Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Wednesday, 24 Apr 1991

Vol. 407 No. 4

Finance Bill, 1991: Second Stage (Resumed).

The following motion was moved by the Minister for Finance, Deputy A. Reynolds, on Tuesday, 23 April 1991:
"That the Bill be now read a Second Time."
Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann believing
(a) that it fails to make any significant progress towards fundamental tax reform, boardening the tax base or a shift in the tax burden away from the PAYE sector,
(b) that the provisions in regard to reform of B.E.S. abuses represent a significant retreat from the measures announced in the budget as a result of extensive lobbying from vested interests, and are particularly unacceptable in the light of the findings of the Comptroller and Auditor General,
(c) that it fails to take any steps to promote job creation, despite the fact that the March unemployment figures were, in real terms, the worst on record,
declines to give a Second Reading to the Bill."
—(Deputy Rabbitte)

When I moved the adjournment of the debate earlier I was about to conclude my remarks on the Finance Bill. In recent years the Finance Bill has become a document which merely forms the basis of negotiation for powerful lobby interest groups. This has been seen in recent years and is repeated in dramatic fashion on this occasion. In Britain the publication of the Finance Bill is virtually simultaneous with the announcement of the budget. This system would do a great deal to obviate the situation here where the Minister is subject to pressure from powerful vested interest groups and even members of his own Cabinet. Budget measures are no longer accurately reflected in the Finance Bill and the Bill as introduced will unquestionably be different when eventually approved by this House. This shows that the professional lobbyists merely regard it as an opening counter on which they can secure concessions. Meanwhile the section of society which cannot afford to employ professional lobbyists on their behalf must make do with the paltry and miserly provisions offered by the Minister for Finance. When the tax year was not as it is now, the publication of the budget and the Finance Bill were more closely aligned. The position has deteriorated in recent years and it is an invitation to powerful interest groups to intrude themselves in this fashion, always at the expense of the taxpayer. They apparently meet a willing ear in the Minister for Finance of the day.

Many of the budgetary measures to which the Bill is designed to give effect are out of date. I have dealt with the Minister's projection on growth and commented on the fact that it is generally accepted that the Exchequer borrowing requirement as predicted by the Minister will not be met. The position in relation to unemployment is already drastically worse than the Minister's prediction for the end of the year — and this only 11 weeks after the announcement of the budget. Despite this, there are no corrective measures in to the Finance Bill to tackle some of these deteriorating economic indicators. There is no stimulation of employment, despite the fact that unemployment is getting out of hand.

There is no indication that the Minister is prepared to reconsider the extraordinary decision of the Government apparently to abandon for the time being the construction of the Tallaght Regional Hospital. This is a further indication of how the Progressive Democrat-Fianna Fáil Government view one section of society as compared with another. This hospital is desperately needed in my constituency. I am not engaged in any special pleading. The need was identified as long ago as 1968 in the Fitzgerald report. It is part of the rationalisation of Dublin hospitals and is not a new hospital in that sense. It would provide very badly needed employment in a constituency which has a huge population of unemployed building workers and would provide jobs for some 1,800 people when opened, as well as a desperately needed hospital facility. Yet there is no indication in this Bill that the Minister is reconsidering his appalling decision which came completely out of the blue to the people of Tallaght, Clondalkin, Walkinstown, Rathcoole and the surrounding area of west Dublin, north Wicklow and part of Kildare whom this hospital was meant to serve.

I have reminded the House on a previous occasion that not very long ago a Government backbencher withdrew his support from the Government when it was threatened to close one of three hospitals in Limerick. The constituency I represent is larger than Limerick and has no hospital. That is the kind of comparison that can be made when one considers how this Government look after people who are taxpayers, who need this kind of service. The Government had the unbelievable cynicism in the same week that they announced the decision not to proceed with Tallaght hospital to appoint a Deputy from the constituency a junior Minister at the Department of Health. That is the kind of cynicism we can do without in politics. If Fianna Fáil think that will buy off the people in my constituency, they have another thought coming.

The Finance Bill does not tackle the question of fundamental tax reform. That is the major omission. There is a climb down on the BES proposals announced by the Minister in the budget and the extension of more taxpayers' largesse to the Temple Bar area of Dublin. Now you could trip over the various designated areas for development in Dublin. Those tax-led construction projects now far out-number demand. One wonders if the business community will do anything any more for which they do not get incentives. It would seem that they will not and that the Minister is encouraging that approach to business. I wish to put on record that at a minimum the Minister should take on board the views expressed by the Comptroller and Auditor General in his report on the business expansion scheme from which I quote:

It can therefore be argued that the same criteria should apply to tax expenditures as would be applied to direct State expenditure and that mechanisms should be put in place which systematically measure and record the cost of schemes financed by tax expenditure and which evaluate the economy, efficiency and effectiveness of such expenditures and report on them to Dáil Éireann.

That is a reasonable safeguard which the Comptroller and Auditor General recommended and, at a very minimum, should be taken on board by the Minister. I notice from the Minister's remarks that the Department have somehow suddenly produced a figure for the number of jobs which they claim have been created by the business expansion scheme. I do not know where those figures were produced from as I have had no opportunity to examine them. They were certainly pulled out of the hat very late in the day because as recently as two or three weeks ago when the Secretary of the Department was examined by the Committee of Public Accounts he was not able to say — and this was very explicit — how many jobs were created by the business expansion scheme. In fact he said it would not be possible to state the number of jobs created, but in order to save face for his climb down, the Minister has suggested "X" number of jobs were created by the business expansion scheme. However, I cannot accept that without seeing the basis of the figures.

I have dealt with The Workers' Party view on privatisation but I should have remarked in passing that one of the great privatisers in this Government, the Minister for Tourism, Transport and Communications, Deputy Brennan, very much agrees with the Progressive Democrat philosophy of privatising our successful State companies but he was too cute to jump ship and join the Progressive Democrats when everybody anticipated that he would. When addressing the difficulties in B & I, he did not have very much difficulty in writing off the £28 million accumulated deficit before it will be handed over to some of this Government's friends in the private sector. If the Government had agreed to write off the accumulated debt when I was dealing with the B & I a number of years ago, it would be the B & I Group who would be taking over the ICG group, but B & I, like so many other companies, was strangled by the accumulated debt. The Government would not write it off then but they are prepared to write it off now for the private sector. The Minister for Tourism, Transport and Communications seems confident he can justify that approach.

The extent of the haemorrhage of funds out of the Irish economy is frightening and requires urgent action on the part of the Government. There were outflows of £3.2 billion this year which is a haemorrhage that this economy cannot afford. Some measures must be devised to cause at least a portion of that money to be reinvested in the domestic economy. Unfortunately, this Finance Bill is a poor reflection on what has been a failed budget.

I have sat in this Chamber throughout the course of the debate since the Minister rose to his feet yesterday afternoon. I have listened attentively to the proceedings. I have paid particular attention to the contribution from the Opposition benches. Quite frankly I have been amazed at some of the negative patter over the past two days. The doom and gloom gospel preached by Deputy Noonan was extremely depressing if one were to give it credence. However, the reality of the situation is that as a direct consequence of the sustained, positive and progressive policies conceived and implemented by this Minister and Government, the Irish economy is light years ahead of the chaotic and depressed situation which obtained when Deputy Noonan and his party were at the helm. The rate of inflation is now the lowest in Europe and is below that of the great powers. We recently have seen the initial signs of a reduction in interest rates. Despite what the Deputy said, the Government do not lack credibility with the business sector. This must be seen against the background of the extraordinary external factors which have occurred and over which we in this country have no control whatsoever, but which Deputy Noonan saw fit not to mention. The entire world virtually has been at war. All of our main trading partners have been at war but still our economy has performed strongly and buoyantly, although we had a slight hiccup. That is the reality.

I do not share Deputy Quinn's doubts and reservations about self-assessment for tax purposes. I think our approach must be much more positive than that. This Administration has already proved that they have a feel for the timing of such things. A major example of this was the hugely successful tax amnesty. This has been attempted by previous administrations but without any success whatsoever, yet the Fianna Fáil Government in their timing and by their mode of application of the amnesty yielded substantial benefits to the Exchequer, and simultaneously enabled thousands of business people and taxpayers' throughout the country to regularise their affairs and start afresh with their fears and traumas eliminated.

I am sorry that Deputy Rabbite has now left the Chamber but I listened to his very lengthy contribution. He devoted much of his time to criticising the business expansion scheme. He portrayed the Minister's actions in regard to that scheme in a totally false and inaccurate light. As far as I am concerned he pulled the figures out of the air when he talked about a loss in revenue to the Exchequer of £100 million. I should like to know from where he gleaned that figure. The position with regard to the business expansion scheme, or indeed any other, is that there are always professional people out there, prepared, ready and willing to exploit their provisions, within the law, ascertaining loopholes for the benefit of their clientele. That is the reality. Successive Ministers for Finance must contend with this practice, will have to do so in the future, closing off the loopholes as they appear. The present Minister has done precisely that. In fact he commenced closing loopholes in relation to the business expansion scheme in last year's budget when he saw untoward practices creep in. He tackled the position again in this year's budget when fresh loopholes and untoward practices became apparent, when he saw great merit in implementing changes in the provisions of the business expansion scheme. Because of its job creation implications he amended the action on which he had embarked at budget time. I might express my sincere appreciation of the Minister's action in that regard.

I spoke recently with the chief executive of the Irish Hotels Federation, Mr. John Horan who, in his official capacity, was loud in his praise of the Minister's realistic businesslike, astute handling of the business expansion scheme. The Minister foresaw its implications for job creation and the advancement of tourism generally. Consequently he implemented the necessary amendments to ensure that meritorious hoteliers and others, up and running with their plans to upgrade and improve, were accommodated.

Deputy Rabbitte spoke about the lack of job creation. I was very surprised he mentioned jobs at all. If one did not have knowledge of Deputy Rabbitte's actions on the ground in one's constituency, his criticism of the scheme, of the merits and attempts of this Administration to create jobs and improve our economy, if one did not know that Deputy and his modus operandi so well, one would be incredulous of what one heard. Unfortunately I have had experience of Deputy Rabbitte's approach to jobs and their creation. I contend that job destruction would be a more apt description in that regard.

It is not long since there was the greatest disgrace and scandal in the entire history of industry and industrial relations in my constituency in Wicklow when a thriving, viable industry, the lifeblood of Wicklow town and its hinerland, namely, the VEHA company, went to the wall in an exercise of industrial relations vandalism spearheaded by the actions of that same Deputy.

I would remind the Deputy that his language is not acceptable. He must speak about the Finance Bill and that which it could relevantly contain. That kind of language is not at all appropriate at this time.

I will accept the Chair's censure but it does not change the factual position. I will go on to more constructive things. However, the Deputy's name will long be remembered in County Wicklow but not with any fondness.

Reverting to tourism, the business expansion scheme and its job creation implications, Deputy Rabbitte repeated a number of times that there was not a job creating factor within that scheme. Taking one small example in the same neck of the woods, in the same area where those jobs were lost in the VEHA company, I can assure the Deputy that the Minister's actions in amending the provisions of the business expansion scheme will lead directly to a number of jobs being created in the immediate future in the case of two hotels in the Wicklow town area which will almost make up for those jobs lost as a result of the closure to which I referred.

There have been three years of excellent progress in tourism. It is now three years since there was a real shake-up in Bord Fáilte, when a new chief executive, Mr. Martin Dully, was appointed. He was given one simple, explicit instruction: double tourism in Ireland and take five years to do so. Despite the external difficulties that prevailed in the current year, Bord Fáilte have made tremendous progress, and are almost on target in delivering on that direct instruction from the Taoiseach resulting from a Government decision. Matters are progressing very well in our tourist industry generally. Despite those external difficulties all the signs augur well for a good year for tourism. The American market may suffer somewhat but it is expected that substitute business from the United Kingdom and Europe will compensate. We look forward to that with relish because we are all disappointed. I am particularly disappointed that the economic progress that has been achieved and with the macro-economic issues coming to fruition, job creation has not been increased to the extent that is necessary. Therefore, we look to tourism as one of the areas where this badly needed job creation can materialise.

In the same area of tourism, we in Wicklow, in the last couple of years, have been deemed to have a national park. I would like to raise an aspect of that national park which is of the most vital economic importance to the county and, indeed, to the country: that is the progress with an interpretative centre that is planned by the Office of Public Works in the centre of the Wicklow mountain plateau which is causing some disruption at present for local people who are concerned about the location of the centre.

I have spoken recently with senior officials in the Office of Public Works and, quite frankly, I have chided them on their lack of liaison and communication with the local people regarding this meritorious project. The day is gone when the State or anybody else at any level can impose on the people something they do not want or into which they do not have an input. This centre is wanted, it is needed and is meritorious. I have been trying to keep an open mind on the situation. An expenditure of £200 million would be involved and that is welcome in a county such as Wicklow where great efforts are being made to follow the example given by the Government to ensure that the tourism industry is furthered to the ultimate extent. It comes back to liaison, co-operation and discussion with the people on the ground to ensure their co-operation with the location of such a centre.

In the past I have taken up the matter of this national park in Wicklow with the Minister for Defence, Deputy Daly, who formerly had responsibility for the Office of Public Works, who was extremely co-operative with me and my constituents with regard to the development of this national park. I had proposed to the Minister that he set up a board of trustees who would be fully representative of all the interests at local, county and national levels so that that liaison and co-operation, about which I spoke earlier, would obtain. The Minister took that on board and accepted it but unfortunately this board of trustees, or board of management, have not yet been put in place. I would ask the Minister and, indeed, the Minister of State at the Department of Finance, Deputy Vincent Brady, who now has responsibility for this area and who, I have no doubt, will be as co-operative as was his predecessor, the Minister for Defence, Deputy Daly, to take that on board as a matter of urgency and put the board of trustees in place. The line of liaison will be there for the benefit of the people on the ground and the Office of Public Works who are endeavouring to do a good and meritorious job. It would be in the Minister's interest to have a co-ordinated effort on this whole affair which we in Wicklow want but which, perhaps, could progress at a faster rate if that level of liaison and co-operation existed.

The process of decentralisation is continuing on an ongoing basis. I am very happy for those counties which benefit from this process. This is a very worthy process which takes Civil Service Departments from central areas where they have been since time immemorial and relocates them, thus breathing new life into areas throughout the country. It is a very worthwhile process, one on which I commend the Government. As I said previously, it is not necessary to be 100 miles or 200 miles from Dublin to have worthy decentralisation. At this point I would like to make a strong case for siting one of these Government Departments in my constituency of Wicklow.

I am convinced that, in the short or medium-term, it will become necessary to relocate the Coillte Teoranta headquarters. Forestry is expanding at an unprecedented rate throughout the country. I would ask that the headquarters of Coillte Teoranta be set up in the premier forestry county of Wicklow. More land area in County Wicklow is planted with trees than in any other county.

In Wicklow we have contributed to forestry and afforestation over the years. There have been great advantages to the people of Wicklow resulting in the provision of jobs and a major boost to the economy. There has been a downside as well in that the heavy trucks carting the forest products have played havoc with the roads. These roads were never meant for such heavy loads and the safety factor has sometimes been precarious. All things considered a strong case can be made for locating Coillte Teoranta headquarters in the premier forestry county.

In talking about forestry I would make one further plea on behalf of the small family type timber operator. I have spoken about it previously in this House. It is very important that these people continue in the jobs that they, their fathers and forefathers have kept going right across the country. There are an estimated 350 small operators in Wicklow working in the timber business in family-type small mills. That is typical of many counties throughout the country. There was a period when the availability of timber to these people was extremely scarce. I would ask that this matter be addressed so that these people can be allowed to carry on that tradition for many generations to come, especially in view of the fact that we as a country have, in the last few years, committed ourselves so much to afforestation. We had been at the bottom of the heap in Europe in terms of planting, with about 6.5 per cent of our land area forested whereas the European average was about 25 per cent. The survival of these people, their children and their children's children should be thought of at all times.

In my contribution to the Finance Bill this time last year I spoke about the position with regard to post offices, and it appears now that that was somewhat prophetic. I voiced concern last year, but at that time there were just rumours that there might be an attempt on behalf of the company to reduce the number of sub-post offices around the country. Unfortunately that has come to pass with An post's plan to tackle their financial difficulties. One of the measures they proposed was to close rural post offices. This is as unacceptable as their policy to provide roadside letter boxes throughout rural Ireland. If these two changes are brought about they will have a major effect on rural life. We all talk about rural development and keeping people in rural Ireland, and much of our European funding is being channelled into that area but——

Acting Chairman:

Whatever the implications of the decisions of An Post, I would remind the Deputy that we are discussing the Finance Bill which relates to finance, taxation and so on. The Deputy's speech is not relevant to that. I would ask him to be relevant.

I will comply as usual with the Chair's ruling. Before leaving that point I would appeal to the Minister concerned to go along with the modus operandi in progress at the moment. In the final analysis, the two aspects to which I referred are infinitesimal when compared to the company's overall financial difficulties. In the context of those two issues rural Ireland should remain unchanged.

I would like to bring to the Minister's attention the important matter of VAT on all hotel services in the context of the European stance on this issue. The 30 January budget increased VAT in the hotel services area from 10 per cent to 12.5 per cent, with a view to this being — and I quote the Minister on that occasion —"another instalment of the adjustment we must make for participation in the new Europe". Since budget day on 30 January 1991 there appears to have been a change in the European view on this matter. On 26 February 1991 Mrs. Schrivener, the EC Commissioner for Taxation, announced that she now favours the application of the reduced rate of VAT— 4 to 9 per cent—on tourism activities, including all hotel services. In these circumstances, would the Minister examine the position with a view to perhaps veering in the direction of this apparently revised European thinking. Perhaps the Minister could in this Finance Bill consider this matter favourably in view of the current major momentum of the Irish hotel industry and Irish tourism and in view of the job creation record to date.

There are some commendable inclusions in this Bill to which I will briefly refer. The improvement in the family income supplement is extremely welcome and I commend the Minister for taking that on board. The widowed parents provision is also welcome. In the area of agriculture, the improvement in capital acquisitions tax is extremely welcome, particularly in these difficult times. The further liberalisation of the installation scheme for young farmers is very welcome. This is continuing evidence of what the Minister and the Government are trying to achieve. They are creating an incentive for the young to take over from the old in Irish farming. The disabled drivers' scheme is another welcome measure. The provision with regard to inheritance tax being made retrospective to 1982 is extremely welcome. That obviously will take into consideration the specific and anomalous cases to date.

In the area of taxation the Minister has been playing around with the tax bands to great effect in the last number of budgets. He continued down that road in this budget, and that is welcome. He is reducing the tax payable by people on the higher rates. We are spot on target with regard to the promises and commitments in the whole area of taxation. Despite the criticism and different interpretations of the situation, the reality is that we are spot on target with the commitments already given.

I compliment the Minister for Finance and the Government on their quite magnificent performance in the economic management of our country. I wish them continued success.

The budget was a disappointment and the Finance Bill implementing the budget only compounds that disappointment. While we are discussing this Finance Bill the twin evils of unemployment and emigration continue unabated. The Government can no longer cope with the situation and it is difficult to find much comfort in the Finance Bill to alleviate the position. When one considers that there are more than 246,000 people unemployed and another 30,000 on social employment schemes and various training courses, the implications of the unemployment problem are absolutely frightening. More than 100,000 of those people have been out of work for over a year. Have the Government become so anaesthetised by the problem that the only comfort they can give each year to these people is to increase the social welfare allowances and hope that by this method they can keep the lid on the problem?

I listened to Deputy Jacob spouting a lot of optimism, saying that the Government were spot on target. However, if unemployment is a barometer of the success of the Government then God help us. The Minister in his speech referred to the innovative approaches towards tackling unemployment black spots but his statement rings hollow because I have analysed the budget and Finance Bill and do not see any indications that there is a positive attempt to do something about this specific problem. Indeed, it is incumbent on the Government to try to achieve a positive framework within which to do something about this great affliction.

In regard to taxation, the Government are possibly long on aspiration but lack commitment to reform taxation; they continue to tinker with the present system. The only utterances in relation to taxation have come from Michael McDowell, the chairman of the Progressive Democrats Party, their appointed spokesman on Finance. He can talk almost uninterruptedly outside this Chamber in relation to taxation and the laudable and long term ambitions of his party. However, the Progressive Democrates, who form part of this Coalition, seem to be achieving very little in responding to Mr. McDowell's ambitions.

There have been minor reductions in the rates of tax but the tax allowances and bands remain virtually unchanged. Some people, no matter what increases and small gains they achieve find themselves in the higher tax bands which means they are paying more tax. In the last few budgets, because of the increases in social welfare, an unintentional poverty trap has been created for those who work in the main income group earning between £8,000 and £10,000 per year. Indeed, over the last few years, especially from 1986 to 1990, tax receipts grew at an average annual rate of around 7 per cent. This was possibly because of changes in the tax collection system and indeed its administration and enforcement. Undoubtedly, the amnesty of 1988 helped; it was rather strange to hear Deputy Jacob justify that amnesty, saying that it achieved something and at least allowed people to put their tax affairs in order and start anew. It almost appeared to me that he was condoning the tax avoidance which existed up to then.

Deputy Jacob also referred to the self-assessment method; he said that the Government were spot on in relation to self-assessment. It was a strange remark because, at the recent conference of the Tax Officers' Association, the self-assessment system was castigated. I agree with Deputy Rabbitte's statement that there are defects in the self-assessment system and that there were no checks on the people paying tax, with the exception of a very small number, to verify whether it was working effectively. Where tax officers made those effective checks they found that the people availing of self-assessment were underestimating the amount of tax they should be paying. That proves that the self-assessment system is not working effectively when it comes to monitoring and tracking what is happening. There is possibly a tax reservoir to be collected; PAYE workers who are taxed at source are incensed at the fact that other people are not paying their fair share. The Minister for Finance should address this.

It has been recognised that the difference between a person working as opposed to being unemployed and on social welfare is minimal in many cases. On many occasions it has been highlighted in this Chamber that there is a poverty trap. The Government have not recognised that there is a problem in this regard; indeed the Minister for Social Welfare will give examples to prove, in relation to certain areas, that the poverty trap does not exist. However, the Minister is very selective in his examples and I can give many examples to show that there is very little difference between working— and earning between £8,000 and £10,000 —and not working. This has happened because, over the last few years, there has been a narrowing of the differentiation due to social welfare increases and the disposable earnings of those working.

I am often amused when I hear people trotting out what is regarded as the average wage, well over £200. I come from a rural constituency and I am well aware of what many factories in the area pay; in many cases the factories are unionised and within a radius of ten miles at least six of them pay the princely sum of £140 to, possibly, £160 per week. What is the attraction of that sum to a married man with two children working in one of those factories? Many of them have told me that they would be better off not working but that that would drive them mad. The inbuilt motivation is not in relation to the financial inducements and the Government are not helping those people. We have gone a little bit but not far enough. We must recognise that our PRSI and taxation systems create a poverty trap for that sector. I recognise that the Minister has made minor adjustments to help the lower paid but the unemployed must be motivated to try to get jobs.

As a result of the social employment scheme many people do laudable work in their communities. I regret that recently the number of places has been reduced. If anything, I would expand the number of places on the schemes because the money from the Department of Social Welfare would be better used to pay people for working. It is really only juggling the books in relation to where the money comes from. The Government should do an in-depth study of the link between social welfare and taxation at work if we are to ensure that those at work are adequately compensated for their efforts and not caught in the poverty trap to which I referred. I have encountered many people who are fearful of working overtime in case they lose their medical card and other concessions. A medical card, in recent times, has been valued at in excess of £460. There is no incentive for a person on social welfare to move into a low paid job. We must, as a matter of urgency, try to integrate the tax and social welfare systems and analyse the position in regard to these poverty traps. The question I ask is, is there a willingness by the Minister and the Government to do this?

We all know that the housing situation is disastrous. We have escalating house prices. Young couples are looking for houses. Yet, progressively since 1987, almost by sleight of hand, mortgage interest relief has been reduced from £4,000 in 1987 to £3,200 at present, a reduction of 25 per cent. The idea of giving mortgage relief to young, hard-pressed couples is certainly worthy of consideration. I particularly pinpoint that sector because many of them are making attempts to house themselves.

We listened today to people advocating that we should get some movement into housing policy here. We know that over 19,000 people are at present on a housing list. Many of them have the motivation and desire to house themselves, but we are not giving them any incentive to do so. They must be given that incentive. What have the Government done in response to the needs of these people? Many young married couples took out endowment mortgages which have a life assurance element, and in this budget the Government reduced tax relief on life assurance policies from 50 per cent to 25 per cent. Is this a positive approach to the young people in our society who are trying to do something for themselves? I defy anybody in this House to tell me that they have not encountered people in their clinics who want to get a start, to get out there and provide themselves with housing. However, there is no encouragement given to them to do so.

There is reference in the Finance Bill to the DIRT and further modifications, particularly in relation to foreign accounts. When this tax was introduced by the Fine Gael—Labour Government it was derided by Fianna Fáil who stated that on their return to office they would abolish it. Then they got an attack of fiscal rectitude, rather belatedly, and retained this tax which is pumping out £300 million a year. There is one appalling aspect of it that has not been touched on by anyone, that is that our old age pensioners pay this tax and then have the option to reclaim it back. My understanding is that last year £15.3 million was claimed back by in excess of 20,000 people. The majority of that 20,000 happen to be old age pensioners and they deserve to get that money back. But I know that thousands of people are not bothering to claim it back. They are afraid that their pension might be tampered with afterwards; they detest paper work and bureaucracy. They have all kinds of fears and concerns. Many of them would need to go to an accountant for professional advice.

I have met accountants who have told me that the same concerns were put in front of them by old age pensioners. They are worried that it might be deducted from their pensions. Let us not say that that is fantasy. It is not. In the UK, pensioners do not have to pay retention tax; that is determined in advance. Let us not indulge in this three card trick of taking the tax from them and giving them the option to claim it back but almost hoping that they will not. Let us have some respect for our older people. It would not be very difficult for the people in the Department of Finance to some up with a more simple mechanism than exists at present. I want the situation addressed because it would mean that many pensioners would be much happier. The amount of money involved averages out at about £70 per person, less in many cases. What must it cost to administer a scheme like that? It would be worth looking at that whole situation in relation to our pensioners. Let us show a bit of respect for them, just as our neighbours in the UK do.

It is because of these fears that pensioners have, that they keep cash in biscuit this under beds. They are afraid to put the money into the post office, the building society or the bank because they feel it is being watched, that it is being monitored and that it would be better to keep the couple of hundred pounds in the biscuit tin rather than invest it. Because many of these people live in isolated rural areas they run the attendant risk of burglaries. Last week we read of somebody getting £30,000 because we have these sharp people going around the country with one person going to the front door to distract the occupier and another going in the back door to rob these poor people. I know of a situation where a women died when there was a fire in the house because she went back to get the biscuit tin with the cash in it and suffocated.

There has been much talk about the business expansion scheme which Deputy Rabbitte castigated. During the course of his castigation he derided people like Deputy Peter Barry for trying to have it reinstated for the hotel industry and trying to get the Minister to realise that in what he introduced in the budget in January last, he threw out the baby with the bath water. As a result of pressure from people within the hotel industry and, indeed, this Chamber afterwards, the Minister changed his mind, a very welcome change of mind.

Deputy Jacob mentioned that he recently spoke to Mr. Horan who is prominent in the hotel industry and said that Mr. Horan praised the Minister for his realism in relation to the whole business expansion scheme. I would like to ask Deputy Jacob if he spoke to him recently, or after the budget, because if he had met him after the budget he would have been calling it the business eradication scheme, not the business expansion scheme. There is no point in saying that the tourist industry will gain us the maximum number of jobs, that we have to have leisure facilities and that we must pump in money if we are to get the tourists into this country. There is no point in saying that if we are not serious in our attempts to help out the tourism industry.

I applaud what the business expansion scheme has achieved in certain sectors, particularly in the hotel industry. I do not condone the abuses of this scheme which have taken place in the past, for example, the much heralded investment of over £20 million in the aviation firm at Shannon which created only seven jobs. Whether or not we realise it, professional experts will continue to find loopholes in whatever schemes are introduced and, obviously, these loopholes will have to be plugged.

I very much resented some of the comments made by Deputy Rabbitte. He almost castigated Senator Shane Ross on his decision to join Fine Gael. He said that he had different views about the business expansion scheme——

There should be no reference to Members of the other House.

I am only responding——

It ought not to have happened.

I regret that it did happen. Senator Ross is very welcome to our party, which is a compassionate party——

The Deputy will obey the Chair.

That is the only point I wanted to make. I can assure you, a Cheann Comhairle, that I would not be as uncharitable as Deputy Rabbitte in my comments about Members of this House; there is still a shred of diplomacy in our party.

When one analyses the budget and the Minister's speech one wonders if the Government ever heard of the word "farmers". The Government are well aware of the current crisis in farming and what is happening in regard to the GATT negotiations and the Common Agricultural Policy. If farmers are looking to the Government for their salvation in the future they will be bitterly disappointed. Farmers feel betrayed not only by the EC but also by the EC Agricultural Commissioner, Mr. MacSharry, and the Minister for Agriculture and Food. Many farmers have told me they believe Fianna Fáil would be far more critical of Commissioner MacSharry if he came from some other stable and I am sure they would be far more critical of him and would be telling him to do something positive for farmers.

The purpose of the Finance Bill is to implement the proposals in the budget. However, as the Minister has now discovered, the economic forecasts on which the budget were based were over-optimistic; independent commentators at the time said that the forecasts were over optimistic. The unemployment forecast was based on an average level of unemployment of 228,000 in 1991 and the social welfare projections were based on that figure. However, we all know the reality which prevails at present. Obviously that optimistic evaluation will lead to an overloading of the social welfare system and increased expenditure by the Government. The level of unemployment has been higher in the first quarter of the year than had been expected and does not support the Minister's projections.

The Minister stated that the Government would monitor the evolving situation very closely and would not hesitate to do what they thought necessary. The indicators already show that economic growth will slow down this year. Earlier one of my colleagues was accused of making a contribution of doom and gloom. I was present in the House yesterday when he made his speech and I did not hear any doom and gloom in it; he referred to reality, which is what we also expect to hear from Members on the other side of the House.

Obviously there has been a downturn in the construction industry in the housing area. There has also been a decline in the tourism industry. It has already been projected that there will be a reduction of 20 per cent in the number of tourists visiting Ireland this year. In addition, the contribution made to the economy by the agricultural sector this year will be minimal. Was the Minister really telling us that another budget would be introduced this year when he said that the Government would not hesitate to do what they thought necessary? I am beginning to think that is what he meant.

I began my contribution by referring to unemployment and taxation and I will conclude on these points as I do not believe the Minister has dealt properly with them. He has certainly failed to respond adequately to the serious problems which will confront us in the future.

I welcome this Finance Bill which will underpin the consistent growth achieved in our economy since 1987. This Bill addresses the fundamentals of our economy — the absolute necessity to curtail public expenditure, to reduce borrowing levels, particularly our debt ratio, and where possible, to achieve sectoral growth in the economy so that we can cope with the ongoing problem of unemployment. The Government have been successful in reducing our rates of inflation, public borrowing, foreign borrowing, public expenditure and interest rates. Our economy is now much more competitive than it was three or four years ago and I hope this competitiveness will continue to improve.

One of the most important aspects of the Minister's speech was his resolve and determination to maintain budgetary discipline. He stressed this point throughout his contribution. The maintenance of our budgetary discipline will be of fundamental importance to our performance during the next 12 months. It is extremely important that we give a clear signal to our international competitors and the financial world that there will be no slippage by the Government in achieving our budget targets or over-expenditure in achieving our spending targets. The Minister has made it clear that, if needed he will take action to prevent such slippage or over-expenditure.

As the Minister was quick to point out, we are only in the first quarter of the year and this time last year the main Opposition spokesman on Finance made similar claims about our inability to achieve the targets which had been set. As we know, he was ultimately proved wrong. We expect to see an improvement in the figures during the second quarter of the year and the situation will be reviewed mid-year.

The Finance Bill has been framed in the context of the Programme for Economic and Social Progress which follows on from the very successful Programme for National Recovery. Much of what is contained in the Finance Bill flows from the contents of that programme. It is very significant to note that in this day and age the Government have achieved broad agreement with the social partners, both in industry and the trade union movement, on a wide range of issues covering health, social welfare, employment creation, taxation, etc. This consensus which is to be lauded will underpin the Government's confidence in the future of this country over the next three years. The programme allows for a combination of moderate pay increases, low inflation and income tax concessions which, cumulatively, amounted to almost £800 million over the past two or three years. Real take home pay increased over the past two to three years and is set to increase further in the future. If inflation can be kept down and income tax and VAT reduced, this will contribute to increased levels of take home pay.

The Minister has increased the basic rates of social welfare payments over the level of inflation and has brought in some innovative schemes. Since 1987 the consistent aim of the Government has been to protect and improve the lot of large families on low incomes and social welfare through the introduction of certain taxation measures. In a difficult budgetary context that has been the aim of the Government. To a large extent they have succeeded. The much quoted poverty trap, and the argument that there is not an incentive to work, bears out the fact that the Government have improved the position of people on social welfare to such an extent that they are nearly at the level of people on low incomes.

Workers on low incomes have access to the FIS which was significantly improved by the Minister in the Finance Bill. The FIS increases the take home pay of workers on low incomes and particularly benefits those with larger families. I am not sure about the argument about the incentive to work. It has not been quantified by speakers. It seems to be a throw-away phrase or a useful catch phrase for after dinner speeches. The vast majority of unemployed people want to work. They are not unduly worried about taxation or the levels of social welfare payments. They want work; irrespective of what people may say about the poverty trap or the lack of incentive to work, the majority of unemployed people want to work.

All the measures in the Bill which will reduce unemployment are welcome. I particularly welcome the initiative in relation to unemployment blackspots. I would appreciate it if the Minister would ensure a greater degree of consultation with local authorities and local interested bodies in preparing a package to tackle unemployment in a blackspot area. This problem demands an integrated approach from development agencies and Government Departments.

In the context of preparing the city development plan for Cork city economic blackspots were pinpointed. Certain short term remedial measures can be taken in relation to, for example, training young people in FÁS workshops, in creating community work projects or social employment schemes, but the long-term answer is to increase the level of educational achievement among young people in these areas. The number of children who leave schools in these areas at 13 or 14 years of age is too high. When they leave school they are desperately short of skills and find it extremely difficult to secure a place of employment. Any initiative which seeks to address unemployment blackspots must address education and devote extra resources to keep people in the educational system for as long as possible and equip them with skills which will enable them to enter employment on a permanent basis. The Government introduced initiatives in relation to the Youthreach programme and so on, to deal with that problem and we have had some success but the problem demands greater resources. The Minister has made a move in this Bill and I would urge him to expand on it and consult where possible with the local agencies and local authorities.

The Minister in his speech said that 1991 would be more difficult than previous years because of the international situation, the recession in the UK, the recession in the US and the Gulf War. While we are all glad that the Gulf War has ended there is not any question but that it had a negative impact on economic activity, both in construction and tourism. I hope we can recover by the end of the year in that respect.

Despite the difficulties, the Minister made genuine efforts to reduce the basic rates of income tax. When one considers that 29 per cent applies to the lower band, a significant decrease has taken place over the last three years. Likewise, VAT was reduced by 4 per cent over the last three years. This has had a beneficial impact on inflation and take home pay. Larger families on low incomes have also benefited from the tax provisions in the Bill. The exemption limits have been substantially increased, by varying degrees up to as much as 60 per cent, for example, for a couple with five children. These improvements along with the improvements in the FIS have assisted large families. The standard rate band exemption has also increased by 40 per cent in certain areas. The higher tax rate has been reduced over the years from 58 per cent to 52 per cent and a significantly lower percentage of taxpayers pay the higher tax rates than two or three years ago. That, combined with the VAT reductions, means that we have made significant improvements in tax reform over the last three years.

Furthermore, when one considers that we have introduced a new taxation system for the self-employed and the farming community and that we raised £500 million over two years ago, on the tax amnesty, it is fair to say that we have made inroads on the broad taxation front. We have increased the yield from corporation tax and capital gains tax. In that context it is difficult to explain the opposition from some Members of the House to local service charges, for example. When service charges were originally introduced it was argued that they represented double taxation in that people were already paying through PAYE. To what level does one reduce income tax or VAT and to what level does one increase the yield from corporation tax or capital gains tax to render local service charges acceptable? The people who opposed that tax have yet to come up with an answer.

This is one area of local taxation which has been fudged right across the political spectrum. The Government have basically said that the other options are not palatable and that therefore they will continue with the service charges but most politicians on the other side of the House will talk about the need for local taxation but will not specify what they mean and how we are to go about funding it.

I am not sure that our taxation system represents the major disincentive to employment that it is made out to be. Neither am I sure about Deputy Noonan's argument yesterday that we should have a significant reduction in tax rates for those entering employment. I sympathise with the point in relation to having a low commencement rate for people entering employment, but the Deputy failed to specify how we should fund this. When one contrasts that idea with the contributions of other Members of his party who suggested that we should increase mortgage interest relief or life assurance relief, one begins to find a certain degree of incompatibility in their positions. We cannot reduce rates, continue to increase allowances and at the same time insist that we must keep public expenditure down and reduce borrowing. The equation does not work out. We had a number of generalities yesterday in the House but few specifics as to how the taxation system should be changed. It is about time people stopped talking in generalities and got down to specifics in that area.

The business expansion scheme received a lot of attention during this debate. By and large the business expansion scheme represented a success. I can say unequivocally that when the scheme was extended jobs were created in the tourism sector. Indeed, there is hardly a hotel in the city of Cork which did not at some stage successfully utilise the scheme and as a result create extra jobs in hotels and the tourism industry in general. I welcomed in particular the Minister's move after the budget to allow those concerns who had entered into contracts prior to the budget to go ahead with those contracts; and I can honestly say that at least one hotel in Cork was saved from going out of business. Unfortunately, the scheme was abused. It is a sad indictment that schemes introduced to create employment and encourage people to invest are so blatantly abused as this one has been and as others will be in the future.

It is important to stress that the business expansion scheme is not dead as far as tourism is concerned. Contrary to what Deputy Finucane said, it has not been eradicated; it is still in place to help smaller companies who can raise up to £500,000 to undertake ventures which carry a degree of risk. I was impressed by the figures given by the Minister for the number of jobs created under business expansion scheme related projects during the past few years. The Minister referred to an interdepartmental review and suggested that an additional 4,250 jobs had been created in 347 companies.

It is important to point out that while hotels are excluded, a number of other enterprises in the tourism area, such as marina services, cruiser hire, equestrian centre services and tour coach services, can still benefit under the scheme. Tourism is not just about hotels. One of the conclusions of the ESRI study on tourism, and indeed other studies, was that our product was not what it should be and we were not meeting the needs of tourists. People can still invest in a broad range of areas in the tourism industry by utilising the business expansion scheme and I suggest that the Minister should highlight this fact for would be investors. As he mentioned in his contribution, there is a lack of investment in certain areas and the quality of the product on offer needs to be improved.

I was particularly struck by the strategy outlined in the Bill for the Temple Bar area and other designated areas throughout the city. I welcome the proposal that the Temple Bar area, which I visited, was picked out for specific treatment. The strategy is an interesting one and the Minister should consider adopting a similar strategy in other cities which could be considered as a flag ship project for tourism and the arts. Recently the residents of the marsh area of Cork city produced a very interesting plan, along the lines of the Temple Bar project, to create a tourist trail along the old medieval city wall, incorporating examples of period housing going back century by century and a number of interpretative centres. Depending on the success of the Temple Bar project, this is a strategy which could be implemented in other cities, Cork in particular. I suggest that the Minister take this idea on board. A model could be drawn up for the south parish through to the middle parish and Shandon.

Another welcome provision encourages private owners to loan works of art to galleries for display to the public. The provision states that where a work of art worth over £25,000 has been on loan to an approved art gallery for over six years for display to the public it will be exempt from capital gains tax on its subsequent disposal. That is a very enlightened provision and will be welcomed by the art world.

The Minister has clearly indicated that the Government are still on the right road; that they will try to keep inflation down, to have moderate wage increases, to control expenditure, to reduce borrowing, to create jobs in the areas of tourism, aquaculture, fish farming, the electronics industry and so on, to reduce the lowest income tax band to 25 per cent by the end of 1993, and ensure that we have a fitter, leaner and more efficient economy during the next decade.

During my contribution I would like to address the question of unemployment, which is the most serious economic and social problem facing us, and the transport sector in my capacity as Opposition spokesman on that area. People do not seem to realise the extent to which the unemployment position has deteriorated in recent times. At present 250,000 are unemployed and up to 30,000 people emigrate each year. In addition, between 24,000 and 25,000 young people leave school annually. As a consequence, there is a great need to create jobs. I get the impression from statements made by the Minister for Finance and the Taoiseach that they do not think they can do anything about unemployment and that essentially they have thrown in the towel. They have said that the right economic climate and confidence need to be created if we are to create jobs but there is no direct role the State can play. This is wrong and this issue must be addressed.

As chairman of the Joint Committee on Small Businesses I remember the lobbying of the then Minister for Finance to introduce the business expansion scheme to which Deputy Noonan referred. Over 6,000 jobs have been created since that scheme was set up. We need to look at our tax code and investment policy to see how they can be reorganised to give preference to job creation. I would like to put forward a number of suggestions in this debate because unless we are serious about restructuring our tax code to create jobs we will not improve the present position.

The first matter which needs to be dealt with is the cost of employing a person. Not so long ago I spoke to the boss of CIE, our biggest transport operator, with three holding companies. That group have reduced the number of their employees from 22,000 to 11,000 and intend to reduce it further. If we talk to the personnel managers of large companies we will find that they are equally intent on shedding labour wherever possible. The point I am trying to make is that we have made it very costly to employ people. To put £1 net pay in the pocket of a married man with one or two children costs something like £2.20 in average employment terms. To put £1 overtime in someone's pocket costs £3.10. We have organised our tax affairs by penalising labour intensive industries and people who employ others. There is no need for that. We can tax other things; we can tax profits, turnover and so on, but why do we tax jobs in this way? The Coalition Government's fixation to have two rates of tax, 40p and 25p, misses the whole point of our tax code. We need to address all the focus of tax relief towards the lower end of the scale so that more people will have less gross-net pay differential and the disincentive to employing people will be removed.

I will try strongly to make an issue in the next election of the fact that heads of households with larger families find it less attractive to work because the social welfare system pays you for having more children and the tax system gives no recognition for having children. In other words, I favour strongly the reintroduction of a children's tax free allowance which more than anything else would swing the scales for those it pays to work or not to work. It simply does not pay people to work if they have four children or more and if they are getting anything less than the average industrial wage because their entitlements for house rent and medical card are based on gross rather than net pay, not even taking into account travelling expenses and so on. Unless we reintroduce a children's tax free allowance and re-orientate our tax system to favour the majority of workers by reducing the lower band exclusively and changing the bands and allowances in that regard we will not remove those poverty traps and will not reduce the cost of employment.

Employer's PRSI at 12.8 per cent is a tax on jobs. The more people you employ the more tax you pay. It directly penalises labour intensive industries, and extensive data show that our industrial policy has succeeded in attracting capital intensive industries to Ireland and not labour intensive industries when what we require is exactly the opposite. In other words, we give very substantial allowances and reliefs for capital expenditure. We give substantial IDA grant aid for capital expenditure, and we give virtually nothing only stiff taxation in the form of employer's PRSI to people who create jobs. It is no surprise, therefore, that we have the lowest industrial base in Europe in terms of employment and the second highest rate of unemployment, at over 21 per cent. Therefore, I favour the abolition of employer's PRSI strictly on the basis that that money will be made up by an increase in corporation tax or a new tax based on company turnover, and I urge that we move away from penalising people on the basis of employing them. Until we do that and perhaps introduce exemption at a high level, maybe up to £85 a week, where they would be free of all PRSI and get the full class A1 credit, we will make no serious inroads into the situation.

One thing that has been proven successful is the social employment scheme, the only scheme that will deal with the permanent level of unemployment we have. I do not know whether the figure is 90,000 or 100,000, but it is estimated there is a permanent level of unemployment. What is the best social response in those circumstances? We in Government introduced the SES and it has been successful but it has been limited in a number of respects. After a year people have to leave it. People can get on it only if they are on unemployment assistance. We should extend the scheme to cover a number of voluntary activities. I know many voluntary organisations who could not afford the sponsorship of the SES. I would even favour introducing grants to such bodies to help ensure they can engage people. In the area of personal services, people may employ, for instance, a gardener or baby sitter. There is a huge black economy there. If the SES is extended to include that it would make a meaningful contribution.

In summary, I am suggesting under this Finance Bill in relation to employment that our tax reform be based on reintroducing a children's tax allowance to restore the incentive to work for those who have more than three children, that we gear income tax relief not across the board but to the lower paid to ensure there is not a tax on employment in that way, that employer's PRSI be abolished and replaced by a proportionate increase in corporation tax or a new tax, and that we extend the SES.

The Oireachtas Joint Committee on Small Businesses proposed the introduction of a jobs tax credit, an American idea, under which an employer taking on an employee who was on the dole for a year or more can get a credit of, say, $1,000 in the first year, or $500 in the second year if he retains the person for the full period, to set against any tax bill the company might have, corporation tax, personal income tax for a sole trader, or whatever it might be. It has worked and I believe is worthy of consideration.

There are significant problems in the transport sector in relation to taxation. Our transport costs are double the average in the EC. If you want to bring a container of goods from here to any other part of Europe the average cost is 9 per cent of product price. In Europe the average is 4.5 per cent. That is obviously because of our peripherality and we will have to deal with it. If we are to be competitive in the Single Market let us consider the basics. We have higher insurance costs, certain higher wages costs, we have to cross a couple of seas and so on, but if we look at taxation the implications are very clear. If you buy an articulated vehicle for the transport sector you will pay 6.5 per cent excise duty which is not reclaimable at all in the Republic. There is no excise duty on vehicles of that kind in Northern Ireland. VAT is reclaimable but VAT in the South is 21 per cent and in the North 15 per cent. The rate of excise duty on fuel oil in relation to the price per hectolitre here is one of the highest in Europe, second only to Italy. Similarly, VAT on fuel is 21 per cent here and 15 per cent in the North. These are the cost disadvantages the Irish transport sector have to carry.

Is it any wonder then that we see an increasing proportion of freight out of this country going through Larne? Northern Ireland hauliers can come down here, offer cheaper quotations, come across the Border and sabotage our business. With the development of cabotage whereby there will be total free haulage movements within Europe, we will suffer even further. The legitimate haulier here will see his business eroded by illegal hauliers on the one side and traders from the UK and Northern Ireland on the other. This type of penetration is very damaging to the transport sector and provides no great basis on which it can grow.

The only prospect of resolving this problem is harmonisation of taxation. The only analogy I can use is that this Government's attitude to tax harmonisation is something akin to a child's attitude to the dentist in so far as they are doing everything humanly possible to resist it. They are seeking exemptions and derogations in every direction and are even going so far as to look for compensation if the EC insist. The only way to have a competitive transport sector is by tax harmonisation.

Earlier speakers mentioned the privatisation of Irish Life. We must have a very clear policy in relation to privatisation in the transport sector. No such policy exists. We had the attempted sale of the B & I line for £6.3 million. The strategic interests of transport are so strong that the State must retain an interest in the transport sector. Be it Aer Lingus or B & I, a stake must be retained by the Exchequer. Whether that should be a minority stake, a majority stake or a golden share will vary from case to case. It is wrong, short-sighted and too simplistic for the Minister for Transport simply to wash his hands of the B & I Line after the investment of £100 million. A golden share must be retained because of the vital strategic links. Eighty per cent of all our exports are shipped. Therefore the shipping services on the Irish Sea are vital to the economy. If we completely wash our hands of involvement, what will happen in ten years if Irish Ferries say they cannot make money on the venture and sell it to Sealink or some other foreign owner? Leaving aside the short term interests of the employees, that is not in the long term interests of the economy.

We have no policy in relation to Aer Lingus, which will lose £40 million on air transport this year. When the market is liberalised in 1993 there will be complete deregulation. We have seen spectacular collapses of some of the largest airlines in America and we need to be very careful that Aer Lingus is not left behind. Other airlines such as British Airways, KLM, Lufthansa, Swissair and SAS have taken cross-investments in different airlines. They have set up a European quality alliance and have taken shareholdings in each other because they see an interdependence and globalisation of shareholdings. Aer Lingus is still on its own, the bachelor of Europe which will be left on the shelf, adding to our problems of peripherality. We must have a clear aviation policy. A minority of the shares in Aer Lingus should be sold to different airlines to give us marketing and cost tie-ups, links to the Far East and Australia and strong transatlantic links. Unless this is done and there is clear thinking about that element of privatisation we will be left behind.

If anybody has a good case for spending money it is the motorist. Having gone to considerable lengths to get the figures from the Department of Finance, I discovered that the driver of a truck, an articulated vehicle, a van or an ordinary car spends £1,260 million on VAT, excise on vehicles, fuel, tax, road tax and fines. That is a great deal of money. It is not unreasonable that the motorist should ask for a little bit of that money to provide reasonable roads. It is agreed by the Department of the Environment and by the EC Commission that at 1987 prices it will cost us £3.3 billion to bring our roads up to European standards. I am not talking about the roads around Ballybay or the backstreets of Ferns and Camolin or Lyrecrompane. I am talking about the inter-city radial routes. To bring our roads up to standard by the year 2010 would require the investment of £200 million or £250 million per annum. The level to which the Government are committed is much less. They have not even set up the national roads authority, only an interim body which has acted as another layer of bureaucracy. There is no clear thinking by the Government with a view to resolving this problem. It must be borne in mind that the motorist is paying £1,280 million in taxation.

Apart from the national routes, there is the question of the potholes competition being held through the media to find the largest and the worst. It is a joke. The problem of non-national roads will only be resolved by more resources. Deputy Boylan's constituency of Cavan is regarded as the capital of potholes. It is unacceptable that the people of that area and other places, such as Clare, should have to put up with roads in this condition. My constituency of Wexford is not the worst but is certainly not the best We will shortly be putting forward radical proposals in this regard.

Total motor tax receipts by local authorities are estimated to amount this year to £161 million. The level of grant paid by the Government is £68.13 million for non-national roads. The idea is that the national roads authority will deal with all national primary and secondary routes, that is 6 per cent of all roads carrying 37 per cent of all traffic. The remaining 94 per cent of roads must have a new financing scheme. Motor tax revenue should be retained by the local authorities. This would make available an additional £41 million. Some may say that all the money will go to Dublin. It would be possible to devise a scheme whereby no local authority would get an increase in their road fund of more than 30 per cent and a transfer of resources would then take place to counties like Clare and Cavan to ensure that this problem is dealt with. We need also a road audit to ensure that local authorities are performing, that the work is being done and that no money is wasted. We must have uniform costings per kilometer for the restrengthening and resurfacing of our roads. Until we have a real plan to get to grips with our pothole problem there will be no resolution of it. This will be a major issue in the local elections and our party will have a sound and well thought-out solution.

It is a tragedy that in the operational programmes to deal with peripherality within the EC the funding received by the railways is derisory. It is virtually nonexistent, apart from some diesel cars to Dundalk. At a time when the British Government and the Northern Ireland authorities are prepared to expend very substantial resources in upgrading the Dublin-Belfast link, this Government have dragged their feet and have not put any money into it. They are looking for more studies, more reports and more reviews. It is not right that the transport company, Irish Rail, should have to bear the total cost of the permanent way, the railway track. No motorist has to pay for the cost of the roads in that form. The cost of maintaining and upgrading the permanent way, which I understand ranges from £41 million to £45 million a year, should be included in the Public Capital Programme. The Public Capital Programme for both roads and railways should be included under the auspices of the Department of Transport. This has been done in Denmark where they have been very successful. They have an integrated transport policy involving air and sea, roads and ports and railways.

The lack of investment in upgrading our railway line means that the Government have to make a decision either to abolish or retain the railway. If they want to abolish it, let them say so. If not, then why allow the situation on the line from Sligo or Ballina to Dublin, where the train has to travel so slowly for safety reasons because the rolling stock is run down and the permanent way is run down that fewer and fewer people will use the slow and unreliable service. That is unacceptable. The Government have no clearly thought-out policy. They have not even approached the EC for aid towards the cost of maintaining the permanent way.

Even those of us who are not Dubliners know that it is taking longer and longer to get to the city centre. It now takes 40 minutes for people to get to work when it used to take 20 minutes. The problem of congestion will get worse and because 40 per cent of the population live in the greater Dublin region. Frankly, this problem requires a solution.

Having looked at various options, such as guided bus ways, which are dedicated routes on which only buses can run, light rail and the possibilities offered by road development, it is my considered view that we must embrace the option of light rail in a planned coherent way, encompassing two or three phases over the next five to ten years, for example, starting with the Harcourt Street line, then developing a route to the airport, a route to Cabra and another to the south-west. Unless we have a concerted policy of investment in light rail, for which we seek EC funding, we run the risk of seeing Dublin's traffic congestion problem get completely out of hand. That simply is unacceptable.

The advantage that light rail has over any other mode of transport is its exclusivity, in other words, it will not be caught up in traffic jams. This is where Dublin Bus has failed; even though there are bus lanes, there have been problems with illegal parking. The fact is although buses are very efficient and carry up to 80 passengers at a time, they get caught up in the same congestion as the motorist. Therefore, that is not a solution. I understand that for an investment of something in the order of £350 million we could provide a very high quality light rail system. In over 300 major urban centres, some of which are of a similar size and have similar problems to Dublin—such as Manchester—they are now opting for a light rail system.

There will be EC support for the development of light rail routes and there is a 75 per cent grant for national primary route development. If we put together a concerted expenditure programme of £350 million, we could actually achieve results similar to those achieved on the DART corridor, in other words, more than half the people who go to work from Howth to Bray go by public transport; less than half go by car. On any other route where Dublin Bus operate, less than one third of the commuter traffic to and from work use public transport. Here we have an opportunity to solve the problem but we cannot have a half hearted commitment. You cannot reopen the Harcourt Street line only; you must have a concerted approach to the development of light rail transport. From the point of view of the environment, transport, bringing greater life to the inner city and sound investment, this is the way to go.

I would now like to deal with the two growth areas of transport where there is enormous potential. I referred to cabotage earlier, but I believe we must look at international haulage as an export traded sector and give it the preferential corporation tax treatment that applies to other internationally traded sectors. The second area of growth is in shipping. It is undoubtedly the case that Fianna Fáil made a special case of the shipping sector in 1987. They promised grant-in-aid, that the business expansion scheme would apply and that they would restore the whole fleet—this was after the difficulties of the Irish Shipping Company which had been put into liquidation. What do we see in 1991? The grant scheme has been gutted and virtually no container can now get grant-in-aid.

The situation is quite unacceptable because people's hopes were raised. For no reason the business expansion scheme has obliterated the shipping sector. There was no evidence of abuse or of the asset based schemes in this sector as there were for hotels and golf clubs, but for some mysterious reason the business expansion scheme no longer applies to shipping. I think this is very unfair. The modest Irish shipping sector for container traffic, less so for deep sea traffic, are disappointed at the way they have been treated. This is shameful and runs totally in the face of what was promised by Fianna Fáil earlier. I do not wish to detain the House, but these are some of the transport issues that need to be dealt with.

The most important issue at the end of the day is employment. If we are serious about dealing with the problem of unemployment we will have to move away from the climatology approach where if interest rates and inflation are OK, jobs will be created. The fact is that inflation has been very low by European standards over the past three years but we have not seen the jobs. Real interest rates are too high. The rate of return on an investment when you pay interest rates of 15 per cent is simply unacceptable, and even an interest rate of 13.5 per cent is unacceptable.

The differential between deposit interest returns and the lending rate is out of line and is too high. That will retard growth. We can only convert economic growth into jobs by abolishing employers' PRSI and increasing corporation tax proportionately, reducing the lower rates of income tax and reintroducing the children's tax free allowance so that it pays people with families to go to work; to reintroduce a jobs tax credit, as they have in America, to give a direct incentive to create extra employment, and to extend the social employment scheme way beyond its present frontiers so that it will cover new services and many voluntary organisations. I believe that up to 70,000 jobs could be created by the voluntary sector who are doing unpaid work ideally suited to people working one week in every fortnight.

This budget is disappointing but I will return to some of the issues that I have raised in the future.

Debate adjourned.