Deputy Tom Kitt was in possession but he is not here. I must now call Deputy Creed.
Financial Resolutions, 1990. - Financial Resolution No. 9: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law in relation to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(The Taoiseach.)
The budget, more than any other item of legislation, deals with the basic underlying philosophy or ideology of the Government because it prioritises all other policy measures in so far as it dictates the amount of money and resources available to Government Departments. It is in this context rather than in the context of individual proposals that I propose to address the budget today. However, before I do that I could not let the opportunity pass without referring to some of the issues raised by the previous speaker and the unfair criticisms of the 1982-87 Coalition Government.
It would be well to remember that Government's long, credible and laudible list of achievements and I intend to list a few for the record of the House. Low inflation is a cornerstone of economic health and it was that Government which brought inflation down from 21 per cent to 3 per cent. The trade balance had reached a record deficit of £1.8 billion in 1981 following the four years of Fianna Fáil Government but was brought into a surplus of £315 million by the Fine Gael-Labour Coalition in 1985. It was the first trade surplus in 40 years and we have had a trade surplus every year since. The balance of payments went into surplus in 1986 for the first time in decades and has been in surplus ever since. The Fine Gael-Labour Government brought the top rate of income tax down to 58 per cent and it was also that Government who brought the top rate of VAT down from 35 per cent to 25 per cent.
It is worth remembering that from mid-1981 to the end of 1986 that Government reduced the Exchequer borrowing requirment from 20 per cent of GNP to 12.8 per cent. It is that figure rather than the spurious figures that are trotted out without context by members of the Government today that are worth bearing in mind. It was that Fine Gael-Labour Government which brought the designated areas into being and introduced the business expansion scheme about which the previous speaker spoke very favourably. There are four major State schemes in operation to encourage employment — the social employment scheme, the employment incentive scheme, the enterprise allowance scheme and the Teamwork scheme — and not one of those four schemes was introduced by Fianna Fáil. All those schemes are credible and laudable achievements of the last Government.
To appreciate and objectively assess the merits and demerits of the 1990 budget, one has to take into account the context in which the Minister began to put together that budget. The backdrop was ten years of increasing taxation and ten years of reduction of State expenditure in services, and I do not have to list the effects that has had on our health system, our educational system and the ability of our local authorities to carry out their statutory duties. There was also the immediate context of rising interest rates, 50,000 people having emigrated in the previous year, 230,000 people unemployed and one-third of our population living in poverty. After a decade of retrenchment, of cutbacks in public spending and services, much of it badly planned and poorly executed, economic recovery had arrived. The Minister for Finance, Deputy Albert Reynolds, unlike any of his predecessors, had a golden opportunity to alleviate much of the suffering and hardship which had to be endured in order to put him in that position.
As we entered the last decade of the 20th century the over-riding problems facing our economy and staring the Minister in the face as he sat down to draft this budget were poverty, with one million people or 31 per cent of our population affected — 41 per cent of the children of this country are living in poverty — and unemployment, with 230,000 people unemployed. These were scarcely recognised in the Minister's preamble or in his proposals for the 1990 budget. The opportunity to repay those people, on whose backs this economic recovery had been brought about and to whom we owed a debt of gratitude for the suffering they endured in the eighties to bring about this recovery was lost. It must never be forgotten that this recovery was built on the backs of those least able to afford it.
In a just society this deserved recognition in the 1990 budget but unfortunately this was not forthcoming. Social welfare increases, which by the end of 1990 will have been consumed by inflation, serve only to maintain those sections of welfare recipients in continuing poverty. Of course some progress was made in improving the lot of single long-term unemployed people, people with incomes of £60 a week or less and low income families. I welcome the provisions in the budget to introduce a carer's allowance, new resources for women's projects, increases in school capitation grants, adult literacy programmes and so on. However, these improvements across a wide and diverse programme of needs, highlights the absence of a clear and coherent policy to eliminate poverty in Irish society.
With unemployment at 230,000, despite the huge numbers who have been forced to emigrate in recent years, this, along with poverty, should have been the focus of a two-prong attack by the Minister but unfortunately this was not the case. The Minister and the Government, consumed by political matters, gauged the pulse of the public correctly prior to the publication of the budget With presidential and local electons in the offing, the Minister squandered like confetti the scope which he had to tackle the twin problems of poverty and unemployment. Politically it is very difficult to be critical of a budget whose basic achievement was £5 here, £5 there and £5 everywhere. No wonder the general public sighed with relief afterwards. There are shades of the late seventies and the activities of Fianna Fáil in that period inherent in this budget. A real opportunity was lost.
This Government lack the political will to tackle in a serious way poverty and unemployment. They pander to public relations to espouse concern for their position when the reality is much different. One could be forgiven for believing that unemployment and poverty were by and large urban phenomena. I want to dispel that myth and concentrate much of my remaining time dealing with this problem as it affects rural Ireland. Poverty and unemployment permeate every corner, every town, every parish and townland in rural Ireland. There are not the same glaring symptoms or concentrations of poverty as in large urban areas and much of it is hidden by family pride and embarrassment. Rural poverty has two clearly identifiable strands: rural unemployment which is devastating because of remoteness of those affected from possible employment opportunities elsewhere; and poverty due to inadequate income from agriculture.
Much emphasis is placed in the run up to 1992 on regional development and infrastructural investment to facilitate this. This is very laudable and the eight such regions in this country spent considerable time and effort drawing up plans for local development in consultation with local knowledge and know how. What an elaborate fraud. The final draft submitted by the Government to Brussels bore little testimony to the plans and programmes drawn up by the subregions. Structural Funds, marketed as the last opportunity for rural revitalisation, a do or die effort, has failed miserably. Perhaps the Minister, if he disagrees, could justify why not one mile of strategic routes, identified in the national roads plan for investment from Regional Funds, is to be found in Connacht, Munster or Ulster but runs in a line from Dundalk to Rosslare and ventures out of the pale in two directions as far as Kinnegad and Portlaoise. This is only the tip of the iceberg. I would appeal to the Minister and the Government to give regional authorities direct access to the Commission for funding. Put local authorities on a sure financial footing and these regions will serve as vibrant development agencies, the likes of which are necessary if we are to survive and prosper in rural Ireland in the post-1992 era. This is a fundamental prerequisite to tackling the problems of rural unemployment and poverty.
In some uninformed quarters farming and poverty are deemed to be mutually exclusive but the reality is much different. Approximately 7,000 farmers are forced to leave the land every year due to inability to eke out a living. Large tracts of agricultural lands are being planted by State and private forestry as a result. This, in the absence of positive policies to combat it, has tremendous consequences for rural Ireland and has the destructive potential to change the whole social fabric of Irish rural society in a relatively short period.
Poverty and unemployment in stagnant rural communities, drained of their life blood by emigration, lead to depopulation and a gravitus towards urban life where services and companionship are assumed to be near at hand. Without elaborating on this, the consequences for the countryside are horrendous. Schools, post offices, Garda stations, are all undermined, not to mention private commercial concerns such as public houses, shops and so on.
The debate on the extension of the disadvantaged areas has generated much comment in the House. To date it is the only effective mechanism at our disposal to counteract the problems I have outlined. I should like to avail of this opportunity to again call on the Government, in particular on the Minister for Agriculture and Food, to immediately grant a maximum extension to safeguard in some small way the future viability of 30,000 family farms currently under threat. I firmly believe that that in itself will not ensure viability in the long-term of those holdings. By its nature the disadvantaged areas scheme tends to favour those who have already developed to such an extent that ensures their survival. Some form of direct income aid to those beleaguered farmers is necessary if they are to survive. The emergence in recent times of a family farm organisation for that marginalised group in Irish agriculture is proof positive of the problems I have highlighted and which need to be addressed by them.
The milk quota system, like no other structure, has decided who will stand and who will fall by the wayside in Irish agriculture. Talk is cheap but a major diplomatic and political initiative is necessary at EC level to shake the shackles off Irish agriculture in this context and to give scope to many countless young farmers, in whom we have invested millions of pounds of State money in agricultural training and education, to make a decent living. It is interesting to recall that when milk quotas were introduced the attitude adopted by the Fianna Fáil Party who were in Opposition was that they were unnecessary. We were told that if Fianna Fáil were in Government the quotas would not have been introduced. That glib remark was typical of Fianna Fáil opposition between 1982 and 1987 but we could well do with them using our EC Presidency to make some progress in that area to ensure long-term viability for rural Ireland and the many educated young farmers who are inheriting holdings that do not have the potential to provide them with a decent standard of living.
Rising interest rates are the biggest single factor affecting our ability to generate employment and eliminate poverty. The very fact that our Minister for Finance on budget day was unaware of the implications of German unity for our interest rates displays incompetence beyond credulity, especially as the dogs in the street knew of the implications for Irish interest rates of such a move. In fact, interest rates have risen by 5 per cent over the last 12 months and the budget offered no relief for besieged mortgage holders. In view of the alarming increase in the number of repossessions by local authorities, banks and building societies, and the implications of that for local authority housing waiting lists which are already endless, I should like to appeal to the Minister to consider restoring full mortgage interest relief when he is drafting the Finance Bill.
To alleviate the impact of interest rate increases on farmers and industry it is necessary to provide low interest loans for specific projects with the exchange rate risk being guaranteed by the Government. That is not a revolutionary idea because it was used in the period between 1982 and 1987. In agriculture all farm grant costings are four to five years out of date and need to be revised. Prompt payment by the Department is also essential. Some farmers are suffering severe hardship by reason of those twin disadvantages in the grant schemes. It appears that there is a deliberate policy by the Department to delay grant payments.
Criticism of a budget is easy if one does not have to find the additional finance for one's alternative proposals but I do not intend to deal with that today. Our tax base is excessively narrow with an over-reliance on personal taxation. In my view we are reaping our just rewards in terms of unemployment and emigration because of our over-reliance on personal taxation. We need to widen our tax base. In 1987, taxes on corporate income in Ireland was equivalent to 1.3 per cent of gross domestic product, and 3.2 per cent of total tax revenue. That put us at the bottom of the OECD league based on the information available.
The huge amounts of money paid out by the State in planning compensation is a scandal. The Government must ensure that every pound of taxpayers' money is accounted for and maximum benefit derived from it. That has not always been the case. Overall a significant opportunity was lost in the budget to produce a more just and equitable tax system. I have no doubt that people will look back on the 1990 budget as an occasion when the Minister for Finance was presented with a golden opportunity to redress inequalities and injustices in our society. The opportunity was lost as the Minister pandered to political popularity. In planning the budget the Government listened to the articulate, well-off and influential lobby. What about the provision in our Constitution which states that we are obliged to cherish all children of the nation equally? We must never be intimidated in our pursuit of justice for the downtrodden. The Minister and the Government were.
In his first budget the Minister faced two difficult tasks. The first was the need to promote continued recovery of the economy and the second was the requirement to cater for the needs of the disadvantaged in our community. I am pleased to say that on both counts the Minister has been successful. Central to the achievements of the last three years has been the consensus between the Government and the social partners on the main economic and social policy objectives. I am heartened that that consensus which underpins the Programme for National Recovery is reflected in this year's financial statement. Advances in the area of employment, debt reduction, tax reform and social equity can only take place when their interdependence is recognised. The Government are to be applauded for adhering to the strategy of progress on parallel fronts.
I have come to the House from a business background and resulting from that is my concern that an environment in which commerce may thrive should continue to develop. On the face of it there are substantial grounds for confidence as we enter the nineties. The country has embarked on the fourth successive year of economic expansion. The runaway national debt has been captured following the Government's valiant efforts. Inflation is low and there are indications that the improved economic conditions are having a positive effect on the stubborn problem of unemployment. Despite recent difficulties the differential with UK interest rates has improved by 6 per cent on 1986 and by 5 per cent with West German rates for the same year.
Export growth remains buoyant and we have built up a £2.5 billion trade surplus with the rest of the EC. The economy's industrial production has been impressive. There has been a 10 per cent, or more, growth in volume over the last three years. The same period has witnessed a renewed flow of investment; strong demand, especially at home, and the gearing up of EC Structural Funds spending during 1990 will provide a vitally important boost to the forecast expansion in capital spending this year. The budget announcement that accelerated capital allowances are to be eliminated from April 1992 onwards should cause planned investment to be brought forward. Nevertheless, difficult tasks remain to be completed.
Personal taxation is a key issue to be addressed if national recovery is to be sustained. The legitimate grievances of the heavily burdened and the flight of skilled people from our shores to more favourable tax regimes demand action. The Minister deserves our praise for his positive, yet prudent, approach to tax reform. We now have a situation whereby virtually two thirds of taxpayers pay at the standard rate of tax. Between 1989 and 1990 this standard rate has been reduced from 35 per cent to 30 per cent. In addition, the higher rate has fallen from 58 per cent to 53 per cent. The latter move is particularly welcome as many skilled single people are taxed at the higher rate. Now that that trend has been firmly established I look forward to the achievement of two rates of taxation. Equity requires that the self employed contribute fairly to the tax yield. Self assessment, the withholding tax on professional fees and the new powers given to the Revenue Commissioners to combat fraud or non-compliance have facilitated the collection of tax. For the year 1988, excluding the impact of the tax amnesty, the average income tax paid by the self employed, businesses and professional taxpayers was 55 per cent higher than in 1986.
I welcome the commitment of the Minister for Finance to introduce tax assessment on a current year basis for the self employed in this year's Finance Bill. The changes to the corporation tax regime are both timely and astute. Amendments made are such that while revenue will increase, the rate of tax can be reduced from 43 per cent to 40 per cent this year. The significance of this move for the service sector should be clear to all. The Government's decision to adjust the regime to aid the creation of new jobs is a fine example of justifiable intervention to promote economic growth.
The levels of excise duties and VAT rates have long been a source of disquiet. The cutting of the standard rate from 25 per cent to 23 per cent will have a positive inflationary effect and will promote job creation. This move will, of course, benefit the poorest in the community with the fall in the price of necessities. In addition, the Minister is to be commended on his efforts to curb the loss of business in Border areas.
As someone involved in the motor industry, I enthusiastically support the changes in indirect taxation. The industry has shown signs of an upturn in recent times. This latest development can boost growth still further. While there is much in the budget provisions about which to be encouraged, there is need for some words of warning. The economies with which we have much of our trade, namely, the UK and the US, have experienced a slow down in recent months. The UK can legitimately be said to be bordering on the brink of recession. Consequently, we need to look to domestic demand expansion as a growth source. Static demand levels abroad, combined with high levels at home, could put our balance of payments surplus in peril. In addition, weak exchange rates for high domestic demand could well exert upward pressure on pay.
We must avoid a trend whereby wage settlements are above the levels recommended in the Programme for National Recovery. Past experience shows the danger of pay settlement expectations becoming unreasonably inflated once economic conditions improve. Control of inflation has been one of the Government's top priorities and principal achievements. Care must be taken lest rising demand pressures release the inflationary beast from its cage.
Our national debt remains a great obstacle to full recovery. The economy's rapid growth in recent years has reduced the length of the shadow it casts over us all but we should never forget its capacity to hinder our progress if the economy falters. However, these observations are made against a background of outstanding achievement by this Government. Now is the time for resolution and commitment to a winning strategy. We have come too far to throw away our success.
At a time of major fiscal adjustment the situation of those who lack the strength to articulate their needs demands attention; it is a crucial test of any administration that these people should feature prominently on the Government's list of priorities. In years to come when Fianna Fáil's term in office from 1987 onwards is examined I am confident that credit will be given for the efforts made to protect the underprivileged. It is evident that the allocations to Departments charged with providing services of value to the marginalised have enabled the State, not only to protect these people, but to make significant progress in raising the real value of transferred payments to them.
While there are definite signs of economic revival the Government of a democratic civilised society are honour bound to ensure that the benefits of economic improvement are spread across our society. Care for the weakest in society has long been a hallmark of Fianna Fáil Governments. The lot of those on low pay has been improved with the further extension of the exemption scheme for low income families. A married couple with five children and an income of £8,000 or less, will be completely exempt from tax. This is but one of a package of measures to aid the low paid. Further evidence of the Government's commitment to those on the fringes of economic life is seen in the 5 per cent general rise in social welfare benefits. This is well in excess of the predicted rate of inflation of 3.35 per cent for the coming year. The successive increases of about 11 per cent for each of the last three years and the transfers to the long term unemployed represent a genuine effort to assist the most vulnerable in our community. The same is true of the extra payment to lone parents on long term assistance and to spouses in the home. I am particularly pleased by the increase in the carers' allowance.
This is an added recognition of the many dedicated people who tend to the needs of infirm relatives. Any country claiming to have a Christian ethos should not neglect these people. This budget has delivered to those in need.
The operation of the various free schemes has given rise to adverse comment in recent times. I am pleased that the Minister has taken steps to remove anomalies in schemes and to facilitate individuals in their efforts to avail of those schemes to which they are entitled. The take-up of the free travel concession by the elderly was low because a companion travelling with the elderly person to aid mobility had to pay the fare. From now on companions may journey free with beneficiaries of the travel scheme. This reform is sensible and humane and I hope the frustrations of those who were unable to avail of their entitlements will be greatly reduced.
A further enlightened change relates to the decision to permit pensioners over the age of 80 to retain their free electricity entitlement when people come to live with them. This is a fine example of the State recognising the reality of life for the most vulnerable in our community. I also welcome the removal of the anomaly in the treatment of invalidity pensioners. The fact that persons with free scheme entitlements lost their entitlement when transferring to retirement pension at 65 was absurd. The ending of this restriction comes not before time.
The rationalisation of the operation of the free fuel scheme reveals the Minister's practical approach. Heretofore, a long-term welfare recipient was denied free fuel allowance where the recipient of short-term benefit lived with him. As of mid-October 1990 the denial of the fuel allowance will be abolished in such cases and it is gratifying that the allowance will be extended to persons in receipt of smallholders unemployment assistance who live alone. Such people are often battling against considerable economic odds and a small change in the annual budget can greatly enhance their circumstances.
This debate on the economic wellbeing of the country gives me the opportunity to acknowledge the Government's action to alleviate the plight of fishermen in Kilmore Quay. Members will be aware of the damage along the east coast caused by the recent severe weather. The village of Kilmore was particularly badly affected and many fishing businesses crashed following the destruction of boats. Given that the replacement cost of a fishing boat is about £1 million, even those fishermen with insurance are facing daunting bills. The magnitude of the problem is obvious when one considers that three boats were wrecked and 17 severely damaged, jeopardising the livelihood's of almost 100 people. Against this background representations were made to the Minister for Finance for whose assistance I am grateful. The decision to allocate £100,000 to BIM to assist in the repair and replacement of boats is a wise move which will aid a return to economic vibrancy in the area which enjoyed virtually full employment. It also represents a compassionate response to the plight of citizens overtaken by natural disaster.
The 1990 budget further consolidates our financial position. It offers significant personal tax relief, keeps a downward pressure on inflation, moves towards tax harmonisation and creates economic growth and employment. I compliment the Minister on his excellent budget. May it be the first of many.
I aim in my contribution to examine the contribution of the Minister for Agriculture and Food. There is a comprehensive examination of every aspect of Government policy expressed in a budget, and the Minister's contribution in a budget debate usually charts the policy of the Department for the coming year. The speech of the Minister for Agriculture and Food on the budget devoted six lines to agriculture, and that was on the grants for agricultural students. The contribution of the Minister of State, Deputy Walsh, in the budget debate — who I take it was stating Government policy on agriculture — was pathetic and appalling given the present outlook for the nation's greatest industry. We heard from the Minister of State the usual banalities about how much the so called better economic climate suited agriculture and how it would make the industry grow.
The Minister acknowledged that in 1990 we are facing into somewhat weaker markets for some of our major farm products in a tight price cost environment and made a meal out of a marginal increase from 2 per cent to 2.3 per cent in the flat VAT rebate to unregistered farmers, but he forgot to tell us that that used to be 2.4 per cent until Mr. MacSharry rather vindictively reduced it to 1.3 per cent in 1987 to punish farmers for not paying their health and employment contributions; how could they when a proper assessment was never sent to them? The Minister of State also spoke of the concession of indexing capital acquisition tax, to family transfers. That is hardly a concession since a principle of justice in any taxation measure should be the indexation to the changing values of money. Of course the Minister had nothing to say about the fact that the thresholds on transfers fixed several years ago were not changed from £120,000. The Minister scraped the bottom of the barrel quoting the most miserly pickings to put some kind of gloss on the farm scene.
In the early part of 1989 we listened on many occasions to the tiresome blustering optimism of Mr. O'Kennedy. As we passed the mid-year with all the indications bad except the weather, he decided to close his mouth. Minister Walsh spoke of interest rates in his policy speech on the budget.
Sorry, Deputy, it is the custom here to give each Minister and Minister of State his official title.
Sorry. The Minister of State, Deputy Walsh, spoke of interest rates in his policy speech on the budget on 6 February last, but did not mention that the increased interest rates in 1989 cost farmers £30 million more than in 1988. The Minister said not a word about the fact that, with the exception of dairying, most enterprises fared no better in 1989 than in 1988 and that for cattle farmers 1989 was nothing short of disastrous, especially for summer grazers and everybody selling cattle in the autumn. Overall margins in dry stock were back to 1984 levels even in nominal terms. Sheep margins fell significantly as did those for winter wheat and spring barley. But for the good returns in dairying due to an improvement in world trading conditions in 1989, the year would have been one of agriculture's worst in a generation.
I remember Deputy O'Kennedy in ebulient mood in the Seanad last April telling me that 1989 would be one of the best years for Irish farming in a generation. Now the outlook for 1990 and beyond is pessimistic and depressing since virtually all price projections are negative. The imminent fall in the milk price is unprecedented in scale, about 20 times greater than anything that has happened since World War II. Consequently the biggest prop that agriculture has is about to take a hammering this year with margins likely to fall by 25 per cent or more with a fall greater than that for the 50 per cent of total dairy farmers whose milk quota is 20,000 gallons or less. That is the state of the most important sector of the country's largest industry. The Minister for Finance did not say a word about this in his Budget Statement nor did the Minister of State, Deputy Walsh, say a word about it when he gave what we must regard as the definitive policy statement in this House on the budget a month ago.
The position is even more depressing when one considers the low returns for cattle and sheep with producers prices running from 10 to 20 per cent lower than last year's low levels. Cereal farmers face another fall in prices and after a brief respite last autumn pig producers face a very uncertain future. All in all we are facing a very serious crisis. Income in all sectors will fall this year, in total by perhaps 10 per cent, with the small producers coming out worst.
The position is particularly critical for cattle producers. This sector is now arguably in a more depressed state than it was in 1974. It is true to say that the industry is in a total shambles. What happened to the promises which were made in 1987? After his return to power at the time the Taoiseach gave an expansive spoof about doubling the workforce in the food processing industry. He said that the food processing industry would be the "leading motor" of economic recovery. All that is forgotten now. The processing jobs promised for Tuam and dozens of other places have all gone up in smoke and the histrionics and cant on the subject by the Taoiseach and his Ministers is finished.
The position at farm level can be helped by headage payments. I should like to remind the House that headage payments are the principal outreach from the Structural Funds to low income and marginal farmers. In recent years the Minister accepted drastic reductions in intervention price guarantees. I accept that when intervention is abused it can do a lot of harm to the real market but for all its faults it was a major source of transfer to small farmers and its removal or reduction affects the income of smaller farmers and producers most acutely. We can see the effects of this all around us in recent months. However, there has been plenty of warning that intervention as a market support was on the way out but there were plenty of promises in parallel that income supplements from the Structural Funds — headage payments are the best example — would fully compensate those whose incomes were adversely affected by the move to market determined prices. The move to market determined prices has been at great speed — well helped by our Minister for Agriculture and Food — but the compensatory headage payments have not moved at all.
The promises to double these payments, as was mentioned by Deputy Creed, extend the classified areas and develop the integrated rural development programme have so far not been kept. During a year when thousands of small or marginal enterprises are about to go to the wall the Estimates only include an extra £10 million this year to fund this Government's promises to double the headage payments, extend the eligible areas and include — this has officially been brought in, part-time farmers in the scheme. The fact that there has been no meaningful move on the integrated rural development programmes means we are losing out on several million pounds which we could be drawing down from the Structural Funds this year.
There is a range of other income supports which the Government could be drawing down to help small producers. So far as the Commission is concerned the way is clear to apply the environmentally sensitive areas scheme. This would be a major boost to the 4,000 flood victims and farm families in the Shannon valley who have been most callously ignored by the Government. There is also the extensification scheme — the opposite of intensification — by which a premium is paid to a small producer if he reduces his livestock by 20 per cent. Has this scheme been applied for?
I want to refer to another very important point. What is the Minister's attitude to the saving this year of four billion ECUs in the Community farm budget? Four billion ECUs amount to well over IR£3 billion. Some years ago the Council of Ministers, with the enthusiastic support of our Minister, placed planned enforced restrictions on farm spending. These restrictions would have meant that the planned spending budget for 1990 could not go above 30 billion ECUs. Now that the farm talks have resulted in an agreed budget of 26 billion ECUs for 1990, four billion ECUs have been saved which can be redirected and spent without infringing the regulations. Is our Minister ensuring that this money is being directed towards market supports which would help our cattle or milk prices in 1990? That is an important question. Is the Minister seeking some of this money for our people who have been partially or fully ruined by storms and floods during recent weeks? Is he seeking some of it for major structural reform, that is, a land policy which would direct more land to the farmers who wish to and can stay in farming if they could extend their holdings to economic limits?
Does the Minister not realise that larger more economic holdings must evolve to meet the challenges of GATT and other market changes? Will the Minister fight for a share of this IR£3 billion to fund a plan for the beef and beef processing industry which is utterly in chaos and now more critical than ever? Will he seek support for an overall plan to give some sense of direction and support to all farm commodity markets since confidence and morale are so low?
The Deputy is no help to them.
No doubt when the Minister is replying — the Minister of State, Deputy Lyons, is trying to do this now — he will try to represent my contribution as scaremongering.
I want to refer to a report published last Monday by Teagasc, the agricultural and food development authority set up by the Government. Their findings on farm incomes in County Offaly is a case study typical of more than half the farms in Ireland. I wish to quote from a summary to that report written by Mr. Michael Miley. It says:
Offaly has a total of 4,500 farmers, of which 3,000 are farming full-time. Only 18 per cent of full-time farmers are in milk production. The bulk of the remainder rely on drystock for their main source of income. Because of the very low number of beef cows in Offaly, these farmers were forced to rely on calves and store cattle from the dairying counties of the south.
As the impact of milk began to bite, a greater proportion of these calves and stores were retained on dairy farms resulting in a scarcity and a dramatic increase in prices.
The overall result has been an erosion of the income base of the majority of drystock farmers. The main conclusions in the analysis are only 300 farmers — all with more than 30 dairy cows — have expanded their farming activities and income since 1983. This group represents one-third of the country's dairy farmers of the remainder of dairy farmers, almost half have fewer than 15 cows and earned an average income of just £5,500 in 1989. They face major problems of viability and survival in the future; among drystock farmers, almost 1,000 have an apparently strong resource base with adequate acreage and livestock numbers. However, the average income of this group in 1989 was just £8,000, reflecting the poor returns from cattle. While a number of these farmers have substantially expanded sheep numbers, this has not been sufficient to counteract the erosion in cattle incomes.
In summary, only about 700 farmers, or 25 per cent of those farming full-time, are in a position to meet the adjustments which the current changes in EC policy and other market forces will impose. For the remainder, it is essential that support measures are introduced to help them restore their income base.
That is the state of farming in Offaly, scientifically and objectively arrived at. The House will agree that it concurs with much of what I have just said about the industry nationally. Let me repeat that this Offaly study is but a case study which is typical of half the country's farms and the response to this situation by the Government is six irrelevant lines by the Minister for Finance in the budget speech and the most appalling sidestepping and evading of responsibility in the budget speech by the Minister of State at the Department of Agriculture and Food, Deputy Joe Walsh, delivered in this House about a month ago.
I will conclude by raising the plight of flood and storm victims and the awful, shabby manner in which the Government have dismissed and disregarded them. I will speak solely of the plight of the unfortunate people in my own county of Roscommon who have been hit by the storms and the floods because they too are another case study and, like the farmers in Offaly who are typical of those people on low incomes nationally, the people and situations I will mention now are typical of the unfortunate people washed out all over the country.
There is a tendency to associate the Shannon and its lakes with tranquility and leisure, but when the system becomes badly swollen with floods and storms it is far from tranquil; it becomes instead an overwhelming and very bad tempered neighbour. The Shannon, incidentally, is our direct neighbour for 70 miles of boundary on the eastern side and its second largest tributary, the River Suck, is our direct neighbour for over 40 miles on the western side. Because of the poor elevation of widespread areas of land close to both rivers and because of poor gradient in the main river channels, flooding is always a prospect.
However, enough is known about normal flood behaviour that most people in vulnerable areas have arranged their lives and activities to avoid damage, major loss and major inconvenience. However, these arrangements went well out the window with the recent persistent downpowers and hurricanes to such an extent that there are now over 2,000 people, mostly farmers, suffering major loss, many of them absolute disaster, in the Shannon valley alone and most of them in County Roscommon.
In County Roscommon, for instance, out of a total of 8,000 holdings, 2,300 are or were affected by anything ranging from medium loss and damage to absolute loss of everything. In an area south of Athlone, on the west side, there are 200 farmers, 70 per cent of whose lands on average are or were completely under water, much of it over six feet deep. There are or were at least 40 homes cut off or marooned by water in that area and at least 20 homes have become uninhabitable as the water flowed through them.
That is, or very recently was, the situation in one area, and I am talking about a relatively small area at that. In other areas in the catchment there are dozens more, less concentrated admittedly, who are marooned and they too have fled their homes and their lands are just acres of lapping water anything from one foot to six feet deep. This was brought home very graphically to me when one unfortunate woman wrote to me about the floods. She addressed her letter, as all people do, with her home address but asked me not to reply to her at that address because she had had to leave home and would probably not be able to return for a month. She is typical of at least 40 or 50 families in that area.
The economic losses of these people are quite colossal. Winter fodder stocks are lost or destroyed. Hundreds of livestock have had to be evacuated and weight loss is most severe because of the lack of food and the lack of dry or sheltered layerage. Miles and miles of farm fences have been swept away and will take countless thousands of pounds to reinstate. Miles of private farm roadways have been destroyed too. In my own county of Roscommon alone a conservative estimate of the farm losses is £5 million to £6 million. Teagasc, using another conservative figure, state that there was 16,478 acres of land under water in County Roscommon two weeks ago from the spates and the burst banks of the Shannon and the Suck systems. Our colleagues here from Counties Leitrim, Longford, Westmeath, Offaly and East Galway will no doubt be able to give the acreages inundated in these other counties from those two systems alone. If one adds those acres ruined and swamped to the 16,500 acres overwhelmed by water in County Roscommon, one must surely arrive at a figure close to 50,000 to 60,000 acres of land in total. Somehow, and despite all that, the Minister of State at the Department of Agriculture and Food, Deputy Kirk, claimed he travelled from Donegal to Cork and that he could see no floods or damage. I do not wish to suggest that the Minister of State was misleading the House when he made that statement last week, but the most charitable thing I can say is that he must have developed a serious eyesight problem, because when I visited the flooded areas on our side of the Shannon valley I could not escape the impression that I was looking at the Atlantic Ocean.
Did you drive from Cork to Dublin?
It remains a matter of sheer disbelief on my part that the Government have so callously ignored the ruin and destruction of the farms, homes and livelihood of so many unfortunate people. In the summer floods of 1985 and 1986, not a fraction as bad as the recent floods were, the then Minister for Agriculture, Deputy Austin Deasy, made available £13 million from the State Exchequer to stricken farmers to improve their fodder supply. That was in 1985. In 1986 the then Minister, Deputy Austin Deasy, negotiated an extra £14 million from the EC to double headage payments in the disadvantaged areas as a cushion against flood damage in that year which again was a mere puddle compared with what was experienced in the current year.
The Deputy's party lost 20 seats in 1987. Let him continue with the story.
What have we got from the current Minister as expressed across these benches last week? I listened with absolute incredulity to the Minister, Deputy Wilson, talking about the £120,000 which the EC were going to pay us to cushion us against the damage we suffered recently. Does the man know his arithmetic? In 1985 the Exchequer here spent £12 million — or was it £13 million — and in 1986 we got an additional £13 million from the EC to which there was Exchequer additionality. There had to be, although the then Minister, Deputy Deasy, did a very good job in getting the EC to pay 70 per cent of it. The Minister and the Government came into this House a week ago and told us what their response to the problem was, that the problem should be resolved by giving £120,000. That amount would not solve the problems of the three people I talked to in the Athlone region a fortnight ago. That is an indication of how bad the problem is and of how extreme the response is from the Government.
What did your Leader solve?
I am appealing to the Government to be reasonable, to make the necessary adjustments in the Finance Bill to ensure that some help is provided for these stricken, unfortunate people in these flooded areas.
I do not want this Cabinet committee — this Government are great for committees, study groups and what have you — to come back in, say, two months time to tell us — they will if they are let away with it and I know they are setting themselves up to get away with it, that the problem has gone away so there is no question of its having to be solved. There is an ongoing income problem for those people who have been ruined and the Government have an absolute duty in justice to respond to it. I am appealing to their reason and to the fact that Ministers are public representatives, too, who have to go back to their people. The Minister for Finance has to go back to the Shannon Valley to look for many of his votes, and I hope there will be at least a smidgen of sympathy in his heart and mind to respond to the problems of these unfortunate people.
I would like to have said a good deal more but time does not permit. I hope the House, and especially the Ministers concerned have taken due and good note of what I have said.
I congratulate the Minister for Finance on bringing in this excellent budget, his second, which will go a long way towards rectifying this country's finances and providing employment. Listening to the previous speaker I wondered if he realised that, considering the massive borrowings we had in the Coalition Government's time.
As a rural Deputy my prime concern is bringing to the attention of this House the problems, needs and priorities of the constituency it is my privilege to represent. It is part of the region that is peripheral not only within the county but within the Community. It shares part of the Border with Northern Ireland. It has a scattered, rural population and all the towns there are small with the exception of Sligo town. Unfortunately, the level of emigration from there has been high over the years. The region's rugged, varied and often breathtaking scenery makes it a major tourist attraction, but these rural and scenic assets present significant problems in the field of community development which add to the cost of infrastructural development. The nature of the terrain means that the cost of maintaining roads, particularly county roads, is high. Here I pay tribute to the Minister for the Environment. In 1986 we had £66,000 for county roads. This year in County Sligo we have almost £1.5 million to upgrade and strengthen our county roads and a marvellous job is being done in that respect. I welcome the Minister's measures in this regard.
My constituency is a maritime one and has a very important port in Sligo town which has tremendous potential for industrial, agricultural, marine and tourism development in the area. Therefore, I would welcome a decision to tackle the situation that has arisen in this port in recent years. The Minister for the Marine is taking a look at new proposals and I hope he will make a decision to grant money to update Sligo port.
I welcome the plans for the development of Sligo Airport which is a vital part of the infrastructure of our constituency. Because of our remoteness it is essential that Sligo Airport be enlarged, extended and improved in every way so that it can cater for direct flights to major British and European cities. Aer Lingus provide a feeder service at the airport for people wishing to fly to other destinations. Ryanair will be establishing direct flights to Luton very shortly, and I welcome that. I support the growing number of people who are calling for direct flights to Horan International Airport at Knock. I see no logic in the present arrangement which requires planes to land at Shannon before they can land at Knock. Such compulsory landing at Shannon adds thousands of pounds to the cost of chartered flights to Knock from North America. Direct charter flights from the US, for example, to Knock would save considerably on time, fuel costs and landing charges if they were allowed to overfly Shannon. Knock airport has proved itself. Justifiably it has attracted a huge number of tourists, pilgrims, commuters and others. An ever-increasing number of emigrants are using it. It is the success story of the eighties. In the past there was a great deal of criticism of Knock airport even among Members of this House. Some Members have realised their mistake and have withdrawn their criticisms. I welcome their courage in that.
Debate adjourned.