuir fostaíocht agus obair ar fáil do chonraitheoirí agus do dhaoine eile. Má tá tú i do chónaí taobh amugh den Ghaeltacht, if one is outside a Gaeltacht area now, no matter what reconstruction work one carries out, no matter what extensions one provides there are no grants whatsoever available and in san Ghaeltacht féin tá isliú suntasach ar an deontas atá á chur ar fáil. Bhí sé ábalta £7,000 agus £8,000 a fháil faoin sean scéim agus anois tá sé anuas go dtí £2,000.

The only housing initiative introduced by this Government is the tenant purchase scheme where the pool of local authority housing is being disposed of. Could not some of this money be allocated to a major housing programme that would alleviate some of the harsher conditions that many families are living under and, at the same time, give a badly and urgently required boost to the building industry where unemployment is so high at present?

These are some of the initiatives that could be taken in this budget. However, I believe the Minister missed the opportunity. I am sure he would have the support of the entire House if he tackled these problems. Of course, we all know that there is a strong correlation between unemployment and other serious economic and social difficulties.

One of these is emigration. The emigration problem was first brought to the nation's attention by Fianna Fáil when they were in Opposition. I remember the huge billboards that were erected in various parts of the county. I remember particularly on the approach road to Dublin from the North the huge billboard depicting a long line of people outside the passport office and the slogan underneath asking "Is this their only future?" I must admit it was a very arresting poster and slogan which made us all aware at the time of the seriousness of the emigration problem.

The previous Government initiated many imaginative schemes for young people in an effort to keep them at home —training programmes, unemployment incentive schemes, enterprise allowances schemes, social employment schemes, to name but a few. These schemes were fairly successful and succeeded in keeping the flow of emigration at around 20,000 to 30,000 per year according to the official figures and statistics available to us. However we were castigated in the Dáil and throughout the country at that time by Fianna Fáil and accused of exporting our young people like cattle.

Private Members' motions and Adjournment Debates were initiated in the Oireachtas to highlight the seriousness of the problems and to augment the effects of the poster campaign. To give them their due, they succeeded in convincing the country that emigration was at a crisis level when it was at between 20,000 and 30,000. Then, of course, the 1987 general election came and went, but it did not solve the problem of emigration which is still with us not, I regret to say, at 20,000 or 30,000 per annum, but, according to the latest statistical evidence available, at the astronomical and frightening level of perhaps 70,000 per year or more. My colleague, Deputy Michael Noonan, highlighted this figure in the Dáil last week. He said the difference between the net number of those coming into this country and those leaving was 73,000. This figure might not be 100 per cent accurate, but it is a fair indication of what is hapening at the moment.

The devastating effects of emigration are to be seen and felt in every townland and parish throughout this country. Entire areas are being deprived of their young people. The fabric of many urban and rural communities is being torn apart. Sporting organisations are no longer able to field teams. Places of entertainment are becoming cultural Saharas. In my own constituency one island, Arranmore, has sacrificed almost 20 per cent of its population to emigration since January. Not alone are young, educated, energetic, idealistic people fleeing this land of ours but a new and more sinister dimension to the problem is manifesting itself. Entire families are leaving — fathers, mothers sons and daughters — and are heading towards the UK and, those who consider themselves more fortunate, to the United States and further afield.

All this is presided over by a Government that shed so many crocodile tears when in Opposition. One can justly ask, where are the billboards, posters and slogans of yesteryear? Where are the pictures showing the long queues outside the Pasport Office, at airports and other points of departure? We are entitled to ask, what is in this budget to stem the vicious flow of emigration? What policies and measures are being adopted and implemented to keep our people at home? What incentives are to be found in the budget to convince our people at home that they have a future in this country or what incentives can we offer those who have already departed to consider returning home? We may indeed ask all these questions but I am afraid the answer to each one is "none". This is one more illustration of a party who offered so many solutions when in Opposition but are delivering so little when they are in Government.

This Government are perceived by some, particularly the media, as being solely responsible for controlling the fiscal aspects of our economy. They are being hailed as financial wizards for reducing the rate of inflation to about 2 per cent and the level of borrowing to 6 per cent. It has been conveniently forgotten that the previous Government reduced the rate of inflation from almost 20 per cent in 1982 to 3 per cent in 1987 when they left office. That was a major achievement but it is inclined to be over-looked by many commentators, and perhaps by ourselves also.

Another example that illustrates the progress made by the previous Government is the budget deficit. In 1981 it was spiralling towards 20 per cent of GNP. However, in 1987 before leaving office we succeeded in reducing it to slightly over 10 per cent and we did that despite the constant and vicious opposition of the Fianna Fáil Party. We succeeded in doing that in Government without any consensus or co-operation from the Opposition. They used every opportunity, both inside and outside the Dáil, to generate anti-Government feeling. Indeed their efforts outside the House were often more successful as I do not believe they once succeeded in inflicting a defeat on the Government in the Dáil.

Most of us who are public representatives remember attending protest meetings throughout the country, anti-health cut meetings, anti-education cut meetings and so on. This was well orchestrated and we got absolutely no co-operation from the Opposition at that time. There was no such thing as putting the economy and the country before narrow political party advantage. Every Government measure, good or bad, had to be opposed both inside and outside the House. Is there anyone in this country today who thinks Fianna Fáil would act differently if they were still in Opposition? Is there anyone who seriously believes that the Taoiseach would have it in him to adopt a Tallaght strategy if still in Opposition? Indeed, Fianna Fáil are the chief architects of our recent economic troubles.

How many people recall the general election of 1977 and the manifesto at that time? During the campaign Fianna Fáil promised to abolish every progressive form of taxation, including rates on domestic dwellings, car tax, wealth tax and capital gains tax and, to complete the circle, they promised to provide full employment in the eighties. We know what happened between 1977 and 1981. Unfortunately, most of these promises were kept and the taxes were abolished but during those years they borrowed £12 billion in the process to fill the vacuum that was created. We should never forget that major figures in this Government were also members of the 1977-81 Administration that launched and set in motion the economic locomotive that created the present difficulties. They are implementing policies that are coming to grips with the crisis, with the support, understanding and consensus of the major Opposition parties but we should always remember it was their irresponsibility that got us into the difficulties in the first instance.

With the consensus available to the Government at present, the Minister had a golden opportunity in the budget of tackling the great economic difficulties, namely, unemployment, emigration, taxation and poverty. Imaginative policies to stimulate employment in the development of our natural resources could be undertaken. For example, the fishing industry that has such great and excellent potential has again been left in the doldrums. Fishing vessels are tied in ports and fishermen are even emigrating. On my way to Dublin last Wednesday I gave a lift to two fishermen from Donegal who boarded a plane in Dublin and headed off to England. Never was the fishing industry hit as seriously as it is now.

Instead of doing something about these matters the Minister has presented us with a patchwork budget, a patch here and a stitch there, without any definite plan of action. It does nothing to solve the great problems and it certainly contributed nothing to our preparation for 1992 and all that it involves. To put it in a nutshell, it is a missed opportunity.

In conclusion, I would once again like to refer to the difficulties being experienced in the Gaeltacht. I have discussed this matter already with the Minister of State and perhaps in his contribution today or tomorrow he may have some good news for us on that front.

Mr. Dennehy

I have listened to Deputy McGinley and others, and indeed to his party leader, emphasise the excellent and unprecedented opportunities that exist at present. I am glad they acknowledge that these opportunities exist. I would stress that the reason they exist now is that the things they are saying we should do are not being done, that the things that were done in the past, particularly in the mid-eighties, are not being done. That is really the secret of economic recovery and it has to be recognised as such.

I came in here last night and listened to Deputy Carey on the Opposition benches. I found it amazing that he had absolutely no sense of guilt, remorse or acceptance of responsibility for the damage done to this country between 1983 and 1987. He was in no way penitent. He actually tried to fault Fianna Fáil for the fact that they, when in Government, spent £12.5 billion of taxpayers' money. It is my job to remind Deputies McGinley, Carey, Dukes and other, but most of all the public, of what happened in the mid-eighties and to contrast it with what is happening now. I will continue to repeat the words of people such as Deputy McGinley, that we now have an unprecedented opportunity to do something and I will say why that is so. In that way the public will understand what is happening.

Last year I stressed that more money had been borrowed, wasted, spent — whichever way you like to put it — from 1983 to 1987 than had been spent since the foundation of the State. Deputy McGinley would like to skip a period and go back to 1977 — others can go back as far as 1969 — but I am interested in the present day. If the Government's performance must be compared with that of another Administration the obvious comparison is with the 1983-87 Coalition.

Even Deputy De Rossa in his contribution admitted that one cannot but be struck by the very favourable climate for investment. In the Official Report for 25-26 January 1989, volume 386, column 334, Deputy De Rossa went on to outline the various excellent factors as follows:

Growth is at 2 per cent, having been a minus figure for several years, manufacturing output is soaring, productivity is high, industrial disputes are rare, exports are booming, imports down and we have the highest balance of payments surplus within the EC.

It was not the Taoiseach not any Fianna Fáil Minister who said that but Deputy De Rossa. The same Deputy told us that farmers' incomes are rising speedily — one might not think so after listening to Deputy Durkan and others this morning — and that interest rates are down and profits are booming. I admit I am quoting Deputy De Rossa selectively but he stated these facts. We must recognise that he is the Leader of his own party and that he is accepting what I might be trying to persuade people to realise is happening.

I must speak to the ordinary man on the street because many of them are finding it difficult to understand how things can have changed so rapidly in such short time, that is from February 1987. They remember the shambles that was created in the previous short four year period. At meetings people who are not politically involved will ask how it has been done and how is it that Labour and Fine Gael, when they had a majority in this House, could achieve nothing like it. We have heard Members speak here in the context of the 1983-87 period as though Fianna Fáil could have voted the Coalition out of office. Of course they could not, unlike the position of the Opposition today.

It is important to look at what has happened because it did not happen by accident. There are dozens of examples of programmes and issues that the former comrades in arms were due to carry out but failed to proceed with. In many other cases there were ideological differences, there were rows and there were even differences within each of the two parties at times about what should happen. There were two efforts at the tax amnesty, for instance. I do not know the exact figure that was realised but it was something of the order of a few hundred thousand pounds. Let us compare that with the tax amnesty of last year. A local radio Bill was hatched by one of the junior members in the Coalition for three or four years but probably because of ideological differences either within his own party or across the board, nothing happened in that case. Now we have a commission and we have control of the position. Many other things were attempted, but they were either botched or did not see the light of day at all. People will ask what has been happening since. We have a committed and totally dedicated Taoiseach leading the Government and he is in touch with the real needs of the country. He is not living in any ivory tower and there are no theoretical considerations blinding him to the reality of what is needed. We have a team of Ministers who are capable and innovative and who work together. There are no ideological hang-ups or clashes and this is very important. When these clashes took place in the Coalition it was the ordinary punter in the street, the taxpayer and the young persons who were suffering. Their futures were being jeopardised.

There are dozens of examples of the initiatives that have been taken. As recently as last night we witnessed the Minister of State, Deputy Brennan, getting people together in this country, in a way that he has already done internationally through the international marketing houses, to ensure that the local market which was being plundered by foreigners would not be plundered in future. He wants them to get in, become professional, grab up the local market and create jobs for our own people rather than for Germans, Italians or anyone else. That was the kind of initiative we needed rather than the theoretical nonsense that took place before. There has been movement in many other areas but generally we have reached the present position as a result of having a combined, active and capable team in Government. The Taoiseach this morning touched on many of the areas where initiatives have been taken.

The people of Ireland are capable of working, given the leadership and the opportunity. They are capable of competing, probably better than most in the world. Perhaps I am being a little chauvinistic in my approach but I believe we are the best if we are given the opportunity. We need the leadership and we are now getting it.

There are other areas such as tax reform. The Taoiseach made a statement this morning which proves that he is in touch with reality. He said that people should understand outside of the vague generalisations, that the ordinary hard-pressed taxpayer only wishes to see a reduction in the excessive amount of personal taxation he or she pays. I agree totally with that. This is the kind of attitude we need to have because for too long I have been one of those who collected a wage packet on a Thursday or Friday night and found that 50 per cent of my expected wages had been taken by the State. We have people here who have never had the experience of drawing an ordinary weekly wage packet and this has been one of our problems. They have the theory but in practice they do not know what it is all about. They should have that experience and they should know that that is what matters to the person on the ground so I am delighted with the Taoiseach's reaction this morning.

I can give schedules of how that ordinary PAYE worker will gain from the budget as will every section of the community. I am not too worried about the theory of it or about expanding the tax base or about much of the other hogwash we get here when people are trying to make a case for arguing with the Minister for Finance. The reality is that people will gain as a result of the budget.

The general reaction of the public to the budget could be put under three headings. There is almost universal agreement on the main thrust of the budget. Certainly, the reaction I received from people was that the correct measures were being taken. I went out and spoke to people — obviously, many of them would know I was politically involved — while others contacted me. These were not all Fianna Fáil people but the reaction of all of them was that the correct measures were being taken. The reaction of the various interest groups, some of whom made submissions, is extremely favourable. There are, and always will be, groups who feel that not enough is being done in a specific area. It is acknowledged that even God himself could not please everybody. However, there is the development of a social conscience and that in itself is good because it will give the Government the support they require to make changes. I think many of these people might have tended to ignore poverty in the past and I see a danger that they might ignore economic reality.

It is worth stressing the overriding factors inherited by the Government in February 1987. As I said last year and in the previous budget contribution, almost everything is dictated by economic factors — the £24.5 billion debt, 50 per cent of which was run up in the four year period, 1983 to 1987, 250,000 people idle and more than one million people in receipt of social welfare payments of one type or the other. This mess was left. The majority of interest groups believe that the correct decisions are being taken to clean up the mess. I accept that nobody has a monopoly on wisdom and there will always be minor issues to be argued, and it is important to recognise that, but the general reaction reinforces the Fianna Fáil view that we are on the right course.

Let us now look at the reaction from Opposition politicians. Last night Deputy Carey read at length from a paper, I think he was quoting from the Donegal People's Press, telling us how Fianna Fáil and the Minister had got it wrong. To counteract that argument, in fairness, I must quote from my local newspaper, and the Cork Evening Echo probably summed up best the reaction of Opposition politicians to the budget. The very simple headline read: “Unable to pick holes in budget”. It is a fact that they were unable to pick holes in the budget. The proof of that is that most of the discussion has concentrated on an issue that is not included in the budget but is being examined to see if it needs to be amended next year, that is, the question of either taxing or doing away with payment of child benefits for certain people. This is a hardy annual. The fact that there is such a concentration on this area shows how firm the budget is.

Many comments made by the Minister were either deliberately misdirected or misinterpreted. The Taoiseach laid on the line this morning what is being looked at. He quoted previous Ministers, and I think Mr. Richie Ryan first suggested that this area should be looked at.

Last year, I said I was worried about any suggestion to tamper with child benefit and the reasons I gave them are now being reinforced. I said I felt the cost of implementing means testing would be greater than the benefits gained. I also said this was the only direct payment to the housewife in very many cases, and I felt that if there was a cut off point, unfortunately it will be the PAYE worker, the legitimate taxpayer who is billed on every shilling earned, who will suffer. Those outside the PAYE sector will be able to manipulate figures to ensure that their income is under the quoted figure.

On the other hand, obviously I agree totally with the people who say that as far as possible, the money should be kept for the less well off. The Government have been doing this for the past 12 months or more and the figures are there to prove it. As an aside, there must be a few ladies getting a guilt complex about this because they are the few unfortunates who are misquoted every time anybody wants to have an emotive go at this topic. I feel sorry for those three or four women.

In the course of the debate there was a lot of huffing and puffing about the Minister scoring own goals or having the goal at his mercy and shooting wide. However, I think these football style analogies lacked enthusiasm. Everybody was aware that the country had been brought to the edge of bankruptcy and I hope it is now recognised that our hard work will bring us back from the brink. Constructive criticism is always helpful, but meaningless clichés like scoring an own goal, and kicking the ball wide do not help anyone. They are useless rhetoric.

As I said, most of the critical comment has centred on a matter that is not included in the budget, and hopefully the public will take note of that. This issue had been raised by some commentators during the silly season and by one or two interest groups, but their lack of comment was noticeably absent in the past week. The next time they raise this issue, we might remind them of that fact.

We should look at the social welfare programmes and how they affect people. When this Government introduced their first budget, there was very little time to educate people on the various programmes and the strategy behind them. To some extent, an attitude of blind loyalty was asked for. By the time the second budget was introduced, the public could see that the previous crazy spiral of mismanagement had come to a halt, and, at this stage they can see, as was spelled out by Deputy McGinley, Deputy Carey, Deputy Dukes and others, there is room to manoeuvre and that there are options open to us. Let us look at the reasons for that.

An extra £71 million has been injected into social welfare to ensure that the Government promises of providing for the less well off are adhered to. This increase has been added to last year's vastly improved benefits. If we look at the overall figure, we will have a true picture of what has happened in less than two years. That figure cannot be argued with. It is equally important to point out that the Minister for Social Welfare, Deputy Woods, has brought forward a massive programme of legislation.

One of the problems with social welfare was the incidence of fraud and the wastage of funds. In certain areas people were getting money to which they were not entitled. The Minister has worked on a two pronged approach: first, to ensure that very good rises were given to the least well off — I think a rise of 10 to 12 per cent is a very good rise; second, to ensure that there is legislation to deal with people in the black economy or those who were deliberately using fraudulent methods to claim money or to ensure that we can divert funds to the least well off.

People may try to gloss over these social welfare increases and say that a 12 per cent increase from a very low base does not make a great deal of difference. I have to emphasise that this is the first time that an increase in the region of 12 per cent has been granted. Last year the Minister was very courageous when he tackled many little needling issues — such as split payments of pensions, or troubles caused by changes in the PRSI scheme, etc. Now he has taken up other issues. The family income supplement was first introduced during the Coalition period, but it was neither advertised nor funded properly and most people were totally unaware of it. In contrast, this Minister is ensuring that all local groups are aware of it. He is advertising the scheme widely and providing an extra £1 million this year to ensure the scheme is expanded, that the threshold limits are improved and that the payments are extended to a greater number of children.

For some time many of us working in the community care area have been making a case for free electricity units for the elderly. We have been asking that they be allowed carry forward any unused units. Many of them are terrified by technology, they are not aware of the method of reading the meter, and they are afraid to use all the units to which they are entitled. People were pleading with Labour Ministers, Fine Gael Ministers and probably Fianna Fáil Ministers on this issue, and I am glad to see a change is being made and that elderly people will be entitled to carry forward units of free electricity that have not been used in one billing period. This is a major step forward for the elderly and should not be under estimated. This is a simple enough measure, I do not know what it has been costed at, but it will be a major benefit for the elderly, particularly when they can carry forward the units they do not use in the summer period to the winter period. I thank the Minister and congratulate him on taking yet another initiative.

The allocations of £500,000 to the St. Vincent de Paul Society and £100,000 to the Samaritans are welcome. Another £1 million has been set aside for special housing for the homeless. Last year people sneered at the allocation of money to the St. Vincent de Paul Society. Somebody actually said that it was teaching the poor to be poor. That was a snipe at the least well-off section of our community. We all need constant education, as the Leas-Cheann Comhairle pointed out earlier on. There is a need to teach people how to manage their incomes. The St. Vincent de Paul Society have done tremendous work in this area.

On finance, we could at this stage almost use a series of one-liners and Deputy De Rossa has pre-empted my efforts in this regard. He has lauded the changes that have taken place; Exchequer borrowing coming down from £2,145 million in 1986 to £1,057 million in 1989. We might as well spell out the difference — £1,008 million. It is worth stressing, for the benefit of the person in the street, that this is the lowest borrowing level in 30 years. People are blinded by talk about billions of pounds, but it is made up of single units of currency, one punt at a time. The current budget deficit was referred to this morning by the Taoiseach. The difference between the present time and 1986-87 is phenomenal. People are asking how this could have been achieved. It has been done by careful management, a co-ordinated effort by the Cabinet and by good leadership.

The Taoiseach referred to interest rates being down by 6 per cent. There was much talk about the cut in the relief in mortgage interest rates. It should be pointed out to the ordinary mortgage payer what the benefits are to him or her. An example is given that the cut in interest rates will mean a saving of up to £1,800 to a person with a £30,000 loan. That fact should be pointed out and statistics can be worked from there. The ordinary person on the street should not be under-estimated when doing his or her sums and will recognise all these facts. It is worth pointing out that when we say we are 6 per cent below UK rates, there was much reaction when we broke with sterling. I cannot quote the sources but from memory I believe that there was a fair measure of criticism at the time, that this was a reaction by people like the Taoiseach in being anti-British. Of course, that was rubbish. That expression was used in an emotive fashion at that time. The real reason for the break with sterling can now be seen, as can the benefit to our country. We now have a level of economic independence which we would not have if still linked with sterling. The arguments used at the time should be researched. Many people attacked the Taoiseach just for the sake of attacking him, but that was an important break for us and for our industry, for agricuture and other sectors.

Inflation is down to just over 2 per cent, the lowest in 28 years. When asked by constituents why this could not have been achieved between 1983 and 1987, the answer is that it is because of these factors that we have been drawn back from the disastrous results of that period. The new records in growth in exports and so on did not just happen. The Minister for Social Welfare, Deputy Woods, and the Minister for Finance would not wish to hog the limelight in this regard. Every Minister has been making his or her own positive contribution. Growth in exports and other matters are very much related to the national agreement with the working partners and also to the efforts of the Minister for Labour. We now enjoy the best labour relations for approximately 30 years and this did not happen by accident. It was hard work in co-operation with the social partners, attention to genuine complaints and grievances and attempting to work on them. There were no kite-flying or high profile activities at all, just sheer hard work and the Minister, Deputy Ahern, is to be congratulated for his work.

It is very important to have industrial peace. It is very important to ensure that there are no stoppages, particularly in areas of exporting. Working with the other Ministers who have responsibility for marketing, we have improved the situation. The record growth in exports again shows the commitment of another Minister. It is the same down along the line, for example, with the Minister for the Environment. There is the example of not imposing the 5p increase on lead-free petrol, in contrast to the action of a previous Minister in the Coalition Government who gobbled up all the benefits of a cut in oil prices. He believed that if petrol prices were kept up people would not make non-essential journeys but that was a negative attitude. Now we have a positive approach of exempting lead-free petrol, to encourage people to use it rather than normal petrol. All these things are being done, in contrast with what was not done in the past.

There was criticism levelled in Cork last week because the Government had the "cheek" to delay for three months in giving a decision on allocating another £3 million for a ferry. That criticism came from people who sat in this House between 1984 and 1986 when the Government delayed for three years, without even tackling this problem. There was also criticism about lack of money for refurbishing houses. Last night I was able to welcome a £3 million allocation from the Minister for the Environment for the refurbishing of housing for the elderly people of our city, people who had been ignored for years. We must compare performance in 1988-89 and between 1984 and 1986. Everybody who wants to evaluate this budget correctly and evaluate Government performance should forget about 1977, 1972, 1969 and 1916 and should compare the performance of the two most immediate Governments, the ideologically differing partners of 1983 to 1987 and the present committed united Government.

Mr. Quinn

I have listened with some interest to some of the points made by Deputy Dennehy. Following the logic of his argument, I should compliment the Government on the mildness of the month of January because the Government seemed to have had as much of a hand in that marvellous turn-about in the fortunes of the world's climate as they would appear to have in the fortunes of the country's economy.

Having said that, I want to concentrate my remarks on three specific areas. I want, first, to talk about Ireland's relationship with the European Community in the context of the development plan which Deputy Reynolds, the Minister for Finance, talked about at length in his budget speech. I want to talk about the budget strategy in a broad way and about employment which is an issue that unites everybody in this House with regard to their concern.

The Minister for Finance, Deputy Reynolds, said something which I want to put on the record because it is very relevant to what I shall proceed to say and argue. This quotation is from the Official Report, column 239, Vol. No. 386, of 25 January 1988 and it reads:

The preparation of a development plan designed to enable us to accelerate the development of our economy in partnership with the European Community is nearing completion. The plan will set out the Government's strategy for maximising use of the increased funding which will result from the decision to increase the resources of the Structural Funds. It will play a pivotal part in the building up of the economy over the next five years.

While Ireland is classified as a single region for European Structural Fund purposes, the Government decided to set up an extensive local consultative process on the preparation of the sub-national programmes which will set out the detailed implementation of the development strategy adopted in the plan. The purpose of this is to ensure that local interests will have an input into the programmes. Through the Department of Finance, which provide the chairmanship and secretariat for the seven working groups that are drawing up the sub-national programmes, the local interests have a direct line of communication to the Government.

The national plan will be formally submitted to the European Commission not later than 31 March next. The proposals in it will then have to be examined by Commission staff to ensure that they comply with the regulations governing the three Structural Funds. The Commission will then establish what is known as the Community Support Framework which will set out the priorities for Community assistance and an indicative financing plan.

That is what I would regard as a parliamentary lie. I repeat that the Government have been deliberately misleading this country for the past seven or eight months. There has been no such local consultative process. Yesterday in this House the Minister of State with responsibility for European affairs backed off in a pathetic way to a question from me about the regular reports which she assured the nation were coming from county managers after the meetings of these working groups. That was a lie and if she did not know it was a lie, she should have known.

Acting Chairman (Mr. Leonard)

I would ask the Deputy to refrain from using the word "lie".

Mr. Quinn

I will naturally confine myself to its correct parliamentary usage, but the dictionary is bereft of any more accurate description of what would be described in the local vernacular as misleading information. This Government have been deliberately misleading the public. The Minister of State said on radio that to the best of her knowledge county managers were giving regular reports after each working group meeting about the formulation of these development plans. That is not true.

Minister of State at the Department of Agriculture and Food (Mr. Kirk)

Are they not involved with the working groups?

Mr. Quinn

They are not reporting back. A secretive process is going on in relation to the preparation of a development plan. According to the Minister for Finance the preparation of this plan, which is to be submitted on 31 March, will play a pivotal part in the building up of the economy in the next five years.

I have been raising consistently since last June the preparations for this historic shift in terms of resources. For whatever reason this Parliament and the public representatives throughout the nation, including members of Fianna Fáil who do not happen to be chairman of county councils, have been specifically and deliberately excluded from the process. The public have been conned into thinking that they have a role by way of submitting proposals. The various working groups have received bundles of proposals from all sorts of community groups which, I have been informed, are effectively being ignored.

This State for the purposes of the European Regional Development Fund and the enhanced Structural Funds is classified as a single region. This House is the only comprehensive democratically elected assembly representing that entire region which qualifies for such support. Despite repeated requests, as recently as this morning on the Order of Business, we are being denied the possibility of debating what this Government are proposing to present to Brussels on our behalf on 31 March.

The outcome of the last general election produced a new Government; it did not turn the Republic of Ireland into some private estate managed and owned by the Fianna Fáil Party. In so far as they will be using taxpayers' money to look for support from Brussels, this House has a right to see what is being proposed. We are being denied that right, yet we are told by the Minister for Finance that this is one of the major things that will happen to this economy in the next four or five years. This is a fundamental denial of basic democratic rights. It is not even smart. If the Government of the day were able to go to Brussels on 31 March and present an overall document about which there had been an enormous amount of consultation and which had been endorsed in our national Parliament following a debate, it would greatly strengthen the hand of the Government in relation to the transfer of resources which we so desperately need. The secrecy which has been so obsessive and defensive during the past 18 months is not only an affront to the democracy of our Republic and to the rights and privileges of elected Members of this House but is also counter-productive to the interests of the Government and the citizens of the State.

One of the areas in which we are grossly deficient by contrast with the rest of the Community is in regard to our road transportation system. Our national primary roads are substandard, which imposes a heavy cost on goods being exported from the Republic. In some areas the national primary roads are grossly deficient. The general consensus is that we need a massive investment of capital into the national primary road system so that when the completed internal market comes into effect on 31 December 1992 we will have an improved road system in place. There is effectively no mention of this in the budget speech delivered by the Minister for Finance. He talks about giving approximately £150 million for county and regional roads over a three-year period. It is not disputed that this expenditure is needed. It will amount to about £47.5 million this year. An extra £60.5 million will be contributed by direct Exchequer expenditure of which £34 million will go for road improvements. He did not state that the £34 million will be for improvements in the national primary road system. Significantly, there is no multi-annual planning, no suggestion of a three year plan, as there is for county and regional roads. There is no mention of the National Roads Authority which was to be the agency which would bring us up to speed in relation to our national primary road system. All I can conclude is that in one area where we would benefit significantly from our application to Brussels for structural assistance—the roads system at national primary level because that is where we would be on an equal footing in comparative and competitive terms with Brussels and the rest of the Community —the Government have not got their act together, do not have a coherent strategy for the National Roads Authority and do not know how much capital sums they want to spend on our national primary system over the next three or four years. If they knew what they were going to spend—estimated by the National Roads Authority at £3,000 million—to bring our roads system to comparative equality with the rest of the European Community, they would be trumpeting it loud and clear in the budget speech. Instead, the trumpets are silent.

If the Government have not got their act together in relation to the roads system which will benefit from financing in a significant way from the increased Structural Funds, particularly under the European Regional Development Fund, then we can only conclude that they have not got their act together elsewhere. We can also draw the conclusion that the reason for the obsessive secrecy in relation to the publication of the various plans is that the entire thing is a total mess. I am forced to that conclusion but I would love to be proved wrong. Therefore, I invite the Government to publish the draft plans currently in the various sections of the Department of Finance and allow the House to have a debate and to endorse the proposals if they meet with our approval. The Minister and his colleagues would then be able to go to Brussels and not be humiliated as they were immediately after Christmas when they went to Brussels cap in hand like mendicant friars on some kind of mission or pilgrimage to the mainland of Europe looking for some kind of hand out only to be told to go away and do their sums. What did the Commission say to the Government? In column 240 of the Volume to which I referred earlier it is stated that the Commission understandably could not give any formal commitment to the level of funding which will be available to Ireland in 1989. In January the Commission could not give any formal commitment. Decoded, the Commission told the Ministers where to get off, to go away and do their homework and to come back with the proper proposals because the Commission knows what sort of money it will spend in 1989. With anger, I must say that the Government are misleading the citizens of this State in the way they are handling this issue and their obsessive secrecy is compounding my fears and my worst worries.

The budget strategy is working to the extent that interest rates have been reduced. The strategy is working to the extent that they are operating within an economic climate which internationally, despite a lot of fears, is still buoyant. The Dow Jones Index in the United States, New York Stock Exchange and the FT Index in London indicate that share price levels and the volume of share dealings have now virtually recovered—and in some cases exceeded—the peak which was achieved prior to Black Monday over 13 months ago. The wind is at the back of the Government who operate a very open economy highly dependent on world economic factors. That wind has enabled them to achieve the first leg of their strategy which is the reduction of interest rates. That strategy has been substantially augmented at local level by the massive reduction by the Government in public expenditure.

Let there be no doubt about who is paying for the reduced interest rates which has excited the financial sector. It is the person who has to wait six to nine months for a hip replacement in a public ward, it is the person whose child attends a school where a teacher has not been replaced, it is the local authority tenant who looks at a queue getting longer by the day in terms of being housed. It is every member of our community who depend on the support of the welfare state to augment their own economic frailty as they try to combat the difficulties of surviving. It is the cutbacks on the backs of the weak and the vulnerable which have reduced the Government's need to borrow money domestically which has driven down the rates of interest. That is the army whose long and lonely march has brought about the victory for the Government in terms of reducing interest rates, the army of the weak, the vulnerable and the poor, many of whom as they fall victims, do not have the resources themselves or the support of the welfare system in hospitals or anything else, to aid and comfort them and to bandage their wounds.

The Fianna Fáil Party are not without compassion. Indeed there is considerable concern in many quarters of Fianna Fáil in relation to the havoc wreaked in some sectors of the social welfare system. They are being told that this is done in the name of the economy and in the name of getting the investment climate right and that the key element in the investment plan is interest. I accept that reducing the rate of interest is critical in any economy that needs to invest a lot of capital in order to secure tangible economic growth. However, this is where the second part of the budget strategy is not working and where the Labour Party diverge fundamentally from the present consensus that seems to underpin this minority Government in this House. Fine Gael, Fianna Fáil and the Progressive Democrats believe that having lowered the rate of interest to its substantially low rate now relative to what it was over the last five or six years or even longer, the private sector will automatically respond and that its response will automatically generate employment. We have been down this road before. In 1977 interest rates were not reduced for the private sector but money was thrown at it like confetti at a wedding or snuff at a wake. There were pleas to the private sector to avail of all the grants and extra Government funding which was available at the time. Deputy McCreevy will remember that.

The private sector, other than setting up a Mickey Mouse organisation called The Response from Industry, a hyped up front of a number of concerned businessmen which was supposed to stimulate investment in a number of quarters and which disappeared without trace after about 18 months or two years, did what it is always good at—which is why it is called the private sector—it looked after itself. I do not know why the Government or the combination of parties supporting them are so naive in their belief that people who run a private sector enterprise will not be concerned primarily with maximising their own position. If that happens to produce extra employment it is a bonus but it is not why they are in business in the first place. Therefore, a heavy reliance on private sector investment leading automatically to job creation is naive and does not tally with experience in the past. If you think that is ideological claptrap I suggest that you read the plea from the Minister for Industry and Commerce when he brought out a whole array of businessmen and entrepreneurs, wined and dined them in Malahide Castle and begged them to invest in the hope that some jobs would be created. That was reported in yesterday's newspapers.

There are problems in relation to the correlation between capital investment and job creation as to whether that investment would be privately or publicly inspired. The traditional relationship between capital investment and job creation in the manufacturing area has started to break down. The old presumption in terms of ratios of pounds invested for job creation no longer applies.

The Minister for Industry and Commerce and the IDA have alleged that many new jobs have been created, at an enormous cost, but despite this we were told on the opening day of this session of the Dáil that last year the number of redundancies outstripped the number of new jobs created. Unless public or private investment has a specific job creation element built in it will not create the number of jobs we need to create in the short term. The Labour Party are of the view that there needs to be a joint approach in terms of investment, that the State should use its influence but not in terms of a Malahide Castle policy, and should not have to beg or implore entrepreneurs to invest money. Rather we believe that it should come forward with specific proposals and enter joint ventures with private companies so as to maximise resources and ensure that there is planned growth to produce the maximum number of jobs.

The third point I want to make is in relation to employment as distinct from overall budget strategy. Apart from the intention to reduce expenditure there are no great surprises in the budget. It is a steady-as-she-goes budget and the Government hope that the confidence of the business community will be retained. To the extent that that was the main intention I have to say that that objective has largely been achieved. Regardless of what party are in Government and how much money is invested in the short term this country, with a present unemployment rate of 18 per cent along with whatever emigration figure one wishes to choose, is going to face a massive unemployment problem in the short term.

I am concerned at the way in which the Government have consistently refused to increase the allocation for direct labour programmes, such as the social employment scheme. On coming into office in 1987 they reduced the amount of allowance paid to some participants in the social employment scheme. In 1988 some of the allowances paid were frozen at a time when social welfare benefits were increased. This resulted in the gap between the two levels of payment narrowing to the extent that in some cases it was not worth the while of some people, particularly young people, to go on the scheme. Belatedly there has been an increase of £5 in the allowance paid to a single person with a pro rata increase for a person who is married. I am not aware of the full details. To the best of my knowledge they have not been announced as yet.

Recently a study was carried out by FÁS on the real economic cost of the social employment scheme. For those who may not be familiar with the scheme let me summarise what the aims of the scheme are. It aims to provide part time employment for those over the age of 25 and who have been unemployed for one year or more. They are required to work 40 hours in a two week period either on a day on, day off basis or a week on, week off basis. The work they do must be of benefit to the community, not to the commercial gain of the employer. Many people have taken up posts as caretakers in schools and have found jobs in community projects, such as the restoration of canals, and in environmental improvement works up and down the country. Currently there are about 10,000 people employed on this scheme. The cost per head is about £100 per week. This cost is made up of the allowance paid to the participant, £65 if the person is single or £85 if they are married, with the balance being made up by the cost of materials and administration. After taking into account the savings made in social welfare and elsewhere the actual cost to the taxpayer amounts to £25 a week. I admire some of the things the Government are trying to do. I have not been blind to the positive achievements gained by any Government or any individual but I would put it to the Government that no matter what they do or no matter how fast they do it they are not going to transform the unemployment figures in one year, three years or five years. Those out of work for over a year are in need of a job or some other activity and they need to have it next week.

If one takes away work from somebody they take away something very fundamental, that is, their natural right. When we meet a stranger for the first time we might ask them their name, where they come from and what they do. If the person cannot give an answer to the third question, he can give no response to that natural inquiry, like a three legged stool a key support of their fundamental identity is swept away and they lose dignity and self respect. As we know, in many cases they physically deteriorate. That is the cancer, the curse of unemployment that has to be confronted. If our economy is not strong enough in a conventional way to confront the problem we need to intervene directly and we can do this by way of dramatically increasing the amount of money to the social welfare system, for example, through such schemes as the social employment scheme. I have made a quick calculation and found that if an extra £50 million a year was made available an extra 40,000 people could be put on the social employment scheme with the result that a lot of community work around the country could be done in areas where there is genuine deprivation and in areas of urban dereliction. As well as this they would be working and would be receiving more than they would receive on social welfare.

The first two points I made, that there is secrecy in relation to the allocation of the European Structural Funds and that the strategy behind the budget is only partially working as employment is not being created in the orthodox economy, lead me on to the third point I wish to make which is that we desperately need to deal with the problem of unemployment and that this can be done by reallocating a very small amount of the £7 billion contained in the budget for 1989.

Mr. McCreevy

Like Deputy Quinn, I regard myself as a fair minded commentator on the Irish political scene and on the Irish economy, perhaps to my detriment in the past. While Deputy Quinn's approach to the problems of the economy might be different from mine —he holds a philosophy that is different from mine—it would be most churlish of me not to congratulate him on making one of the most constructive speeches I have heard from the Opposition benches. I am one of those people who believes that budget day is one of the great over played days in the season. Perhaps this is because it comes shortly after the Christmas period when the needy do not have a lot to write home about. It is portrayed as the day that is going to affect all our lives. Even those who would not know what a current budget deficit is are of the opinion that something dramatic happens in Leinster House on budget day.

Budget day presents the Minister for Finance with an opportunity to outline what Government policies are and what the Government intend doing in the following year. The amount of money played around with on budget day is very small as the major decisions are made before the publication of the Estimates. Because of the approach adopted by the Government since coming to office they have allowed themselves more scope to announce pieces of good news on budget day. Such an approach had been lacking in the preparation of Budget Statements over a long number of years. While the amount of money played around with on budget day is very small, budget day presents the Minister with an opportunity to comment on what the Government have done and what they intend to do in the following year.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.