Dáil Éireann díospóireacht -
Thursday, 1 Feb 1990

Vol. 395 No. 2

Financial Resolutions, 1990. - Financial Resolution No. 9: 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.

—(The Taoiseach.)

Mr. Dukes

Before beginning I should tell you, Sir, that I am not speaking in the capacity of the main spokesperson nominated by my group; that main spokesperson will be Deputy John Bruton.

I want to inform you also, Sir, that I am moving an amendment to Financial Resolution No. 9 which is with the office at present and will be circulated shortly. The amendment to Financial Resolution No. 9 reads as follows:

After "with finance" to add the following words:

"and, in particular, to make provision for the adequate funding and proper management of the health services".

An Ceann Comhairle

In regard to the amendment I must tell the House that I was given this amendment on my way into the House this morning to occupy the Chair. I have had no opportunity whatsoever to consider the amendment. I require some time to consider it. I will communicate with the Deputy as soon as possible as to whether it is in order.

Mr. Dukes

Thank, you, a Cheann Comhairle. It is very generous of you to put it in that way. I will, of course, await your decision with keen anticipation.

On the issues before us there are some general points which should be made and which might be overlooked in the reaction to the details of the budget. I am bound to say, a Cheann Comhairle, that what I might call the orange juice and champagne breakfast brigade have been very active. I am sure all Members have received several copies this morning of these reactions, some of them providing a great deal of food for thought, some indeed taking a lot of the shine off the presentation yesterday of the Minister for Finance of his budgetary proposals.

On a more general level we should look at what this House can do in order to ensure a better future for our people, which is what we want to do. We are now in a position in which wise political action can secure gains for our people. It was difficult to get to that position. Indeed the economic history of the eighties was marked by an unremitting battle waged against the debt built up in the late seventies. The Fine Gael Party played an honourable role, for the greater part of that period, as the only political party in this House which consistently put the national interest first. We used our parliamentary strength, both in Government and Opposition, to tackle the debt crisis. From the mini budget of July 1981, through the term of office of the Government from 1982 to 1987, we took action. We consistently put that objective before the people in successive general elections during that period. From 1987 to 1989 we took a revolutionary step, that is revolutionary for an Opposition party, of supporting decisions which, while necessary, were often unpopular.

In September 1987 I explained in detail why I had adopted that approach. I told the Tallaght Chamber of Commerce that, when we strip away all the rhetoric and get down to what really matters in the day-to-day life of ordinary people, the resolution of our public finance problems constitutes that essential key to everything we want to do in the economic and social fields, to everything we want to do in order to provide for our people the conditions in which they can live their lives in the way we believe is right. In other words, I said that what I want for the Irish people cannot happen until our debt burden is brought under control. It was for that reason that we fought against an irresponsible Fianna Fáil Party right throughout the eighties. It is for that reason that Fine Gael and I supported economic sanity while we were in Opposition from 1987 to 1989. That is why the issue of debt control was the dominant one of the decade just finished. We must never again allow the future of our country and the welfare of our people to be sabotaged by economic recklessness. My party will continue to hold fast to that fundamental principle.

Control of our debt is essential but it is very clear from what I have said that it can never be an end in itself. Now that the economic indicators are moving in the right direction — and there is no doubt that they are moving in the right direction — we must single-mindedly direct our energies to creating a better and more equitable society. My party and I will apply the same resolution, the same firmness of purpose, to tackling poverty and inequity in the nineties as we did to tackling our debt in the eighties. I have no doubt but that our efforts in that respect will meet with the same success that has attended our work in relation to debt control.

Everybody now agrees that, with the turn our financial situation has taken, we are poised for growth. That growth must be encouraged and distributed evenly. We must ensure that we avoid a drift towards the kind of divided society we now see in our next door neighbour, in the United Kingdom. We do not want to see that kind of division appearing or widening in our country. We must all be extremely concerned by the fact that we can now see the beginnings, indeed not just the beginnings, but a well developed trend in that direction in our society. We have a divided society here. In recent years we have seen what my colleague, Deputy Noonan described — and what is the proper description of it — as the emergence of an under-class in this country — people who are caught in poverty traps, who are caught in circumstances they can never get out of because they are disadvantaged in relation to education, the provision of health services, in their access to training and by the way our tax and social welfare systems treat them. We cannot allow that to continue because, apart from any other consideration, it would be inhuman to allow a situation to continue and develop in which a large proportion of our population, of our brothers and sisters, are systematically left outside the gains of an expanding economy.

We can either have fundamental reform of our tax and social welfare systems or we can simply drift along with that social division getting wider and wider, with that social and cultural time-bomb ticking away just behind us. For example, there is no reason the provisions of this year's budget should not have begun firmly and clearly the process of taking the poor out of the tax net. There is no reason PRSI should not have been taken off the first £3,000 of income this year. There is no reason we should not have had a substantial reform of our social welfare system in order to get rid of poverty traps. There is no good reason for any one of those initiatives not having been taken. The reason we have not seen those desirable initiatives is that this Government did not have the courage to take a hard-headed political decision to identify social and economic priorities and set out to deal with those of them they could tackle immediately.

Instead what we have witnessed is a budget with a little of everything and nothing much of anything. There is no doubt that it was cleverly packaged. A casual observer, the ordinary citizen listening to sections of the Minister's statement yesterday — incidentally no ordinary citizen would inflict it on himself to sit and listen to two and a half hours of turgidity as it was presented to us yesterday — as it went along would have said: yes, that sounds like a good idea; that sounds like a sensible move. Of course, a great many things in the budget were good ideas and did represent sensible moves but they were not big enough to make any real difference. That is the case in relation to the various social welfare provisions as I have said, a number of which were very good but not big enough to make a real difference. That is the case in relation to the changes proposed in regard to taxation. Again good enough ideas in themselves, certainly moving in the right direction, but not big enough to make any substantial difference.

The Government have taken the option of not making up their minds about priorities, merely drifting along effecting minor adjustments to tax and social welfare. That is the wrong way to go. It is wrong in every sense; it is wrong socially, economically and politically. There is among the public a genuine expectation of radical reform and a real desire to bring it about. We must get into our heads in this House that the nineties should be the decade when we make these reforms and this year's budget should have begun those reforms in a purposeful and meaningful way. After all the work and argument in this House over the last ten years about getting on top of our debt problem we have finally got it to the point where we know we can control and manage it. We know we are facing a period of years ahead — if all goes well — when we will have an expanded level of access to the resources that we ourselves produce and a greater degree of choice in the way we use them.

If controlling the debt means anything — and the Taoiseach and his Ministers probably understand this — it means that there is £2 billion of public expenditure over which we can regain control. We can gradually liberate part of that sum on an increasing basis so that we do not have to use it for debt servicing but for providing the services and reform needed at home to bolster the effects on our own people, their jobs and daily lives, on the wealth we produce. That is why the nineties should be a decade of reform. We should have tax and social welfare reform and reform in our local government structures. However, I do not see any determination on the part of the Government to begin that kind of reform.

What do we see? A series of deceptions is being perpetrated in the budget this year and, as usual, they are obvious when you look at the Principal Features of the 1990 Budget. The most glaring omission is that there is no provision in any real sense to meet the problems with which we are all familiar, day in, day out, in our health services. It is true there are little pieces here and there, there are a few changes in health and social welfare schemes that provide assistance or care for people who are ill or handicapped but there is nothing of any significance. They are good ideas in themselves but they will not make any real difference to the people suffering deprivation because they do not have any real access to health services.

In regard to social welfare, the Government are now trying the same thing which was tried last year. An entry in the Principal Features came to my attention yesterday. I looked at it and it seemed to have a familiar ring about it. I went back to the Principal Features of the 1989 Budget and, sure enough, it contained the same thing. In the Principal Features of the 1989 Budget, under Social Welfare there was a provision for an adjustment of £56.5 million to expenditure over and above the figure that had been provided for in the Estimates published some time before that. The Government said that this would make a big impact on the problem.

This year as I looked through the Principal Features I found they are operating the same trick, but the other way around. In 1989 there was £56.5 million extra which was trumpeted in the budget. We were all pleased a little more money was made available. What happened? At the end of 1989 the Government made a great virtue of the fact that they had saved about £56 million on social welfare provisions. What was presented as a big act of largesse turned out to mean nothing in practical terms. When the Estimates were produced a couple of months ago the Government again had a big increase in social welfare provision. They would look after the needs in this area. What do we find in the Principal Features of the budget? To cobble together the final outturn at which they are aiming, the Government say they can make adjustments in the light of the 1989 provisional outturn and developments since publication of the 1990 Abridged Estimates Volume of £57,600,000.

The Government and their predecessor have spent a good deal of energy and ingenuity in trying to con this House and the people into the belief that they are helping people in receipt of social welfare. They are really operating paper transactions that mean nothing to people on unemployment assistance, child dependant allowance or any of the other schemes which are covered under various subheads. This must be one of the few places where accounts are given of Government money which threw up a sum of £57,600,000 and called it "various subheads".

Mr. Noonan

(Limerick East): They learned that from the ESB.

Mr. Dukes

Another deception is being operated on page 17 of the Principal Features of the 1990 Budget. Under International Co-operation there is an adjustment in the figures compared to those provided in the Estimates. The 1990 published allocation for International Co-operation is £7,025 and an adjustment of £1,000. The explanation is “Payments to International Funds for the benefit of developing countries: The contribution required for the European Development Fund will be £1 million less than originally estimated by the EC”. If the Government say that the payments required will be £1 million less than originally estimated we must accept it. We assume they know what they are talking about and what the EC is asking for.

After three years in which the Government and their predecessor consistently, regularly and totally unfeelingly reduced our allocation for international co-operation and development aid they were presented with a situation this year where — compared to the allocation they made in the Estimates — they could have gained leeway of £1 million which would have funded bilateral aid programmes. What did they do? They simply robbed it again. In the financial circumstances in which the budget is presented to us, that smacks of pure boneheaded meanness and a total lack of preparedness on the part of the Government to recognise that there was an opportunity to put right some of the damage they had done to our international development aid efforts and indeed to the Government's image.

There is no recognition whatever — and this has been referred to by a number of my colleagues yesterday and today — of the dramatic situation which has emerged in the civil legal aid system. I speak from a background of some experience in this matter. When I had the honour to be Minister for Finance and my colleague, Deputy Noonan, had the honour of being Minister for Justice, he persuaded me — he is a good persuader — and the rest of our colleagues that we should use the device of the Funds of Suitors Bill, which no doubt the Taoiseach will remember, to make money available to support and expand the civil legal aid system. We did that to the point where, in 1986, we were able to open two new legal aid centres, one in Athlone and one in Tallaght. On leaving office the system had expanded; there was a great deal of pressure on it but over a period of two years we had managed to increase the capacity of the system to meet the real needs. We never pretended — nor could we — that it was meeting all the needs but we could say with honesty, satisfaction and pride that we had expanded the ability of the system to meet the problems.

What is happening now? Over the last two years there has been inexorable and unbearable pressure on the system to the point where it is less and less able to meet the needs. People who were honoured at being asked to direct its operation feel that it has gone past the point where they can, with any honesty or credit, stay with it and they have resigned. That problem should be addressed very quickly but there is no recognition in the budget that the problem even exists. The Taoiseach may be unaware of public concern in this regard but I can tell him, from the experience of my colleagues and myself on this side of the House, that there is hardly a week when any one of us would not have a number of reasons to find out the possibilities of the free legal aid system helping several people in our constituencies — and outside them — to deal with their pressing problems. One of the most depressing things I and I am sure my colleagues can meet in our work is a person whose difficulty is that he cannot afford legal representation although his case is clearly covered by the free legal aid system, and to know without a shadow of doubt that there is not the slightest chance that that person's case will be dealt with at any time in the next two or three years under the system we have. There should have been a move in this budget to deal with that.

I do not intend to go into a lot of detail about the various facets of this budget but we should take up on one or two things referred to by the commentators, or as I call them, the champagne and orange juice breakfast clubs, who have looked at what is in the budget. They have looked into their crystal ball at the outlook for interest rates and their conclusion is that the rise in German interest rates and external reserve losses pushed domestic rates higher in 1989, that while German interest rates may well have peaked, domestic rates are unlikely to fall in coming months. The Minister for Finance could not present a very different analysis from that. There will be pressure on the Government, on business and on households over the next few months arising from the dangers of increasing interest rates. I wonder if this means that the Government cannot rely as happily as they indicated yesterday on saving money from the provision for debt servicing, a figure of £35 million, because they expect that this new office of debt management will be more effective, efficient and subtle in its operations. The Government will be very lucky this year to find a situation where their provision now for debt servicing will not be breached. The Government can argue that rises in interest rates that occur from here on will not affect the full amount of the outstanding debt. That is quite true as most of the debts have fixed charging rates for interest but there is no doubt that if there is upward pressure on interest rates it will make life more difficult for the Government.

A comment on the outlook for the gilt market, which is a subject not without interest in itself, suggests that the budget can do little for the Irish market in the short-term given international uncertainties. That is another reason I have to suspect that the Government may be a little more than optimistic in saying that they will save £35 million by the operations of this new office for debt management.

The budget this year does a little in relation to a lot of things but not much of anything. That is a pity. This has occurred because the Government clearly lack the will or the imagination to prioritise what they are doing and they do not understand that we must give priority for all kinds of social and economic reasons and concerns of justice, to action that will stop the widening of divisions in our society, that will deal directly with the issues of poverty, low pay and inadequate access to services. The Government have missed an opportunity this year following on missed opportunities in previous years by the same Taoiseach leading different Governments. Apart from what we might say about it politically, it is a great disappointment to our people who should be better served.

Mr. Quinn

This budget presented an opportunity at the start of this decade to signal the kind of society we want to construct with the resources available to us. The opportunity has been lost. The full impact of the budget when analysed will reveal that the Minister has adopted a cautious and conservative approach towards the management of our economy. This will result in no structural change or radical shift in the way in which power and resources are used. Those in secure jobs and safe in their homes will be little affected by the budget. The minor changes in personal rates of income tax will be offset by other tax allowance changes. In fact, the increases in interest rates over the last 12 months have left people on mortgages of £20,000 or so worse off now than they were at this time last year and the budget will not bring them back to the position they were in in 1989. The 5 per cent increase in social welfare payments which will not be paid until July has already been absorbed in advance, by an increase in local authority housing rents which came into effect in the first week of January this year. What the Minister for Social Welfare gave with one hand the Minister for Finance in anticipation of it had already taken with the other.

The large structure of corporation taxes allowances and charges to business remain the most favourable in the whole of Europe. Our private sector economy remains the most subsidised and lightly taxed of any of our competitors in the EC, yet there are no signs in the budget of any attempt by the Minister to provide either financial inducements or sanctions to ensure that the private sector will create employment.

The real tragedy of the budget is that it is a lost opportunity and that it admits in no uncertain terms that for the foreseeable future over 200,000 people will be unemployed. The budget does not attempt to address this problem. The paltry sum provided to increase payments for the long-term unemployed will further weaken their position relative to the rest of society, as the gap between those at work and those who are unemployed continues to widen. We are now looking at a problem of enormous proportions which has defied conventional solutions and measures for some time.

The Labour Party are committed to the creation of a society within which every person can participate according to his abilities. The exclusion of over 200,000 people from participating in meaningful jobs is creating a society with dependent spouses and children who are totally without the experience of work and fulfilment in society. The decision to increase, by 5,000 work places, the social employment scheme so that it will now have 15,000 participants in community work by the end of 1990 is a small but welcome step. However, it is probable that in urban areas, the effectiveness of the social employment scheme will be further reduced because of the failure of the Government to increase the rates of pay for participants and the consequent reduction in real pay when the increases for the long-term unemployed come into effect.

This Government could have done a number of things but they chose not to and we should ask ourselves why. Improvements over the last number of years have undoubtedly been made in relation to the management of our public finances, in relation to coming to terms, as a political society, with the need to control the whole question of debt and in relation to our obligations and responsibilities there.

Politically our society is more mature at the start of this decade than it was at the start of the last decade. To that extent as democrats in an open society we should recognise that progress has been made. However, that progress will have little relevance or meaning to an increasing section of our population if we do not succeed in bringing everybody with us. That is the challenge of the nineties.

We are looking at the permanent exclusion of people from the workplace, at the permanent exclusion of people from meaningful educational opportunities. The prospects of some of our people who do not have access to meaningful educational opportunities of getting a job are reduced. In my constituency there are families who are entering into the third generation of unemployment. There are families growing up in our urban areas who do not know anything about the culture of work, the discipline of going to work and all the other things that go with that experience. More people are being excluded from those opportunities and we must be wary of the consequences of that for our society. We should not allow it to happen and should intervene directly to arrest it.

The respect for property, for people and for the elderly in parts of Dublin and other urban areas has declined dramatically. Politicians in contact with their constituents in rural or urban areas tell of horrific attacks on elderly people and of the extraordinary drop in social standards. Is it any wonder that we have had that breakdown in standards in relation to safety and attacks on women and children when what could be described as the underclass are told officially through economic forecasts that we will have upwards of 200,000 people unemployed through the nineties? We cannot blame those people for feeling excluded and that they are not part of the economic upturn. It is not surprising that they feel there is no place in our society for them and, as a consequence, they are outside the normal constraints and standards and are free to do what they feel they should do to get their paltry slice of the action.

Our society is divided and the budget reaffirms that division. In this regard I should like to quote from an article by Dick Walsh in today's edition of The Irish Times:

In blunt terms, a reduction of three percentage points in the top rate of income tax will mean more to someone earning £50,000 a year than an increase of 11 per cent in the benefits available to the long-term unemployed. And while there are hidden advantages on both sides, the debilitated state of the health services and the privilege (or lack of it) represented by education, housing and opportunity ensure that the imbalance remains undisturbed.

The imbalance to which he referred was the division in our society. The purpose of trying to manage an economy, of introducing incentives, sanctions and proposals for development that will result in many people being employed directly by the taxpayer, is to create a society that will have room for everybody. That will not happen as a result of the budget.

We have had an inconclusive debate going on for some time about our divided society and neither side has succeeded in persuading the other. Perhaps the conditions under which we all have to operate have changed due to international forces but in addressing the problem of a divided society we need to create jobs in a way that we have failed to do over decades. Professor Joseph Lee's book, A History of the Irish State 1910-1985 is an incredible indictment of successive generations of Irish people since Independence. Our failure to perform relative to other European states is devastating when one looks at the evidence produced in that comprehensive, historical work. We should ask ourselves why countries like Finland, Denmark and the Benelux countries who suffered the ravages of world wars and economic traumas have been more successful in running their economies and accommodating in their societies those who are seeking employment.

The House, on another occasion, should ask why our reliance on the private sector, which the Coalition Government seem to do exclusively, is not resulting in more jobs. The money that is necessary to promote investment and reduce inequality is available within our corporate sector. However, it will remain untouched as a result of the budget. With the single exception of a change in the capital allowances, and the consequential reduction in the rate of corporation tax to 40 per cent, that sector of our economy has been left untouched in real terms. As the Minister for Finance said yesterday, the corporate sector make a contribution of just under 4 per cent to our tax revenue. We should bear in mind that that sector receive a lot of money from taxpayers in the form of grants from the IDA and CTT. A lot of taxpayers' money is spent on infrastructural development, an essential requirement for the private sector to develop but the performance of that sector in terms of job creation is disappointing to say the least. Nobody has been more disappointed about that than the Minister for Labour.

The contribution the private sector make in terms of putting finance back into the community will remain disappointing when legislative effect is given to the provisions of the budget in the Finance Bill. I would like to have seen the Minister accept some of the recommendations put forward by Deputy Taylor in his pre-budget submission to the Government. It is not too late yet and the recommendations can be included in the Finance Bill. Indeed, the real budget will be prepared between now and the introduction of the Finance Bill. The Minister for the Environment, who is present, will be aware of the need to expend money on improving our infrastructure. Roads, in particular, seem to be the poor orphan as far as the Government are concerned. Their improvement would have a beneficial effect on the profitability of many of our public and private enterprises. An increase in corporation tax would be a welcome addition to State revenue. If we did that we would be in a position to restore some of the cuts such as that of £1 million to ODA.

Deputy Taylor, with regard to the taxation of companies, suggested that all companies should be required to pay a minimum amount of tax irrespective of allowances. He suggested a minimum of 20 per cent of the rate applicable which would mean a minimum of 2 per cent tax on the manufacturing sector and a minimum tax of 8.6 per cent on the profits of the rest of the corporate sector. That concept has been around for some time and is used in many countries. We are all aware that there is a rapidly expanding group of accountants who can show any company willing to pay the fees required how to manipulate the various allowances in their favour. Some companies do not pay any tax and they can do that within the framework of the laws passed by the House. It is for that reason that we are suggesting that, notwithstanding any entitlements to allowances, there should be a minimum contribution of 2 per cent. That could hardly be described as a radical or a heavy imposition on companies who are making profits. We are talking about 2 per cent on their profits, not on their turnover; we are talking about companies that are trading profitably. The second suggestion of Deputy Taylor was that section 84 reliefs should be abolished and other allowances sharply curtailed so that companies will actually end up paying a fair share of the tax due.

We need to reduce levels of taxation on the PAYE worker to the point where they significantly impact on their pockets. With all due respect, the present proposals will not have that effect. A single person in the 48 per cent band with an endowment mortgage will be worse off as a result of this budget. If we want the PAYE workers, who came out in their thousands ten years ago this very month, to feel there has been a significant change in the taxation system, the tax base in our society has to be broadened. That is a painful exercise. It is much more popular to reduce it as we saw back in 1977. Indeed, the Minister for the Environment is seeking an all-party consensus in an Oireachtas committee to look at the question of local government finances because if we do not do something about them the entire system will collapse and the services, such as they are, will disappear.

The other area where the tax base could have been broadened was in the corporate area which would be far less painful and would not damage the performance of the companies. One only has to read the business sections of our newspapers or the Sunday Business Post with a circulation of 30,000 to 40,000 designed specifically to cater for the burgeoning corporate population in our society to realise that the international trading conditions for Irish companies, the comparative pricing of our products relative to other competitors particularly within the EC, notwithstanding the recent drop in the rate of sterling, give most of our companies a very strong position to trade internationally. One only has to look at the financial reports of the quoted companies that have reported improved economic performance over the last two years to see there is room for that kind of increased tax take. That increased tax take did not come about and perhaps the Minister for the Environment can tell us the reason. Much of the improved economic performance of those companies is in part due to the wage restraint exercised by workers and their trade unions during the course of the Programme for National Recovery. There was, therefore, an added reason for getting more money from the corporate sector but unfortunately that opportunity has not been availed of.

This is a long document with a lot of figures and a whole series of adjusted savings which total about £84 million and there is a presumption of additional buoyancy of something of the order of £30 million. There is, however, a hidden budget within the figures that have been digested by us so far as we will have to look over the next couple of months at the real impact of that hidden budget. One aspect of it has already been highlighted — the mean miserable reduction by £1 million in our overseas development co-operation budget, simply because the EC got it wrong and said we did not need to contribute as much as was intended. That money should have been transferred into the bilateral side of that budget within the Department of Foreign Affairs and given to the various programmes or some of the voluntary organisations that are doing excellent work in the Third World, work for which there is broad popular support across the community.

We may concentrate on our own economic difficulties and the poor in our own society and those who are disadvantaged and alienated in our society, but in real terms we are a wealthy country. We are the 25th wealthiest country in the world, and there are over 150 nations in the survey that has been done by the World Bank. It is not just in terms of GNP per capita that we are ranked 25th. In some regards we are the wealthiest. We have the highest rate of home ownership of any society in the world. We have things that do not measure on an economic scale that would indicate that our wealth is even greater than the 25th placing to which I referred. The miserable taking of £1 million off the ODA budget is, therefore, incomprehensible until one looks at the record of Fianna Fáil in relation to development co-operation and overseas participation. We will probably spend more on public relations between now and June hyping the ego trip of the Presidency than we have taken from the ODA budget. That is an indication of our priorities.

Finally, I want to turn to an area that concerns me personally and the Labour Party in a very particular way, that is, the continued failure of our economy to provide employment. The official projections from the ESRI, NESC and all the other bodies, independently and collectively, is that unemployment will be of the order of 200,000 for the foreseeable future. Within that there is a group of long-term unemployed, measured conventionally by EC standards as people who are 12 or 13 months or more out of work. If one were to look in detail at that figure one would find that in some cases there are people who have been out of work for three, four and five years. There are families going into the third generation of unemployment who have lost total contact with the whole experience of participating in society and contributing in a meaningful way.

The Labour Party have held the view for a long time that the State must take a prime role in creating employment. However, we have never said and we do not say now, that we should create artificial jobs, the avenue which was explored with such gusto back in the seventies and the results of which we are now trying to unravel and pay for with such pain. That kind of false job creation is not a solution. I think perhaps the Deputies on the Fianna Fáil side of the House, including the Progressive Democrats, who led the charge to stuff every health board with additional unwanted staff back in 1977 have been converted to seeing the madness of the 1977 manifesto. If we have learned from history, let us all be the wiser for it.

We are not talking about false job creation. The right-wing ideologues of the Progressive Democrats and some of their supporters in Fianna Fáil and Fine Gael believe in the magic of the private sector and say that if we simply keep on facilitating it, encouraging it, subsidising it, the private sector will ultimately create sufficient jobs to deal with the problem of unemployment. There is no evidence of that happening. If that were the case I would not be arguing against the private sector. I have no antipathy towards it. I simply do not think it is capable of generating the level of employment we require. The private sector is exactly that, private, concerned with its own immediate concerns and not with the broader social issues to which we in public life must have regard.

That is why this budget has failed to deal with the problem of the massive numbers of unemployed. The consequences of continued structural long-term unemployment will have a devastating social effect, resulting in the creation of what various social scientists and commentators in the United States and elsewhere talk about as an under-class. Deputy Dukes referred to Deputy Michael Noonan's use of the words "under-class" as if it was a phrase Deputy Noonan had discovered for the first time and put into coinage here. That is not the case. This is the negative side of a welfare society which basically pays people to disappear. This welfare dependency was rightly condemned by Mr. Phil Flynn, general secretary of the Local Government and Public Services Union, in an article he wrote for The Sunday Business Post of 28 January 1990.

Acting Chairman (Mr. Wyse)

I am sorry to interrupt the Deputy but he did not state at the start of his contribution if he was spokesman for his party. If he is not, he has only five minutes left.

Mr. Quinn

I am spokesman but I will not be any longer than five minutes.

I was about to quote from a very comprehensive article in The Sunday Business Post in which Mr. Phil Flynn, rightly identifies the problems of permanent dependency, the sense of dependency on welfare payments and refers, in particular, to unemployment and long-term unemployment. The article is one of a series of articles by various people who were asked to pretend that they were the Minister for Finance and to write a budget. I want to quote from Mr. Flynn's article because he is a key player in the Programme for National Recovery, a key advocate of its renewal, and therefore a person to whom the Government might listen with a little more attention than they would to others. With regard to unemployment Mr. Flynn said:

Unemployment is a human tragedy, a drain on the economy and a major source of poverty. The long-term unemployed, in particular, must be prioritised. For the most part they are over 30, unskilled and educationally disadvantaged. Only targeted policies including skills training will lift them from their present position.

The following is proposed:

—Payment of ten per cent above welfare levels to those participating in approved education, training or employment.

—Additional £1.5 million for pilot literacy and second chance education schemes.

—Restructuring of Social Employment Scheme.

—Provision for additional 20,000 places in employment/training schemes including a new training for employment scheme.

—An urgent examination, in consultation with social pressure, into how education/training/employment schemes can be better integrated into job creation strategy and also to assess the general adequacy of current provision.

—Employers to be exempt from PRSI for duration of employment of any individual recruited from long-term register.

—State aid to industry shifted from support of fixed asset investment to marketing, R & D and employment.

—Extension of existing urban renewal areas and designation of new ones.

With the exception of the change in capital allowances, virtually none of the proposals contained in that tight summary are incorporated in this budget. A tax incentive to encourage employers to take on people is not provided in the budget. The reduction in PRSI for somebody who is earning £60 per week may have some impact for a person who is outrageously low paid, but it will not encourage an employer to take on any other person for whom he will still have to pay his part of the employers' contribution to PRSI.

The budget has not dealt with the social employment scheme or with what FÁS are trying to do. In urban areas the social employment scheme is simply breaking down and is being used increasingly by local authorities as an alternative means of running their own stretched and underresourced services. This is totally contrary to the whole concept of what a social employment scheme is about in the first instance. There are areas of ghettoised poverty in this country where one problem compounds another. There are two Deputies in the House at present, one from Dublin north west and one from Dublin south west, who have intimate knowledge of the kind of ghettoised areas of deprivation to which I refer. There is no interim targeted programme provided for in this budget which could effectively do anything for those people and lift them out of the morass of dependency and despair. As I said, generation after generation in these areas face unemployment.

When the increases are expressed in percentage terms they look very substantial but the 10 per cent increase for the long-term unemployed only amounts to £5, or the cost of three or four pints, and if someone has all day to drink three or four pints this does not amount to much. By the time the city manager has taken the rent increase out of this 10 per cent, which he did two weeks ago, these people will be in arrears when they get the extra £5 in July.

A budget has to do many things, and many of the things which are conventionally required have been achieved in this budget but even if there was no Minister for Finance these things would have been done. If the permanent Minister for Finance in the Department of Finance wrote the budget most of the provisions in it would have been introduced anyway, and the basic drift and shift in the regulation of fiscal affairs would continue without much dramatic change. Political input is about direction, priorities and values but when we look at the two and a half hours of turgidity of the budget speech — to quote Deputy Dukes — we note there is very little evidence of political direction, political priorities or political values. I may be wrong but I cannot find them. Perhaps the Government spokespersons over the next few days will try to locate them for me.

The Labour Party regret that there is very little evidence of a clear value system that is animating the political agenda of this Coalition Government. We believe that the management of a vibrant, open and mixed economy such as ours is about creating sufficient wealth so that there is space, in every sense of the word, spiritual and physical, for all citizens to fully participate according to their abilities and needs. What this budget has said to those who are fortunate enough to be at work is "steady as you are; there is not much change particularly if you are single", and to those who are not at work "here are another few percentage points to keep you just above inflation, so long as you stay out of the mainstream of society". We are creating a level of dependency and demotivation for hundreds of thousands of people who are now dependent either directly or indirectly on social welfare payments which will pile up in the form of a negative social legacy and threaten society for the remainder of this decade.

This is the real tragedy in final terms about this budget. The Government could have used the first budget of the nineties to signal to us and the people who depend on us that they are serious about turning this country around and reversing the verdict which Professor Joe Lee has come to so succinctly and comprehensively in his analysis of political performance over the past 60 or 70 years. They could have used this budget to send a clear message conveying some sense of hope. They could have used this budget to mobilise people and enthuse them as they tried to do in their public relations exercise associated with the Irish Presidency of the EC. Tragically this has not been the case and there will be little change as a result of this budget. To quote Mr. Dick Walsh again, the imbalance between the haves and the have nots in our society is going to remain undisturbed as a result of this budget.

Acting Chairman

Perhaps Deputy Rabbitte will outline at the beginning whether he is contributing to this debate as spokesman for his party.

Mr. Rabbitte

I am. The need to get the national debt under control and reduce the Exchequer borrowing requirement has been used over the past three years by the Government and their predecessors to impose a wide range of cutbacks on the people least able to bear them, that is, the PAYE workers, the old, the sick and the handicapped. The same excuse was given for not tackling the important matter of tax reform, the subject of major protests exactly ten years ago. Of course, it is possible to present statistics in the manner most suitable to the case that one is seeking to make, but it is worth recalling all the very favourable indicators, except the one on unemployment, facing the Minister when he sat down to prepare the budget. I argue that those propitious circumstances were won on the backs of the PAYE workers and the disadvantaged who during most of the past decade were forced to tighten their belts and most savagely during the past three years.

Economic growth was almost four per cent in 1989, a tremendous performance, and it has been forecast that there will be similar growth in 1990. Exports were up by the extremely high figure of 11 per cent and this trend is likely to continue in 1990. Industrial output was up 13 per cent and the stunning record of the work-force's productivity continued. During the past five years it has virtually quadrupled. The Exchequer borrowing requirement, forecast in last year's budget to be 5.3 per cent or £1,055 million, turned out, as we know, to be drastically different. Indeed, some of the predictions and forecasts in recent budgets have been so far out that serious questions have to be asked. For example, the House will be aware that in the negotiations on the formation of a government between the Progressive Democrats and Fianna Fáil the borrowing requirement was targeted to be at 3 per cent by 1992. That is the target that was fixed as recently as seven months ago, but already the outturn for the past year reveals a figure of 2.4 per cent. Therefore the target fixed for 1992 by the Government at three per cent has already been surpassed.

They were the parameters within which the Minister had to work when he sat down to prepare the budget. Against the background of the figures I have given one can only describe this budget as a populist but cowardly budget in which the Minister and the Government fail to address either of the two fundamental structural problems in the economy which are, the declining number of people creating wealth in the economy, that is, the number in employment and, second, the question of real structural tax reform. Neither of these issues has been addressed in any serious way, despite the propitious fiscal circumstances I have referred to, earned on the backs of the PAYE worker and the disadvantaged. The Minister passed over those opportunities to tackle the two major structural problems I have referred to and instead he went for the customary populist Fianna Fáil approach.

Our biggest problem and this is the problem that has baffled the Government — they admit to it in private — is the size of our social welfare pool, or to put it another way, why can we not put 100,000 people back to work in productive jobs. The most disheartening statement I have heard for a long time was the statement made last night on television by the Minister of State at the Department of the Environment that never will we have full employment in the economy. This is an extraordinary statement which no doubt will come back even to haunt the charmed life that that Deputy leads. She is, after all, the alter ego of the man who is Minister for Industry and Commerce. Are we to take it that she was speaking on his behalf when she admitted to the people that full employment will never be realised? Let it be said that no matter what improvements the Minister for Finance could be realistically expected to make in social welfare, and in my view he made the minimum, they would still represent no more than subsistence support for the individual recipient of social welfare. This is simply because, notwithstanding the haemorrhage of emigration, there are too few people at work and too many people unemployed.

Has the Minister for Finance addressed this fundamental problem? The answer is an emphatic no. The Minister is engaging in the politics of illusion if he thinks otherwise as his only contribution to job creation in the budget is the pathetic suggestion that 5,000 people may find recreation through an expansion of the SES schemes. On these make work schemes, which have nothing to do with generating wealth, participants are paid a subsistence wage. That is the only contribution he makes to job creation in the budget. Where was the reference to the major review of industrial policy? In a reply to a parliamentary question last November the Taoiseach told me that a major review — allowing for the fact that everything is major with the Taoiseach — of industrial policy is underway. What has happened to that major review of industrial policy? I can tell the House that it has now run into major difficulties within the Department of Industry and Commerce.

The previous Minister, Deputy Bruton, passed a law which requires that a White Paper on industrial policy should be published every three years and that a review of industrial performance be carried out about every three years. Deputy Reynolds when Minister for Industry and Commerce, took fright at the implications the advent of 1992 would have for the economy and industrial policy and asked a gentleman called Mr. Frank Roche at UCD to prepare the report on industrial performance which I have referred to. That report has been completed, but I am sad to have to inform the House that the report has been suppressed because of disagreement within the Department of Industry and Commerce. That Department, like the Government, are at sixes and sevens on this question of industrial policy.

The Government are not comprised of fools; their advisers are not fools. They know that where all the indicators are right the jobs should be coming on stream now. They know, despite the haemorrhage of emigration, the jobs are not coming on stream and the attempt to review the wastefulness, inefficiency and ineffectiveness of our industrial policy has been stymied because they cannot agree what alterations have to be made. They acknowledge privately that our industrial policy is very expensive and that it has failed, but they cannot agree on what to do about it; indeed, over the last 30 years it has been a sad legacy of failure and neglect.

I need look no further for examples than what we have seen in the last few days on the industrial landscape. If an Irish branch of a foreign based company should decide for corporate reasons to pull down the shutters in any major Irish town, as happened in the Minister's town not too long ago, why should the closure of one such plant leave such devastation in its wake? Let me instance the threat hanging over employment in Bray this week. If attempts to put together a rescue package for Nixdorf are not successful — I sincerely hope they will be successful — the entire town will be left with no major private sector employer because of the failure of successive Governments to develop a thriving indigenous private sector. Similarly, unless a rescue package can be put together — again I hope it will be successful — on the north side of Cork for Sunbeam, what are the prospects for that part of Cork city? Again the prospect is devastation. The last major private employer on the north side of Cork city is threatened. Again that would not have been the case if we had made any progress developing a productive indigenous sector over the last 30 years. The practice down the years of throwing good money after bad has manifestly failed to create the jobs or the indigenous private sector I have spoken about.

Irish industrial policy is extremely expensive in terms of subsidies to the private sector by way of cash or tax breaks. The cost to the taxpayer in tax foregone, for example, in 1987 was £1.3 billion, in the average year it is about £1 billion. In this year the combined cost in terms of direct grants and tax foregone will be just short of £1.5 billion. I remind the House that £1.5 billion is more than the entire budget for education and health. That is the kind of money we are spending, yet if a multinational decide to pull out, there is devastation in Castlebar or Bray or the north side of Cork or the myriad other examples I could instance.

Falls in unemployment on the live register are due to emigration, not to the supposed success of Government policies in putting people back to work. Let me refer to the Budget Statement of the Minister for Finance where he chooses to avail of the figures published by the labour force survey. It is a perfect example of the kind of presentation of statistics I spoke about at the outset, where statistics can be presented in a manner which makes the case for whatever point of view you are adopting. The only pertinent fact is that the labour force survey figures to mid-April 1989 show there are 1,000 fewer at work in the Irish economy than there were in mid-April 1988. That is the only figure that matters. Never mind trying to claim credit for taking 20,000 people off the live register. They are in Brooklyn, Chicago, London and elsewhere. One thousand people fewer were productively involved in this economy between April 1988 and April 1989, and that against the background of varying optimistic forecasts — from the ESRI 10,000 net new jobs, the Central Bank 13,000, and various spokespersons from the Department of Finance gave the same figures.

For years economists and conservative politicians have been telling us that if wages could be reduced jobs would be created. In other times this may well hold some truth in the public services, but it has obviously been proved to be untrue in most manufacturing companies, especially the new manufacturing sector. The climatology school of economics has mesmerised conservative politicians for a decade into believing a Nirvana type state where something called the "climate for enterprise"— how many times have we heard it? — will produce, I was going to say full employment but let me correct that, will create productive jobs. We have now got as close to that dreamlike state as we are ever likely to get. Low wage increases, low inflation, unprecedented calm in industrial relations, booming growth, unprecedented industrial output, spiralling profits and tremendous productivity, but where are the jobs?

The State spends a fortune on industrial, tourism, agricultural and fishing policies, but too few jobs are created. Meanwhile, unfortunately, redundancies continue apace. It is The Workers' Party's view that such intervention by the State is costly and ineffective and should have been replaced in this budget with an active industrial policy. As a democratic socialist party The Workers' Party are not a spending party in the manner alleged by so many Government spokespersons. We do not believe a more equitable or productive society would be created simply by increasing public spending each year. We do not believe in expanding the levels of State intervention beyond what is economically feasible. We believe Government should borrow; indeed, the Minister for Finance yesterday could have afforded to borrow another £200 million, but that should be to fund investment spending. Those investments must be wisely and carefully selected and not rendered ineffective or wasteful by simply pouring money into wasteful and ineffective subsidies to the private sector in the hope that a few productive jobs will occur here and there.

Last week on the television programme "Today Tonight" an industrialist was asked to describe industrial policy in Ireland and he said that he did not consider himself to be particularly ill-informed but he could not say what the industrial policy was. We scattered industries around a bit for everybody, in the hope that a few permanent jobs will stay here and there. We must seek to achieve a radical alteration in industrial policy designed to secure the structural changes necessary to produce and increase real jobs. This alteration should favour what I call "national champions", that is indigenous companies that have been deliberately and carefully selected to grow and develop in Ireland.

There have, of course, been several reports that have drawn attention to the weakness in current industrial policy. Sadly all of these reports, so far as I can see, starting way back with the Telesis report, have been shelved. As long ago as Telesis, it was identified that we were not getting value for money and that the resources spent should be channelled more selectively in terms of trying to produce jobs in this country. The most recent report to update the work of the Telesis report was NESC 88, which made the point that Ireland has not done as well as any other similar small economy in the area of job creation. It instanced the Scandinavian countries, for example Denmark with whom we share a great many similarities.

The main failure of this budget as the central piece of economic policy is the failure to overhaul our industrial policy, by which I mean the set of measures that are designed to tackle job creation financed from fiscal policy. As I have said, offering people the prospect of "make work" jobs or social employment schemes is no substitute for genuine, productive jobs generating wealth in this economy.

In referring to the favourable circumstances that formed the backdrop to the preparation of this year's budget, I would like to refer to the contribution made by the Programme for National Recovery. I had occasion recently to put something in writing on this question because it is topical and somewhat controversial at present. I make no apology for having supported the concept and the conclusions of this programme. It might be no harm to review why that was the case in 1987 and whether the situation has changed since then. I wrote my article from the perspective of a trade unionist. I admit that bias quite openly, unlike many of the economic gurus who claim to be independent, professional, and whatever other ambiguous words suggest they do not have a point of view. I think the trade union movement found itself in the trough of recession competing against monetarist policies and a monetarist consensus, against the backdrop of what the Thatcher revolution was supposed to have brought on the neighbouring islands. We were working against the background where Mrs. Thatcher had very successfully marginalised the trade union movement in Britain and I thought that ought not be allowed to happen in this country.

We, unlike Britain, have very few representatives of the working people in Parliament and it is necessary that the strength of the trade union movement be protected. That was the background against which the Programme for National Recovery was negotiated — a background of sluggish growth right throughout the eighties and the prevalence of a right wing consensus at that time. Indeed we were also negotiating against the background of an expected rate of inflation of 2 per cent. Therefore it was reasonable to anticipate that the programme might have represented a marginal improvement or a standstill in average wages. Despite the immense pressure on the trade union movement to negotiate that agreement, it was only with the very marginal vote of the ITGWU that the agreement was concluded.

Today the mood is very different. There is sustained economic growth, massive trade surpluses, the debt-GNP ratio has come down and the Exchequer borrowing requirement has been reduced to 2.4 per cent, lower than the target set by the two parties to this Coalition as recently as seven months ago when they predicted the target of 3 per cent for 1992. Profits are booming. There has been wage restraint to a degree of moderation that we have not seen for over 20 years. Yet no additional jobs have been created. Workers are beginning to feel, and have been feeling for some time, that they have a right to expect better. The leading Irish companies, which the Minister for Labour correctly criticised when he pointed to their pitiful contribution to job creation, are experiencing unprecedented and spiralling profits, yet wage constraint is imposed on workers who may not share in those profits. Most regrettably, of course, the vast bulk of those profits, if not all in some cases, are being repatriated to the country of origin. It is worth reminding ourselves that the Programme for National Recovery promised 20,000 new jobs. The ink was scarcely dry when we had arguments about what 20,000 new jobs entailed: were they 20,000 net new jobs or were they — as the Taoiseach eventually settled in this House — 20,000 extra new jobs? Of course, we know that what happened was that in the first year the 20,000 target was met by including — and this was not part of the agreement — jobs created in the financial services area which brought the figure to 20,000 at the same time as 22,000 redundancies were being notified to the Department of Labour. Therefore, the job target contributed nothing in terms of additional jobs to the economy.

Nonetheless I will continue to argue that the trade unions having a place at the table with the Government at that time was important. The first and key element of the deal, as I well recall, was that there would be no compulsory redundancies in the public service. At a time when jobs were being shed throughout the entire public services the voluntary severance arrangement made possible by the deal was an important consideration. On top of this vital gain the deal led to many imaginative and popular job reduction schemes, for example, job sharing, career breaks and early retirements. Many of these schemes will filter into the private sector and, while of benefit to employers, will also be as popular with workers as they are in the public service.

The second major gain of the deal, one which is of historic proportions, is the reduction of the working week from 40 hours to 39 hours. It may not be readily known to everybody in the House that it was the first time in 20 years there had been a reduction in the average working week. Of course that has not been implemented sufficiently widely yet but, I am satisfied, will be by the time the Programme for National Recovery expires.

The negative aspects of the programme were on jobs and tax reform. In retrospect, I contend that the ICTU agreed to job targets which could easily have been achieved without any effort on the part of Government and employers. There was no tax reform whatsoever; tax improvements, but not tax reform. Whereas there was a commitment concerning privatisation nonetheless we have already seen the privatisation of the Hospitals Joint Services Board, the proposed privatisation of Irish Steel, INPC and I suspect — and regrettably so — Irish Life. There may be no option but for trade unionists to accept the first two because of the critical financial position of those companies. However, the privatisation of Irish Life clearly is in contravention of the programme unless the agreement of the Irish Congress of Trade Unions is forthcoming and that should be taken on board by this Government.

One may well ask: what is up for renegotiation at present? — pay, particularly in the private sector. Profits have soared and productivity increases have been staggering. For example, overall profits have grown by 18 per cent in 1989, or on aggregate 20 per cent. Between 1982 and 1989 output in modern industry quadrupled and productivity trebled, a staggering increase. Even in the traditional sector productivity has grown by 50 per cent. As numbers have shrunk and wage increases have not been much above inflation virtually all of the gains have been to business. This can be observed from the soaring increase in profits. We have noticed that inflation was falling in the run-up to the negotiations in 1987 — from 10.4 per cent in 1983 to 3.2 per cent in 1987, followed by 2.1 per cent in 1988, but in 1989 inflation was averaging 3.75 per cent and it rose to 4.5 per cent in mid-August. The Minister's forecast of 2.5 per cent for next year is way off the target.

That is the background against which workers will approach the negotiation of the next pay round. During this time, while workers have been accepting an average of 2.5 per cent pay increase, the position of leading Irish companies has been starkly different. In an analysis I undertook I made an attempt to examine the profit figures of the top 22 companies in the Irish economy. However, as only nine of those important companies publish accounts — despite the requirements of the EC Fourth Directive — that analysis cannot be comprehensive.

One group doing especially well in the current climate is the banks. For example, the directors of Allied Irish Bank gave themselves an overall increase of 11 per cent in 1988, bringing their gross remuneration — which includes pension contributions and so on — to £1,248,000 or, an average, £65,684. The Bank of Ireland directors were kinder to themselves with an 18.5 per cent increase or, on average, £106,250 each. In spite of the problems experienced in Waterford Glass — which has been troubled by incompetent management — the directors tried to console themselves with an increase of 16.2 per cent in 1988, gross remuneration per director of £152,000. They also paid off one or more directors with a golden handshake of £209,000 in 1987 and another of £117,000 in 1988. Smurfits directors were extremely modest and increased their remuneration by 5.3 per cent only. However, the total package came to almost £10 million or an average of £827,407 each, and so it continues — one rule for the rich and another for those struggling to make ends meet.

Against that background it can be clearly seen that the circumstances in which the trade union movement approached the discussions in 1987 have changed dramatically. I would not be surprised if next week's special conference of Congress decided to withdraw from the Programme for National Recovery. As a trade unionist my view is that they ought not do so, but great consideration must now be given to any renegotiation of that pact. We can no longer tolerate circumstances in which companies return such profits in which workers are not permitted to participate. We cannot tolerate circumstances where workers are expected to engage in interminable wage restraint while at the same time, jobs for their unemployed brothers and sisters are not being provided. They were told wage restraint could be traded off against the creation of more jobs but that has not happened. In my view there is no mechanism in this economy that will ensure it will happen.

That brings me to the other major disappointment in this budget, the Minister's refusal to face up to tax reform. Of course he is once again being seen to make some improvements in the tax code but as they begin to be analysed more closely, more and more workers will appreciate that there is very little in it. Improvements do not constitute structural tax reform. That has been the greatest area of disappointment. For example, the Government promised to take 31,000 people out of the tax net. That is the kind of promise we have heard in the last four budgets with the exception of 1987 but what has happened? Before the Minister sits down and completes his speech, already that figure is no longer valid. With the effect of fiscal drag on the one hand and inflation on wage increases on the other, a great number of those 31,000 are sucked back into the tax net. I think it was the Conference of Major Religious Superiors that estimated that between 11 and 18 per cent of those living in poverty are caught in the tax net. That is a disgrace. The tinkering that the Minister engaged in with the tax code yesterday does not seriously address that problem.

The major concern that I would express is my disappointment at the failure to look at the take from the corporate sector. All the leaks to whichever paper you read predicted that the Minister acknowledged that the take from the corporate sector is derisory and that by comparison with any of our EC partners it could not continue. There were very specific forecasts but what happened? Roughly 4 per cent of tax is contributed by the corporate sector. That sector escaped virtually unscathed. All one has to do is read The Irish Times this morning which interprets, comments and reports on the views of the CII on this issue. Indeed the Minister himself made a very specific statement concerning the abuse of the special rate for the manufacturing sector in terms of how the manufacturing process is ill-defined in this economy. He referred specifically to recent court cases that have produced what has become known as the green banana ripening phenomenon. He presaged in those statements that he would have to deal with the definition of manufacturing because of the extent of the abuse. I can find no mention in this document of any such attempt by the Minister to address that problem.

By comparison with any of our EC partners, we come out at the bottom as far as the contribution from the corporate sector is concerned. I would remind the Ministers in the House that this is at a time when profit repatriation is at a level which was unthinkable only a few years ago. Last year economic commentators predicted that £2 billion would be repatriated but what happened? The amount repatriated to the countries of origin was £3.1 billion. That immediately forced the Central Bank to revise downwards its figures for growth by 1 per cent. That amount — £3.1 billion — happens to be almost precisely the figure about which there was so much bruhaha by this Government when they went to Brussels looking for structural money over a period of three years. That amount of money is going out of this economy every year and it was open to the Minister to take some tax measures to cause a proportion of it to be reinvested in this country. I do not expect that it is realistic to suggest that all of it can be redirected for investment purposes here but I sincerely believe that some of it ought to be redirected and that a modest tax regime, as recommended by the Irish Congress of Trade Unions, for example, of approximately 10 per cent on profits in the manufacturing sector, would have had some impact in causing some of that money to be channelled into investment and job creation. That was one of the greatest missed opportunities in this budget. It shows how bewildered the Government are about this central matter of job creation.

I welcome the 80,000 jobs that are being provided by the foreign sector here but I do not believe that the profit spiral that I am talking about should be allowed to continue. I repeat that this is a matter that requires the most urgent Government attention. When one of these companies decides to close its branch in Bray, Castlebar or Tralee the entire town is devastated because of our failure to have produced an indigenous sector in this economy over the last 30 years.

My party made 31 proposals under the heading of tax reform. Virtually none of them — although some would be regarded as eminently reasonable by a consensus of this House — has been applied. We sought to increase the tax allowance in line with inflation and convert it into credits; to increase the PAYE allowance by 10 per cent and convert it into tax credit; widen the bottom tax band to £15,000 taxable income for married persons; abolish tax relief on covenants; abolish tax relief on VHI Plans D and E by which the average taxpayer is subsidising private medicine for the most wealthy in our society in the Blackrock and Mater private clinics; give an option to workers to have tax relief on mortgages either by way of tax reliefs at the standard rate in the context of the substantial widening band rate that I have spoken about or on a credit by the loan agency; allow actual PRSI payments and levies as a tax allowance; tax all income on a current year basis; extend withholding tax on professionals to include all private sector payments; increase the rate of construction industry withholding tax from 35 to 50 per cent on subcontractors without tax deduction cards; introduce a charter of rights for complying taxpayers; provide a proper information and advisory service for all taxpayers, including the provision of understandable explanatory leaflets and mobile offices; provide a form filling service for small businesses and farmers at a small nominal rate, say, £20; redesign tax return forms to make them more user friendly; launch a major drive against tax evasion and the black economy generally; introduce a global provision to outlaw for tax purposes any scheme where the primary purpose is to avoid tax and is not for bona fide commercial purposes; introduce a provision to require all holders of accounts in financial institutions to provide their revenue and social insurance number to that institution who in turn would return the details to the Revenue Commissioners; introduce self-assessment for companies; relate tax relief for businesses to job creation and not just to capital expenditure; charge PRSI and levies for the self-employed on their income before capital allowances; amend company legislation to ensure that it is no longer used to facilitate abuse of the tax system; introduce a system of local tax collection and grant the collectors power to take walking possession of goods; pay sheriffs an annual salary instead of commission; abolish lease charges and introduce proper financing for local authorities; no VAT to be imposed on foodstuffs and other essentials; no VAT refunds to be made to unregistered farmers; no reduction in indirect taxes; reorganise and restructure capital taxes to double the present yield. That is a shopping list of 31 proposals and there has been some modest partial concession on only about three of them.

Minister of State at the Department of the Environment (Mr. Connolly)

I think you would be putting the chain on the gates with a good few of those proposals.

Mr. Rabbitte

I do not agree with the Minister.

Mr. Connolly

That is what happened in eastern Europe.

Mr. Rabbitte

It did not.

Mr. Connolly

Indeed it did.

Mr. Rabbitte

We are talking about taxation and the fact that the proportion of the tax burden on the PAYE sector is now the same as it was ten years ago when 750,000 people marched on the streets. The advent of 750,000 people marching in East Germany could bring down the Government but 750,000 people marching in Ireland cannot even produce tax reforms ten years later. That is the issue. There has not been any shift of the burden of tax from the PAYE sector to the wealth-owning sections of society. The Minister is surely not challenging the fact that there is widespread evasion and tax avoidance, that professionals are avoiding tax, that farmers are not paying their fair share and that the corporate sector is contributing the lowest proportion of tax in Europe. These are inescapable facts and the Minister missed this opportunity to tackle this important question yesterday.

The Minister also failed to acknowledge that one of the achievements that the Government boasted about in the June 1989 election was the fantastic progress made in terms of interest rates, and the beneficial spin-off there was for people with mortgages as a result. It is a pity that some of the sums and tables we were presented with in analysing the tax concessions did not have regard to the impact on mortgages. Four times since this Coalition came into power interest rates have increased, with a consequent devastating impact on people with mortgages. Any member of any local authority can tell us the extent of repossessions at the moment. Unfortunately, people on low to middle incomes, penalised by tax who find themselves the victims of the vagaries of the interest rate fluctuations, are having to hand over their homes to either the sheriff or the building societies and be rehoused by the local authorities. At one meeting of Dublin County Council at which I was present they dealt with 60 such repossessions. That is the effect of the economic policies being pursued by this Government.

I would reluctantly advise my colleagues in the trade union movement to do precisely what the Minister, Deputy Connolly, recommends, and take a leaf from the book of the peoples of Eastern Europe and go back on to the streets for tax reform. After the persistent campaign in the late seventies and in 1980, ten years later all that has been done is that levels of tax have been tinkered with and there have been only minimal improvements but no constructive or real tax reform. That is a major issue dividing society. There is no reason why some people should be punished and have to bear the burden of the social services. I recommend that a Government which was so committed to tax reform should now be provoked by persistent disciplined organised protest campaigns by the trade union movement and by PAYE workers into lessening the load on the backs of the PAYE workers.

I would refer to a number of other matters given the time but I only have about five minutes left. The Minister referred yesterday to a commitment to further sales of State assets and said that this is the first phase of a new five year programme of such sales so as to help reduce the national debt. I am very concerned at the ominous note here which has gone largely unnoticed. If we are to sell off the family silver it would appear to be a vote of no confidence in the future of this economy and in our hopes of putting people back to work.

I will give one example to illustrate the kind of thing envisaged by the Minister. The Dublin Port and Docks Board owned 25 acres of fully serviced land at the docks site in Dublin. The IDA had an option on ten acres and a company called AI Industrial Wastes had a waste disposal site in the area, operating illegally, causing a nuisance to residents, and adjacent to the proposed site for the sports centre. The Minister, Deputy Flynn, gave instructions to have them moved at any cost. The IDA sold the site privately for £400,000. The Dublin Port and Docks Board subsequently sold the balance of 15 acres for £450,000 to a company which proposed to provide airport short takeoff and landing facilities. AI Industrial Wastes sold to the airport company for £1 million within six months. The airport sold the total site of 25 acres to a UK company who are now developing a £27 million industrial estate. Two questions arise from that. Why were the IDA, whose job is supposed to be to encourage industrial development, forced to sell this prime site? What is the IDA strategy for sites in Dublin, particularly in North Dublin, and why did the IDA not benefit to the full value of the site? If the intention is to sell off the family silver, it is tantamount to a vote of no confidence in this economy and future generations will live to regret it.

The two matters in this budget which were of fundamental importance were, first, the question of what measures the Minister could take to improve job creation and what measures he would take to initiate genuine tax reform. The Minister has missed both opportunities. I have dealt at some length with the taxation arguments. It is a cause of serious disappointment to the PAYE sector that, ten years after they marched on the streets for tax reform, their situation is little better than it was then.

It always happens — it was the case last year — despite claims to have reduced tax on the PAYE sector that they end up paying more at the end of the year than was predicted at the beginning of the year. That, of course, will also happen this year. There has also been a most disappointing performance in regard to jobs which reveals the conflict, bewilderment and confusion at the heart of Government about what they have to do to get our people working. To hear a Minister admit on television last night that full employment will never be the case in this economy is the most dismal prediction a Minister has ever made. I would almost have preferred the disingenuous promises from Fianna Fáil since 1932 that they would put our people to work. As the late Mr. de Valera said: "No more will our children, like our cattle, be raised for export".

I would almost prefer to believe that kind of fairytale than have the new cutting edge of this Government, the PD wing, go on television and tell the people that to seriously contemplate an economy where we can put our people back to work is a mirage and will never happen. We will never get out of this spiral where too few of us at work have to pay for and carry on our backs — not only the cost of running the social services — but the huge pool of unemployed.

Minister for the Environment (Mr. Flynn)

It has to be agreed, however reluctanly by some Opposition Members, that a great many people in this country feel better off today. The newspapers have told them precisely how much better they will do as a result of the tax reform and social welfare measures in the budget. The general public are clear that this is a budget geared to consolidate the national recovery, increase our international competitiveness and improve the living standards of the weaker sections of the community.

Immediate good news is always welcome but this budget, when it comes to the Environment, also provides long term good news. It provides the money for the biggest, most comprehensive, best co-ordinated environment package in the history of the State.

I will go further. The environment action programme I announced last Friday is arguably the best example of a country rapidly coming to terms with environmental threat, identifying environmental opportunity, cherishing environmental assets, and encapsulating all of that in a national plan, a radical plan, a workable plan.

It is part of a continuum which started as soon as I became Minister for the Environment. At that time, the Department were essentially the Department of Local Government and the Department that related to the construction industry. Within months, I announced that I would turn it around, to grapple effectively with the environmental problems which were beginning to simmer beneath the surface. Last year's budget started the environment ball rolling; this year it has gained speed and scale.

The Taoiseach indicated that this six month period would be a Green EC Presidency. By his involvement and commitment to the environment action programme, he has made that real. Today's budget makes it fact. In environmental terms, this Government have put their money where their mouth is.

What about specifics? Twenty million pounds has been allocated for initial expenditure on measures announced in the action programme with the commitment that the moneys necessary over the coming decade will be found in each succeding budget.

The package is about information. The road to environmental disaster is paved with good intentions not backed up by information. The plan lays a new emphasis on the delivery of information to individuals so that they can make the right environmental choices in every aspect of their lives.

Information will be available in the high street; specifically a city location, where £600,000 will set up the headquarters of ENFO, a new national environment service. The ENFO premises will be a green one-stop shop. If you want information on the toxic products you may have in your kitchen or back garden ENFO will provide it. If you are a schoolgoer doing a project ENFO will provide you with information in a form you can handle. If you are a researcher needing data on the international environment story ENFO will put you in touch directly with data bases here and in other countries.

Information encourages people — and we need our people, as individuals, as communities and as workers — to take care of our precious environment. That is why this budget has allocated extra funding for promotional programmes related to issues like smoke pollution, unleaded petrol, litter and recycling. The extra funding amounts to £200,000 in 1990.

A change of mind is one thing. A change of habit is a quite different thing as the unleaded saga makes clear. Drivers know unleaded is better for the environment and some have changed over, but not enough. Even with the concession in last year's budget, which brought down the price of unleaded below leaded, the consumption has only gone up to 13 per cent of all petrol sales.

We have to get this thing moving faster and so the Government have decided to build on last year's budget. The differential between leaded and unleaded is now 10p per gallon. On a tankful of petrol the saving could be £1 or higher depending on the type of car. The increased price differential should boost sales of unleaded petrol substantially and help us achieve the ultimate objective — putting an end to the use of leaded petrol in this country.

Putting an end to the use of smokey coal in our capital city is a Government objective with a deadline. Now, we are saying bluntly that bituminous coal has to go. Its marketing, sale and distribution in Dublin stops in October next. It is as simple as that. However, it will not be simple to implement. It is not simple to change patterns of living etched in the memory of Dubliners. It is not simple to make so massive a change and at the same time protect the vulnerable of Dublin, the old, the sick and the poor people. Hence the provision of an extra £3 million in this budget to help the changeover. To soften the blow, work is already in hand on a plan to make the best use of this extra money so that the inevitable problems are kept to a minimum.

For the last few years, Dublin had smog in the winter while in the summer not all our beaches have been a joy. There are two aspects to this. One is the cleaning up of our seas. The environment action programme demonstrates our commitment as a Government to tackling head on the pollution of our rivers and coastal waters.

I intend, by the year 2000 to eliminate all pollution of inland waters by sewage discharges, to eliminate discharges of untreated sewage from major coastal towns which will cost £400 million, to have secondary treatment facilities, costing £40 million designed, urgently, for Ringsend and to clean up Dublin Bay, to bring to an end the present arrangements for the disposal of sewage sludge by Dublin Corporation and to bring to an end all dumping at sea from our land based sources. These are just some of a host of measures which are going into place right now.

Our objective is that our seas will be clean, not nearly clean, not clean in isolated areas but that we will have the cleanest coastline in Europe. That is going to make a considerable difference to the holidaymaker and tourists who in increasing numbers use our beaches.

The Government have agreed to double the grants to local authorities for amenity work at beaches. The grants go from £500,000 to £1 million. That means better facilities for ourselves and for visitors attracted to the country. In some areas, let us be clear, we have to change our environmental practices.

By international standards, for example, waste recycling in Ireland is very low. I have got to change that by positive indications backed with money. I propose that each local authority prepare a recycling scheme for its area by June of this year, identifying recycling opportunities and saying how it will facilitate and promote recycling. Another nudge, backed by money, is the provision of grants to voluntary bodies and local authorities for small-scale recycling activities. It is going up from £250,000 to £500,000 this year.

What we want to achieve is a situation where every business, every school, every home, segregates its waste so that paper is recycled, cans are recycled and plastic is recycled. It is a big objective, and we have to reach it by starting small, starting local. This year's budget allows us to do precisely that.

We have also got to recycle CFCs. We are seeking at international level to eliminate their use but CFCs are already around us in most of our houses and what we need to do is make sure we dispose of that material as safely as possible. This budget allows me to allocate £50,000 this year to promote recovery and recycling facilities for CFCs, especially those used as coolants in fridges. Here again, local authorities have a developing and important role to play. County Wicklow set a good example for other counties when they took the initiative as far as CFCs recovery is concerned.

Most of us who care for the environment want action now. The environment action programme is action now and it is costly action now. But we have got to make sure that we are not throwing money at environmental problems; money does change those problems, it does not solve those problems.

One of the things that is becoming very clear is that people's feelings about the environment do not always inform their day-to-day decisions. Why? We do not know. We do not have a handle on the level of environmental knowledge in this country, nor on the attitudes and behaviour that have got us to where we are, that must be informed and changed if we are to get where we want to go.

For that reason, £100,000 is to go on a baseline survey which will give us at least some of the answers and which will make sure that in planning policy and promotion programmes in future we are not planning in hope from a basis of understanding and knowledge but truly it can be said that the budget of 1990 will be a green budget which will have a dramatic impact on the environment from now until the end of the century.

Not for a decade has a Minister for the Environment been able to give an entirely favourable picture of the construction industry. I am fortunate to be the Minister who has the pleasure of announcing to this House today that 1989 was a bumper year for this key sector of the economy with significant growth across all areas of the industry.

The trend of declining output and of declining employment which had persisted since 1981 was not just halted in its tracks; it was reversed. Volume growth of at least 10 per cent was achieved. Jobs came with that growth; construction jobs rose by more than 4,000 last year: that is direct construction jobs. There were countless other jobs created in areas providing support services to the industry.

What is most significant is the fact that current volume growth is being underpinned principally by private investment, not by unsustainable public expenditure. It comes from areas such as new commercial development and new private residential construction, which showed increases in output of more than 50 per cent and 20 per cent respectively.

The long-term implications for our economy of this move are all good. I looked at the expenditure when I came into office and it seemed to me very obvious that we were digging ourselves a hole out of which we would never climb unless we stopped digging, and did some lateral thinking. We have done that and the payoff is evident, not just evident now, but will continue to be evident — and beneficial — in the future.

The present resurgence in the construction industry did not just grow, like Topsy, and people within the industry are the first to admit it. Government strategy has helped to create the present resurgence particularly by the introduction of important incentives to promote construction activity in key areas. Among the most important of these are the urban renewal scheme and the section 23 — type tax relief for the provision of private residential accommodation for renting. Both of these incentives have generated significant building activity in the residential and commercial sectors.

The budget provides for the extension of the time-limit applying to qualifying expenditure in the designated areas from 31 May 1991 to 31 May 1993.

This extension of time limit gives breathing space for orderly progressive development in the present designated areas and those additional areas which I will be announcing shortly.

Nineteen hundred and ninety will also see the tide turn on publicly funded construction works. The provisions in the 1990 Public Capital Programme affecting the construction industry represent an increase of almost £57 million in real terms over 1989. The major expenditure increases are on roads, sanitary services, agriculture, industry and the local authority housing programme. These increases will contribute over 4.5 per cent to volume growth and generate at least 1,500 direct jobs in the industry in 1990. EC Structural Fund assistance is an important feature of the increased PCP provisions affecting construction, and, indeed, of the industry's excellent medium-term prospects.

The prospects for the construction industry are better now than they have been for a decade. For the industry, the last decade was like knocking your head off a stone wall; it was lovely when the knocking stopped, as it did in the last couple of years. The feeling has been one of relief. Relief, not confidence. Now confidence is beginning to develop as the industry realises that the Government objective for 1990 is to reinforce the growth pattern, based on the upturn in 1989, and to give the industry a strong competitive edge. If Ireland's construction industry has that strong competitive edge, facing into and fully exploiting the potential expansion at home and the opportunities in Europe will be a welcome opportunity, not a threatening challenge.

I have been talking about growth, sustainable growth, in the construction sector. That growth has meant that the level of appeals received by An Bord Pleanála increased significantly during 1989. The Government are most anxious to ensure that appeals are dealt with as expeditiously as possible by the board and that the targets the board have set for themselves in this regard will be met. Accordingly, I am providing an additional sum of £250,000 to the board in 1990 to bring the total Exchequer provision to £1.45 million. The facts are that in 1989, appeals were up 34 per cent over 1988 and up 24 per cent over the 1987 figure.

The Government have always been most anxious to ensure that the build-up of a backlog of appeals in An Bord Pleanála does not hinder the continued growth of the construction sector or its important contribution to the overall growth in the economy. Therefore, we responded positively to all requests for staffing and other additional resources during 1989. Three professional staff were recruited, a further four were retained on a fee-per-case basis to deal with the workload and five clerical/administrative staff were appointed.

In 1989 an additional Exchequer funding of £121,000 was provided on top of the original Estimates provision of £1.2 million. All these steps were taken to ensure that the board had sufficient resources to deal with the task in hand. While about 90 per cent of all appeals are dealt with within six months, there is no doubt that better can be achieved. As a first step in this direction, the board have set themselves the target of ensuring that all appeals are dealt with within six months by the end of March 1990 and further improving the targets thereafter. I will be pressing the board to meet this target.

I have previously announced an increase in the level of appeal fees payable to the board from 1 February 1990. Together with the extra income to be generated by the increased fees, estimated at £100,000, the board are more than adequately catered for in the current year. The Government have done all in their power to ensure that the board will be in a position to fulfil their functions in an effective and efficient way.

I want to turn now to one of the most successful aspects of Government policy, the reviving of our inner cities by the designated areas incentive.

The budget fully preserves the benefits of the urban renewal incentives, notwithstanding the changes being made otherwise in the system of allowances against corporation tax. It goes further and provides for a year by year extension of these allowances beyond the previous deadline of May, 1991 until 31 May, 1993.

This measure is a vote of confidence in the urban renewal programme, and it will ensure that the £170 million worth of work which is still in planning within the designated areas will be consolidated and built on even further.

I would like to remind Deputies of some of the achievements of the urban renewal programme so far. Apart from the Custom House Docks development, which will ultimately involve construction to a value of some £300 million, projects to a value of some £30 million have already been completed in the 15 designated areas and work valued at £110 million is actively in progress.

All of this investment will create in the region of 7,500 once-off man year construction jobs, with substantial permanent employment to follow, especially in the services sector.

I have already made clear my proposal to build on the success of this programme by, in particular, extending urban renewal designation to a number of additional areas in Dublin and to eight new provincial centres — Ballina, Bray, Carlow, Clonmel, Drogheda, Ennis, Longford and Portlaoise. I am finalising my detailed proposals to implement these measures and I hope to announce them shortly.

In 1989, a sum of £2 million was provided in State grants to assist works by local authorities designed to enhance the environment of the designated areas and to complement other development under the urban renewal programme. Very worthwhile work has been carried out in many areas under this scheme. The original provision of £2 million for these grants in the 1990 Estimates will be increased to £2.5 million, in accordance with the recently announced environment action programme.

Let me now inform the House on the overall housing situation. In 1989 over 18,000 new houses were completed, compared to just 15,600 in the previous year. All the indications are that a further significant increase in new house building will be achieved in 1990, but with a crucial difference. While the increase in 1989 was entirely due to the strong recovery in the private housebuilding sector, 1990 will see increased output across the board in both private and local authority housing.

Last year's resurgence of the private housing sector, after years of decline, proves once again that housing demand is affected by general economic conditions more than any other factor. The restructuring of stamp duty rates applicable to transfers of houses and land valued at less than £25,000 will help the purchasing of modest size houses.

This year £51 million will be available for the local authority housing programme and there are important changes in the sourcing of finance for this work. The Government have decided that the proceeds of the local authority house sales schemes should be used to fund most of the programme. Of the total capital being provided, £33 million will be used to build and acquire new dwellings. This is an increase of over 50 per cent on the 1989 outturn and reverses the trend of previous years since 1984. The increased funding for the programme this year will yield about 1,200 completions in 1990 and facilitate about the same number of housing starts. This level of completions, together with casual vacancies arising from existing stock, should produce over 4,000 new lettings during the year. Also, additional employment will be provided on the new house building programme this year.

The results of the most comprehensive and in-depth survey yet carried out of the need for local authority housing show that, at 30 September, 1989, the aggregate number of approved applicants for local authority housing was about 19,300 households.

The Housing Act, 1988 provides a framework for housing authorities to deal more effectively with the problem of homelessness. Local authorities can now rent accommodation outside their own stock or make financial arrangements with voluntary bodies to provide accommodation for homeless people. My Department will recoup 80 per cent of payments made by a local authority arising from its exercise of powers under section 10 of the Act and the provision for such recoupment has been increased to £600,000 this year.

The provision of accommodation by voluntary housing organisations plays a key part in meeting the housing needs of homeless people, elderly people and other disadvantaged groups. Last year, some 400 units of accommodation were provided by voluntary groups and organisations with the aid of £6.6 million from my Department.

New projects continue to be brought forward by existing approved voluntary organisations. New organisations continue to be formed throughout the country. What they are doing is important. It should not be unduly delayed by lack of resources. To further encourage the voluntary housing sector, the Government, at my request, have decided to increase the original provision for voluntary housing in 1990 by £1.3 to £9.3 million. This represents an increase of 41 per cent on last year's expenditure and is clear evidence of the Government's commitment to meeting the housing needs of the most disadvantaged groups in our society.

The budget allocation for voluntary housing includes a special provision of £120,000 for the Focus Point project in Stanhope Street, Dublin: the largest single voluntary housing project. When completed it is going to contain 86 single flatlets and 10 small family units.

In a sense this will be the flagship of all the work being done by voluntary groups for the homeless under the Government's programme for housing the homeless announced in 1988.

The special allocation — additional to the ordinary grant of £1.92 million already committed — is intended to fund the inclusion of communal facilities and other features that will give the project a pleasant community ambience far removed from the institutional atmosphere of days gone by.

It recognises the work being done by Focus Point and the major contribution the development will make to relieving the problem of homelessness in Dublin's inner city.

I mentioned days gone by. Sometimes "days gone by" leave us with something valuable, but something which can disappear if we do not take action. We used to be a country of many thatched cottages but that is no longer the case. Now, it is their absence which is establishing the character of many parts of the country.

That is a pity, in many ways. Thatched houses represent an important and distinctive element in the Irish heritage but sadly they are also a disappearing aspect of our heritage. In some parts of the country where thatched cottages were the traditional house form — and they were certainly the traditional house form where Deputy Flaherty's grandparents came from — they have become very rare indeed.

Miss Flaherty

Housing in general is becoming rare.

Mr. Flynn

I have been conscious of the need to, as far as possible, halt the decline of thatched houses in this country and I am delighted that the Government approved in principle a grant towards the cost of renewing the remaining thatched cottages.

Mr. Rabbitte

Any chance of a céilí at the crossroads?

Mr. Flynn

A sum of £150,000 is being made available to fund this scheme of grants in 1990.

In summary, then, this budget has been described as hard headed and soft hearted. It has taken the opportunity offered to introduce reforms to the existing taxation system; to provide incentives and encouragement for further economic development; to increase payment levels and introduce schemes for those who rely on the social welfare system.

What it has also done is provide substantial funds to improve our environment, funds that will go towards immediate action and long-term measures; funds that will go to solving problems that have been with us for far too long — and which will go to preventing the development of other problems; funds that will take care of our built and our natural environment so that this country is always a green and pleasant land to live in.

Yes, this is a caring budget. It is a careful and controlled budget but it is also a green budget of a kind we have never had before.

There is always a danger that in the rush to make political points, we will not see the wood for the trees. This budget ensures that we will continue to have trees during the coming decade, that we will have clean air and clean water and a continued growth in the construction industry.

I trust that this House will acknowledge this historic re-positioning of the environment in Government policy and national direction.

Miss Flaherty

Fine Gael believe this budget will leave inequality and poverty rampant in our society and leave our social welfare system riddled with anomalies. Last week Fine Gael produced a document containing their proposals on social welfare and anti-poverty measures and targeted certain areas for action. The first area we identified as being in urgent need of a response is the position of those on low pay. However, the budget has by and large not dealt with those on low pay and those who were caught in the poverty trap prior to the budget will be more firmly fixed in it than ever.

The changes proposed will not affect the majority of those on low pay. The reforms in PRSI mooted in the budget will not help the group caught in the poverty trap identified during the past number of weeks by Deputy Jim Mitchell. I am referring in particular to husbands and wives and their children, to people on low pay and who are better off on social welfare. The exemption from PRSI payments for those earning £60 per week is irrelevant to those people. The only way some families may benefit indirectly from this proposal is where the wife is the low paid earner. The failure to tackle the area of low pay is one of the major disappointments of this budget. Fine Gael proposed that the PRSI exemption should be extended to the first £2,500 of all income. This would have affected workers at all levels and could have been clawed back by raising the ceilings for higher levels. This would have directly helped the category of people about whom we are most concerned.

The changes proposed in relation to tax and social welfare are a totally inadequate response to the plight of families with children which report after report has identified as suffering most from poverty and who are most at risk. The net package for social welfare amounts to £76 million of gross additional expenditure. As our party leader pointed out this morning, £57 million of this amount has already been found through savings in the Department of Social Welfare so the net additional expenditure will be more in the order of £20 million.

The increase of 5 per cent in line with inflation to social welfare recipients may initially seem like a shiny package but it loses its shine very rapidly on closer inspection. We have to remember that last year inflation greatly exceeded the level of any increases awarded and there is a necessary catch-up of between 1 and 1.5 per cent for social welfare recipients. We also have to take into account the figures for inflation being mooted by various commentators which range from 3.5 to 4.5 per cent. If we have a higher level of inflation this year, then the basic rate of increase for social welfare recipients will not match the inflation rate.

A very valid point which the general rate of inflation may hide is that the items on which those on very low incomes spend the bulk of their money do not relate exactly to the overall consumer price index. These people spend a very high proportion of their money on basic items of food and clothing and accommodation. The last assessment of the inflation rate showed that accommodation and food costs made up a very high proportion of the increase in the consumer price index. This means that the real rate of inflation may be higher for families on social welfare than the national average. This is also borne out by the fact that many families on social welfare are facing rent increases of up to 25 per cent on the levels they paid last year. I know we are talking about very low rents but we are also talking about extremely low incomes. If this is an indication of the increases that will have to be borne by these people, then the increases awarded in this budget will not even cover them for the increase in inflation and will do nothing to improve their position.

There has been some rationalisation and targeting in this budget but there has been inadequate targeting of families with children. In some cases dependant allowances have gone up by pennies and in other cases they have gone up more substantially. The minimum rate has been increased from £10 to £11 but this is substantially below the level recommended by most commentators as adequate for maintaining and supporting children. The Minister has failed to acknowledge in any way the case we made in our pre-budget submission about the extra costs of rearing older children. A child of 12 years plus can be classified as an adult and may need adult clothing and footwear. All commentators and most of the members of the Conference of Major Religious Superiors who are campaigning for social welfare reform have identified the need for extra support for older children. I regret very much that no progress has been made in this area which we highlighted as being very much in need of action.

The only differentiation in dependency levels is the size of families. Large families and the age of children increase the demands on family incomes very substantially because of additional schooling costs, examination expenses, etc. Families with teenagers can have a lot of demands on their income and we believe this concept should be introduced into social welfare payments. We will raise this matter again when we are debating the Social Welfare Bill and I hope we will be successful in winning a response from the Minister.

The other very important factor to bear in mind in the light of the glowing presentation of a generous and caring budget is the background of the substantial savings made in the social welfare area over the past number of years. The Minister has regularly claimed to have made savings in the order of £200 million in the social welfare area over the past two years and during the past two months since the Estimates were produced he has been able to save a further £59 million. What will be the saving in a whole year? What does the give-away really amount to? I will refer later to specific social welfare schemes.

In our pre-budget submission we argued there is a need for a multi-disciplinary approach in tackling poverty. With a few honourable exceptions, the Government have failed to tackle this problem seriously. I listened for the last half an hour to the Minister for the Environment talking about a green Ireland and a caring Ireland. It seems that the only housing to be provided are thatched cottages in the west, but I would like to point out to him that there are people in Dublin city who would settle for any kind of cottage or accommodation and that by the end of this year the problem will be a great deal more serious because of the grossly inadequate level of funding provided for local authority housing. I thought this was one of the issues which would have been addressed by the Government if they were serious about responding to people's needs. It is bad enough to have to live on inadequate incomes, but having to live in over-crowded or inadequate accommodation in estates crying out for improvements and upgrading and which have been listed in local authority plans for five or six years adds to their plight. However no attempt has been made to address the growing housing crisis in Dublin city. You, a Leas-Cheann Comhairle, know this as well as I do. I, as I am sure you did, had hoped that there would have been some allocation for refurbishment in Dublin city and in our other cities, but unfortunately there was no such good news.

The Minister in detailing the grossly inadequate allocation for housing this year said this marked the end of the downward trend, but this is blatant misrepresentation of the facts. The funds allocated in the budget do not come anywhere near the amount of funds provided for housing in Dublin city alone four or five years ago. The allocation has to be spread around the country which inevitably means thinly. The failure of the Government to put together a package to tackle this problem will add to the problems facing people on grossly inadequate incomes who will find that the problems they face in health, housing and legal aid have not been eased in any way.

I welcome the response to the demands we made on primary education and the increased allocation for second level schools. Our second level schools following the withdrawal of the religious and their indirect subsidies for second level education, are becoming the Cinderella of our education system in terms of their capacity to meet the cost of maintaining and upgrading buildings and providing equipment and to maintain standards. I also welcome the fact that this area has to some degree been targeted.

I support the view expressed by my party leader this morning that people living on inadequate incomes will find that their housing problems, as I have already identified, are going to get worse, and there is nothing in the budget which will lead them to have any hope that their position will improve. They will also find that if they run into family and legal problems the services being provided are grossly inadequate. The same will apply in the area of health. There is nothing in the budget which will lead to the average person thinking that the service will improve.

I welcome the gesture the Minister made towards women. In our pre-budget submission we indicated that women are strongly represented among the social welfare groupings, the poor, and form the bulk of the low paid. I now want to refer to the PRSI exemption on incomes below £60. The problem in using exemptions to assist people is that there has to be a cut-off point and above that figure people run into problems. Therefore as is the case with equality legislation there is an incentive to keep people on low pay. The reactions of a group of unemployed workers yesterday to the budget which included "I do not want to be forced into slave labour" and "I do not want to be paid £2 extra a week, I want a job" should focus our attention on another weakness in the budget and that is the lack of action on jobs. I will return to this point later.

At present women are over-represented among the social welfare groupings and the poor and they make up the bulk of the low paid. This exemption will help to ease the plight of some women but it will also act as a temptation to keep women confined to those lower levels of income. While I have no reason to doubt that the Minister will handle this matter with sensitivity and compassion these funds should be allocated to a department of women's affairs. I regret that we do not have such a department. The fact that the Government are reintroducing a heading in the budget indicates that they were wrong to abolish it in the first place. I also expect them in due course to admit that they were wrong to abolish the women's affairs section. Women are carrying on the struggle in a very determined way and are coping well under very difficult circumstances. They need our support. Women's organisations, particularly in poorer areas, are often left with the burden of tackling the problems facing families on their own. They deserve direct support. I welcome this step as an acknowledgement of the immense work that they do and I hope this will be followed in due course by greater funding and the re-establishment of a department of women's affairs which in my view is essential.

The unions in their response to the budget expressed their disappointment at the failure to take any action on jobs. Even though the budget was presented as one which would encourage job creation it contains nothing which will free the job market. The Minister has made no attempt to radically reform social welfare or to integrate social welfare, PRSI and taxation and leaves the burden of taxation on employment almost unchanged. No attempt is made to remove the poverty traps to help husbands with a dependent wife and family nor is any attempt made to remove the disincentives to take up employment except for those at the very lowest margins of income. The position of the person on the average industrial wage with a large family will remain unchanged.

What is required is radical reform and the restructuring of PRSI and taxation along the lines suggested by Fine Gael in 1989. In the absence of such reform and restructuring we have to look at the existing schemes to see how they can be better targeted and improved. On a first reading the list of schemes announced by the Minister makes impressive reading but when we examine them more closely we see that they are grossly inadequate. While the position of the long-term unemployed on unemployment assistance has been significantly improved, they have leapfrogged, to an ever greater degree, those on unemployment benefit and disability benefit. This is strange if there is to be any coherence in the idea of having a social insurance scheme.

It is impossible to get statistics — at least I do not see them — for those on disability benefit and unemployment benefit who are in receipt of pay-related benefit. Only a further 2 per cent of the gross spending on disability benefit is spent on pay-related benefit. In the case of unemployment benefit one would have expected it to be fairly substantial but the figure is of the order of 10 per cent. This indicates a tiny number in receipt of pay-related benefit while in receipt of disability benefit, and a substantial number of those on unemployment benefit in receipt of no additional benefit. They are now on a lower level of benefit than all social welfare recipients other than the supplementary welfare group. This is a problem for those on disability benefit. At least if you are on unemployment benefit for 15 months you have the option of proceeding to unemployment assistance, to a higher level of benefit, and the additional benefits that go with that such as free fuel, bonus payments, etc.

According to the Minister's statistics, many people on disability benefit have been in receipt of it for three to five years — upwards of 22,000 recipients have been receiving disability benefit. While a number of them, said to amount to half, would have other sources of income into the family, the other half must be entirely dependent on disability benefit.

I have had this argument with the Minister at Question Time and feel I have not got very far with it. Fine Gael are concerned about this group. Coming up to Christmas they were in contact with me and, I am sure, with other Deputies about facing Christmas on a lower level of benefit and treated as short-term recipients although some of them have been in receipt of disability benefit for many years; they have applied for their invalidity pension, which the Minister suggests is easily available, and have been turned down time and time again and asked to come back six months or a year later to be checked again.

Invalidity pension is extremely difficult to get. The position of that category is appalling because the supplementary welfare system is not even allowed to respond to them positively in that they are seen as being on short-term benefit. There is an urgent need to address the problems of this group and to bring their payments more in line with those of other social welfare recipients. This group have become a sub-class, perhaps because of the failure to reform the whole area of disability benefit entirely.

A large group are in need of assistance along the lines of disability payments, which would be means tested. This would allow them to come on the higher rates and get all the ancillary benefits. This group have a large number of dependants and they are living on grossly inadequate incomes for long periods. We will raise this problem again on the Social Welfare Bill.

The Minister has allocated £1 million for the improvement in the family income supplement scheme. This is grossly inadequate to do what Fine Gael recommend, which is to calculate this on net rather than gross pay. It is totally inadequate to respond in any way to the fact that the tax changes have left the position of the low paid at work virtually unchanged and unimproved, and they are caught as much as ever in the poverty trap. Their only hope is the FIS.

I note that the Minister, through the Revenue Commissioners, intends to target the low paid with information. This was recommended by Dr. Blackwell in his study of the FIS. I regret that his advice was not taken for a more targeted approach rather than a general PR campaign which may have done the Minister and the Department some good but simply raised expectations of large numbers of people who are not qualified. The target information did not reach the identifiable groups who might have been beneficiaries. While there has been an increase in the uptake of this benefit, it has not reached all those who qualify.

The Minister says he will ensure that persons who qualify for FIS will not lose their medical card. That is welcome, and I will be very interested to hear how he intends to implement this because this is seen as a disincentive to take up the FIS because these people would lose benefits they have as a result of their level of income.

The Minister did not refer to the demand from women on separate payments. I understand that he has in the past indicated a willingness to deal with this but there has been a total failure to do anything about it. Women on separate payments looking after their children and often separated from their husbands or maybe living with a husband who is not maintaining the family properly, who has an alcohol problem and is using up a substantial portion of the family income, should be able to receive at least half the combined personal adult dependant allowance. This was acknowledged on another occasion by the Minister but we have seen no effective action on this to date. I would like the Minister to respond to that.

Much has been made of the improvement in the prescribed relative's allowance. This is welcome because up to the announcement in the budget it was the lowest of all social welfare payments for a service we claim to regard highly. The proposal to increase the level of payment to approximately that of unemployment assistance is welcome and is a move in line with our policy.

Acting Chairman (Mr. M. Barrett)

Deputy, if you are not your party's spokesperson on Finance you have two minutes left. You are entitled to half an hour.

Miss Flaherty

The most problematic part is that only 2,000 people nationally are currently benefiting from this. The number of people caring for elderly relatives is of the order of 60,000 and unless the conditions under which this allowance is awarded are improved, this will be a nominal change and will have no substantial effect on improving the situation for carers. This is an essential reform and we will be pressing for the rules to qualify for this allowance to be improved and relaxed. The fact that a person is giving up employment to look after somebody else should be taken into account.

The scheme for free travel for the handicapped is confined to those on DPMA. This excludes blind pensioners and old age pensioners. In my correspondence there is a great demand among those to be included in this scheme. The Minister has not mentioned the issue of pro rata old age pensions for people who are in mixed insurance. These are people who have contributed an average of between five and 19 annual contributions. One group of pensioners have qualified but a large group of pensioners are excluded. This is an anomaly and an injustice. I have been trying for months to get the numbers involved from the Minister. The Minister, kicking to touch, says the pensions board are looking at it.

Minister for Social Welfare (Dr. Woods)

This budget continues the progress we have made over the last three years. Our successful economic strategy, set out in 1987 in the Programme for National Recovery, continues in place with the Programme for Government 1989-1993.

Our objective is to achieve strong and sustainable economic growth with increased employment and a reduction in personal taxation. At the same time, we are committed to maintaining and improving the position of those who depend on social welfare.

This budget produces a unique balance in achieving our twin objectives of social concern and the promotion of enterprise and jobs. The social welfare provisions show the Government's continued determination to protect and improve the position of those dependent on social welfare. The package of improvements which we are implementing will more than maintain the position of all those on social welfare and at the same time special additional increases are being given to a wider range of people than in previous years. The total value of the package for those on social welfare or at work on low pay is £216 million in a full year and £100 million this year. It brings estimated total social welfare expenditure to £2,764 million in 1990, its highest ever figure.

The speech that has been circulated is a little bit longer than the speech I will be reading because of the time constraints, but it gives Deputies a little more information.

We are providing: an across-the-board increase of 5 per cent in all payments, including child benefit — this is well ahead of the expected inflation of just over 3 per cent for 1990; extra increases for those on lower payments and these increases are being granted to 16 different groups of welfare recipients; innovative measures in response to the special needs of certain groups such as carers; a major initiative to relieve people on low earnings of liability for PRSI while preserving their entitlements; substantial improvements in the tax exemption levels for people at work on low pay.

The main improvements in social welfare payments in this year's budget package are: weekly social welfare payments, which will increase, in general, by a minimum of 5 per cent; the 5 per cent increase will also apply to child benefit from October; there will be special increases in certain rates as follows: £5 per week (11 per cent) to £52 for people on long term unemployment assistance or single woman's allowance: special increases of between 7 per cent and 15 per cent in the rates for adult dependants of the unemployed and those on supplementary welfare. The new adult dependant rate for all of these payments will be £31 per week; £4.80 per week (10 per cent) to £52 for people on disabled person's maintenance allowance; £4 per week (8 per cent) to £53 for widows, widowers, deserted wives-husbands, unmarried mothers and prisoners' wives under 66 on means-tested pensions or allowances; £3 per week to £53 for people on non-contributory old age pensions; £3.50 per week to £56 for widows and deserted wives under 66 on contributory pensions; £3 per week (7 per cent) to £45 for people on short term unemployment assistance or supplementary welfare allowance; and £3 per week (7 per cent) to £48 for people on unemployment benefit or disability benefit.

There will be an increase to a minimum of £11 per week per child in the child dependant allowances payable with weekly social welfare payments. Streamlining of the rates for child dependants will reduce the total number of these rates from 12 to six i.e. down from 36 rates in three years.

Child dependant allowances up to 20 years of age will be paid to the long term unemployed, old age and invalidity pensioners, where the child remains in full time education.

A new clothing allowance will be introduced in September to help social welfare recipients to provide for their children's school and winter clothing. Three million pounds has been provided for this allowance.

A new carer's allowance will replace the current payments for prescribed relatives providing full time care and attention to pensioners in October. The rate of the allowance will be £45 per week, an increase of £17 (61 per cent). The new allowance will be means-tested and a wider range of people will be able to qualify as carers under the scheme. Arrangements will be made to preserve entitlement to the existing prescribed relative's allowance where this would be to the advantage of the household.

Improvements to the value of £1 million will be introduced in the family income supplement — FIS. These will include increasing the income limits and the maximum amounts payable.

Extra benefits such as free travel and free electricity will be extended to certain pensioners, as follows: a companion will be allowed travel free with a recipient of disabled person's maintenance allowance — this will particularly benefit handicapped people, including mentally handicapped; all the extra benefits will be extended to pensioners of states, such as Austria, with whom Ireland has bilateral social security agreements — we are completing a number of other bilateral agreements at present; people aged over 80 who have free electricity or natural gas allowance and free TV licence will retain these entitlements even if someone comes to live with them; and invalidity pensioners who transfer to retirement pension will now retain their entitlement to extra benefits.

The national fuel scheme will be extended to householders where a long term social welfare recipient lives with someone on short term unemployment assistance or supplementary welfare allowance. Deputies will be aware that the scheme was introduced for the elderly originally. It was then extended to the long term unemployed and I am now arranging that those on short term unemployment assistance or supplementary welfare allowance will not be debarred from the scheme. This is an important improvement. It will also be extended to smallholders receiving long term unemployment assistance who are living alone. That, of course means living within the general terms of living alone, which can mean living with a dependent wife or children or other dependants.

Special grants will be paid as follows: a special allocation of £500,000 for programmes for women. Of this £150,000 is for the Rape Crisis Centres. The balance will be used to give grant-aid to self-help groups working with women in the local community; a special allocation of £550,000 for community development and other initiatives will be used to support certain worth-while projects which did not get funding under the third EC Poverty Programme; and a grant of £50,000 to the Simon Community for community enterprise projects which involve the homeless.

A PRSI exemption for low-paid workers is being introduced. From April 1990 workers currently paying full rate PRSI whose gross earnings are at or below £60 in a week will be exempt from their share of the PRSI contribution (5.5 per cent) for that week. They will continue entitlement to full benefits. The value of the exemption is up to £3.30 per week for these low paid workers.

Tax exemption limits for low-paid workers are improved as follows (from April):

	From:	To:
	£	£
Single	3,000	3,250
Married	6,000	6,500
Child	200	300

That represents a very substantial increase. As a result a family with five children earning up to £8,000 a year (£150 per week) will be exempt from income tax, with marginal relief above that level. There is further relief for those earning above £8,000.

The age exemption limits for income tax are being increased for single persons to £3,750 for those aged over 65, and to £4,350 for those aged over 75. These rates will be doubled to £7,500 and £8,700 respectively for married couples. This, of course affects old age pensioners particularly, and will be of considerable benefit to them.

The social welfare improvements in this budget build on the achievements of last year by again focusing on families and particularly women working in the home. Measures which are of benefit to women include: the increase of 5 per cent in child benefit payments; the special increases for the first time in the personal rates of widow's non-contributory pensions and the streamlining of the rates of contributory pensions; the special increases in the rates for adult dependants of the unemployed with the rate being streamlined at £31 per week; the special increases in the rates of deserted wife's allowance, unmarried mother's allowance, prisoner's wife's allowance; the further streamlining and improvement of child dependant rates to achieve a new minimum payment of £11 per week; and the further extension to 20 years of age of the payment of child dependant allowances to long term recipients whose children remain in full time education.

I was surprised that Deputy Flaherty thought there was very little for women in this budget. In fact there is a very strong emphasis on women and many facets of the budget were designed specifically to support women, and particularly those working in the home.

Also included are: the further improvements to be announced in the family income supplement scheme; the introduction of a new clothing allowance, particularly welcomed by women in the home; the introduction of a carer's allowance which will mainly benefit women who care for elderly people at home, the reality being that most carers are women; a special allocation of £500,000 for local programmes for women; and the exemption from PRSI liability for those on low pay which will especially benefit women in low-paid jobs.

In addition to the PRSI exemption I intend to provide half rate disability benefit for up to 15 months, for windows and other lone parents — something they have been seeking in recent times. Those in this group earning above the £60 per week exemption limit will be liable for PRSI on the same basis as other workers.

I would now like to go through the various measures in some detail.

The 5 per cent across-the-board increase at a time when inflation is expected to be around 3 per cent for the year mid-1990 to mid-1991, more than meets the commitment in the Programme for National Recovery. This will keep social welfare payments above increases in the cost of living. This overall increase is being provided at a cost of £51.5 million in 1990 and almost £100 million in a full year.

In line with the general increase, child benefit is also being increased by 5 per cent from October. The monthly rates of payment from then will be £15.80 per child in respect of the first four children, and £22.90 per child for the fifth and subsequent children. A 4-child family will receive an increase of £3 per month while a 6-child family will receive an additional £5.30 per month. As a matter of interest, a five-child family will now receive £20 per week in child benefit. Expenditure on this scheme will be over £211 million this year in respect of some 470,000 families and 1,140,000 children. I believe that this scheme is one of the most important instruments available to me for providing direct payments to mothers. It has the advantage that it goes to families of people whether at work or on social welfare. I am happy to be in a position to meet the request of the Irish Congress of Trade Unions and others in this regard.

Mrs. Barnes

Particularly women.

Dr. Woods

In line with the commitment in the Programme for National Recovery significant special increases have again been given to those on the lower payments. In addition, on this occasion new groups of people will benefit from special increases. As Deputies will be aware, the long-term unemployed for three years in sucession have received substantial increases but this time we are extending such increases beyond the long-term unemployed. The long-term unemployed will receive an increase of £5 per week or nearly 11 per cent. This is on top of increases of 11 per cent and 12 per cent in the last two years. It means that over the last three years we have increased long-term unemployment assistance by over 37 per cent. This represents a real increase after inflation of 23 per cent. By any objective yardstick it must be recognised that this represents a substantial improvement. The range of special increases has been extended this year in a number of ways, as set out earlier.

In this year's budget we have provided a special increase for people on disabled person's maintenance allowance. The DPMA rate for a single person will be increased from £47.20 to £52, an increase of just over 10 per cent. There will also be increases in the payments for dependants. This is a significant development and ensures that people on DMPA — who are long-term disabled — will receive the same rate of payment as those on long-term unemployment assistance.

In line with the recommendations of the Commission on Social Welfare I am convinced that the best long-term approach is for the supplementary welfare allowance and the DMPA schemes to be administered directly by my Department. While, in both cases there are major issues to be addressed I envisage at this stage a phased approach with responsibility for the DPMA being transferred to my Department as soon as the necessary administrative arrangements are put in place. I am today giving the House an undertaking to set that in motion.

In line with the focus on families — and particularly women at home —I am especially pleased to announce that special increases have been given in the rates payable for adult dependants for unemployment payments. The rates are being streamlined and increased to a minimum of £31 per week. This means an increase to £4.10 or 15.2 per cent for those on short-term unemployment assistance or supplementary welfare allowance and an increase of £2 or 6.9 per cent for those on disability benefit, unemployment benefit or long-term unemployment assistance.

The new rate of £31 per week from July next will mean that adult dependant rates will amount to between 60 per cent and 69 per cent of the personal rate of unemployment payments. This meets and indeed exceeds the relationship recommended by the Commission on Social Welfare.

Following on the improvements made in increasing and streamlining payments in respect of child dependants last year, I am glad to be able to say that this work is being continued. The minimum child dependant rate is being increased from £10 to £11 per week, and the number of rates is being reduced from 12 to 6. The range of payments is also being reduced and will now be between £11 and £15. I have now reduced the number of separate rates of child dependant increases from 36 to 6.

Also, as I indicated last year, the child dependant payment will be paid up to age 20 in respect of all long-term recipients as a further step towards age 21. These payments are already paid up to age 21 in respect of widows and other lone parents.

What do these increases mean? The package of special rates increases coupled with the general 5 per cent increase, is a significant achievement in budgetary terms. It also means a considerable increase for single persons and families. This is illustrated by the following examples: a couple with two children on long-term unemployment assistance will receive £105 per week, an increase of £8, while a couple with four children will receive an increase of £10 bringing their payment to £127 per week. A couple with four children on short-term unemployment assistance or supplementary welfare allowance will receive £120 per week, which is an increase of £11.10, while a couple with six children will get an increase of £13.10, and a total payment of £142; a lone parent under 66 with three children on an assistance payment will receive an additional £5.20, giving a total payment of £93.50; a widow or deserted wife on a contributory payment with four children will receive a payment of £116 which is an increase of £5.10; an old age pensioner couple each on a non-contributory pension will receive a total increase of £6, giving them a payment of £53 each; and a couple both over 66 — and under 80 — on a contributory old age pension will receive a payment of £107.20 which is an increase of £5.

In approaching the social welfare improvements in this budget, I was very much aware of the submissions I received from Deputies and various organisations. Most of these referred to the increases recommended by the Commission on Social Welfare. I trust that the House will agree that the increases now being provided represent substantial progress in this regard. The 1990 equivalent of the priority rate recommended by the commission is £53. This has now been achieved in the case of all old age and lone parents pensions and almost so — £52 — in the case of the long-term unemployment assistance and disabled person's maintenance allowances. On any objective analysis I know it is not possible to satisfy everybody. There will always be people who will say we should have given more. They always say that even when we have given very substantial increases. These are substantial increases, we are making substantial progress and the benefits emanate principally from the Programme for National Recovery. I know only too well that family budgeting on low incomes is not easy, particularly where children are involved. Expenses are high especially at certain times of the year and many families find it difficult to budget for these expenses. In recognition of this last year I introduced improvements into the footwear scheme. This year the Government have gone a step further by providing a clothing allowance for families on social welfare payments for school and winter clothes. We have allocated £3 million for this purpose.

I will announce details of the scheme in the coming months. Information leaflets setting out the payment levels will then be published so that clients will be aware of their entitlements before autumn. From my pre-budget discussions with the voluntary bodies and ICTU, I know that this will be a very welcome measure.

Currently a prescribed relative allowance is paid in certain cases where a person is providing full-time care and attention to a pensioner. This is a very important scheme though limited in scope. I have been aware for some time of the need to improve the present arrangements. Many Deputies and voluntary organisations working with elderly people have made this case to me. Recently I arranged for the prescribed relative allowance to be paid directly to the prescribed relative and Deputies welcomed that in last year's Bill. In this budget we are providing for a major change in the scheme.

From October this year a carer's allowance will replace the current arrangements. A payment of £45 per week will be made on a means tested basis, and the scope of the scheme will be extended. This improvement indicates that the Government recognise the role of carers, who are mainly women, and the debt the community owes to these dedicated people. The precise details of the new scheme are currently being worked out and I will be making an announcement in due course.

Mrs. Barnes

Will the scheme be widened also?

Dr. Woods

It will be widened. Obviously there will have to be controls and criteria but it will be a widened scheme.

Given the changes in this and last year's budgets the carer's allowance will provide a payment, equivalent to the short-term unemployment assistance rate, to a carer in her/his own right. I will be keeping the whole scheme under review to establish how it can be further improved given the twin objectives of providing an adequate income maintenance payment to carers and enabling elderly people where possible to remain in their own homes rather than have to go into hospital or a home.

The budget provides £1 million for increases in the family income supplement. The Government are not against providing more money. It is a question of estimating what is likely to be taken up in this case. We will see how it goes, but it will be improved further. In the last year I have made considerable efforts to improve the take-up of FIS including a special advertising campaign. In the weeks following the campaign, FIS applications were more than double their previous levels. Cases in payment increased from 5,159 at the end of 1988 to over 6,000 at the end of 1989. The advertising campaign was followed in November with a mailshot to families on low wages in the north-west of the country. Further mailshots in other regions are planned, and it is proposed to use a number of different mailshots to test the impact on the response rate. I will also be arranging for research into the reasons so many people who appear to be eligible for FIS are still not applying for the scheme.

As announced in the budget the Government are taking steps to ensure that no person loses the medical card as a result of claiming the family income supplement. This has been a major concern for many people and I expect that this measure will have a significant effect on the level of take-up under the scheme. I would like to thank those health boards who co-operated already before we had to take this step — as Deputies will be aware a number of health boards were not prepared to co-operate with us but all will have to co-operate now.

The £1 million now being provided for family income supplement will allow for increases in the income ceilings and rates of payments. The increases will be designed to give an additional incentive to persons who may not be taking up their entitlements under the scheme. I will announce details of the improvements at a later stage.

In line with the approach adopted last year, I am continuing to improve the free electricity, TV licence and telephone rental schemes and remove anomalies which come to our notice. The following improvements will be implemented this year: the free travel scheme will be altered so as to allow recipients of disabled person's maintenance allowance who cannot travel alone to bring a companion when availing of the free travel concession. This will help physically and mentally handicapped people to utilise the free travel concession more fully; elderly pensioners over 80 years of age will be allowed to retain their entitlement to free electricity allowance when people come to live with them; invalidity pensioners who transfer to retirement pension on reaching 65 years of age will no longer lose their entitlement to the free schemes. The gap which existed there is now being covered; free scheme entitlements will be extended to all social security pensioners of States with whom Ireland has signed bilateral social security agreements.

The Government have strongly supported the EC Poverty Programme as a means of developing local initiatives. Two large scale Irish projects based in Connemara and Limerick and a smaller project based in Dublin are included in the third EC Programme which is now commencing. The Government are concerned that other very worth-while projects such as those in Tallaght, Blanchardstown, Coolock, the Inishowen Peninsula, Louisburgh, the Knocknaheeny and Mayfield areas of Cork, south Wexford and the south inner city of Dublin, should be supported. These projects provide a vital resource in their communities. They initiate a wide range of activities, including local enterprise activities and projects with the elderly, young families, single parents and other groups in need of help and support. An amount of £0.6 million has been provided in the Estimates for grants to voluntary organisations and the Government have decided to allocate £0.525 million of this to support the core activities of worthwhile projects of this kind and I will make the necessary arrangements to allocate these funds. This is in addition to the voluntary grants scheme for once-off projects.

Mrs. Barnes

Is any monitoring and research of these projects being done?

Dr. Woods

Yes. Most of these arose through the Combat Poverty Agency and were left out of the EC Programme. The balance of £50,000 is being provided as a once-off grant to the Simon Community for community enterprise projects involving the homeless.

I am delighted to be able to introduce a special allocation of £500,000 for projects aimed specifically at women. The establishment of community-based self-help groups has encouraged women to think about their personal development, to continue to improve their education and to develop their capacity for leadership and organisation. Overall, they enable women to contribute more fully to their own personal development and the development of their communities. The Combat Poverty Agency have identified a considerable potential for development in this area.

Of this special allocation, up to £150,000 is being made available to support the work of the Rape Crisis Centres around the country. The balance of the allocation will be used as grants to local self-help groups working for women. Details of the grant arrangements are being worked out at present and I will be making an announcement shortly as to how the funds will be allocated.

The disincentive to work faced by those on social welfare payments has been greatly exaggerated. In fact, only a minority of individuals are better off on social welfare than at work. A study of 1,000 unemployment benefit claimants recently undertaken by my Department examined the incentive to work for individuals, as measured by the replacement ratio — the ratio of net income while on social welfare to net take home pay from working. That study established that only 7.9 per cent of the sample were better off unemployed than at work. This comprised 3 per cent single people, who are entitled to the lowest level of social welfare payment only. The reason for their high replacement ratio is obviously that net pay from working was low. In contrast, a large proportion of the sample were considerably worse off on social welfare. For almost 60 per cent of individuals, social welfare payments replaced less than 50 per cent of their income from working. These figures represent the real life situation of workers and social welfare recipients and avoid the unrealistic assumption which is often made that all social welfare recipients are eligible for a medical card, reduced rent, pay-related benefit, and so on.

In this budget, we have taken steps to ensure that further progress is made towards increasing the incentive to work for the minority of individuals for whom it is a problem and I have mentioned most of them already.

In relation to the new PRSI exemption for employees, the Government are conscious of the position of individuals on low pay, who have their net take-home pay reduced by deduction of PRSI contributions. The payment of such contributions can be a heavy imposition on those below the poverty line. Moreover, PRSI contributions penalise those who are willing to take up low paid employment rather than remain on social welfare.

The Government have decided to tackle this problem by exempting low-paid workers from PRSI contributions. From April 1990, employees whose gross earnings are £60 per week or less will not be required to pay social insurance contributions. Workers will benefit by up to £3.30 per week from this concession. I would like to emphasise that this will not affect the entitlement of these employees to social insurance benefits. It is estimated that as many as 50,000 individuals may benefit from this relief at a cost of £8 million in 1990. I will be announcing details of the scheme later.

I have pointed out that in the Department of Social Welfare we have taken major steps to improve the position of those who depend on us. I also set out in the speech I circulated changes I am making in the means testing scheme which will be welcomed.

The package I have outlined, including the improvements in the administration of my Department's services, will have a major impact on the people who depend on us. The fruits of the Programme for National Recovery and the co-operation given by the social partners have made these improvements possible. We begin the 1990s with an excellent and progressive social welfare package and a number of novel developments. I know these measures which the Government have introduced will be widely welcomed.

Mr. Carey

Time passes quickly and we have another budget with the usual budget speeches. Yesterday we witnessed a marathon speech by the Minister for Finance who could be congratulated on his delivery of it. The speech was greeted in the Chamber by almost total silence not alone from the Opposition but from his supporters and many people seemed relieved that nothing radical had happened. Ministers have an opportunity to do things and this is the second time Deputy Reynolds has had an opportunity to do something radical for the people and the economy. Once again the Minister has been inhibited by the problems in social welfare the details of which were given ad nauseam by the Minister for Social Welfare.

The real problem relates to unemployment and we have over 200,000 people unemployed. In any financial arrangements there should have been an attempt to improve the conditions for creating employment. As far as I can see the Minister has once again turned the budget into a great PR exercise and the bigger PR exercise relates to tax revenue.

On examination the Principal Features of the budget will show that instead of tax revenue coming down in 1990 as indicated by news headlines, it will go up by £360 million. That is nothing new for the Fianna Fáil Party in Government. Since they got to power they have given a little here and taken a little there. Their economic policy has been totally defensive. They have isolated this country for long periods and now we are being asked to become a market economy.

Fianna Fáil have adopted a begging bowl approach in order to arrive at solutions for our economic difficulties. When their partners in Government, the Progressive Democrats, were on this side of the House they trumpeted to the other Government that current revenue and current tax was going up, that there was no change in the burden of taxation which was enormous. Yet, last night they trooped through the lobby saying they had had a major achievement. The bottom line for the taxpayer is a real reduction in the tax burden which means that the outturn for 1989 would be greater than the post-budget estimate for 1990. The ordinary taxpayer wants a real reduction in tax. This Government has kicked to touch here and there and given a little here and there and we have ended up with the same national problems and the same constituency problems.

Great expectations were raised of the European Presidency for this country. One would have thought the Minister for Finance and the Taoiseach would lead on tax harmonisation. Most people on the Government side of the House praised them for leadership and if they want to dissipate some of the gloom and doom, that is all right. They were the authors of the rumour that we will never see the single market in 1992, that we will never get monetary union or tax harmonisation, that those propositions were only pie in the sky and that Fine Gael were spreading rumours which would never materialise. When meetings were taking place around the country debating the single market, it was played down, too. They said none of these things would happen. Although Fianna Fáil were not ready to lead this country into tax harmonisation or monetary union, they had an opportunity which they did not grasp.

The Minister in his long speech yesterday just touched on tax harmonisation. He could have said what were the objectives of the Government, what we would like our partners to do and what kind of expenditure would be involved in arriving at a suitable solution to this problem of tax harmonisation. However, when challenged by our spokesperson on finance, Deputy Noonan, and by Deputy Dukes, neither the Taoiseach nor the Minister for Finance indicated what the cost would be. It is still a mythical figure. I know the officials in the Commission in Brussels are receiving indications of huge sums from the Department of Finance who are saying it might be this, and it might be that. I am afraid the people in the west of Ireland will be left in 1992 with "it might be this and it might be that".

This Dublin-orientated budget will leave us on the real periphery of Europe with very few jobs and few people left if no jobs materialise. In the long run young people will look at their pay packets and ask themselves why they should work and pay this crippling tax when they can go abroad and have greater opportunity. They will ask themselves if they should not take the boat, as their forefathers and others before them have done. The budget should have provided an incentive to keep young people at home and should have lead to an improvement in conditions for people in the west.

As far as the western seaboard is concerned we will be left with improved tourism only. A campaign was launched by the Dublin Chamber of Commerce, subtly backed by the Taoiseach's principal adviser, Mr. McCarthy, that flights should overfly Shannon and that we should have only one national airport. They — the people in Dublin — even want to take that away from us. The media are the same. We had one correspondent last Sunday talking about the irritation of having to stop in Shannon——

An Ceann Comhairle

I would appreciate it if names were not mentioned.

Mr. Carey

I did not mention the name of the correspondent but when I meet her I will. I had looked for some kind of assistance or direction from the Minister in relation to the Structural Funds and the preparations for 1992. I had hoped there would be something about this in the Budget Statement but there is nothing in it.

Debate adjourned.