I call on Deputy Gay Mitchell who will be sharing the time allocated to Deputy Belton. The Deputy has 21 minutes.
Finance Bill, 1990: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
What is striking about the Bill is that it carries few, if any, innovations. The one exception is the restoration of the child allowance for the residential property tax which is welcomed. This was abolished by accident because the tax free allowance itself was abolished and the child tax free allowance legislation was related to the legislation on residential property tax.
Let me concentrate on the effects of this Finance Bill and the budget which gave rise to it and on a number of issues as they affect people in the tourism and transport area and as they affect taxpayers in general. The tourism sector has improved many of our hotels in the recent past and has given a lot of new employment in the service sector, but because of the arguments about what is and is not acceptable for business expansion scheme tax allowances the sector now does not know whether it is coming or going. They have come up with the bones of 5,000 additional jobs. Very recently they were recruiting in England and bringing back Irish people with various skills who had been trained here at the expense of the State and now they find that restrictions are being placed upon them.
This Bill offers nothing new and it certainly does nothing to encourage employment. There is no direct encouragement to the tourism industry to progress along the road it is on in an effort to create employment. There certainly is not any general encouragement in this Bill by way of significant changes in PRSI which would encourage employers in general to take on additional employees. The thrust of the Bill is neutral. I think it is a pity that is the case because one would have expected that a Government, even a coalition Government of two opposites like this Government, could have been expected in the honeymoon period to make major innovation, to take chances or to challenge the status quo in dealing with the terrible problems, particularly unemployment, facing the community and to deal with this in a radical way. The Government have missed the boat and they will not be able to get on that boat at a later stage because they will be facing into an election and it will be difficult to take innovative steps at that stage. I regret that in the first Finance Bill introduced by this Coalition Government they have missed the boat.
There is a number of innovations which would assist the tourism industry which could still be introduced and I ask the Minister to consider these measures on Report Stage. For example 95 per cent of the tourists who bring their cars into this country either via Northern Ireland or by the car ferries have their tanks full of petrol whereas the percentage of those leaving the country with their tanks full or nearly full of petrol is less than 17 per cent, I think the figure is 16.8 per cent. That is a clear indication that the message has gone out loud and clear to those wishing to holiday in Ireland that they should make sure to buy their petrol before they come into this country. If somebody asks where you are going on your holidays and you answer you are going to France, the first thing they will do is mark your card and tell you to watch out for this or that. That is what is happening before people come here. When they tell their friends they are going to Ireland on holidays they are told to be sure to fill their cars with petrol before they visit. This is a pity and it is putting people off coming to Ireland in the first instance.
I ask the Minister to consider the possibility of making duty-free petrol available at our ports and airports. There should be duty-free petrol stations at airports for rented cars and at the ports such as Dún Laoghaire, Rosslare, Dublin, Cork and the various ports at which tourists arrive with their cars. I think this could be developed very easily by Aer Rianta. Aer Rianta have expertise in the control of duty-free goods and they also have experience in dealing with fuels. They have a very significant barter arrangement with the USSR and they are partly paid for their services in airline fuel but there is no reason they could not receive gasoline or petrol which could then be used by tourists. They have this dual expertise and I think it is time we started to look at this type of innovation. I do not think a voucher system would work and it would be difficult to find some other way to deal with it. Therefore, the possibility of having duty-free petrol stations ran by Aer Rianta at both seaports and airports should be examined. I think we would find there would be no loss of revenue to the State since people are already bringing their cars into the country with the tanks full of petrol. However duty-free petrol would be a significant attraction for people coming on holidays from Northern Ireland or via the various ports.
I regret the proposed plans put forward by Dublin Corporation to build motorways through our inner city. We certainly need major roadways around the city, there has to be a road to by-pass the city and there has to be access to the port as part of that roadway, but we do not need major roadways running through the city. In my constituency, along the side of Bridgefoot Street flats there is a 72 foot wide road coming up from the River Liffey to Thomas Street and it is proposed to continue that roadway down the side of St. Catherine's Church to come out onto Marrowbone Lane, thereby cutting off part of the Liberties from its natural hinterland and causing it to become an island. Thankfully, there is a proposal at present to modify that to some extent. We do not need such motorways running through the inner city. Research has borne out that if you build motorways you will fill them with traffic. However, what we need to do is to provide a rapid transport system in Dublin. The problem is that the Minister has not got the money to provide such a system and it is a simple as that.
However, if the Minister cannot provide the finance for such a system, I believe there are other ways the finance could be provided and the Finance Bill could address this. First, the Minister should consider encouraging CIE and private enterprise on a joint venture basis to consider developing a rapid transport service in Dublin. This House should, in turn, look at the possibility of giving urban renewal type tax incentives to both the State company and their private sector partner, if what I am proposing were to take place, in order to encourage them to provide the necessary investment the Government have not got for the transport service. It would not just have a spin-off effect in terms of savings on roads which are not necessary but it would have a spin-off in jobs in the public transport system and also in the building that would be necessary. I know there is a private company at present interested in developing such a system.
Public transport is the type of service that should have public sector involvement. In addition, CIE could do with additional funds to invest in this joint venture, and if it were to take place, the possibility of employee share option plans, ESOPs, should be considered and this would allow employees of CIE to buy shares in their company which they would do, if the company were to be profitable as a result of the turnover from the rapid transport system. The employees would get a return on their shares or they would be able to sell the shares back to the company at a future date at the cost price plus a premium. ESOPs work on the basis of getting a tax write-off on the investment in the first place and thus it is a form of the business expansion scheme. If the Minister were to ask himself what he should do in the Finance Bill to facilitate transport in Dublin, he would say that urban renewal type grants for CIE and their private sector joint venture partner should encourage them to develop the major rapid transport system. If the employees of CIE were given an option on employee share option plans with tax write-offs they would make an investment in their own company. This could be done.
I regret this Bill does not have an imaginative approach in dealing with or encouraging the diminution of the terrible traffic problem. I believe the answer to the problem is not simply the building of motorways through the city. That is just throwing good money after bad and causes pollution, divides communities and brings transport into the city unnecessarily. All people want is accessibility and if they can get from A to B at a reasonable price they will not want to bring their cars into the city. The DART is the proof of that. Some of our most senior business people, public servants, judges and so on use the DART for access to work. If there was a good rapid transport system the same would apply everywhere else in the city.
There are darkening clouds on the international horizon. The external climate is not favourable for the future economic development of this country. In particular, UK and German pressures on interest rates here are doing nothing to alleviate the pressures which exist and which will continue to exist. There is nothing in this Bill to counteract that. The lack of mortgage interest relief for couples on the most modest of incomes, given the exceptional circumstances of the interest rates, is not addressed in this Bill.
This is yet another Finance Bill, adding to the Income Tax Act, 1967, the last consolidated Income Tax Act passed by this House. On the 20th anniversary of that Act I raised in this House with the then Minister the need to bring in a consolidated income tax Bill and he told me the matter was under examination and that he would try to get it under way. If you were to place on top of the Income Tax Act, 1967, a copy of the Finance Acts passed every year, and sometimes twice a year, since then you would probably have about 3 ft. 6 ins. of tax legislation dealing with income tax alone which tax practitioners and the public are supposed to wade through to find out their entitlements. That is some of the most technical legislation which anyone in this House, even some of us with experience in the area, would find difficult to go through. Tax is so complicated that we have to have experts looking at sections of tax. I regret very much that we are yet again adding to this. It is about time we had a consolidated income tax Act so that people, or their advisers, would know their entitlements.
This Bill only plugs holes. It does not revamp tax. The changes it makes are ad hoc and it makes it impossible for any long term planning by industry or by the services sector in particular to in any way plan their future tax arrangements, profits or employment potential. The Bill should lay down more meaningful guidelines as to the Government's long term intentions regarding tax and that could be done if there was a consolidated income tax Act. At least people should know there would not be any major changes for some considerable time.
The change in the manufacturing rate of 10 per cent, with immediate effect on businesses which already enjoy that rate, will have negative employment consequences. Whatever about applying the new rate straight away to new industries in this category, the Minister should at least consider phasing it in so that the industries concerned can make the necessary arrangements to continue to trade profitably and to make the business investment they had been planning. Many of these businesses made their long term investment plans based on the knowledge that there would be a 10 per cent tax rate and it is a bit much to change this with immediate effect. I want to make two other points if I have the time.
We will see how expeditious the Deputy can be in the four minutes left.
In relation to exemption limits, I am glad to see that the Revenue Commissioners advertised recently for senior citizens in particular to come forward and talk to them about the question of exemption limits and their possible entitlement to refund of DIRT. I discuss tax matters every year with my constitutents and one matter which arises annually and which I am able to deal with beneficially from my constituents' point of view relates to senior citizens who are either not on the exemption limits they should be on and are therefore paying too much tax or are on the right exemption limits and are due a refund of deposit interest retention tax but do not know and therefore have not applied for it. I suspect that there is probably a small crock of gold, a little lottery-type fund, in the hands of the Revenue Commissioners waiting to be claimed back by senior citizens who are fearful of claiming it. Many of these people would not be due to pay tax in the first place if they were on the correct level of exemption. They are fearful of claiming because they feel that somehow they might be pulled further into the tax net. If their tax band does not extend beyond the 30 per cent rate they have nothing to fear in the first place.
I take my hat off to the Revenue Commissioners for placing those advertisements. The word should go out clearly to senior citizens to check, with the inspector of taxes or, if they are afraid to go to the inspector of taxes, with someone they can trust as regards their tax. There are also other categories of taxpayers who would be exempt but many senior citizens in particular are not on the correct exemption limits and are therefore paying tax which they should not be paying or are on incorrect exemption limits and are therefore entitled to a refund of DIRT but are not applying for it because they do not know they are so entitled. I would ask that the Revenue Commissioners continue to inform people of his important matter.
The Revenue Commissioners introduced last year a charter of taxpayers' rights at the request of, among other people, the Committee of Public Accounts and I welcome that. It was a very worthy and useful development but there is one big problem. The affairs of taxpayers visiting tax offices are not dealt with in privacy. People often have to talk at a hatch with a queue of people behind them. They feel oppressed because firstly they do not understand the tax legislation or anything to do with tax, and secondly most people are nervous about tax anyway and want to make sure they are on the right side of the taxman. The Revenue Commissioners do not quite realise the fear of God they put in people's hearts.
In any event the system is not satisfactory. Any person, young or old, attending a public office should not be dealt with in relation to confidential matters while standing at a hatch with a queue of people behind them. We have to somehow press home to the Revenue Commissioners the need to provide for privacy for taxpayers in tax offices, as part of the charter of taxpayers' rights. I wanted to put those points on the record. I hope the Minister will consider them and introduce amendments on Committee or Report Stages along the lines I have suggested.
I compliment the Minister on bringing the Finance Bill before the House. It is informative and detailed. This Bill is part of the annual budgetary process. It provides the statutory basis for the taxation provisions announced in the budget and for other changes that the Government now deem necessary. The Finance Bill contains a wide range of issues from the change to a current year basis of assessment for the self-employed to tax avoidance, investment schemes, business expansion schemes and a narrower definition of manufacturing for the purpose of the 10 per cent rate of corporation tax. It legislates for most of the measures announced in the budget.
The budget successfully promoted the recovery of the economy while at the same time catering for the needs of the disadvantaged and underprivileged in our community. The consensus between the Government and the social partners has been central to the success and attainment of our economic and social objectives. The consensus has ensured advances in areas of employment, debt reduction, tax reform and social equity.
The broad economic strategy of the Government was set out in the Programme for National Recovery in 1987 and in the National Development Plan and was further clarified in the Programme for Government. The strategy comprises of a number of inter-related key elements. The main elements are the reduction of the national debt and its associated debt service cost, the firm linking of the Irish exchange rate to the European monetary system, the achievement and maintenance of a low rate of domestic inflation to ensure the competitiveness of our exports, the reform of the tax system in order to promote employment and to stimulate growth, the reorientation of sectoral policies to increase their effectiveness and their contribution to the creation of sustainable employment.
There are substantial grounds for confidence as we enter the nineties. The runaway national debt has been recaptured, inflation is low and there are indications that the improved economic conditions are having a positive effect on the creation of employment. The Government's Programme for National Recovery has once again been reflected in this year's budget. The medium term strategy has given this country three successive years of regeneration, recovery and progress. Domestic consumption, investment and exports all made important contributions to our economic progress. Over the past three years GNP growth averaged 3.5 per cent and is expected to be a little higher in 1990. Consumer spending has risen and is expected to be approximately 4 per cent this year. This is due to the increase in numbers at work. In April, 1989 employment figures showed that about 30,000 more people were working in the private sector than in April, 1987.
Income tax changes have relieved the burden on the hard-pressed taxpayer. This is a very important measure to improve Ireland's competitiveness and to put people back into jobs. The Government's aim is to provide incentives for more job creation and investment in Ireland. European investors are showing a growing interest in Ireland due to the strengthening of the Irish pound and the economy. I welcome these developments and I look forward to continuing overseas investment.
The Government have made solid progress in reducing taxation in the past two budgets. Within the past two years the Minister for Finance has implemented tax reductions of 5 percentage points at the top and bottom rates. The Government have delivered over £800 million in income tax concessions, more than three times the amount estimated in the Programme for National Recovery. This is a major step towards achieving a standard rate of 25 per cent by 1993. With the standard rate of VAT reduced, £125 million will be back in people's pockets in a full year. The Government's objective is to ensure that all sections benefit from our economic progress. The Programme for Government confirms the Government's commitment to continue and develop the policies which have turned around this economy and restored growth in employment. Ireland is now in a position to utilise the additional resources coming from the Structural Funds to make the economy more competitive and to expand its capacity and create jobs.
The budget has made a signficant contribution to creating the right climate for future development. The Government's aim is to make the tax system favour growth and jobs. The primary objectives of our taxation policies are to underpin any pay moderation and hence competitiveness through tax relief to workers, to support anti-inflationary efforts of Government and to make the tax system more favourable for employment. With the standard rate of tax reduced to 30 per cent and the top rate reduced to 53 per cent in the 1990 budget, the Government have cut the top and bottom rates by 5 per cent. The standard rate of VAT was reduced by 2 per cent and excise duty was reduced on a range of products. All these measures will help reduce inflation and improve competitiveness. Without this progress the tax reform and tax cuts of recent budgets would not have been possible. The recent budget was the result of three years of good Government. The Government will continue to ensure that our economic progress will continue, aiming at securing public finances, keeping a strong competitive position and low inflation.
The Government must be complimented on the tremendous progress in lowering the rate of inflation. In the three-year period from February 1987 to February 1990 average consumer prices in the shops rose by less than 10 per cent. There were years in the early eighties when consumers would have been extremely pleased to see the annual rate of inflation restricted to that level. Consumer price inflation fell to just over 2 per cent in 1988, the lowest level since the sixties. Low inflation is essential if we are to continue to negotiate continued moderate pay increases.
To maintain the continued boom in exports it is imperative that our inflation rate be low. Ireland's inflation rate remains below the EC average of 5.2 per cent and well below that of Spain at 6.5 per cent, Britain at 7.7 per cent, Portugal at 12.1 per cent and Greece at 14.8 per cent. The Government have encouraged the reduction in inflation by reducing the standard rate of VAT from 25 per cent to 23 per cent and by refraining from imposing any additional excise duties on the old reliables. Imported inflation should decline due to the strength of the Irish pound, not only against Sterling but also against the US dollar. With the strengthening of the Irish pound, British imports become cheaper in Irish pound terms. Domestic inflation will be lowered if cheaper import prices are passed on to the domestic consumer. Constant monitoring is necessary to ensure that cost reductions are translated into price cuts in the shops.
The performance of the economy since 1987 shows the success of the Government's economic and budgetary strategy. Manufacturing output had a growth rate of 12 per cent in 1989 compared with a growth rate of 3 per cent in 1986 and an average rate of 5.5 per cent in the period 1980-85. The volume of exports of goods and services grew at an average annual rate of over 11 per cent in 1987 and 1988 and exports grew by 18.7 per cent in 1989.
Both 1988 and 1989 have been excellent years for tourism, with growth rates of around 13 per cent. The launch of the operational programmes for tourism will have major benefits. The scheme will provide financial assistance from the ERDF to private sector investment in amenities specifically aimed at attracting additional foreign tourists and revenue to Ireland. The primary objective of the scheme will be to acelerate the provision of infrastructures, to support and maximise the economic impact of planned product development in the tourism sector, to expand and diversify the product range and to increase the scale of tourism development by bringing more substantial investment into this sector.
The operational programmes for tourism will provide finance for such works as sailing, cruising, angling, equestrian, water, field and adventure sports, language, traditional craft learning, theme parks, leisure facilities, historic houses, conference centres and marketing. Grant-aid under this scheme will range from 10 to 50 per cent. It is proposed to aid coastal marinas at certain strategic locations. These marinas must support hire facilities, sailing schools and accommodation. They must be located near Bord Fáilte designated tourism centres. They must make full use of natural shelter in order to reduce costs. Wexford Harbour satisfies all of these criteria. Wexford is uniquely placed to capitalise on the growth of water based leisure activities in Ireland and overseas.
No marina exists along the Irish coast between Dún Laoghaire and Waterford Harbour. A marina in Wexford Harbour will not compete with similar facilities in the region but will compliment facilities in the Waterford Estuary and at Dún Laoghaire and Greystones. For hundreds of years Wexford Harbour has been a haven for boats. Sea-going vessels have been using the harbour from the middle ages to the middle of this century. I would urge Bord Fáilte to grant-aid this project.
The Government continue to put our vast State resources into our education system to prepare our young people for a world of rapid change both economically and socially. We are now spending £1,260 million on education, 18 per cent of Exchequer spending and 6.2 per cent of GNP, the second highest in Europe.
Job creation depends on investment. Last year there was a growth rate of 10 per cent in investment. Construction investment also rose by 10 per cent and the outlook and trends for the future look very good. This remarkable change in investment performance in Ireland over the last three years has made a major contribution to the recovery of the economy. The Government's common sense approach has given investors at home and overseas confidence in the economy. Sound investment takes place with confidence and the climate has never been better. The investment of Community Structural Funds will be a major boost to Ireland over the next few years.
When a stockbroker advises that the yield from Irish Government securities is far more attractive than a Sterling deposit account, this House should feel a sense of pride.
In the education area gross expenditure on second and third level education will increase by 4 per cent and 13 per cent, respectively. The launching of the five year language programme, the development of the adult literacy programme and the expansion of the educational opportunities scheme from the present 60 places to 660 places by 1990 are all examples of a caring Minister and a caring Government.
The Government have once again indicated their clear commitment to alleviating the difficulties which confront those on low incomes and persons in receipt of social welfare payments by introducing measures in the 1990 budget. Major social welfare improvements have been announced by the Government and the cost of the social welfare package for 1990 is £100 million.
This year the Government delivered the biggest welfare package ever with welfare increases ranging from 5 per cent to 11 per cent, with special measures to help those on low pay and those most in need. The main provisions in this package are that weekly social welfare payments will increase, in general, by a minimum of 5 per cent from July. This 5 per cent will also apply to child benefit from October. Special increases of up to 11 per cent will be made available for 16 groups of social welfare recipients, which will include further streamlining of rates and a minimum payment of £11 for child dependants.
A new lone parent's allowance scheme will provide for one parent families bringing up children on their own and will incorporate the existing unmarried mother's allowance, widower's pension and deserted husband's allowance. Women receiving widow's pension, deserted wife's allowance and prisoner's wife's allowance, who have child dependants will also be brought into this new scheme.
The Minister is to be complimented on providing this lone parent's allowance because up until now parents, such as separated spouses and unmarried fathers, relied on supplementary welfare allowances.
In providing a carer's allowance the Government recognise that every effort must be made to ensure that those who are permanently ill and the elderly receive as much attention as possible from their relatives. This allowance has been increased from £28 to £45 per week. This measure will provide incentives to families to care for their elderly relatives in a home setting rather than leave them to institutional care.
The following measures will help to alleviate some of the difficulties that low paid workers are experiencing. Workers who are currently paying the full rate of PRSI and those whose gross earnings are £60 per week or less will be exempt from their share of the PRSI contribution for that week. The exemption from employee's contribution will not affect the entitlement to social insurance benefits of those employees involved. It is estimated that over 50,000 employees could benefit from this particular scheme.
The creation of employment is central to Government policy. I would ask the Minister to look at the question of building advance factories. I fully appreciate that there are many empty factories throughout the country but in my own town of Wexford we have no advance factory, although we have one of the highest rates of unemployment in the country. The incentives to prospective builders and investors need to be reviewed.
I would now like to deal with specific sections of the Bill. Section 33 amends section 39 of the Finance Act, 1980, which contains a definition of goods for the purpose of manufacturing relief. For practitioners and companies it is a welcome development. The classification of the meaning of manufacturing is a welcome departure from the events of the last three years. The 1980 Act loosely defined the meaning of manufacturing for corporation tax purposes and this ambiguity has given rise to the difficulties that arose, some of which had to be settled in the Supreme Court. The clarification of the meaning of manufacturing in the case of our largest export industry — the meat industry — is worthy of note. It will encourage local suppliers to bring their operations to EC standards which is desirable.
There are two provisions in the Bill, in sections 7 and 29, which inpinge on the business expansion scheme. The business expansion scheme was introduced in order to generate risk capital for companies in selected areas. Section 29 ensures that BES relief will not apply where arrangements exist which guarantee the investors their shareholding. I welcome this amendment. I welcome the use of BES money for tourism projects, but I would like to see a greater percentage used for the development of agriculture.
Section 7 prevents a situation where investors can get interest relief on loans taken out to buy BES shares. I welcome this development where relief will not be available on both capital and interest.
In family businesses in years gone by tax relief tended to move cash surpluses towards the assets of a business on which tax relief was granted. The BES affords tax relief for investment at a rate of 100 per cent of £25,000 each year which parents see as a useful vehicle to provide in some way for their children other than the heir to the business. In years gone by education was in many instances the only share of the family assets which a child other than the one chosen to succeed received.
Section 84 lending, which is an important financing vehicle for many of our exporting companies, remains more or less intact. For any of us in business it is a distinct advantage to have our financing at favourable rates in order that we can compete in Europe and world markets with the sale of our goods that have been so important in trade surpluses in recent times.
I welcome the extension of the manufacturing relief to the year 2010 which should at this time give solace to planners in the manufacturing area. The effect of the reduction in capital allowances will need to be monitored carefully especially for the small employer who does not have the benefit of manufacturing tax, export sales, Shannon relief or the benefit of the industrial building allowance. Such people are now meeting competition from people in urban renewal areas.
Assessment on a current year basis is an addition to the self assessment introduced in the 1988-89 tax year, and this should be the last of this series. The system now ensures that individual earnings of all classes will be assessed in the actual year, a further example of the Government's commitment to equity for all citizens of the land. No doubt the system will have some teething problems but I feel confident that our competent practitioners will have no difficulty in adjusting to those changes. Difficulties will arise undoubtedly in specific cases but, as in the past, these will be resolved in the offices of a maturing inspectorate on behalf of the Government and the nation. I would like to feel that their continued professional approach will ensure ease in working this system. Registration of practitioners might be desirable to protect public interest in this now complicated and extensive area of taxation. It is worthy of note that for the year 1988, excluding the impact of the tax amnesty, income tax payment by the self-employed and the professional taxpayer was 54 per cent higher than in 1986. In 1990 the Public Capital Programme showed a rise in expenditure of 19 per cent, the first increase since 1982. This shows a strong determination by the Government to apply resources to the productive sectors of the economy, and these allocations have been increased by £260 million, a substantial increase on the 1989 budget.
There will be an increase in jobs, in particular in the building and construction industry because of the Government's increased expenditure on the Public Capital Programme. The increase of 11 per cent, which is equivalent to £94 million, should generate over 2,000 additional new jobs. Road and sanitary services show an increase of £25 million. Agriculture is up £27 million which will benefit the farm modernisation scheme. There is an increase of £20 million in industrial construction and a £12 million increase in local authority housing. The Government's commitment to improving the quality of county and regional roads has been a major boost for both tourism and the needs of rural communities. We are seeking an injection of capital into our infrastructure through the Structural Funds at a time when the State comes to the most harrowing period of carrying out its surgery on the finances of the country. These Structural Funds create an environment and expectation possibly equivalent to EC entry itself which was quite an event. Those of us in business and in employment in those years will remember the prosperity and comfort in which we lived until we reached those devastating eighties when interest rates in both internal and external forces did so much to undo the effects of those early years.
Listening to the contributions, particularly from the Government side of the House, I was struck by an imbalance in so far as greeting the budget and the Finance Bill following it was concerned. There was little or no reference to the greatest imbalance of all, that is how little either the budget or the Finance Bill implementing it will contribute to removing the huge inequity in our society at present. We managed at long last to get poverty on the political agenda, but this budget and Finance Bill do little or nothing to counteract the widening gap, the bleakness, the desperation of the lives of people caught in that poverty. In some instances, such as the area of housing and certain areas of health, the budget allocation is so inadequate that I fear that not alone will we not talk in next year's budget, 1991, of having a society that we can be proud of, but that there will be a deterioration for some sections of our community. I say that in no partisan way but more in concern and sadness. No side of this House has a patent on reform or on consciousness about poverty, but what worries me is that in talking about the small tax reforms we have brought about, the small allocations we have made to public housing, the little or nothing we have done in the areas of health that hit the poorest, we have aggravated the problem.
Let us put down a marker from this Finance Bill that in drawing up the budget for 1991 and into 1992 it will not be just a matter of cobbling the system, a little patch here, a little nail there and a little bit of plaster over there. This Government and politicians in general as well as leaders in other areas and management in our society must realise that radical structural reform is needed, otherwise we will forever be faced in this society, a small population of three and a half million, with the shame that with the resources we have, we have not been able to bring about a society that can even begin to promise equality of opportunity. Remember that is not an accident, it does not come about by a whim, an act of God or an act of nature, it comes about by our ignoring the fact that fundamental changes are needed and by our forever merely cobbling the system.
In the time left to me, I say with all seriousness that we must not ever again have a budget that promises so little as this one in the areas of most desperation and need. Let us consider the areas of housing. Much has been said about the increased activity in the building trade and about the increase in the level of the Structural Funds. We need most to invest Structural Fund moneys in providing housing for those people most in need of accommodation. The budget failed totally and dismally in that area. At the moment, there are over 22,000 people on housing lists. In my constituency of Dún Laoghaire, which is considered affluent, indeed probably the leading affluent constituency in Ireland, over 460 people are in desperate need of housing while a huge number live in housing that is not fit for human habitation. A total of 10,000 people are on the Dublin Corporation housing or transfer lists, and the corporation have money for only 34 new houses this year.
Simon in their report responding to the 1990 budget say, and I quote:
apart from some additional funding for voluntary housing associations, the budget fails to provide any extra resources for housing. Continued neglect of investment in public housing will lead to an acute housing crisis in the 1990s with ever-growing housing lists. This scenario would mean that contrary to the objectives of the Housing Act, 1988, the homeless and other vulnerable groups would once again be the losers and denied access to adequate housing.
The ESRI report on poverty produced some astonishing and bleak statistics about the standard of housing here. It appears that about 70,000 households, about one in 14 of all households containing almost 250,000 people do not have an indoor toilet. This report was published in November 1989 but the allocation for housing in the budget will not do much to relieve that problem. According to that report one household in ten, or 35,000 people, live in houses that do not have a bath or a shower. The same number of people live in damp conditions and, from a health point of view, that is probably more serious. It appears from that report that 100,0000 households, containing 350,000 people, rely on secondhand clothes. Close to 600,000 people or three out of every five households, are unable to save. From that it is obvious that the building industry is not booming although a lot of work could be done to improve the accommodation of our people. Deputy Hillery referred to the bleak and depressing eighties but it is more depressing to find that in the jubilant and dynamic nineties the people most in need of protection are falling further behind. The figures I have quoted point to that.
I am aware of an unmarried mother in Dún Laoghaire who has had to leave her very inadequate rented accommodation following a fire at the premises. To date she has been unable to find alternative accommodation and Dún Laoghaire Corporation are unable to help her. I am aware of an unmarried mother who is living in very poor conditions in Cork with her daughter. She has a terminal illness and sleeps in a chair because she is anxious to sleep some distance away from the wood lice that invade her flat each night. She is afraid to sleep in her bed as a result.
Deputy Currie highlighted the work of the late Willie Bermingham. Nobody believed that some of our old people lived in atrocious conditions until Wille Bermingham and his group drew attention to the fact that many people were living in dirt and in isolation in Dublin. I am sure that many old people live in similar conditions in other areas. It is hard to credit that people live in such conditions in the nineties. It is important to focus attention on the plight of those people at every opportunity. We must insist on allocation being made in all budgets to help those people. We must do what we can to improve their accommodation. If we do not, nobody will be able to claim that our economy is improving or that the standard of living of our people is improving. If our economy is improving I must ask who is benefiting?
The figures I have quoted are not mythical. They were published in various reports and relate to the conditions under which our people live. An unacceptable proportion of our population are forced to live in bleak conditions without any hope for the future. One of the best ways to improve conditions in our society is by increasing employment and by encouraging our skilled and educated young people who have been forced to emigrate to return and create jobs. The youth are the life blood of any country and it is they who will be risk-taking, who will be innovative and will have originality. If we do not encourage them to return home the haemorrhage of emigration that we suffered in the fifties and sixties will return. There is no doubt that we had a partial recovery in the seventies but the problem is returning in the nineties.
It is sad to think that many of our skilled young people left the country because there was no incentive to comtinue to work here. They did not consider it worth their while, because of the crippling tax system, to continue to work here in low paid jobs. Members will be aware of many people who left low paid jobs and moved into the social welfare system. That is contrary to everything we want for our people. We have failed to reward those who work, those who have stayed at home and helped to build up the country. Many of our young people are propping up the industrial and economic system of the US, Canada and Australia. They are there because they were driven from Ireland by the crippling tax system and the lack of reward for work done. To our young people some of our managements represent authoritarian, patriarchal, paternalistic and redundant attitudes. If we are seriously concerned about keeping our people at work we must carry out a fundamental reform of our tax system. We must consider moving many low income workers out of the tax net and the PRSI system because they cannot afford to pay them.
We must ask ourselves where our future lies. We must consider how to invest our resources. The development of technological information holds out the greatest hope for the creation of jobs. We need a back-up for agriculture and downstream industries. We must develop the tourist industry and insist on a standard of excellence in training and management that will make us unique and able to compete with wealthier countries. That is the reality and the dynamism and energy of our people are well up to it. When we get the resources, support and encouragement to do something in Ireland we do it excellently.
I should like to think that without setting up many more review committees we would immediately — and, where necessary, budgetary arrangements would need to be made — look at the whole structure of the IDA and FÁS because time and technology have overtaken them. A recent graph of projected employment and jobs in 1999 showed that manufacturing industry had fallen to 8 per cent and in relation to information technology and all the service and back-up industries dealing with the graph had gone through the roof. In fact, projections could not put a figure on it; all they knew was that it was expanding at a rate which we could not begin to understand and encapsulate in 1990 because of the rate not just of present technology, but the breakthroughs which will occur, particularly between 1995 and 1999.
Are our agencies such as the IDA and FÁS coping with that change and preparing everyone else to cope with it? These two areas must be looked at urgently; if changes in the budget allocation or legislation are necessary the Bill giving effect to these changes needs to be introduced here as soon as possible because it is only through investment and technological training that we will succeed. Technological training, flexibility and adaptability are needed to cope with the fact that only 8 per cent of our jobs will be in the manufacturing area by the end of this decade. That will mean huge changes, not just in training but also in management.
The allocation towards management training should be looked at in regard to the kind of management we are turning out. The manager of the future must be adaptable, innovative, dynamic and energetic. Perhaps some people believe they have gone past the stage of being able to make a supreme effort and all kinds of encouragement should be offered to them to take early retirement so that younger people may take over. The OECD report has been quoted selectively here today but a Swedish consultant said last year that two factors struck him about this country, apart from our high unemployment and emigration. He said that the two factors were unique to Ireland compared with the rest of the European Community and indeed the OECD countries of which he had specialist knowledge. One of the factors was the very low number of married women working in this country outside the home and the very low promotional expectations of women. The second factor — I know this is an extraordinarily sensitive matter for a certain gender and age group — was that we had a very large number of elderly men working at top management level. He suggested we should take a radical approach, give encouragement to such men to retire earlier and remind them that there is leisure and a quality of life outside work which they might find very rewarding. That means looking at pensions, indexing, flexibility and adaptability. The consultant pointed out if that is the age profile of management taking decisions, then the dynamic changes and challenges facing us, particularly in this country which has been cut off for so long from mainland Europe, will not come about.
Poverty and inequality are at an unacceptable level but the budget and the Finance Bill have done nothing to relieve them. Nutrition surveys have shown that mothers are literally doing without food to feed their children, which shows the level of deprivation and poverty. Tax, management, privilege, decision-making and power must be redistributed and decentralised and indeed removed from certain levels. They could be granted to other sectors which would make tremendous productive use of them. That is what the budget should have been about this year and what the Finance Bill should have been implementing. I listened to the budget and I read the Finance Bill with a sinking heart. Those who enter politics are committed to working long hours but they must realise that we need to offer a better future and an egalitarian society. We must offer hope to the young people who have been forced to leave and, with an improving economy, they should be able to come back here and to flourish.
With regard to decentalisation we must make sure that Structural Funds will not go into physical structures only. Legislation for post-1992 should be introduced by the Government but there does not seem to be any recognition of this at present.
Debate adjourned.