Mary Harney
Ceist:2 Miss Harney asked the Taoiseach if he will report on the case made by the Irish Small and Medium Enterprise Association for representation on the Central Review Committee of the Programme for Competitiveness and Work. [7651/96]
Ceisteanna—Questions. Oral Answers. - National Agreement.
Mary O'Rourke
Ceist:3 Mrs. O'Rourke asked the Taoiseach his views on whether representatives of the unemployed and small business people should be in attendance at the negotiations on the next national agreement; if his attention has been drawn to the recent comments of the General Secretary of SIPTU on social partnership; and the concerns, if any, he has regarding the gathering storm clouds over the process. [7633/96]
I propose to take Questions Nos. 2 and 3 together.
I want the social partnership process to be as inclusive as possible. I have received requests from a number of organisations for inclusion in the Central Review Committee which monitors the implementation of national programmes but it is not possible to accommodate all of these.
The existing committee is working well and I have no plans to change it. However, I intend to ensure that in the preparation of any new programme, mechanisms will be developed to allow for a contribution from a wider number of groups than at present, including ISME. Contributions by these groups would be limited to particular areas of direct relevance to their members.
The inputs of NESC and NESF in developing a framework for any new national programme have been sought. I have requested the council of NESC to prepare a strategy report which will inform the negotiations on any new programme and the NESF, which has an even wider range of representation than the NESC, has also been invited to prepare a report on the elements and consultative process for a new programme. The INOU — the organisation for the unemployed — is represented on both NESC and NESF.
I am aware of concerns expressed by a number of social partners as to a new programme and the need to develop the partnership approach at company level. Social partnership as a whole has served Ireland well. Taxation changes, including increased allowances, widened bands and other improvements such as increases in children's allowance over the last three budgets, have contributed to increased net real pay, and most significantly for those on low pay with families. For example, between 1993 and 1995 net real pay, for a married single-earner household with two children on the average manufacturing wage, has increased by 5.4 per cent, and for a similar family on three quarters of this wage, the increase has been almost twice that at 9.8 per cent. As partnership has served the country well, it would be unwise for Government, employers, farmers and trade union members to abandon it lightly to return to local bargaining. However, the Government will be concerned to ensure that the terms of any new national programme will meet the economy's need for competitiveness and continued fiscal responsibility in the interests of tackling unemployment and meeting the European Monetary Union criteria.
Will the Taoiseach agree that, increasingly, the CRC is seen as an insider's club where the traded sector in the economy is not represented and that giving ISME consultative status is not appropriate?
All the participants in the Central Review Committee represent the traded sector of the economy. It is important to point out that the trade union movement represents the traded sector of the economy to a great extent given that many trade union members are in this sector and that their jobs depend on the competitiveness of the economy. IBEC clearly represents the traded sector of the economy and its delegation includes the Small Firms' Association which is part of the traded sector of the economy at the smaller and more vulnerable end. We all recognise that the farming community which is represented is affected in the same way by developments in the traded sector as any other occupation. It is affected by changes in taxation, interest rates etc., in the same way as businesses in other sectors. The traded sector is represented on the Central Review Committee and the Government, as a partner, has a responsibility to take account of the needs of this sector.
The Deputy raised the issue of ISME representation on 30 January and I dealt extensively with it at that time. There is not much advantage in repeating what I said then beyond saying that following that question a very useful meeting took place between ISME and the Minister of State, Deputy Mitchell.
Peter Cassells has said that any new agreement will have to be radical while Bill Attley has said the party is over. Does the Taoiseach agree that any new agreement must be radically different in nature? ISME and the INOU should not be on the outside looking in at previous participants in agreements. Does the Taoiseach agree it would be much better for all groups to look after the needs of society rather than give them a consultative role, which seems to be the intention in regard to ISME and the INOU?
The Irish National Organisation of the Unemployed is represented on the National Economic and Social Council and the National Economic and Social Forum, both of which have been specifically asked to make an input to the basis for negotiating a new national agreement. Other organisations are also seeking inclusion but if one admits one organisation there are demands for others to be included. For example, the Chambers of Commerce of Ireland are seeking separate representation. If one admits one additional organisation three or four other organisations will say they have as good a case for inclusion. Having looked back on what happened, the existing system has worked well. It is important to point out that since social partnership was instituted economic growth has been 21 per cent while, during an equivalent period prior to social partnership, it was only 1.2 per cent. Other factors such as international interest rates affected the earlier period. During the period prior to social partnership the net take home pay for a single person fell by 7 per cent while in the period since social partnership the net take home pay for a single person has increased in real terms by 20 per cent. Similar examples could be quoted for married people. From the point of view of trade union members, the record in terms of actual take home pay, disposable income in the light of inflation, has been good under the social partnership model and the existing CRC arrangement. I am reluctant to change arrangements which are working reasonably well, if it is not broken do not fix it.
In the context of negotiations in Northern Ireland the Taoiseach rightly advocates the idea of inclusiveness and emphasises the importance of everyone being involved. It is important that social partnership is as inclusive as possible. Will the Taoiseach accept that it is not inclusive if key sectors of the economy are outside the process or treated as second rate players in it? Will he further accept that if we are to have a successor to the Programme for Competitiveness and Work— and I favour social partnership on balance — it must be based on real tax reform?
There are degrees of involvement which are appropriate depending on the size and representative character of particular organisations. We have tried to strike a balance by allowing a larger number of organisations into the NESF than are in the NESC and by allowing a larger number of organisations into the NESC than are in the Central Review Committee. All those organisations are involved in the process, other organisations which are in none of those three bodies have been invited to make submissions and will be consulted by the CRC and others who are directly involved in the process. One must be realistic and accept that there is a trade off between representation and efficacy. If a huge number of organisations is involved it will be difficult to get agreement. The smaller the number of organisations the easier it is to get agreement. It is easier to get agreement between two organisations than between three organisations and it is easier to get agreement between three organisations than five organisations——
What about the three parties in Government?
——unless there is a very good chairman, which is the key to the success of certain arrangements. The Deputy must be realistic about this matter.
There are five groups involved.
I appreciate the Deputy's concerns about ISME and I have taken note of them. However, there must be a limit to the number of people involved in the CRC. I had nothing to do with it but since the CRC was set up in 1987 it has worked——
Thank you.
The Taoiseach hated it.
It has worked reasonably well and I am reluctant to change anything which does.
The Taoiseach should ask the Minister of State, Deputy Rabbitte, about it.
It is great to see what a change in geography can do; following his move to that side of the House the Taoiseach came to love the CRC. Nevertheless I am glad he is in agreement.
It is very important to be happy in one's work.
I am very happy in my work.
The Minister of State, Deputy Rabbitte, is particularly happy in his work.
He has become like a docile dove. He used to be full of outrage but now he is all sweetness.
The Deputy will find out what I am like when I reply to questions.
It is amazing what a car and driver can do. I am concerned that the bigger players, such as the main social partners, are the ones inside. The smaller groups who are knocking at the door and demanding entry should be fully included in the forum where the decisions are made. I agree with the points made by Deputy Harney about the need to reform taxation. However, will the Taoiseach agree that a reduction in unemployment should be the main focus of the next programme?
The Government will strike an appropriate balance between the divergent opinions expressed by the Opposition parties on the appropriate priority of tax reform and employment creation. The two complement one another. Tax reform assists in employment creation but obviously it has to be done in a way that takes particular account of the needs of the low paid, because it is the take-home pay of the law paid that is important in terms of establishing an incentive to work for families. We will take that into account in the work we are doing, and have done so. The Government has put particular emphasis on the position of families in its work. For example, there has been a 45 per cent increase in child benefit since this Government came to office, the largest increase ever in child benefit. I would make the point that, in looking at take-home pay and the disposable income of families on PAYE, the abolition of third level fees would be worth up to £2,000 a year to families with children in third level education. That is a very substantial improvement in the annual budget of families. It is important that that should be taken into account in making calculations about real income.
Who does the Taoiseach think represents the small industries on the CRC?
The Small Firms Association.
That is not on the CRC.
The Deputies are not particularly well informed. The Small Firms Association is represented on the Central Review Committee through IBEC.
I always like to hear the Taoiseach announce how much he has changed his opinions on social partnership since he went over to that side of the House. I would like him to consider a point I made before about ISME. I accept what the Taoiseach has said about the number of groups. From March 1987 to December 1994 I was a Minister in two different Departments, including the one centrally involved in the social partnership concept and in the partial success of it — not everything about it was a success. At that stage the CII, the Federation of Irish Industries, and the Federated Union of Employers were the two employer bodies. They amalgamated and many of the people who were in those organisations, mainly in the FUE, split away to form ISME because they believed their interests were not being represented. ISME is still fighting the case. The SFA was formed as a reaction to that and, I am sure, is doing a very good job within IBEC. It is not increasing the numbers. All we are advocating is giving representation to ISME by returning the position to what it was prior to the formation of IBEC. That is the case as articulated by ISME and it is totally consistent. The people who represented the small industry associations in all my early discussions and with whom I dealt for four years were the people who are now the central figures in ISME. They are the people who are seeking representation and that should be considered.
This is tending to be a debate. This is Question Time.
This is not historically accurate. The Deputy is more accurate about 1796 than he is about more recent times.
It is historically accurate. I raised this issue before and the Taoiseach said he would look into it but never came back to me. Regarding my second question, the Programme for Competitiveness and Work promised workers that, in line with the Government's concern with taxation and employment, the proportion of tax on income as a share of revenue would be reduced. The Taoiseach will agree that the proportion of direct tax as a share of total revenue was reduced in my last budget from 39 per cent to 36 per cent. This Government, in its two budgets so far, has let the proportion rise again in breach of its commitments under the Programme for Competitiveness and Work by giving no worthwhile tax relief. Will the Taoiseach accept that this is what is causing the present large-scale unrest throughout the country? How is he going to address it? It is hopeless to have his Minister for Finance talking about what he intends to do in the next budget when we have not yet ratified the legislation following what he did in his last budget.
It is important to be accurate about this. The people to whom the Deputy is referring have seen an improvement in their take home pay in all cases. The level of mortgage payment that they are paying each month is about £100 per month less on average than it was in the early 1990s. Third level fees are being abolished and child benefit has been increased by 45 per cent. All of these are direct benefits in addition to the increase in net take-home pay that people in that category have. That needs to be taken into account. It has arisen not by accident or as a result of the munificence of the Government but because we have had industrial stability, a climate for investment growth and responsible management of the public finances which has led to low interest rates. The formula has worked from the point of view of the people concerned. They are better off now than they were last year, and they were better off last year than they were the year before. It is important that people should recognise that that prosperity is a direct result of social partnership and of arrangements that are working well.
As far as ISME is concerned, the Small Firms Association which is part of the CII existed prior to the amalgamation of the CII and the FUE to form IBEC. The Deputy will recollect that the chief executive of the Small Firms Association is now the chief executive of ISME and that in his first capacity he worked under the CII umbrella.
I hope what I have to say will be helpful to Deputies, but perhaps it will not be. I do not want to encourage the splintering of organisations by giving representative capacity or strength in numbers that rewards splitting organisations.
That is not our purpose.
That is not the Deputies' intention but it could be the result of Deputies urging me to put a premium on splitting because splitting could result in more representation for a particular sector.
How many farming organisations are on it? The Taoiseach's argument is illogical.
Whatever may have happened in the farming sector in the distant past, in current circumstances this Government should not give additional representation to a sector just because an organisation that previously represented that sector splits in two.