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Dáil Éireann díospóireacht -
Thursday, 30 Apr 1992

Vol. 418 No. 9

Finance Bill, 1992: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Deputy Nolan is in possession. As Deputy Nolan is not resuming and no one is offering from that side of the House, I now call Deputy Hogan.

The economic background in which the Minister for Finance has introduced this budget leaves nobody in any doubt about the difficult financial situation facing the country in the next few years. The Minister for Finance has indicated clearly the necessity to introduce a second Finance Bill during 1992 and this clearly indicates that a huge retrenchment in public spending, a reduction in public services or increased taxation will be required in the latter half of 1992 and in 1993-94. This is further compounded by the fact that the Minister for Finance has postponed various commitments under the Programme for Economic and Social Progress until after the next general election when the next Government will have the opportunity to resolve the financial difficulties the Minister has delicately postponed. We might get a false sense of security about the healthy state of our finances if we do not acknowledge there are serious issues facing the country in 1993 and 1994. We need to take steps to bring the economy into a healthier state.

One of the greatest afflictions facing the country is the level of unemployment. Various speakers have referred to the massaging of figures and the understatement of the level of unemployment that will emerge following the enactment of the Finance Bill, 1992. It is undoubtedly true, and it is acknowledged by the Ministers that 300,000 people will be unemployed by the end of this year. This is a huge drain on our national resources, and on the Department of Social Welfare in particular, but no radical initiatives are being taken by the Government to bring more people into mainstream economic activity or to provide jobs.

In his budget speech the Minister stated this was a pro employment budget. Nothing could be further from the truth. How can the Minister declare the budget and this Finance Bill are pro employment when the evidence before us runs counter to that statement? The new Cabinet's first major announcement on creating employment was made by the Minister for Labour, Deputy Cowen, when he proposed taking the initiative by setting up FÁS offices in Europe and exporting 10,000 of our people, thus taking them off the live register. In my opinion, this is a damning indictment of the Minister's lack of imagination and radical proposals to deal with this major national crisis. If that is the best he has to offer, I feel very let down. The unemployed should not expect to hear any more on those lines from the Minister but should expect to take more radical measures in the foreseeable future.

The Culliton report was a very important development in industrial policy. It pointed to very important decisions that have to be taken to give better value for money and greater scope to create a more pro-active employment policy. The Culliton report proposals are radical. I am disappointed that the task force appointed by the Minister for Industry and Commerce has not been seen to be radical in coming to early conclusion about the implementation of aspects of that report.

Various proposals put forward in this budget are anti-employment rather than pro-employment. The Minister for Finance has tinkered around with the tax bands in order to make it more palatable for people to get up in the morning and go to work. So long as the PRSI rates remain at their present levels there will be no extra incentive in this Finance Bill to employers to employ more people rather than more capital. A radical shift is needed in the grant aid given through our industrial policy and through various tax changes made from one budget to the next to ensure more labour is employed rather than more capital.

The cliche that small is beautiful has often been related to industrial policy. Unfortunately, the level of economic activity in generating small indigenous industry, particularly during the last year or two, is practically nil. I am disappointed there has been no recognition in the Finance Bill that the greatest contribution that can be made to job creation is through the many aspects of our indigenous industry, through small industrial and manufacturing projects that have the wherewithal and the expertise at local level to generate employment. No concern is being expressed at present by people living in cosy cocoons in Kildare Street or in any Government Department that there is a crisis beyond the Pale in the living standards and the employment opportunities of people in rural areas. In fact, the decimation of towns and villages by large tracts of unemployment has not conjured up anything but glib statements by Government Ministers about how terrible it is and about the need to create the proper climate but no Government intervention is being employed to alleviate the problem.

The Finance Bill has copperfastened an anti-consumer aspect to this budget. Car tax was increased by 25 per cent. Alternative proposals are being put forward by the Minister for Finance for vintners' licences. I am sure a civil servant had for a long time dreamed about getting a Minister for Finance to implement that regime and found a very innocent Minister in Deputy Ahern. I am delighted he has had a change of heart, I compliment the Minister of State at the Department of Justice, Deputy O'Dea, who, I am sure, played a very important part along with the other Deputies in his party and Opposition Deputies in bringing pressure to bear.

And Deputy Leyden.

Probably Deputy Leyden has some concern for publicans in rural areas. The Minister was seeking to put rural publicans out of business by that ill-considered proposal put forward in his budget speech. The fact that he had to do a swift U-turn on that valuation proposal in respect of licensed vintners is a clear indication of how badly thought-out that proposal was and of the Minister's innocence in accepting it in the first place. Had that proposal gone ahead there is no doubt that there would be an increase of 20p on the pint and 10p on the glass of spirits to assist publicans to pay the increased charge for the renewal of licences. I look forward on Committee Stage to hearing the Minister outline the detailed proposals concerning the implementation of the levy on turnover in respect of the renewal of vintners' licences. I will also be anxious to hear whether food and admission to various musical events which may be held on licensed premises will be taken as turnover or what exemptions will be granted in respect of the definition of turnover.

There is an anti-consumer measure in the budget in respect of increasing the VAT rate from 12.5 per cent to 16 per cent. That will affect those who are most vulnerable in our community who have to spend a considerable amount of money on essential items, such as clothing. It will have a major impact on the clothing and textile industry which is going through a difficult time.

Another measure announced by the Minister during the course of his budget speech is the abolition of life assurance relief for policy holders. Indeed, a Minister has attempted to reduce many reliefs over the past number of budgets and his predecessor did likewise, particularly in relation to mortgage relief. Any holder of an endowment mortgage policy over the past number of years will have found a serious erosion of the various reliefs to which they were entitled when they first took out the policy. I contend that the endownment mortgage market will slow up considerably as a result of the continuous erosion of the various reliefs that have been allowed to mortgage holders over the last number of years and which are no longer available. The savings opportunities given to consumers generally will be considerably reduced as a result of the reduction in tax reliefs and the elimination of the life assurance relief that will be put forward as part of this legislation.

The announcement, by the Minister for Finance, during the course of his budget speech, that he will change the regime for writing off start-up expenses for life assurance companies in this country will add a further anti-consumer measure to the Finance Bill. The only one from whom a life assurance company can recoup the costs incurred in establishing in this country and taking out a policy is from the policyholder. If the writing off of expenses which have been allowed over a considerable period for life assurance companies are restricted to a seven-year period, it will be exceedingly difficult for the various life assurance companies to give an attractive return on the savings that would normally accrue from a policy. It may be the Minister's intention to get the additional finance from the life assurance company but it will be passed on to the consumer in the form of lower growth rates and lower returns on maturity of the policy.

The Minister's statement that he was introducing a pro-employment budget, while at the same time eliminating one of the most fundamental and radical initiatives taken for a long time in relation to employment policy, namely, allowing tax relief for share options through manufacturing companies, is another example of how naive he is. Share options have become the norm in this country since 1986 and many public and private companies have taken the opportunity to give additional incentives to employees to take a stake in the company and assist, in a more beneficial way to themselves as well as the owners of the company, the long term wellbeing of that company. The idea of having a stake in the profits of the company and in the development of the company was very worth while. I am disappointed that the Minister for Finance has considerably reduced the level of opportunity people will have of getting additional income and an incentive to build up a company in the private or public sector.

I am disappointed also that the Minister did not refer to the lack of consumer protection for people who invest money in the life insurance business and Government gilts. There are plenty of examples of consumers investing considerable amounts of money through intermediaries without any consumer protection if that money is invested in the wrong place or not invested at all. There is an urgent need for protection for consumers who have given their money to an intermediary to invest on their behalf and who fails to do so. A bonding system is necessary to ensure that that investment is returned to the consumer if the intermediary defaults. There is no control at all over transaction costs relating to financial products and financial institutions generally. The Minister should do something about that as soon as possible.

The Minister also attacked the very essence of rural life in seeking to impose extra taxation on the co-operative movement. This is a retrograde step that will have serious implications for employment in the co-operative movement. The reasons given by the Minister for the withdrawal of the tax exemptions on co-operatives is that there has been a radical transformation of the co-operatives, and the distinction between the co-operatives and other commercial entities has disappeared. The Minister alleged that there was unfair competition if co-operatives were treated differently in terms of their tax and that he wanted to broaden the tax base generally. The Minister's argument is flawed. Co-operatives, including those which have developed their financial structures, provide the same core services for their members as they provided in 1978 when the exemption was restored by Government, and trade with their members in the same way as they did at that time. There has been a huge growth in the size of the co-operative business in this country and it is not out of line with what is happening in other sectors of the economy. There is different legislation governing co-operatives and the private sector business throughout the entire European Community. What we are seeking to do in this Finance Bill is to put Irish co-operatives at a disadvantage compared with their European partners, particularly when we face severe competition post 1992 on the completion of the Internal Market. There could not be a worse time for any Minister for Finance, particularly an Irish one, to put the food industry and the co-operative structures of this country at a serious disadvantage. The emphasis in co-operatives on providing service to members has always been to improve the living standards of the people who are forming the co-operatives and also to provide much needed employment in areas that find it very difficult to get any employment. One of the largest co-operatives in my own area, Avonmore Foods plc, has made a tremendous contribution to the employment opportunities of our young people in Kilkenny and the surrounding counties. That co-operative has made a major contribution in recent times in coming to the rescue of the meat business, particularly in the west. I know my colleague, Deputy Leyden, would acknowledge that were it not for the intervention of the co-operative structure into the meat processing business we would have great difficulty in getting any player who would be sound and reasonable, who would provide much needed employment and would last the pace in this very competitive meat business. We should acknowledge that were it not for the funds that were made available in 1991 through rights issues and financial incentives given by co-operatives to shareholders to invest money with them we would not have the wherewithal now to take over another aspect of the agricultural business through the co-operative structure and ensure that we not only have competition in the meat business but the potential for lasting employment in that important sector of our economy.

It is important to realise that co-operatives do not currently have exemption from taxation on all their activities. Some of the activities of co-opeatives, particularly in the hardware business, are subject to normal taxation levels and corporation tax. It is only some aspects of the co-opeative taxation structure that are being changed in this Finance Bill. There are substantial indirect benefits from a thriving co-operative in any rural area. There is not only employment but, downstream, suppliers to co-operatives benefit considerably from the activities of a successful co-operative. Through employment in co-operatives at the moment they are paying about £50 million in PAYE contributions to the Exchequer. If the Minister proceeds with the tax structure he is proposing in this Finance Bill he is running the considerable risk of reducing employment in the co-operatives. He is taking £1.5 million from Avonmore Foods plc in extra taxation which they could use to make further investments, to make further acquisitions and create more employment opportunities for the people of the area where they set up.

The consequences of abolishing the tax exemption are that it will weaken the financial position of many co-operatives to the extent that many of the service co-operatives will collapse; it will ignore the role that many co-operatives have played in providing a public service, for example, animal breeding and farm relief co-operatives; it disregards the positive role that has been played and will be played by co-operatives in future rural development through the Leader programme and there has been no account taken of the major role of co-operatives in job creation where there are no economic alternatives to co-operatives.

I do not want to see the Minister making that mistake and I appeal to him to reverse that decision if he is serious about creating job oppotunities in rural Ireland.

One of the other aspects of agricultural activity at a time when Mr. Ray MacSharry, the Commissioner for Agriculture seems intent on bullying all the member states and the Council of Agriculture Ministers into accepting reforms to the Common Agricultural Policy along the lines he proposes, is that the Minister, Deputy Walsh, would seem intent on accepting tacitly that Mr. MacSharry wants to put the commercial farmer here out of business. There are those who say that the agricultural community are an untapped source of taxation, but I can assure the Minister that if these proposals are implemented by the Commissioner for Agriculture, Mr. Ray MacSharry, there will be a marked reduction in the contributions made both directly and indirectly by the agricultural community for services in 1992-93 and onwards.

It is a disgrace that there are delays in making payments under the various European schemes, including the special beef premium and headage payments. Even though this money is lodged with the Department of Agriculture and Food in December of each year, because of the morass of bureaucracy farmers do not receive their entitlements until the end of April, five months later. This is obscene. I ask the Minister to take the initiative and discuss the issue with his colleague, the Minister for Agriculture and Food, to ensure that the system, the merry-go-round under which cheques are issued under various schemes to the farming community from offices at Castlebar, Cavan, Dublin as well as local departmental offices is rationalised immediately and that the task force which he has established will report as soon as possible. He should also give local management discretion to make payments to the farming population without having to go through bureaucratic channels around the country. This merry-go-round of bureaucracy must stop as an enormous amount of resources are wasted during this procedure.

I am disappointed that the Minister for Finance did not announce he was going to improve the inheritance tax regime for the agricultural community in the Finance Bill. While I understand fully that a concession has been made in relation to the transfer of land for agricultural purposes, nevertheless there should be no tax impediments in transferring land in an agricultural country to ensure that land is handed over to young farmers at the earliest possible opportunity; but that is not the case at present. In relation to the punitive inheritance tax regime, which is enshrined in this Bill also, the dead will pay less tax than the living. This is not in keeping with the objective of generating economic wealth and encouraging the rural population to be more active and, in turn, generating more employment.

Before I conclude I would like to make a few general comments. Economically, 1991 is a year this country would like to forget. The scandals within the public sector have been the subject of investigation and have consumed much time and money through various inquiries under the auspices of the courts and this House. Resources have been wasted in seeking the truth in the beef tribunal, the Greencore inquiry, the Telecom inquiry and indeed other scandals which perhaps are too numerous to mention at this stage. Perhaps we should not go into too much detail as the general public are fed up with the activity which has taken place within the public sector and business in general during the past seven or eight months. Therefore it might prove to be counterproductive to add further to it. The public are cynical about the activities of politicians and it is distasteful that they appear to have been too close to the business activities which have taken place during the past seven or eight months. Nevertheless, it is important that we seek the truth in all these matters and do not waste resources in the foreseeable future in inquiring into those distasteful activities.

The image of the Government and of business and political circles has been damaged considerably by these scandals with the result that our capacity to attract investment from the United States and other continental destinations has been reduced. It will take take some time to get back to sound investment policies which will not be tarnished by the image of scandals which have made us the laughing stock of the world in relation to the way we handled our business during the past few months.

I find it difficult to understand the reason the Minister for Industry and Commerce and the Minister for Justice could not agree on the cost of the Government inquiry before it commenced. It is obscene that they are paying out £1,750 each day, which will have to be met by the taxpayer, to auditors, solicitors and barristers to carry out work on behalf of the State. I hope this lesson will not be lost on the Government in relation to any future inquiries, which I hope will be few and far between.

It has also been alleged on many occasions since 8 March 1992 that the Minister for Industry and Commerce interfered with the work of the inspectors involved in the Greencore inquiry in particular.

I am sorry to interrupt the Deputy but it seems he is straying quite far from the Finance Bill.

It relates to expenditure——

That is so, but he is going into a lot of detail on matters which do not impinge on the Finance Bill as such.

The reason I mention it is that I am concerned that taxpayers' money has been wasted on inquiring into these scandals. It might not have been necessary to do this if proper procedures had been followed in the first place. Perhaps some of the financial incentives available were a contributory factor. These were enshrined in the Finance Act during the years.

A passing reference would be in order but the Deputy should not go into detail.

I hope the Minister for Industry and Commerce will clarify if he intends to initiate legal proceedings against the Sunday Business Post, for example, in relation to these matters to clear the matter up once and for all. That newspaper alleged that he had interfered with the work of the inspectors in compiling their report, that resources had been wasted and that the publication of the report had been delayed.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

The Finance Bill is anti-employment and anti-consumer and postpones a number of financial measures which should be implemented. I agree with my colleage, Deputy Noonan, that the Government would prefer to have a general election instead of implementing some of the harsh medicine which will be necessary to conform with the Maastricht Treaty.

I congratulate the Minister for Finance, Deputy Bertie Ahern, on presenting his first Finance Bill following the introduction of his first budget last January. It is a very comprehensive document which brings before the House some very imaginative proposals in relation to the management of our finances.

We are fortunate in Government — particularly in Fianna Fáil Governments — in having had such good Ministers for Finance over the last number of years. They include the former Ministers, Deputy Albert Reynolds and Commissioner MacSharry. Deputy Bertie Ahern is following a fine tradition.

Section 24 refers to the restrictions of capital allowances on holiday cottages. The Minister should allow any project which had been commenced before 24 April to qualify as commitments have been entered into by bona fide investors. That would be of benefit in relation to job retention and creation. A straightforward amendment to that section would be of great benefit and I hope the Minister will accede to my request.

Arising from discussions with the Minister on behalf of the licensed vintners, I am very pleased that he has amended the proposals in the budget. Discussions took place at meetings of the Fianna Fáil Parliamentary Party and elsewhere and the Minister decided not to implement the multiplier in regard to valuation. Deputy Hogan said that this constituted a U-turn but that is not so because when a budget is published and debated it is an opportunity for Deputies to assess and evaluate the proposals and to bring forward logical alternatives for the Minister to consider, it is parlimentary democracy. The same applies to amendments which will arise as a result of the publication of the Finance Bill. My experience in Government was that when the Opposition advanced good proposals I, as far as possible, accepted them if they were logical and well worked out. It is certainly not a U-turn by a Minister to consider well worked out, alternative proposals. It gives Deputies in Opposition a say and involvement in the passage of Bills through this House. When Fianna Fáil were in Opposition the same applied. I compliment the Minister in that regard because the initial proposals for the multiplier of £7 in relation to the poor law valuation would have been a major imposition and an inequitable system as far as publicans are concerned. There are approximately 10,000 licence holders in the country, the majority of which are outside the greater Dublin area; 4 per cent of the licences are in Dublin with roughly 40 per cent of the population and 96 per cent of the licences are outside Dublin catering for about 60 per cent of the population. There are three public houses in Fuerty, where I live, serving a population of about 450 people. It is obvious that there is no quick buck to be made as far as that is concerned. Many premises have carried out improvements and have been revalued. The Minister should examine valuation of property because rates are becoming a major burden in rural areas. There is no limit on the overall rateable valuation imposed by local authorities in addition to water and service charges. It is becoming extremely difficult to run a small business in rural areas. The Minister has been given clear examples of the kind of turnover in small businesses and public houses in rural areas, indeed 75 per cent of the licensees will pay in the region of £200 for the renewal of their licences. The sliding scale is very attractive in that it allows for increased turnover in the city of Dublin and elsewhere and for a small return in rural areas.

As a result of the evaluation being carried out, the Minister should consider reducing it in some cases because large increases have made life very difficult in rural areas in relation to development. Rural Ireland is under major threat at present. The proposals by An Post some time ago in relation to the reduction in the number of sub post offices has met with rightful opposition in rural areas. The Minister has at her disposal the report of the National Economic and Social Council on the viability plans of An Post. That document should be published as soon as possible to allow for a further debate in relation to the future of rural post offices.

As a former Minister of State at the Department of Posts and Telegraphs. I would fight for the retention of the majority of rural post offices, which are a vital cog in rural areas. Particularly in the post-Maastricht era, when Ireland will be the peripheral part of Europe, it is important to retain services in the rural parts of this country. It is my argument that the services of the local sub-post office are a vital part of a rural community. I would also say that there has been natural wastage in the provision of post office services because in many cases people are not prepared to run post offices for the small amount of funds provided by An Post for a particular area.

On the basis of economic development and in relation to the Finance Bill, I urge that the present dispute affecting postal, services be brought to a speedy conclusion. I appeal to all parties in the dispute to come together and commence negotiations aimed at ending the dispute. The taking on of additional employees seems to me to be worth while, particularly when one considers the institutionalised £21 million spent in overtime payments each year here in the city of Dublin. Such huge expenditure is completely unacceptable. For much too long anarchy has reigned at Sheriff Street. It is my belief that the management of An Post had to bring that position to an end, but negotiations could have been carried out in a more satisfactory way that has been the case to date.

I suggest that when the Minister examines the position at An Post she should consider the management of that organisation. I for one am not too enamoured of certain transactions that An Post have carried out in the development of properties in Dublin and in the sale of properties that An Post did not even own. In that regard An Post will face major claims, which will be fought through the courts, probably successfully. Such problems bring to my attention the lack of managerial skills and the ability of people at the very top of An Post. The Minister now has an opportunity to examine the management of An Post, and if heads are to roll then they should roll now. I appeal to all parties in the dispute to come together as quickly as possible because the availability of modern technology such as facsimile machines and the efficiency of the courier services will result in the overall turnover and the use of An Post being seriously reduced if the strike continues. I stress that the dispute must be settled as quickly as possible. There is a general lack of confidence in the ability of An Post to provide satisfactory service and a protracted strike will result in companies using the facilities of private courier services and modern telecommunications systems for the transmission of information and correspondence. The dispute should now be reassessed in a cool and calm manner.

The Minister and the Government have been successful in the privatisation of Irish Life and the Irish Sugar Company. However, I advise caution in future privatisation proposals for Telecom Éireann. Telecom Éireann are a very successful public company that provide excellent service and employment. The initial advantages of privatisation are evident in the amount of capital that would be realised to the Exchequer to assist in the paying off of our national debt. However, the regular returns from Telecom Éireann should be taken into account. As the organisation make profits of about £50 million per annum, it is my contention that they are in a position to pay dividends to the State to pay off the original investment of £1 billion required in 1974 when Telecom Éireann and An Post were formed as State companies. The employees of Telecom are gravely concerned and the Government should very shortly come to a decision on their plans for the company. At this stage I am not over-impressed by proposals for further privatisation of Telecom Éireann. It is my argument that the company have great potential for paying regular dividends to the State. State companies have the objective of providing a service to the customer and they are also pro-employment, whereas private companies are pro-profit and are not particularly pro-employment.

Those of us who live in rural areas do not have the advantage of cheaper telephone costs enjoyed by businesses in the greater Dublin area. There should again be a review of charges for inland telephone calls. Higher telephone accounts are certainly one disadvantage in establishing a company in a rural area compared to establishing a company here on the eastern seaboard.

The Minister should consider proposals for continuing the decentralisation policy initiated by Fianna Fáil and continued by the previous Fine Gael/Labour Coalition Government. Decentralisation has proved an economically beneficial measure throughout the country. It has provided major benefits in the west of Ireland in towns such as Ballina, Castlebar, Galway, Sligo and Athlone. Improvements will also flow to Longford following the success of the previous Minister, the present Taoiseach, Deputy Albert Reynolds, in his attempts to take decentralisation to that town. I appeal to the Minister to look favourably upon a proposal that I have made for some time now that the decentralisation policy be extended to Roscommon county. The town of Roscommon would be a natural location for application of the decentralisation programme as it is able to provide the necessary facilities and sites. The Patents Office is certainly ready for setting up as a semi-State company and I earmark that organisation as a possibility for decentralisation. With modern technology, there is no reason that a company such as the Patents Office should be located in Dublin or its surrounding area. I recommend that the Minister consider the location of the new Patents Office in Roscommon, a proposal that would bring more than 150 jobs to an area badly in need of development.

I encourage the Minister and the Government to consider decentralisation throughout the regions, and particularly in the west of Ireland, to towns such as Ballaghaderreen, Boyle, Castlerea, Tuam, Ballinasloe and Carrick-on-Shannon. A decentralisation programme would be of major benefit to the west of Ireland and would recognise the concerns being expressed throughout the region. In that regard I think of the appeal made by the bishops, who have brought together a group to discuss the problems faced by that region. It would certainly be welcome in the context of the disadvantages that will be suffered by the area post-Maastricht and in the single European market, when we will be the most disadvantaged area in the whole of Europe in relation to the location of mobile industry.

The IDA are making great efforts to bring employment to our region but those efforts have not been too successful to date. The Minister for Industry and Commerce and the Government should consider the provision of additional incentives coming from the EC for the relocation of industry to rural Ireland and specifically in the west. If cohesion means anything, a special case should be made for additional support from funds that will be forthcoming when the Maastricht Treaty is endorsed, for both Irish and international companies to relocate in rural Ireland.

The FEOGA grants have been a tremendous support in the location of industry in rural Ireland. Industries like the Key Pack project in Athleague, the Polar West Ltd. project in Boyle, Hannons Poultry exports and Avonmore Irish Country Meats in Rooskey have all been supported by FEOGA. This aid is a major incentive. Industrialists have told me that they would not have established companies in counties west of the Shannon but for the FEOGA assistance.

I welcome the decision by Avonmore plc to buy the UMP plants in Ballaghaderreen, Ballyhaunis Sligo and Camolin. This step has allayed the deep concerns of the employees in those plants. To allow for the speedy reopening of the plants in Ballaghaderreen and Ballyhaunis, I appeal to the receiver, Mr. John Donnelly, to discharge all the accounts, particularly the accounts entered into in good faith by Mr. Des Guilfoyle, the Examiner under legislation brought before this House on foot of the Companies Act, 1990. This Bill, which was put through this House by the Minister, Deputy O'Malley, and myself as Minister of State, is good legislation. The examples highlighted in relation to the issue of cheques by the examiner in the UMP case which were not honoured by the banks has undermined the legislation. The Act is generally worth while and this is the first example of it not working in accordance with the intention of the Oireachtas. This was one of the most important Bills produced for some years with regard to jobs retention and jobs rescue and I was glad to be associated with it. Defects which show up will have to be amended by the Minister.

Is it the Finance Bill we are discussing?

Yes. This is relevant to the Finance Bill because all funding comes through the Department of Finance. The support from the Department of Industry and Commerce to industry comes through the Department of Finance. My comments also have a bearing on taxation policy. The support we received in the Oireachtas for that Bill was encouraging and any defects will have to be rectified. I appeal to the receiver to discharge all the accounts of the suppliers, hauliers and small creditors to allow Avonmore re-open the plants as quickly as possible so as to re-employ the workers and ensure that the plants will be up and running for the lamb season.

At the end of 1991 the value of our exports was in the region of £15 billion while our imports were valued between £12 billion and £13 billion. This gives us a trading surplus of £2 billion. That is a credit to the Government and to the Departments concerned. We face further challenges in relation to the open market of 1993. Then our doors will be open to intense competition from European companies.

About £1 billion of our imports could be substituted here if we had the will to concentrate on an intense "buy Irish" campaign. I urge people when purchasing to consider buying quality Irish products which are available at competitive prices. Import substitution could bring about an increase in jobs and about 50,000 extra jobs could be created as a result of an intensive "buy Irish" campaign. The quality Irish committee who issue certificates are doing their utmost to bring this to public attention. I appeal to everybody to purchase Irish products.

I commend the proposal by Dr. Tony Ryan at the IMI Conference for an air bridge to a European airport, possibly Luxembourg. The Ministers concerned, in consultation with An Bord Tráchtála, should examine his proposal. As Ireland is on the periphery of Europe it is vital that we get our products to the centre of that major new market. Dr. Ryan's proposals are worthy of consideration. Airports like Knock and Shannon could be geared to export some of our products. An air bridge would be expensive and it would have to be subsidised for a period but we should consider using the Cohesion Fund which will become available under the Maastricht Treaty to implement that proposal. The best way to get our products to the centre of the market is by direct air transport services. Only about 4 per cent of our products are exported by air because of the cost of air transport. Dr. Ryan's proposal should be costed and we should use the airports in the west as a hub for implementing it.

The Finance Bill is imaginative and contains many good proposals. In relation to the development of Europe we must be seen to bring the benefits of European union to the most peripheral regions of Ireland. We face major challenges including how to deal with the many people who are unemployed. We need to invest more in the development of tourism. As a result of the Maastricht Treaty we will be able to get additional assistance from the EC to promote tourism, agri-tourism and so on. It will be to our advantage to ensure that we are part and parcel of the greater European union.

The purpose of the budget, and the Finance Bill which implements its provisions, is to manage finances and decide how to raise finance for the coming year. The budget can also be a method to motivate the nation to create employment. Certainly a magnifying glass has been used in the budget and Finance Bill to raise finance. They kill any initiative for job creation. This is the most negative Finance Bill I have seen come into the House. Deputy Leyden described the Bill as imaginative, but he did not indicate where. I do not see anything imaginative in it.

Over the past few years the Progressive Democrats element of the Government have treated us to speeches about the great reform of our taxation scheme. I cannot see any reform taking place in our taxation system. We are merely tinkering around with a system that is not serving us well, taking a penny off here and putting a penny on there, but not reforming it. Reform means root and branch change in the system. Unfortunately, this Bill will not bring about those changes.

We have had enough doses of medicine from the Government, particularly from the Progressive Democrats, about taxation reform, the great things they are going to do and how they are going to reduce the tax rates to 45 per cent and 27 per cent. These figures are up in the air — there is no substance in them. The structure of our taxation system is driving young professional people out of the country. An American consultant who was involved in the Culliton report said that if one wanted to devise a system which would drive young achievers out of the country one could not devise a better one than our taxation system. I do not think any of us would disagree with him. I am talking mainly about young single people who are paying high rates of tax. The Minister will introduce another budget towards the end of the year in which he will probably seek to tax fringe benefits such as car parking spaces, cloakroom facilities, etc. We need to be more dynamic. It is clear that the Minister did not have any hand, act or part to play in drafting this Bill. This is a Civil Service Bill; it is not a political Bill with the political imagination this country needs.

Reference is continually being made to the need to create employment. When the Minister for Finance was Minister for Labour he constantly spoke about the importance of profit-sharing schemes: he was the guru who encouraged such schemes. It is only correct that employees should have a share in their companies as it brings them together, motivates them and makes them that bit more loyal to their companies than if they thought they were just numbers on a page. However, in his first budget the Minister proposed to wipe out the profit-sharing arrangements, about which he had preached for years. Did the Minister propose this himself? This is why I question the part the Minister played in drafting this Bill. I do not think this was the Minister's idea. Once he spotted the change and after he had been assailed by all and sundry about it he decided not to abolish the scheme but rather to reduce the amount from £5,000 to £2,000. This is most unsatisfactory. If the Minister decided to make this change on his own, obviously he was talking off the top of his head when he was Minister for Labour and did not really believe what he said about the importance of profit-sharing. Was everything he said when he was Minister for Labour about the importance of profit-sharing merely bland talk? We are not going to create the kind of climate we need to generate jobs if this type of nitpicking continues.

Up to now people who made a profit of, say, £14,000 from their investments in manufacturing industry knew they would not be taxed on half of it. As we all know investment in manufacturing is very risky. If there is a risk element people should get some reward. I do not know why this concession which gave people an incentive to invest in manufacturing industry is being done away with. A person who made a profit of £14,000 knew he would have £7,000 in his back pocket which would not be taxed. That was a good idea. Under a new arrangement which will be introduced towards the end of the year a husband and wife who make a profit of up to £100,000 will only pay 10 per cent tax. This means no employment will be generated. If they make a profit of £10,000 which they reinvest they will only have to pay £1,000 in tax but if they do not reinvest it they will pay 48p in the pound. This is not the way to encourage enterprise. It seems we are only paying lip service to the 300,000 people who are unemployed. We have set up a talking shop in this House, a committee. If we have a problem which we cannot solve and which is creating hassle we put it into a committee where we hope it will be resolved. I see some sense in a jobs forum but I do not see any sense in this proposal.

I wish to refer to the business expansion scheme which no doubt was abused to some extent. Nevertheless it was fairly successful. If it was open to abuse it should have been possible in the Finance Bill to eliminate the avenues which allowed for such abuse. So far as I am aware this scheme will be done away with next year. In future there will be little or no incentive to create jobs. Unemployment is the great scourge in this country. Our economy is in a fairly good position, we have a reasonably low rate of inflation and a reasonable level of growth. We should be doing everything within our power to ensure that we create the climate necessary to encourage employers to take on people, something which so far as I can see they are slow to do. When an employer takes on someone he has to pay a payroll tax in addition to PRSI, etc. A man employing say, 100 people may be making reasonably small profits but, because he is employing people, he has a large payroll tax. There may be another fellow located in the Financial Services Centre, operating from a couple of rooms there, with three or four people, reaping large profits but because of the type of business in which he is engaged, his payroll tax will be minimal; he will be paying 10 per cent tax only on his business. I should like to see the general payroll taxes spread uniformly across the overall business taxation code rather than an employer incurring a cost for employing somebody. I do not know how that can be achieved but I do not think it is beyond the bounds of possibility. If that could be done the burden of taxation would be shared more equally and would be divorced from employment, in other words, impose a minimal tax on employment, whereas at present we tax employment to the maximum. There is no doubt but that this acts as a disincentive because, whenever one talks to employers, they all have the same story — they are slow to employ people because of the inherent cost and the volume of paperwork involved. If we are serious about resolving the unemployment crisis, we must examine the overall payroll taxation system ascertaining whether we can devise a better one, thereby allowing employers to take on people whenever they wish.

While talking about unemployment, disincentives to employers and so on, it is only right that I should refer to our legislation relating to employment generally. It is now practically impossible to dismiss an employee. Indeed, whenever one threatens to dismiss an employee they can publicise the fact in the media and they can create havoc. I am not advocating a hire and fire attitude — we have progressed from that point — but if people are not pulling their weight within their overall employment regime, then they must be let go. Business people tell me they have employees they cannot dismiss. They know they are creating havoc, that they are not pulling their weight and that they take matters to the brink, knowing exactly how far they can go without being dismissed. That is another disincentive to employing people. This leads to employers preferring to purchase another machine, engage in additional overtime or whatever in order to overcome that difficulty.

I see nothing in this Bill which will create a sense of motivation or imagination that would lead to greater, more stable employment overall. The proposal to move away from allowing people tax breaks, that is, those who invest in manufacturing industry, to allowing very generous tax breaks to people who have money, is not a good idea. It must be remembered that our banking institutions today are most reluctant to loan money to small businesses; they do not want to know such people; they are afraid of them. I contend that the greatest potential for employment in any country is to be found in its small businesses. I know the odd company will expand and develop into a much larger business, but it is through helping the small industry or business we can create employment. I do not foresee that the provisions in this Bill will help in that respect in any way.

The Minister proposed introducing a new system of reaping money from licensed vintners based on their rateable valuations. Apparently now he proposes to impose some type of levy on their turnover. This begs the question: is this a new form of taxation? It appears the Minister has singled out publicans because they pay a licence, but it should be remembered that the purpose of granting a licence was to streamline the trade overall. I contend the Minister is initiating a new form of taxation on publicans' turnover. I assume that all businesses pay tax on their turnover and are taxed on their profits; henceforth publicans will have to make additional payments which will be passed on to their customers — the publicans will not pay it themselves — by way of additional charges on the ordinary customer. If this proposal is a success — and I hope it will not be since it constitutes another form of taxation — it begs the question whether the Minister will move on to, say, a draper's shop. Will he then decide that we could get a good few pounds out of them? Will he decide to impose a levy on the turnover of, say, the greengrocer, the supermarket or whoever? Will it stop there? He may think that is a great idea and impose another tax on the retail trade. I do not like this proposal.

In reforming the overall taxation system, one must ensure that people pay tax on their profits — which is what they should be taxed on — on a once-off basis rather than being taxed on their profit and then ascertaining whether there are other ways in which additional revenue can be squeezed from them under the guise of charging more for their licences. Blantly it is an additional tax. I consider it wrong and it will open the door to yet more taxation.

We must also remember that the inflation rate is most important to our economy and must be firmly nailed down at all times. However, I must admit it has been kept well in check; I am not disputing that. Nonetheless, I could advance a number of reasons that is so. However, this latest additional taxation will constitute an additional charge on services which will lead ultimately to an increased cost of living, in turn leading to an increased rate of inflation. We are well aware of its consequences because, once it begins to rise, it is very difficult to restrain. Therefore we should be doing everything in our power to ensure that does not happen.

I appeal to the Minister to genuinely examine some reasonable reform of taxation. I know it is not easy but we must ensure that we do not drive our achievers abroad because, ultimately, it is they who will render this country great, and this country can be great. It has enormous potential if only we could move away from the begging bowl mentality. Over the forthcoming six weeks or so when there will be much talk about the Maastricht Treaty, I hope we will not hear predictions that we may lose, say £6 billion if we do not comply. If that is the only reason we are a member of the EC — that we might get £6 billion here or £2 billion there — better we never joined.

There are tremendous opportunities in Europe for this country, a very affluent market of 400 million people we can cultivate and develop, which is the way we shall resolve our unemployment problem but not by moving around contending we are one of the poorer countries of Europe. I very much resent that attitude because we are not a poor country. In many ways we are a wealthy country, perhaps not in a financial sense, but we have tremendous wealth in other forms and we should exploit it rather than going around Europe with a begging bowl, cap in hand — like a dependent nation. In so doing we are merely creating within our country a further dependency attitude.

Whenever a businessman or industry decides to expand here they almost always ask themselves what will I get if I do this? Is there a grant for it? Will I receive anything from Brussels? This overall dependency mentality is wrong. Having said that, I should make it clear I am all for assistance, for having funds allocated where they are needed to develop our infrastructure, and so on, in a really competitive manner. We have reaped a great deal of funds from Brussels but are we any more competitive or better, have we spent those funds in the correct manner, or have we engaged in activities that will improve our competitiveness, our attitude or entrepreneurial spirit vis-à-vis development?

These are questions we must ask ourselves. I am not sure that it could be fairly said that we have rendered our stewardship well as regards the money we have received. Assuming that we receive £6 billion — that figure has not yet been agreed — it will not be adequate to meet our requirements. However, that is not what we should be thinking about. We should be thinking about the advantages, encouraging industries to go into Europe and helping them with their marketing. That is how we will create the employment that is required. The fact that there are roughly 300,000 people on the unemployment register is a sad indictment on us all. There are more people on the live register than there are in manufacturing industry. That frightening fact is referred to in the Culliton report.

I said I would not delay the House because I know that a number of speakers wish to contribute. This Finance Bill is a disappointment in many ways. It is an anti-business, anti-job Finance Bill. It is a mean, petty Finance Bill in which the Government are trying to squeeze all they can from people, whether in terms of shares in a company, investment in manufacturing or other areas. Let us consign that sort of thinking to the waste paper basket and become a nation with a vision and imagination. Let us come up with ideas to make this country a very competitive one and to put us in the position whereby we do not care whether people come here to invest because our own people can do the job just as well.

First, I welcome the Bill. I take issue with Deputy O'Brien's rather derogatory remarks on the Bill. That type of opposition for opposition's sake is something which the public and the electorate are tired of. This is perhaps the largest body of legislation to come before the House for many years, and that is a tribute to the Minister. It is a reforming Bill which takes cognisance of changes that are about to take place in Europe and which will have a direct impact on the management of our public finances and on our budgetary strategy.

The Minister in his speech detailed the changes to the taxation system in particular and outlined his strategy on unemployment. This Finance Bill continues the correct financial and fiscal strategy which has been the hallmark of all Governments since 1987. It is fair to say that the economic and financial strategy from 1987 to 1992 has been the best of the last 20 or 25 years, and that can be easily lost sight of. Opposition speakers should acknowledge that we have restored control to our public finances. We have significantly reduced taxation rates and we have reduced foreign borrowing as a percentage of GNP. This was not done easily, it was done with some pain, but it was very necessary. It is very important that when we talk critically of unemployment we remember that the overall financial framework is a solid and an improving one. That results from wise policies pursued by Governments since 1987 and it should be put on the record because people are allowed forget it too easily.

The Minister referred to the still excessive burden which our national debt imposes on our finances. Almost one-quarter of total tax revenue is spent on servicing our national debt. That is an incredible figure which has obvious implications for spending and for expansionary Government policy, which some people have been calling for. It imposes very real limits on what Government can do in terms of reflating the economy, in terms of public expenditure, expenditure on health, social welfare and education. Almost one-tenth of GNP, or one-quarter of total tax revenue, must be allocated annually to meet debt servicing costs alone. That is a very sobering reality which we should not lose sight of and which should be borne in mind when commenting on this Finance Bill.

I am glad to see from the Minister's speech that he is committed to maintaining financial and economic discipline. If we show any slippage or give any indication that we are going back to our wayward ways, the unemployment position and the economy in general would be the poorer. The Minister has given a very clear commitment to follow through on the budgetary discipline and to attain the targets he set in the areas of borrowing, public expenditure and taxation, and that is to be welcomed.

On unemployment, the Minister in his speech outlined four basic areas in which the Government are moving to combat the unemployment problem. The first is by simplifying the taxation system and reducing taxation rates. Most bodies who have carried out surveys and analyses on our economic performance have drawn attention to the taxation system as an inhibiting factor and a major disincentive to the creation of employment. The OECD, the National Economic and Social Council, the Commission on Taxation and the Culliton report have made similar points and recommendations regarding our taxation system. The Minister has followed through on a number of those and in this Bill has gone further than in most Finance Bills in recent years in endeavouring to implement certain proposals put forward by the Commission on Taxation and by other bodies. Hopefully, by streamling the taxation system and reducing tax rates we will give greater incentive to the private sector thereby creating more employment.

Second, the Minister referred to the new employment subsidy scheme and in-company training. That is a very significant scheme and one that should be expanded. It highlights the necessity for the Government to push harder at EC level for greater funding for direct employment and training initiatives. We should be putting the whole question of employment and training firmly on the EC agenda and we should focus very strongly on that area post-Maastricht. This is a very welcome start, with total European funding covering the employment subsidy scheme and training. However, we should look for even more money in the years to come, and that is not the begging bowl mentality. Unlike our European partners we have structural problems of ten to 20 years duration in relation to unemployment. These problems relate to our population structure and our demographic situation. We have the fastest growing labour force in Europe with thousands of young people coming onto the labour market year after year. That is a fact of which we must take cognisance. There is a case to be made to Europe that this is a problem which we will face for the next 20 to 25 years, a problem that will require interim measures by Government and that under normal economic and fiscal policy we will not be able to seriously reduce the unemployment figures.

We need special initiatives like the employer subsidy scheme but we require funding from Europe for them. The Government should put employment and training on the top of the agenda. Given the financial constraints under which we have to operate we should examine whether the moneys being spent on social welfare, on labour and training and on education are being used most effectively, whether we are getting value for money or whether the moneys might be used better if they were directed to employment creation.

During discussion of the Social Welfare Bill, we were told that £3.3 billion is being spend on social welfare alone this year. We will also be spending considerable amounts of money on employment and training and on education. It is necessary to carry out a critical examination of expenditure with a view to redirecting moneys to employment creation and training. For example, I do not think that a young person who leaves school at either 15 or 18 years of age should immediately go on the dole. This is a bad start for any young person and it should be avoided. There is an onus on the State to provide the young person with further training in order that the dole queue and the negative impact this has on personal self development is not inevitable. We should try to steer young people towards vocational courses. We should ensure that like other industrial countries no young person leaves the educational system without some skills that are useful in the labour market.

We have a chronic shortage of employment. A very considerable number of our young people leave school far too early — perhaps at 15 or 16 years of age and without any skills whatsoever. It is extremely difficult for those people to ever gain access to the labour market. They may pick up temporary work here and there but as a result of increased technology and the reduction in manual employment right across the board they will find it almost impossible to get sustainable employment. There is a great need for targeted training programmes for the early school leavers who find it most difficult to gain access to the labour market. We should direct both European and national funding to this group.

Another group are those who have worked in traditional industry or areas of work for 20 to 25 years and now find at the age of 45 or 50 they have been made redundant. We need training programmes so that these people are helped to adapt to further employment. The reality is that in the next ten to 20 years people will not be in the same job for life. People will have to be open to the possibility of change and may have to change the nature of their job in a ten year span. This is why retraining is very important. I want the Government to examine carefully the redundancy packages and rationalisation programmes that many semi-State bodies and local authorities set in place. I question the wisdom of their actions. This course of action is taken in the name of rationalising the State body and making savings but I am not sure if it achieves their objectives. The net result however is that more people are put on the dole and this costs the State considerable sums of money.

The staff in Telecom Éireann, An Post and indeed in local authorities throughout the country were offered redundancy packages which were very expensive. Thousands of workers took redundancy and are now on the dole. The State has had to make significant redundancy payments and will continue to pay superannuation and pensions to those former employees. The net saving to the State is minimal. Let me illustrate: I am a member of Cork Corporation and I know that that body laid off 500 staff since 1987. Yet, if it was indexed linked, we are spending the same amount of money now as we were in 1987. With 500 fewer employees, obviously there is an impact on the capacity to provide services. The corporation still pay superannuation and pensions to those who took redundancy as well as the substantial redundancy payments which they received. I question the wisdom of offering redundancy. We would have been far better off if the 500 people were retained within the local authority.

The question boils down to what type of society we want. We should ask whether we want more people in employment or more people without jobs? If employment is the cornerstone of our philosophy we should be examining critically the rationalisation programmes that companies undertake and asking if there are alternative ways of effecting savings and redeploying those who are surplus to requirements in a given area. We should look at the problem in a different way. The frame of mind in many organisations is how people ought to be shed but a fundamental change in that thinking is needed because I do not think it has been particularly effective. We can all talk about success stories but if they mean that we put 3,000 or 4,000 people on the dole we have to question how we measure success.

The Minister made some interesting comments in his speech on taxation. It must be acknowledged that in the past five years we have made the most significant and progressive reductions in taxation levels of the past 20 years. In 1987 the then Fianna Fáil Government initiated the process which has been carried on by the present Government. Prior to that we had a great deal of talk, many promises but very little action. At present the lower rate of income tax is 27 per cent and the higher rate is 48 per cent. Both figures represent significant reductions in the marginal rates of tax.

Some reliefs have been abolished causing considerable sectoral opposition right across the board. In many ways this brought the taxation debate into focus. Many people who called for reductions in taxation never looked at the other side of the coin — the abolition of reliefs and shelters. Various groups lobbied the Minister and Members of the Oireachtas to effect changes in the measures announced in the budget. The Minister made a fair point when he said taxation reform is not just a universal lowering of taxes, that it involves pain for certain sectors by way of the removal of reliefs. I believe, however, that we should proceed cautiously with the removal of certain reliefs and I am particularly anxious that mortgage interest and the VHI premium reliefs would be retained and not tinkered with in future Finance Bills. These reliefs and others are justified because of their social dimension. We must not forget that we can boast of having the highest rate of home ownership in the world. Mortgage interest relief has a bearing on that in that it acts as an incentive in assisting people to purchase their own homes. This reflects well on the State and on successive Governments. The level of home ownership is a socially progressive achievement.

This year we got a taste of the way various sections of the economy respond to erosion of reliefs. I am not saying they were wrong as people are entitled to make their case. However we need to have a more honest and up-front debate by the various sectors in society and the social partners who, on a global level argue for tax reform, but when it actually affects a specific sector mobilise behind the sector in opposing the reforms.

In that context I welcome the measures contained in the Finance Bill which deal with profit sharing. Deputy O'Brien was rather critical of the Minister in that regard as he has modified his original budget position on profit sharing and has reduced the limit from £5,000 to £2,000. In reducing the annual value per employee of profit sharing schemes from £5,000 to £2,000 rather than eliminating the relief entirely the Minister has responded well to the arguments put forward by the Irish Congress of Trade Unions, the Federation of Irish Employers and the Confederation of Irish Industry. I welcome the modification. There is still merit in the profit sharing schemes, they improve employment motivation and industrial relations within a given company and it is a concept that should not be eliminated. A considerable number of employees in my constituency share that view also.

In regard to company cars, the Minister responded fairly reasonably to the case put forward by company sales representatives on the question of benefit in kind. The fundamental point which sales representatives made to me, which I accept and support, is that the company car for all sales representatives is the tool of the trade — in other words, it is the modus operandi of their work and should not be taxed. The Minister has moved significantly to meet the request put to him by sales representatives and they are reasonably satisfied with the response in the Finance Bill.

The third area which received considerable attention was liquor licences and the renewal of publican licences. The Minister has responded reasonably to that lobby group. He did so in a way which maintained the overall framework of the budget and its objectives, but basically he devised an alternative scheme. The licence charge will obviously apply to the bar turnover. It will be set at £200 where the turnover is less than £150,000, a sliding scale of increased charges will apply subject to a maximum of £3,000 for any premises that has turnover of £1 million. The Minister estimates that over three quarters of all publicans will have a turnover of less than £150,000. That is a reasonable response to a very reasonable case put forward by the vintners and publicans. It is wrong to relate it to rateable valuation because that would act as a disincentive to publicans to improve their premises in future years. People would be slow to improve their premises — improvements which have been demanded by the tourist industry for some time — if they realised they were increasing their own tax liability by doing so. We have all witnessed significant improvements to public houses throughout the country which benefit the tourist industry and create employment in the construction industry. Anything that would act as a disincentive should be discouraged. That is one reason the rateable valuation was not the best means of doing things. Certainly, the whole question of the multiplier left an open door for future Ministers in so far as they could increase the multiplier from year to year. The present system, as announced in the Finance Bill, relating it to turnover is a reasonable one and will not adversely affect the objectives of the Bill.

I am concerned that urban designated areas have not taken off as quickly as they should have. In the city of Cork some significant areas were designated two years ago and so far we have witnessed very little growth. In one area the difficulty is that the State controls a number of the buildings, a former Garda station and a former school. There have been genuine difficulties involving title and so on in putting the buildings on sale to any prospective developers who may wish to develop the sites. I would urge the Minister to continue to monitor and review the deadlines under the designated areas scheme with a view to extending them further where there is a genuine reason for development not taking place and a strong potential for such development. Development should not be prevented because of a deadline at the end of 1994 and the Minister should be flexible in that regard. The designated areas scheme works tremendously well, particularly in the South Parish area of Cork city. There has been a dramatic improvement in urban renewal in the streetscapes, in business, housing and so on, all of which is directly attributable to the implementation of the designated areas scheme. Cork Corporation deserve to be complimented in that regard.

I welcome the jobs committee. Deputy O'Brien was over critical of the jobs committee. After all, it was Fine Gael who called for the jobs forum. They should participate actively on the employment committee and try to add some of the imagination and vision which Deputy O'Brien talked about to the deliberations of that committee. I thank the Chair for facilitating me. I congratulate the Minister in putting such substantive legislation before the House.

I intend to be mercifully brief because my colleague, Deputy Quinn, the Labour Party spokesman on Finance dealt with this Bill at some length earlier in the week. I do not intend to range far and wide over the Bill. I just want to express a view on a few areas about which I feel strongly. Obviously, our party will be opposing this Bill because we had looked forward to a Finance Bill which would have a major impact in attacking the great problem that besets this country, namely, unemployment and an escalating figure of 300,000. This is something which shocks all of us. Various initiatives are being suggested and are being considered, but surely the Finance Bill could have been used as a means of making work more attractive. Because of the tax and PAYE levels people have to consider whether their household budget would be improved by employment. They must consider whether they can afford to come off dole and travel to a job or move the family to a different area where opportunities may arise. When we see the PAYE figures, which have increased over the previous years we must accept that the concessions given in the budget under PAYE do not offer the incentive to workers who pay high rates of tax. Every year the figure goes up. Small increases are given but every Government know there is a buoyancy in that and they can look forward to between 25p and 45p of every pound given coming back into the taxation pool.

I do not intend to dwell long on this issue because my colleague has dealt very well with it. However, I want to give two examples which are close to my heart. Because of the postal strike, one of the little jobs we had to do is to take cheques that are issued here to our secretaries. I asked my secretary for permission to open her envelope and look at what tax she is paying. Out of her gross pay of £269.55 a week there are deductions of £80.55 and the biggest deduction is £65 tax leaving her with under £190. I know she has a mortgage, she tries to run a car and she has all the other usual expenses. That somebody in a fairly low paid job has to pay such an amount in tax shows there is something wrong with the taxation system.

The other example I would like to give is our pay in this House. Some of the public think we do not pay tax at all, that we are very well paid, get subsidised food, travel expenses, etc. However, we pay heavily in taxation. Out of a gross pay of £2,429.59 a month my total deductions are £935. It is right that the public should know that public representatives are not getting away with something. We have no advantage under the PAYE system. We have allowances for office expenses and various outgoings. When one sees what a relatively well paid person pays in taxation — in my case it is £650 per month — one realises that the tax burden on the employed is very severe.

This budget failed to appreciate the value of the PAYE payers to the community and to give them as good a break as possible; it sees them as the main prop in gathering money to carry out the various services the Government must provide under the Estimates for the various Departments. The levels of tax are crippling PAYE payers. There is a great disincentive for employers to create jobs and there is a disincentive to the unemployed to consider becoming employed and coming off the dole. Most people are on the unemployment register because there is no work for them. However, the level of take home pay compared with the amount of tax paid in even the most lowly paid jobs is a great disincentive for people to go into employment. Ministers for Finance have a duty to examine this to see if it is the main reason for the increase in the unemployment figures.

The other areas I want to deal with are pub and hotel licences. I had the honour to be the Minister for Tourism, Fisheries and Forestry for a short period in 1986. I know what efforts organisations like Bord Fáilte and Ministers for Tourism are making, and with some success, to expand our tourism industry at a time when this country is becoming far more attractive than some of the traditional Mediterranean resorts that held sway during the seventies and eighties. We have the potential to expand this industry, our second largest, but this Bill seems to attack the producers. On 29 January the Minister for Finance proposed that for public house licences the charge would be based on the rateable valuation of the premises. He said that the operation of the rating system had been improved in recent years and reflected turnover, thus providing a fair means of differentiating between pubs. He said that although the same general approach could be validly applied to liquor licences for hotels, he proposed, in designing the system, to take into account the fact that the valuation of such premises was based on much broader considerations than bar turnover alone.

There has been a howl of protest from the licensed trade and from hoteliers since then and certain modifications have been made. To say that the application of the rating system is fair is to forget what happened in the farming area when the farmers of Wexford took the licensing system to court and got it overthrown. The rating system is grossly unfair as a basis for reflecting the valuation and wealth creating potential of one premises as against another. It was a major fault to consider that as a fair basis for the application of licence fees on premises. The valuation of public houses and licensed premises anywhere is an area that requires root and branch change. It should be considered by the Minister and the Valuation Office with a view to introducing a fair system of rating. Rates have been removed from domestic dwellings and local authorities now depend to a very large extent on the income from commercial premises.

Local authorities, depending on their make-up and complexion, in examining the question of service charges and commercial rates at their estimates meetings to pay for services, which have been reduced since 1987, have leaned unfairly on commercial and industrial users. The Minister for Finance is now proposing to introduce a rating system to penalise them further. This reflects the disincentive effect this Bill will have in relation to the creation of employment. Indeed, it will place commercial premises with marginal profit levels in jeopardy. I hope therefore that this proposal that licences be based on the rateable valuation or turnover will be rejected by the House as it appears to be a cute little way, on the part of the Minister for Finance, of raising additional taxation.

I have never known the size of an operation to be reflected in the licence charge. When we take all licences into account I do not think turnover was ever considered. Indeed, the only area where the licence charge varies is the area of motor taxation if one wishes to use a larger or more powerful car. It is worth recalling that in 1977, in an effort to win an election, the then Fianna Fáil Government decided that there would be only one licence for all vehicles.

If one goes to buy a dog licence one does not say that it is for a bull mastiff or a pekinese as it is the one licence. The purpose of the licence should be to ensure that statistics are available on the number of premises or dogs as the case may be. I would have thought that the taxation system would garner tax from any viable business for the Exchequer without the need to see if a business is doing well or to determine its turnover. It should also ensure that tax is paid on behalf of employees. I think therefore that the Minister has been badly advised. As he did not increase the licence fee from £100 to £200, ignoring the question of turnover, the workload of the Department will be increased in checking out licenced premises, which run into thousands, to see if they are being honest and straight in making their returns on their turnover and are paying the correct charge. At the end of the day it might be useful to carry out a cost benefit analysis to discover the increase in revenue under this section.

I am concerned in relation to tourism that the basic producers of the product are being attacked despite the fact that we depend on them to provide a good welcome and proper facilities for tourists and to encourage them to return. Therefore this legislation has been badly thought out.

I am concerned in particular about the way in which this new charge will affect hotels. Indeed, one of the major hotel groups has written to me about the effect it will have on its business. I can show the Minister this letter, if he would like to see it, but I imagine he has a similar letter on his desk. The letter reads:

In the case of my company, I am already paying three hotel rates amounting to £250,000. We are now faced with this new additional charge from the Government of approximately £13,000 per annum. Briefly, my objections are based on the fact that the proposal represents a new tax on hotels, a dramatic increase in an operating cost which will adversely affect our competitiveness in the international marketplace. The comparable fees in Northern Ireland and the UK are £75 and £12.50 respectively.

The country with the biggest tourism industry in the world is Britain, in terms of its size and population, and they can accept a fee of £12.50 for a hotel licence. Given that this man will have to pay an extra £13,000 it seems that we are pushing ourselves to the limit. The increased duty payable in respect of public houses and hotels will be passed on to the person who spends his few pounds on a pint each week or to the visitor. Publicans and hoteliers will not absorb this cost out of their own profits, which may be marginal. I can assure the Minister that this will place us at a competitive disadvantage with other European countries which attract tourists.

He went on to say that the increased cost, in turn, will have to be passed on to the consumer, as I said, adding to inflation and that this is an inequitable charge which is based on an already inequitable rates system. I have dealt with that matter in some detail. He also said that it is a penalty on hotels which improve their facilities and are revalued upwards accordingly and that it is a disincentive to investment. It is worth listening to someone like him in the business world and taking his views into account.

If we are to make progress in the tourism industry we must look at any charges which make us less competitive and we must be very slow to apply increases. On the one hand, the Department of Tourism, Transport and Communications are spending taxpayer's money all over the world to attract tourists, but on the other the Department of Finance are imposing a penalty. Therefore we are back to the old problem of one Department spending taxpayer's money to advertise our wares and the boot being put into the same industry by another Department. Surely, the then Minister — there has been a change of Ministers since the budget was framed — should have voiced his annoyance and hostility to this change.

While I accept a concession has been made in this area, my party will be tabling amendments to sections 134 and 135 of the Bill as it is a mistake to make this change. I hope when the Ministers come to realise that they have made a mistake they will undo it because, as I said, this industry is now employing more people, is expanding and generating wealth.

People will also have to show that they have received a tax clearance certificate in seeking to renew their licence. This means that a publican or hotelier could find himself in difficulty if he is having problems in making his tax return. This amounts to a further penalty on the industry.

I said I would be brief and I do not intend to cover any other aspect of the Bill. I am concerned that our tourism industry could be affected by the changes in the Bill. I am disappointed that the Bill will not encourage job creation; indeed it will have the opposite effect. Our spokesperson, Deputy Quinn, voiced his criticisms of the Bill and, for many reasons, we will be opposing it.

I compliment the Minister on introducing this reforming Bill which provides an incentive to those at work while, at the same time, caring for the people who are forced to rely on social welfare benefits. More important, it creates a climate for investment and Members on all sides are anxious to ensure that the prevailing climate will encourage Irish and foreign investment to solve our very worrying unemployment problem.

The Minister for Finance, Deputy Ahern, introduced a reforming budget but two matters caused great concern to many Deputies. One was the proposal to set the liquor licence fee on the basis of rateable valuation and I compliment the Minister for reviewing this. If we had committed ourselves to this decision many publicans, particularly in rural areas, would have gone out of business. I should like to take up a point made by Deputy Kavanagh. The Government will have to look at rateable valuations as a basis for collecting commercial rates. It is inequitable and will not encourage the commercial sector to expand business. If we had insisted on granting liquor licences on the basis of rateable valuations there would have been little refurbishment or extensions to existing public houses. We are all very proud of the role publicans have played in ensuring that there are good facilities for tourists. Indeed, the Government have recognised that the tourism industry is very important in helping to solve our high unemployment problem.

I also compliment the Minister on reviewing the increases in regard to benefit-in-kind. The original proposal would have caused major problems for many companies, particularly for company representatives. As a businessman, I am aware of the contribution many company representatives make to the success of their companies and I welcome the decision of the Minister to review that proposal.

I agree with Deputy Martin that there is a need to extend the urban renewal programme. However, it must be on the basis of success which particular counties or boroughs have had; it would be foolish to extend urban renewal to counties where little or no commitment was given to that concept. I make this point in relation to my county where, in Wexford town, there was an outstandingly successful £10 million urban renewal programme which has changed the whole facade of the town. The Minister should extend this programme to counties and boroughs who have worked hard to ensure the success of the concept of urban renewal.

The day, Wednesday, 29 January 1992 was, without doubt, an important and historic one in the lifetime of this Government. It will go on record as the day the Minister for Finance, Deputy Bertie Ahern, introduced a reforming, socially caring and socially conscious budget. It was also a courageous budget, once again stressing the Government's intention of addressing many of the ills of our society and in seeking fair and equitable treatment for all. The budget — and the Finance Bill — when looked at objectively have a very positive and forward looking framework. Many will benefit from their measures. All income taxpayers will benefit because the standard rate tax band has been widened from £13,400 to £14,950 for a married couple and from £6,700 to £7,475 for a single person. The lowering of the income tax rates — from 29 per cent to 27 per cent standard rate and the top rate from 52 per cent to 48 per cent — will benefit taxpayers in a very significant way as it will give them an increased disposable income. Such measures will be a positive boost to employee and employer alike. They will act as a great motivating force among the employed and will give the jobless a greater incentive to work. Employers will find such tax reforming measures very supportive in encouraging and motivating the workforce. These measures, together with employment initiatives announced by the Minister, can only be seen as a worth-while boost to increasing employment and encouraging growth in the economy. The two-tiered tax rate structure also offers a much simpler and more efficient system.

Social Welfare recipients will also benefit with weekly welfare payments being increased by 4 per cent, short-term welfare benefits being increased by a further 2 per cent and other appropriate measures, which will more than adequately take account of the predicted inflation rate for 1992.

I do not have any hesistation in reiterating the Government's commitment and willingness to grapple with the current employment situation. The Minister spoke of his concern in relation to safeguarding existing jobs and encouraging the creation of new jobs. The Government know the road ahead, the creation of a single European Community market from January 1993 and the establishment of political, economic and monetary union. Ireland must be ready to grasp the opportunities such events will present and share in the economic prosperity that such ventures will undoubtedly bring. Given the world situation, Ireland has fared quite well.

There is no doubt that unemployment is the single greatest social problem with which this country must contend because our labour force is growing. I referred earlier to the stimulus that the tax reforming measures specified by the Minister will give to employment. I commend the Government for initiating two schemes, an employment subsidy scheme and an in-company training scheme. This marks a most important and significant new development with clear long-term viability. The employment subsidy scheme will cater for up to 15,000 additional employees and will be open to a wide range of employers. The in-company training scheme will provide training for up to 10,000 people and the Government's commitment to both schemes is further indication of the thrust of the budget to confront the problem of rising unemployment and to speed up new employment opportunities. There is evidence in my own constituency of many companies expressing an interest in availing of these schemes and I have no doubt they will create badly needed employment. These initiatives will give them all the encouragement they need to advance their positions and create further employment in a county which has the second highest unemployment rate in the country.

However, I also have to point out that significant improvement has been achieved in jobs in the manufacturing area under this Government. Jobs in manufacturing in the Wexford district increased in 1990 by 1.74 per cent to 5,140. That achievement was the third successive annual net increase and in 1991 jobs increased by 3.75 per cent, making a fourth yearly increase. The figure stood at 5,012 in 1983 and in 1987 it stood at 4,700, a decrease of 6.2 per cent at the hands of the Fine Gael/Labour Coalition Government. Between 1987 and 1991 manufacturing employment increased to 5,333, a remarkable increase of 13.4 per cent.

At this stage I wish to recognise and commend the work of the IDA and the positive role they are playing in enhancing the employment prospects in our country. I have no doubt that the 143 small business companies in County Wexford will find heartening and encouraging reading in this year's budget, as will other such firms throughout the country. I also commend the IDA for their commitment of £15,000 per annum for five years to Wexford Enterprise Centre resulting in the creation of 73 jobs in 23 projects. The IDA have also approved assistance for an enterprise centre in New Ross and are supporting a feasibility study into an enterprise centre for Enniscorthy. I welcome and appreciate the work and money committed to such projects but I feel that the time is now ripe for the IDA to locate an advance factory in Drinagh on the main Rosslare-Dublin road. That is an exceptionally good site. The IDA have committed more than £1 million on site development work. As I said at the commencement of my speech, Wexford town is facing dire problems because of unemployment. I ask the IDA to locate a significant factory on the Drinagh site on the Rosslare-Dublin road as a matter of urgency.

The general infrastructure of Wexford has much to offer. At Rosslare Harbour a major investment programme has been approved, including the provision of a new jetty, to enhance even further the modern facilities there. There is an ever-improving road infrastructure, IDA sites will be improved by ongoing drainage schemes at Enniscorthy and Wexford; and of course, we have an educated and available workforce.

While welcoming the initiatives introduced by the Minister, I suggest that the Government could and should complement those measures by seeking to implement such recommendations of the Task Force on Employment as increasing access to higher education, which would have many positive side effects; reviewing the imposition of stamp duty on new houses, allowing the exemption of new houses with a floor area of up to 140 metres square; and a greater emphasis on a higher proportion of residential development in further development under urban renewal schemes.

This budget, despite a difficult financial climate, has responded very positively to the demands of providing an efficient and improving health service in 1992, underlining this Government's responsibilities in this area. Expenditure in health services is being increased by 5.8 per cent, a significant increase in real terms and a further indication of the Government's response to the needs of the health services and a definite and major commitment in advancing the already high standards of our health services.

Of great interest to my constituents will be that the health estimates will make it possible to fund several hospital developments commissioned in 1991, particularly the new and eagerly awaited hospital at Wexford. That hospital has been a major bone of contention for several years. Various Ministers have promised to allocate funds for the building of the hospital. I am particularly pleased that it was under a Fianna Fáil Administration that the new hospital commenced and I hope that it will be opened in the coming months. The new facilities, which will include a new surgical department, new operating theatres and recovery area and new radiology, outpatients and casualty departments, will provide the people of Wexford and the south east in general with the top class facilities they deserve.

Of special significance will be the provision of a specialist paediatric service for Wexford. I pay a special word of thanks to Deputies Rory O'Hanlon and Chris Flood for the work they have done in this area. I know that there was a very strong view within the Department of Health opposing the allocation of a paediatric service in Wexford County Hospital. Because of the work of both men our appeals were very successful. I have no doubt that the people of Wexford are very grateful to both Deputies for their work and commitment and for the finances provided to ensure the provision of the new paediatric service.

I especially welcome in the budget the extra £10 million provided for services to the mentally handicapped. As the Minister for Health pointed out, this is the most significant annual increase ever for people who are handicapped. It is most important that we support such people, beautifully described in our native language as "daoine le Dia", the people of God.

Later today a meeting will be held with the Minister for Health, Deputy Dr. John O'Connell, to seek funding for Saint Clare's and Saint Michael's Centre in Wexford town. Those involved in this area of health care are doing an exceptionally good job but in deplorable conditions. Mentally handicapped and retarded people are lying on floors in Wexford town because of the failure to provide money for this service. Knowing the Minister for Health, I am sure that today's meeting will have a successful outcome.

I am particularly pleased that the Government have seen fit, despite the current financial restraints, to respond positively to the needs of people in receipt of social welfare. I have no doubt that these improvements, together with others announced by the Minister for Social Welfare, will lighten the burden of those who depend on social welfare.

Education and the provision of the best facilities possible in furthering what is widely regarded as one of the most highly educated cohorts of young people in Europe is of the utmost importance. The reduction of the pupil:teacher ratio at both primary and post primary levels to 25.2:1 and 19.25:1 and a commitment to improve further these ratios next year is indicative of the high priority standing of education and the young people of Ireland in this Government's programme. A very substantial number of schools will benefit from the decision to recognise a significant number of vice-principals and school guidance teachers on an ex-quota basis. Also welcomed is the introduction of a programme to expand the provision for caretaking and clerical services at primary and post primary schools. These measures mark a very important step in redressing the position that this Government inherited from the Coalition Government of 1983 to 1987.

I pay special thanks to both the former Minister for Education, Deputy Mary O'Rourke, and to the present Minister, Deputy Seamus Brennan, for the allocation of funds for the building of a new community school in Gorey at the cost of £5 million and also for a major extension to the Wexford Vocational School in Wexford town. Construction of the Gorey school commenced last month and I expect the extension to the vocational school to commence early this year. Those two problems have been with the Department for the past ten or 15 years and I am again particularly pleased that it was a Fianna Fáil Government which addressed the situation and solved the very serious problems.

This budget recognises the current problems of the motoring trade and goes some way in improving the situation. I particularly welcome the reduction in excise duty on cars and its removal from heavy commercial vehicles. Particularly welcome is the 2p per litre reduction in petrol duty. On balance, the changes are for the better and should help in creating additional sales and an increase in jobs in the long term.

Tourism should also benefit from measures introduced in relation to the motor industry, particularly the reduction in petrol duty. One must welcome the £1 million fund to assist the car hire sector and the retention of VAT at 12.5 per cent on accommodation and meals. This underpins the Government's drive in helping the further development of tourism here. Tourism is one of our major earners and is fast becoming one of the world's major industries. It is in our interests that these measures be taken and, if possible, improved on in later years to help our competitiveness in what will be a major income earner for the rest of the nineties and into the 21st century. We are competing in a very competitive market, but we must do all in our power to attract an increase in the number of tourists to our country, boosting earnings and enhancing job prospects.

This budget which the Minister has declared as being realistic and ambitious is that. The Bill shows social concern with the problems of the people. I commend the Bill to the House.

A number of speakers on the Government side, including the Minister, have repeatedly stated that the simple objective of the Finance Bill was to support the fight against unemployment. I fail to see how the provisions in this Bill will have any significant effect on our spiralling unemployment. We need a more radical approach than that in the Bill if we are to arrest the decline in jobs.

This Bill removes some of the incentives to employment creation. I am concerned about the imposition of VAT on commercial, sports and leisure facilities. At a time when we are trying to encourage people to take more exercise and live healthier lives, this is an unfortunate imposition. Health clubs, golf clubs and outdoor pursuit centres will have to increase their fees to stay in business. It will also mean further price increases for tourists who come here to play golf and so on. This is really a tax on health. The Minister should reconsider it on Committee Stage.

This Bill makes life assurance less attractive. The holder of a typical life assurance policy will lose about £250 on average in tax relief as a result of the Minister's action. What the Minister is giving to the wage earner through tax reduction and widening the standard tax band he is taking away through increases from 12½ per cent to 16 per cent in VAT on a wide range of goods and services and through the removal of tax relief on life assurance policies and the curtailment of other reliefs. The Bill could be said to rob Peter to pay Paul.

I welcome the Minister's decision in section 17 to reconsider his proposal to abolish the revenue approved share schemes which allowed employees to take shares to the value of £5,000 in their companies on a tax free basis. The scheme worked exceptionally well in companies like Kerry Group plc., and others. Over 200 companies, I understand, were involved in this innovative scheme which was introduced by Deputy John Bruton as Leader of Fine Gael. The scheme encourages workers to take a more active interest in the welfare of their companies and it gives them a greater incentive to work harder. That is in line with the policy purused in the USA, Japan and in most industrial countries. I am disappointed that the Minister reduced the ceiling to £2,000 and I appeal to him to restore it to £5,000 on Committee Stage, or to at least reconsider it when framing next year's budget.

I am glad, too, that the Minister had modified his original proposal on taxing co-operatives. The co-operatives are major contributors to rural Ireland and employ about 15,000 people. The Minister's original proposal would have put huge pressure on the small co-operatives. However, he should look at this section again as co-operatives will be taxed at the full 40 per cent corporation tax rate by 1994.

I am glad the Minister has modified his proposal to charge liquer licence fees on rateable valuation. No doubt the wave of opposition from publicans throughout the country influenced the Minister to change his mind. The proposal framed in the budget was unfair and inequitable and took no account of the varying conditions in the licensed trade. Many publicans are experiencing severe financial difficulties because of the fall off in their business over the last number of years. Publicans have hidden expenses — rates, water and refuse charges, heating, lighting, insurance, sponsorship, glass breakages and so on. When it comes to any charitable cause in any village or town, the publican has to give support, mostly in financial terms. Several small publicans are doing very little business and they are in danger of going out of business because of all the charges they have to pay, the doubling of the licence fee, etc. We talk about the threat to small farmers but I would remind the Minister of the threat to publicans and the small businessman.

The Minister's modified proposal will still mean that the minimum licence fee for publicans will be £200 compared with Northern Ireland where it is £75 and England where it is £12.50. Although the Minister has made a major concession, he should have another look at the licence fee and take into account the fact that a 100 per cent increase in the fee will impose a major burden on many small businesses throughout the country. At the moment a number of licence holders with a low turnover are contemplating closing down. Most of these people are living in small towns and villages in rural Ireland and are providing an important social service because the public have no other social centre to go to. People go to the pub to meet each other because there are no recreational centres in many towns and villages.

This proposal was an attack on the publican with a small income. It was an effort to put these people out of business. The Minister should review the increase again before he makes a final decision. This certainly should be discussed on Committee Stage.

I am disappointed the Minister did not include a provision in this Bill to allow tax relief for families who do not qualify for higher education grants. The rising costs of maintaining students at universities and other colleges cause many parents severe financial hardship; in particular, the burden on middle income families maintaining students away from home has become intolerable. Parents who are not entitled to fees subvention or maintenance grants are subject to great financial pressure, in many cases having to forego their life savings or they resort to second mortgages or loans to maintain their children at college. The financial burden is particularly difficult when students are required to live away from home in order to pursue their third level studies. The total cost to parents over the four years of a normal university course is in the region of £18,000, an alarming figure since these costs must be met from their income after payment of income tax, mortgage repayments, life assurance premia, VHI contributions, service charges and all the other costs involved in rearing and maintaining a family.

The increase in the rates of VAT on household goods and services from 12.5 per cent to 16 per cent will add further to overall housekeeping costs, subjecting parents to further financial pressure, particularly those who must pay for their children's higher education. The time has come to allow parents offset at least course fees against their tax liability at the standard rate.

The Minister has decided to effect certain changes which will reduce the impact of the benefit-in-kind reductions announced in his budget. This is a welcome change since they will reduce its impact on employees, such as company representatives and commercial travellers who incur very high mileage travelling throughout the country in pursuit of their businesses. However, the Minister should re-examine this section, otherwise, sales representatives will be forced to reconsider the value of a company car as opposed to receiving generous mileage allowances from their employers similar to the tax-free mileage allowances of public servants.

There is very little about which to enthuse in this Bill. There is no obvious incentive to investment or job creation. I am convinced that its provisions will do little to stem the spiralling growth in unemployment, the scourge of urban and rural areas. When contributing to the Finance Bill last year I predicted that our unemployment figure would exceed 250,000 by the end of 1991; it exceeded that figure. Unfortunately I predict today, with some degree of confidence, that we shall face an unemployment rate of 300,000 people by the end of 1992.

Despite the fact that our macro economy appears stable, something which is to be welcomed and in respect of which I must give the Government credit over the past five years, nonetheless their fiscal plicy is not creating the necessary climate for job creation for our large labour force which warrants greater, more radical changes than those proposed in this Bill.

I would appeal to the Minister, who has been involved in the Department of Labour, who has a great deal of insight into job creation, to examine more radical proposals to ensure greater incentives to both employers and employees. Because of the gap between social welfare payments and the standard income of low wage earners, it is no longer profitable to work in this State, particularly when one considers that low wage earners lose their medical cards when in receipt of earnings. It will readily be appreciated that these people are being victimised and discriminated against.

It would appear that budgets are being framed with an eye to larger economic forces rather than on what would really benefit the ordinary wage earner. It would also appear that focus is concentrated on the top level of our economy rather than on the medium or lower level. There should be scope within the overall financial regime to create the type of climate desired and about which we all speak. I heard a number of speakers from all sides of the House refer to the creation of the proper climate. If we continue these traditional approaches to budgets and Finance Bills, I cannot foresee the requisite radical proposals being introduced to impact on our major unemployment problem.

While I have acknowledged some provisions in this Bill as being welcome, they do not go far enough to effect the radical changes needed or the necessary climate within which to stem the growth of unemployment.

It is a pleasure to follow Deputy Deenihan on an occasion when he has not pilloried me as having overall responsibility for the national debt. I had been hoping he would have done so and then I would have set the record straight on one or two matters. However there will be another day for that.

As a number of Members have said, this is a singularly complex Finance Bill giving legislative effect to one of the most comprehensive Budget Statements ever made in this House. It illustrates a number of things. First, it illustrates that the Minister for Finance, while attempting to fulfil many frequently competing objectives in his budget and in this Finance Bill, has a quality not often attributed to Finance Ministers, that is, the ability to listen. A number of Members on all sides of the House have been generous in accepting that the Minister has listened to lobbying from all sides of the House, has listened to our representations and has, dare I say it, improved this Bill as a result. The Minister's openness and attentiveness to the advice of Members from all sides of the House is shown in the very welcome changes proposed, for example, in the deposit interest retention tax regime, in the amendments to the employee share ownership scheme — very important changes which Members from all sides sought and got; in the changes in the calculation of benefits-in-kind and in the method of calculating the renewal cost of licences for publichouses and hotels.

This Bill has rightly been described by at least one financial commentator as being the mother and father of all Finance Bills; weighing in as it does, at a hefty 246 pages, with 232 sections, not to mention its explanatory memorandum which weighs in at a further hefty 60 pages of, at times, less than sparkling prose. The sheer size of the Bill, the virtual impossibility of any one Member, or even tax specialist, being capable of grasping the full range of the impact of its provisions, leads me once again to question our overall approach to the manner in which this House exercises a very important constitutional role as guardian of the public purse.

I believe that the nation's tax affairs and the level of Government expenditure have reached a height and the point at which public administration is so complex that the traditional budgetary approach is no longer applicable or appropriate. I very much doubt if any Member, with the possible, even the evident exception, of the Minister, has absorbed the full impact of this Bill and all its provisions intend to achieve.

I listened very carefully to the contributions of Finance spokespersons from the main Opposition parties. It was evident, to put it at its most charitable, they were struggling to make comprehensive, valuable, if occasionally, politically critical contributions to this debate. Whatever about marks for method-acting, even the most loyal and myopic supporters of the leading spokespersons would find it difficult to persuade an impartial observer that their spokespersons had any real impact on this legislative behemoth. I say that not in a sense of criticism but rather in a sense of appreciating just how difficult a task the spokespersons of the two main Opposition parties faced endeavouring to address this extraordinary leviathan in the House.

As always the pirouetting of Deputy Michael Noonan of Fine Gael was enjoyable but, dare I say it, he is still a little heavy of foot to make it to the front benches of the Kirov. Deputy Quinn of the Labour Party was censorious with sufficient gravitas to be almost convincing. The simple truth is that they and all of the other contributors who spoke after the Minister are little more than bit players in an obscure drama which we all know will march on gobbling up Dáil time to the point where we can say that the Bill has been sufficiently chewed over to be passed into law. Of course, the reality is that the Bill which is ultimately passed into law after many worthy hours of effort will be overwhelmingly the same Bill introduced by the Minister. If we are honest with ourselves, we know that the vast majority of nuances, details and clauses in the Bill will not be touched on on the Second or subsequent Stages. The only comprehensive changes made will be introduced by the Minister, some of which, like the new car registration tax, he has already highlighted and others which he probably has in mind in any event.

The failure of the House to make any really serious or major impact on this Bill is not attributable to Members but rather to the system we operate here. I wonder whether the whole budget process makes sense any longer in a world where virtually all public expenditure programmes are multi-annual and the Estimates are now being cast on a multi-annual basis. Does it really make sense in this circumstance to continue to operate on the Victorian principle of the annual budget? I wish to briefly consider that principle and the related principles on taxation which effectively are the core of this Bill.

It is worth reminding ourselves that the budget format which we inherited from the British was created at a time when parliament was in its infancy; the constitutional democracy experiment was only a few years old when budgets in their modern format began to be formulated. The idea of contributing the supply of funds on an annual basis was derived from the Victorian notion that this would force the Government — the Cabinet, which was a new concept at that time — to come before the House at least once a year to give an account of their stewardship.

The motivation for re-enacting the tax provisions each year are even more obscure, lying in the myth that income tax was introduced as a once-off, short term measure to tide the State over financial problems when dealing with Mr. Bonaparte. Whatever validity those notions had when the Victorians put in place the type of regime we still dance around with, they have no validity today.

Clearly it is time to consider replacing the traditional budget with a statement covering the financial and economic state of the nation. Obviously we should be considering the formulation of what exists in reality, producing and enacting multi-annual programme budgets for individual areas of Government. The Estimates cycle which we go through here is high farce. Formally adopting the programmes in the Dáil when the costs and objectives can be established in public policy and then leaving the ongoing monitoring of programmes to Ministers and their Departments in the first instance while delegating parliamentary committees focused on specific areas of public administration to carry out day-to-day political supervision of how the policies are performing, is the only realistic way of achieving the constitutional responsibility of being the controller of the public purse. That would deal with one side of the financial cycle, the expenditure side.

I wish to refer to the "black arts" of the budget process, the taxation provisions — provisions which are only understood in the most hidden recesses of the Department of Finance. The taxation provision of the budget and the Finance Bill cannot be handled by a Parliament in plenary session in the way we are attempting to handle this Bill. It is not possible for a Parliament in plenary session to deal with a Bill of this magnitude, with all of its complexities — even if it were half the size I would make the same contention — in any comprehensive way. Clearly we need to establish a standing House committee on finance and taxation and to leave to that committee the responsibility for vetting the detail of taxation and reporting back to the Dáil in plenary session. Such a committee could clearly process the work of this House more expeditiously and efficiently than a House in plenary session can do. It would allow Members with the expertise and inclination to make a greater input into taxation policy.

By removing the political debate from the crucible of the Dáil Chamber where frequently contributions have more to do with political posturing than with policy compromises taxation changes could more easily be achieved. Ministers could listen in more detail to the statements which come from all sides of the House and Members of the Opposition could have a role to play in building a truly effective taxation system. Thus the impact of the democratically elected representatives of the people could be enhanced, re-establishing the democratic linkage between taxation and representation. Above all else, this is what the current system fails to achieve. The reality is that by going through this mythical process here year after year we have dis-established the link between taxation and representation which runs to the very core and essence of the democratic process. Clearly the time has long since come to effect root and branch reform of the budgetary process.

I wish to refer to specific areas of the Bill. I commend the Minister on the Bill and welcome a number of changes he has introduced. The change proposed by the Minister in regard to the DIRT is both welcome and sensible. It has been publicly recognised by financial commentators that this measure will have a major impact on the savings market and will attract back funds which are currently illegally held abroad. This carrot, applied in conjunction with the stick of better control and reporting, will mean more funds in savings in this country. This will inevitably mean more funds for investment, which, in turn, will mean more investment for jobs, and of course, that is the aspiration of Deputies on all sides of the House.

I compliment the Minister on his modification of the taxation of employees share ownership schemes. The Bill proposes to modify the stance taken in the budget by curtailing rather than abolishing the relief. This is very welcome. I lobbied the Minister in this regard and he has adopted a very sensible approach to the issue in the Bill. I recognise that the spokespersons from the other parties have accepted the legitimacy of the Minister's concern that this tax incentive should not become a loophole for tax abuse. I think we all recognise that the Minister has made an honest effort to square the circle, so to speak, and achieve what we all want to achieve, that is, the closing off of loopholes which are abused while at the same time holding in place valuable incentives. The employee share ownership scheme which, as Deputy Deenihan said, was introduced by Deputy Bruton when he was Minister for Finance, is a very good scheme as it gives workers a very real sense of ownership and involvement in the firms for which they work. However, this scheme is evidently being abused.

On the question of practical patriotism, I listened recently to extensive coverage on RTE by a leading member of the Irish business community who lectured the Government on how they might better improve their transportation networking and transportation hub out of Shannon. He made very sensible and worthwhile suggestions. However, I thought it was a pity that it was not accompanied by practical patriotism — a willingness to stay in this country and contribute to the economy through the taxation system. As I have said, the Minister's approach on the employee share ownership scheme is very sensible, logical and welcome.

Another issue on which I and many others, including my colleague from County Wicklow, Deputy Jacob, have lobbied the Minister is the question of duty on licensed premises. Apart from the detrimental impact which the dramatic increase in licence fee renewals was likely to have on the profitability of small family operators and therefore on employment, the move to a valuation base was a departure from the principle of taxation on income. Smith's tenets of what constitutes a just taxation scheme was that of tax on income because it was progressive and it recognised the ability to pay. Tax on a valuation is not related in any sense to ability to pay. By changing the basis of calculation to turnover the Minister has moved back closer to the principle of assessment of tax on income and therefore on ability to pay, an equitable and progressive principle on which I compliment him.

I know that the Minister said in his speech that if there is a disappointing yield under this heading he will further review the matter. However, I suggest that he should not move in the direction of a valuation. If there are problems with assessment of income in the licensed trade they are likely to be on the control side, the accounting side and the reporting side and they can be resolved by appropriate mechanisms at the revenue collection stage rather than by changes in the principle of taxation.

Having praised the Minister I want to prod him a little also. The Bill introduces additional powers for the Revenue Commissioners. I have no gripe with this element of the Bill. I wholeheartedly commend the Minister for further extensions of power in this regard. Tax avoidance, evasion and dodging are still endemic in society. We have to inculcate into all Irish people the view that taxes are the price we pay for living in a just and democratic society. There is too much of a nudge and a wink attitude towards taxation. We still have the attitude that we are willing to tolerate tax avoidance and evasion, which is little more than putting hands into each other's pockets and removing each other's funds.

Taxes are our individual and collective contribution to running a civilised society and supporting those less fortunate than ourselves. However, I am concerned — I hope that the Minister and his officials will note this concern — about the impact of some recent measures. I have already outlined my concern to the Minister about the impact of the requirement to produce RSI numbers on the home help service, particularly in north County Wicklow but also, I understand, throughout the Eastern Health Board area. I have urged the Minister to make some changes in this regard. The payment to home help workers is little more than pocket money. It barely covers the cost of travelling to the site of the person requiring help. The State derives a phenomenal benefit from the unselfish contribution made to society by home help workers.

I know that the Minister, Deputy Ahern, is a compassionate man and I know from my conversations with him that he recognises the contribution of these people. What I ask now is that the officials in his Department and in the Revenue Commissioners turn their collective minds to resolving the problem, which should not be difficult. By giving groups of home help workers an individual PRSI number to cover the entire group it would assuage the fears that have led home help workers to remove themselves from the service to the detriment of the service and of this caring community who in recent times have helped people who need assistance. I have urged these changes on the Minister for his consideration and I anticipate that he will respond positively.

I am also concerned about the impact of circular F49/13/87 on various activities within public administration. This Finance circular dealing with tax avoidance causes unnecessary red tape in a number of areas. I know of a case where its implementation is delaying Wicklow County Council from processing a disabled person's grant. I have a letter from Wicklow County Council referring to my personal representations in this regard. It states that in the case of two elderly people who have applied for disabled person's grant they must obtain tax reference numbers and due clearance from the Dublin Tax District No. 1 office, that this information is required under the aforementioned circular of the Department of Finance and should be forwarded before the application for grant assistance can be considered. I can understand and I approve the principle of what the Department of Finance are trying to achieve. They are trying to ensure that at least those who are paid from the public purse do not avoid their tax responsibilities. However, red tape can result from the application of a good principle and we should certainly ensure that that does not happen in this case.

Another serious concern which I have brought to the attention of the Minister for Finance and the Minister for the Environment is the negative impact of strict adherence to the Finance circular on self-building operations under the new shared ownership scheme. It is becoming impossible to exploit the creativity in the new social housing programme because of the level of bureaucracy which is in place. I have a case in mind where a young couple and their builder, who has a scrupulous tax record, cannot progress because the builder has been told at the 11th hour, just as he was about to put in the foundations, that he must produce a C2 certificate. Some application of common sense at a bureaucratic level is all that is required to resolve this case, which is now entering its twelfth month of delays.

The irony in this case is that the builder in question has an exemplary record of tax payment but because of the strict adherence to the circular within the context of the new shared ownership scheme it is impossible for the officials in the county council to tell him to go ahead with the building without deducting tax at the emergency rate. That is not what the Minister, the Government, the Department or the Revenue Commissioners sought to achieve when they put in place administrative controls. I urge that a degree of ingenuity be used to free these controls to ensure that they do not have an undesired impact on small people legitimately going about their business but that they are addressed more precisely to tax dodgers.

I would ask the Minister to consider section 24 of the Bill which deals with restrictions on capital allowances on holiday cottages. This will have the same impact this year, if it is implemented as it was introduced, as the change in the BES would have had last year had the Minister not adjusted arrangements to allow a degree of phasing in. A holiday cottage project in my constituency which is under way at present is endangered by this change. I will read into the record a couple of points relating to this project. It is being built in an extremely sensitive area and, therefore, the planning process took many months. The local council, Bord Fáilte and the community at large were involved in helping to establish parameters which would be acceptable for the project. Much consultation took place and in July of last year the application was given the go ahead. The project includes the building of 20 holiday cottages, with 50 rooms for holiday accommodation. The total cost of the project is £3.65 million, the holiday cottages costing over £2 million. Because of the complexities in planning it has taken a while before expenditure can be incurred, although some expenditure has been incurred.

Section 24 of the Bill as currently drafted provides that tax incentives for schemes such as the holiday cottage scheme are withdrawn with effect from 24 April. The consequences, unless the Bill is changed, are that this project will no longer be viable and cannot proceed. Construction will cease. Already 15 construction workers are on site and at the height of the construction phase there is potential for almost 100 workers. The long term job prospects on this site are 15 jobs. As my colleague, Deputy Jacob, will attest 15 jobs in any part of County Wicklow is something we will fight for. More than £1 million has been invested in the scheme and it is neither right, fair or proper that the scheme should be cut short in this manner.

The proposer of the scheme wrote to me yesterday and said:

It seems to me to be grossly unfair and contrary to natural justice that a scheme which is promoted in response to the tax incentive proposed by our Government should be forced to be terminated mid-way through its construction phase by the withdrawal of those very same tax incentives without any previous notice. No intimation was given by the Minister for Finance in the budget and no intimation was given in any official communication about this change.

I ask the Minister to review section 24 and do as was done last year when we encountered similar difficulties with the BES. I remember my colleagues and I in County Wicklow were particularly upset about this and we asked the then Minister for a phased element in the BES and the Minister responded to our request. I am confident the Minister for Finance, Deputy Ahern, will return to this and help.

I ask the Minister to look again at section 28 and, more precisely, at the final extension of the tax advantages of the urban renewal scheme until 31 May 1994. Through no fault of either local authorities or site owners progress on some schemes has been delayed inordinately by the application of the planning process. In one project in Bray, which is just behind my house the enthusiasm of a site owner for development of a scheme covered by urban renewal, a marginal scheme but on a highly important site, has been blunted by the lengthy planning process and by the downturn in the market during that process. If this site continues to lie in its present state of semi-dereliction, nobody will gain. Moreover, jobs which could come with the development, will be lost forever. Let me suggest to the Minister that the Minister for the Environment and he should give this matter some further consideration. Where the planning process has clearly delayed a project or prevented its implementation, either an extension should be negotiated at local level which will take into account local considerations or else, where the project is permanently stymied, the local authority and the Department of the Environment should be permitted to identify any alternative site in the locality on which urban renewal status could be bestowed for a specific and finite period. When the Government designated individual sites for urban renewal, they did so because (a) the sites in question clearly fulfilled specific criteria; (b) they wished to create jobs, particularly in the construction industry and (c) they wanted to get economic activity going again in areas of blight hoping at the same time to enhance the environment.

In towns such as Bray, relatively small areas were designated for urban renewal. The urban renewal status was welcomed and good work has been done under the urban renewal scheme. For example, the town hall scheme in Bray is a model. This remarkable building which had fallen into disrepair has, effectively, been rebuilt in an arrangement with private interests for the joint development of the site. That is very positive. It has created jobs and at the same time enhanced the local environment. It has produced a civic focal point in the town. There have been other developments under the urban renewal scheme in the town but the major site earmarked for development by the Government was stymied by the planning process. Given the current state of the market, even with the extension of the scheme to May 1994, it will be very difficult to put an economically viable package together to produce worthwhile high quality development on the most sensitive of the urban renewal sites. I suggest renegotiation to extend the period after getting specific commitments from the builders and developers. I do not accept that site owners should be given an open-ended right to an extended scheme, but it should be put to them that if the site is developed by a certain date the tax breaks will apply in full. If this cannot be done areas which were unsuccessful when they applied for urban renewal status should be re-examined and the benefits of the scheme should apply to an equal acreage for a finite period.

I welcome the changes the Minister has made and I am confident that the Minister — who has shown enormous ability to grasp the detail of this Bill — will listen to the suggestions I made. Perhaps it would be too much to hope that he would respond to everything I said. However, a number of speakers and I have made the same point on areas designated for urban renewal and the difficulties that affect small businesses on the tax side, for example section 24. I am confident the Minister will attend to those issues when he replies to Second Stage debate and deal with them in detail on Committee Stage.

This is a fine Bill. It is extraordinarily difficult for an individual to come to grips with its intricacies but it goes a long way to achieving what the Government set out to do in 1987, to reform the tax system. Members were critical about the removal of certain tax concessions but the only way to produce tax equity and a bearable rate of tax, particularly on the PAYE sector, is to remove some of the more exotic schemes which give tax concessions to minorities. Any scheme which gives a tax concession on analysis should be capable of showing that the benefits to society are greater than the cost to the tax system. Ultimately, the only way to have a just system of tax is to return to the old principles of tax on income, related to the ability to pay and with very few special arrangements.

I have pleasure in commending this Bill to the House.

I welcome the opportunity to speak on the Finance Bill but, like other Members, I consider it outrageous that so little time is available to Members to discuss it. The Finance Bill runs to 246 pages and consists of 232 sections. One must ask what is happening when it takes so much legislation to run a small country with a population of about three million and decreasing. In 1926 we had more than five million people but in my constituency people are leaving in their hundreds. Why? There is so much red tape and bureaucracy that people will not take it anymore. Everybody is under suspicion. Every corner of the country is being raked for tax and initiative is being stymied.

Deputy Roche — I welcome his contribution — spoke about the carer's allowance for people who are anxious to look after the elderly but now they are being asked to fill in PRSI forms. This is charitable work. The PRSI scheme for part-time employees was designed to attack large multiples that were exploiting young people but we did not help small business that take on people legitimately to work for an hour or two a day for a small amount of money to help with household expenses. They must fill up a form for everything now. Many young couples refuse to apply for the £2,000 new house grant as they feel it is not worth the effort.

No initiative is given to people to come together to help themselves. Time and again I come across a young couple who are building a bungalow and hope to get a grant, yet their friends who can do brick work and carpentry work cannot come together and help them because they must fill out a form which must comply with various regulations. For heaven's sake give a little backbone to those who administer the schemes and allow them to use their common sense. The lowest ranking official is afraid of the highest ranking official who in turn is afraid he will lose his job. He turns his back on common sense and says: "No, that `i' is not dotted, that `t' is not crossed" and it must go back down the line again. That is why, as a nation, we are coming to a standstill.

I welcome parts of this Bill. I have not come in here to say there are not some good sections in the Bill. I welcome sections 128 to 130 which deal with the reduction of excise duty on televisions, videos and petrol. As long as I am in this House I will fight the issue of the Border region and the north west, the disadvantaged area, because we have a particular problem. Since I came into this House in 1987 I have highlighted the one way traffic system to Northern Ireland because of the serious disadvantage in relation to petrol prices. Because of people travelling north of the Border to buy their petrol with household shopping there was a major loss of income to local traders and revenue to the State. I am not against people travelling north or south. Nobody wants to promote it more than I, but I would like to see that it is not all one way traffic. We welcome people to our county from Northern Ireland and further afield and from the fair city on shopping sprees or whatever. Likewise I have no objection to people who do it occasionally but when there is a constant flow of people north of the Border then somebody must suffer and we suffered drastically.

The Finance Bill and the budget were introduced by our new Minister for Finance, Deputy B. Ahern, who was heralded as the bright boy in the Fianna Fáil Party and the Coalition Government and the great Minister for Labour who could resolve any dispute in our semi-State bodies and restore peace. When he moved into the Finance portfolio we thought he would sort out all the unholy mess in the Department of Finance. Officials in the Department of Finance who got tangled up in their red tape cried blue murder when they were called to task. I am not blaming them; I am sure they are doing their best. I suppose the Minister has to take the blame at the end of the day because it is he who comes before the people. One wonders how much thought was put into the budget in the first place in view of the fact that so many U-turns had to be taken before the Finance Bill was produced.

I would remind Deputy Daly, who is in the House at present — and I do not wish to revert to sad memories — that the pub licence is not unlike the rod licence. We will not open that chapter again. The pub licence was as ill thought out as the rod licence at that time.

They supported the rod licence fully in Cavan.

Not exactly. This Finance Bill is anti-rural Ireland and anti-initiative. I have spelt out how I see it as being anti-initiative so far as young people coming together to help each other are concerned. A new section in the Bill deals with the royalties from patents, which will now be taxed. That section should be spelt out clearly to ordinary people. When a person works on an idea, develops it and patents it, he is entitled to royalties. He has spent many hours, days and weeks developing the idea; but now, lo and behold, the Government have said they will tax that initiative.

This morning I noticed a machine on the Dublin road putting in cats' eyes in the centre of the road. That was a marvellous idea developed by a Swede 50 or 60 years ago. I read recently that he died a millionaire. How many lives did that man save by that simple idea — simple when we see it in operation, but which took so much thought. He was entitled to every penny of royalty he received. I understand an old penny was one item plunged into the centre of the road. Initiatives must be encouraged if we are to develop new ideas, patent them and manufacture them in this country. Instead the Government have decided to stem that initiative and will not allow it, just as people will not be allowed to come together to help themselves.

The Finance Bill is anti-rural on three points: the new licensing arrangements for pubs, the co-op tax and the car tax. I should like to deal first with the tax on co-operatives. Originally the idea was that there would be a 40 per cent tax on non-manufacturing co-operatives. We have a system in my county of Cavan of small co-operatives who collect milk and deliver it in bulk to a processor. Because of the geographical position of the county it is difficult for farmers to travel to a central unit where processing takes place. This is an excellent system using small lorries to save our roads — small tractors had been used in earlier days. Those co-operatives have now been hit by the Minister for Finance with a tax of 40 per cent. There was consternation in my county and in rural Ireland at this move. This is a tax on the co-operative movement set up by people who have come together to protect their livelihoods. It is outrageous.

I congratulate the co-operative movement on their well thought out campaign which they brought to the Chamber of this Dáil and the Minister backed off. What has he done instead? Instead of a sudden death of the 40 per cent in 1992 he has decided on a slow death, one-third this year, two-thirds next year and the full tax in 1994. I am asking the Minister to back off before he does untold harm. These co-operatives are a necessary part of the farming structure in counties Cavan and Monaghan and in rural Ireland generally. Farmers are experiencing sufficient difficulty at present because of falling milk prices. Milk quotas are leaving my county as a result of the buy up scheme introduced by the Minister for Agriculture and Food, in whom I had faith while he was a Minister of State. I am beginning to think differently about him now that he has become a Minister and I wonder whether he will be as good a Minister as I had expected and a good bargainer for farmers.

We have no apology to make to anybody in Europe or elsewhere for producing quality food. We can produce the best quality food in Europe. There is a market for quality food and I have said that continuously both before and since I came into this House. The system of producing quality food is the system we have in Ireland. The tax which the Minister intends to introduce gradually will strangle the agricultural community and I would ask him to back off. On top of the 40 per cent tax we have a 10 per cent tax on the manufacturing companies who are buying up the small co-operatives, thus resulting in a 50 per cent tax rate. If they sell into Bord Bainne there will be a further 10 per cent tax, amounting to a 60 per cent tax on the gallon of milk collected at the farmer's door. That is outrageous. It is not applicable to any other section of the community and it is not on. I am asking the people and the farmers of rural Ireland to continue the campaign they started until the Minister opens his eyes and sees the folly of what he is doing.

I am delighted that the Cavan-Monaghan committee is one of the groups approved under the Leader Programme this year. This programme is designed to encourage groups to come together to provide alternative enterprises in rural Ireland. It is not based only on farming enterprises. People in villages and towns can also get involved. However, the Minister for Agriculture and Food and the Minister for Finance are taking away the very business we know so much about, the production of milk and quality food products. It does not make sense. One wonders how, when these people become Ministers, they become so far removed from reality. Milk production is vitally important in my region. It is the only activity from which the hilly drumlin soil will give a reasonable income. Sometimes our people are involved in beef production and store cattle but milk production is the main occupation.

Under the buy-up scheme announced by the Minister, the milk is moving to the south of Ireland. I defy anybody in this House to say that is not true. A large volume of milk was offered; why was it offered in my region if there is such a clamour? Farmers who have reached a certain age or who have decided to get out of milk production have quotas of 5,000 gallons and 10,000. However, there are young men anxious to take up those quotas. The co-operatives will help to get those young farmers operating a reasonable sized quota of 30,000 to 40,000 gallons, the type of quota needed to derive a livelihood. It is those small co-operatives that the Minister is slowly strangling. I am asking him to back off.

Lest anybody in the urban and greater city areas might think that the people in the country do not want to pay tax, the trading elements of those co-operatives pay 10 per cent tax, as does every other trading store in this country. They supply fertilisers, feedstuffs, hardware, etc. They also give credit facilities to farmers to take them over the lean periods. People think that because of our entry into Europe milk can be produced 12 months of the year. That may be possible in the south and south-east but where I come from, it is a seasonal business — generally from March to November. The winter period is difficult but some farms are producing winter milk. However, they can make a living from small quotas combined with other enterprises which the Leader Programme is bringing in I welcome that. However, there is no point in introducing initiatives on one side and taking away a farmer's livelihood on the other. I have stressed that point because it is important.

In regard to the licensing of pubs, are the people of rural Ireland not as entitled to enjoy themselves as the people in the towns and cities? Small rural pubs are family run businesses where a husband and wife can go to enjoy a drink after a hard week's work. These pubs will be closed down because a pub with a turnover below £150,000 will have to pay £2,000 under the present licensing system. When would a small rural pub have a turnover of £150,000? Many of those pubs have a turnover of only £5,000 a year. Coupled with that there might be a grocery business or a small hardware, one complementing the other, and providing a service for local people.

Tourists enjoy the peace and tranquility of these pubs and provide a little extra business. I believe the threshold should be £100,000, or maybe £50,000 and if it is below that, the licence should be a nominal fee of £10. There is a huge difference between a turnover of £10,000 and £150,000. I have no figures but everybody is aware that the turnover of these small pubs is minimal. However, it is sufficient and the pub is a place for people to meet and have a little refreshment.

I want to make a point about the present blitz against drink driving. I am totally opposed to drink driving but, like everything else in this State, when we get an idea, we hammer it until we take the good out of it. I have no objection — and I do not see how anybody could — to a husband and wife, a bachelor, spinster, young fellow and his girlfriend, going into their local pub to have one or two drinks. However, they cannot get to that pub without a car. Again we are becoming urban orientated. It is easy in large towns and cities to get a taxi or, if the pub is only up the road you can walk, but in rural Ireland you must drive. Because of the present campaign on drink driving many honest, decent people who would not break the law are afraid to travel to their local pub for the little enjoyment they have had over the years; and that is wrong. Again it comes back to the application of commonsense.

An important factor in the loss of life through road traffic accidents is speed. It is not all young people who are driving fast. I come to Dublin three mornings a week, travelling at 60 or 65 miles an hour, and people are passing me at 70 and 80 miles per hour, and they are not all young people. It is speed that the Garda should be watching out for, along with the erratic drunk driver. The person driving carefully to his country pub and minding his own business should be left alone. Unfortunately that is not happening, and again this shows the lack of discretion and application of common sense. This has affected life in rural Ireland and it has affected the pub scene. I am asking the Minister to leave people who are going about their business alone and not to turn the country into a police state. It is wrong and will have an adverse effect.

The same can be said of the Maastricht Treaty and the Taoiseach's outrageous outburst threatening people if they did not vote in a certain way. That attitude is wrong. The same can be said about the application of law in relation to people having a social drink. The position should be clarified. There is talk about lowering limits. I think they are satisfactory. I have the highest regard for the Garda who are doing an excellent job. However, we have to acknowledge there are many road traffic deaths and all are not attributable to drink, but to other factors that should also be looked at.

Car tax has been increased by 20 per cent. Have we a 20 per cent increase in the road fund? Has there been a 20 per cent increase in the quality of our roads? We have not. A car is a necessity in rural Ireland; young people cannot get to their jobs without a car, elderly people cannot get to towns and villages to do their shopping. A car is a must. In the larger cities and towns there is a bus service but there is practically no public service in rural Ireland, and yet there is an increase of 20 per cent on car tax without a corresponding increase in the road fund to provide proper roads for people who are paying an exhorbitant tax on cars, commercial vehicles and tractors. We have gone over the top without making the necessary improvements in our road structure to ensure that people can travel safely and get some enjoyment when they take their cars on the road. Under the present system the grants from the European Community — the Structural Funds — the IFI and the national Exchequer are combined and then redistributed. I would prefer to see the funding from the Exchequer and the European Community allocated under separate headings to the local authorities so that they could see exactly where the money is coming from.

Debate adjourned.
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