Dáil Éireann díospóireacht -
Wednesday, 5 Feb 1992

Vol. 415 No. 4

Financial Resolutions, 1992. - Financial Resolution No. 22: General (Resumed).

Debate resumed on the following motion:

THAT it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance).

Mr. Dennehy

This is an extremely good budget. It is employment oriented. It provides real benefits for the PAYE workers who can at last see a realistic effort being made to cut the contribution they make to central funds. They are promised also further concessions in next year's budget and we are moving in the right direction in that regard. The budget is geared also to meet the needs of those on social welfare particularly those who have slipped behind the rest of the community.

It is obvious that a great deal of homework was done on tax avoidance measures and other loopholes in the system that had been ignored for many years. These were examined and dealt with. Almost very single source of income was carefully examined and adjustments were made to cut out unfair advantages that were available to the select few.

I welcome the Minister's decision to allow full relief of VAT on medical equipment supplied by way of voluntary fund-raising. This is particularly relevant to Cork. Several groups are involved in fund-raising for much needed medical equipment which the State does not have the resources to supply. One group based at Cork Regional Hospital use the acronym ACT, that is, Aid Cancer Treatment. They recognised there was a need for cancer treatment in the Cork area, they did not agree with the policy of total centralisation of cancer treatment in Dublin. This committed group of people formed ACT in the early eighties and through their magnificent efforts have been able to hand over more than £1 million worth of equipment for the treatment of cancer. They have lobbied long and hard for the dropping of VAT charges on the equipment used. The local media — I might mention The Cork Examiner and The Evening Echo— have been most supportive of their campaign and have backed them all the way. I became particularly interested when I was nominated by the public representatives from all parties to liaise with the group and to co-odinate the case being made to the then Minister for Finance, Deputy Reynolds, for the removal of the VAT charges. At a press conference prior to that meeting, Deputy Reynolds had given me and those present a commitment to work for the removal of VAT on such medical equipment. At this stage, on behalf of ACT, may I place on record our thanks to both Deputy Reynolds and the present Minister, Deputy Ahern, for their recognition of the great efforts made by voluntary bodies. This decision will give a great boost to the fund-raising efforts of those seeking funds for different aspects of medical care. In Cork, there are several dedicated groups involved in fund raising for the purchase of different items of medical equipment. The fact that VAT had to be paid on equipment which had been purchased through fund raising was psychologically damaging and far outweighed the benefits accruing to the State from the VAT income. I welcome this decision.

Yesterday I listened to Deputy Duke's presentation on the budget. I found it fascinating but I believe he may have been deliberately mischievous when he boasted about putting four budgets before the Dáil. He dwelt at some length on the VAT rates. While there is a degree of opposition to and haggling on the budget, the Minister for Finance usually gets on with the job. I can think of only one glaring example where the standard performance of a Minister for Finance failed to materialise — coincidentally that budget failed because of a stupid decision taken on the VAT rate. Deputy Dukes may have been reminding us of the budget introduced by the present Leader of Fine Gael rather than referring to last year's or this year's budget. The Deputy's budgets failed effectively to make any real change particularly to the lot of the PAYE workers. It is probably worth comparing the past four budgets with the budgets he introduced particularly in the context of income tax reductions. I say that because Deputy Dukes concentrated on the mess that had been made of tax particularly the area of tax reform. He claims that the changes announced this year will make no difference at all to the PAYE sector. He reiterated the argument for widening the tax bands rather than cutting the rates of tax.

If one analyses the financial implications, it is true to say that the widening of tax bands could be used to make the tax system more equitable. Indeed, many commentators support this argument, and what they have in common is that they understand fully the complex aspects of income tax bands and the relationship between the various tax tables. What they do not have is the practical experience of dealing with people who have taken a psychological blow. I am referring to people who may have worked overtime in their job on one or two weekends and then find out during the year that that has cost them an enormous amount of money when their wages clerk or someone else notifies them that they have jumped from one tax band into the next and that they will in fact be worse off after earning a small amount of money through overtime. In the last four budgets in which Fianna Fáil were involved the tax rates have been lowered in a way that allows every person to assess his or her position at the end of the year or at any point during the year. People are financially better off regardless of the amount of work they do.

We now have two tax bands that have been lowered progressively by 7 per cent or 8 per cent and the new system is clearly understood. The psychological difference of someone being able to assess his or her wage packet in that fashion as against the system of the mid-eighties is very hard for someone in Deputy Dukes' position or with his background to understand. I should point out that there has also been a great widening of the standard rate tax bands for both single people and married couples. The general exemption limits have also been increased significantly.

Lest someone might think I am over-emphasising the simplicity of the present system as against the previous system, it would be no harm to compare the position now with that of the mid-eighties. Ordinary workers then had difficulty understanding the system and were told by administrators in the middle of the year that they had jumped from one tax band to another. I must point out, lest people have forgotten, that Deputy Dukes was Minister for Finance in 1983-84, when one's first £1,000 of income was taxed at 25 per cent, the next £3,000 at 35 per cent, the next £2,000 at 45 per cent, the next £2,000 at 55 per cent, the next £2,000 at 60 per cent and, believe it or not, the balance at 65 per cent. Unless an ordinary worker had a good commercial background and a calculator to hand it was almost impossible to figure out his or her position. A quick comparison with the system that applies today demonstrates how much tax matters have been simplified. As I said, the commentators and the experts are all in favour of tax bands, are au fait with taxation and are able to grasp a complex system. Fiddling with tax bands was not the answer, particularly when one took into account the psychological effect on working people when they lost out having worked longer hours or tried to better themselves. Now working people will understand that they have extra money in their pockets, they will be able to recognise that they are better off and will realise that things are being done for them for the first time. In the time about which Deputy Dukes boasted he made absolutely no effort to do anything about taxes for those on the PAYE system.

Throughout the debate on the budget speakers have stated that Ireland is much worse off than any other country in Europe. I was very interested in the chart compiled by Ernst and Young, international auditors that showed the difference between pre-tax income and after tax income which appeared in Monday's Irish Times. It illustrated that the Irish tax rate comes within a few pounds of the rate in Germany. Ireland is very much in line with the United Kingdom, the United States, Australia and France, particularly when it comes to taxing married couples. In regard to taxing of single people, Ireland lags behind the other countries to which I have referred apart from Germany — our single people are less well off after taxation. It is worth considering illustrations such as that chart to bring a touch of reality to the discussion.

The steps taken were necessary and the steps taken by the Government in the last four years were very necessary. The measures will bear fruit for the ordinary worker.

Some aspects of the budget have been attacked. Deputy Dukes yesterday criticised the level of funding for implementing equal treatment legislation. He was extremely critical that the payment to women deemed to have been unfairly treated under the terms of the EC directive relating to equal treatment for men and women in matters relating to social security was not being made in full this year. The Deputy complained that only £22 million will be provided this year, with the remainder to be paid in 1993 and 1994. Deputy Dukes criticised the arrangements, which are costing the Exchequer a huge amount of money, with such polish and style that any observer would be forgiven for not realising that it was the Deputy's own blunder and mismanagement — which he boasted of when telling us about his budgets — that led to the need for the payment. Deputy Dukes was the paymaster, he was Minister for Finance. From the deadline for the implementation of the directive, 23 December 1984, to the date of implementation, May and November 1986, Deputy Dukes, and his colleagues, were guilty of gross negligence. They shilly-shallied and procrastinated in a deliberate attempt to deny the legal entitlements to those women about whom Deputy Dukes is now so concerned. As a result of the huge amount of money due — some commentators estimate it to be £200 million — it is obvious the Government must make the payment over a phased period. Deputy Dukes was critical but he is the last person who should be critical.

This morning Deputy O'Shea boasted of the clear conscience of the Labour Party in relation to payments to women. He was very emphatic in saying that the Labour Party had wrestled with their conscience and the women had won out, but, if my memory serves me right, the Labour Party were a little involved in the 1984-86 arrangements in that they refused to apply the equality code for women.

Deputy O'Shea told us of Labour Party worries that some families with a greater income would gain more than other families under the Government's tax cuts. The Deputy is correct in saying that there will be a greater gain for some but I must point out that when his party were in Government no family gained from income tax reductions, regardless of their level of income, and that is well documented. The previous Coalition Government simply refused to reduce the tax rates.

The budget is employment orientated and I welcome it for many reasons, particuarly the inclusion of two new employment and training schemes, which will be of particular importance. I welcome the support of the trade union movement for the schemes. Many cynics decry even the description "job training", but that is mainly because of their complete ignorance about the industrial arena. In that regard, a very serious topic was referred to by the Minister for Education about a fortnight ago and it is something Ireland will have to consider very seriously. The Minister was right when he said that the values of vocational or technical training did not enjoy the same recognition or acknowledgment as did those of academic training. People in technical training work for an equal number of years and under the same pressure as those in academic training but receive little or no recognition. As someone of an industry-related background, I am aware of that and I believe that one of the greatest weaknesses of our country is the failure to recognise the value and the need for vocational and technical training.

Vocational and technical training have always been categorised as second class and are officially recognised as such in many State bodies and groups and under State regulations. A radical change is needed in that regard. People ask why countries such as Germany and Japan have done so well in the industrial field. One of the main reasons is that those countries recognised the need for vocational and technical training at a very early stage. They recognise the ability of those who undergo such training. It is an attitude of society that is at issue. We might not like to admit that but, unfortunately, in many quarters in Ireland it is felt that the manual worker — the blue collar worker or any other description one might like to give him or her — is inferior. They are the people who work with their hands and keep this country going. They produce the goods we export and consume at home. They maintain the service area and everyone else in the State. There is an unfair view that they are in some way inferior to those who are described as white collar workers. Manual workers, those who work in industry and in the productive sector, are the lifeblood of this country. They are underestimated and treated badly. This may be because the rules have been drawn up and are being implemented by people who have come through the academic field rather than the industrial or technical fields.

I was shocked recently to learn that a brilliant person in the Defence Forces was denied advancement for training in the technical arena in which he excelled on the basis that he had not completed his leaving certificate. I raised such a hullabaloo over this that there may be some alteration of that rule, but such a rule is indicative of the bias about which I speak. That bias will be there until we get our act together. I am glad that the Minister for Education has recognised this. This country will never reach its full potential until we recognise the talents of these young people. I have worked with trades people and technical people whom I could describe as artists in their own fields. I have worked with young people who have represented Ireland at the highest level of international competitions and they have won out against the so-called advanced industrial states like Japan and Germany. In many ways such young people are less regarded in the public eye and in some institutions than a person with the most modest academic letters after his name. This is an imbalance that has to be dealt with and I hope the Minister will deal with it.

The new training schemes will highlight the need for training. People in every walk of life should recognise the need for training and accept it up to the day when they finish employment. Technology and systems are changing and we need to keep up with the changes.

I welcome the schemes too because for a long time large groupings of people on the live register will have to be dealt with under specific schemes if there is to be any hope of cutting down on numbers on the live register. Our method of assembling the live register will have to be carefully examined. We constantly compare our figures with those of other countries, particularly those of the European Community, but we are not comparing like with like. We have a different method of putting together our live register. Specific groupings in the live register need help and these two schemes are helping.

The constituency I represent has a 37 per cent rural population. Most of the farms in my constituency are fairly large, are efficient and are viable, but in many parts of the country there are small farms which need assistance if we are to stop the estimated drain of 12,000 people per year from the land. Membership of one of the farming organisations is 114,000 and membership of the other is 40,000. There are a lot of people involved. About 50,000 of the people involved in those organisations are effectively included in the unemployment figures and they are in receipt of benefits of one kind or another. Many families are on non-viable units. We need a scheme to cater for these people so that they can retain a sense of dignity. They need to feel that they are equal to blue collar workers and at the moment they are not equal to them. As they see it, a lot of money has been wasted on sending officials out to question them about social welfare and so on. These people have been the backbone of our culture. They have produced great musicians, singers, footballers and so on. Now we are losing these people off the land. Unless we get our act together we will be in difficulty. We need a European scheme to cater for small farmers on non-viable units. It appears that at the moment the European Community frowns on agricultural production. There is no flexibility for small farmers. A lot of regulations have been introduced to hinder them and they do not have an opportunity to get into other areas of production. The disadvantaged areas grants do not seem to be effective and we must go beyond that.

An Leas-Cheann Comhairle

I must interrupt the Deputy's flow of eloquence and advise him that his time is up.

Mr. Dennehy

I unreservedly welcome the budget as a step in the right direction. All Deputies would have to agree with almost 90 per cent of it.

Mr. J. Higgins

I am afraid that rather than agreeing with 90 per cent of it I have to disagree with 90 per cent of it, although I take some of the Deputy's comments on board. Once, the Budget Statement was seen as the key economic instrument of Government policy in relation to the direction of the economy for the forthcoming year. It was the Government's plan of action to underpin in financial terms the Government's key social and financial objectives. While much of the immediate and public comment would be in relation to the changes in what used to be termed "the old reliables", and in relation to the taxes that would impact straightaway, such as those on drink and tobacco and so on, the budget was always seen, until relatively recently, as providing the country with the correct checks and balances and the fuel to maintain a definite social and economic flight path for the year ahead.

In the past, we had budgets which were stringent, budgets which were holding operations, neutral budgets and budgets in which the bullet was bitten. This budget has scarcely been rivalled in terms of being a colourless and indecisive budget. This is a dithering budget which has failed to bite the bullet when it is necessary, when unemployment is rapidly heading towards 300,000.

I fundamentally disagree with what Deputy Dennehy said about the compilation of the live register. That was a ploy to try to camouflage the reality. That was running from reality rather than facing it. The Minister in the budget lowered the threshold for the pre-retirement scheme. The scheme in itself is all right but it camouflages the real extent of unemployment. Anybody from 55 years of age upwards from now on is classified as being in the pre-retirement category, is effectively out of the workforce and off the live register. The pre-retirement scheme is a sort of sweetener before one eventually goes out on pension. To talk about lack of co-ordination in the compilation of the live register here and in other countries is invalid. There is an across-the-board unanimity in most countries, particularly EC and OECD countries in regard to unemployment.

At a time when unemployment is charging relentlessly towards 300,000, people being unemployed, the Government are bemoaning the fact that there is a recession in Britain, Australia and the US, but the recession does not impact directly on this country. It impacts indirectly in that those countries cannot now absorb our human surplus workforce. With so many small farmers literally clinging to the cliff face for existence, as they are being pushed off the land by the twin forces of GATT and Common Agricultural Policy changes, and with an average of 250 grant-aided industries closing down per annum here, what was needed was not a soft budget, a holding budget or a neutral budget, but something special. Yet the Minister for Finance, despite all the expectations with regard to his first budget, dithered badly and produced a grey, drab budget. Apart from the income tax changes, which I acknowledge as worthwhile and long overdue, the budget merely treads water. If the Minister is to operate on the same principle as Dicken's Mr. Micawber, waiting for something to turn up, then his term of office, be it long or short, will not achieve the lustre which certain sections anticipated with his arrival in Merrion Street.

There is a massive cloud of national depression over the country, a sense of abject hopelessness. There is total cynicism about politics and politicians, which is dangerous in the extreme. There is a prevailing atmosphere of inevitability and despair. This country has the capacity, given proper leadership, to shake off the lethargy and to do something for itself, to leave aside the begging bowl and to develop a strong indigenous economy. We must get up off our knees and leave the craven attitude aside. This country has huge potential in terms of human power and natural resources. There are many people willing to work and there is much work to be done, yet we have failed miserably to produce the blueprint to bring the two together.

While one must welcome the twin initiatives by the Minister to take 25,000 people off the live register for a year, this is a variation of the employment incentive scheme and various other schemes which operated under the Fine Gael-Labour Coalition. They are welcome in themselves because they afford people the dignity of work, but they are essentially short term. They are tinkering with the economy and treating the problem at the edges rather than at the core. The two initiativs announced by the Minister will do nothing fundamental to get to the heart of the problem.

How Deputies Deenehy and Hyland can talk about this as a job-driven budget is beyond me. How the media commentators can talk about "Bertie's budget bonanza" is also beyond me. There was no bonanza for the unemployed or the social welfare categories, although they were welcome increases. If ever the country needed a special budget to get the engines of the economy going again, it was at this time. I am disappointed that the opportunity was missed.

There are many people who have viable ideas which are capable of producing jobs in the manufacturing and commercial sectors, but these people do not get from the organs of State the necessary encouragement to put their ideas into practice. Before Christmas I asked the Minister for Industry and Commerce the number of companies who went out of business in 1989 who had received grant aid from the IDA. About 240 companies went out of business that year, having previously received grant aid amounting to £32 million. In 1990 257 companies went out of business who had received £33 million in grant aid from the IDA. That amounts to £65 million by way of grant aid to failed industrial entities. One wonders about the degree of screening and monitoring. What type of business plans were produced? How thorough was the scrutiny of those companies? Many people have good ideas relating to the service and industrial sector who would gladly avail of a pittance of the grant aid given to these failed entities. A job is a job, whether in the service or in the industrial or manufacturing sector. I realise that the IDA have in some cases to take risks. I also subscribe to the principle that you cannot make omelettes without breaking eggs. There are many eggs in £65 million in two years. That has been the pattern.

We have never really gone into the whole business of targeting our industrial policy in the area of export substitution. We have never systematically analysed the inventory of imports to see how we could meet the challenge from abroad. What efforts were made by the IDA, for example, when Gateaux went out of business to stave off the influx of products with a long shelf life by encouraging major bakeries to diversify and meet the challenge? If a bakery applies for any kind of grant in relation to confectionery to keep out imports of long life products, there is not a penny available by way of grant aid. Many bakeries are willing to take up that challenge. We need to develop small indigenous industry and we have the people to do it, provided they are given the stimulus and the encouragement. In the past we have always talked in terms of the grandiose. One thousand small lights spread far more light over a wider area than one massive spotlight. I welcome the recommendations in the Culliton report but I despair at the predictability of the Government response — yet another task force while Rome continues to burn.

One of the major success stories has been the operation of CERT. A recent analysis shows 98 per cent job placement. What other organ of training can claim that high level of success in terms of getting jobs? Yet the CERT budget has again been decimated. The food industry is where the key lies. Foreign industry has no commitment here, although they have made a welcome contribution in the past. They are essentially torso industries — the body is here but the head and legs are elsewhere. They go at the slightest whim without any real commitment to this country.

If we accept that education is the key instrument of social policy, this budget has disappointed badly. Even allowing for the improvements in Programme for Economic and Social Progress in the pupil-teacher ratio, as and from next September, when the pupil-teacher ratio at primary level is to be 25:1, there will be over 600 primary school classes which will have over 40 pupils. Imagine any teacher trying to contain a class of that size, let alone trying to educate them. There will still be 3,500 classes with between 35 and 40 pupils; 4,000 classes with between 30 and 35 pupils; and 3,800 classes with between 25 and 30 pupils. There will be 11,000 classes over the pupil-teacher ratio of 25:1. Two-thirds of those schools will not have remedial teachers. It is a fundamental principle of social policy that every single pupil has the constitutional right to the degree of teacher or tutor contact appropriate to his or her educational needs. I therefore support fully the principle of weighted pupil-teacher ratios targeted into areas of greatest need.

Friday last was the closing date for receipt of applications for the CAO/CAS offices, forms that qualify students for third-level education. Again under the Programme for Economic and Social Progress the Government boasted about making additional money available for guidance teachers, additional vice-principals, caretakers and secretaries in schools. Yet, when the budget was announced, we discovered that all the Minister had given was an additional £1.1 million to cover caretakers, secretaries, career guidance counsellors and additional vice-principals. The overall lack of career guidance teaching and counselling is a scandal. Of the 270 vocational schools in the country, 58 only have career guidance counsellors. Of the 800 second level schools nationwide only 208 have career guidance counsellors. Of the 65 community comprehensive schools, only 54 have career guidance counsellors. Of the total 1,135 post-primary schools nationwide a mere 320 have ex-quota career guidance counsellors. In my opinion that is most unfair. Indeed it cannot be allowed to continue.

The position is that the careers and course choices made by students last week will, in most cases, prove to be life-long decisions. Despite the excellent advice offered in privately produced booklets and publications, in the education supplements in papers and by education correspondents, it is virtually impossible for a 17-year-old, the majority of parents, or even those who have had third level education themselves, to unravel the labyrinth of the CAO/CAS scheme. The fact that 800 schools do no have any access whatever to career guidance or counselling inevitably means that hundreds of students make wrong career choices. They do not understand the system. For example, they are accommodated in classes where they fail examinations; they drop out from college or remain stuck in careers for which they are manifestly unsuited. Therefore, it is wrong that career guidance teachers should be allocated simply and solely on the basis of school size.

At present only schools with 500-plus pupils are allocated a career guidance teacher. Under the provisions of the Programme for Economic and Social Progress, as from 1992 onwards, it was stipulated that schools with 350-plus students would be allocated half a career guidance teacher but those with fewer than 350 pupils — as is the case in the majority of schools — would be allocated none. This problem must be tackled in the short term. The way in which to do this is to have shared career guidance teachers, with small schools pooling their resources, thereby affording every student without exception adequate career guidance. I am vehemently opposed to the recent announcement by the Minister for Education that he proposes to means-test European Social Fund grants for third level students. It is quite clear that the Minister's policy in relation to third level education — that is if he has any at all — lacks vision and planning, that he is embarking on a scheme which will place impossible burdens on middle income families in the provision of higher education for their children.

There is a very generous budget for Bord Fáilte, one of the big spenders in the semi-State sector. There is much talk about tourism but, unfortunately, tourists are fairly thin on the ground. It is somewhat like looking around these benches where there are huge gaps, as there are in rural areas with huge tourist potential but who never see tourists on the ground. Instead of embarking on a major thrust at the Japanese market, welcome though that may be, as Deputy Kenny said on radio one morning, we have absolutely no tracking system whatsoever for our people. There are 40 million people of Irish origin worldwide. Five million people have left this country since the foundation of the State. I honestly believe that, for an investment of a 32p stamp, a well crafted personal letter to each and every one of those emigrants would be very worth while. I contend that would be the answer in the short term to attracting tourists, particularly to areas like the west.

We were told that if we got the essentials, the nuts and bolts of the economy — inflation, our balance of trade, borrowing requirement and so on — correct, everything else would follow. That has now been the case. This Government had a political amnesty from Fine Gael for long enough. They got an amnesty from the unions, from farmers, from the electorate. The day of amnesties is over; they have failed.

Mr. Martin

It is important that we examine the overall picture in a budget debate. To date, the role of the Opposition in this debate has been solely to apportion blame and offer very few solutions. We are all somewhat agreed on the basics in the formulation of our economic policy. First, we should endeavour to reduce exchequer borrowing, reduce the current budget deficit, reduce taxation, endeavour to maintain our social services, specifically in the education and health areas, and endeavour to increase employment and economic growth. Nonetheless it will be acknowledged that the marrying of all of those is an enormous task. Yet we have had from the Opposition benches contradictory signals, with calls for increased expenditure over a whole range of areas and for reduced taxation in others, but very little attempt to cost their proposals or advance a reasonable, sustainable programme of policies as an alternative to present Government policies or actions.

When the Opposition were in Government, that is Fine Gael and Labour, between 1983 and 1986, the performance of our country was the worst within the league of European countries. Contrasting that performance with the results for the period 1987 to 1991 we find that there was an average economic growth rate of 4.5 per cent in those years. Indeed in 1990 we had a growth rate of 7.5 per cent, equivalent to the record growth we had as far back as 1968, whereas in 1991 there was a retardment of that growth, when we still managed a 1.5 per cent growth rate. It is estimated that our growth rate this year will be in the region of 2 per cent. In addition exports have been particularly buoyant in that period. There is an estimated growth of 7 per cent in manufacturing production for the year 1992. Our inflation has been maintained at very low figures. Along with our EMS counterparts, we have been successful in keeping it down since 1987. Our balance of payments has been in continuous surplus since 1987 and in 1991 our balance of trade figures again showed a surplus of over £2 billion. Indeed there has been significant stability also in our exchange rate within the EMS band since March 1987.

Within the context of all the economic indicators any objective analyst would have to accept that this Government have performed very well since assuming office, as was the case with their predecessors. There is one major problem from which we cannot run away, that is unemployment. In outlining the positive factors prevailing in our economy at present, I am not endeavouring to conceal in any way our major problem which is unemployment. I would even agree with comments from the Opposition benches that it is a problem that should be taken out of the party political arena, because no one party have all the answers to unemployment. Perhaps there is need for the establishment of some forum like the New Ireland Forum, on employment creation, some forum of the same structure, with every single group and institution nationwide being entitled to make submissions on their ideas and policies in relation to the creation or protection of jobs here.

I would certainly support any such proposal. Of course, even that would not solve our unemployment problem, provide solutions immediately or in the short term. At least it would be an acknowledgment and recognition that we must all work together to tackle our huge unemployment problem, which is primarily a structural one peculiar to our population structure. It is a problem that will remain with us for a long time, for anything up to 20 years given our demographic structure. Therefore, any Government must produce a series of interim measures designed to impact on the crisis levels of unemployment obtaining and which will obtain in the foreseeable future.

I welcome the provision in the budget whereby 25,000 new places, both in manpower training and in State jobs, are being funded by the European Community, as outlined by the Minister for Finance in his Budget Statement. Such measures are needed for the next few years to deal with the problem of unemployment which we will endure for some time to come. There will have to be a European dimension to the resolution of the problem and a European input because harmonisation will reduce our competitiveness in certain areas and will create difficulties in certain sectors of the economy in regard to competing with our European partners. Unless there is a balancing dimension to our participation in a Single Market we will be in difficulty. Therefore, it is not with any begging bowl mentality but with the recognition and acknowledgment of structural difficiencies in our economy, and given the particular make-up of our labour force and our population, over the next ten to 15 years, there is a clear case to be made to Brussels that we have special needs in the employment area. There should be an obligation on our European partners to assist us in reducing our unemployment and improving the quality of life for all. We have witnessed the first step in that direction. A number of people have under-estimated the significance of that measure which involves the European Community taking 25,000 people off the live register in 1992. We need more of that type of initiative in the future.

I disagree strongly with the comments made by Deputy Jim Higgins in relation to foreign investment and foreign industry. We have had too much of that type of comment. The reality is that were it not for foreign industry since the beginning of the sixties we would have an appalling unemployment situation. I acknowledge that very often the research and development headquarters of these firms and major plants may be elsewhere but the reality is that they contribute enormously to employment creation in Ireland and, indeed, to the exports boom we have had over the past ten years and to the quality of life for many people. Far be it for Deputies to make ill-judged criticisms of foreign investment and foreign industry because we are living in an open economy where borders no longer exist in economic terms. To make comments of the type mentioned by Deputy Higgins is really burying our heads in the sand; they will not advance employment creation in any significant way.

It is very important that we invest very heavily in our education system because, as I have said frequently in this House, employment creation is inseparable from educational development and from investment in our educational infrastructure. There is a strong correlation between the qualifications which young people have on leaving school and third level and their gaining employment. Those who leave educational establishments with qualifications by and large gain employment and the percentages are high in all the surveys which have been carried out. Those who leave school early and who are unskilled, or who have no qualifications, find it extremely difficult to gain employment, tend to get into a rut and find it very difficult to re-enter the labour market. In that area, specific measures are needed both in the educational sphere and in manpower policy training programmes. I welcome the forthcoming White Paper on manpower policy because it is critical to that growing problem. The difficulty is that given the increased technology in our economy, given the increased need for skills and greater training those young people will find it increasingly difficult to gain employment in future years. Our policy both in the Department of Labour and in the Department of Education will have to target those school leavers to try to improve their capacity to enter the labour market. That is extremely important.

I welcome the commitment in the budget to honour the non-pay aspects of education in the Programme for Economic and Social Progress: the reduction of the pupil-teacher ratio, the provision of funds for extra caretakers and extra secretarial assistants, career guidance teachers and vice-principals. In the context of a difficult financial and economic situation it is an outstanding achievement by the Minister not only to solve the greater Programme for Economic and Social Progress issue on the pay front but also to deal with the important non-pay aspects of Programme for Economic and Social Progress which people in the educational field were concerned would not be honoured. It is gratifying to see that that could be achieved.

On the taxation front, I welcome the fact that the Minister has left the mortgage and VHI relief intact. Attempts have been made in some quarters to attack mortgage interest relief. That has been a very important social instrument in this country in improving the level of home ownership. We have a very proud record and as a country we can boast of having a very high percentage of people who own their own homes. That is an outstanding social achievement and one which my own party can take some credit for. One of the reasons I am a member of Fianna Fáil is because of their strong commitment in the social area. That is best manifested by that satisfactory statistic where a large number of people own their own homes. Long may that continue. Any effort to remove mortgage interest relief would have a detrimental impact on that situation.

We have made very significant reductions in the tax rates over the last number of years. When those reductions are taken in the context of major budgetary constraints we have reduced our taxation rates very significantly from 1987 onwards. For example, from 1989 the standard rate has been reduced from 35 per cent of 27 per cent — almost by a quarter. There has been a significant widening of the standard rate band by 12 per cent which is far in excess of inflation. The top rate of tax has been abolished and we now have two tax rates. This is all in the context of very serious financial constraints. That is why I come back to the Opposition who seem to think we can spend all around us, increase spending in every Department, reduce taxation and so on. The arguments they have put forward are untenable.

There have been significant changes in the VAT area but I welcome the fact that there has been no increase in VAT in relation to construction and tourism. The tourist industry, which will be the growth industry for the next ten years, has the greatest capacity to create extra jobs quickly. If we have growth rates and if we can develop and expand our tourist strategy — I agree with Deputy Higgins in relation to the potential which exists in markets that have not been tapped to date, Japan and so on — that would be welcome. It shows the Minister's concern and acknowledgement of the important role that tourism plays in economic growth and also in the construction industry.

I welcome the decision, as mentioned by my colleague, Deputy Dennehy, to refund VAT on donated medical equipment. This is something which had been strongly fought for in Cork, particularly by ACT — Aid Cancer Treatment — who have done outstanding work in raising money for cancer treatment equipment and so on, for hospitals. Perhaps one could argue that the Exchequer should be providing this equipment but I am a great believer in voluntary endeavour. The State would never be seen to impede voluntary endeavour. Certainly the VAT on medical equipment was seen in that light, as an unnecessary inhibiting factor put in place by the State or the European Community. I welcome the fact that the Minister removed that imposition on medical equipment.

A number of significant improvements on the social welfare front have been introduced by the former Minister for Social Welfare, Deputy Woods, for example, the carer's allowance and the back-to-school allowance. This year the Minister managed to increase the latter by £10 per child. That is a significant provision. It will mean much to low income families dependent on social welfare payments, particularly in September when their children return to school, a time that can prove most difficult for parents.

I also welcome the innovative decision to grant a special payment to adoptive mothers along the lines of the existing maternity benefit scheme. This is an outstanding measure and should be welcomed. It is an indication that the Minister has adopted a very positive attitude towards womens' issues in general.

The decision to extend the free travel companion pass scheme to cover certain pensioners, in particular blind pensioners, should also be welcomed. This unnecessary anomaly was the source of some concern.

In relation to tourism, some people cast doubts on the decision to give a large budget to Bord Fáilte but it should be borne in mind that one of the key areas is marketing and that we have to spend a considerable sum of money in promoting this country abroad. When one travels abroad one realises that this is just a small country in a big world and that we are not as well known as we sometimes like to think we are. It is very important therefore that we do not reduce our marketing budgets. If anything, we should endeavour to target the specific needs of special areas in the tourism sector. I welcome the fact that the Minister is to continue to place emphasis on the tourism industry in relation to job creation.

Let me make one further comment on social welfare. I wish to welcome specifically the decision to make a grant available to the Centre for Education, Counselling and Psychotherapy in Cork, a voluntary group set up a number of years ago and who are providing a wonderful service for people who would not be able to afford to pay for such a service if they had to go to professionals in the ordinary way. The Minister for Social Welfare and the Minister for Finance should be complimented for making a worthwhile grant available to that group.

I welcome the thrust of the budget because it continues the very effective financial management we have witnessed since Fianna Fáil came to power in 1987. They have kept the public finances on an even keel and have continued the process of reducing taxation rates. In time this will have an impact on unemployment. In relation to social welfare, we have maintained payments ahead of the rate of inflation and protected families on low incomes by way of the family income supplement, back to school payments and so on. This fits in with the very strong social philosophy which has been the hallmark of Fianna Fáil policies since the establishment of that party.

Mr. Kenny

Against a background of a series of unprecedented scandals this budget was framed by a Cabinet who have been unable to concentrate on the problems facing the country. For the past 18 months no Minister has been able to direct his or her attention to their constitutional responsibilities. They have been torn internally by power factions and outside pressures in regard to one scandal or another. What we are witnessing today in the environs of this House is a severe dose of ministerial jitters. The only two people at present who it would appear are not unduly worried about tomorrow's decision are Deputy Reynolds and Deputy Haughey.

There are so many bandwagons in the environs of Leinster House today that no Cabinet Minister nor Minister of State knows whether they will be able to implement the decisions made as they affect their Departments in this year's budget. Thank God that whole scenario would seem to be almost at an end. The song may well change — it may not be "Albert, don't go", but "Hold on to me, while you can".

In relation to the implementation of the budget by those appointed to the Cabinet, internal faction fighting and power seeking, where people are crawling over each other to stay on the mast of State, does no good when it comes to dealing with the real problems facing our people.

The budget is somewhat like the Minister for Finance's approach to the leadership struggle.

Mr. Briscoe

There is no need to become personal.

Mr. Kenny

It is incomplete, indecisive and unclear. Certainly there are strong blips in the budget, which everybody would have to agree with, but we are not clear as to the direction it is taking, mainly because, as I said, of internal faction fighting. That is the background against which people had to frame Estimates during the past few months.

It is fair to say that the reason the Progressive Democrats, who are now absent from the House, came into being will not exist for much longer. It will be interesting to see what the reaction will be when the next set of demands are made by the minority partner in Government. It is fair to say also, depending on what Government are formed next week, that substantial changes may well be made in the Finance Bill, which will give legal effect to the budget, in the weeks and months ahead. At this stage we do not know what opinions or ideas a new Taoiseach and Cabinet may come up with when they begin to discuss the implications of what was passed here last week.

I would like to refer to some of the measures announced in the budget; these have been dealt with by other speakers during the past week. The introduction of Revenue numbers for small farmers marks a continuation of the attempts to drive them into the ground. In vast areas we are beginning to replace people with trees. Small farmers, with between ten and 50 acres of land, will now have to deal with accounts and revenue insurance numbers and will have to pay VAT on services rendered to them by contractors. This will place a further burden on them and lead them to the impression that the Government want to drive them out of business.

Each year we receive millions of pounds from Europe in agricultural subsidies. Each Deputy in this House, particularly Deputies from rural Ireland, has been inundated with claims from farmers in regard to the payment of these grants. In 1986 it proved possible to pay and deliver not one but two headage cheques to farmers before Christmas. We have now reached the position where farmers have to contact public representatives on a daily basis to point out that they have not received last year's cheques. Claims are processed and dealt with in local offices but are then sent to Dublin for payment. Why is it not possible, with modern technology, to pay out claims once they have been approved? The answer, of course, is that the Department of Agricuture wish to keep those moneys in their own bank account for long enough to balance their books in a better light. The next Minister for Agriculture should be in a position to state to the farmers — and to those eligible for all kinds of agricultural grants — that they will receive payment by a particular date. This would allow agricultural planning to take place and it would mean that people who buy agricultural goods, fertilisers or feedstuffs, will be able to pay for them. We should not have the position of thousands of farmers still waiting for the postman to arrive with the envelope containing their cheque. It is not good enough that people are contacting TDs to complain that they are not in a position to pay their motor insurance because the agricultural grant has not arrived. It is perfectly possible, through existing technology and computerisation, to do that swiftly and efficiently. It should be a fundamental principle that a date should be fixed by which these payments are sent out.

Much talk has been generated in regard to the taxation measures in the budget. I want to refer briefly to one aspect, the area of VAT within the general parameters of harmonisation. We are under instruction, through European directives, to harmonise and reduce our number of VAT levels. In this case the Minister for Finance now has to deal with six levels of VAT: the zero rate, the 2.7 per cent rate, the 10 per cent rate, the 12.5 per cent rate, a new rate at 16 per cent and the 21 per cent rate. It is an administrative nightmare to attempt to deal with the many aspects of VAT as it stands in the budget. For instance, in the area of hotels and the tourist industry generally, there is a 10 per cent rate of VAT on accommodation, a 12.5 per cent rate on meals and a 21 per cent rate on bar facilities. How can Revenue be in a position to distinguish between these three levels in any middle-class hotel? Will it be reduced to the level of a B and B? How do the administration expect to be able to cater for three levels of VAT in one hotel? Instead of expanding the levels of VAT the Minister should have had the courage to contract them and make it administratively easier for Revenue to deal with them. Indeed, this also applies to the people concerned.

In the area of catering there is a 4 per cent increase in VAT. There is no VAT on food in express takeaways but the level of VAT will be increased on the overall turnover. This means that the managers and those involved in the business will have to increase their costs by approximately 10 per cent in order to be in a position to pay the 4 per cent increase. It obviously means increased costs for those who use the facilities.

Some concessions have been made in regard to excise duty on new motor cars. However, the Minister did not take into account the fact that many garage owners who have been very severely pressed over the last number of years might have had quite substantial stocks on hand prior to the reduction in excise duty. It means that many of them stand to lose between £10,000 and £20,000, as a result of which they will have to work for two or three months this year before they get back to the position in which they were prior to the budget and before the effect of the reduction in excise duty takes effect. The Finance Bill should provide for retrospective payments to people who, quite genuinely, had very heavy stock on hand prior to the budget, to facilitate those who wished to purchase new vehicles.

Every local authority now has to deal with vastly increased lists for housing claims and this matter has not been addressed in the budget. I greatly regret that the reconstruction grant was abolished some years ago because it provided an opportunity for many people throughout the country to put their houses into better shape and to give them State assistance to do so. It also meant that small contractors, tradesmen and others involved in that area had a constant stream of work available to them. I very much regret it was not possible to introduce the reconstruction grants, even in a limited form, because local authorities and urban councils now have to deal with increased claims for housing. In many cases there are nine to ten people living in a house and in others there are five and six people in one room. Obviously this is a matter which would have to be treated with great sensitivity but it has not been addressed to any extent in the budget. Fianna Fáil and the Progressive Democrats have fallen down in regard to their constitutional responsibilities to the people who require housing.

Unemployment, according to the January report of the CII, at the end of December was 269,200, or 20.2 per cent of the labour force. That compared with 232,800 at the end of December 1990, which was 17.8 per cent of the labour force. Assuming that the figures are correct, where does that budget attempt to deal with a situation where thousands of young people will be coming on to the labour market every year? There will be many more people than the Government can hope to deal with through the provision of jobs.

I note that the Minister for Finance in one of the Sunday newspapers expected that the leadership crisis would not have arisen for some time; he expected that the unemployment problem could have been dealt with, in part at least, by the introduction of four or five major corporations from abroad. Does this reflect a return to the attitude of the sixties and early seventies when the IDA were instructed to buy land banks and to build advance factories in the hope that industry would be attracted to the country? What kind of thinking is there in the Department of Finance and at Government level to solve the problem of young people on the streets who are crying out for the opportunity to be able to work at home? They do not want to be driven abroad; some of them, unfortunately, end up in cardboard cities in London, Boston or New York. It is interesting that in Munich in 1986 there were around 600 Irish people, a figure which has now grown to several thousand. These people were trained and educated here but they emigrated to Germany because work was available there. Regardless of where our young people are working aborad, they would return to Ireland in the morning if they could get jobs here.

The issue of a jobs forum which has been referred to by several parties should be addressed by the Taoiseach designate and the Government. An end should be put to the tinkering around with the various schemes which has gone on for the past 20 years. If the Culliton report really addresses the heart of the matter, the Government should deal with the priority areas outlined in an effort to create employment.

Tourism seems to be the means chosen by the Government for reducing our employment problem. I do not believe young people want to spend the rest of their lives making a living from carrying suitcases or serving at tables. Obviously a great number of jobs can be created in the tourist area, but people would hardly wish to spend all of their lives working at that level. Many speakers have referred to the budget for Bord Fáilte. We should ensure that we have top quality facilities and products for tourists. Instead of giving grants in respect of accommodation and other services money should be provided for decent facilities, whether they be parklands, theme houses, etc. which will attract visitors here in the first instance.

In this context, the quality of our environment has to be taken into account. For a great number of years the question of native resources has been raised by people in the west. Recently the bishops became involved in the issue. The matter of goldmining in the west of Ireland has raised its head and the Minister for Energy has dictated to Mayo County Council that a blanket ban should not be introduced in this regard. I intend to raise this issue on the Committee Stage of the Finance Bill when I shall be seeking clarification on whether a local authority have the legal right to implement a ban or direction which is against written Government policy.

Mr. Briscoe

I welcome this budget and I congratulate the Minister for Finance, Deputy Bertie Ahern, on its introduction, this being his first budget. I commend the Taoiseach on his valuable input into the social aspects of the budget, particularly those aspects which are of concern to elderly people. Since I have been a Member of this House the Taoiseach, first as Minister for Finance and then as Taoiseach, has always ensured that increases for old age pensioners have been that bit ahead of the rate of inflation. The lot of old age pensioners has been made considerably better as a result of the Taoiseach having passed this way, so to speak. The elderly people I have met in my constituency have always been appreciative of the efforts he made to ensure that they were cared for. I have every confidence that the incoming Taoiseach will implement measures which will favour the older people in our society, no matter how difficult things may be in the economy.

I should like to commend too, the former Minister for Finance, Deputy Albert Reynolds, on the budget he introduced last year. That budget had to be prepared during a most difficult period — the Gulf War was imminent and no one knew what the full implications of that would be. It must have been a nightmare for the then Minister to prepare a budget in such circumstances. In any event, he produced a good budget which left us in a much better position at the end of the year than most, if not all, countries in Europe. We should remember that due to the efforts of the Government and the former Minister for Finance we were in a better position and better able to ride out the recession which still holds sway in many other countries in Europe. We have done very well in that regard. We are in a much better position than for example, Italy, where efforts are being made to form a new Government or our nearest neighbour where the recession has given rise to the loss of thousands of jobs.

In spite of the recession in other countries, which has led to a decline in the number of Irish people emigrating, the number of new jobs here has continued to rise. I want to refer to some of the figures in this respect. From December 1982 to April 1987, when the former Coalition Government were in office, there was an approximate net loss of 50,000 jobs. Since April 1987 there has been a net increase of 41,000 jobs, 70,000 of which have been created in areas outside agriculture and the public sector. Unemployment was reduced by 40,000 from March 1987 to May 1990. The increase of 50,000 in the number of people unemployed over the past year and a half has been due only to the cessation in emigration. Under the Fine Gael-Labour Coalition Government unemployment increased continually.

When Fianna Fáil came into office in 1987 they had to deal with very major problems. We have weathered the storm very well and have shown ourselves worthy to be in Government, unlike the Labour Party — who are very fond of barracking this side of the House — who ran out of Government when tough decisions had to be made. This Government made some very tough decisions. I recently met someone who told me that when the Fine Gael-Labour Coalition Government would make a tough decision in the interest of the country a week or two later the then Taoiseach, Deputy Garret FitzGerald would go before the Cabinet and say that as a result of embarrassment caused to Deputy Spring, the then Tánaiste, they would have to rescind the earlier decision. This tough Labour leader, then, was not capable in Government of pulling his weight in the national interest; he was only able to do so in so far as it affected the fortunes of the Labour Party, and that, I am sure, will become evident when the Cabinet papers from his time in office are released.

I am very concerned not only at the high unemployment rate in Dublin but also at the level of crime and vandalism. The cost of this to the community is enormous. The Oireachtas Select Committee on Crime of which I am a member, recently visited Trinity House which is run by the Department of Education. One of the problems there is that three or four of the young people detained are psychiatrically disturbed and should not be detained in that situation. Some years ago a very fine, secure detention centre was provided in the Central Mental Hospital in Dundrum to cater for the criminally insane. That is a fine building but, unfortunately, it now has to be used for purposes other than those for which it was intended. I appeal to the Minister for Finance to provide extra money to the Minister responsible, to build a secure detention centre to deal with psychiatrically disturbed people.

There are not many of these people in Trinity House but the cost of keeping them there is enormous. So much of the time of the staff is taken up with these people that they have no time for the other people under their care whom they could help. The psychiatrically disturbed people there are constantly rioting and have no intention of mending their ways. When they are of age they will go from there to Mountjoy or Dundrum. Those people should not be detained with the other young people in Trinity House and I ask the Government to urgently consider this matter. I do not think they should have to wait for the report of the Select Committee on Crime before taking action. The matter should be dealt with urgently.

We can be very proud of our economic performance vis-à-vis that of other countries. The Exchequer borrowing requirement was reduced from 13 per cent of GNP in 1986 to 2.4 per cent in 1992, and that is an achievement of which we can be very proud. In addition, we have been steadily reducing our national debt. It had increased from £21.6 billion to £25.4 billion in 1991, just less than £4 billion, as compared with an increase of £10 billion between 1983 and 1986. Again, tremendous progress has been achieved in that area. We can be pleased that we have managed to control inflation which is very important.

When I compare our shops with their range of merchandise on sale to the public with the empty shelves in shops in the former Soviet Union and other Eastern European countries, as can be seen on television, I am thankful to God. Recently, a woman complained to me about the cost of food, but while it is expensive at least all types of food are available. Much of our fruit and other foods are imported and, fortunately, we have the money to buy them. I am sometimes concerned that if the recession deepens in Europe generally it may affect us because we depend on exports for our livelihood.

The problem of attracting tourists to our country still exists. Since I was elected to this House in 1965 I have advocated direct flights from Dublin to the United States, an issue which is again very much to the fore. I know that the western lobby have strong feelings about over-flying Shannon, but many of those people do not give Shannon a fair chance. Ultimately, Aer Lingus will have to be allowed fly direct from Dublin to the United States as will other airlines. About 50 per cent of passengers coming to Ireland are destined for Shannon while the other 50 per cent travel on to Dublin. I do not understand why, if there are two flights on the same night, one flight cannot fly direct to Dublin while the other stops off at Shannon.

Shannon is a hub for Europe. Plane servicing facilties are available in Shannon as are all other services. The future of Shannon is assured and always has been under Fianna Fáil Governments, but if they are not willing to compromise in allowing direct flights from Dublin — ultimately it is the Government's decision — Shannon will be the loser in the long run because Aer Lingus cannot continue losing money. Aer Lingus, at tremendous effort, succeeded in getting permission to fly direct to Los Angeles but cannot put the service into operation because of the stop-over at Shannon. There is no point in operating that service unless they can fly directly from Dublin to Los Angeles. The sooner Shannon lobbyists come to an agreement on this matter the better it will be for this country. Dublin is probably the only capital city in the world into which airlines flying the transatlantic route cannot fly directly, except in the case of charter planes. We have to change that practice because we should be attracting people here rather than keeping them out. I urge the people in the west, particularly those in the Limerick-Clare region to consider this matter.

I would like to refer briefly to corporation tax. Under a former Government the amount of corporation tax collected was minimal, but it more than doubled between 1987 and 1992. There was only a very slight increase in corporation tax under the Fine Gael-Labour Coalition. In 1982, corporation tax realised £206 million and in 1986, under the Fine Gael-Labour Government it realised £362 million. In 1991, under the Fianna Fáil-Progressive Democrats Government corporation tax realised £593 million and in 1992 the estimated yield is £678 million which is a big improvement. The yield from capital taxes has increased from £20 million in 1982 to £77 million.

I am delighted the Minister for Finance is exempting from VAT medical equipment purchased by voluntary bodies. I am one of the founder members of the Bone Marrow for Leukaemia Trust, and in their early years the committee raised money to buy a cell separator for St. Luke's Hospital. It cost approximately £20,000 at the time and VAT had to be paid on that amount. I have always believed that where people contribute money voluntarily for the purchase of expensive medical equipment, the equipment should be free of VAT. I am delighted this has been finally recognised. I would like also to see this apply to voluntary organisations such as the Order of Malta, the St. John Ambulance Brigade, or other voluntary organisations which purchase medical supplies, bandages, stretchers, et cetera. I hope these purchases will be free of VAT. I would have liked also to see a measure by which ambulances could be purchased duty free, as most ambulances are operated by voluntary bodies.

Those over the age of 66 years have the concession of free travel. I am delighted also that the companions or spouses of people in receipt of the DPMA will be allowed to travel free when accompanying them. I was in London recently and I was surprised to learn that the free travel concession applies only to travel within London. People there were astonished that a person with a free travel pass in Ireland could travel anywhere in the country. This shows how a little country like Ireland has been able to look after its elderly people. We have done this with tremendous panache. Fianna Fáil Governments were responsible for the introduction of the free television licence, free electricity, free telephone rental and free travel for the elderly in addition to the removal of excise duty on vehicles specially adapted for disabled persons. We can hold our heads high when we come to discuss our social conscience. We have done very well indeed.

I was very pleased to see that the Minister for Finance is giving the Rape Crisis Centre an extra £25,000. As a member of the Eastern Health Board, I visited their premises last year at a time when they were almost closing down. The Eastern Health Board fund the Rape Crisis Centre. I was very impressed by many of the people, especially the psychologists, whom I met. At the time I felt, and still do to a certain extent, they were not dealing with emergencies, as much as people thought they were but with those who had undergone trauma years beforehand. They seem now to have come more within the ambit of what the Eastern Health Board had hoped they would do. There is now a great sense of co-operation between their staff and that of the Eastern Health Board. The centre should go from strength to strength and they will certainly have the backing of the health board. I am delighted to see they have the backing of the Government, who have come to their aid on a number of occasions.

I was very worried when the Minister for Finance announced that grants to third level students were to be means-tested. I was worried that only the children of the very poor or the very rich would be educated and that the middle income groups would not be able to educate their children. I felt that the income limit for eligibility for third level grants was set too low and that the child of those parents with an income of over £12,000 would not be eligible for a grant. I was speaking to the Minister for Education about this problem. He assured me that the free element of the grant was not means tested but that the maintenance element of it was. Wealthy people who can well afford to pay the maintenance element should pay to keep their children at college. I am still concerned that the means test is pitched at too low an income, and I hope the Minister will look into this.

Mr. Byrne

When the man or woman in the street or in the pub ask the question: "What do you think of the budget?" I need only refer to four headlines in The Irish Times on the day after the budget which accurately summarises in headlines what the budget was about. The first headline read: “High paid employees without perks will benefit most”. The article went on to say that the biggest winners would be the higher paid employees without perks, like a company car, who would gain substantially from the cut in the top rate of tax to 48 per cent and that better off employees paid a salary without fringe benefits would gain substantially. The clear message is that well paid workers will see an incredible increase in their take home pay. An executive is quoted as saying: “It is a budget for the secretaries of Government Departments”. This is not a budget that will benefit the ordinary working man or woman PAYE taxpayer, In fact, it will not alter by a single percentage point the scandal that 90 per cent of all income tax is still to be paid by the PAYE sector who will continue to carry the burden of taxation.

The second headline reads: "Many on welfare barely protected from inflation". The article went on to say: "This budget will increase the spending power of most people on social welfare from July by a quarter of a penny in every pound." That is another way of saying that it will more or less protect welfare recipients against the expected rate of inflation of 3.75 per cent to 4 per cent. I have been quoting Pádraig Ó Moráin, the well known journalist and social welfare correspondent of The Irish Times.

While the Progressive Democrats have succeeded in increasing the real take home pay of the "secretaries of Government Departments" the Fianna Fáil partners in Government have left welfare dependants no better off. They have been barely covered against inflation.

The third headline read: "VAT increases will reclaim part of gains from tax cut". The 16 per cent rate will apply to clothing and telephone charges, etc. This writer, Colm Boland, reminds us that: "The increase from 12.5 per cent to 16 per cent on VAT covers a wide range of goods and services including adult clothing and footwear, personal services such as hairdressing and repairs and maintenance, including car repairs. Telephone bills will also increase. The increase also applies to services such as health studios, televison repairs, driving lessons and sales of works of art and antiques. Whatever about the arts and antiques VAT increase, VAT on eye glasses and contact lenses will also rise to 16 per cent.

By this stage the man and woman in the street are beginning to see through the deceit of the Minister, Deputy Bertie Ahern but, in fairness to them, they are prepared to tolerate some sacrifices or even accept the budget as presented if they think the main issue of concern to them and to the nation as a whole is being addressed.

They then ask the key question: are there any jobs in the budget? A headline of an article written by John Bradley on the economic impact of the budget answers the question for them: "Unemployment remains with us despite some other successes". The article states that the most appropriate measure of Ireland's economic success is the number of people gainfully employed and their standard of living relative to other EC countries. He explains that Ireland's real gross national product grew by some 2 per cent last year, that our inflation rate was among the lowest in the European Community, the big trading surpluses were run up and the national debt continued to fall at a fraction of gross national product, and that while that might indeed warm the hearts of economists and statisticians, nevertheless all of that good news still translated into a fall of some 2,000 in the total number employed.

The sober reality is that growth of over 3 per cent per annum is needed to create net increases in employment. Much higher growth — say, 4 or 5 per cent, allied to a parallel high labour demand in the UK would be required to cut unemployment. That message translated into layman's language reads that 300,000 people will continue to be unemployed after this budget, that the country has failed them and that they had better hope for an uplift in the economy of the UK so that they can go there to look for work.

The budget starts out in part by recognising the real poverty of the poor throughout Ireland who resort, out of desperation and poverty, to the services of the illegal moneylenders who like piranhas, prey on the poor of our society. Their huge rates of interest and their exploitation have been highlighted in the past 12 months by the number of cases successfully prosecuted through the courts. The Minister provided a welcome £260,000 for the setting up of several pilot projects aimed at building new and more comprehensive approaches to combating the problems of moneylending, and I am glad to say that Dublin was an area to be targeted.

However, the stupid directive of the Minister for Energy, Deputy Molloy, in telling the ESB to stop serving their customers who want to buy electrical appliances on easy payment through their electricity bills will effectively undermine attempts to curb the activities of illegal moneylenders. The Minister for Energy will have driven thousands of vulnerable people who can ill afford the lump sum payment for electrical goods right into the waiting arms of the moneylenders. I ask the House, particularly those on the Fianna Fáil benches, where is the logic in that strategy? What is the logic in recognising the moneylending problem on the one hand, and, on the other hand, giving stupid directives that will exacerbate an already frightening problem?

I wish to put the record straight lest I be accused of Progressive Democrats bashing. The reason that the Minister, Deputy Molloy felt he could take that outrageous step is that he has the support of, amongst others, his colleague and party leader, the Minister for Industry and Commerce, Deputy O'Malley, who would be better employed addressing himself to the unemployment problem, for which his ministry has responsibility, instead of contributing to unemployment in ESB shop outlets and forcing the public to resort to moneylenders. The Minister for Energy could not have taken the decision that he did take without support, and he was assisted by Fine Gael members also. He was supported by Deputy Gerry Reynolds, Deputy John Browne from Carlow/Kilkenny, Deputy Peter Barry, all of Fine Gael, and, above all, by the man who first launched the attack on the ESB, Fine Gael Whip, Deputy Charles Flanagan. The positions of those men can be verified by reading the Dáil Report of 12 June 1991 and 3 July 1991 on both the Committee and Report Stages of the Competition Bill. Last but not least, the Minister, Deputy Molloy, was assisted by the famous member of Fianna Fáil who led the Fianna Fáil charge from his lofty position as Cathaoirleach of the Seanad, none other than Senator Seán Doherty.

The Minister for Energy should take the first opportunity he gets to come into the House and reverse his disgraceful directive to the ESB. Further, he should apologise to the St. Vincent de Paul Society, who have so rightly recognised his decision as a completely negative and regressive attack on the poor.

We must ask ourselves what is the overall political direction of the budget. The Minister, Deputy O'Malley, in twisting the neck of his partners in Government, has hailed his contribution to the budget as representing the liberation of the PAYE worker. It has done nothing of the sort. The budget is a budget of class deception. It aims unashamedly to improve significantly the spending power of high earners while only marginally improving the lot of the vast bulk of medium-income to low-income earners. The budget and the announced intentions for the budget of 1993 aim to unreservedly shift the burden of payment from the middle class to the working class.

In this political charade let us not be drawn into an anxious debate about the removal of "in kind" benefits to executives. Rather, let us concentrate on the real effect, which is that while the high earners will gain 4 per cent of their income the lower earners will gain only 2 per cent. Changes in indirect taxation, for example, the increase in VAT, are regressive because they impact more harshly on lower paid workers, who spend all of their salaries and cannot save money.

If the Progressive Democrats were really anxious about tax reform, then the one thing we might hear them talk about is tax equity. The budget will do nothing to alter the fact that PAYE workers will still pay 90 per cent of all of the income tax paid, and that is the real scandal.

The budget does little to spread the tax burden to other sectors such as farmers, the self-employed or the corporate sector. On that issue we hear nothing at all from the Progressive Democrats. Why not? The reason is that the view of the Progressive Democrats, Fianna Fáil and Fine Gael is that the so-called economic environment must be improved in order to provide incentives, as if the 300,000 unemployed somehow or other lacked incentive. This is an insult. It is a That-cherite attempt to shift the blame for unemployment on to the unemployed. The intention to tax welfare payments in 1993 in addition to taxing disability benefit, introducing means-testing, curtailing pay-related benefits and so on is deliberately targeted at tackling what the FIE, the CII and the Progressive Democrats call the disincentive to work. The aim is clearly to reduce peoples' living standards so that they will be forced to work for lower rates of pay.

The worker on average pay, the low paid worker and the unemployed will have to pay the cost of unemployment and the economic and financial crisis. That did not satisfy the Progressive Democrats who saw this budget as their chance to put the knife in. They are particularly artful at exploiting the insecurities of the majority partner in coalition, particularly the Fianna Fáil leadership problems. They want to see the further disimprovement of public services. They even demanded more pre-budget cuts. What are those cuts? They are direct attacks on the basic services of education, health, libraries, parks, swimming pools, care of the elderly, community health care and so on. They are cuts in the essentials that lift society from the level of the jungle, that give quality of life to all citizens regardless of income, gender, age or opportunity. The weakening of the services disproportionately affects the poor, the low paid, women, the elderly and the disabled. The Progressive Democrats pre-budget demands for more cuts in services expose the narrow class interests of the Progressive Democrats and Fianna Fáil to which their friends of Fine Gael give wholehearted approval.

What about unemployment and the unemployed? The Minister, Deputy O'Malley, should be known as the godfather of unemployment. His portfolio is Industry and Commerce, but he has managed to avoid being targeted for any responsibility for job creation. When unemployment figures are released he is either out of the country or not available. When did we last hear the Minister respond to indepth questioning from the media on his dismal performance as Minister for Industry and Commerce? The ever-spiralling increase in unemployment figures is ritualistically commented on by the Opposition party spokespersons and by the Minister for Labour but I cannot remember this saintly man, the Minister for Industry and Commerce taking any responsibility for employment creation. The Minister has never been challenged to explain his inept handling of this ministry. The Progressive Democrats, always quick with a comment, always taking the high moral ground are silent on unemployment. I hope the resolution of the crisis in Fianna Fáil will expose the naked class interests of the Progressive Democrats. They should no longer be able to hide behind their moralising veil. They should be forced into the open. They should be relentlessly exposed for their complete abdication of responsibility. They are in Government but they have nothing to say on unemployment.

Let us look a little closer at the argument about incentives. This argument is about increasing profitability and that is fair enough, but we should always remember that profits are private and that this is really an argument for self interest masquerading as policy. In the eighties we found that profitability, productivity and reduced labour costs are no guarantee for increased employment. The most striking feature of economic restructuring is that there is no longer any correlation between economic growth and employment. Sean Lemass's notion that a rising tide lifts all boats is no longer conceivable. Instead we have had a growth in joblessness; profits without job creation. It is a phenomenon which completely undermines the credibility of Government hopes that by favouring corporate sector reinvestment, unemployment will miraculously disappear. What concerns me most about unemployment is the Government belief that all that is needed are appropriate conditions and that if we do certain things we will be in a better position when the international economy picks up. The rapid industrial growth of the sixties and seventies was an exceptional experience, a temporary phenomenon which passed, leaving little significantly changed.

I am forced to believe that the situation facing us is so explosive and potentially destructive that it can no longer be ignored. The numbers at work continue to decline. The same number of people are at work in 1991 as were at work in 1931. In 60 years there has not been an overall increase in employment. That is a vicious indictment particularly of Fianna Fáil's performance since this nation got its independence.

The decline in manufacturing and in agricultural production is not just a temporary phenomenon. It is part of the overall global change in the nature of western capitalist modes of production. The collapse of traditional manufacturing employment has disproportionately affected Irish males when contrasted with expanding foreign and service sector industries employing mostly females. In the mid-eighties low skilled males could emigrate. That was not a satisfactory solution but at least it offered them better opportunities than they could get here. Today, economic crises in the key host countries, the UK, Australia and the US, and the discovery of cheaper labour in the Third World, means that this safety valve is no longer open to us. In addition, technology has changed the nature of employment qualifications and skills demand. All studies of future economic trends show a need for a significant reduction of unskilled workers and for a much more highly skilled labour force. Given the Government's abdication on job creation this has major implications for Ireland.

Emigration, in the year ending April 1991 was only 1,000 compared to 31,000 and 46,000 in the two previous years. Not all emigration has ceased. Figures for graduates show a continuing movement of highly skilled technical, scientific and professional labour out of this country. We should look at what is happening in medicine and in our hospitals generally. Through continuing emigration we are losing highly trained, highly skilled doctors. The training of these people cost the taxpayer money and we are increasingly replacing them with Third World doctors and medical professionals. In 1991, 18 per cent of our population was living elsewhere in the EC and over 25 per cent of Irish graduates left Ireland during the eighties. The emigration of skilled labour is set to continue. A German IAB prognosis study of occupational trends to the year 2010 forecasts an increase of 3.4 million jobs in highly skilled occupations and a reduction of two million in unskilled and low skill jobs.

The effect of this change is already visible in the escalation of unemployment and in pressure on housing and welfare services. The picture is clear. This social immobility restricting educational and occupational opportunities reinforces and cements the existence of a permanent two-tier society. For those who make it, not only are their living standards at home to be improved — courtesy of the Progressive Democrats — but their ability to leave is also guaranteed. Either way, this class wins. For the one-third depending on the State for support, their low skill status imprisons them not just within their poorly equipped housing estates, purposely built on the outskirts of towns and cities so that they will not be seen or heard, but also in Ireland. They have nowhere to go because nobody wants them, not even their own Government.

I had intended to conclude by referring to the 25,000 Mickey Mouse jobs to be provided courtesy of EC funding which will do absolutely nothing for unemployment. Unfortunately, my time has expired. I will seek the opportunity to address some of the other points in greater detail on another occasion.

Mr. Hilliard

I am amazed to hear Deputy Byrne quoting as gospel words and phrases from The Irish Times. This must be the new-found ideology of The Workers' Party.

Mr. Byrne

I was quoting four professional journalists, expert in fields ranging from social welfare to economics.

Mr. Hilliard

Following every budget when Fianna Fáil are in Government I hear nothing but criticism from the Opposition parties. They criticise this Government in regard to unemployment, but I have not heard one word from The Workers' Party or any other party about what they would do.

Mr. Byrne

We would not do what Fianna Fáil have done since independence.

Mr. Hilliard

The Opposition have no policy but to criticise the Government of the day, who are doing a good job under severe financial constraints. I should like to think the Opposition would give the Government the recognition they deserve for doing their best to keep living standards as high as possible.

In 1986-87 there was nothing but depression and lack of confidence among the people and there was little or no investment. Business people had not the incentive to invest at home because they were afraid they would be unable to recover their money. Emigration was at a high level and there had been massive borrowing in preceding years. That was the position in 1987 when Fianna Fáil took over the running of the country with a minority Government. These are matters the Opposition parties do not want to be told about. They had their chance in Government and this was the result of their years in office. Between 1983 and 1986 the growth rate in GNP was zero, while the growth rate from 1987-91, on a five year average, was 4.5 per cent. In 1990 it was 7.5 per cent, equal to the record in 1968. I admit that national growth relaxed in 1991 when growth reached 1.5 per cent. It is estimated that GNP will increase this year by 2 per cent. We acknowledge that we cannot keep improving GNP without massive investment. World trade is on a downward trend and most countries are finding it very difficult to maintain growth. However, the figures I have given show the comparison between the two Governments who have held office during the past two years. The facts cannot be contradicted and the people are well aware of them.

The Exchequer borrowing requirement in 1986 was £2,145 million, or 13 per cent of GNP. In 1991 the EBR was £501 million or 2.1 per cent of GNP. We estimate that in 1992 the EBR will be £592 million, or 2.4 per cent of GNP. Let us reflect on the difference between the EBR of £2,145 million in 1986 and £501 million in 1991. The current budget deficit in 1986 was £1,395 million, a record 8.75 per cent. In 1991 it was £300 million or 1.3 per cent. This year it is estimated to be £339 million or 1.4 per cent. I can assure the House that this Government have been more efficient between 1987 and 1991 than their predecessors. Yet an enormous amount of money was expended by the previous Coalition Government on running the affairs of the country, during which time they created a massive debt.

Let us examine the Exchequer borrowing requirement. These are the realities we should be speaking of and putting to our people. For example, in 1986 the Exchequer borrowing requirement was £2,145 million whereas in 1991 it was £501 million. The current budget deficit in 1986 stood at £1,395 million whereas in 1991 it amounted to only £300 million. Any fair-minded individual drawing such comparisons would readily conclude which was the winning team.

Mr. Allen

We were excellent.

Mr. Hilliard

Clearly it was the Fianna Fáil-led Government. Deputies opposite me smile but these are the facts, however, difficult it may be to stomach them. I welcome these budgetary provisions. People may contend that the less well-off have not been looked after adequately but Fianna Fáil have looked after the less well-off annually in their budgets.

Mr. Byrne

Not as well as the Progressive Democrats for their own.

Mr. Hilliard

Fianna Fáil have continuously increased social welfare benefits. It is easy to forget the good work of past Fianna Fáil Governments. For example, this budget provides for an increase in social welfare benefits of 4 per cent and, in the short term, a further 2 per cent.

Mr. Allen

It is also proposed to tax some recipients.

Mr. Hilliard

Is the Deputy disagreeing with that proposal?

Mr. Allen

No, but the Deputy should not pick out provisions in isolation.

Mr. Hilliard

The Deputy should not make smart comments. I hope the Deputy will clarify that point when he contributes to the debate. Indeed, I hope he will clarify his party's political policy on that matter. It is obvious that the Deputy is not fully aware of what the Fianna Fáil-led Government are doing. In addition, the "back to school" payments have been increased by £10 per child and the family income supplement has also been increased. Workers in larger families will be subsidised to a greater extent so that they will not have less than those drawing social welfare, unemployment or other benefits.

There has been much criticism about taxing people. It should be well noted that the standard rate of income tax in this budget will be reduced from 29 per cent to 27 per cent. It should also be remembered that in 1986 the standard rate stood at 35 per cent when the Fine Gael-Labour Government were in office. The then highest rate of tax stood at 58 per cent, at a time when they were borrowing enormous amounts of money to keep the country going. The higher income tax rate henceforth will be reduced from 52 per cent to 48 per cent. There will be two tax rates henceforth, whereas there were three, of 27 per cent and 48 per cent. In addition, the relevant bands will be widened from £13,400 to £14,950 for a married couple, affording those people more disposable income. The relevant band for single persons has been increased from £6,700 to £7,450 with the general exemption limits being increased by £100 to £3,500 for a single person and by £200 to £7,000 for a married couple. I very much appreciate those exemption limits being increased. It will eliminate many old age pensioners from liability to tax, people who, if they had two pensions heretofore, would discover that part of the second was liable to tax. This is an attempt on the part of this Government to assure such people in receipt of two pensions that their tax liability is removed.

The lowering of the income tax rates and the widening of the income tax bands will offer relief to many taxpayers. Indeed, it has been greeted by employers as a pro-jobs tax reform, rendering it easier for them to hire, remunerate and motivate employees. Henceforth people can decide for themselves how best to spend their increased disposable incomes brought about by the income tax reforms proposed in this budget.

Our greatest national problem is the repayment of our national debt, coupled with unemployment and the provision of the requisite finance to meet the ever-increasing social welfare budget brought about by the enormous number of unemployed persons. It is unacceptable that those political parties responsible for doubling the national debt to £23 billion in the mid-eighties should criticise this Government because of the unemployment position. Today, £2 billion, or 80 per cent of total tax revenue, must be provided to pay our national debt. Listening to the comments of Opposition parties one would get the impression that this Government were doing nothing, or were incapable of doing anything, to reduce unemployment. It is time the media informed the public whether Opposition parties have any policy to reduce unemployment.

Mr. Browne

(Carlow-Kilkenny): The Deputy's party are in Government.

Mr. Hilliard

All I hear on radio, television or read in the newspapers are critical comments only, nothing positive.

Mr. Browne

(Carlow-Kilkenny): The Deputy should remember the period 1982 to 1987.

Mr. Hilliard

I remember the period 1983 to 1986 when the national debt was increased from £11 billion to £23 billion, when there was also unemployment——

Mr. Browne

(Carlow-Kilkenny): I will deal with that tomorrow.

Mr. Hilliard

——when the then Coalition Government spent billions of pounds in an endeavour to keep the show going and were still unable to do so.

An Leas-Cheann Comhairle

Deputy Hilliard will find that, if he addresses the Chair, there will be no echo or interruptions.

Mr. Hilliard

I will stand a little further back from the microphone.

An Leas-Cheann Comhairle

I do not mean vocal echo, I mean no interruptions.

Mr. Hilliard

Well, I am stirring them up, although it must hurt somewhat.

An Leas-Cheann Comhairle

Pleasant, but not in accordance with Standing Orders.

Mr. Hilliard

They may be trying to catch me off guard but I am sure you, Sir, will ensure that they will not. Unfortunately, the number of new jobs being created is fewer than those lost, which is the problem of Government. It is easy to crow on the far side of the House but the reality is that our older established industries will experience greater difficulty in the future in maintaining the employment they have been giving over the years because of the massive changes that have taken place in trade and commerce. Nonetheless we are creating new jobs but not sufficient to balance those lost. Indeed, I predict we will experience greater difficulty in eliminating that imbalance in the years ahead. However, we will continue to do our best as we have in the past. There are now people willing to invest in this country, people who have some confidence in doing so, not as was the case in 1986 when the ship had almost sunk.

Mr. Browne

(Carlow-Kilkenny): Rubbish.

Mr. Hilliard

The Government have identified our food export market and tourism as major outlets for investment to increase employment. Both Departments are working hard in these two areas. There have been vast improvements in the food industry in Ireland over the last decade. The pace of change is remarkable. Technology, innovation and better management have achieved these excellent results. This is the way forward in helping to provide extra jobs. If we are to continue our success in food exports in future years we must keep ourselves fully briefed on market trends and demands and supply quality food at attractive prices. The key to benefiting from new technology and new processing lies in having the best information as early as possible. We must strive to keep ahead of our competitors at all times, otherwise we will lose export trade. Using advanced technology and the best materials the Irish food industry has lifted itself from a position of being a primary commodity producer to its present status as a major processor of high quality value-added products and creating much needed employment.

The Government have always encouraged this line of development. Food exports to Europe, and especially to the UK — our nearest market — will play a major role in maintaining and creating new employment in future years. We are facing into a period of intense international competition. Let us give up the cribbing and grousing and identify the marketing opportunities and in the future work together to increase our agricultural output and decide on a new Irish food marketing programme. We have young people with degrees in international marketing and languages — many will qualify in the future — and we should get those people to the UK and other European markets to work in the interests of the Irish economy.

Mr. Allen

I was a little amused hearing the previous speaker, my good friend Deputy Hilliard, being so sensitive to the criticism of Opposition parties who are fulfilling their role in criticising Government policies. Most of the criticism of Government Ministers, and their policies, came from within their own ranks recently when the Fianna Fáil Party treated the country and its people as their own personal chattels and social and economic problems were sidelined. I hope the change of leadership will not mean that Ministers and Deputies of the Government party will think that everything else will change also——

Mr. Hilliard

The Deputy should not mind the leadership issue.

Mr. Allen

——and that they will be forgiven for their sins of neglect and contempt for the Irish people of recent months. The Taoiseach was very strong in his own party because the people around him were so dreadfully weak in dealing with him. He got his strength because of the weakness of the people around him. These people will be running the country from next Tuesday. That is frightening. I hope the people will not forget that Deputy Haughey was not alone in sinning against the people of this country.

An Leas-Cheann Comhairle

The Taoiseach.

Mr. Allen

The Taoiseach was aided and abetted by the people who have turned against him now because the time was opportune. I hope people remember the golden circle that operated and is still operating and the manner in which favours, contracts and public works were doled out not to the lowest tender but because there was a nod and a wink to favoured people. That happened in recent years. We returned to the Taca days of the sixties and seventies with the co-operation of the so-called renewed again Christians of Fianna Fáil.

Mr. Hilliard

The Deputy should give us some proof.

Mr. Allen

I will give the Deputy proof.

Mr. Hilliard

Under what budget heading does that arise?

Mr. Allen

I tried to put down Dáil Questions about the awarding of contracts.

Mr. Hilliard

Will the Deputy deal with the budget?

An Leas-Cheann Comhairle

Deputy Allen has the ability, the experience and the capacity to apply himself to the budget.

Mr. Hilliard

He has nothing to say on the budget.

Mr. Allen

The budget at this stage is academic because it deals only with 1 per cent of public expenditure. Most of the major decisions regading public expenditure are made with the publication of the Estimates, the Programme for Economic and Social Progress agreement and the Programme for Government, some of which were agreed outside this House. Despite all the publicity given to the budget it does not have much impact in relation to public expenditure or social policy.

The budget did very little for job creation and the unemployed who have been abandoned and forgotten. Commentators are correct in saying that unemployment will reach 300,000 in the not too distant future and will continue to rise because there is no economic policy in Government budgeting. The poor have been abandoned and been asked to be satisfied with more handouts. The view is that social welfare payments will placate the poor with the Minister giving a certain amount next July. While the Minister has announced increases with effect from July he has taken from them between £1.50 and £4 through increases in local authority rents in recent weeks. That is a classical case of giving with one hand and taking back with the other.

I was in the House today for questions to the Minister for the Environment, Deputy O'Hanlon. He said effectively, there is no housing crisis here. That was a smug, complacent attitude from a Minister who does not understand. He did not understand the health services, he did not understand the needs of people and, obviously, does not understand the problems of urban areas. The Minister said there is no problem, no crisis, at a time when there are 30,000 people on the waiting lists for local authority housing. The figures prove it. In 1984 the Government of the day spent £206 million on social housing, building 7,000 houses. Today the allocation is approximately £80 million which may build between 1,000 and 1,200 houses. That is how the Government are dealing with the social issues of this country.

In regard to special housing for the disabled and the needy the Minister was ashamed to answer a question from me on 3 December 1991 and he gave me the figures in a letter one month later. In the larger boroughs the number of units of accommodation provided by housing authorities in 1986 was 871 and in 1990 was 209. In urban districts in 1986 the number of houses provided was 185; in 1990 the number was 45. In Dublin city 143 units of special housing were built in 1986 but there was none built in 1990. In my city of Cork 59 were built in 1986; one was built in 1989 and one in 1990. That is the record of a Government with a so-called social conscience. As I said, they have abandoned the homeless and those with special needs. This has led to the exploitation of the poor and the weak by the powerful and those in a position to exploit them.

As I have said already, we are heading towards an unemployment figure of 300,000. I regret to say the scandals, the nods and winks and the faction fighting between the warlords in Fianna Fáil have led to bitterness. Our people are of the view that their needs are being forgotten — the unemployed and the homeless certainly think they have been forgotten. There is plenty of evidence that this bitterness is being translated into violence.

The simple response to the problem of urban crime is "lock them up". Crime is on the increase and the Garda feel helpless because they do not have the resources or the manpower to deal with the spiralling crime rate. The knee-jerk response from some Members on the Government side of the House is to lock them up and provide bigger detention centres. I attended a meeting in Tralee on Monday where the Fianna Fáil members argued that we need bigger detention centres in an effort to deal with the problem of crime. What people need is a commitment that attention will be paid to their social needs — housing, education and health. If they get that commitment the crime rate will reduce and evaporate.

I was both amazed and amused by the contributions of two of my colleagues from Cork today who fell over themselves in praising the Minister, Deputy Ahern and the previous Minister, Deputy Reynolds, but I believe that they have their eyes on bigger things. Coming as I do from Cork city where so many people have to put up with bad housing and poor health facilities, it was sickening to hear them offer fulsome praise for both members of the "dream team"— Deputy Reynolds and the Minister, Deputy Ahern.

I had to visit the out-patients department of the Cork Regional Hospital on Monday and I was very disturbed by the number of people seeking attention in the public waiting room — some of them had been waiting for many hours. I noted the pressure that the medical and nursing staff had to endure, not just on the day I was there but every day because of the enormous cutback in recent years. Even though patients are suffering and the staff are demoralised because of the pressures imposed on them, lip service is being paid to the health services and there is no hope of any improvement in the months and years ahead. As a member of a health board, I am aware of the pressures that the health boards will have to endure again this year. Effectively, we will have to work with a reduced budget when the changes in salaries and wages are taken into account.

Having criticised him earlier I must welcome the point made by Deputy Martin, my colleague from Cork who seems to be in favour of the idea of an all-party forum on jobs. While we in all the parties here may argue among ourselves over the best way to approach the problem we have to be united in our determination to tackle the problem because if we are not seen to be united or to have relevant ideas and policies we will soon become irrelevant in the minds of the people. People are bitter and their bitterness will deepen in the months and years ahead if we do not commit ourselves to tackling the question of job creation.

Unfortunately, many elected representatives are complacent when it comes to tackling the problems of the unemployed and the marginalised and wish that their problems would stay hidden on the outskirts of our cities and towns, but it will not happen like that. We must take note of the lessons learned in other countries who have seen their democracies undermined by complacency and a lack of commitment to meeting the social needs of the people.

In recent years I spent some time in Central America where their problems led to conflict, and what happened there could happen here, I am not being over-dramatic and I warn the Members of this House not to become complacent in relation to the views being expressed by our people at present. In the present atmosphere all politicians are being tarred with the one brush and there is a view that we are careless and have no thought for those who are suffering, of whom there are many. This House would be jerked out of that state of complacency if, as a first and important step, an all-party forum on jobs was set up. This must be done. I will plead with whatever leader we may have next week to put this at the very top of his list of priorities to allow the Opposition express their views on the question of job creation. The previous speaker, Deputy Hilliard, criticised us for making criticisms but we do have our views, opinions and ideas in relation to job creation and we would like to be part of a forum on unemployment.

I believe the Industrial Development Authority are losing the fight in relation to their responsibility for job creation. I recently tabled a question to the Minister for Industry and Commerce in which I asked him to outline the number of jobs created by the Industrial Development Authority in recent years and while I do not have at hand the information he supplied, in 1989, 1990 and 1991, the number of real jobs created by the Industrial Development Authority decreased consistently. What is the reason for this? The answer is that we have no overall industrial policy. A report was published last week. I hope it will be acted upon and not be consigned to the shelves. I fear however that it will not be implemented.

The Minister for the Environment spoke today about waste management and environmental protection, key issues when it comes to job creation, but there was no clear policy or urgency. For example, £1 million was allocated last year to meet the cost of the activities of the Environmental Protection Agency even though they had not been set up. This year only £710,000 is being allocated, which represents a reduction. The absence of a waste management policy is costing us jobs because industrialists are afraid to set up in this country while we do not have such a policy. Surely the Government are aware of this. Neither do we have a policy on regional development. The Government and the Department of Finance want to keep their heavy hand on any initiative to be taken by the regions. I would ask the new administration to allow the regions to take the initiative. In Cork we are revamping our enterprise board and are turning it into a regional authority, comprising Cork Corporation and Cork County Council. If we are given the resources we will create jobs. All we need is freedom to take the initiative and, given the resources, we will translate that initiative into jobs.

The decision to abolish tax relief in respect of shares offered to employees of companies is one that I do not welcome because it reduces the incentive that should be there for such workers. I ask the Minister therefore to reconsider his decision when framing the Finance Bill. I have received letters already from pharmaceutical and chemical industries in the Cork area who operate such schemes and they have assured me that it will lead to the creation of a major disincentive for their workers. I know I am running out of time but the final point I would like to make is in relation to the Structural Funds. Hundreds of millions of pounds have been spent in recent years but we have not spent them effectively. The expenditure on roads and bridges is welcome but many of the improvements have bypassed the areas most in need of improvements, the areas in our cities and towns which are run-down environmentally because of unemployment. Unemployment creates a vicious circle: the area which unemployment affects most becomes run-down because the people become demoralised and the more run-down it becomes the less attractive it is to industrialists. This vicious circle is not being broken by investment from the Structural Funds. Run-down areas in our cities and towns are not getting the benefit of Structural Funds; they are not being uplifted so that they will be more attractive to industrialists. The record shows that, even in my own city.

I appeal to the Minister to give even more attention to the areas devastated by unemployment, up to 70 per cent in some urban areas, and unfortunately they have all the signs of it through no fault of the people. There should be an investment programme in those areas to uplift the people and promote industry. This will happen if there is a commitment to such a policy by the Government.

I very much regret that I must condemn the budget because it contains no commitment to the underprivileged; the homeless have been ignored, the unemployed have been abandoned and there is not a positive thought in the whole area of job creation, which is the major problem in the country at present.

Mr. Lawlor

I am surprised that Deputy Allen disagreed with the thrust and content of the budget because it was a fairly spirited attempt to embrace the consistency of policy which his party, when sharing power with the Labour Party, regularly suggested was the right course.

The Minister for Finance struck the correct balance in this budget between equity to the taxpayer, on the one hand, and the potential for investment and the maintenance of essential services, on the other. Independent and objective observers have come to the conclusion that it is a very well structured, well thought out and pragmatic budget.

In considering taxation we should bear in mind the recently published report A Time For Change — Industrial Policy For The 1990s which in section 4 dwells on reform of taxation. Naturally the annual budget is the focal point for reviewing taxation policies; it has the potential for reform and the ongoing requirements necessary to ensure an equitable spread of our resources, coupled with the potential for investment and job creation. It is a fairly complex and difficult balance to strike because every Member in this House consistently calls on various Ministers to provide better resources for health, education, social welfare, etc. Every spending Department is under constant siege from public representatives at local authority and national level to improve the range of services and to allocate more funds. Page 36 of the Culliton report reads that a fundamental programme of reform of the tax system on a phased but consistent basis should be initiated as a matter of urgency. I do not think that one would be contradicted for suggesting that the Minister for Finance, Deputy Ahern, has given effect to that fundamental principle. The report goes on to state that there needs to be a broadening of the tax base through the reduction or abolition of the many reliefs, exemptions, deductions and other tax expenditures. Much has been said and written about this particular aspect of our fiscal and taxation policy.

The next recommendation is that the standard rate band should be extended to greatly reduce the numbers paying higher marginal rates, with special attention to the problems of single persons on modest incomes. If we want to corral all that detail into an acceptable and equitable taxation policy we must continue the path taken by the Minister, who followed his predecessors in adjusting the tax bands and leaving more in the wage earner's pay packet, giving greater discretionary spending.

I like to think that I am too young to remember the details of tax before the PAYE system but I know it involved half yearly or annual returns. Because of computerisation and ease of access to information it has generally been accepted that the PAYE taxpayer has been in the forefront of tax or revenue collection although many other areas have been catching up over the years to the extent that now self-employed, corporation, capital gains and other forms of taxation are bringing an acceptable equity to the system so that everybody should — and progressively are — shouldering their fair share of taxation. However, much still remains to be done in relation to the PAYE taxpayer, and until there is a further reduction to greatly reduce the number paying higher marginal rates you cannot possibly tamper with the range of reliefs.

The Minister for Finance, with the very committed and regularly publicised views of the minority partner in Government, has been making moves in the right direction. It is a matter which has been high on the agenda of the Fianna Fáil and Progressive Democrats parties for quite a number of years. We would like to think that the Fianna Fáil Party in their minority Government period — I think it was from 1987 to 1989 — made a very positive leap forward in tax review and revisions. The provisions in the budget are a continuation of this policy and the PAYE taxpayer is beginning to see that there is equity now in the overall taxation system.

Another recommendation in the Culliton report is that taxation of savings should be overhauled to remove distortions and to move in the direction of equity between different savings. I have not had an opportunity to study this matter vis-á-vis the report but it is a major, important recommendation which should be vigorously pursued. Two further recommendations are that the 10 per cent corporation tax rate should not be continued beyond the year 2010 and that the range of activities to which it applies should not be extended. The report gives a clear signal to the Government, and to various semi-State agencies, that no consideration should be given to the continuation of this tax.

With regard to the broader thrust of the budget, there is a need to focus in on our inability to tackle the unemployment problem. For far too long, parties on all sides of the House may not have been politically mature enough to realise the difficulty of achieving real progress in the area of job creation vis-à-vis the numbers who are unemployed. Understandably, the IDA and Ministers of the day like to claim credit for jobs, or, as they were previously referred to in IDA statements, job approvals, which are created. The growth in our population and the age structure of the population has made it difficult for the Government to create jobs. Emigration was seen as one means of reducing our level of unemployment — people had access to the UK, limited access to the US and many emigrated to Europe. However, those countries have had economic problems over the past number of years. This has given rise to an increase in the number of returning emigrants. This was reflected in the budget for the Department of Social Welfare for 1991.

We need to have a substantial job creation programme. Deputy Bruton has suggested on a number of occasions that we should have an all-party jobs forum. At Question Time yesterday the Taoiseach said that he believed all the relevant information is to hand and there is no need for further task forces, reports and commissions. The present bureaucratic layers have to be cut away if the State is to be at the forefront of job creation.

Obviously, the report has had a bearing on the budget. It makes a very fundamental and decisive recommendation in regard to the Government's job creation agency, the Industrial Development Authority. It suggests that the agency should be split. I strongly support the recommendation that there should be one agency to deal with home industry and another agency to deal with foreign investment. There has been a feeling abroad for some time — this is probably more the case among politicians than the general public — that the IDA have relied too much on mobile international industries for job creation and that the same level of support has not been given to Irish indigenous industries. The Industrial Policy Review Group recommend the setting up of two separate agencies. To coin a phrase, this would level the playing pitch in that one agency would be responsible for assisting Irish industries while another agency would be responsible for attracting foreign investment here. The Telesis report on the IDA, published some ten years ago made a similar recommendation. However, while the Government welcomed the report, the recommendations in it were not implemented. On this occasion the Government, through the Minister for Industry and Commerce, will set up a monitoring task force to implement the recommendations of the Industrial Policy Review Group. I hope they will carry out their task with great determination and vigour. While there is potential for job creation, unfortunately there are too many impediments and too much bureaucracy. These must be got rid of.

I represent two satellite towns in County Dublin which have rapidly growing young populations. The central policy for these towns has been very fragmented. Due to recent disturbances in Clondalkin another task force were set up at assistant secretary level to examine the prospects for job creation in the area. If it is decided to set up a project on a green field site in the area, the local authority, the IDA, the ESB, Bord Gáis, Telecom Éireann and various State agencies will have to be involved. However, very often they do not work in unison. Attempts were made by Deputy Dick Spring, when he was Tánaiste and Minister for the Environment, to tackle the unemployment problem. During a by-election for the Dublin North-Central constituency, he made a very important announcement about job creation. However, through no fault of his, this proposal was never pursued. He proposed the appointment of a development co-ordinator who would be responsible for the satellite towns of Tallaght, Clondalkin, Lucan and Blanchardstown. It was proposed that he would have the ability and capacity to pull together all the various State agencies, the private sector, chambers of commerce and representative groups so that there would be a cohesive and integrated policy for these towns. However, as I said, this proposal was never pursued. As a result, many vast urban local authority estates have remained unfinished and the IDA do not know where to locate new industries.

This has had a major impact on taxation and employment. It has also led to social problems, a bigger bill for the Department of Justice, the deployment of more Garda in the area, etc. Even though the political will to tackle these problems has been there, unfortunately many proposals have not been followed through. I hope that the budget and the report of the review group will lead to a realisation that there is greater potential for job creation in the economy than we have seen in the past. I sincerely hope that there will be a follow through in this area.

The Minister for Finance in his Budget Statement referred to the need to create the right environment for job creation. He referred to the strength of our currency, the need for stability and the need to reduce Government borrowing, which is like a two stone weight on every taxpayer. The Government have to take high levels of tax from taxpayers in order to pay our national debt. This means that there is less money for investment in jobs. I think most mature politicians now realise that no matter on which side of the House one sits there are no instant answers, that this problem is bigger than any Government or Opposition and that it has to be tackled in a spirit of realism and co-operation. This budget can lay the cornerstone for that co-operation. Perhaps an all-party committee could be set up, even an ad hoc backbench committee to which many agencies could present their views and constructive criticisms in this area.

Debate adjourned.