Programme for Competitiveness and Work: Statements.

The Taoiseach

The Government's overriding priority for economic and social policy is the creation of more jobs. We have expressed this clearly in the Programme for a Partnership Government, and we have developed it in the approach to the preparation of the National Development Plan, in the recent budget and in the negotiation of the Programme for Competitiveness and Work. It is a simple strategy — it means ensuring that all aspects of policy are examined and refocused to make a positive contribution to employment growth.

Our underlying strategy is based on a realistic assessment of the needs of a small, open economy. Jobs can only be created and sustained if we are competitive. Competition has never been more acute, either on the domestic market or globally. To be successful, we must be competitive across all the relevant headings. This includes cost competitiveness, of course, including both pay and other costs for firms located here. However, it extends beyond cost, into other dimensions of competitiveness, including our capacity to innovate new products and service, to meet standards of quality and reliability, and to provide a trained workforce, whose skills are equal to the best anywhere. That is the secret of competitive success.

A simple truth is that, unless all these factors are right, we lose competitiveness and jobs. To get them right and keep them right requires sound public policy and leadership; however, it also requires consistent action and a clear sense of purpose across all sectors of the community. That is the reason the Government remains committed to a partnership approach expressed in programmes, such as the one we are discussing today. A programme framework enables us to look at all the elements simultaneously, to identify areas of potential conflict and synergy, and to mobilise our collective resources and energies to boost jobs and tackle unemployment. This is no cosy consensus between insiders, carving up resources at the expense of the unemployed. That image is a travesty of the reality. In coming together to negotiate this programme, the Government and the social partners have very explicitly put jobs at the centre of the stage. This is reflected in the moderate pay terms which have emerged. It is reflected in the commitment to maintain a stable macroeconomic environment, which sustains confidence and low interest rates, in the commitment to maximise the potential for jobs growth in a number of key sectors, and in the shared commitment to focus special attention on those with the greatest needs, the long term unemployed. This is no selfish agenda. I challenge those who oppose the concept of social partnership to tell us what they would put in its place. What mechanisms to secure wage competitiveness? What strategy to boost the growth and development of indigenous firms? What support for the long term unemployed? Of course, we cannot have social partnership at any price. For some time, it appeared there might not be a programme. Later, the Government gave very careful consideration to the evolving terms of the programme, before giving its agreement. Those who oppose social partnership at any price should explain how they believe a free-for-all would be any better for employment.

This, the third such national programme shows the commitment of the Government to developing the partnership approach which has served our economy well over the past six years. It has underpinned our strong economic performance, including the improvements in the public finances, and it has critically deepened the competitiveness of the economy.

The Programme for Competitiveness and Work has been agreed between the Government and the social partners, following long and arduous negotiations. It could not have come about without the particular commitment of all the parties to these talks. I am grateful to the negotiators representing the employer groups, trade unions and farming organisations on the outcome of these discussions.

The two previous national programmes enabled us to move a considerable distance from the financial crisis which faced us in 1987. Between 1987 and 1990, the Programme for National Recovery rescued the country from a spiralling national debt, a large decrease in numbers at work, declining investment, and low business confidence. These conditions had given rise to an exodus of capital from the country, undermining our exchange rate. This was coupled with a tax burden which was becoming unbearable. The early to mid-1980s under a Fine Gael-led Government were, objectively speaking, the high point of tax and spend policies. Following the success of the Programme for National Recovery, we were able to maintain this impetus under the Programme for Economic and Social Progress, despite a harsh international economic climate.

Mr. J. Bruton

What about the 1977 Manifesto?

The Taoiseach

Our economy continued to grow at rates well in excess of the EU or OECD. Other indicators such as inflation and the balance of payments also moved in a favourable direction during the lifetime of that programme.

Let us look briefly at some of the concrete achievements of the first two programmes, since the whole programme approach has been questioned by the Opposition in this House and by rightwing economists outside it. Net employment has increased by 56,000 over the six year period; economic growth has averaged close to 5 per cent; income as measured by GDP per capita has grown from 60 per cent of the EC average to 74 per cent; farm incomes have risen in all but two years; average take-home pay in manufacturing and construction has increased by anything from 8 per cent to 20 per cent in real terms and the public finances have been transformed, with public expenditure over 10 per cent of GNP lower, and the debt/GNP ratio on a steadily declining trend.

I note with regret that Fine Gael and the Progressive Democrats are opposed to social consensus, even though the Progressive Democrats helped to negotiate the Programme for Economic and Social Progress. They are wrong and have very little support for their view from farmers, employers, or trade unions. Stability and certainty are valuable ingredients in business confidence. Deputy Harney's call for a complete public service pay freeze is unreal and a receipe for industrial unrest and confrontation, and Deputy Yates's claim that the programmes are crippling the economy simply defies all the evidence. Indeed, his former leader and Taoiseach, Dr. Garret FitzGerald, writing in the Financial Times recently, described our recent growth performance as spectacularly ahead of our partner countries. A London based investment firm recently described Ireland's economic performance as “one of the most attractive stories around”.

Mrs. Owen

Fairy tales.

The Taoiseach

Let the Opposition try their best, they will not tear this economy apart.

Mrs. Owen

Hans Christian Andersen.

The Taoiseach

I do not understand how the Fine Gael and PD policy of removing PRSI ceilings will do anything apart from increasing unacceptable costs on employers and make it more difficult to create employment while on the employee side removing the PRSI ceiling would severely impact on middle and higher income groups. They cannot have your loaf and eat it.

Since 1987, there has been a constant effort to belittle the national programme simply as pay deals. They are much more than that. They provide a balanced policy framework based on consensus with continuous input by the social partners——

Mr. G. Mitchell

——except the unemployed.

The Taoiseach

——through the Central Revenue Committee. If one wants to trade off pay increases against tax reductions, the structured programme approach is a sensible way to do it.

The benefits of social partnership extended well beyond the realm of economic growth. A major assault has been launched on long term unemployment, and our social services have been restructured, with a particular emphasis on bringing up lower rates of payment to the levels recommended by the Commission on Social Welfare.

This new programme has a specific focus: tackling the unemployment crisis with the same degree of commitment, as we showed in tackling the national finances since 1987. The Government has illustrated by the measures contained in the National Development Plan and the Programme for Competitiveness and Work, reinforced by special budgetary incentives——

Mrs. Owen

Versions one, two or three.

The Taoiseach

——that it is serious about tackling the structural cancer of unemployment. We are doing this by targeting the areas which need to be targeted, and by providing sufficient funds to ensure that these measures will be successful. We expect the numbers at work to rise by 60,000 overall.

The discussions on this programme were undertaken and concluded at a particular challenging time. While the successful conclusion of the GATT negotiations should, over time, provide a significant boost to the development of trade in the world economy, the shortrun outlook for economic recovery in a number of our main overseas markets is slow and uncertain. What is certain is that the degree of competition to which Irish producers are exposed is increasing, and will continue to increase, both in overseas markets and at home. The preservation of jobs and the necessary increase in sustainable employment require that we meet this increased competition head on.

This programme, by reducing the potential for industrial conflict, helps us to make progress across a range of economic and social areas. The programme was agreed, following a consultative process which was more broad-based than ever before. In the negotiations just completed on the content of the programme, discussions took place within the framework of the NESC report A Strategy for Competitiveness, Growth and Employment. The Government also requested the National Economic and Social Forum to submit proposals on issues to be taken into consideration in negotiating a new national programme. Its views were given the fullest consideration.

In addition, submissions were received from the Irish National Organisation for the Unemployed, the Conference of Major Religious Superiors, the National Youth Council, the National Parents' Council, and the Combat Poverty Agency. What emerged from these discussions was the focus for the new programme — competitiveness and work. I outlined, at the launch of the programme, that it focuses on three areas: (1) the development of small business and start-up enterprises, where comprehensive action, involving lower interest loans, removal of "red tape", focused incentives for equity investment, and support services at the local community level, is being and will be put in place; (2) the further development of jobs in the services sector, where Government departments and agencies, working with private sector promoters, will take new and positive steps to create new jobs and (3) the development of community-based work to a figure of 100,000 by the beginning of 1997. There has been ill-informed comment about the employment impact of these measures. I want to make it clear that I expect an increase in the total number at work of 60,000 by the end of 1996, in spite of a fall of about 10,000 in agriculture, continuing the long-running trend. This will occur through an increase of about 15,000 in manufacturing, 10,000 in construction, 3,000 in public services, and over 40,000 in private services. This increase will be made possible by the combined impact of the measures contained in the programme, the recent budget and in the National Development Plan.

Of particular significance in this employment growth will be the moderate pay terms to apply over the next three years. The private sector agreement covers a period of three years, and provides for general increases totalling 8 per cent payable in four phases over that period. However, due to the date of implementation of the final phase of the agreement, the overall cost will be 7.5 per cent over the three years. There is a provision for floor increases of £3.50 per week, in both the second and third phases, to protect the incomes of lower paid workers. The special arrangements in the public service will ensure that the total cost of pay increases in the public service over the three-year programme and in the first year will be the same as in the private sector.

The public service agreement is for three and a half years, with similar general increases totalling 8 per cent payable in five phases over that period. The starting date in the public service is five months later than in the private sector, except in the construction industry where there is also a five month pay pause. The outcome is very satisfactory, and pay increases are close to the levels of the Programme for National Recovery, rather than the more generous increases of the Programme for Economic and Social Progress, which have been criticised in retrospect.

The partnership commitment to employment does not end with the launch of the programme. The Central Review Committee will continue to operate to monitor the achievement of the targets and objectives of this new programme. To effectively carry out its role, the committee will oversee the development of effective regular measures to monitor the numbers at work and to undertake such analysis and review of domestic and international issues, as it considers appropriate, to identify further action in support of work.

As I stated earlier, this programme is set against the background of a challenging time for our economy. This is particularly true for the agriculture, food and forestry sectors. As the policy changes heralded by the agreement on GATT and CAP reforms become a reality, the Irish farm and food sectors will have to become increasingly competitive in all their markets. To equip these vital industries with the skills and supports they will need, we are in consultation with the farm organisations, developing a programme for competitiveness and rural development. This programme will maximise the benefits of the farm, food and forestry sectors to the national economy, while maintaining the greatest possible number of viable farms and farm households in rural Ireland. As was abundantly clear from the two previous national programmes, a small economy such as ours can only thrive in stable macroeconomic conditions. The task of reducing the debt-GNP ratio begun six years ago during the Programme for National Recovery and the substantial progress will be continued during the lifetime of this programme.

We will also operate our monetary policy, to maintain low interest rates and a stable exchange rate. Both these elements will, of course, have to be achieved consistent with developments among our trading partners.

This programme translates our shared central concern with work into a coherent strategy. In terms of sustainable employment and community-based work, a consistent set of measures are to be pursued over the coming years. The confidence generated by this agreed national programme will, undoubtedly, help to stimulate activity across the economy in agriculture and food, manufacturing, construction, tourism and in the other growing service sectors. We must ensure that this will have benefits for the whole community. In particular, I will be taking steps to ensure that the impact of the programme on equality is monitored on a continuing basis.

This is in every sense a Programme for Competitiveness and Work. On that basis, I thank those involved in negotiating it over a short period and commend it to the House. I take my leave to show how we can get good results in spending European funds in Mullingar.

Mr. J. Bruton

I hope they do not end up with only 91.5 per cent of the by-pass completed with the other 8.5 per cent leading into a bog.

The Taoiseach

If Deputy Bruton had his way, we would end up with £4.5 billion.

(Interruptions.)

Mr. Yates

I hope the Labour hen party hang in there.

Mrs. Owen

They are looking shaky.

Mr. J. Bruton

I will comment later on the revelations concerning the Cabinet meeting yesterday. The Irish Times described the Programme for Competitiveness and Work as “about as exciting as a reheated TV dinner”. That is an apt description given that the programme contains nothing new: it is a national wage agreement, the details of which were known before it was published, with a 75 page introduction most of which is regurgitated from either the National Development Plan which has been thoroughly discredited or the equally fictional Programme for Government.

The political purpose of such a plan is to silence the strongest potential critics of the Government outside the Dáil by entangling them in a mind-numbing process of consultations and committees. That a Government with a 38 seat Dáil majority and a huge tax financed public relations machine in each Minister's office should feel the need for this insulation from criticism is a testament to the deep-seated insecurity of the Coalition partnership.

The record of the previous programme, the Programme for Economic and Social Progress, is a poor recommendation for its successor. During the period of the Programme for Economic and Social Progress unemployment increased by 95,000, a 40 per cent increase; 40,000 people emigrated and the share of each £100 of a person's income taken in tax increased by £2.50. Yet, we want to repeat and replicate that programme.

National programmes, like the Programme for Competitiveness and Work mean that one pays more to get less. They represent an alliance of those who are economically or politically powerful at the expense of consumers, small business, those who are employed in vulnerable private sector jobs and, most important, school-leavers and those looking for their first job. These programmes — this is the third such programme — represent the triumph of bureaucracy over enterprise.

I question the philosophy of pay determination upon which the Programme for Competitiveness and Work is based. The Taoiseach was explicit in this regard when on the eve of the public sector pay negotiations being concluded he said that the guiding principle was to ensure equality of treatment between the private and public sectors. This is a bizarre principle. Yet, it was intoned by the Taoiseach as if it represented the Holy Grail of economic management.

The principle of equality of treatment between the private and public sectors is a nonsense. What is the reason the same pay norm should apply to both sectors? There is no economic rationale for this nor is there any social rationale. What is the reason one group of workers who are substantially insulated from the risk of unemployment should receive the same pay increase as another group who are very much exposed to the risk of unemployment at a time when unemployment has reached record levels? If one was to apply social criteria extra pay levels should compensate for higher risk factors, not the other way round. This must also be seen against the background of rapid growth in public sector pay since 1990 from which I and all other Deputies who are part of the public sector have benefited greatly.

The increases under the Programme for Competitiveness and Work do not achieve equality of treatment. The private sector agreement under the programme envisages an 8 per cent increase in wages and salaries over three years whereas the public sector deal envisages an 11 per cent increase over three and a half years. This is not equality.

During the Programme for Economic and Social Progress the chief beneficiaries of public sector pay increases were not the low paid. Secretaries of Departments received a 101 per cent increase during the period of the programme whereas clerical assistants and those of similar grades received only a 36 per cent increase on a low salary level. Deputies received a larger increase than their secretaries. That is what we get under these agreements. Percentage increases, however tidy in economic terms, do nothing to improve the lot of the low paid. They entrench the situation further.

This happens because the Government has failed consistently, and has done so yet again in the Programme for Competitiveness and Work, to deal with the anomalies in the machinery for dealing with special pay increases in the public sector. These are increases over and above the norm. This machinery takes no account of the State's ability to pay and generates many grievances and injustices.

Fine Gael wants to see increases in take home pay for public servants to ensure they share fully in any increase in national prosperity, but we would prefer if this came about through tax reductions which all public and private sector workers share rather than through special increases that benefit only a minority of workers in the public sector and create leap frogging anomalies that undermine the public finances.

On the face of it, the private sector pay deal looks acceptable from the point of view of preserving competitiveness and jobs — 8 per cent over three years or just over 2.5 per cent per annum almost in line with what one would expect the inflation rate to be. As an average for the private sector this deal is fine but the enterprises that make up the private sector do not operate at this mythical average. They operate as individual entities subject to different trading circumstances. Applying the same increases across the board regardless of differences creates serious difficulties to which I will refer.

Official figures for the prices received by firms indicate how much the circumstances of different firms differ. It is out of those prices that increases in pay must be met. During 1993 the price of sales in instrument engineering — computers — and pharmaceuticals rose by around 10 per cent whereas output prices in the plastics and motor vehicles sectors fell by 3 per cent. Output prices also fell in real terms in the clothing, furniture, bread, grain milling, timber, plastics and many other sectors. Yet, they are all supposed to pay the same increase.

The sectors of manufacturing where output prices are rising strongly are those dominated by multinational or non-Irish owned firms. By contrast, the sectors where prices are falling include those that are labour intensive, in other words, they employ many people, and Irish owned such as clothing, textiles, furniture and so on.

What will be the effect of applying a 3 per cent across-the-board increase within the industrial sector during the three year period on such a diverse range of firms? The multinationals which are not Irish owned will raise wages by less than they can afford and this will probably mean they will be able to repatriate more profits to their parent companies in America or elsewhere and a wage increase that could be obtained through individual bargaining in the plant will not be obtained because the Programme for Competitiveness and Work norm will be applied. This is an avoidable loss to the economy. Clothing firms, for example, will have to grant increases which are more than they can afford because their receipts are falling, and the result may be redundancies to pay for the pay increases. Given these differences within the private sector it is bizarre for the Taoiseach to claim that equality of treatment between these diverse parts of the economy should be the guiding principle. He can only mean that the labour market is an instrument of social policy, but that cannot be reconciled with the Government's other declared policy that the labour market should be more flexible so that we can have more jobs. The Government's labour market policy — which is the cornerstone of any employment policy — is fundamentally flawed and contradictory.

There is evidence from the not too distant past that the Government does not care much about the fortunes of older, indigenous, labour-intensive industries which export to the British market. At the time of the currency crisis, barely over a year ago, the attitude in Government circles was that these industries would go to the wall anyway and it did not matter if it happened a little more quickly because of a sterling-Irish pound exchange rate of £1.10. The Government wants to concentrate on the flagship projects in electronics and pharmaceuticals where few people are employed, but they are all articulate, well-paid and sophisticated people, the ones who really matter.

The policy of letting the weak go to the wall, which was the motive of Government policy at the time of the currency crisis, is now being introduced into the Programme for Competitiveness and Work. The Taoiseach is saying that all industries must pay the same increase across the board regardless of their circumstances, and if it means they go to the wall, that is tough. There is no future in young school leavers all becoming electronic engineers or analysts in the laboratories of pharmaceutical companies. There must be other jobs as well. The Government is making a serious mistake if it pursues this policy and damages the prospects for job creation in small companies by ignoring their interests in the Programme for Competitiveness and Work.

The section in the programme dealing with the public finances runs to less than two pages of the 84. Other sections are much longer. That is an interesting reflection of the Government's priorities. The only target adopted relating to the public finances is that the national debt-GNP ratio be reduced to 95 per cent by 1996. This is an extraordinarily unambitious target. The debt-GNP ratio was just over 102 per cent at the end of last year and it is likely to be 97-98 per cent at the end of 1994. The target in the programme implies that the Government will now be happy if the ratio falls by a little more than a further one per cent each year.

To illustrate how unambitious this target is, we should consider what would happen if Exchequer borrowing were kept at around 2.7 per cent of GNP for the next two years. Given the outlook for economic activity and interest rates, and provided the Irish pound does not depreciate significantly the debt-GNP ratio could be expected to fall automatically to 88-89 per cent over the next two years anyway. Thus, to prevent the debt-GNP ratio falling below 95 per cent by 1996 the Government would have to increase the Exchequer borrowing requirement to 6 per cent of GNP in 1995 and 1996. I presume this is not what the Government intends, but it is what is implied in the sloppy arithmetic in its programme. It shows that the Government is not thinking about medium-term financial strategy.

The programme regurgitates much of the National Development Plan which was published last October and set out projected receipts of money from Brussels. A close examination of the Estimates shows that although it was not until yesterday that Irish Ministers admitted they were not getting the money, the officials in the Department of Finance were admitting last year that we would not get much more than about £6.5 billion. The estimate in the National Development Plan for EC receipts for 1993 was set at £1,081 million and projected receipts for 1994 were set at £1,055 million in 1993 prices.

In the event, 1993 receipts, according to the latest available departmental estimates, amounted to just £941 million, £140 million lower than estimated in the National Development Plan. Projected receipts for 1994 are now put at £930 million, which is £150 million below the National Development Plan projection. The Government Estimates, published at the time of the budget, were already admitting what the Government could not get around to admitting yesterday, that the National Development Plan was a work of fiction, not fact.

There are two important points about what has happened in the last few days. First, it shows that Ministers have consistently underestimated the intelligence of the people. They expected that people would believe any exaggeration Ministers chose to put before them about the amount of money we were to receive. They believed, innocently, that EC officials would not contradict them. They were wrong on both counts. The people know we are getting a great deal of money from Brussels and they appreciate the efforts of officials and Ministers to get that money. They do not need to be told colossal fibs about the amount nor to hear exaggerations of the kind the Taoiseach, the Tánaiste, the Minister for Enterprise and Employment and others have engaged in. They are intelligent enough to be told the truth.

What has happened shows that Ministers are not living in the real Ireland of the nineties with a sophisticated, educated electorate but in the atmosphere of the big promise, of 1932-style elections where 100,000 jobs were promised in order to win a vote and it did not matter what happened afterwards because many could not read, had limited access to information and would, anyhow, forget. That is not the Ireland of the nineties. It is not necessary to tell people such fibs and one cannot get away with it. What is important is the extent to which the Government underestimates the intelligence of the people.

Also illustrated by what has happened is that the Government's basic cohesion is breaking down. Fianna Fáil is deliberately leaking what happened at a Cabinet meeting yesterday in order to put the Labour Party in a bad light, saying that the Labour Party was willing to go along with a particular scenario but that Fianna Fáil was able to dislodge them from that position at Cabinet. It shows that the two parties are not working together on the basis of trust and that the Taoiseach is a hypocrite. He agreed the Irish State should go to immense expense in the Supreme Court to defend the principle of Cabinet confidentiality, even to the point of refusing to give information to a tribunal established by this House. Yet, he is willing to sit here his morning, comfortably and smiling, with papers in front of him which show that the party he is supposed to lead is deliberately flouting Cabinet confidentiality to politically damage the Labour Party and to make the Tánaiste and Minister for Foreign Affairs look small. It is deeply corrosive of the trust needed for efficient Government. This frequently happens when a Government is nearing the end of its life and when members reckon they must look for the lifeboats. It is a matter of serious concern that this Government is already leaking information on such a scale after only one year in office and with a majority of 38.

The Taoiseach should examine closely the position of the Minister for Transport, Energy and Communications, Deputy Cowen, because it appears he was the chief beneficiary of this leak. He should be asked if he had any responsibility for it. We already had an investigation into a leak involving a document of the Department of Foreign Affairs which appears to have gone nowhere. There is another leak today in the Irish Press and it is obvious that Ministers, not civil servants, were responsible for it.

Miss Harney

I am disappointed that no member of the Cabinet is here for the debate. Not even a member of the Labour Party is present, the party committed to "a new style of partnership Government" and which made enormous commitments, some of which I recalled here last week on the debate for the moving of writs for the by-elections, to transforming the Dáil and making it more relevant. It stated that the hallmark of its time in Government would be openness and accountability on which it wanted to be judged. It wanted to reflect our national character and spirit at its best. It is extremely frustrating that on so many important debates in this House the Labour Party does not even have the manners to send in a backbencher, not to mention a Minister of State or a member of the Cabinet.

I acknowledge that the Taoiseach is opening the Mullingar bypass today.

Mr. J. Bruton

A big job.

Miss Harney

As I said earlier, the Taoiseach and the Government badly need a bypass in reality. I was pleased to hear you, Sir, state that you heard Deputy Yates speak on a radio programme this morning, presumably on "Morning Ireland". I am sure you will agree that the real debate on important issues takes place on radio and television programmes and through other forms of the media. This House is becoming irrelevant and it is our fault as Members that we do not have real and meaningful debates about the important issues of the day, which is regrettable. It is farce to be discussing the Programme for Competitiveness and Work in the absence of any Cabinet member on the morning after this country has been engaged in the most embarrassing experience ever in Brussels. Through Deputy De Rossa's motion yesterday, we sought a debate this morning on the National Development Plan, but it was refused by the Government even though it knew what was happening.

On the opening page of the Programme for Competitiveness and Work. it is acknowledged that a key component to increase the productive capacity of the country is the National Development Plan. In other words, the plan is rightly accorded an integral and essential role in underpinning the job targets and development strategy of the programme. This of course begs the fundamental question of where we now stand with the National Development Plan? This is the day that the double-talk, the doublecounting and the double-dealing by this brazen and incompetent Government is finally unveiled in all its sorry and shabby detail.

There have been bitter rows in Cabinet, Commission officials in Brussels have been unfairly pilloried and chastised, smiling knowingly at the ignorance and incompetence of our Ministers and, saddest of all, communities up and down this country, who had been led to believe that vital social and economic projects were in the bag, are now wondering if they will ever go ahead.

Last night I heard the Taoiseach state on RTE that nothing had changed. I simply could not believe my ears. When will this Taoiseach and his incompetent Government colleagues cop themselves on and stop treating the people as fools? It is a long road that has no turning, and the Brussels bonanza road that began in Edinburgh in December 1992 has finally turned on this Government with a vengeance. It was the Taoiseach's bag containing £8 billion that seduced the Labour Party into Government and, regardless of the truth revealed in the intervening months, the Labour Party has stood with it and will continue to do so because when that party enters Government, it is there to stay.

The Government is to blame for what happened to it. Throughout last year, efforts were made to blulf and bluster, to harangue the Commission in Brussels from President Delors to Commissioner Millan and latterly the Structural Funds Director General, Mr. Landaburu. Everyone was out of step but our Taoiseach and his equally arrogant and heedless Cabinet.

Every attempt to get the Government to come clean and confess that the £8 billion was not in the bag was stonewalled. There was bluster about the quality of the National Development Plan, mid-term reviews were promised, and all the time there was an insistence that nothing had changed. That is just some of the double-talk that has gone on and around which the Taoiseach, the Tánaiste, the Minister for Finance and other Ministers weaved a web of deception and even this morning they still refuse to come clean.

There has been double counting. Last October with all the pomp and ceremony that could be drummed up the £8 billion plan was launched in Dublin Castle entitled National Development Plan, 1994-1999. Yet one of the pillars of that attempted charade was to double-count the money we were already drawing down in 1993 and which had been guaranteed under the 1989-1993 Structural Fund programme. The money that was doublecounted was about £845 million, but again there was an attempt to deceive the public.

All along too there was double dealing in the Dáil, in Brussels and, now we learn, in the Cabinet room itself, where the débacle reached an ultimate low with Government colleagues turning on one another and fighting over the dwindling spoils.

There has been a persistent refusal in the Dáil to come clean. Last October we had a "no-confidence" debate initiated by the Opposition precisely to draw public attention to the deception and untrustworthiness of the Government. Naturally, but unfortunately, that debate was overshadowed by the Shankill Road bombing, and the Government was effectively let off the hook of public accountability due to the overwhelming and overriding sense of national outrage. That debate followed confirmation by the EU Commission that the Irish allocation of Structural Funding from now to 1999 would, at best, be £7.2 billion.

Despite that stark statistic, the Taoiseach in the opening Government address of that no confidence debate stated that on any calculation the present figure of up to £7.84 billion is by far the largest sum of EC funds ever negotiated for Ireland. Of course there was, unfortunately no £7.84 billion and the Taoiseach knew that, but that did not stop the bluster and deception.

In that debate, the Minister for Finance sought to bamboozle the public and this House by relying on per capita allocations and claimed we were doing the best of the four Cohesion countries. The Progressive Democrats has never disputed that. We have done extremely well and have achieved the highest per capita allocation of any of the Cohesion countries, but that is not the issue. The concern is not about the amount of money. We would all be delighted with even £7.2 billion or, more appropriately, £6 billion if the 1993 figure is excluded. That is an enormous investment in this country by our fellow partners in the European Union.

The Minister, Deputy Ahern, also stated in the debate that the plan would be implemented in full and that there was no intention or necessity to revise it. The revision is now taking place with a vengeance and his bluff is being called. The Minister forecast that the negotiations on the Community Support Framework would be concluded at the beginning of this year. We are into the third month of this year and this exercise has not been completed. This was the same Minister who tried to explain away why he and his Government colleagues went ahead with the launch of the £8 billion plan on 11 October although he had been told three days earlier by the Commissioner in Brussels that this amount of money was not available. During the same debate the "Minister for the £8 billion", as she has become known, continued with the bluster that she was confident, due to the quality of the Irish plan, we would end up getting an allocation of at least £7.84 billion.

The Government was in a deep hole last October but did they stop digging then? No, as evidenced by the actions of the hapless Tánaiste and Labour Leader. That Tánaiste waxed on 28 October about all the hurt and offence during the confidence motion when his integrity was called into question after he sought to use eminent Irish public officials in Brussels to sandbag him for his failure to understand Euro-speak on the famous night of the long fourchettes in the Community capital on 20 July last.

The Tánaiste continued to dig the hole deeper last October when he told the Dáil, "I believed then, and I still do, that the figure of £7.84 billion, once arrived at, was the figure that we would ultimately get". Now the Government lies at the bottom not of a mere hole but an abyss of incompetence, deception and untrustworthiness. This is an Administration who proclaimed in its lengthy programme that its hallmarks would be openness and accountability. That is how its wants to be judged. The gloss is quickly coming off this carefully wrapped and packaged Government and not even its costly programme managers and advisers can save it from its fate.

Mr. J. Bruton

Or Carr Communications.

Miss Harney

This Administration is characterised by big publicity splashes. Glossy documents and reports are launched and the weaker the contents the grander the occasion, as in the launch of the Programme for Competitiveness and Work. It is nothing other than an illadvised pay deal for the public and private sectors — or rather for those private sector companies who can afford it — dressed up as a would be social and economic programme. It is simply a rehash of some of the prose and of the badly holed National Plan and obviously came straight off the same wordprocessor.

We all agree that unemployment is the most serious problem facing this country. It was an item of the agenda of the first Government of this nation in the 1920s. With the exception of the 1960s no decade has shown the promise that we might be able to solve that blight on our national character. What was it about the 1960s that gave rise to such a great sense of hope? This was an era of low taxation and zero budget deficits. Today we see little of that pioneering spirit. A good example of the prevalent negative thinking is the reluctance to open up our telecommunications industry despite the fact that Irish industry is being put at a cost and service disadvantage to its European competitors. Let there be no doubt this is what is really happening. To prove it one has merely to think back to what happened within weeks of Telecom Éireann reluctantly reducing the cost of international telephone calls last year in what was misleadingly called by the Government a rebalancing of telephone rates. The IDA and various Ministers were running around announcing in one case thousands of jobs in new telesales businesses. Without the reduction in telephone charges none of those jobs would have been promised. The lower charges are also helping other companies who are engaged in international trade become more competitive and be in a better position to maintain and even create new jobs.

Despite those tangible benefits we continue to seek delays in the introduction of liberalising measures from Europe in relation to trade and telecommunications rather than seeking to be out front as we sought to be in the 1960s. It is interesting to note that even after last year's reduction in the cost of international charges Irish companies who can get direct access to British Telecom can still save about 50 per cent in telephone charges to other countries. In other words, Irish companies, and by this I refer to the small and medium sized locally owned firms, continue to be at a major cost disadvantage to their competitors abroad in respect of telecommunication charges.

We seen to be about to witness yet another major U-turn by the Labour Party in respect of the privatisation of Bord Telecom. In changing their view, the Tánaiste and his colleagues in the Labour Party must be congratulated for at last facing up to reality. The proposed privatisation is not privatisation according to the sensitive Labour Party. We have more double speak. According to the Tánaiste we are witnessing not privatisation but a new strategic alliance. What would the Tánaiste and the Labour Party call this if they were in Opposition? Who do they think they are fooling as they try to do a Lewis Carroll to the English language?

One of the greatest mistakes made by an Irish Government must be the decision in the late 1950s not to sell the Irish telephone service to ITT who offered to buy it. Not only was it prepared to give the then Government substantial funds for it but it offered to make the Irish telephone service an integral part of the US telephone system. The benefits this would have brought for industrial development and job creation cannot be overstated. Free local calls, cheap long distance calls and new telephones within hours of being ordered would have been the norm over the last 30 years instead of the inefficient and expensive service Irish business had to rely on.

In reality the Programme for Competitiveness and Work is the National Plan with one new piece of information contained amazingly in an appendix. It covers the draft terms of the pay deal. The Programme for Competitiveness and Work will do nothing new to solve our unemployment problem. It will not result in the creation of a single new real job that can be sustained. In the introduction to the programme the Taoiseach says “the Government's clear objective.... was to make work at all levels the cornerstone of development action in the next three years in particular”. What new thinking emerges from this document? None, but then should we be surprised. We have a clear case of paralysis through analysis going on in this country. More glossy documents, and new Government quangos are not what is required. What is required is action which will help business generate real new jobs and not more jobs in the vast bureaucracies we have created and which have to be funded by an already over-taxed workforce. In the introduction the Taoiseach states the short term outlook of our main markets is slow and uncertain and goes on to talk of the increasing degree of competition to which Irish producers are exposed. Yet we are able to offer ourselves wage increases of a minimum of 8.5 per cent despite the real increases we have enjoyed over the last few years. In his introduction the Taoiseach also states “We must ensure that this (growth) will have benefits for the whole community. In particular, I will be taking steps to ensure that the impact of the Programme on equality is monitored on a continuing basis.” What does this programme hold for the 300,000 unemployed? It does nothing for them. To the extent we have increased the cost base of Irish industry through awarding those at work wage rises, despite the uncertain economic climate and the increasing levels of competition on both the home market and foreign markets, it makes the position of the unemployed worse. Far from having something for the whole community this programme worsens the position of the unemployed. Yet the unemployed were not present at the table when this programme was being negotiated.

The cold war is over, the Berlin wall has come down and businesses based in Eastern Europe are getting freer access to our markets. Those countries are not populated by uneducated, unenterprising masses. If anything some of them have a greater depth of technical knowledge than we have here. People with doctorates can be employed for £5,000 per annum in Eastern Europe. This is the competition we, as a nation on the edge of Europe, must be tackling head on if we are to get the jobs we so desperately need. Nothing in this document gives me any confidence that this harsh reality is fully understood by those who drafted it.

One success we have had is that of Patrick Campbell. He has talked of the current position of the local business community. He sees many Irish businesses selling out to foreign companies because of the obstacles put in the way of small Irish companies as they seek to do business. High on his list is the excessive taxation payable by both employers and employees. He recently said:

The Government is over managing the economy through the introduction of restrictive regulations (which have undermined competitiveness), and draconian measures (which have caused many ordinary business people to feel threatened and alarmed). Today the Revenue have more power of entry and search than the gardaí have to fight criminals and drug dealers. Today the self-employed taxpayer is the suspect.

What does the programme do to address these issues which are sapping the enterprise of people whom we should be holding up as the real heroes in today's Ireland? The answer is absolutely nothing. It goes in the opposite direction to what business people like Pat Campbell are seeking. Mr. Campbell indicates that while the IDA and such other grant giving agencies are held out as the providers of part of the very badly needed funds small and medium sized Irish companies require to build up their businesses, he would have to advise a young enterpreneur to not waste his or her time looking for help from them as their help, to quote him "in practice all too often turns out to be as elusive as the Halloween snap-apple". Mr. Campbell was totally correct in his analysis. To be an Irish entrepreneur is in many ways to be a second class citizen. The Irish entrepreneur gets a smaller grant for each job he creates than would his foreign counterpart for the same job.

Under the small industries programme, £4,000 is the maximum that is paid, a fraction of what a foreign business man would get in similar circumstances. An Irish entrepreneur is asked for a higher percentage of the overall grant package to be repayable than would his foreign counterpart. He is asked to give up equity in his company so that the IDA can make a profit if the business turns out to be a success. Michael Smurfit once described equity as blood. In the way the Government treats Irish entrepreneurs, they become the Dracula of Irish business, while there are smiles and wining and dining for foreign companies.

This programme does nothing for competitiveness and work. The last thing this country needs is an 8.5 per cent increase in pay. At a time when we are told by independent reports that for every 1 per cent improvement in overall wage costs 4,000 jobs could be created, would it not have been better to hold pay levels as they are and make job creation the priority? The additional £252 million that will be spent on public sector pay this year would have been better spent if it had gone towards a reduction in taxation. As my colleague, Deputy Cox, said during his budget speech, if the £347 million that was used to increase public sector pay last year was used to decrease the standard rate of tax by 5 per cent or the higher rate by 10 per cent, or to reduce higher rate of VAT by 4 per cent, it would have done more for competitiveness and work than all the programmes and analyses this Government has engaged in since coming to office.

Mr. Rabbitte

I do not know how upto-date Deputies are with new technology or the word processor, but there is a programme available called Find and Replace, and if all the documents that have been introduced in recent years, including the Programme for a Partnership Government and the Programme for Economic and Social Progress, were jumbled up in the word processor and the Find and Replace programme was operated, it would come up with the Programme for Competitiveness and Work. Yeats's terms about polite, meaningless words——

Mr. Aylward

Which Yeats?

Mr. Rabbitte

The poet, not the Finance spokesperson for Fine Gael.

Mr. Durkan

He will be a poet sometime.

Mr. Rabbitte

Deputy Yeats probably has a very bright future but not in the poetry field. Like Yeats' terms about polite, meaningless words, this document is full of polite, meaningless phrases. It is remarkable that so little of the speeches we have heard was devoted to comment on this document. That is because it does not inspire anyone to opposition. An interesting phenomenon is happening in Irish democracy in that we are presented with this document fait accompli and we simply have the opportunity to make statements on it.

If we look back at the debate that took place on the Programme for Economic and Social Progress, a motion was put to the House and we had the right to oppose it if we felt so disposed. On this occasion we do not have that opportunity. We are having a polite, meaningless debate, and the real economic issues that are being debated outside cannot be raised here. It is part of the smothering consensus that stifles debate in Irish life. It is extended in vehicles such as the National Economic and Social Forum — I have great respect for the people who comprise that forum and great admiration for its chairperson — the majority of the members of which would be better off outside the gate protesting about things they find objectionable for the unemployed and marginalised rather than being induced into the belief that they have an impact on social and economic policy.

We experienced an extraordinary incident here recently when on the Industrial Training (Apprenticeship Levy) Bill the Minister, Deputy O'Rourke, introduced a Report Stage amendment which was the exact opposite to what she had led us to believe on Second and Committee Stages she might be prepared to do. As the earlier debate had collapsed the Bill was brought before the House early and the text of the amendment had not even arrived, but the Minister decided to tell us what was in it and saw no reason that we should object to it.

Deputy Richard Bruton pointed out that the amendment was the opposite to what she had led us to believe she would do. I read into the record what the Minister said on Committee Stage and she agreed that that was her view but said that she had since discussed the matter with the social partners and as they said they would not accept that view she introduced the amendment concerned. She genuinely saw nothing wrong with the fact that those who are elected by the people to make law were not even taken into consideration once the social partners suggested the preferable amendment.

Debate on economic and social policy in this House is virtually irrelevant. If on the one hand we take into account the significance of decisions being made in Brussels as they affect the lives of people here and on the other hand we accept the role of the so-called partners, there is not much of a role left for this House. This document is proof that that is the case. It is a document of 83 pages — Deputy Bruton said it contains 84 pages — but it really starts at page 77. The thrust of this agreement is in pages 77 to 83.

Miss Harney

Page 84 is blank.

Mr. Rabbitte

Some of the other pages could also be blank for all the impact——

Mr. Alyward

There is more to be written on that page.

Mr. Durkan

A revision of the national plan.

Mr. Rabbitte

The document is, as I am being prompted, an appendix, it is a pay deal, and there is no point in pretending otherwise. In terms of the public service generally it is a respectable pay deal and in terms of the majority of the private sector it is a relatively poor pay deal.

I congratulate and admire the way public service unions do their job. They have done a good job in this instance and have secured a deal which, given all the considerations, the anticipated inflation rate, etc., is relatively good for their members. The deal is not nearly as good for the private sector and it is a poor deal for employees of companies which are enjoying considerable profitability at this time. One of the reasons I supported centralised bargaining is that there are many areas where there is a concentration of low paid workers who have no clout, who in many cases are not in trade unions and who stand to do better under this pay deal than if they were depending on their ability to secure a pay deal.

I wanted to refer to some of the points made by Deputy Harney, but there is probably no point in rehashing the historical description she has given to the national plan fiasco. I do not agree with some of the points she made, but I agree with her details of what transpired leading to this national humiliation this morning. When Deputy Harney talked about the history of the deception, deceit, bluster and exaggeration which have been the pattern over the period of the negotiation of these now diminishing billions, she did not refer to the statement by the Minister for Finance in this House as recently as last Tuesday that the Government was confident it would prove possible to draw down the full £7.84 billion EU aid on which the National Development Plan was based in the period up to 1999.

Mr. Yates

That morning he presented proposals to Cabinet to cut that amount——

Mr. Rabbitte

That is correct. That morning the Minister had sponsored a series of cutbacks put forward to him by the officials in the Department of Finance. Despite that in the House he said he was confident we would still get the £7.84 billion. It is beyond my understanding why the Government persisted in maintaining that position up until yesterday. The Minister also told the House last Tuesday that:

For Ireland the CSF amount expressed in 1994 prices is 5.6 billion ECU or £4.54 billion. As regards Community initiatives, no allocations to member states have been made. The Government considers that Ireland will receive at least £400 million in aid under initiatives over this period.

This does not compare favourably with the figures in the published plan. The £4.54 billion which the Minister has told us we will now receive under the Community support framework does not compare favourably with the £6.2 billion in the published plan. Of course, included in the figure is the £8.54 million for 1993 which was counted in already. When the Taoiseach started this entire fantasy at Edinburgh he threw in seven years and counted in the money for 1993 — this was the work of his predecessor and had nothing to do with this funding — to boost the figures to a nice round figure of £8 billion. That £8.45 million has to be subtracted. In regard to Community initiatives, the Minister said he was confident that he would get £400 million, but the programme refers to a figure of £638 million, which includes £122 million for 1993.

The figure of £8 billion conjured up by the Taoiseach did not refer to the impact of devaluation since then. The Taoiseach handled the currency crisis in such a fashion that devaluation was inevitable. The 10 per cent devaluation, which did not apply exactly, for reasons I do not want to go into now, meant we should have got something between £8.6 and £8.7 billion. When one takes this into account and the amount of £7.2 billion we are now supposed to receive, there is a shortfall of £1,400 million. That is the scale of the deception and incompetence.

I have been a traditional supporter of centralised bargaining because it is the best way to secure the concept of a social wage for working people. By "social wage" I mean a wage outside the straightforward realm of pay. In other words, it takes into account tax, social welfare reform, the capacity of our health and education services and our ability to create jobs. It is far more meaningful to working people than pay increases which in many cases can be illusory — the level of taxation determines take home pay and the resources available to pay for education and health depends on take home pay. In many cases pay increases alone can be illusory. For that reason I have traditionally supported the concept of the social wage.

Everything in this document in terms of the key headings to which I have referred is vague, conditional, imprecise and aspirational. The document is made up of paragraphs plagiarised from other Government documents, paragraphs which are an adjustment of the Programme for Economic and Social Progress and paragraphs from the Programme for Government. I said in 1991 that the author of the Programme for Economic and Social Progress, Mr. Pádraig Ó hUiginn, should have been put forward for the Booker Prize. However, his successor would not qualify for the Brooker Prize as this programme is merely a rehash of existing programmes. It is a case of somebody sitting down at the word processor and instead of using a particular word or phrase, a new word is used but the net result is the same.

Can anyone, including the Minister, highlight any specific measure in this document concerning tax reform? The achievements of the Programme for Economic and Social Progress are rehashed in the document and it deals with what transpired in the budget but there is nothing new, specific or definite in it. Farmers were the only people who felt they benefited from the budget but they immediately asked the Minister what would be done for them in the Programme for Competitiveness and Work. They, of course, were given specific commitments which is more than can be said for the rest of us but I do not have an opportunity to comment on that now.

I wish to deal with the prediction of the number of new jobs in the programme. During Question Time last week I asked the Taoiseach whether the projected 60,000 jobs over the period of the programme were net or gross and the Taoiseach said they were gross. People may not be aware that the prediction does not take into account jobs that are lost so that the net contribution in reality would be almost negligible.

The Taoiseach wrote to me the same day saying that he did not wish to mislead me and wanted to clarify the position. He said: "The position is that the figure of 60,000 is a fully inclusive figure....". I have great respect for civil servants who can come up with terms such as that. They avoid the issue of whether the figure is net or gross and talk instead about a fully inclusive figure. The letter went on "...a fully inclusive figure for the increase in the numbers of people at work in the years 1994, 1995 and 1996 taken together". The Taoiseach went on to give the breakdown between agriculture, manufacturing, construction, public services and private services. In reality it is a net figure.

Those targets have been questioned because there are no specific innovative measures in the programme to indicate from where these jobs will come. It simply rehashes old policy, refers to the break-up of the IDA and what has been put in place in Forbairt and so on but in reality it is a pay agreement. When the talks broke down it was said it was because of the abolition of the 1 per cent levy and that while the Minister for Finance, Deputy Ahern, and the Minister for Enterprise and Employment, Deputy Quinn, had promised congress they would roll back the dirty dozen social welfare cuts they had not done so. In fact, the budget taxed unemployment benefit and abolished pay related benefit. In a reply to me yesterday the Minister for Finance confirmed that the amount of tax to be levied from the sick and unemployed — £50 million in a full year — will be equivalent to the total tax from farmers, the people who own the land of Ireland and who the Minister says are estimated to contribute £52 million in 1993 and £56 million in 1994. That is regrettable but since we are only having statements I cannot go into it in more detail.

This programme is a pay agreement and nothing more and I hope we will have an opportunity next week to discuss the real economic issues.

Minister for Finance (Mr. B. Ahern)

The new Programme for Competitiveness and Work does not stand alone. It forms part of a continuous process for change in society in conjunction with the Programme for a Partnership Government, the National Development Plan and the 1994 budget.

I will refer to the economic background against which the programme was negotiated and, in this context, to reflect briefly on prospects for this year.

The prospects for the economy are improving significantly. I expect GDP growth of at least 4 per cent, a rate which when compared with the forecast for the European Union as a whole of about 1¼ per cent, is a healthy prospect.

Allowing for the tax and other changes, which I announced in the budget, real personal disposable incomes are likely to increase by over 3 per cent. Assuming some reduction in the savings ratio, which is currently at a high level, in response to lower interest rates and greater confidence, there should be a strong recovery in the volume of consumer spending. Investment activity should also pick up this year as interest rates remain low and as the buildingrelated increase of over £120 million in public capital spending which I outlined in this year's budget takes effect. This represents a substantial boost to building activity and to jobs in this sector. It should lead to an increase in the volume of building investment this year of at least 5 per cent, with total investment activity expanding in volume terms by about 3¾ per cent.

With the outlook improving in some of our key trading partners, industrial exports should grow by over 7 per cent in volume this year. As in previous years, the increase in exports will exceed the growth in Ireland's export markets. Although import growth is expected to pick up and the deficit on invisibles may widen, the balance of payments surplus should remain in the region of 6¼ per cent of GNP.

Despite recent successes in increasing the share of foreign markets, complacency must not creep in. We must continue to make further gains through improved competitiveness, and through improving our marketing strategies. The Programme for Competitiveness and Work will greatly assist Ireland's competitiveness position. I will return to this later.

The Exchequer borrowing requirement and the general Government deficit in 1994 — at 2.7 per cent of GNP and GDP respectively — will again be low by international standards. While our national debt to GNP ratio remains high, it will resume the downward trend which was temporarily interrupted by the devaluation of the Irish pound last year. Further progress in reducing the burden of the national debt has been recognised by the social partners as a key issue to inform fiscal policy on which implementation of the measures outlined in the programme depends. Continued pursuit of these fundamental goals should also help to keep interest rates low and to enhance confidence of domestic and foreign investors alike in the sensible manner in which we are continuing to manage the economy.

The budget will contribute to our economic performance this year, by building on the capacity of the economy to deliver sustainable economic and social progress. It demonstrates this Government's continued commitment to sound budgetary management. The budget provided a significant boost to disposable incomes for the great majority of taxpayers, particularly the lower paid and in so doing, paved the way for the moderate pay terms of the Programme for Competitiveness and Work. It made further progress in rebalancing taxation and PRSI payments to protect sectors facing significant competitive threat.

This year, I incorporated new supports to business expansion in the interest of supporting employment growth, which is also a fundamental objective of the PCW. By substantially expanding training, work experience and associated programmes, the budget will enable more people to enhance their employment prospects and should raise the levels of skills in the economy. These and many other measures taken in the budget will combine to bring about a substantial addition to the number of jobs which might otherwise have been created during the year.

The recently published labour force survey for April 1993 confirmed what I had been saying all through last year, that the information available to me from tax and PRSI receipts indicated that the employment growth which I predicted in last year's budget was holding up well. While employment declined in every other European Union country except Luxembourg, the labour force survey results show that in the year to April last, employment here grew by 7,000. Taking account of the long-run decline in the number engaged in agriculture, non-agri cultural employment rose by about 16,000 or about 1.5 per cent. The survey results confirm that policy in recent years has been on the right track. At the very least, it can be said that we are converting output growth into worthwhile progress on employment which has been the ultimate objective of policy in recent years. This year we can expect to see non-agricultural employment growth of about 24,000, which after allowing for some emigration should permit a modest fall of about 5,000 in average registered unemployment this year.

Even allowing for the excise duty changes which I made in the budget, I expect inflation to average no more than 2.5 per cent for the year — again well below the EU average. I am not alone in expecting a much improved economic performance this year. There is broad agreement among institutional forecasters and the private financial houses that we are set for a year of strong output growth, significant employment gains and a decline in the number on the live register. The policies of this Government, with powerful support from the social partners, are paying off. I am not being unduly optimistic when I say that the future for the Irish economy in terms of real growth and job creation is very promising.

The new programme spells out the aspirations of the Government and the social partners in relation to public services for the duration of the programme. These aspirations must be seen in the context of paragraph 3.5 of the programme which states that the pursuit of economic stability, on which increased employment is dependent, requires "significantly greater restraint on public expenditure than has existed for the past three years, particularly in relation to current expenditure". All the undertakings in the programme are subject to this requirement.

The areas where the most significant development are to take place are first, employment generation: the Government expect numbers at work outside agriculture to grow by more than 60,000 over the three years of the Programme for Competitiveness and Work. Recognising, however that, while this would match the very best of recent past performance, it does not go far enough. The Government, in addition, will (a) take specific actions to develop small business and start-up enterprises (b) support the further development of the services sector and (c) introduce a community enterprise programme which will, before the end of the Programme for Competitiveness and Work, involve 100,000 people in community-based work, supplemented by work experience and training; second, the area-based response to the problem of social exclusion; third, in agriculture: the Government and the farm organisations have agreed a Programme for Competitiveness and Rural Development which will aim at (a) maximising the contribution of farming, food and forestry sectors to employment and value-added in the economy and (b) maximising the number of viable farms and farm households in rural Ireland at sustainable living standards; fourth, in education, further improvements in pupilteacher ratios and further provision for the disadvantaged; fifth, further progress towards the achievement of the main Social Welfare rates recommended by the Commission on Social Welfare will be an important objective under the programme and sixth, the priorities in the health area will be the Child Care Act, services for the mentally and physically handicapped, the care of the elderly and further improvements in the dental service.

Our overriding economic and social objective is to resolve our critical unemployment problem. This has been confirmed in the most positive way possible in the new programme. Ensuring that taxation policy is pro-employment is therefore essential. This means continuing the process of tax reform, now under way for six or seven years, aimed in particular at increasing the rewards and incentives for working and reducing the cost of employing workers.

It is the Government's policy to continue, within responsible budgetary parameters, to ease the tax burden on earned income and, where necessary, adopt appropriate base-broadening. The 1994 budget set out what the Government regard as the guiding principles for a "pro-jobs" taxation strategy. These same principles are reaffirmed in the Programme for Competitiveness and Work. These concerns underpinned the 1994 budget and will remain the barometer of progress on taxation policy over the coming years. They are: to seek to redress the long-run tendency for “earned income” to contribute a growing proportion of total revenue, focusing available resources on improving the position at lower to middle incomes; to preserve and build on the considerable base-broadening across all major tax heads, achieved during the Programme for National Recovery /PESP period, confining special preferences and incentives to areas where there is a clear economic or social justification and keeping the degree of subsidy involved to reasonable proportions; and to continue pursuing simplification and streamlining of tax legislation and administration subject to the overriding need to maintain effective collection systems, which are fundamental to equity in practice.

The 1994 budget, which complements the new programme, made significant steps in implementing the Government's taxation strategy. It was specifically aimed at lightening the tax burden on earned income. As well as abolishing the temporary 1 per cent income levy, the budget provided for substantial increases in the basic personal allowances and in the standard rate tax bands. These measures will afford relief to all income taxpayers, including those on relatively low incomes.

Moreover, additional measures targeted directly at assisting the low-paid were also introduced. The child addition to the income tax exemption thresholds is being increased by £100 per child. The addition will now be £450 each for the first and second child and £650 each for the third and subsequent children. For example, in future, a married person with four children will be able to earn up to £9,400 per annum or slightly over £180 per week without having to pay any income tax. In addition, the rate of tax at which marginal relief is charged on income slightly above the exemption threshold is being reduced by 8 percentage points from 48 per cent to 40 per cent. This will reduce significantly the marginal rate of tax faced by many low-paid workers. The ICTU and the social partners generally endeavoured to deal with the issue of low-paid workers.

The improvements in this area will mean that some 38,000 taxpayers will either benefit from marginal relief or be fully exempted; moreover, the remainder of the 111,000 taxpayers currently on marginal relief will see their income tax considerably reduced. A low income exemption threshold was also introduced into the health contribution and the employment and training levy. Finally, to help maintain and create employment, especially in labour-intensive sectors, a differential employer's PRSI contribution rate structure was introduced — a reduced rate of 9 per cent will be levied on incomes up to £173 per week in such sectors.

These changes, including those in the PRSI system, should improve significantly the competitive position of firms with large numbers of low paid employees. Deputy John Bruton spoke earlier about this sector. They are in a difficult competitive position but these benefits are geared primarily to assist them.

However, we must all recognise that tax reform is not simply a matter of reliefs, that the strategy behind the tax changes being implemented by the Government involves a reorientation of the overall system to be more employment friendly. This necessarily involves choices and trade-offs. In the income tax and PRSI code, focusing reliefs and reductions on the lower-paid inevitably involves some claw-back elsewhere in the tax code. In the income tax area this involves the confining of tax relief for mortgage interest and VHI premia to the standard rate over time, and making unemployment benefit reckonable for tax purposes. It was also necessary to look to the areas of excise and the residential property tax for some of the funds, which we believe to be justified. Without these trade-offs, the real benefits of restructuring our tax and PRSI systems could not be realised.

I am sure the House will agree that, if tax measures to improve wage competitiveness are to be successful, we must also ensure a receptive environment for investment and an adequate supply of investment capital. Accordingly, the Programme for Competitiveness and Work and this year's budget also focus attention on the need to improve the availability of equity capital for Irish industry in general, and particularly the smaller indigenous business sector. While the general tax policy of restricting reliefs and exemptions so as to favour reduced taxation is the most important plank of the Government's tax policy, I have never ruled out specifically focused reliefs to help develop particular sectors of the economy. In this regard the budget contained a number of measures designed to help businesses to provide more employment.

I do not intend to catalogue all the relevant measures. However, some merit special mention. The budget provides for significant new reliefs in respect of capital acquisitions tax and capital gains tax which will provide a positive incentive to business investment and enterprise. A new business relief is being introduced into the capital acquisitions tax code and the special Capital Gains Tax roll-overrelief has been extended to shares in most trading activities in the wider services sector, whereas previously it applied to shares in BES companies only. A new 27 per cent rate of capital gains tax is being introduced in respect of share disposals in certain unquoted companies, all widely welcomed by all business groups. The company value limit for entrepreneurs' investment in their own company under BES is being raised from the current £150,000 to £250,000. These measures are designed to increase the return from productive investment and tilt the balance in favour of such investment.

The budget paid particular attention to facilitating the establishment and development of small businesses. The VAT registration thresholds for both goods and services are being increased, the current cash basis of accounting for VAT is being extended, and a single registration form will be produced, which can be used by businesses to register for all taxes. In addition, steps are being taken to simplify the tax clearance procedures for public sector contracts. That will have a major beneficial effect on businesses, particularly these that, to date, have had to obtain several tax clearance certificates before engaging in business with State companies and others.

The Government's foremost concern at present is the need to create sustainable employment. With that objective in mind, supporting enterprise in the interests of employment has been a central theme of the new programme and of recent budgets.

On pay arrangements regard has to be had to employment needs and fiscal discipline, first, the need for a concerted approach to tackling unemployment and maintaining existing employment and, second, the underlying need for continuing discipline in the management of public finances. The Government considered that the broad thrust had to concentrate on improving competitiveness through pay moderation, and on aiming for a settlement at a level which would enable resources to be allocated to employment-creation policies. The features of the pay agreement are well known. The special arrangements for the public service are designed to ensure that, in cost terms, pay increases in the public service over the three-year programme and the cost in the first year will be the same as those applicable to the private sector. The public service agreement is for three and a half years, and provides for general increases totalling 8 per cent.

The later starting date, combined with the staggered starting dates proposed in the public service, are designed to provide the necessary space for dealing with outstanding claims or unfinished business under the local bargaining clause of the Programme for Economic and Social Progress. Negotiations on this unfinished business will entail agreement on flexibility, improvements in efficiency and effectiveness and other offsetting measures, and the outcome of any claims will be implemented in four phases during the lifetime of the agreement.

There has been much loose talk about the special arrangements for the public service which I would like to dispel. During the currency of the Programme for Economic and Social Progress pay agreement, many private sector employments concluded settlements with their workers under the terms of the local bargaining clause, which applied for the second year of the Programme for Economic and Social Progress. Public service workers were specifically debarred under the terms of the Programme for Economic and Social Progress from making claims until the third year of the agreement starting from 1 January 1993. While practically all groups of public service workers lodged claims last year, only a very small minority were dealt with and it is unfair to say that the public service received all these increases.

By any standard, an agreement which limits the outcomes of negotiations on outstanding claims for special improvements in pay or conditions of public servants to 3 per cent, over three and a half years, is a reflection of the genuine concern of the social partners for the very special needs of the economy, to ensure that public servants play a real part in improving competitiveness — expressed in their case in the cost of the vital services they provide and in the efficiency and effectiveness of service.

There has also been much loose talk about the special agreement reached on the 1 per cent to be paid on 1 April next. I answered a written question on that issue yesterday. The intention is that outstanding claims for each group of employees will be discussed and arrangements made to process them, on the basis of the options set out in the agreement. When that has been done, 1 per cent of the basic pay of the group concerned from 1 April 1994 will be available either for payment then, if the group concerned so desires, or for use in any subsequent negotiations. While the payment is available to every group pursuing an outstanding claim under the Programme for Economic and Social Progress, it must be offset against the outcome of the subsequent negotiations.

We will probably have an opportunity next week to discuss some of the comments made in the course of the debate about Structural Funds and the ongoing controversy. Deputy Harney referred to statements I made and Deputy Yates raised this issue outside the House. I hope we will be able to deal with this issue next week. During the week I outlined in detail the progress of the discussions underway and the Government's aspirations during the life time of the programme. I would be concerned at any remarks made outside or inside the House that imply I did not acknowledge what was agreed in Brussels last October.

At the press conference on 9 December 1993 I said that the indicative allocation of Structural Fund aid for Ireland for the period 1994 to 1999 made by the Commission on 21 October was less than the figure on which the National Plan was based. I also said at the press conference that this shortfall in European Community aid has been taken into account by the Government in settling the 1994 Estimates in the Public Capital Programme. The assumption underlying the Public Capital Programme and the estimates is that Exchequer and EC spending on areas covered by the plan will be £130 million less than the plan projections. My remarks were fully reported in the media. This is a serious accusation by a Member of the House and one I deny. The record shows that not alone did I acknowledge what was said in regard to the period 1994-99 but subsequently provision was made in the Book of Estimates for the reduction. The departmental Estimates for 1994 reflect that reduction across the board although not on a pro rata basis.

As recently as last Friday, in a radio interview, I made it clear that there was a shortfall in EC aid and that there would have to be adjustments in EC aid and that there would have to be adjustments to the proposals to be included in the community support framework. This did not deal only with 1994 but with subsequent years. On "Morning Ireland" Mr. David Hanley asked me whether I would have to drop £800 million. I replied that was true because the overall level of these funds had already been settled last October.

The record and my statements over many months are clear and as Minister for Finance I cannot allow statements made either outside or inside the House to go unchecked.

Mr. Yates

Will the Minister deal with the allegations I made concerning his remarks on Tuesday? Last night on the 6.01 news, in the course of a dispatch from Brussels, Mr. Tommy O'Gorman said the Minister for Finance has put forward proposals at Cabinet meeting last Tuesday. My recollection is he said there would be a reduction of £200 million in the Department of Transport Energy and Communications and a reduction of £50 million in the Department of Arts, Culture and the Gaeltacht. I could not reconcile that with the impression I had been left with following the six Private Notice Questions tabled on the subject. This morning I read an article in the Irish Press which went into great detail about the Cabinet meeting on Tuesday and I will read a few short quotes from what the Minister said then.

An Leas-Cheann Comhairle

At this stage I should remind Deputies that while passing references may be made to the matter of EU funding in the National Plan it should not be done to the exclusion of the main item for discussion here today i.e. the Programme for Competitiveness and Work.

Mr. Yates

I have a prepared speech on the Programme for Competitiveness and Work and I will not take any longer on this matter than the Minister took. Bearing in mind that this Cabinet meeting had taken place a few hours earlier, the Minister said in the Dáil that the Government was confident it would prove possible to draw down the full £7.84 billion EC aid on which the National Development Plan was based.

Later he said: I do not intend to get involved in commenting on any of the details of the discussions as they progress. This would be neither helpful nor appropriate and could indeed give rise to distortions with relatively minor issues being blown out of all proportion. Is £730 million a minor issue? In response to questioning from Deputy De Rossa, the Minister said, "The Government will not publish a revised national development plan now or in the future". The clear implication was that the Government was not budgeting, yet that morning he proposed deep surgery to the National Plan. I had been told by very reliable sources that Department of Finance officials would present revised proposals at the EU Commission office on Thursday morning, which they did. Whether it was £730 million or 8.5 per cent of everything is irrelevant. Surely it would have been more accurate if the Minister had said the Cabinet is currently discussing a number of different ways of dealing with the shortfall. All he had to do was explain it. The claim has been made that the Government will secure the maximum amount of funding and we will not be far off the figure of £7.84 billion, yet the Minister says he fully acknowledges the shortfall.

Mr. B. Ahern

There are two separate issues. The first is that the Government's wish over the lifetime of the plan is to get £7.84 billion. We still hold that aspiration and hope to achieve it during negotiations on the review and other issues. Second, it was acknowledged in October that £730 million was gone. I acknowledged this in the book of Estimates when I took out the first proportion of it this year. I hope that clarifies the matter.

Mr. Yates

That distinction was not pointed out last Tuesday. I consider the Taoiseach and the Tánaiste and Minister for Foreign Affairs to be more culpable than the Minister for Finance in their handling of this matter. Last night the Taoiseach was shown on the news bulletin putting up his hands and saying that nothing had changed, while at the same time the Minister for Finance was issuing a statement explaining the 8.5 per cent cuts. This is confusing beyond belief. People do not like to see the country humiliated in its international dealings. I will not comment further because we will debate it in greater detail next week.

The Programme for Competitiveness and Work is a microwave reheat of the Programme for National Recovery, the Programme for Economic and Social Progress and our other hyped up plan. These tired policies have failed. We cannot escape the reality that Ireland has the highest emigration and the second highest rate of unemployment in Europe. If the formula was so successful, why are emigration and unemployment the fundamental reality? The real purpose of the programmes is to get all the social partners around the table at the Central Review Committee so that criticism of the Government is swept under the carpet. It is politically ingenuous. We do not see Mr. Peter Cassells, IBEC or the captains of industry publicly berating this or the former Government simply because if they have a problem they go and talk about it in private. It is of political benefit to develop a framework that insulates the Government from criticism and that is the real purpose of these programmes.

There are many good things in the programme but they can be done on a day-to-day basis by a good administration. We do not need national programmes to do a great many of these things.

The Programme for Economic and Social Progress operated from 1990-1993 but during that period unemployment went up by 95,000 or 40 per cent — a staggering increase — at least 40,000 people emigrated and tax levels rose by 2.5 per cent of GNP. To put it more simply, people paid £2.50 more in tax for every £100 in circulation in the economy. I must conclude that the Programme for Economic and Social Progress was not a programme for economic and social progress but for higher unemployment, higher emigration and higher taxes.

This morning the Taoiseach referred to my views on centralised agreements. The Minister for Finance as a former Minister for Labour will be aware that the Irish labour force is not a homogeneous unit. There are sectors which can afford to pay more, for example for productivity deals or when new technology is put in place, but others such as the clothing industry and exposed sectors cannot afford more because survival is the key issue for them. To assume that a centralised pay deal with one formula will suit all circumstances in the Irish labour force is accurate. In some cases it results in higher unemployment because some employers cannot pay the increases. My central thesis is that the flexibility that is necessary to deal with different circumstances in the labour market cannot be properly accommodated in a centralised deal. The second critical weakness is that the captains of industry, the public and private sector unions, and farmers are represented, but who represents the unemployed? Who represents the school leavers looking for a job?

Mr. Broughan

Certainly Fine Gael does not — with two seats in Dublin.

Mr. Yates

With this monolithic consensus and the spin doctors, the Opposition has a very important role to discharge in trying to debunk this cosy complacement consensus.

Over 90 per cent of staff in the public sector are unionised but only three out of ten workers in the private sector are now represented by unions. The majority of workers in the private sector are not represented by the Irish Congress of Trade Unions; similarly the majority of private sector businesses are not represented by IBEC. The Small Firms Representative Association is opposed to this programme. To suppose that everybody is represented is just not valid.

The public service union, CPSU, has argued that over the past two national programmes the low paid Clerical Assistants and Clerical Officers in the public sector got an average pay increase of 36 per cent whereas top brass civil servants such as secretaries of Departments got a pay rise of 101 per cent. I do not think that is equitable. Given that they have little or no prospect of promotion, they have a genuine case for the increment system but this has not been accommodated in the centralised deal. The fat cats have come off much better. There is also a disparity between industrial average earnings and average earnings in the public sector. It is significant that the representatives of the unemployed and self employed have come out against this programme.

The public sector pay bill has risen from £2.7 billion at the start of the Programme for National Recovery to £4.1 billion, an increase of almost 50 per cent. Over the same period inflation was less than 20 per cent. If the increase arose from employing greater numbers, because of our high rate of unemployment, or if it could be explained as compensation for cost of living increases it could be justified but neither applies.

Mr. Broughan

It fell behind.

Mr. Yates

The special pay deal is the problem.

Mr. Broughan

What about the larger farmers?

Mr. Yates

I carry no candle for larger farmers——

Mr. Broughan

The Deputy represents many of them.

Mr. Yates

I represent many people, not just the larger farmers. The Labour Party would like to depict the Fine Gael Party in that way but, fortunately, we have a wider appeal. If the Deputy looks at the figures for the last election he will see that farmers accounted for only a small proportion of the hundreds of thousands of people — albeit a reduced number — who voted for us.

Mr. Broughan

Their incomes increased by 40 per cent in two years.

Mr. Yates

I have no difficulty with the idea that they should pay their fair share of tax; that is not an issue. What is at issue is the reform of the special pay deals.

The Minister has suggested a formula for the payment of outstanding special pay increases but these have not been linked to reform of the conciliation and arbitration scheme; in other words, if the unions say they are not happy with the new criteria to be applied to special pay increases we will be back at the starting gate. There is a series of such claims and during the period of the programme there will be an explosion — the time bomb effect — of special pay increases. The problem is that if one group moves ahead the others will have to catch up and we will have to start all over again. That matter should have been dealt with.

Last year when people were not able to get to work due to industrial disputes the Minister for Enterprise and Employment, Deputy Quinn, made a valid point that there should be a code of practice in essential services. If we are to have consensus let us reap the benefits, in terms of industrial stability. It is not unreasonable that in essential services such as electricity and public transport there should be a code of practice and provision for a cooling off period to ensure the public are not used as pawns in a battle between unions and management.

When people mention the need for an increased contribution from the private sector they mean a training levy paid by employers to meet the cost of the human resources provisions of this plan. Workers are not overpaid, they are over taxed. A training levy to meet the cost of job schemes in the unproductive sectors would damage the prospects of the productive sectors. Let me give a classic example in the clothing sector.

Last year a factory in my constituency, Wexman Trousers, went out of business. Gross pay costs in that company were higher than in any of its competitors in Britain or Northern Ireland; yet the take home pay was lower due to the tax wedge. It is evident that we do not need any further training levies.

The flaw in this programme and the Programme for Government is that there is no commitment — only a vague aspiration at best — to reduce the tax take as a percentage of GNP. If one includes PRSI and health contributions which make up 6 per cent, 44 per cent of GNP is accounted for by taxes, a crushing burden. There are four taxes on employment: PAYE, PRSI, health contributions and levies. We have the highest taxes in Europe on drink and motoring as well as the top rate of VAT. These have the effect of depressing economic activity — the law of diminishing returns.

It is not unreasonable to say that over three or four years we need to reduce taxes. We could debate which taxes should be given priority. Deputy Broughan might prefer to see the family home tax reduced while someone else may prefer to see taxes on income reduce——

Mr. Broughan

Which would the Deputy prefer?

Mr. Yates

I support tax reductions.

Mr. Broughan

How do we compare with other countries?

Mr. Yates

That is what I am illustrating.

Mr. Broughan

The Deputy is not.

Mr. Yates

The statistics to which the Minister referred do not take PRSI into account. If the figure of 6 per cent was added we have the highest rates.

We now have an opportunity to cut taxes because of two factors. The reduction in interest rates has had a dramatic effect on the public finances. Some years ago the cost of servicing the national debt peaked at nearly 11 per cent; it will be 5.5 per cent this year. For every 1 per cent reduction in interest rates the Government will save £290 million. Allied to this is economic growth — exports have increased, incomes have risen, there has been a reduction in the savings ratio and increased domestic spending. Even if we did nothing tax revenues would rise by 5 per cent this year. Despite all the talk about how much better off people will be after the tax changes people will pay £23 million more in income tax this year. There was never a better opportunity to use the fruits of this increased growth, without cutting public expenditure, to reduce taxes but no attempt has been made to do this.

It is regrettable that there is no strategy to create employment in the services sector which are nothing more than glorified tax collectors. This is the sector where jobs will be created.

The tax treatment of investment does not favour risk taking and the tax treatment of bank deposits as against investment is distorted. There is no tax on post office saving certificates and only 10 per cent DIRT on special savings accounts whereas one has to pay corporation and capital gains tax at the rate of 40 per cent if one creates jobs.

The proposed targets in relation to the public finances are disappointing. It is hoped to reduce the debt-GNP ratio to 95 per cent by 1996. With a good outturn this year I expect the figure to be 98 per cent. What is the reason the Government has opted for such a modest target in benign circumstances?

Mr. Broughan

Which programmes would the Deputy cut to make up the £700 million shortfall?

Mr. Yates

Seventy pence out of every £1 paid in income tax goes towards the national debt. The best way to cut taxes is to reduce the national debt. Despite all the hype at Dublin Castle and 300 hours of negotiations all the Government has produced is a "microwave reheat" of past programmes which made little impact in terms of competitiveness and employment.

Mr. D. McDowell

I wish to share my time with Deputies Broughan, Costello and Walsh.

Acting Chairman (Mr. Kirk)

Is that agreed? Agreed.

Mr. D. McDowell

Listening to Deputy Harney earlier, I thought at least one representative of the Progressive Democrats would have been present in the House all day but, sadly, they did not think there was any need to listen to any speech other than that of Deputy Harney. Perhaps we should not take what the Progressive Democrats say too seriously.

I endorse the principle of national consensus which lies behind the Programme for Competitiveness and Work and the two previous programmes. There are three ways in which we can do business: we can seek a national consensus, we can let the labour market rip or the Government can issue diktats which is what Margaret Thatcher was inclined to do in the 1980s. The Labour Party firmly endorses the first of these approaches to allow as many interest groups as possible to have a role in the decision making process to ensure stability and predictability in the economy. It was for this reason that on entering Government we established the National Economic and Social Forum.

This programme will be judged on one criterion alone — the number of people on the live register at the end of three years. I agree with the Opposition that it would be useful to consider the Programme for Competitiveness and Work in the context of the Budget Statement made by the Minister for Finance in January, the National Development Plan published last September and the Programme for Government.

In looking at the plans that have emerged in the past year, we can determine the primary strands of the Government's approach to employment creation. We can start with industrial policy where we have tried to broaden the remit of Forbairt, Forfás and IDA Ireland to give it responsibility for indigenous industry. In terms of fiscal policy we are removing the disincentive to work, particularly by lowering income taxes for those on low pay and reducing the disincentive to employers to create extra jobs by making alterations in the rate of PRSI. Over the next seven or eight years of the National Plan we hope to make considerable infrastructural investment on an unprecedented scale which, for the first time, offers the possibility of having an infrastructure comparable to that of the rest of the European Union.

Another strand of our policy is to make substantial investment in training which particularly targets those unemployed for more than 12 months. One particularly exciting aspect of the Government's policy is the local development schemes. We have targeted areas of particular social deprivation and high unemployment, most especially in this city. We aim too to give incentives to small and medium-sized enterprises. There are many such initiatives in the budget. An advisory group set up by the Minister, Deputy Quinn, is due to report soon and we look forward to additional measures following on the report.

The Programme for Competitiveness and Work sets out means by which costs can be contained. It is interesting that the only costs Deputy Yates and other members of the Opposition seem to pay any attention to are the costs of labour. There are many other costs which influence competitiveness, for example, interest costs, and the Government has provided £100 million to be administered by the ICC which will provide low-cost fixed-rate loans to small and mediumsized businesses for the next decade or so. The Government has also taken specific measures to reduce the cost of telecommunications by the rebalancing efforts last year. The Government will be involved in direct investment or investment by way of joint ventures in creating jobs, particularly in the services sector.

I mention these strands because, with the number of plans that have been produced, it is possible to lose sight of the overall picture. Now that we have got all these strands, it is a matter of drawing them together and getting on with the job.

Deputy Yates accused the Labour Party of being a "tax and spend" party. It would be difficult for him to sustain that charge in the context of a budget which made concessions of £350 million particularly to those on low pay. The Labour Party has always been in favour of providing the maximum possible level of service in terms of education, health and social services to the maximum number of people, particularly those who cannot afford to pay for it themselves. That is something we endorse and still stand for.

There has been a feeling in the past that perhaps all our public spending was not properly targeted, but one novel feature of this Government has been the way Government expenditure has been targeted. Look, for example, at the health budget, where the Minister, Deputy Howlin, has specifically targeted waiting lists and spent £20 million very effectively on those areas despite pressure from interest groups within the health service. Likewise, the Minister for Education has specifically targeted public expenditure at schools in disadvantaged areas. We are targeting our public expenditure more effectively than, perhaps, was done in the past.

The Labour Party endorses the notion of social consensus. It endorses this Programme for Competitiveness and Work and the overall programme of the Government and looks forward to seeing it deliver on the central issue, which is jobs, in the coming years.

Mr. Broughan

Let me take up where my colleague, Deputy McDowell, finished. I strongly support the concept of partnership, not just in political life but in the structure of the economy generally. Countries like Denmark and Sweden are often held up as examples to us. One characteristic of such countries is a strong pattern of social consensus over many years.

It is surprising how often commentators are wrong. Last week a commentator, Ms Nuala O'Faoleán, remarked on the necessity for opposition and the Fine Gael Party in particular. It has been a characteristic of this partnership Government that the real debates about the direction the economy should take happen within the Government between the partners, as happened in regard to semi-State bodies and aspects of Government administration. At this point in the political history of the Government, it is good that that should be so. The Minister for Finance answered one of the charges being levied against the Programme for Competitiviness and Work earlier today by remarking that within the previous two programmes, the Programme for National Recovery and the Programme for Economic and Social Progress, we had outstanding gains in labour cost competitiveness against all our industrial partners and especially against the UK. That pattern will continue with rises of 7.5 to 8 per cent in the next three and a half years.

We are particularly proud that this programme is underpinned by major advances in health, education, social welfare and housing. The immense dangers of social exclusion can only be dealt with by the major initiatives which the Government has taken. I particularly compliment the Minister, Deputy Quinn, on the determined action he has taken in constructing the new Department of Enterprise and Employment, particularly in relation to competitiveness. There is a series of new incentives for small businesses, particularly the enterprise fund of £100 million which will be administered by the ICC and which offers great incentives to small and mediumsized enterprises. In addition, the Minister has attempted to create a new process of job creation in the 70,000-strong commercial State sector. The initiatives signalled in the programme for the development of An Post are very worthy. I hope the Government will pay particular attention to the structural problems and the 300,000 unemployed people. I urge the Minister for Enterprise and Employment to bring forward his programme on work sharing. I understand that his Department and others are currently engaged in a major evaluation of work sharing and will come forward with a major report in June which, it is hoped, will provide a basis for another major attack on the problem of unemployment.

I came to this House not just through political activity but through being involved in community economic development. One of my Democratic Left colleagues, Deputy Rabbitte, was very hard on our community enterprise programme and the new county enterprise boards. I have seen major moraleraising initiatives being taken under the programme so far, particularly on the north side of the city, and I totally support it. The Irish Congress of Trade Unions, led by Mr. Peter Cassells, is to be commended on the steps to insert into the Programme for Economic and Social Progress the area-based partnership programme which has been a signal for future development of our country. It has been a huge boost to the deprived north side and Dublin city communities.

As the Programme for Competitiviness and Work develops and as we move on the worthy initiatives that are being taken in 1994 there are some areas of macropolicy which the Minister would do well to watch out for. We have already heard from Deputy Yates that his party and, indeed, the Progressive Democrats, seem to be in favour of slashing public expenditure. Deputy Yates said he is in favour of paring £700 million of public expenditure off the national budget to dramatically bring down the debt-GNP ratio. I do not favour such an approach. The approach the Minister took this year was prudent and sensible and with a 5 per cent growth in the next three years the debt-GDP ratio will decrease to approximately 60 per cent as required under the Maastricht Treaty.

In regard to our management of monetary policy, it is crucial that the mandarins in the Department of Finance and the new administration in the Central Bank evaluate monetary policy in respect of jobs which, with job creation must be their number one objective. In the past we suffered because they did not take cognisance of that. On behalf of the Labour Party I commend the Programme for Competitiveness and Work to the House.

Mr. Costello

I welcome the programme which was put together with the social partners, it is a mature way of dealing with social and economic issues. The remarks of Deputies Yates and Harney were those of begruders. On the one hand, they spoke about workers being paid too little and, on the other, stated that too much was being given to workers, particularly in terms of pay increases in the public sector. We must recognise the problems that can arise from bad industrial relations and the number of working days that can be lost by trade union disputes. With a combination of economic and trade union stability the progress of the country can be planned and we can ensure that the number of working days lost is reduced significantly. There is no better way for the Government to do business than by bringing together the social partners, farmers, employers and the trade union movement to hammer out an agreement that will be the framework for progress in the next few years. We had a 2.5 per cent pay increase under the Programme for National Recovery, slightly more under the Programme for Economic and Social Progress and an 8 per cent increase under the Programme for Competitiveness and Work. It is regrettable that we have not thought fit to include the unemployed who, at a level of 300,000, represent the second largest sector here. They represent a larger proportion of our population than farmers and should be regarded as an essential part of the social partners.

I welcome the 60,000 job creation target for the next three years, the set target for reducing the debt — GNP ratio to 95 per cent and the 100 per cent target for community based programmes. It is important to set targets. While in the past we have had stability, low interest rates and low inflation, there has not been the expected take up in jobs. We must adopt a more interventionist policy. I hope the proposals of the National Economic and Social Forum are firmly injected in the Programme for Competitiveness and Work and that we can use the mechanisms of the Government and the Central Review Committee to ensure that this takes place whether by sustaining existing jobs, increasing employment through job sharing, the introduction of a shorter week, early retirement or new mechanisms for job creation. We must adopt those proposals during the three year term of this programme. The key success during the lifetime of this programme is to focus on jobs and job creation.

We have set up a good framework involving the social and economic partners. The budget measures proposals in the National Development Plan and the programme for Government will reduce the numbers unemployed and bring many people back into the workforce.

Mr. E. Walsh

I support the Programme for Competitiveness and Work. As a trade unionist for most of my life I understand the necessity for organisation and bringing people together through consensus. The Labour Party appreciates the work put into the programme by the trade union movement through the Congress of Trade Unions who put many hours of work and effort into the preparation of this substantial programme. An examination of this programme and the programme for Government highlights that they dovetail in an overall plan to deliver the best possible programme for the economy for the lifetime of this Government and beyond.

Deputy Harney stated that members of the Labour Party were not present for the debate. Nevertheless, we were all interested in what she had to say and we are now here to put our views on record.

The programme for Government will be of great benefit to the people of Dublin south west because of the number of jobs that will emanate from the Tallaght Hospital project. Some time ago Deputy Harney stated she would like to see the public sector privatised. The ideological differences between the views of the Labour Party and the Progressive Democrats are substantial and I understand her position. The campaign in respect of telephone charges organised some time ago has sunk into oblivion because the statements made at the time were not true. We are maintaining jobs in the public sector and the 2,000 jobs she advocated should be trimmed off that organisation to make it more competitive will probably be maintained while jobs in the public sector will be increased.

The NESC report suggested areas in which we should make improvements, particularly in relation to management and training. I welcome the £10 million proposed in the programme to reduce waiting lists in the health area which are of great concern to the people at whom this programme is directed.

Mr. E. Kenny

This debate takes place during one of the greatest débacles in Government circles — and in the country — for a long time. It is a gross distortion to speak about a Programme for Competitiveness and Work drawn up and launched by the Government amid great publicity sometime ago when the spotlight was on it.

We have heard a series of statements by various Ministers on the Government benches about money we are to receive from Brussels during the period of the plan and programme. The shortfall of £800 million will have a major effect on competitiveness and work. Communities are afraid that finance will not be made available to complete programmes they diligently prepared. They see those projects falling into the bottomless pit created by Government ineptitude, portrayed by Ministers in statements in the Dáil which they knew were false.

Ireland is deemed one of the more prosperous countries of the EU. It is comparable to three other member states which are probably more prosperous in terms of resources per head of population. Governments during the past ten to 15 years have failed to meet the challenge of job creation. This had led to shortage of jobs, social frustration and the need for continued emigration, with consequential draining of the life blood of every community. We are left with an ageing population unable to meet the competitive initiatives of other countries. During the past three to four months the practice of Ministers touting their wares, blowing hot air about the projects to be completed and the citeria to be laid down for the spending of EU moneys is nauseating. Some of those people with seals of office may be inexperienced or naive but it is nauseating to listen to Ministers who know they are not telling the facts. I do not include the Minister of State at the Department of Agriculture, Food and Forestry, Deputy O'Shea in that group. He is here long enough to know that Ministers should speak the truth at all times.

There has been much talk about competitiveness and work. This morning the Taoiseach said that jobs can only be created and sustained if we are competitive. Competition at home and abroad has never been more acute and that is understood by everyone. The Government who has the biggest majority in the history of the State has consistently failed to use the political clout vested in it by virtue of its numbers to create an environment where those with initiative and money can create jobs, employ people, manufacture products, sell them at home and abroad and thereby boost the local and national economy and provide hope for our people. During the past two years many small businesses have closed because of the high cost of insurance. Specialist firms of small contractors, involved in roofing and other businesses who employ three to 15 or 20 people are being put out of business because they are unable to secure insurance at a reasonable cost. Many of those companies are forced to obtain insurance from Lloyds in London who quote astronomical rates, ten times the rate given to an English or larger international firm. Those small companies are being crucified and in many cases being put out of business. The bigger corporations with greater financial clout have different arrangements for public liability insurance and so on. The Minister for Enterprise and Employment, Deputy Quinn, and the Minister of State, Deputy Brennan, should call for an immediate report on the pressures facing small businesses, particularly in respect of insurance costs.

A client received a motor renewal premium notice of £941 from Norwich Union and a quotation of £594 for the same cover from PMPA Insurance. One company owns the other, yet the client received two different quotations. Insurance costs ranging from motor insurance to public liability crucify small firms. They want the Government to address this issue to allow them be competitive and continue in business. An equitable system of insurance would give such firms a reasonable start. The Minister will know from his Department's records that there are hundreds of small businesses whose insurance cover will be exhausted within a few months and they will either have to obtain insurance from Lloyds or go out of business. This will give rise to a monopoly for larger companies and, given their financial clout, increased costs will lead to further unemployment. I have received details of insurance costs for steel erectors, and roofers, many of whom have secured subcontracts under schemes operated by the Department of the Environment and other Departments. That matter of insurance costs needs to be addressed.

The setting up of Government quangos such as county enterprise boards and regional development councils diminishes the authority vested in the local government structure. It is nice to get the task of dealing with the glory jobs preparing reports and setting up task forces on nice development issues, but in reality they do not lead to job creation. Setting up county enterprise boards and regional councils with no real clout will not lead to competitiveness and work.

One never hears of regional councils or county enterprise boards being set up to consider regional dumps or sewerage schemes. Regional dumps are a matter of major concern to many people. Inevitably, they are objected to from many quarters. The lousy jobs are left with the people given the original authority, but not the resources, to develop the country, namely the local authorities. The public representatives are faced with the problem of locating a dump. I will develop that argument further in the context of regional development.

In terms of competitiveness and work, in many peripheral areas, such as Gaeltacht areas, the Government faces a great challenge. For example, on Achill Island, half of which is a Gaeltacht area, seven factories which were fully operational in the mid-1970s are now empty. It is now more natural for young people to work in Cleveland than in Achill or Westport. This is a microcosm of what is happening from Inishowen Head to west Cork. All along the western seaboard communities are dying, there are many studies to back this up, the latest of which is the Bishops' crusade for survival. The Government should provide a proper tax regime for people with initiative, otherwise we will never be competitive and will not provide sufficient work for our people. I have the highest regard for small businesses who employ a small number of people and who manage to keep their heads above water in a very competitive world.

I am glad that the condition of our national primary roads means it is comparatively easy to travel from one end of the country to the other. For small businesses in the west who have to transport their products to ports on the east or south-east, it takes time and money and transport charges are much higher than those for our international competitors. It is very difficult for small businesses to compete in those circumstances. The recent report on small businesses presented to the Minister should be closely examined. A supportive structure should exist for small businesses in terms of tax breaks, special tax reliefs or other measures. The recommendations in the small businesses report are based on the knowledge of people working in these areas.

The people of Waterford are to be complimented on achieving the siting of a wood pulp mill in that county. There is a major port there and sufficient timber in the hinterland to ensure its successful operation. There is much plantation, privately and through Coillte, in the northwest and west and a second wood pulp mill will be needed within the next ten years when this timber matures. There should be forward planning in this regard; we should be making arrangements for the siting of a second wood pulp mill as many jobs would be created in this context. Counties in the west and northwest, including Mayo, would be suited to the location of such a move.

If we are to be competitive and generate a sufficient boost in the economy to create jobs for our people, we must export quality goods at competitive prices. While recent changes have been made in Córas Tráchtála and the export boards, we are not doing enough in this regard. We must make the world aware that we have a young, capable workforce and that we can produce quality goods at competitive prices which will be delivered on time. An insufficient number of people internationally are aware of our capacity to produce goods and have no knowledge of what we have to offer — this matter has been raised here on umpteen occasions. We have consular offices and ambassadors in many countries and these people should be given a backup team to make other Governments aware of what we have to offer and what we can deliver.

The South American continent will open up in the next 20 years and there is enormous potential there — and in the Far East — for new markets. With the big population in these countries, cheap labour puts us at a disadvantage. However, we should be able to vastly improve our exports to such countries. The real problem is that the Government has not introduced sufficient incentives for people with initiative and money to get into the manufacturing area and make quality products for export. If we concentrate on reducing tax and the amount of paperwork with which employers have to deal, it will benefit the next generation.

Given the débacle in the last seven or eight months in terms of Structural Funds and the shortfall of £800 million, one can no longer trust or have confidence in the Government. I am disappointed at its inability to deal with our manufacturing problems.

Mr. B. Smith

I wish to share my time with Deputy Noel Ahern.

Acting Chairman

Is that agreed? Agreed.

Mr. B. Smith

I welcome the opportunity to speak on this motion. The Programme for Competitiveness and Work continues the consensus approach of recent years and the social partners involved are to be commended on their commitment to dialogue. The main themes in the programme are the need to create jobs, to build on our natural strength and to continue progress in developing our social services. Within the necessary financial disciplines, substantial progress can be made during the lifetime of the programme in terms of the creation of much needed employment and the improvement of our social services. The achievement of the programme generates confidence, and the social partners working together have the necessary economic strength to stimulate activity in all sectors of the economy. Economic advancement should be to the benefit of all members of society.

In the past too many people have been relegated to the margins and, unfortunately, have been unable to contribute to the community. There is an awareness in Government and among the social partners of the need to ensure that economic progress is not confined to those areas of greatest economic strength but takes place throughout all regions.

I welcome the Taoiseach's commitment to the continued monitoring of the programme to ensure that all sections of the community benefit from these developments. The commitment to have 60,000 more people at work between now and 1997 and the provision of 100,000 places in community-based work, training and education by the end of 1997 is very important.

The major section in the programme dealing with agriculture, food, forestry and rural development is indicative of the importance of this sector to the economy, with approximately 30 per cent of total employment dependent on farming, food and forestry. This specific commitment in the programme, coupled with the improvements which have taken place in recent years, will help to achieve the maximum number of viable farms and farm households in rural areas. The lifetime of the PCRD coincides with the extension of the international trading regime. It is vitally important, not just for the farming community in rural areas but for the entire economy, that effective measures be taken to ensure that this sector becomes more competitive. In order to tackle seriously our major unemployment problem, industry must be based on our natural strengths and resources and the particular opportunities which arise within the agricultural industry. Agriculture remains the catalyst to regional development.

The commitment to a more active rural renewal policy is absolutely essential if the drift of people from rural Ireland is to be halted. Unfortunately, in areas like my own the drift of population and the age structure give cause for serious concern. Further immediate action must be taken if the aim of stabilising the population in rural areas is to be achieved. I note the Government's specified commitment to the speeding up of the payment of CAP premia and headage grants. We are all well aware that premia and headage payments are now a substantial part of most farmers' income. Surely the time has come for a more efficient and orderly payment system of all premia and subsidies to farmers. I welcome the commitment by the Minister for Agriculture, Food and Forestry and the Ministers of State to the achievement of major improvements in the delivery of compensatory payments in 1994 and to have all eligible premia claims paid within three months of application by 1995. This is a welcome development and the certainty of payment will make it much easier for farmers to plan their programmes of income and expenditure each year.

In the past there has been far too much bureaucracy and red tape in the drawing down of entitlements by the farming community. Many farmers have been punished unduly for unintentional clerical errors and the administration of the schemes was much too rigid. I urge the Minister and the Ministers of State to improve without delay the existing procedures for dealing with complaints and to eliminate once and for all a system which leaves people feeling that they have been hard done by. In too many cases premia and headage payments meant the difference between surviving and not surviving and the loss of even one payment under a scheme for one or two years has been disastrous for many people.

The provision in the National Development Plan for public funding of up to £230 million for on-farm investment is very welcome. I urge the Minister to put in place the schemes designed to assist lower income farmers at the earliest possible date. I appeal to him to try to put the dairy hygiene and animal welfare schemes in operation without further delay. Such State assistance is absolutely essential if many farm households are to upgrade on-farm facilities so that they can survive and meet basic farming husbandry standards.

The operation of the disadvantaged areas scheme has not been satisfactory. I refer in particular to the classification of the less severely handicapped areas as more severely handicapped. The conditions attaching to the requirement to obtain severely handicapped status were much too rigid and basically the people who worked their land to the very best of their ability were punished. I am thinking in particular of my constituency of Cavan-Monaghan where in general the soil is not of good quality and the farmers work hard to create employment for themselves and their families. Yet, because of the income derived from that land they are deprived of the benefits which would accrue from reclassification to more severely handicapped status. The income thresholds must be changed, an element of soil quality must be included among the criteria and soil classification should be taken into account in determining the status of areas which marginally exceed the income threshold.

The substantial increase in expenditure on housing in recent years is to be welcomed. All homes should have basic sanitary facilities. I welcome in particular the increase in funding for the bathrooms programme and the remedial and other improvements works for sub-standard public housing. In line with the other commitments to rural renewal, I ask the Minister to insist that local authorities place greater emphasis on the provision of single rural houses and schemes in small towns and villages. In recent years there has been a drift in population from west to east and, unfortunately, there is also a movement of people within counties to larger urban areas. It is time to put a stop to this trend. The provision of housing for the elderly should be decided by the local authorities and health boards so that there are more day care centres. Such facilities could be provided in small villages with easy access by the elderly.

A house improvement grant scheme needs to be introduced. Such a scheme should be limited and targeted at those who need assistance to provide proper housing for themselves and their families. We all know of families in sub-standard and overcrowded accommodation who cannot avail of any grant assistance to make necessary improvements to their homes. In many of the cases I have in mind, the people are hard working but have limited means. They may have children in second or third level education and there are many demands on their small income. Such a house improvement scheme would not be just of enormous social value but would also be of value in terms of job creation. I appeal to the Government to introduce such a scheme at the earliest possible date. When one considers the VAT receipts from the purchase of materials and the subsequent number of jobs created, the net cost to the Exchequer of a scheme which would be of enormous social value would be very small.

I referred earlier to the paragraph in the programme which deals with the need for a more active rural renewal policy. Rural renewal will not occur unless the regional and county network is dramatically improved. On numerous occasions in this House I have highlighted the extreme difficulties caused by the poor conditions of the roads in counties Cavan and Monaghan and the need for substantial extra funding for this sector. It must be remembered that non-national roads account for over 94 per cent of all public roads and carry 63 per cent of all traffic. These roads are used by heavy commercial vehicles which are involved in the collection of milk and farm animals, the supply of farm materials and the transport of processed produce. Roads in Border counties have suffered more wear and tear than roads in other areas due to road closures and the increased volume of commercial passenger traffic on minor roads. Unless there is a substantial improvement in the regional and county road network in the Border counties we will not only have no rural renewal but we will not be able to maintain the jobs the people in those areas have fought so hard to attract and build up.

I am very glad that many of the issues which have been brought to our attention by constituents on a constant basis have been addressed by the Minister for Social Welfare, Deputy Woods. I am referring in particular to the improvements in the carer's allowance and the reduction in employers' PRSI contributions.

The new FAS community employment programme will build on the experience of the social employment scheme, Teamwork and the community employment development programme. I know from the experience in my county that the schemes operated by many voluntary groups were of great benefit to both the participants and the local communities. Many projects of a heritage, cultural and tourism value can be identified in all communities and the proper use of the new community employment programme will bring about positive changes in many areas and provide part-time work and skills development for 40,000 people. A very welcome feature of the programme is the continuation of certain secondary social welfare benefits for people who wish to participate in community employment or educational opportunties schemes. Previously we had to endure a totally unacceptable situation where the potential loss of secondary social welfare benefits, particuarly the loss of a medical card, was a major disincentive to participation in the schemes.

I welcome the commitment in the programme to expand the remedial teaching service with the provision of an additional 100 primary and 25 post-primary posts in 1994. I appeal to the Minister for Education to take special note of the unacceptable position in County Cavan which has one of the lowest ratios of pupils per remedial teaching posts at primary level. The Minister will have the opportunity to rectify this imbalance when she allocates the teaching posts for the 1994-95 academic year. The lack of remedial teaching services in County Cavan is a source of worry to all those involved in education. The Minister has committed herself to the provision of extra third level facilities to provide additional student places. Colleges, such as the Cavan College of Further Studies, which provide post-leaving certificate courses and the first year of courses for various regional technical colleges, should be established on a statutory basis. Those colleges which are most successful are addressing the needs and opportunities which exist for employment within their catchment areas.

The commitment to extend the Youthreach programme with the additional 1,000 places in 1994 is welcome but the Minister should review, without delay, the decision on the staff administering those courses. I understand many of them have no permanent status and the substantial increase in this programme should provide the opportunity to regularise their position.

This programme will contribute significantly to economic and social development in the years ahead.

Mr. N. Ahern

I welcome the Programme for Competitiveness and Work. It received some negative criticism here this morning, that there is nothing new in it and that it is simply a rehash of the Programme for Economic and Social Progress. Deputy Rabbitte made jokes about the find and replace computer programme and said that much of the programme is already on the Government word processor. Perhaps it is, but that is only an indication of the Government's consistency. We had the Programme for Government, the budget, the national plan and now the PCW, the Government cannot produce a completely different programme each time. If it did, the Opposition would complain more vigorously. The same basic guidelines must be included in all these programmes.

In the various programmes the Government has made jobs the main priority because it is obvious that is the only way forward. That means being competitive but more than simply keeping wage rates low. It means providing the business sector with a plan they can work on for the future and ensuring stability and certitude over the coming years. That is as important to business as the wage rate.

Since 1987 the Government produced these programmes in consultation with the social partners. That is the only way it can proceed because the alternative would be to rule by diktat which is not feasible. Those who criticise national programmes cannot come up with an alternative. I was amazed at Deputy Bruton who, in criticising this programme this morning, referred to employees in successful multinational firms who might not receive a wage increase above a certain limit because of this programme. He said those employees could have received money that will otherwise leave the country in the form of exports from these firms. That is an extraordinary comment and one which I would normally expect to hear from a militant trade unionist rather than a responsible politician.

The trade union movement made many sacrifices in those negotiations and realised that it must take the long term view. The militant trade unionists of the past have been silenced, which is welcome, but Deputy Bruton's comments this morning were nonsensical. Such comments encourage selfishness, greed and an attitude that every worker should screw employers for every penny they can. That is not the way forward. Fine Gael used to have a trade union movement — perhaps it still has — and I would be interested to know if it would endorse the comments made this morning.

The value of these programmes has been apparent since 1987. They have helped to get the public finances in order and resulted in a great deal of success. Those who criticise these agreements are unable to come up with any alternative. The only alternative is confrontation and conflict which leads to industrial chaos and uncertainty for the business sector.

Deputy Rabbitte referred to the Minister of State at the Department of Enterprise and Employment, Deputy O'Rourke, who made an alteration to the Industrial Training (Apprenticeship Levy) Bill following consultation with the social partners. Deputy Rabbitte appears to have forgotten his former role in which he would have demanded that the unions be consulted. The unions have forfeited much in these programmes; they are entitled to an opportunity of having a real input at the highest level.

I welcome the new community work programme. While it is fine to talk about competitiveness and the creation of jobs in the industrial and services sector and hope that the international recession will eventually disappear, we must realise that, regardless of what measures we take, the numbers of unemployed will not be seriously reduced in the coming years because of people constantly coming on the labour market. We are finally talking in real numbers. Last year 15,000 people participated in SES schemes; this year the figure is 40,000 and will be up to 100,000 in the coming years. This is welcome because we cannot simply forget about the 300,000 people unemployed. Many of them wish to contribute to society, these programmes will not give them much more than they receive in social welfare payments, but they will provide hope. To talk about offering 100,000 people an opportunity to take up these programmes is fine and in ten or 20 years' time we may be able to offer such an opportunity to as many as 300,000 people.

Mr. Durkan

We will need to be taking on 600,000 people by then.

Mr. N. Ahern

We may reach the stage where participating in these programmes will be obligatory. The terms of the pay agreement in the programme are welcome. For the past number of years we have heard that the pay deal for the public sector is increasing by millions yet individuals do not appear to be getting the ten and 15 per cent increases the overall figures show. As a Dublin Deputy against decentralisation — and I am unaware of the cost of decentralisation on the public sector bill — I put down a parliamentary question about 150 civil servants who were moved to Longford. A total of 59 of them had to be bribed or promoted to transfer and I wonder how much of the additional moneys spent in recent years were due to the policy of decentralisation.

The Government played a blinder in regard to the national plan. If it looked for £5 million it would have received £4.5; if it sought £7 million, it would have been given £6.5 million. The Government's bluff was called but it has been very successful.

I am concerned that some Ministers and Government backbenchers suggested in the past number of days that everything in the plan must be achieved and that money must be spent regardless of from where it comes. That is irresponsible and regardless of forthcoming elections we should not go down that road. The plan is good but is not written in stone. Many other Government programmes would not have qualified under the national plan and they cannot be sacrificed or pushed aside to allow resources to be allocated to national plan projects. I strongly object to money being taken from other programmes and allocated to national plan projects simply to allow certain Ministers to say they achieved all their goals in their individual plans. We are all aware of the mess we were in up to 1987. There were sacrifices by many people, mainly the working class, who endured huge cuts in public expenditure from 1987 to 1990.

We cannot disregard all the hardship and sacrifice occasioned by the cuts between the years 1987 and 1990 and resume a programme of spend, spend, spend. The National Development Plan is a good one and I am sure most of its goals will be achieved, but we cannot go wild no matter what elections may be forthcoming. I hope that realisation dawns on many of my own colleagues and Opposition Members.

Mr. Durkan

I do not wish to be at all personal in my remarks because I know that my colleague across the House is a decent, respectable Member who would not endeavour to hoodwink us. He mentioned the Government having played a blinder, but I would have to say they have blinded themselves by their exuberance. I would be somewhat queasy were I sitting in his position. This blinder they have played is not perceived by the general public.

Deputy Noel Ahern mentioned that public servants could not acknowledge or understand that they have been overpaid; I can well understand that because in fact they have not. Other measures taken by the Government will undermine anything they will reap from the various wage agreements of recent years. This Programme of Competitiveness and Work sounds good, but the reality is that, while this agreement was being compiled and edited, there were other things happening which will have a bearing on the outcome of this agreement which were not made known to the social partners at that time. I genuinely feel sorry for the Government, particularly for their unfortunate backbenchers, who will have to travel around the country explaining to people why things are not as they would appear to be. The taxpaying general public are now receiving updated tax free allowances which show a considerable reduction on previous years for most of them when they take into account, on the one hand——

Mr. N. Ahern

——falling mortgage interest rates.

Mr. Durkan

They used to be told a couple of years ago by essentially the same Government that we were getting into circumstances or a climate in which we would have low tax rates. There was talk of the rates being in the low twenties and so on, whereas there are very few people in that bracket; they are all in the high bracket. These unfortunate people are receiving their certificates of tax free allowances which show their mortgage interest relief fast diminishing. It is very difficult for backbenchers to explain to their constituents; even a Minister, with the assistance of a spin doctor, would have great difficulty explaining it. The poor unfortunate taxpayers were led to believe, while the negotiations in relation to this programme were taking place, that certain targets were attainable. Based on information available at the time of negotiations, the Government made certain projections in their discussions with the social partners which will not now be realised. This will have widespread implications and serious consequences for the confidence of social partners when dealing with Governments in the future.

I will not stray into the area of the National Development Plan. There will be another occasion to do so. Immeasurable damage has been done recently to public confidence in Government and politicians. Over the past six months in particular, there were repeated assertions by Government Ministers to the effect that there was nothing to worry about in terms of planning for the future, in particular in relation to this National Development Plan, and there was no reason for anybody to believe there would be any shortfall anywhere. This was repeated continually. Why did they not admit the truth? Now it is too late. The electorate will be extremely angry when they discover that they have been deceived. They will not forgive the Government.

Let me now examine some of the projects likely to be affected. The Programme for Competitiveness and Work is like the National Development Plan and previous plans in the sense that it contains the same phrases repeated ad nauseam since I became a Member in 1981. I have no objection to people repeating themselves — I am sure we all do it from time to time — but why repeat those same phrases? Why not change the phraseology? Why allow themselves be drawn into the same corner?

Paragraph 6.20 of the Programme for Competitiveness and Work states,

Under this Programme, continued progress will be made in implementing the seven-year programme agreed under the Programme for Economic and Social Progress. A sum of £65 million has been provided to date towards the seven-year target of a £90 million increase in current expenditure above 1990 expenditure levels for such services, and an increase of £100 million in capital expenditure. In addition, £9 million has been provided to date to implement the Nursing Homes Act.

There is absolutely nothing wrong with that. It is extremely laudable and I sincerely hope we achieve that objective, but there is a question mark hanging over all of those areas at present, as to whether the information which was available to the people who negotiated this document on the Government side was disclosed to their partners in full. In the light of recent events, it would appear they did not.

Paragraph 6.21 states:

The continued developments in this area will, in particular:

—support the implementation of all the provisions of the Child Care Act, on a phased basis, by the end of 1996.

That is excellent, and I sincerely hope it is capable of achievement. The same paragraph goes on to say:

—continue the provision of resources for the planned expansion of residential and day-care places, home support schemes and respite care for the mentally handicapped in all health board areas, and in particular the continued transfer to the mental handicap services of those people with a mental handicap who are at present placed inappropriately in psychiatric hospitals,

That is excellent. As a long-serving member of a health board I can assure the House there will be universal approval of that.

Let us now examine the area of training for the mentally handicapped. In view of recent events, are we now to get a reassurance from the Government that there will be no diminution whatever in the funds earmarked for that area? Can the Minister and Government clearly indicate that there will be absolutely no movement whatever from that area? I would hope the Minister would be able to give us some indication of what we can expect. Incidentally, one could go down through the various disciplines within the health services, all of them necessary, all long overdue, in terms of the expenditure earmarked and proposed. I must repeat the importance of this. Since the health services contain elements most sensitive to economic change, once funds are slowed down or withdrawn — which is done on a regular basis — there is an immediate disastrous consequence on the most unfortunate people in society, those who are ill or in need of hospital or community care at any given time. I hope the Minister for Health is strong enough to stand up to his Cabinet colleagues to ensure there is no shift in that programme.

Let us look at what happened during the past few days. Obviously, various Ministers decided they did not want any reductions in their programmes contained in the National Development Plan. When the spotlight focused on a particular Minister to take all the proposed cuts there was a queasy feeling as a result. I am not surprised that the information that the cuts would be spread across the board and that all Ministers would have to share the reductions was leaked. That is fair play. They could have saved themselves that trouble had they told the people and the social partners six months ago that they were sorry, there was a slight difficulty and as a result they would not be able to deliver as anticipated. If they did not tell the social partners they misled the people with whom they were dealing. They certainly did not disclose it to this House and they misled Members. This problem needs to be tackled. It goes back to public confidence in Government's ability to negotiate and, in my opinion, immeasurable damage has been done in that regard.

Housing is heavily dependent on regional funding and was no doubt used in the compilation of the Programme for Competitiveness and Work. On housing the Government side claimed much credit for progress on that front in the past year, the Labour Party in particular. The housing programme in recent years was described as disgraceful by the Labour Party.

Mr. N. Ahern

There is no EC money for housing.

Mr. Durkan

That party claimed that this disgraceful programme was corrected in the past 12 months. I was at a meeting of a housing allocation committee a week ago when 12 houses were being allocated by the local authority for which there were 189 eligible applicants. The Government should cop itself on as the people do not believe the type of nonsense it is publishing about housing. The people who live in unfit, unhygienic and unsuitable housing conditions do not give two pins for the garbage that goes into the well-phrased documents such as the Programme for Competitiviness and Work because they do not see those words relating to them. The sad feature is that this Government was to be transparent, accessible, amenable and open to the people. Never in the history of the State has a Government distanced itself from the people more quickly than this coalition. This reflects on all of us. Will the programme for social housing proceed as anticipated when this document was negotiated or will it be reduced by 8.5 per cent or 10 per cent?

Mr. N. Ahern

It is not affected.

Mr. Durkan

Are we to assume that if we are lucky we will renegotiate the programme in five or six years time and achieve some more benefit? If the Minister for the Environment has not been more successful than some of his colleagues he will have to shoulder the burden of the shortfall in European structural funding and a serious problem will arise with that programme.

This country has a well written housing history and the right of people to own a home and property, all of which is enshrined in the Constitution. I do not hold any brief for people who do not pay their way. If people fall into arrears with their mortgage repayments it follows that the financial institutions will take some action to recover their property. Building societies do that on a regular basis. In fairness, more often than not they will listen to representations to act in the most amenable way possible causing the least amount of hardship to those concerned. It appears that the attitude under the present administration is that anybody who has not met their commitments will have to give up their houses, will be evicted. Notwithstanding all the laudable support projects referred to the Programme for Competitiviness and Work I received a telephone call two weeks ago informing me that a family — husband and wife and two children — were being evicted in the snow. I recall hearing as a small boy a song about an eviction that took place around Lough Sheelin in the snow. The Ministers and Government backbenchers who claim to be compassionate, caring and considerate, should listen carfully to what I have said and to try to reverse the present trend so that people will not be treated in that fashion in the future.

Surely we have reached the stage whereby an intermediary should become involved to ensure that the same drastic measures for which landlords were shot here 100 years ago are not continued to this day. It is incredible that we should be witnessing similar scenes in 1994 under what is alleged to be a most caring and compassionate Government. I am not exaggerating. I am not asking the Government to spend taxpayers' money to redeem somebody else's losses. However, planning, advice and compassion would go a long way to resolve the difficulties that have arisen. In my time in public life I have never known of more mortgage arrears with the HFA or local authority SDA loans or shared ownership loans. The Government should examine this situation and try to remedy the problem.

Housing concerns the health of those living in unfit housing conditions. Many families live in unsanitary, unfit, overcrowded and unsuitable housing conditions and that has a detrimental effect on the health of the occupants for many years. Children who must live under those conditions will have recurring health problems which, in turn, will cost the State a great deal of money.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. O'Shea)

Tá áthas orm go bhfuil seans agam labhairt sa diaspóireacht tábhachtach seo. Beidh mé ag caint faoi chuid a dó don chlár agus ar chursaí talamhaíochta, bia, foraoiseachta agus forbartha tuath.

The consenses approach to economic and social policy has served the country well over the past six years, first under the Programme for National Recovery and then under the Programme for Economic and Social Progress. The strategy underlying these programmes, and the new Programme for Competitiveness and Work requires consensus between the Government and the social partners. The result has been six years of economic growth with practically all economic indicators showing substantial improvements especially when compared with the mid-1980s: GNP has increased by more than 25 per cent in real terms in the past six years; inflation was only 1.5 per cent in 1993, well below the European Union average of 3.25 per cent; interest rates have been reduced, with Irish rates falling sharply since the devaluation last year to the point where they are now in line with German rates; the balance of payments moved from a deficit of 3.5 per cent of GNP in 1986 to a surplus of 6 per cent of GNP in 1993; the national debt has been reduced from 126 per cent of GNP in 1987 to just over 100 per cent and the top rate of tax on personal income has been reduced from 60 per cent to 48 per cent and the standard rate reduced from 35 per cent to 27 per cent.

During the past couple of years of low economic growth and recession in many OECD countries, Ireland has performed better than average in most areas of economic activity. Despite the currency turmoil at the end of 1992 and into 1993 we still managed to achieve 2 per cent growth in GNP last year with an estimated 3.75 per cent for 1994. This is against an international background of poor economic performance from many of our European Union partners and despite the very open nature of the Irish economy with exports accounting for 56 per cent of GDP.

However, it is clear that employment growth has not been sufficient for our growing working population. Although employment, in contrast to many European countries, has remained stable at about 1.125 million, not enough new jobs have been created for the increasing number of young people coming onto our jobs market. With our main trading partners in recession or with only weak economic growth we have been unable, in our trade dependent economy, to offer sufficient employment opportunities. The result has been rising unemployment which now stands at about 17 per cent of the labour force, second only to Spain in the OECD. That is why jobs are at the centre of the Programme for Competitiveness and Work and through this programme, with the help of the National Development Plan, unemployment will be significantly reduced during the coming three years.

Despite the gradual decline in the relative importance of agriculture in the past couple of decades it still remains far more important to the Irish economy than it is to most other OECD and European Union countries. Agriculture directly accounts for almost 10 per cent GDP, 13 per cent of jobs and 16 per cent of exports, compared to the European Union average of 3 per cent of GDP, 6 per cent of employment and 8.5 per cent of exports. The combined agri-food sector in Ireland contributes about 17 per cent of jobs and 25 per cent of exports.

The importance to our foreign exchange earnings is even greater. Because of the high level of foreign based manufacturing in Ireland profit repatriations are high whereas the food sector is largely Irish owned and most of the raw materials are produced here as well. The result is that agriculture and food exports contribute about 40 per cent to our net foreign exchange earnings.

In most rural areas direct employment in agriculture or food processing is the principal source of jobs and practically all economic activity in many rural areas depends on agriculture. Whatever the changes in the national and international economy agriculture and food will remain absolutely vital to this country. Anything that adversely affects agriculture to a significant degree will also impact adversely on the country as a whole.

With the completion of the GATT talks and the implementation of the CAP reform measures the external environment for the agriculture and food sector is now reasonably well defined. The sector is moving to a more open trading environment with lower sale prices and limits on production which are compensated to some extent by CAP reform direct payments and the accompanying measures. In addition the GATT agreement will, from 1996 onwards, lead to increasing competition from outside the European Union at the same time as export opportunities are restricted with reduction in export refunds and in the volume of subsidised exports.

The new environment means increased competition and, as the NESC recommended, requires effective policies in the areas of education, research and structural reform. These policies must be implemented now in order to enable the agriculture and food sector to compete successfully in the new environment. The Programme for Competitiveness and Work details these policies and commits the Government to pursuing them.

In discussing the agriculture, food and forestry sectors it is necessary to acknowledge that there are many different components to policy in these areas. Some of these are decided at European Union level, such as the CAP's market and income support measures, others are decided at national level, such as taxation, and others internationally such as the GATT. This programme brings together the different strands and sets out the national policies which we intend to pursue over the coming years. These policies will contribute significantly towards creating a competitive agri-food sector.

Within the overall Programme for Competitiveness and Work a Programme for Competitiveness and Rural Development, PCRD, is outlined which sets out the central objectives for agriculture and food policy for the years to come. These are to maximise the contribution of the farming, food and forestry sectors to the national economy, in terms of employment and value-added and to maximise the number of viable farms and farm households in rural Ireland, at sustainable living standards in line with those in other sectors of the economy.

This PCRD is based on the absolute necessity to prepare Irish agriculture and the food sector for the more liberal international trading regime which will arise from CAP reform and the GATT agreement. This will require greater competitiveness in the core sectors while encouragement will be given for diversification within agriculture as well as into different sectors.

The programme commits the Department to a significant agenda of work over the coming years and the progress made will have a significant effect on all areas of agriculture, food and forestry.

The Programme for Competitiveness and Work affirms the broad strategy set out in the sub-programme for the development of the food industry in the National Development Plan and in the report by the expert group on the food industry. This strategy, inter alia, recognises the importance of investment in research and development and human resources and the Programme for Competitiveness and Work commits the Government to a more open approach to research and development with funds allocated on a competitive basis. I expect An Bord Bia to commence operations in the middle of this year where it will fill the role outlined for it in the expert group's report.

The programme also addresses the question of animal health status which is an important component of our marketing strategy as outlined in the expert group's report and the National Development Plan. I draw the attention of the House to the section dealing with the eradication of bovine tuberculosis. In 1991 there were 4.4 reactors per 1,000 animals tested. This figure was reduced to 3.3 in 1992 and to 2.9 in 1993. It is too early to say if this trend will be continued because we are now dealing with the residue. As we are aware from our experience of dealing with tuberculosis in humans, this is an extremely difficult task.

A commitment is given in the programme to pursue the question of securing European Union funding for research and development on new technology and diagnositic methods. This would lead to a reduction in the levies payable by producers and the cost to the Exchequer.

The role of badgers in the transmission of tuberculosis must be addressed. There is a large population of badgers, 250,000 — there is a similar number in Sweden. Research is being carried out at university level to develop a vaccine to prevent the infection being transmitted to other animals.

I hope the legislation dealing with An Bord Bia will pass through the House mid-year. This will allow us to play to our strengths and produce a quality product in a clean and green environment which should be consumer led. We must reduce our dependence on intervention and through research and development greatly enhance its added value.

Many of the commitments given for the agricultural sector will be the subject of negotiation with the European Union. We will keep the social partners fully briefed on the progress these negotiatons make through the Central Review Committee. Of particular importance is the need to ensure that the budgetary provision for the reformed Common Agricultural Policy is adequate for the increase in direct payments, for acceptable levels of market support and for the accompanying measures. As well as the budgetary concerns there is the question of quotas or production rights and we are opposed to further restrictions which could possibly arise as a result of the GATT and which would be in addition to CAP reform.

Following on the successful operation of the milk quota review group, we will set up similar groups to cover the suckler cow and ewe quotas.

Substantial progress has already been made on premia and headage payments. The additional funding provided in the budget for administration and computerisation and for headage payments will contribute significantly towards achieving the objectives for this area set out in the programme which are: achieving by 1995 payment of all eligible applications for premia within three months of application, where this is permissible under EU rules and payment by October of the year in question for headage applications.

Structural reform is necessary for a more competitive sector and we are committed to supporting the farmer early retirement and the young farmer installation aid schemes with improved technology and training, both through Teagasc and other institutions. The £5.5 million of additional finance for Teagasc provided in the budget will help the organisation develop and restructure in order to improve the service it offers to farmers and the food industry.

Both the National Development Plan and the Programme for Competitiveness and Work emphasise the importance of rural development and, in recognition of this, the budget provided additional finance for the Leader and Interreg Programmes. We are committed to making the Leader Programme the centrepiece of our rural development strategy.

Forestry offers considerable potential for expansion and the creation of employment opportunities often in remote areas where opportunities are limited. A strategic review of the entire forestry sector is to be undertaken which will cover all aspects of the industry from seeds to tourism to timber processing and marketing. This review will take account of the legitimate concerns raised by different interest groups.

Other important areas under the Department's responsibility covered in the Programme for Competitiveness and Work which are subject to EU negotiations concern animal health, the extension and reclassification of the disadvantaged areas and EU funding for quota restructuring. We will keep the social partners informed of the progress of these negotiations.

The Minister for Finance announced significant tax reforms in his budget. Farmers, along with everyone else, will benefit from the general income tax changes and the programme states that those in the lower and middle income brackets will be the focus of future improvements. The budget also provided specific measures designed to help farmers. The reductions in capital acquisitions tax are in recognition of the poor return from land relative to its market value. In addition the programme outlines the following measures designed specifically to help farmers: capital allowances for farm buildings will be increased to allow the cost of these to be written off over seven years instead of ten and there will be a reduction in stamp duty for transfers of land to young trained farmers which will be specified in this year's Finance Bill.

The main challenge facing the industry is, in my view, the need to intensify the trend towards market led production. There is a pressing need for greater reliance on consumer preferences to decide what products should be produced and for the industry to respond by becoming more flexible. To achieve this it will be necessary to place a greater emphasis on improving production and processing technology in the agri-food sector to ensure that Ireland becomes an increasingly low cost and high quality producer of food. We must exploit our distinct marketing advantage on the acknowledged fact that production is in a clean and pollution free environment.

This programme will help farmers and the food sector develop their strengths so that they can compete in the more open market brought on by CAP reform and the GATT agreement. Part of this development will require structural change. This programme together with the National Development Plan, aims to develop a strong, vibrant rural society with farming and the food industry as its base which can offer sustainable standards of living in line with other areas of the economy.

Mr. Cox

On the Minister's remarks about the role of the badger in spreading TB, I do not wish to appear to badger the Minister, but it is appropriate that I set out the context in which I intend to deal with the Programme for Competitiveness and Work. The European Union dimension, covered at some length vis-à-vis agriculture by the Minister, is prominent in the programme. It states that the European Union dimension is vital in terms of its significance to the achievement of the key objectives of the programme and specifically in relation to the creation and maintenance of employment. The programme states that the European Union has agreed the basis for financing up to 1999 a major increase in allocations to Ireland from the Structural Funds, a new Cohesion Fund which will benefit Ireland greatly over the period 1993-99 and that the Treaty on European Union which came into force in November last is going ahead purposefully.

The news we received in the past 24 hours of the Government's enforced and humiliating concession to the inevitable with regard to the Structural Funds represents a classic example of a hapless Government snatching defeat from the jaws of victory, because there is no doubt that what we have achieved in the negotiations with our European partners is substantial. It is a pity to see it ruined by the way it has been portrayed. The Government's bluff has now been called, a bluff which continued up to and including the response by the Minister for Finance to a series of Private Notice Questions tabled by Opposition parties last Tuesday. He said then that the Government was confident that over the full period of the plan up to 1999 it would prove possible to undertake all the investment in the plan and to draw down the full £7.84 billion EC aid on which the plan was based, taking account of the mid-term review which will take place in 1996. It requires some contemplation to define precisely what the figures of the Department of Finance mean.

Since the Edinburgh Summit in December 1992, our pursuit of the mythical millions has had all the hallmarks of a Don Quixote tilting at windmills. Yesterday and earlier today the Taoiseach referred more than once to the prestigious French daily newspaper Le Monde. I should like to recommend some supplementary weekend reading to the Taoiseach. One of his advisers should secure a copy of the very extensive arts section which is a supplement to the weekend Le Monde and try to find when it last reflected on the man from La Mancha, poor old Don Quixote. Don Quixote rode astride a donkey, but he thought he was riding a stallion. Some of the statistics the Minister of State at the Department of Agriculture, Food and Forestry presented to us were a bit like that. The stallion statistics of the economy are well rehearsed in all the documentation relating to the Programme for Competitiveness and Work and its predecessors. In real terms GNP increased substantially, better than our EU partners; our inflation rate was lower than that of our EU partners; interest rates reduced after the devaluation; the balance of payments is in surplus, one of the highest in the EU and the national debt has been reduced. Those statistics are familiar, are substantial, and are real to a point, but the Minister also dwelt on the donkey aspect of economic performance, which is the level of unemployment, and agreed that after the Programme for Economic and Social Progress I, after the Programme for National Recovery and all those glowing economic statistics about performance, we were left with a rate of unemployment of 17 per cent, second only to Spain in the OECD which represents the 24 richer, if not richest, countries in the world.

It is because of that that I want to look at the Don Quixote example. A large part of our performance has much in common with the myth-making of a Don Quixote on a donkey believing that he is astride a stallion, and it is worth looking at it. The yarn of the £8 billion is now being respun into a new set of windmills which, like so many bolt-holes, represent the politics of last resort now that the Government has beaten its enforced retreat. The Government is tilting at four different windmills — revising the timescale, putting in Irish resources in place of missing European resources, telling us of the prospect of a mid-term review coming good when at the outset it has failed to hit the target set, and reminding us that in 1989 we were promised £2.86 billion but by the end of 1993 the amount had grown to £3.4 billion. I wish to tilt at each of those windmills in turn.

The first is the timescale: we will proceed with our national plan, runs this myth, but we may have to alter the timescale for some of the projects. In this scenario Don Quixote, astride his donkey, will lead a partnership battalion into a new millennium to complete the unfinished business of the current millennium. What we see in this first windmill is a Government that has dissembled the basic facts, which has failed up to this to separate the myth from the reality. What we see is the Taoiseach contemplating his own role in leading this country beyond the millennium to try to achieve what the plan sets out. Extending the timescale extends the myth. This plan set out to achieve targets over a certain time, and extending the timescale replaces the myth of the missing millions with the myth that if the targets are achieved at some time it will amount to the same thing.

The second windmill is increasing the national resources. The National Development Plan was devised essentially as a means for drawing down European Union funds to the maximum. Of course, it has other wider functions in terms of politics, its presentation and the manner in which it is interlocked with the Programme for Competitiveness and Work. Its essential purpose was to design and produce an economic plug that would draw down the maximum power from the European socket. In this case The Man from La Mancha can argue that we should put more Irish resources into the plan to make good any European Union deficiency. In some respects, like a real Don Quixote, this turns reality on its head.

Was it not the case that because of resource constraints at home we overreached to draw down the mythical £8 billion in the first place? Nothing ever stopped us and nothing ever will, from producing whatever type of national plan we like that requires the spending of our money, public or private, whether it is £12 billion, £20 billion, £30 billion or £40 billion. There is no European rule that stops us from planning our future. Nothing stopped us on that account before. The problem is that there is no fairy godmother in the Irish public or private sector capable of waving a magic wand to fill the gap which was finally ignominiously accepted by the Government yesterday in its negotiations with Brussels. There is no crock of gold waiting for us to place in the gap which has appeared. We could have produced those plans at our will in the past and indeed, we can do so in the future.

Increased Irish resources to make good the European Union gap is a possibility and has always been a possibility. To produce a more ambitious plan in respect of our own resources has always been a possibility, but to talk about increasing Irish resources under the constraints of public borrowing and so on — which the Government has recognised in the Programme for Competitiveness and Work— is missing the point. Similar to extending the timescale, a second myth is born with the notion we can fill the gap with the resources at home.

The third windwill in respect of this exercise is that the mid-term review will deliver. Unlike the last round of Structural Funds in 1989-1993, this round provides for a mid-term review. Some interviews in the media laboured under the misapprehension that there was a mid-term review on the last occasion, but that was not the case because the rules did not provide for such. The next windmill for Don Quixote to tilt at is that the money will be in the bag in 1996 but not in 1994. I was somewhat bemused to read that the placing of the money in the bag would come through the President of the European Commission, our good friend Frère Jacques Delors and that we would receive the mythical £8 billion, but when push came to shove Frère Jacques did not deliver. Instead he delivered a fourchette which was the wrong way up for the Irish appetite. Frère Jacques delivered his fourchette and skewered the Government on the underside rather than the upper end of its possibilities and is now quoted as the person likely to deliver to us in the future what he could not deliver in the past.

I have some news I would like to share with the Government in respect of our latter day Don Quixote windmills and the politics that go along with that. Frère Jacques who could not deliver when he was there, will not be there to deliver in 1996 because he is leaving the scene at the end of 1994. I would not put many eggs in that basket.

Moreover, for Ireland to get more money in a mid-term review will mean that poorer regions, in particular other Cohesion countries such as Greece, Portugal and Spain, will draw down less than their allocation this time round. It is possible that if there is some slack in the system and because we are good at drawing down funding from Europe, we will take up the slack, but I would not like to hold my breath in that regard. A great deal of argument took place, not only in the case of Ireland but by other European countries, to get their slice of cake in terms of European Structural Funding and it is highly unlikely those countries will not use their funding to the greatest effect. We should have no illusions about that.

That budget of the European Union was set in December 1992 at Edinburgh and subject to inflation adjustment the financial envelope for planning EU spending until 1999 is already set. There will not be a new bag of money in 1996; the money will be already in some bag. The amounts will change subject to inflation from one year to the next and subject to that the financial perspective is set. We will receive more at the mid-term review only if others get less. That is a very thin basis on which to suppose that may happen.

The fourth windmill of the Don Quixote battalion involves recycling and respinning the mythology of £8 billion. We were told the Europeans promised us only £2.86 billion in 1989 and that we ended up with £3.4 billion. How did that come about? Have we some superior skill, capacity, acumen, inside track or winning way with Brussels to overcome the obstacles in our way and like the mediaeval alchemist — to go back to Don Quixote's time — we found the formula for turning base metal into gold. The reality is much less impressive.

The £2.86 billion came from the Community Support Framework which involved three funds, namely, the European Regional Development Fund, the European Social Fund and the guidance section of the European Agricultural Guidance and Guarantee Fund. In 1989 an amount was set aside for each year until 1993. It was set in 1989 prices——

An Leas-Cheann Comhairle

I reminded Deputies earlier that while a passing reference could be made to European funding in the National Development Plan, the debate should not be totally devoted to that to the exclusion of the issue we are debating, namely, the Programme for Competitiveness and Work.

Mr. Cox

I heard you, Sir, making that request and for that reason I indulged in the preamble of reminding you that a very essential part of the fabric of this document is listed in section I under the heading of the "European Union Dimension". It is on that aspect I am concentrating just as the Minister concentrated on the agricultural-Euro aspects of the programme earlier.

In regard to the final windmill, the figure of £2.6 billion, through inflation and exchange rate adjustment, became £3.16 billion. To that was added the community initiative programmes of approximtely £200 million and as a result we received £3.4 billion. There was no magic, acumen, skill or mystery involved. It was a simple matter of adjustment. That is why what we get in the bag on the first day is crucial.

Miss Harney

The Government got the Labour Party into the bag as well.

Mr. Cox

I am glad to see Deputy Broughan here and welcome him from the bag back into the House.

Miss Harney

The Labour Party is firmly in the bag.

Mr. Cox

Those four windmills are becoming the new spin in respect of how we will cope in the future.

Yesterday I received a reply to a parliamentary question and one of the reasons I am something of an agnostic about such programmes is contained in it. I compared the increase in total public expenditure under the programmes since 1990 with the relevant rate of inflation for that period. In 1990 and 1991 total public spending increased by more than twice the rate of inflation, in 1992 by almost three times the rate of inflation, in 1993 by almost six times the rate of inflation and the projected increase this year is almost twice the rate of inflation. That position is not sustainable but it is a legacy of those programmes.

Mr. Broughan

What about the rate of growth?

Mr. Cox

I will tell the Deputy about the rate of growth. We dealt with it earlier. A standard type performance produces a donkey type result because it misrepresents the substance of the Irish economy.

Miss Harney

The Labour Party will not grow.

Mr. Cox

I will be happy to pick up this theme next week because I have barely begun to scratch the surface.

Minister for Transport, Energy and Communications (Mr. Cowen)

I listened with interest to Deputy Cox refer to the four windmills. I presume he would describe with certainty, when he is not in command of all the facts, that we would get no more than £5 billion as a broken down sluice gate at this stage. A totally synthetic storm has been raised over the National Development Plan. The bottom line is that we will be receiving at least £7.2 billion in EU aid between 1993 and 1999,——

Miss Harney

Is it 1993 or 1994?

Mr. Cowen

——easily the largest amount ever negotiated for Ireland. It is also freely acknowledged that we are getting the most per capita of the four Cohesion countries. Only this week that was reported by the French newspaper Le Monde.

Miss Harney

Will the Minister quote the reference from Le Monde to which he referred.

Mr. Cowen

I will get it for the Deputy.

Miss Harney

Does the Minister not have the reference with him?

Mr. Cowen

I do not carry copies of it in my pocket like some of the MEPs of the Deputy's party. Those MEPs will change shortly and the party might change the order form then.

Miss Harney

The Minister and the Taoiseach were quoting so much from the paper I thought they might have copies with them.

Mr. Cowen

I listened quietly to the Deputy's party spokesperson and perhaps the Deputies would extend me the same courtesy and perhaps not impugn my integrity the way she has impugned the integrity of others. The Opposition are trying desperately to turn good news into bad news. They know that EU aid is eagerly awaited for many different projects around the country.

May I say I am sad — others might be angry; I am simply sad — sad that Opposition Deputies have no higher ambition than to create confusion for people with worthwhile projects seeking EU Structural Fund support. I say to the promoters of good projects that all projects sound enough to be included in the National Development Plan will be implemented. In the worst case, even if no additional funds come from the EU mid-term review; as again sadly Opposition Deputies now appear to wish for, if no additional private funding emerges and if the Government does not put in more Exchequer funding — in that worst case scenario a change of 8.5 per cent in over six years is the equivalent of a delay of seven months — all good projects will be completed with a delay of at most seven months.

When did Fine Gael in Government ever negotiate from Brussels a fraction of the sums we negotiated in 1989 and again today? They mostly got pious aspirations and promises of good will, but little hard money. It is no harm for those who have built up the politics of goodwill to dip in now and again.

Over the last 15 months the Opposition Deputies have been consistently engaged in trying to sabotage and denigrate one of the greatest negotiating achievements this country has seen in terms of EU funding secured for Ireland. When the European Parliament elections come around in June we are going to ask the people if they want to elect representatives who are going to spend the next five years systematically selling the country short, trying to undermine Ireland's case in Brussels, trying to ensure that we get less money, all for the sake of petty political advantage at home.

I find Deputy Rabbitte's new found advocacy of wimpish style negotiation particularly hard to take. As a trade union official, he negotiated so hard sometimes that he put hundreds of people out of work.

As we all know, this row is simply a rerun of what happened in 1989. The plan for £3.7 billion was heavily criticised. We initially got only £2.86 billion. Thanks to the mid-term review we got £3.4 billion.

Mr. Cox

A windmill.

Mr. Cowen

The implementation of that plan has been highly praised from the Commission President down. Yet in 1989 we had the same type of criticism from the Opposition, that the plan was a shambles and we were making a holy show of ourselves. Let us face the truth.

Fine Gael, the Progressive Democrats and Democratic Left are green with envy at how well Ireland has been doing in Europe and at the sums we have been able to negotiate, far beyond their imagination, even based on Deputy Cox's perceived facts at the time. No amount of smokescreen can obscure the fact that we on this side of the House have delivered, and will go on delivering, in sharp contrast to their failure to deliver.

Mr. Cox

Overreaching.

Mr. Cowen

In social consensus, in our ability to negotiate massively increased support from Brussels, we have a method that works. The policy cupboard is bare. They have no alternatives. So they have to kick up artificial rows about nothing. That is the story of this debate. It is a campaign to try to muddy the waters and confuse the electorate in advance of the European elections. That is the political reality.

It is also afoot that Deputy John Bruton has not studied the Programme for Competitiveness and Work properly. His claim that firms will have to pay across the board increases, regardless of difficulties they may be in, is simply not true. The programme states very clearly that due regard will be had to “the economic and commercial circumstances of the particular firm, employment or industry”.

The Programme for Competitiveness and Work is about performance and acceptance of change. It is about recognising that to be able to compete effectively in the world we live in today, requires constant top quality performance and a willingness to embrace constant change.

This demanding and challenging environment affects everybody. There are no categories of industry, business or administration that can afford to feel complacent or insulated from this environment. Traditionally only private enterprises competing on the open market were considered to be vulnerable to competitive pressures, but that is no longer the case. Today the semi-State sector, the public sector and the Civil Service find themselves coming under increasing competitive pressure and they too must be prepared to change and redirect their efforts.

In this competitive environment the extrapolation of past performance into the future will no longer be good enough. The temptation is to consider today's manufacturing and trading environment as a temporary difficulty. However, it is no good hoping that things will get easier tomorrow. It is no good expecting that conditions will soon get back to normal. Waiting for the global economy to pick up or for the recession in Europe to bottom out is not a credible or productive stance. We must act now. We have to plan on the basis that the way things are in business today is the way things will be tomorrow, the day after and the day after that. The Programme for Competitiveness and Work recognises this reality and sets out in a practical and pragmatic way the basis for action to create sustainable jobs and increased wealth here.

The need to come to terms with today's business environment cannot be emphasised enough. Anybody who is waiting for things to get back to normal will be sorely disappointed. Today's business environment can be likened to being in a small boat in the middle of a permanently rough sea. It is no good wishing the waves would die down, because they will not. It is no good hoping to find a sheltered harbour or a safe haven, because they do not exist. The only choice is to respond and adapt to the environment as it exists now. We must recognise that the environment will shape our business behaviour far more than we can shape the business environment. If we seek to do otherwise we will not survive as a trading nation in an open and increasingly competitive worldwide economy.

As is set out in the Programme for Competitiveness and Work, our education system must be geared to educate people to successfully take on the challenges thrown up by today's business climate. Our training systems must foster the necessary skills to enable people operate effectively in this climate. We, as a Government and Administration, must recognise and satisfy the needs of industries and businesses to help them thrive in this environment.

I am very conscious I have a particular responsibility in this respect. As Minister for Transport, Energy and Communications, my portfolio embraces a considerable segment of the commercial semi-State sector of our economy. These companies have a vital role to play in helping business to prosper and in helping the Irish economy as a whole to adapt and prosper. Not only does the semi-State sector provide many essential services to the economy but often the semi-State corporation is the most important player in its particular sector of commercial and industrial activity. These companies can hold commanding heights in terms of their market dominance, employment levels and sales volumes. In these circumstances the influence of the semi-States can far outweigh their formal role of providing a specific essential service to the State, important though that role may be in its own right. This economic clout must be turned into real results in terms of sustainable jobs and increased national wealth.

These semi-State companies are critical to the further development of our economy. They have a vital role to play and can act as a catalyst in bringing about change and in creating opportunities for business success. Their very size is crucial in terms of the purchasing power they have and the spin-off industry to which they give rise. They have a powerful resource in terms of managerial and financial skills that can be matched by few private sector corporations in a small economy such as ours.

Significant though they are in Irish terms, the State owned companies have found they are not immune to the pressure for change that is sweeping the world. The cosy security of operating a Government granted monopoly is coming under increasing threat in a single European market that seeks to deregulate and open up to competition every sector of service that was traditionally supplied by way of a public utility. No longer can a utility expect to be granted protection from market competition in return for providing certain public and social services.

Even without the challenge of the changing regulatory framework within the European Union many semi-State organisations have had to recognise that the rate of change of technology was in any event effectively opening-up what had seemed to be impregnable and protected markets. All the semi-State organisations have to accept that managing strategic change is now a way of life. It requires a continuous ongoing process of confronting the most basic questions concerning the business of the organisation. Changes in regulatory environment, technology and customer preference will continue to drive the need for changes in how our semi-State bodies organise themselves and operate. It may even cause them to change the business that they are in. Because in a rapidly changing and competitive world, an organisation that ceases to change will cease to match the demands of the marketplace and will ultimately fail.

Given the historical operating environment of many of our semi-State companies, one in which there has been no exposure of the competitive need for responsiveness to the market, a fundamental shift in the style of their operation is called for. What was considered appropriate in the past is no longer acceptable both to the recipients of State services and to me.

Successful change programmes do not just happen. The business journals are littered with examples of ambitious programmes that came to nothing. One commentator has suggested that the bulk of these programmes have had as little effect on the performance of the companies concerned as a rain dance has on the weather. We cannot afford to just hope for the best with the implementation of the Programme for Competitiveness and Work and from the various initiatives that will flow from it.

A vital ingredient for successful change is to involve all the key players: workers, managers and shareholders. The programme must be centred on achieving specific results. Resources and action plans must be matched to achieve those targets.

I am pleased to report that we already have some notable examples of a willingness to embrace the culture of change. For instance, the cost competitiveness review to be undertaken by the ESB, which I announced last week, demonstrates a new disciplined approach which will fully involve the State as shareholder, the board, the management and the employees in the process of confronting the problems of the next decade and reviewing the competitiveness of the ESB.

It is worth while repeating what the chairman of the ESB Group of Unions, Mr. Denis Blanch, had to say regarding this project:

Trust and openness are essential features when major change is planned. Change can be difficult. It is vital that the ESB continues to be a successful company capable of sustaining good employment. The agreement of the trade unions to participate as a partner in the Cost and Competitiveness review follows a long period of discussion with management. The sharing of information about the future of the company and the challenges it faces as competition emerges is most important.

One of the particularly heartening aspects of this new spirit of co-operation with the ESB is the clear break with some of the older industrial relation recipes of the past, many of which contributed to unhappy industrial relations ultimately affecting electricity consumers. There is also a recognition in this joint approach that the ESB must maintain its market position and give the efficient and keenly costed services its customers require. Adaptation is a state of mind and not a once and for all snap-shot business plan. It is this flexible mindset which, ultimately, will be the best long term assurance for our electricity industry, its consumers and, indeed, ESB employees. There are clear examples of an acceptance of the need for ongoing change at every level in one of our biggest semi-State organisations and a willingness to work at successful implementation of the change programme.

The Irish National Petroleum Corporation is another good example. It operates Whitegate Oil Refinery in Cork. Since the refinery was taken over by the State a decade ago it has operated under a protected market regime which guarantees cost recovery. The board and management of INPC rightly took the view that the shelter provided by such a cost recovery system was blunting the commercial stimulus which ought to be the driving force of the company. They also recognised that the long term continuation of market protection was unlikely. The board proposed a programme of "transition to commerciality" which was designed to put INPC on a clear, commercial footing by 1997. However, there is a need to plan for the longer term future and both INPC and myself as the shareholder, recognise that if the refinery is to sustain its competitive capability into the next century it will require major additional investment to upgrade the facility to a level that will allow it to match the performance of the most advanced refineries in Europe.

To achieve this upgrade, a strategic alliance is the obvious route for the corporation to follow. It would combine INPC's local market knowledge and successful operating capability with the technological resources of an international oil company to bring benefits to both parties. Any such arrangement would not be a dilution of INPC assets but rather a measured enhancement of our oil refinery with evident benefits for both energy, security and employment. It is instructive to point out that such changes are underway in the semi-State sector today, if only to balance the tirade of tired rhetoric from the other side of the House seeking to portray all semi-State corporations as being incapable of adapting to the new environment.

Aer Rianta is another example I will give to bring home this point. This is an organisation with important responsibilities, given our peripheral geographical location. As the holder of our international airport management franchise it is vital that its landing and other charges are the very minimum cost imposition on vital access air traffic. I know the board is particularly conscious of this mandate and will respond urgently and imaginatively to a recent request by me that it should redouble its efforts to ensure that the company's focus is on increased productivity and cost reduction. Unions and management in Aer Rianta are currently negotiating a very innovative model where necessary changes will be tackled by partnership. I look forward to an early completion of this effort which might well provide insights to other companies looking at partnership models to address constant change.

When it comes to semi-State body change perhaps the unsung heroes are the staff of Bord na Móna. Faced with a critical and daunting financial challenge some years ago Bord na Móna worked out in full partnership with its trade unions innovative and revolutionary work changes which doubled productivity. The setting up of pioneering autonomous work units was the leading edge of radically changed organisation production processes. All of this was achieved without industrial disputes; indeed, not a day was lost in effecting this quiet revolution. All of this was necessary to keep Bord na Móna competitive, but it will not be sufficient. To remain continuously competitive it will require new generation of technology and as shareholder I am prepared to lead and facilitate the drive of this next milestone for the company. New technology does not come cheaply but the company deserves this vote of confidence in the way management and unions demonstrated a capacity and an appetite to confront structural difficulties.

The most obvious recent example of market force change has been the turnaround in Aer Lingus. I have already paid tribute to the staff and employees of Aer Lingus for the flexible and courageous response to the traumatic demands made on them. Here again the necessary decisions will have to be continuously augmented by the ability to react to the marketplace and competition.

I would like to refer to An Post. The Culliton Review of Industrial Policy pointed out that the cost of our postal services is high relative to our competitor countries and urged that An Post's financial difficulties be resolved. Our postal charges are in the top five in the EU league table. In the context of its strategy for implementation of the Culliton report the Government decided that An Post should implement efficiency and cost reduction measures without recourse to general price increase or public subsidy. As part of that strategy, the Government has decided that An Post should reduce its postal charges to at least average EU levels over a three-year period.

The management of An Post has reacted very positively to this challenge. As part of its recovery measures designed to reduce costs and improve profitability, An Post recently implemented a programme of changes in the arrangements for distribution and delivery of mail. The changes affected operations in Dublin and in country areas and were fully worked out and agreed with the appropriate trade unions before implementation. The recovery measures are part of a major programme to make An Post more cost efficient — it is expected to show savings of £8 million to £9 million a year — while maintaining standards for all customers.

Even where successful partnership agreements have emerged or are emerging there must be a clear recognition that these in themselves do not guarantee success. Increasingly competitors react to improvements by domestic companies, whether State or private, so inevitably it will be necessary to retain sufficient inbuilt flexibility to meet the challenges of unforeseen changes and notably those by competitors. I am determined to support the new era of strategic thinking in the boards of semi-State bodies which will have a primary objective of producing their goods and services in the most cost effective way but at the same time will have the positive spin-off effect of avoiding crises and traumas that we have encountered in the recent past.

It seems a pity that it is only wherever a serious critical and imminent challenge has to be faced that semi-State bodies have demonstrated the ability to react. While such crisis management may have helped us out in the past, in an increasing competitive era this approach carries within it the seeds of potential disaster. What we must do now is to sustain on an ongoing basis the creativity, flexibility and innovation that have been applied to crises in the past, and to build them into our strategic planning partnership approach in the future so that crises can be foreseen and avoided.

Managements are the key agents with the responsibility for change. It is the Government's intention that they be allowed to get on with the job and, indeed, my Department will act as a facilitator in this, where appropriate undertaking such necessary revisions to operating and reporting procedures to free up the management of semi-State bodies from excessive interference in their day-to-day thinking.

It is particularly significant that the trade union movement has increasingly been to the forefront of new thinking on industrial organisation and management issues. The fact that we are discussing a programme which emphasises competitiveness and has been embraced by the social partners in an indication of the maturity of thinking which is not always evident on Opposition benches. There is a genuine risk here, however unintentional, that Opposition parties by hanging on to the old adversarial rhetoric may offer a prop to the diminishing number of people who wish to cling to the comforts of outmoded industrial relations and discarded authoritarian management regimes. The increasingly open and imaginative trade union movement will not be helped by the clouded and out-of-date thinking contained in responses from the Opposition benches to these issues.

The Programme for Competitiveness and Work recognises the urgent need to come up with practical solutions to the high level of unemployment. In this respect the semi-State sector has two important roles to play. As stated in the programme, the most significant contribution of the State enterprises is that they are efficient, effective and able to compete in the markets they serve. This is the core function of the commercial semi-State sector. If it fails to do that it has failed the nation. Instead of enabling the economy to develop, an inefficient semi-State sector can become a burden on the economy. That may be considered too harsh a judgment but it is a fact.

Current thinking on how nations develop their competitiveness places considerable importance on the development of cluster industries around a core asset, a strategic facility, a natural resource or a specialist market. This creates an interdependent pool of skills and supplies. The Programme for Competitiveness and Work recognises this potential in terms of improved linkages between small sub-suppliers and large corporations. This outcome can be confidently predicted only because of the singular dedication of the staff of semi-State companies to the successful rebuilding of their companies in the face of unprecedended changes in their industries and their operating environments.

Ms F. Fitzgerald

Tackling the unemployment problem requires an act of will, a decision by society as a whole that this goal is worth pursuing. In order to tackle unemployment we need an informed and extensive debate as to whether the average pay increases are in the national interest. Given the record of previous programmes and of the Government, that question must be asked. The clear answer is that tackling unemployment has not been made a priority in previous programmes or in the Programme for Competitiveness and Work.

There is a certain Alice in Wonderland quality to this debate. On almost every page of the Programme for Competitiveness and Work reference is made to the National Development Plan. On some pages it is referred to more than once and on page 19 it is referred to four times. The plan underpinned the negotiations on the Programme for Competitiveness and Work, but which plan was it? Was the programme decided before the Government faced up to the reality of the present situation? A loss of £800 million can hardly be described as a synthetic storm. Given that it is only in the last day or two that the Government has accepted the need for cutbacks in all Departments, it seems that the discussions with the social partners were based on a false premise. This undermines the credibility of the entire plan, much of which is Alice in Wonderland stuff.

Despite its unprecedented majority, the Government could not face up to reality. It is extraordinary that the Government has consistently refused both inside and outside this House to admit the actual allocation from Brussels. This raises questions about the seriousness with which the Government treats this House. The statements today on the Programme for Competitiveness and Work are suspect and something of a charade. I would be much more impressed if we had had an opportunity, at the very least, to be part of the discussions on the complex questions with which the Government attempted to deal in the programme. Instead, the programme has been drawn up without any reference to the Dáil or any debate on public pay. Is it any wonder that the general public is sceptical of the Dáil and politicians?

I am sceptical about the Government when I consider the lack of real discussion on key issues in this House. Decisions are consistently taken outside this House and reality is not faced up to. This is typified by the misinformation fed to the public and the inadequate information given to Opposition Deputies. If the Opposition has to face this web of mystery and duplicity, how much more difficult will it be for the person in the street to get a clear understanding of the money available and the projects which will come on stream? Is is any wonder politics has fallen into disrepute.

Since I was elected I have had repeated representations from community groups who feel they are caught in an endless web of bureaucracy in trying to find out what grants they may apply for, not to mention the ones for which they may eventually qualify. This type of stroke politics confuses the public and undermines our democracy. One has only to remember the general election when we were promised the £8 billion was in the bag and the impact this had on the negotiations at that time. The attempt to mislead the public began a long time ago during the formation of the Government. This gives rise to questions about the Government's commitment to, for example, arts and culture the funding for which is usually cut first. So much for the Government's deep seated commitment to arts and culture.

I want to refer in detail to the programme. The Conference of Major Religious Superiors, a body long recognised for its input to economic and social policy, states that the available resources were shared among those at the table, with a total insensitivity of the people outside. It goes on to say that the programme gives priority to the politics of greed and fails to provide the vision and leadership needed to build a more inclusive and less divided society. It is concerned that the new national programme negotiated by the Government will lead to growing exclusion and deepen the division in society. It believes that the decisions taken in the new programme will mean that the number of people living in poverty will not decrease but may well increase over the next three years. I was struck when reading through the document by the lack of reference to the poverty, exclusion and marginalisation experienced by many people and predict that the gap between the poor and better off will widen, unemployment will not decline and the number of people excluded from real participation in Irish society will grow.

There are very few recommendations in the programme which suggest giving more empowerment to people at local level. Rather it contains many generalisations and idealisations. We need to remind ourselves that the Programme for National Recovery from 1988 to 1990 and the Programme for Economic and Social Progress from 1991 to 1993 resulted in increased poverty, unemployment and exclusion. Despite the sound fundamentals about which we hear so much, we did not turn growth into jobs or help people break out of the vicious cycle of unemployment. The programme contains no comprehensive antipoverty strategy. The Government pattern of dealing with problems without any creative thought has set us on the same track once again.

The programme is full of wordy statements about how bureaucracy will reorient itself and redirect its efforts. If all these things are worth doing, why does it need a pay agreement to articulate them? If the Government really believes that all these things are worth doing, how many of them would have been done anyway even in the absence of a pay agreement? The Government should tell us the proposals and plans in the programme which would have proceeded on their own merits even if no pay agreement had been formulated.

What is the need for a pay agreement? Under the Programme for Economic and Social Progress some workers received increases greater than those negotiated. These people work in the industrial or services sectors where profit levels are strong, productivity has increased or both. The Programme for Economic and Social Progress had little or no effect on their position. Other workers received less than the increases agreed in the Programme for Economic and Social Progress. Because they worked in industrial or service sectors with low profitability or productivity problems they had the good sense to recognise the effects of market forces and adjust their expectations in the interests of maintaining their jobs. For such workers the terms of the Programme for Economic and Social Progress are largely theoretical. The only group of workers for whom it meant anything concrete in operational terms were those in the public service. Whatever one may think about the actual outcome, it seems clear that what was needed in the public service in late 1990 or early 1991 was a pay agreement. The same logic applies today.

There is a statement about public service pay in the programme. It says: "Improved planning of such costs facilitates the freeing-up or better utilisation of resources needed for the improvement of the cost-effectiveness or efficiency of the operation of the economy as a whole". If the improved planning means higher costs the country cannot afford and if it means the continuation of the level of unemployment we have seen, how can it lead to a more cost effective economy that in the long term will solve the problems we face?

The section on the European Union, to which Deputy Cox referred, certainly succeeds in hiding the débacle in which the Government has found itself in relation to Structural Funds. The section on the environment shows clearly that the Government has failed to understand what environmental policy is all about. This paragraph carefully avoids taking any real position on environmental issues. It pays the usual lip service but does not take a position. The most important point to be made about environmental protection is that no one country on its own can pursue a rational environmental policy. Any serious environmental protection policy would have to make explicit the cost of using petroleum oil and petroleum oil derivatives as raw material. This in turn would require an enormous increase in the taxation of these products balanced by compensating reductions in other forms of taxes. No one country could afford to do this in isolation since it would immediately lose its competitiveness; it could only be done by international agreement. There is no indication in this document that the Government understands that basic requirement or intends to pursue the real issues on environmental protection. Its inaction on THORP this week underlines once again its lack of commitment to saving our high quality environment.

There are many references to targets in this Programme for Competitiveness and Work. One of these concerns the Gaeltacht, where jobs will be increased by 1,920 and a new strategy will be put in place. We are not told what that strategy is, but there is a guarantee of 1,920 jobs. It states also that the money and the development support provided by an Bord Tráchtála will yield an average increase of 9 per cent per annum in exports by indigenous industry. What is this figure based on?

There are interesting statistics in the section on tourism, which I do not have time to deal with now. Suffice it to say that we expect tourism revenue will increase by far greater amounts than during the period of the Programme for Economic and Social Progress. What are the realities of these targets? There is a promise of 1,500 jobs in the forestry industry during the period of this programme. Are these the same 1,500 jobs that were promised by Fianna Fáil Coalition Governments in past programmes since 1987? Were any of these targets ever met in the past? What about the competitiveness and employment protection unit? The programme states that this unit will encourage employers to consider options other than redundancies where these would be appropriate and would not affect the future viability of the competitiveness of the firm. The vast majority of employers would already consider such options before considering redundancies.

The section on employment in State companies — and I listened carefully to Minister Cowen on this — seems to have been written on a different planet when compared with recent statements about aviation policy, Aer Lingus, Team Aer Lingus and Telecom. There is no reference to the fact that a number of State companies need outside support by way of equity injection in order to maintain their existing employment. This again is an indication of the Alice in Wonderland quality of this document. Perhaps the investment of £100 million through tolling of our national primary roads is in the same category; we must wait and see. In relation to the references to taxation, what major reliefs in general income taxation were introduced in the 1994 budget.

Regarding the section on health, while there are many promises about the development of community care services, the reality is that many elderly people and carers are still not getting the level of support they need despite the changes that have been made. I am tired of lip service being paid to the health needs of women when I see those attending the breast treatment clinic in St. Vincent's Hospital having to wait for hours every week for treatment. What sort of health service are we providing for women if these waiting times continue to be an inevitable part of their treatment at a most serious stage of their illness? We are still not making cervical screening available to women.

Under the equality measures, which I read with interest, we are promised yet again a committee to monitor the implementation of the commission's recommendations. The committee still has not met; it was promised many months ago. We are promised equality employment legislation, which is long overdue. Yet again we are promised a survey on equal opportunities in the public sector and we are told also that yet another working party to examine the job potential of child care services will be set up. We have not yet received the printed report of the last working party, which included the social partners, set up two years ago to examine child care. Surely one of its briefs was to examine the potential of jobs creation in this area. These sections or the programme contain promises that were made months and years ago.

Unfortunately — and I say this with regret — this programme will not lead the country out of the horrifying unemployment and poverty that many people are experiencing.

Minister for Social Welfare (Dr. Woods)

This new national programme focuses on what we all agree is our greatest national priority, namely, the creation and the maintenance of jobs. It will continue to build on the work which has been achieved to date under the Programme for National Recovery and the Programme for Economic and Social Progress. The commitment of the social partners will ensure that the less well-off sections of our community continue to share in the economic benefits derived from those programmes. The commitments in the new programme will give a clear direction in tackling unemployment, increase the numbers at work and continue to support those who need the protection of our social welfare system.

One of the central commitments in the new programme is that of maintaining the real income position of those who depend on social welfare. In relation to certain groups, we have given increases in this year's budget of up to 6 per cent and 10 per cent to boost their weekly payments. Reaching the priority rates set down by the Commission on Social Welfare in the case of all weekly social welfare payments has been another achievement of this year's budget. Not only have the priority rates been achieved but all the new weekly rates from next July will represent at least 90 per cent of the commission's main recommended rates. A great deal has been achieved already, therefore, in relation to those recommendations.

We are committed also under the new programme to the further development of family income support measures, including child benefit and the family income supplement. Both of those measures have been increased in this year's budget.

More than ever before, the family income supplement is providing much needed support to workers bringing up families on low pay. In the last year, take-up under the scheme has shown a dramatic increase of almost 25 per cent. There are now some 9,600 families in receipt of family income supplement and over 30,000 children benefiting from this payment. It is clear that the very substantial improvements which I introduced last year are now having an impact on take-up under the scheme.

I welcome in particular the commitment in the new programme to the maintenance of the social insurance system, including the contributory principle. The cornerstone of the social insurance system is the Social Insurance Fund, which exemplifies the partnership consensus which exists between workers, employers and the State in providing essential protection for workers.

The Social Insurance Fund is working very well at present and is in a sound financial state. That is one of the reasons it has been possible for the Government to introduce in this year's budget a significant package of PRSI measures which are directed at supporting jobs in labour-intensive industries and helping those at work on low pay. The combined effect on the new low rate of employer's PRSI and the exemption from paying the levies amounts to a major boost of the order of some £89 million a year in support of jobs. These measures will benefit twothirds of all employers, that is, 80,000 employers, as well as 60,000 self-employed people and some 400,000 employees and occupational pensioners. By any standards this is a major investment. The return I am expecting is in the form of jobs retained, jobs created and jobs made increasingly available to long term unemployed people. I would hope, having regard to the primary objective of the Social Insurance Fund, which is to provide pensions and benefits for workers, to continue down the road of shaping the PRSI system so as to encourage employment.

The new programme endorses a number of measures designed to facilitate unemployed people and others in receipt of social welfare payments to take up employment, self-employment, education or training. There is a clear commitment to identify and minimise obstacles to facilitating entry or re-entry into gainful employment, whether they be financial or otherwise.

The initiatives introduced by my Department in recent years have also been endorsed. Over 1,100 — the figure is now 1,269 — new jobs have been generated under the back to work allowance scheme I introduced last October. In addition, almost 5,000 unemployed people are currently pursuing second and third level education courses. Schemes such as these will continue to be promoted and developed over the period of the programme.

I am particularly pleased with the success to date of the back to work allowance in that 600 of the 1,100 people employed are involved in self-employment ventures ranging from activity holidays, crystal glass and peat products to services such as carpentry, car maintenance and beauty care.

There is a strong commitment in the new programme to continue to improve the quality of service delivered to our 1.4 million social welfare customers which has been a feature of the social welfare system in recent years. Among the service improvements on which we will be building are modern payment methods, more flexible signing arrangements and greater local access to services. All remaining local offices will be fully computerised during 1994 providing the basis for our "one stop shop" objective. Less frequent signing on for unemployed people and more payment options for them will mean that staff will have more time to address their needs and those of their families.

I look forward to hearing the views of the new customer advisory groups which are provided in the new programme. Those groups will comprise representatives of social welfare customers, such as pensioners, lone parents and families who are out of work through illness or unemployment, as well as representatives of those responsible for the delivery of the service. The process will be a major source of feedback on customer satisfaction with the way the Department does its business so I consider that market research and regular reviews of customer perceptions form an important part of the development of customer-oriented services.

The complexity of the social welfare system always has been an issue within the context of developing our services. The enactment of the Social Welfare (Consolidation) Act, 1993, and the guide to the provisions of that Act we produced have been particularly well received. It is important that the provisions of overall social welfare legislation be clearly and easily understood and comprehended by all concerned.

An Leas-Cheann Comhairle

The Minister has five minutes remaining.

Dr. Woods

Work on consolidating the various regulations made under the consolidation Act is already at an advanced stage. I propose to publish a similar guide to the regulations when this task will have been completed.

There are a number of other major commitments within the new programme, which include the following. First, the recommendations in the final report of the National Pensions Board will be examined and consultations held with the social partners. I am very anxious to proceed with the recommendations of this report as early as possible. Second, a White Paper on partnership between the State and the voluntary sector will be published in 1994. Third, problems being experienced by low-income farming families will be reviewed, including the issue of the family income supplement. Fourth, the position of lone parents in the social welfare system will be examined further following the significant improvements in the means test announced in the budget. Fifth, the concept of dependency on the social welfare system will be examined within the context of overall social welfare reform. Sixth, application and assessment procedures in relation to social welfare and other means-tested State services will be streamlined and standardised. Seventh, the recommendations arising from the work of the expert group on the integration of the tax and social welfare systems will be given urgent and careful consideration and consultations held with the social partners. Eighth, we will continue our efforts on the detection of fraud and abuse and monitor compliance with the social welfare code. Lastly, we will continue to pursue measures to counter the black economy, including a review of the C45 scheme by the monitoring group on the black economy.

The House will see that there are major proposals included in the programme affecting the lives and livelihoods of all workers and also of all people who now depend on social welfare. Therefore, for social welfare generally, this programme is particularly important. I am quite surprised that the Opposition has not noted that fact. This is something which, if it had not been done, the Opposition would be crying about; whereas there is now a clear commitment on the part of this Government to protect those dependent on social welfare, not only at present but into the future, in the course of the implementation of this plan. That is particularly important to me, as Minister for Social Welfare and also, I can assure the House, to all of those dependent on social welfare.

Deputies will be aware of the bilateral social security agreements I have concluded with countries outside of the European Union in order to provide protection for emigrants who go abroad to work. For example, Austria, Australia, Canada, the United States, Quebec and, since 1 March, New Zealand all now operate bilateral agreements with Ireland. This facilitates our emigrants and, in turn, nationals of each of those countries coming to Ireland. Those agreements have real and tangible benefits for Irish workers who have gone to work in those countries.

Deputies will be aware also from the debate this week on the Social Welfare Bill, 1994, of my concern about the effects on Irish emigrants to the United Kingdom and on the rights of Irish people living there of the United Kingdom Government's proposal to introduce a residence test for people seeking certain social welfare payments in the United Kingdom. I met the British Secretary of State for Social Security, Mr. Peter Lilley, in London last evening when I received his assurance that the proposed new residence test was not intended by the British Government to interfere with the traditional working arrangements and patterns of migration between our respective countries. That was an important assurance for us from the British Secretary of State for Social Security. I very much welcome that assurance and look forward to a satisfactory outcome. In that connection it was agreed that a high level group of officials from our respective Departments would meet early next week to agree a formula which would ensure there was no negative impact on the traditional working arrangements and patterns of migration between our respective countries.

Past national programmes have set the agenda for social welfare progress in the late eighties and into the nineties. That agenda has been comprehensive, balanced, and has been completed in terms of the real progress we have made since 1987.

This new Programme for Competitiveness and Work continues that agenda, providing a real social guarantee to those dependent on social welfare that they too can share in the increased national prosperity flowing therefrom and from the massive investment by the private sector, the European Community and the Exchequer over those years. All who genuinly care for the less well off sections of our community and those who depend on the Social Insurance Fund — such as widows, old age and retirement pensioners and invalidity pensioners — must strongly welcome this new programme.

Mr. Broughan

On a point of order, I would like to know the Government's response to the start-up of the THORP nuclear processing plant on Monday next following the judgment against Greenpeace and Lancashire County Council at 12.30 today in the London High Court. Can the Government take any action in defence of the Irish people's interest and health before Monday?

An Leas-Cheann Comhairle

That is not an appropriate matter.

Mr. Broughan

I would like to have it on the record of the House that this matter was raised.

An Leas-Cheann Comhairle

I call the Minister for Enterprise and Employment, Deputy Quinn, to conclude.

Minister for Enterprise and Employment (Mr. Quinn)

I intend to conclude immediately because I do not see any point in addressing an empty House when not one member of the Opposition has chosen to come in to listen to a debate for which they sought time from the Government.

I commend the speakers who have contributed to this debate. I join with my Government colleagues who have put on record, at considerable effort, our considered views on the relevance of the Programme for Competitiveness and Work. I do not see any point in taking up the time of an empty House in addressing it any further and I propose to conclude the debate.

The Dáil adjourned at 3.40 p.m. until 2.30 p.m. on Tuesday, 8 March 1994.

Dáil Éireann díospóireacht - Friday, 4 Mar 1994

Programme for Competitiveness and Work: Statements.

Acting Chairman

Dáil Éireann díospóireacht -
Friday, 4 Mar 1994