This budget fails to address Ireland's long term social and economic failure. A country that disposes as much resources as we do, and which yet has no work for 300,000 people, is a social and economic failure.
It is obvious that neither of the Government parties recognises this national failure. To introduce a tinkering budget when it has so much leeway for radical reforms shows how mediocre the thinking of this Government really is. There is no sense of impatience or urgency, just a complacement feeling that it is sitting on a huge Dáil majority in good economic circumstances and it can coast along.
The Minister has £200 million to spend yesterday, for one reason and one reason only — the dramatic fall in interest rates that flowed from the devaluation of the pound, a devaluation which he opposed. The Tánaiste even inferred, when I called for the devaluation last year, that I was treasonable. Yet if the Government had not eventually followed Fine Gael's advice on devaluation last years, there would not have been £200 million to spend yesterday.
I strongly disagree with the political priorities of this budget. It will slash mortgage interest relief for all those who pay the top rate of tax, which is most full-time workers. In that way, it will discourage people from being self-reliant and from borrowing to provide their own homes. Instead, the Minister offers more money to build local authority houses.
The budget cut health insurance relief. In that way, it will discourage people from being self-reliant and taking out insurance to provide for their own health costs. Instead, they will be encouraged to rely on public waiting lists. In doing so, it runs directly counter to an all-party Dáil committee report produced by Deputy Liam Kavanagh of the Labour Party only last week.
The Minister failed to take Fine Gael's advice and reintroduce the tax allowance for children and introduce a tax allowance for spouses who look after children. This shows that the Government has no respect for the International Year of the Family. It also shows that the Government does not understand the huge disincentive to work caused for parents of large families by the current tax and welfare codes. While the social welfare code give an allowance for children, the tax code for workers does not.
The budget is, quite rightly, providing financial support for marriage counselling, but it fails to recognise that the disincentives to work affecting large families, and the lack of any recognition in the tax code of the costs of rearing children are among the chief causes of the financial pressures that drive so many families apart. Many widows too who have a job will find, as a result of this budget, that they will have to give up their job if they are to keep up their pension. This is another curious way of marking the Interntional Year of the Family.
We are told that this budget is helpful to employment because it broadens the standard rate band for a married couple from £15,350 to £16,400. I would remind the Minister that the Fine Gael tax proposals for the 1994 budget, which were costed down to the last penny, provided for an increase in that band from £15,350 to £20,000. Fine Gael provided for a £5,000 widening of the standard rate band, the Government could only manage a £1,000 widening. That is the difference between serious tax reform and tinkering. Against a background in which, in 1993, tax receipts and spending increased at six times the rate of inflation, this Government could only manage an average income tax reduction of £3.41 per week for the PAYE worker.
The really dispiriting thing about this budget, about the National Development Plan and all the economic proposals of this Government is that there is no development philosophy. There is no coherent statement on the threats to, or the opportunities for, Ireland in the next ten years.
Many Members of this House have children between the ages of ten and 16, but very few of them will be able to say with honesty that this budget, in which the Minister had more leeway than any Minister for almost 20 years, will improve the chances of those young people finding a job in Dublin or Cork rather than Los Angeles or Adelaide.
If they do get a job in the Civil Service after April 1995, they will be the subject of blatant age discrimination. After April 1995, young newly recruited civil servants will have to pay three times as much PRSI each week as older civil servants, even though they may be in the same grade and doing the same job in the same office. I have serious doubts about the constitutionality or the compliance with European Union Treaties of such age discrimination proposals in regard to PRSI for public servants. It is not equal pay for equal work.
Let me now outline what I believe should have been the developmental philosophy of this budget. The underlying premise of our developmental philosophy should be to keep the jobs we already have as well as creating new ones. Existing Irish jobs are in danger because of the increased skill and competitiveness of work forces elsewhere. Improving the knowledge and skills base of the Irish work force should therefore be the overriding economic and social priority of any Irish Government. That should be explicit. It should be more important than any other economic or social objective. The priority of saving jobs by increasing the training and educational capacity of one entire work force is not reflected anywhere in this budget.
In the past we could have ignored competition from places like Korea, Hungary and India, yet, today, American companies are moving highly sophisticated operations to those countries, operations that might previously have come to Ireland. For example, J.C. Penney's is now having its microwave cookers designed in Korea, General Electric is having its lighting fixtures designed in Hungary and Motorola is having its software programmes written in Madras in India. This is because the Korean, Hungarian and Indian work forces are rapidly catching up with Ireland's educational and skill levels. With a little investment in education it is possible for many countries which were far behind us five years ago to catch up with us.
The priority should therefore be to upgrade continually the competitiveness, skill and flexibility of Ireland's work force in order to keep ahead of this rapidly growing competition.
The clear focus of all governmental activity should be to preserve jobs by preserving our competitive edge in terms of skill and education. We now live in a world where we can no longer take for granted the advantage that OECD countries enjoyed over others for some time. Five or ten years ago there was no GATT deal and we were able to keep those countries out. They were way behind us in terms of access to technology. Now eastern European countries, India and other countries are rapidly catching up with our skill levels. Of course their wage costs are substantially lower. I do not argue for a reduction in wage costs here, but if we are to earn higher wage levels than those countries, we must have commensurately higher skill levels than those countries. If we are to maintain our income advantage we must constantly maintain a commensurate skill advantage over other countries with whom we compete for work because there is now an international market for work. Under the new GATT deal work that needs to be done can now be done anywhere in the world. There is relative freedom of investment worldwide. We are in an open competitive market for work. Therefore, the focus should be on making our work capacity competitive with other countries. I would regard that as the central developmental philosophy that should have been, but is not, contained in this budget.
I would like to make the following proposals which are consistent with that central developmental philosophy. Firms which invest in agreed programmes to upgrade the training of their work forces should qualify for a 50 per cent cut in their employer's PRSI. Why should a firm that conscientiously gives its employees time off for training every year, and spends the firm's money on training, pay the same PRSI rate as a firm which does not bother to update its employees' skills and allows their skills to become, literally, redundant over time?
Firms which employ research staff in Ireland — and they are few in number — should have their employer's PRSI on those staff written off entirely. We need research to take place here if we are to generate extra jobs. Our current 10 per cent corporation profits tax actively discourages firms from conducting research here because the tax allowance they receive is lower than that which they can obtain in other countries worldwide. If we are not to have less research conducted in firms here than in firms elsewhere in the world we must take other action to encourage the carrying out of research here. I suggest employer's PRSI in respect of research employees should be written off. Lack of spending on research is the reason we have to rely on foreign, not home-grown investment for new jobs at present.
Firms in difficulty should be given a direct financial incentive to retain and retrain staff rather than make them redundant. It is ironic that we give an income tax relief on a redundancy lump sum but give no tax reliefs or incentives to firms or employees who agree to reduced working hours as the preferred means of cutting the wage bill to save jobs. In other words, we give no tax relief to a firm which decides to spread the pain among all its workforce and keep the jobs while we give tax relief to a firm which gets rid of a specific number of employees. That is wrong, it is something that can easily be changed and it is something this Government promised to change. On page 13 of the joint programme the Government parties committed themselves to devise a scheme "aimed at providing employers and employees with alternatives to redundancy where labour cost reduction programmes are sought". Nothing has been done about this promise despite the redundancies in Digital, A. T. Cross and many smaller firms during the past 12 months.
We must also remove the bureaucratic obstacles to the creation and the taking of part-time jobs. PRSI and income tax administration costs deter small businesses and homes from offering their first part-time job to a person outside the firm or the home. We should revert to the old idea of a daily stamp on the employee's card, which would be an easy and non-bureaucratic way for very small employers to cover income tax and PRSI obligations. The old system where an unemployed person could sign off for a day and only lose that day's benefit, no matter how much he earned on that day, should be restored also.
Individuals as well as firms should be given a direct cash incentive to invest throughout their lifetime in their own retraining and education. For instance, an early school leaver should be entitled to a pro-rata education voucher, calculated in proportion to the schooling he has missed by leaving school early. This voucher could be cashed in to cover the fees and maintenance for an improved training course at any stage later in life. This would encourage people to take courses as and when needed rather than artificially cram all education into the first 21 years of life.
This proposal, which I have made on many occasions, has been recommended by the European Commission in its White Paper on Growth, Competitiveness and Employment. It is worth nothing that a person who leaves school with only the junior certificate forgoes £15,000 of State spending on education which they would have received had they continued in the education system up to third level. It is only a matter of social justice to find a way to give them back that money in the form of a voucher they can cash for training and education at an appropriate time later in their lives. I was interested to note that that proposal has been taken up by the European Commission and recommended to governments in the White Paper.
We must maintain educational standards here as the best in the world. We must not slip into second place; we must not slip behind in the competitive educational race, and there is a competitive educational race in the world at present, a race, through education, to preserve jobs. Irish 13 year olds have come out badly in recent international tests in science. Of 14 countries surveyed Irish 13 year olds were rated the lowest in terms of their knowledge of science. Their rating in mathematics has also been undistinguished. It is well known that our competence in foreign languages falls far behind that of our continental European competitors. Yet, there is no informed debate about this matter.
I skimmed through the recently published Report of the Convention on Education and I saw no reference to the issue of comparative standards of our education system at different stages with other countries. That issue does not exist for those debating education here at present. Yet if we accept the thesis that education is one of the ways in which we compete on the world stage to preserve jobs here — it is one of the most important educational issues we face — all the debate about education is concerned with is how much resources should be provided for education, who should control it, but none of it is about the choices we make about how to use the money we spend on education or about the results, compared internationally, we achieved for all we have spent.
For instance, the choice we have made to devote so much time — in the region of six hours out of a 24 teaching hour per week — to teaching Irish at primary schools has meant that less time is spent on other subjects. This makes no difference to more talented pupils, those who go on to third level, who can easily catch up on other subjects later which they may have missed out on at primary level, but I believe this priority has a significant adverse effect on pupils in the medium and lower ability ranges who leave school early. They are the students about whom I am concerned.
I would like to see an objective study on the impact of the distribution of time in regard to subjects at primary level on early school leavers. I agree Irish should remain a compulsory subject for all students for at least the first nine years of schooling because it is the basic part of our culture. However, we need to ask whether primary school children must spend more time each week on Irish than they do on mathematics. We must also ask whether, as a result of this time distribution, it is right that there is no space at all in the primary school week for science or a continental language. We must ask whether the time spent on Irish is spent as well as it ought to be. If more time was spent on oral Irish, a higher level of competence could be achieved in a shorter time. It is my experience that the competence in oral Irish of six year olds in primary schools is as good as that of ten year olds. Competence does not improve and enthusiasm diminishes. One must therefore ask whether the methods of teaching Irish and the time devoted to it are appropriate.
Irish should be compulsory and everybody should be competent in the Irish language, but current policies are not working. They are shaped in such a way that primary school children are denied teaching in continental languages and science. That does not matter for the people who go on to third level, the elite in our society, because they can catch up. When we congratulate ourselves on our educational system we are thinking our PhDs, MScs and MAs; we are not thinking about junior certificate school leavers, the people who will become redundant and who will have to find jobs elsewhere. If their basic competence is not good enough. We have failed these people.
I want an objective international study of the comparative competence of Irish ten year olds, 13 year olds and 16 year olds, right across the ability range, to satisfy ourselves that our competence in mathematics, in science and in foreign languages is not falling behind the best in the world. We should also bring in external examiners each year to tell us how Irish standards in each subject in the leaving and junior certificate compare with those countries with whom we compete for jobs and investment. I want to repeat that unless our education is the best in the world, there is a danger that a peripheral island like Ireland will continue to lose employment. Our overall aim must be to ensure that our education and facilities for retraining will be so good that firms will go out of their way to locate businesses here, in spite of the disadvantages of Ireland's peripheral location.
