The House will now hear two-minute statements on matters appropriate to the Minister for Foreign Affairs and the Minister for Finance. I propose to call on Deputy Allen in respect of three matters and Deputy Hogan in respect of two matters.
Adjournment Debate. - Foreign Affairs and Finance Matters.
The first issue is the plight of the people of East Timor who have suffered prolonged oppression. I am asking the Minister for Foreign Affairs to raise at the United Nations or at the European Council of Foreign Ministers the plight of these people.
East Timor lies off Indonesia about 600 miles from Australia. It is a former Portuguese colony which was invaded in 1975 by the army of General Suharto of Indonesia, who is still in power. There was very little protest by the international community. Sixteen years later with 200,000 people dead — about one third of the population of East Timor — a war of extermination is still going on. The international community have done very little to bring about a peaceful solution. When will the international community turn their attention to the crime against humanity which is being committed there? Journalists have been excluded from the island and the Red Cross were expelled some years ago. With the cessation of hostilities in Iraq and the plight of the Kurds being attended to, I hope that the people who were so rightly vociferous in their condemnation of the treatment of the Kurds will turn their attention to the appalling carnage among the East Timor people, amounting as it does to genocide.
I have had a special interest in Nicaragua over the years. With the normalisation of affairs in Nicaragua and in view of the national consensus reached between the Chamorra Government and the Sandanistas, arising from the general election last year, will the Minister consider, through the appropriate international fora, increasing technological and financial aid for the people of Nicarague who have suffered decades of war and hunger?
I had the privilege of visiting Nicaragua in 1985 for the elections there, and last year I represented this Parliament as an observer at the elections. I was pleasantly surprised to see that the Sandanista regime have accepted the democratic voice of the people and have reached a national consensus with the Chamorra Government. The damage to property and to industrial installations, as well as the damage inflicted on the friendly, open people of Nicaragua by the US economic blockade, must be put right. As much positive attention must be given to the plight of the people as when the Sandanistas were in power. It is a country full of rich natural resources with major potential, but it needs help after the oppression of the last two decades.
The plight of the people of East Timor is one which continues to be of great concern to us all. This concern is mirrored by that of our partners in the twelve member states of the European Community. As recently as 27 February the issue of East Timor was raised by Ireland and its partners in the Twelve at the Commission on Human Rights in Geneva. The Presidency, on behalf of the Twelve, adverted to the reports which have been reaching us that human rights abuses, including long and short term imprisonments, ill-treatment, torture and killings, continue to be inflicted on the inhabitants of East Timor. We wish to see a just, overall solution to the problems of East Timor which is acceptable internationally and which complies with the principles of the United Nations Charter, including respect for human rights and fundamental freedoms.
Ireland believes that the political issues related to East Timor are best resolved in the negotiations between the countries directly concerned — Portugal and Indonesia — under the auspices of the Secretary-General of the United Nations. The Secretary-General has been given a mandate by the General Assembly to facilitate a comprehensive and internationally acceptable solution to the question of East Timor and to conduct consultations with all the parties concerned. Ireland fully supports the Secretary-General in this endeavour. We wish to see these negotiations succeed in order that the legitimate interests of the population of East Timor can be fully safeguarded.
In the meantime Ireland and its partners in the Twelve will continue to monitor developments in East Timor, in particular the human rights situation prevailing there.
On the second question, the Government welcome and strongly support the efforts to promote national reconciliation and harmony, which have been undertaken to date by both the Government of Nicaragua and the main Sandanista opposition movement. These efforts were consolidated in the concertation agreements reached last October between the Nicaraguan Government and employers and workers organisations to consolidate democracy and promote stability and economic and social development. I hope that this process of co-operation and constructive dialogue between Government and Opposition in Nicaragua will continue and will serve as a useful example to help strengthen the democratic process throughout Central America as a whole.
The favourable political developments now occurring in Nicaragua offer some encouragement that the major economic and social problems which that country faces can now be effectively tackled. It is important to recognise, however, the scale of the economic problems with which Nicaragua is faced, in particular a very considerable balance-of-payments deficit compounded by a serious debt problem. While effective action is obviously needed to deal with these problems the danger is that the particular adjustment policies required contain within them the potential to undo much of the progress which has been achieved in the political arena through exacerbating social tensions, for example.
The international community as a whole recognises this danger and has indicated its willingness to take account of the serious economic circumstances of Nicaragua in preparing its aid programmes. A donors' conference on Nicaragua is currently meeting under the aegis of the World Bank. Hopefully this will soon produce definite proposals aimed at mobilising considerable amounts of economic aid in support of Nicaragua.
The European Community, like other international donors, also recognises the difficult economic problems which Nicaragua faces and the scale of the challenge which will be involved in resolving them. To that end, the European Community decided last year to establish a special export development fund to benefit both Honduras and Nicaragua, another Central American country which is experiencing severe balance-of-payments problems. The agreement formally establishing this fund was signed, at the recent San José conference of EC and Central American Ministers in Managua, which the Minister for Foreign Affairs attended on behalf of our Government. This fund will be used to boost the export capacity of both countries and should greatly contribute to both increasing Nicaragua's foreign earnings and generally furthering its economic development.
In addition to the special measures which it has taken the Community also provides considerable amounts of aid to Nicaragua each year within the framework of general Community aid to Asia and Latin America. This aid encompasses financial and technical aid as well as emergency and food aid. Nicaragua has been the largest single recipient among Central American countries of Community aid in recent years. In 1990 the Community provided 48.5 million ECU — 37.4 million punts — in aid to Nicaragua which was 7 million ECU more than was provided to all the other Central American countries combined. The Community in 1990 also sought to ensure a more even distribution among the different categories of aid provided to Nicaragua with financial and technical aid accounting for over 21 million ECU of the total.
I should also like to point out that Nicaragua should benefit considerably from the new guidelines agreed last December by the Community on providing aid to Asian and Latin American countries. These new guidelines provide for a qualitative improvement in the Community's relations with such countries, not least through a virtual doubling of the levels of aid which have been provided up to now. This will result in a substantial increase in the overall level of Community aid to Nicaragua which has been provided up to now. The Community are also committed to supporting Central American countries in their efforts to promote economic integration within the region, a process which should indirectly benefit Nicaragua through allowing it to participate on better terms in regional trade.
From what I have described, therefore, it can be seen that international efforts are being intensified to assist with the economic reconstruction of Nicaragua. Ireland fully supports these efforts and accepts that increased levels of aid will need to be made available to Nicaragua if its economic and political future is to be assured. We will continue to close monitor the situation in Nicaragua and not lose any opportunity which might be presented to press for additional support where it is required.
I now call on Deputy Allen to make a two minute statement addressed to the Minister for Finance.
Voluntary groups throughout the country who purchase medical equipment with moneys collected by way of public subscription are being forced to pay VAT on that equipment at 12.5 per cent. One organisation in Cork city — ACT — who raise funds for equipment for cancer treatment are extremely concerned, because on equipment bought for over £1 million to date they have had to pay almost £150,000 — in other words, they are being taxed for doing the Government's job because they are providing equipment the Government have failed to provide for the health services in that hospital. That story can be repeated throughout the country.
We are being told that the Government are restricted by EC law from waiving Government taxes. I should like to know from the Minister this evening what is the law? How is it that voluntary organisations in Great Britain and Northern Ireland have a zero tax rating while ours has arisen from 10 per cent to 12.5 per cent because of recent increases?
Three countries within the EC have zero tax rating. As we know, Ireland has zero tax rating for food. The United Kingdom have zero tax rating for charities who provide vital funds and equipment for hospitals. Portugal also have zero tax rating.
The Minister must not reply to the effect that he is being prevented from exempting such equipment from tax by European laws. I cannot see on record any action having been taken against the United Kingdom or Portugal for having a zero rating. The Government should give a commitment to such organisations throughout the country because they are fulfilling a vital role within the community. The present VAT rate of 12.5 per cent on such equipment is punitive and acts as a major disincentive to such organisations.
It is ironic that the Minister this evening spoke about reducing the standard rates of VAT on soaps, toothpastes, washing powders, disinfectants, biscuits, sweets and confectionery while at the same time increasing the VAT rate on medical equipment so vital for our health services which have been effected enormously by Government cutbacks.
The Deputy is well aware of the position. I do not know why he persists in asking this question when he knows what is the answer — it is on the record, having been answered so often in the past.
Medical equipment, instruments and appliances are generally liable at the standard rate of VAT, which I reduced to 21 per cent on 1 March 1991. As I explained to the Deputy and other Deputies on previous occasions, I cannot remove VAT from hospital equipment irrespective of how it is financed. This is because the introduction — and perhaps the Deputy would listen to it for the last time please — of new VAT zero rates or exemptions is prohibited under EC VAT law. Therefore, it is not legally permissible for me to respond to the Deputy's request.
I might add there would also be a difficulty in re-classifying medical equipment at the 10 per cent or 12.5 per cent rates. This would be incompatible with the 1992 tax approximation proposals which envisage standard rating of these items generally. As the Deputy will be aware, it is probable that the post-1992 standard rate will be in the range of 14 per cent to 20 per cent.
However, I am glad to say that agreements reached at Community level on the rates and structures of VAT to apply after 1992 should not affect the existing refund scheme for donated medical equipment. This provides for a refund of VAT to voluntary fund-raisers of the monetary difference between the standard and 10 per cent VAT rates on qualifying equipment. This scheme was established in recognition of the valuable work done by voluntary fund-raising groups who raise significant amounts of money to finance purchases of specialised health equipment.
In framing the terms of the refund scheme it was necessary to ensure that the objectives of fund raisers were accurately targeted. That is why qualifying purchases have to be the subject of a recommendation by the Minister for Health that, having regard to the requirements of the health service, a VAT refund would be appropriate.
Setting a lower limit of £20,000, exclusive of VAT, on the cost of qualifying equipment represents an attempt to strike a balance between the demands of fund-raising groups, the needs of the health service and the administrative cost of operating the scheme. Having regard to these considerations I believe a reasonable balance is being achieved.
For the information of the House, I should say the Revenue Commissioners have refunded over £600,000 under the terms of the scheme since it was initiated by us in 1987. The fact that zero rates exit in Ireland and in other countries does not permit anybody to introduce a new element into zero VAT rating.
Deputy Hogan may now put two statements, of two minutes each to the Minister for Finance. I would prefer that the Deputy would allow the Minister to reply to them separately.
In 1984 the Fianna Fáil spokesman on Finance, Deputy O'Kennedy, on behalf of the Fianna Fáil Party, promised that Fianna Fáil would remove VAT on hurleys if returned to Government. Of course, like other election promises at the time the mechanism to implement this promise could not be found afterwards. Hurling, as the Ceann Comhairle will know, is the Irish national sport.
Especially in Cork.
It is a sport that is uniquely Irish. The cost of hurleys is increasingly becoming a financial burden on GAA and camogie clubs to the detriment of promoting the sport. I am aware of one club in my county of Kilkenny which spent up to £7,000 in 1990 on hurley sticks alone. That is scandalous when one considers that the GAA was always considered by the Fianna Fáil Party as part of our national spirit and our national culture. I look forward to the Minister's reply in view of commitments given in relation to this many times in Opposition but not yet fulfilled in Government. No other sport has to incur such expenditure as the game of hurling because the costs involved are unique to the game and are unavoidable because of the nature of the game.
In my opinion there was a political sideline cut against the Government led by Dr. Garret FitzGerald particularly when one considers that the ball has been dropped many times since then. It was upsetting to me, and to many other people, that the GAA authorities went so far in taking on board this Fianna Fáil promise that they found it necessary to withdraw tickets to an All-Ireland hurling final in 1985 to the Taoiseach and the Cabinet of the day. Unfortunately, we have heard nothing since then from the GAA or from Fianna Fáil who promised a refund of VAT. Many young people are willing to play our national game but may not be able to do so because of the cost of hurleys.
Unfortunately, the same situation exists here as exists in relation to the topic raised in the previous question. I can appreciate the Deputy's concern but I have to point out to him, as I did in reply to the last question, that I am not in a position to remove VAT from hurleys. The deciding factor in this regard is that the introduction of a new VAT zero rate or exemptions is prohibited by EC law. That is the law and Deputies cannot expect me to break the law. For this reason, all of my predecessors over the last decade have had to reject similar requests.
The Minister's party promised it.
That was when the Deputy was in the Seanad. Of course, the whole question of VAT rating at this juncture has to be looked at in the context of the 1992 tax approximation. Measures taken between now and the end of 1992 must be consistent with the framework that is emerging for the new VAT system when tax borders are abolished.
I am sure the Deputy is aware that the intention is that there would be a basic two-rate VAT structure. This will comprise of a reduced rate, probably in the range of 4 per cent to 9 per cent, and a standard rate, probably between 14 per cent and 20 per cent. Member states are anxious that the scope of the reduced rating should be as restrictive as possible mainly for budgetary reasons. In order to achieve this they are trying to settle on a list of essential goods and services for which reduced rating would be appropriate. No sports equipment of any kind has been considered for inclusion on the list. In the circumstances, it is unlikely that it would be possible to get Community agreement for reduced ratings of hurleys after 1992. Without such agreement, we have no basis for unilateral action. The only way we can succeed is by unanimous agreement in the whole tax area.
I would point out to the Deputy that hurleys will have benefited from the reductions in the standard rate from 25 per cent to 21 per cent over the last two years. In addition, the GAA is in receipt of both current and capital grants from the Departments of Education and the Environment to assist them in their well deserved activities, that is helping to continue our traditions and customs in every parish in Ireland.
A final two minute statement from Deputy Hogan.
I now wish to raise the issue of the necessity of decentralising the National Museum to Kilkenny city. The Minister will be aware of the importance of tourism to a city like Kilkenny and the fact that we attract a tremendous number of visitors to the city annually. I am aware also that the National Museum are considering the possibility of decentralising some of the material which at present cannot be displayed in our National Museum in Dublin because of lack of space and that regional centres are being examined for the purpose of displaying material at regional level.
At present Kilkenny Castle is undergoing tremendous reconstruction work and I compliment the Minister, and the Taoiseach in particular, for this development. I would be grateful if favourable consideration could be given by the Government to relocating much of the museum material that is not being displayed to Kilkenny Castle or to Kilkenny.
The city of Kilkenny is renowned for its artifacts, its history and its cultural spirit. It could become a focal point for the south-east region for the development of the tourist industry and also for the displaying of museum material in that area. I am concerned that artifacts and items of regional interest be put on display in this decentralised location.
Kilkenny is certainly on the map this evening.
As the Deputy is probably aware, the Taoiseach has indicated in the past that he would be happy for groups or organisations from outside Dublin to approach the National Museum with a view to locating certain exhibits in their areas, and that, provided the Director and his technical staff could be satisfied as to professional standards of security and environmental protection, these requests would be fully considered by the National Museum. The Taoiseach also said, of course, that there would be no question of breaking up the national collections.
It has not been decided if the Office of Public Works would have any role to play in such a process. If it is decided that they do in fact have a role, the matter will be fully addressed at that stage.
The Dáil adjourned at 5.50 p.m. until 2.30 p.m. on Tuesday, 30 April 1991.