Financial Resolutions, 1996. - Financial Resolution No. 7: General (Resumed).

Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
mdash;Minister of State at the Department of the Taoiseach, Deputy J. Higgins.

Deputy Boylan is in possession but I regret to inform him that he has but one minute.

I wish to pay tribute to the Minister for Justice, Deputy Owen. I have every confidence that she will come to grips in the short-term with the wave of crime gripping the country. I know she will deliver and from a person of her background I would expect nothing less.

I cannot understand the mentality of a judge handing down concurrent sentences. Each crime must have a penalty and crime must be punished. Therefore, if someone is to be sentenced to 12 months for crime A, and to 12 months for crime B, he must be sentenced to two years' imprisonment and serve the full term. The nonsense of remission for good behaviour does not wash with the public — what else could one expect but good behaviour from a person behind bars? If they are not of good behaviour, there should be people to ensure they behave themselves.

I have absolute confidence in the Garda Síochána who are an excellent body of men. However, time has caught up with them and the force needs to be reorganised. The modern criminal can move fast, as a matter of fact they are better equipped with modern communications technology than some of the Dáil Deputies. The gardaí must be equipped to deal with them. I accept it is difficult for a garda to relocate on promotion when he and his family have lived in an area for a number of years but I think it is important that gardaí of whatever rank reside in the area to which they are appointed. In that way a garda will get to know the people and get a feel for what is happening. If he arrives at work at 9 a.m. and leaves at 6 p.m. he has not the personal contact that former gardaí had in the area. That point was made to me and I think it worth taking on board. While I do not wish to uproot garda families it should be a condition of appointment from now on that the garda will reside in the area to which he is appointed.

For months before the budget we were treated to daily reports of high revenue yields and additional funds being made available to the Minister for Finance. Naturally it was expected there would be substantial cuts in income tax and PRSI. It is wrong for the media and politicians to build up those hopes and expectations. Not only will people be no better off, they will be worse off. The average taxpayer will benefit by £2 per week but when account is taken of the expected increase in ESB charges, television licence fees, the increases in petrol and cigarettes and so on, a householder who smokes and takes a drink will be no better off.

One of the most disturbing aspects of the budget is the addition of another £1 billion to the national debt. When the Labour and Fine Gael Parties were in Government in the mid-1980s, they doubled the national debt from £12 billion to £24 billion. They now have the added distinction of being the first Government to top the £30 billion mark.

I listened to the Taoiseach's party political broadcast on the budget in which he spoke about the 45,000 extra jobs created in 1995. This point was reiterated today by two Members from my constituency. If that were the case, would we not have expected the creation of 1,300 jobs approximately in Cavan-Monaghan, as our share-out? The facts are different. I tabled a parliamentary question to the Taoiseach prior to the Christmas recess asking about the increase or decrease in the numbers unemployed from September 1994 to September 1995 and I was told there were an additional 400 people on the live register. With the claim of an additional 45,000 jobs, one would have to ask questions about equality between areas.

The priority should be to provide employment and the Government's performance should be assessed on how it deals with the unemployment problem. There are a number of successful furniture manufacturing companies in Monaghan as well as firms manufacturing structures for timber framed houses some of which are exported to Japan. These companies found it difficult to get extra staff. It is regrettable that people are unwilling to forego social welfare benefits and dole to take up indoor jobs offering security and the prospect of continuing employment. We must examine our social welfare system. The food industry provides much employment in my constituency with up to 2,000 people employed in the food processing and mushroom industries. It is ironic that the food processing industry should have to fight so hard to survive due to the continuing strength of the punt against sterling. At present it is IR£1.04 to £1.

The Minister for Agriculture, Food and Forestry stated that the food industry was assisted in the budget. However, the reduction by .44 of 1p per litre of liquid petroleum gas will not offset the additional transport costs incurred by firms exporting to Britain. The fact that food producers and the representatives of the processing plant met the Minister to fight for the industry's survival gives the lie to the statement that the industry was assisted.

The development of the mushroom and poultry industries are prime examples of the enterprising spirit in a region with a strong work ethic and that is why it is annoying to hear people will not take up employment. The poultry industry, which provides employment for young people, was built up without any Government support or assistance. Two housing units were built at a cost of £180,000. The co-op was set up in the 1950s. Primary producers did not receive any financial assistance. Feedstuffs for poultry costs £15 per ton more here than in Britain or the North. I tabled a question to the Minister and he stated in reply on 24 January that the question of comparative feed costs for poultry had been addressed in a report on the implementation of the development strategy for the poultry processing sector by the poultry meat forum set up in January 1995 and that the report will be available shortly. Twelve months have elapsed and the industry is on its knees. During my time in the private sector if something needed to be done it was done immediately, not 12 months later.

I welcome the tax exemption proposal in regard to farm levies and the removal of the disincentive in the treatment of the value of farm stock under the early retirement scheme. That is an important contribution. I also welcome the increase in farmers' flat rate VAT from 2.5 per cent to 2.8 per cent. The Small Firms Association fought hard for a reduction in corporation tax and this has been reduced from 38 per cent to 30 per cent on the first £50,000 of taxable income. The mushroom industry, which is not a manufacturing industry, was subjected to 38 per cent corporation tax. Cross-Border workers residing in the South are exempted from paying the 2.25 per cent levy. Two schoolteachers lived in the same street in a town in my constituency. One of them was born in Northern Ireland and the other in the South. Both teach in the North. One owed the Revenue Commissioners £3,500 in taxation and I arranged for him to meet the Minister for Finance. I am glad the matter of double taxation has been dealt with.

I am concerned about setting up Teilifís na Gaeltachta at a cost of £16 million. People in north Monaghan have been unable to get a proper signal for many years. In December I tabled a question to the Minister for Arts, Culture and the Gaeltacht asking him to request RTE to provide a transmitter to improve the signal in the north Monaghan area.

I received a long reply which stated:

As a further improvement measure RTE propose to establish a new transmitter station for North Monaghan. At present possible sites are being assessed. RTE hopes that, subject to the necessary international coordination, licence and planning permission, the new station for North Monaghan will be on-air during 1997.

A sum of £16 million is being provided for Teilifís na Gaeltachta while people in many parts of the country do not receive a proper signal and are unable to see the stations that are broadcast already.

There has been a call for the Taoiseach to set up in the Border area an interdepartmental task force to co-ordinate the various schemes in the area. At present there are 36 programmes, including the Operational Programme 1994-99; the INTERREG Programme, the EU Programme for Peace and Reconciliation, the International Fund for Ireland Programme, the Leader Programme and the county enterprise boards, which are administered by ten agencies. I support the call for an interdepartmental task force. Unless there is co-ordination of these programmes we will not be in a position to gain the maximum benefit from the funding available. Existing agencies such as the ADM and the Combat Poverty Agency should be given greater responsibility under the Peace Initiative Programme. A co-ordinating body is necessary to administer the £200 million available under the various headings.

Funding is available for health boards under the Health Programme. There is very good co-operation between health boards north and south of the Border in maximising the use of hospital space, specialities and so on. Those health boards are in a better position than most to take advantage of the funding available.

Professor John Fitzgerald of the Economic and Social Research Institute carried our a review of the Operational Programme 1989-93 and gave an evaluation of the position as he saw it for 1994-99. In an article in The Irish Times he stated:

In Ireland we have given a lot of attention to the need for increased support from the European Community to help lift the standard of living closer to the average Community level. However, we have given much less thought to what we want the money for and how we propose to spend it.

Those are very sensible words. Professor Fitzgerald went on to state:

But investment in human resources is essentially an act of faith. In the 1989 to 1993 programme, experience shows that the principal beneficiaries from educational programmes were the middle classes. While £220 million went to high tech courses at universities, only £72 million was allocated to FÁS's youthreach programmes for early school leavers with no qualifications whatsoever.

The statement that we have given little thought to what we want the money for and how we propose to spend it is true.

In recent weeks the EU audit service was very critical of expenditure in Border areas and stated there is little sign of cross-Border co-operation. I would ask that an interdepartmental task force be set up to deal with this matter. The audit service said that only 39 projects out of 270 benefit from the joint London-Dublin finances.

A number of groups have been set up on the northern side of the Border to attract industry. At present there is a great shortage of factory space, particularly in Monaghan, and the IDA claims it has no money to build factories. It proposes that developers build premises and in the event of them remaining vacant it will pay the rent for a year, thereafter the developer would pay. On 24 January last I put down a question to the Minister for Enterprise and Employment asking if he would request the administrators of the various schemes mentioned earlier to refocus their programmes to take into account the identified shortage of factory space necessary to meet demands in Border regions. In the course of his reply the Minister stated:

To enable IDA Ireland compete for mobile overseas industry, one of the essential requirements is the availability of good quality, fully serviced industrial sites and buildings in key locations. Other requirements include quality transport, infrastructural and educational facilities, and proximity to a sizeable population centre.

A site was secured in Monaghan 20 years ago and a 24,000 square foot advance factory was built about 16 years ago. The factory was sold in 1987 and has been sold twice since, but not one industrial worker has stood inside its door. To overcome the problem in this area we must re-examine industrial development. At that time Monaghan County Council provided a treatment plant close to the factory, on the national road between Monaghan and Armagh, in anticipation of securing industry for the site. An interdepartmental task force should be considered to oversee the spending of money in this area. Development funding must be made available to build much-needed factories.

The Northern Ireland and Border Counties Trades and Investment Council, whose headquarters is in New York and which was set up by American businessmen with Irish connections representing 360 businesses, operates by way of strategic alliance and networking.

Members of that council met public representatives and local business people to ascertain if some local factories could network with American factories. Additional factory space, which is difficult to obtain, is badly needed.

The recent report of the nutrition advisory group set up by An Bord Glas stated that there was a low level of fruit and vegetable consumption here compared to other EU countries. That is not only disappointing but disgraceful. Thousands of jobs could be provided in the fruit and vegetable industry. The continuing substantial increase in the importation of potatoes and many other vegetables which could be produced here is disappointing. I made that point here on numerous occasions and I recall a Member, a publican representing a Dublin constituency, shouting across the floor of the House that we cannot grow bananas or oranges. That may be true, but we can grow turnips, beetroot and carrots.

Following the findings of the advisory group, I asked my local health board to follow up this matter. This low level of consumption should be brought to the attention of parents. I asked the Minister for Health if he had consulted the Department of Agriculture, Food and Forestry or An Bord Glas following publication of the report and what were his proposals on the matter. He said he was undertaking widespread consultation on the report and that it is recommended that four portions of fruit and vegetables should be consumed daily. Much fallow and set-aside land could be used to grow non-subsidised crops.

I have often raised the issue of an alternative energy programme and I discussed it with the Minister for Transport, Energy and Communications today. Under EU regulations Governments are committed to advertise for and provide alternative sources for electricity generation. A report published last March identified various sources of power including wind power, hydro power, combined heating power and gas that could be obtained from land-fill sites, all of which are grant aided. At that time we understood that such sources of energy could be grant aided under the biomass heading. There is a problem in my county in disposing of farm waste and mushroom waste compost. We visited a plant in England where such waste is used to generate electricity for the national grid. The EU require that there be competition in this area. In a question I tabled to the Minister for Transport, Energy and Communications I asked if cognisance is taken of the need to recycle waste. I was told that each application is dealt with separately. Account was not taken of the financial and environmental benefits an area could derive from recycling waste at a time when there is much talk about the benefits of a green environment.

We have asked that the operational programmes should be refocused to take account of the peace initiative. Recently there has been much talk about the Dublin-Derry route. When the last tranche of funds was announced and the last programme was drawn up, emphasis was placed on the Dublin-Sligo and Dublin-Belfast routes, not the Dublin, Ardee, Monaghan, Derry route. Since then much pressure has been exerted to ensure that the Dublin-Derry route is developed as the fifth national corridor. The improvement of that route is strongly supported by the Northern Ireland roads authority, a body which heretofore did not appear to have much interest in it. It is also supported by various county councils including those in Derry, Dublin, Donegal, Fermanagh and Monaghan, various North-South bodies and the Derry-Donegal cross-Border group.

An article in The Irish Times of 19 October stated that a committee in the village of Collon is pressing for improved road safety measures along that route due to increased traffic on the road as a result of the peace process. Within a short period of the commencement of the peace initiative there was a 25 per cent increase in the number of vehicles using that route daily. That increase should be sufficient evidence of the urgent need to improve that route. There has also been a welcome increase in trade, slightly greater north than south of the Border.

I am glad to have an opportunity to speak in this debate. This budget goes a long way towards tackling the fundamental problem in our economy, that of long-term unemployment, the implications and effects of which are much wider than most people credit. Long-term unemployment affects us all. In addition to the obvious effects on the unemployed, it costs money in a range of areas beyond direct transfers to those involved. If the Opposition are serious not only about tackling long-term unemployment but about the economy as a whole, it should welcome the measures spelt out in the budget by the Minister for Finance. The Opposition seems to be all over the place. It disingenuously seeks to portray the budget as one under which the long-term unemployed have won out over middle income earners and the low paid. If this reflects a genuine concern, it is somewhat late in coming.

When Fianna Fáil and the Progressive Democrats were in power taxation relief was deliberately targeted at the well off. Members need not take my word for that. I refer them to a recent Davy Stockbrokers' report. I doubt whether Davy's carry a torch for the Labour Party or Democratic Left in this regard. That report states that since the Labour Party came into Government tax reform has been directed disproportionately at the lower paid. As Deputy Ahern was Minister for Finance in the previous Government, one might expect him to recall those facts. He probably does, but it does not suit Fianna Fáil to recall them now as it appears to be playing footsie with the Progressive Democrats in an effort to win the middle class vote. Of course, they are acting on the dangerous assumption that the middle classes do not care about the standard of State-provided education, health care or poverty, which I do not accept.

In the run-up to this budget we were treated to two policy documents, one from Fianna Fáil and another from the Progressive Democrats. Fianna Fáil made little attempt to publicise theirs, rightly so, because of its quality. One of its contentions is that, each year, the Government will have between £200 million and £300 million to play with on budget day. The difference between those two figures is a substantial sum which, over five years, amounts to £0.5 billion; so much for Fianna Fáil costed programme.

On the other hand, the Progressive Democrats have not been bashful about their party proposals. Indeed, Deputy Michael McDowell's comments have appeared so often in newspapers of late, he must qualify for honorary membership of the National Union of Journalists. The Progressive Democrats appear to have a problem with a growing economy. They contend the Labour Party is responsible for the increased income tax take — they are right — we have created jobs to allow people to work, certainly very many more than were achieved by Deputy Desmond O'Malley when in office.

As is only right, the budget targets the long-term unemployed. As I already suggested, the existence of a group of people beyond society is not only unfair on them but costly on the remainder of us. If we do not tackle this problem now, its continuation may lead to second and third generations without any stake in society. The problem of the culture of social disadvantage is that it crosses generations so that, if remedial action is not taken now, it will impose a burden on the taxpayer for generations to come.

The Government's response to this problem is comprehensive, involving public spending — anathema to both parties in Opposition but beloved of them while in Government. For example, this year the capitation grant to schools with disadvantaged status will increase by an additional £10 to £75, representing an increase of two-thirds since the Labour Party came to Government and a substantial commitment to tackling the problem of social exclusion at its roots.

Other measures announced by the Minister for Finance in his Budget Statement have been the subject of greater publicity but, as a whole, represent the first real attack on long-term unemployment. In particular, the proposal to allow the long-term unemployed to retain their child benefit allowance for 13 weeks after taking up employment, with their eligibility to apply for the family income supplement, is very worthwhile. In addition, the fact that unemployed people who return to the workforce can retain their medical card for a three year period is a particularly meaningful strategy since its loss proved a major deterrent to those wanting to return to the labour market. I expect this proposal to be very successful.

There is also the scheme to provide an £80 subsidy to employers who recruit long-term unemployed people. While welcoming this initiative, we need to be extremely careful to ensure that proper guidelines are in place to safeguard against its resulting in the displacement of existing workers by long-term unemployed people — on the back of a subsidy such as this — with the potential of benefiting employers only.

Another good move has been dropping the publicised intention to reduce dole in the case of 18 and 19 year olds, something I opposed publicly at the time, which would have been a very regressive move. These young unemployed people, very often with poor, if any, educational qualifications, represent a particularly vulnerable group which has been ignored for many years. New strategies will have to be devised to cater for them. While some budgetary provisions for them are welcome, they are not sufficient.

The notion of reducing dole payments to force young people into further education or the labour force is outrageous. Here, I make the point that anybody in receipt of unemployment assistance at the age of 18 or 19 will already have been means-tested. Indeed, many people argue that current unemployment rates are below the breadline. Therefore, I do not know how it can be argued that inflicting greater poverty on people will force them to remain in education.

Let us examine what happens to 18 and 19 year olds who are unemployed, perhaps with a pass level leaving certificate. We should be endeavouring to retain them within the education system, providing them with opportunities to participate in further training, PLC courses and the like. The reality for them is that, if they choose to do nothing and remain at home, they will be paid unemployment assistance whereas if they choose to participate in a PLC course, the State offers them no financial support. Despite that present huge disincentive to them to remain in education, very large numbers do manage to survive without any independent income, and to whom great credit is due. I understand there are at present approximately 17,000 or 18,000 people participating in such PLC courses without any State subvention.

That scenario contrasts starkly with that of others who attain honours level leaving certificates, admitting them to third-level education, whether in universities, Dublin Institute of Technologys or regional technical colleges where fees have been abolished. While welcoming that, it appears that we concentrate on one end of the market, the high achievers, those with a number of honours in their leaving certificate, to the detriment of those other lower educational achievers. This differentiation should be given greater attention in future because it constitutes another problem.

The irony is that what the Opposition finds particularly difficult to stomach in this budget is that, in tackling long-term unemployment and improving social welfare, these measures have been achieved while maintaining control over public expenditure and promoting social solidarity. Indeed, the Leader of the Opposition, Deputy Bertie Ahern, made great play here of the elimination of the current budget deficit in 1994. He may recall that that had been a great surprise to him as well as to others. Yet, the proposed current budget deficit this year is forecast to be 0.2 per cent. Since Deputy Bertie Ahern must be fully aware that budget figures are always properly cautious, it should come as no great surprise to anybody if the current account transpires to be in surplus at the end of this year. The Exchequer borrowing requirement is 2 per cent only, well below what had been expected by most commentators, falling well within the Maastricht criteria.

The real beneficiaries of this prudent, economic management of our economy are the middle income groups. Mortgage interest rates are lower than for many years although the Opposition has engaged in churlish attempts to suggest that responsibility for that lies beyond the State. While interest rates reflect wider development, the markets are capable of forming a judgment on our economy alone if they felt the need to so do.

The positive reaction to Government bonds in the aftermath of the budget indicates the confidence of the market in the strength of our economy. I very much doubt the market would feel the same if a Government introduced a package along the lines of the Progressive Democrats' policy document published a few weeks ago. Markets tend to recognise political posturing when they see it. Another fact which the Opposition conveniently ignore is that interest rates this year are more likely to fall than to increase, given the difficulties in the German economy. It has also criticised the introduction of free third level fees. Let them explain that to the middle income group.

I wish to refer to a few omissions in the budget but first I shall refer to taxation. We have heard much criticism from Opposition Deputies of the ongoing changes in relief on mortgage interest. I would remind the House, regrettably no Opposition Deputies are present but perhaps they are listening in their offices, that this measure and the timetable for its implementation was introduced by the then Minister for Finance, Deputy Bertie Ahern. It seems Opposition Deputies are suffering from collective amnesia.

On the social welfare side there is much to commend this budget. The general increases are well above the projected rate of inflation. There have been further increases in child benefit and in family income supplement. The popular back-to-work allowance scheme has been substantially increased. There are also increased payments for anyone who has twins and improvements in the back-to-school footwear and clothing allowances. An important and farreaching improvement is the opening up of the free schemes to State pensioners and low income private pensioners. I welcome this because we are all aware of many elderly people who have paid into occupational pension funds for many years. When they retire they are in receipt of a small pension and may not qualify for a State pension. Frequently those people were worse off than those in receipt of social welfare pensions because they could not avail of any of the free schemes. This is a welcome change as it allows pensioners, whose pension from work does not exceed the rate of contributory old age pension plus £30, to avail of the free schemes. This is a good start and I would wish to see it extended.

Another welcome development is the increase of 1,000 places in VTOS courses. In welcoming this extension I ask those in charge of the VTOS to actively market these places because in the past they have not always been taken up. Many people are unaware of the facility to return to education while retaining their social welfare benefits. Community employment workers have been given proper status as workers and this is recognised for the first time by the introduction of the class A stamp for them.

There are some omissions from the budget. No research funding is provided for examining taxation and social welfare systems in a different light. The world is changing rapidly. There are new roles, particularly for women, new family arrangements and new working arrangements. Our tax and social welfare systems do not reflect those roles adequately. We have to examine new ways of doing things because the existing systems do not always serve modern needs. In that respect I welcome the proposals by the Conference of Religious of Ireland which are balanced, reasonable and well thought through. Its idea is to develop a basic income system. Such a system would have much merit.

Debate adjourned.