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Dáil Éireann díospóireacht -
Wednesday, 29 Jan 1997

Vol. 474 No. 1

Financial Resolutions, 1997. - Financial Resolution No. 5: 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.
—(The Taoiseach).

I wish to share my time with Deputy Hughes.

Is that agreed? Agreed.

On reform of local government and car tax, very little illustrates more the belief of the rainbow Coalition Government in the drunken sailor school of economics than its faith in this system to raise adequate funds for local authorities. I say this because during good times people buy motor cars and there are, hopefully, sufficient funds for local authorities, but when times disimprove one of the first casualties is the sale of motor cars, leading to a reduction in funds. In the usual coy fashion which has become his hallmark, the Minister for the Environment does not tell us who will pay the piper then.

That is a pessimistic statement.

I wish to deal with what I would describe as my area of activity. At a time when serious crime is rampant, it would be reasonable to expect the Government to devote greater resources to the fight against it. It would be reasonable to assume that, but I often get the feeling that we are not dealing with very reasonable people. It is a damning indictment of the low priority the rainbow Government attaches to crime that the amount of money allocated to the Department of Justice in 1996 as a percentage of GNP was the lowest in almost 20 years. It is extraordinary that it was less than the amount allocated by, for example, the minority Fianna Fáil Administration which was obliged to engage in public expenditure cutbacks to rescue the country from bankruptcy after the drunken sailors had rearranged the deck-chairs on the Titanic. The Estimate for the Department of Justice as a percentage of GNP in 1996 was 1.68 per cent. At the risk of boring the Minister for Tourism and Trade, I will give the percentages for other years.

The Deputy does not bore me at all.

In 1980 the figure was 1.75 per cent; in 1981, 2.02 per cent; in 1982, 1.95 per cent; in 1983, 2.01 per cent; in 1984, 1.99 per cent; 1985, 1.92 per cent; in 1986, 2.14 per cent; in 1987, 1.97 per cent; in 1988, 1.85 per cent; in 1989, 1.7 per cent; in 1990, 1.71 per cent; in 1991, 1.71 per cent; in 1992, 1.74 per cent; in 1993, 1.78 per cent; in 1994, 1.78 per cent and in 1995, 1.7 per cent.

It is like saying Kerry scored four points in 1987.

The Minister for Justice wins the match again.

Government spokespersons have boasted about the buoyancy in the economy during 1996. Leaving aside the fact that Fianna Fáil provided the ammunition for this boast, no rainbow Minister cast a cold eye on the direction of the buoyancy of crime. When will this multicoloured shambles of a Government recognise that people want to feel safe in their homes and on the streets? Fianna Fáil will give practical and pragmatic effect——

What does that mean?

——to our oft repeated and entrenched view that in the hierarchy of obligations the protection of people's lives and property is a superior obligation.

Can the Deputy put a figure on that?

On return to Government after this year's general election, Fianna Fáil will herald the greatest crackdown on crime and illegal drugs seen in any western democracy in modern times. We will ensure that an adequate proportion of the fruits of the economic policies we pursued between 1987 and 1994 are applied to terminate the constant and overpowering fear people have for themselves and for what is theirs.

I wish to refer to the speech by the hybrid Minister of State, Deputy Pat Rabbitte. There is no more nauseating spectacle on the fringe of the body politic or the Cabinet room than the Dudley Moore of politics, the Minister of State, Deputy Rabbitte, expounding on the virtues of the rainbow coalition Government.

This clichéd speech is not like the Deputy's usual straightforward ones.

His pretentious pronouncements on the purity of his present cabal are only surpassed by the fallaciousness of his denunciations. Not content with taking the ship, he now wants to bang the drum and lead the parade. What is even more astonishing is that his new found friends are his old enemies. They are on record as saying they would not be found dead in the same room with him or his ilk.

The Deputy's party is having trouble with its new friends.

The Minister of State's diatribe this morning can be dismissed as cant and hypocrisy from a man whose party has a very good vantage point on such matters. Since the Lowry affair, Pat the gunslinger is forgetting to take the gun out of his holster before he pulls the trigger. He would do well to remember the biblical maxim, look not for the mote in the other man's eye but for the beam in thine own.

In this context the rainbow roll of honour is worth recalling for posterity. First up and first fired was the unfortunate Deputy Phil Hogan for leaking the budget. Hot on his heels was the telephone call made by the Minister of State, Deputy Hugh Coveney, who was consigned to the sin bin when the joker in the pack and Svengali Finlay wagged their fingers.

There is no fear of the Deputy's party doing that.

There was no such punishment for the Minister for ethics, information and whatever you are having yourself when she invited people to pay £100 a head to have a chat with the Minister for Finance before he framed the budget. In the letter she used the words "a unique opportunity to meet the Minister for Finance". Nobody even dared to suggest the Minister for Arts, Culture and the Gaeltacht should resign when the independent chairman of the Independent Radio and Television Commission decided to get involved in fund-raising for his lord and master. We should not forget the North Korean connection and the advertisement which was not an advertisement. An advertisement is not an advertisement when it is placed by the Leader of Democratic Left in a Democratic Left newspaper seeking employees for his office. That is what I call in the words of Deputy Rabbitte, this morning "a both sides of the road with us" strategy.

Then we had Deputy Michael Noonan, who in his handling of the hepatitis C crisis extended a grave insult to the family of a deceased victim. Hot on his heels came the Minister for Justice who failed to implement a decision to delist a member of the Special Criminal Court from August 1996. We have still to ascertain whether she was all at sea or lost in the post. Then we had the Minister for Agriculture, Food and Forestry, Deputy Ivan Yates, who was in Kavanagh's pub in Enniscorthy when the Russians were going and thought he was in Dublin Airport. Deputy Rabbitte should take a sup of whatever they were serving that day in Kavanagh's pub to see if will help to clear his mind. Next up was the redoubtable Deputy Lowry who thought he was under surveillance in 1995 when he could not see any detectives following him. His latest foray into cartel land ended with the hare hunting the hound and the Taoiseach making a distinction between what happens before and after one becomes a Minister. Deputy Rabbitte might care to reflect, prior to his next outburst, whether he should take on a machine gun with a pea shooter.

I refer to fact sheet No. 1 issued by the Department of Social Welfare in regard to the budget. I welcome the improvement in the method of assessment of capital and savings for recipients of old age pensions. I have called for that for some time and at a time when we have historically low interest rates it is long overdue. That element of the budget stood out, yet it has received least comment. We have historically high buoyancy and prosperity as a result of prudent management by successive Governments, not least the disciplined efforts since 1987 by Fianna Fáil. Nothing in this budget indicates such a level of prosperity when we talk about those who are most disadvantaged in our society. There is tinkering with the free telephone system and no mention of improvements to the free travel scheme.

I welcome the removal of the discrimination in the assessment of savings as some people might have savings of £2,000 to £3,000 for their burial. The savings were assessed at a rate of 10 per cent interest when no such rate of interest was available from any institution. One can laud the fact that this year saw the highest increase in social welfare benefits but, in context, the vast majority of social welfare recipients got £3. Three pounds may be extremely welcome to a social welfare recipient in Dublin where there is an excellent bus service but in rural Ireland most people have to make their own way to the post office or to the social welfare office to collect their payments. On the other hand, this budget has ensured if they use their own cars, the cost of running them on an annual basis will erode the benefit of the 4 per cent increase. In a comparison of percentage increases given over the past 40 years, it is one of the lowest. Giving with one hand and taking away with the other is the hallmark of this budget.

Nobody suggests that the Conference of Religious of Ireland is a supporter of Fianna Fáil. It has been critical and constructive each year in its response to the budget. In response to this year's budget it said:

Money for the better off; rhetoric for the poor. There is something profoundly wrong with a society where resources are growing dramatically yet it refuses to give priority to tackling poverty, unemployment and exclusion. This is exactly what Government has done in its budget for 1997. The massive new resources which are coming on stream have been allocated to those who are already better off. Meanwhile, poverty, unemployment and exclusion will persist at their present totally unacceptable levels. This Government has the resources to impact dramatically on poverty, unemployment and exclusion. It chose to allocate these resources to those who are already better off. Budget '97 marks the triumph of greed over need.

That is extremely strong language. I read its previous budget responses and nothing is comparable to the language used on this occasion. It further states:

We welcome some aspects of budget '97, especially the social welfare increases, the targeting of the elderly and carers, the healthcare package and the changes in family income supplement. However, when the whole budget is evaluated it is clear that most of the resources will continue to go to the better off in Irish society. This budget aggravates the widening of the poverty gap between the long-term unemployed and all those with jobs.

This budget was framed at a time when we have never enjoyed such economic prosperity but it has had a scatter gun effect. It is all over the place and to suggest it is not an election budget totally denies the fact that this budget has been framed solely with an election in mind. The middle classes have been targeted. They received substantial improvements in the budget and prior to it, such as the abolition of service charges, residential property tax and various income tax measures.

The poor in our society have done extremely badly and I have no doubt most Government members will be told so in no uncertain terms as they travel around their constituencies. I remind the Minister for Tourism and Trade that in a recent study by the Combat Poverty Agency, Donegal and Mayo were shown to be the most deprived areas of the country. There is a feeling of further discrimination following some of the pre-election announcements.

Mr. Jim O'Leary, in an article in The Sunday Times last Sunday, stated:

One of the reasons Irish budgets now lack drama is that their contents are routinely leaked. Also, the Government has surrendered most of its discretion in fiscal matters: the deficit target is now set with reference to the Maastricht Treaty, while revenue and spending are determined by the "social partners".

The 1997 budget was framed in the shadow of Partnership 2000 for Inclusion, Employment and Competitiveness, the agreement on economic and social policy between the Government, trade unions and employers finalised before Christmas. It includes a three-year public sector pay deal and commits the Government to spending £525m on social welfare improvements and £1bn on tax reductions over the next three years. The only significant areas in which the Government retained any freedom of manoeuvre were the timing and detail of the tax and welfare measures. However, even at this level, one suspects that there were "understandings" with the social partners.

It seems that the Irish Congress of Trade Unions (ICTU) was opposed to a cut in the top tax rate, and their displeasure was particularly to be avoided last Wednesday as the trade unions will next week hold a special delegate conference to ratify Partnership 2000. Failure to ratify would be extremely embarrassing for all concerned.

All this suggests that something vital in Irish politics has died: meaningful debate about how the country should be governed and the economy managed. It has been replaced by a suffocating consensus, so much so that Partnership 2000 will form the core of the manifestos of all the mainstream political parties in the 1997 election. If power over social and economic policy resides in Merrion Street at all, it is in the well-upholstered rooms where trade union and employer leaders congregate and in the offices of those senior civil servants who orchestrate such proceedings.

Vital decisions are made outside this House, the contributions of Opposition Members are not listened to. Ministers ignore requests for meaningful debates.

We talk about prosperity in macro economic terms, but when considered in micro economic terms, is it enjoyed equally by all sectors of society? This is the first opportunity I have had to place on record my disgust at the Government, particularly Ministers from the west, presiding over the creation of 17,725 new jobs, 71 per cent of which were located in Dublin. That is an appalling record of job creation in rural areas, including counties Mayo, Donegal and Clare. The Minister for Tourism and Trade, Deputy Kenny, gave assurances about APC on radio today. While I wish that company every success in Castlebar, the west will need many more such companies. It is unacceptable that more than 1,000 young people per annum leave County Mayo to take up jobs in Dublin.

We knew in 1995 that additional jobs were in the pipeline. While representations were made to locate those industries throughout the country, week after week the Minister and the IDA announced jobs in lots of 500 or 1,000 for the Dublin area. We are told those companies want to locate near large centres of population to avail of the necessary services. Similar industries that located here between 1970 and 1973, during the previous industrial revolution here, were satisfied to locate in rural areas. Why is that not the case in 1996-7? Dublin constituencies have been targeted to placate the electorate of the Labour Party and Democratic Left, even though the majority of those jobs will be filled by people with rural roots. Young people are forced to leave their homes and villages to avail of third level education and jobs. Despite more than 40,000 new jobs being created in Dublin since 1990, statistics show that unemployment has decreased by only 1,000. The majority of new jobs targeted at the Dublin area will be filled by people from rural areas. Why can they not be created in rural areas?

The Minister of State with responsibility for western development and the Minister of State, Deputy Coveney, spoke about the necessity for communities to provide local initiatives, such as advance factories and so on. What local initiatives were provided by the people of Blanchardstown or Swords to attract the industries that will have huge economic and social benefits for those communities? Why do rural communities have to purchase industrial landbanks and provide factories for such new industries? It is unacceptable that the IDA should wash its hands of those important functions. The Minister of State, Deputy Higgins, stated recently that the Government has finally realised there is an imbalance in the location of industry and it is now changing the package of incentives to ensure that industry moves out of Dublin. We did not have to read about the Taoiseach being caught in a traffic jam for two hours on the Stillorgan dual carriageway to realise that Dublin is growing at a pace which does not benefit its citizens. Growth in the city needs to be controlled. Neither the city nor rural areas benefit from industry being sucked into the capital. The Government is committed to spending millions of pounds on developing infrastructure in Dublin, such as the docks area and so on. There is another part of the country which should also be developed.

I am annoyed at the recent approach of the Minister of State at the Department of the Marine, Deputy Gilmore, in regard to salmon fishing. We were given a commitment that a debate would take place on the report of the salmon task force. As public representatives we should have a say in the final package of measures drawn up for those fishermen. However, by way of regulation, the Minister has curtailed the livelihoods of many small fishermen along the western seaboard without regard for the income they will lose. I am pleased this matter was raised at a meeting of the Select Committee on Enterprise and Economic Strategy today. It is another example of the failure of the Government to support rural areas.

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

I listened with some amusement to Deputy O'Donoghue's colourful contribution. Pragmatist that he is, he did not put a figure on what he called a pragmatic and practical response by the Fianna Fáil aspirants to Government. They may get their chance early in the next century but not this year.

I also listened to Deputy Hughes talking about IDA Ireland and job creation. As a Minister I accept one can never supply all the jobs one might wish in any part of the country. However, when IDA Ireland attracts major industrial concerns to Ireland it does so in the face of competitive packages from other countries. The choice of location is not finally directed by the IDA but is determined by the company concerned. It is the company's choice to locate in Blanchardstown as opposed to Westport, for example.

I am happy with recent IDA Ireland results and that there will be a bias towards job targets in the regions. Last week I presented the ISO9002 award to McHale Engineering in the small village of Kilmaine, County Mayo. That company is involved in the manufacture of agricultural machinery. It exports to 27 countries on four continents and employs 60 people, including its own designers, engineers and welders. It operates in the face of international competition and succeeds despite currency fluctuations and competitive pressures. Its product is a world leader and 35 per cent of round bailing machines sold last year in Great Britain were manufactured by McHale Engineering.

It is an example of a small company which spends money on research and development and constantly reinvests in changing its product for the future. It is an outstanding example not of despondency and despair but of a company which has thrived in its original location and done so in the face of international competition with the assistance of the State agencies.

We do not often take into account the creation of jobs in sectors other than the industrial sector. For example, the Mayo County manager recently released statistics to Mayo County Council, of which Deputy Hughes is a member, showing that the European Regional Development Fund spend in County Mayo from 1989-93 was £4.2 million and from 1994-96 was £46 million. This is not money which disappears into a black hole; it reappears in the creation of jobs in services and in sectors related to industry. If we debate the issues we must take all the elements into account.

I hope the initiative taken by IDA Ireland in terms of a regional determination of jobs will yield results. I am happy Deputy Hughes has welcomed the announcement by American Power Corporation to proceed with the Castlebar project as a stand alone project. It was part of the company's original proposal to come to Ireland and locate in Counties Clare and Louth. Having built a plant in the Philippines it now proposes to proceed with a stand alone operation in Castlebar.

The 1997 budget is a bridge to the future linking our economic successes of recent years with our plans for the 21st century. Cental to its design is Partnership 2000 which ensures that this approach, which was so vital in the past, will be continued. I hope the Partnership 2000 approach will be adopted by all involved. Without such a fundamental element it would be difficult to sustain the current economic boom. The budget has been framed to enhance the competitiveness of an economy which is the envy of Europe and is considered the Celtic tiger by the Asian countries. We now enjoy the fastest growth rate in western Europe and clearly meet the Maastricht criteria for membership of economic and monetary union and it is the firm intention of the Government to maintain that position so that Ireland joins as a founding member.

The success of the Government strategy is clear from the filibustering and inane criticisms from the Opposition which has no clearly defined economic policy. We await the Fianna Fáil policy document on the economy and, given Deputy McCreevy's analysis on budget day, we will be waiting a while longer. God knows what will be in it. The new found friends of Fianna Fáil, the Progressive Democrats, published Deputy Michael McDowell's plans for the economy. However, members of Fianna Fáil moved quickly against them, seeing in them an extremist and unworkable concoction. Be they rottweilers, poodles, labradors or dalmations they do not provide an alternative option for the people. A political marriage between Fianna Fáil and the Progressive Democrats would be doomed to irrevocable breakdown from the start. There is concern in the business community that the current low interest rate regime, which creates a good investment and job creation climate, would be ruptured by crises that would happen on a monthly basis in such an administration.

It was interesting to note that the criticism of the Progressive Democrats came from the Fianna Fáil Chief Whip, Deputy Dermot Ahern. I served as Fine Gael Whip and, while I like the Progressive Democrats as people, when whips' agreements were made the decisions were not adhered to because of their craving for publicity or the unsuitability of the decision made to the general body of the Progressive Democrats. If that is their deep-rooted approach to partnership it will not work in Government.

The overall strategy in this year's budget will benefit development of the tourism and trade sectors which are experiencing an unprecedented boom. The budget also contains specific measures in the areas of taxation and social welfare which will help to create employment. The tourism sector had another record performance in 1996. The total number of overseas visitors is expected to be up by 10 per cent to a level of about 4.6 million. In line with this increase in numbers, visitor expenditure is estimated at £1.45 billion, a 12 per cent increase. Our objectives are to create 35,000 new jobs and to have an annual revenue yield of about £2.25 billion by the end of 1999. This will mean bringing in between five and six million visitors on an annual basis.

Current market indications are that the British market will send us more than 2.2 million visitors for the first time in history. The US and mainland European markets are also likely to produce particularly strong performances. I am heartened that more than 700,000 American visitors came to our shores. This is an important market and it continues to improve. These are excellent annual results and can be attributed to strong consumer demand stimulated by sustained marketing and targeted advertising.

The role of Bord Fáilte has changed to that of a sophisticated international marketing agency and the new Tourism Brand Ireland follows from analysis and research carried out by Bord Fáilte. The new brand will pay huge dividends in the future. Consequently, the tourism industry must respond to that dividend in terms of facilities, quality, personnel and competitiveness. Allied to our uniqueness as a people, the importance of this development speaks for itself.

Tourism is now a major contributor to the wealth of the nation and generates 8 per cent of GNP. In employment terms, it sustains 107,000 jobs. The real success of 1996 was the growth in Ireland's share of the world tourism market. The average rate of tourism growth in Europe was 3 per cent but Ireland managed a double digit increase. That means both the product and the price have entered a happy confluence which attracted the customers. This year, I am expecting the industry to sustain these levels of growth. For the first time in our history, I expect in excess of five million visitors.

The industry is buoyant and faces the future with confidence. That is not to say there are no problems confronting us. We must beware of complacency, competitiveness, seasonality and the need to extend the season. I recently launched a nationwide music festival — entitled "Celtic Flame"— which was devised by the Tourism Council as an off-season attraction to lead into the St. Patrick's week festival.

As with overall economic growth, tourism growth does not happen by accident and cannot be expected to continue unless well thought out comprehensive strategies are in place. A number of these were introduced in 1996. First, there was the launch of Tourism Brand Ireland. The development of the brand represented a response to an identified need to move towards a strategic consumer marketing approach, focused on long-term yield and return on investment. In other words, bigger spenders spending more money in the economy. Our tourism performance in recent years benefited enormously from the removal of disadvantages in access and related costs compared to competitors. Other developments which contributed to growth were the peace dividend, the investment to update our product and the fashionability of Ireland internationally thanks to our music, literature, film, theatre and sport. One of the consequences of Bord Fáilte's research was that, were there a return to permanent peace in Ireland, an additional five million British people would seriously consider holidaying here on an annual basis. It would not be desirable to have the five million visit at once but an annual increase of 10 per cent would provide strong growth in the economy. It was widely acknowledged that further major increments of growth could not be driven by such developments and a more assertive, targeted and integrated approach to market development is required.

Tourism Brand Ireland builds on two key identified tourism assets — accessible unspoiled pastoral scenery and interaction with friendly engaging people. This is the foundation of the new marketing approach. It is sufficiently different from the product benefits offered by competitors to make the more discerning and higher yielding tourist want to visit Ireland repeatedly, and as such, is part of a deliberate strategic policy to ensure growth primarily from more spending per tourist rather than increasing tourist numbers. In other words, we do not want to try to continually increase numbers without forgetting that yield is all important in terms of economic development.

Second, a comprehensive programme for the use or roll out of the brand is being put in place and already the new logo is starting to become a familiar feature of tourism promotional material and publications. The Overseas Tourism Marketing Initiative, for example, the main consumer advertising partnership, composed of representatives of Bord Fáilte, the Northern Ireland Tourist Board and the industry North and South, has committed its resources behind the deployment of the brand. I expect and am encouraging the industry generally to row in fully behind the brand to ensure its effectiveness in successfully shaping the promotion and marketing of tourism well into the next millennium.

I already mentioned the Overseas Tourism Marketing Initiative — OTMI. This international marketing vehicle, which followed from the 1994 US Marketing Initiative, has been a singularly unique success. It has brought together the public sector tourism bodies and more than 50 commercial investors from the industry in a fruitful partnership, and significant increases in tourism benefits have resulted from its carefully orchestrated advertising media campaigns in the British, US, German and French markets. Furthermore, the industry's hands-on involvement through its participation on the board and sub-committees of the OTMI has provided valuable assistance and input and genuinely fostered a spirit of understanding and co-operation. This type of co-operative marketing effort is to be encouraged at all levels.

I stated previously that tourism is the one sector that, irrespective of one's political affiliations or religious beliefs, can benefit both economies, North and South. It is a coming together of peoples in the interest of peoples. Irrespective of the political situation, this is one sector that has benefited both economies. In that context, the OTMI involves the entire island of Ireland for everyone's overall benefit.

Third, the Domestic Tourism Marketing Initiative, which the Minister of State, Deputy O'Sullivan, launched in February 1996, is specifically targeted at developing shoulder and off-season domestic tourism. A sum of £500,000 was secured towards the cost of developing a home holiday initiative with co-financing from the industry to encourage greater marketing of home holidays. This is worth hundreds of millions of pounds per year. The Minister of State established a high level working group comprising representatives of the tourism industry, the relevant State tourism agencies and officials of the Department of Tourism and Trade to develop the initiative on a partnership basis. The working group has developed an integrated national marketing programme to accelerate growth in home holidays, with particular emphasis on the shoulder and off-season periods. A further £500,000 was invested in this for 1997 and the campaign will be relaunched by the Minister of State on 10 February.

CERT, the State tourism agency, launched an initiative to promote career recruitment and succeeded in ensuring that all places in the 1996-97 programmes have been fully taken up. Also planned is a national campaign for this spring to target 6,000 further recruits, which will be considerably boosted by employment initiatives currently being undertaken by employer bodies. In that context, it is important to note the Irish Hotels Federation introduced a code of ethics and practice with the understanding that this is an industry as distinct from a lightweight, short-term, low paid operation with no career prospects for its employees. It is an industry involving people and the presentation of the best of our country. In that sense, I am glad there have been moves from within the industry and CERT to respond to that traditional perception. I hope this campaign will prove fruitful in making young people understand that careers in the industry offer good pay and conditions, long-term prospects, promotional outlets, etc. I want the industry to be perceived in that way and not be just a romantic illusion as are other industries. Tourism, which employs 107,000 people and will soon increase its capacity in that regard, should have that status as an industry.

Last year, a new company was formed — Feilte Dhuibh Linne Teoranta — to revamp the St. Patrick's Day National Festival in Dublin. The reaction was very positive but the new festival was not perfect. This year, plans are already advanced for an even better and extended event in March. The Department provided a Supplementary Estimate of £100,000 in 1996 to assist with marketing and other organisational costs associated with the 1997 festival. A further £100,000 will be advanced by the Department to the festival in 1997. St. Patrick's Day falls on Monday this year and, therefore, the festivities will commence on Friday night and finish on 17 March. This is a very good opportunity to market a modern image of Ireland as TV and media coverage is international.

It is time we recognised that, unlike many other countries, we have a national day which provides an outstanding opportunity to present a week long festival of the best of Irish. We should not be under any illusions that, by the year 2000, St. Patrick's Day festivals in Ireland will be the best in the world. This will present an outstanding opportunity to the Irish diaspora to return to Ireland to witness its transformation from a hovel ridden, poverty stricken country 150 years ago to a modern, energetic, committed and dynamic country preparing for a new century. Great support for this idea has come from Irish business and I look forward to the festival's success.

In framing the budget the Government took steps to ensure the maintenance of a dynamic, low inflation economy aimed at maintaining growth in sustainable employment and improving our competitiveness. Building on the economic successes of recent years the budget will further promote enterprise, reward work and strengthen social solidarity — the Minister for Finance has made that clear on a number of occasions. Important initiatives include further reductions in corporation tax, reduced employers' PRSI, new provisions for firms to claim for certain pre-trading expenses, improvements in capital acquisitions tax and concessions to workers on income tax and PRSI contributions.

In regard to corporation tax, I am confident the reduction to 36 per cent from 38 per cent and from 30 per cent to 28 per cent on the first £50,000 of taxable income will further improve significantly the competitiveness of our exporters. The Government has achieved a real reduction of nearly one third in the corporation tax rate for SMEs which play an important role in our economy and which are increasingly the focus of our trade promotion supports. The reductions in PRSI and PAYE will benefit industry significantly. These, together with the back-to-work-allowance scheme, will encourage companies to invest in employment and should help improve the work ethic.

Controlling public expenditure is essential to the achievement of the Government's medium term budgetary goals. We must ensure that our public expenditure programmes give value for money and are directed at areas of need which have the ability to create wealth and employment. In this context my Department, as part of the Government's Strategic Management Initiative, has recently published its Strategic Management Statement 1997-1999. From a trade perspective our stated mission is to optimise Ireland's earnings, thereby increasing employment and wealth creation. Our trade target is to achieve growth in exports of indigenous goods and services, other than food, to £4.5 billion per annum by 1999. The targets provide for a special focus on the indigenous sector and emphasise the importance of continuing in our efforts to increase our share of trade with Europe and decrease dependency on the UK market, which is extremely important to us. I am confident we will achieve these targets with the help of this budget, which will create the necessary competitive environment for our exporters.

In this context I am aware that our exporters to France and Germany are experiencing some problems at the moment due to the strength of the punt compared to the franc and the deutschmark. Exchange rate problems have always been and will continue to be a factor in international trade. Last year, for example, we experienced further difficulties in the sterling market. ABT, the trade board, set up a specific task force to look at companies experiencing difficulties in this regard and the results prove the benefit of setting up such a task force. On a sombre note, industry cannot expect the State to act as insurer in these situations and exporters will have to gear themselves for dealing with such problems as they arise. However, the advent of the single currency block will improve the situation for our exporters in a number of markets.

The Minister for Finance, in presenting his budget to the House, outlined in detail the economic and social achievements of the Government since 1994. For example, during 1996 we achieved export growth of 11 per cent in the first eight months of the year, total employment increased by 45,000 over the year to April, GNP grew at 6 per cent, well above the European average of 1.75 per cent, and inflation averaged only 1.6 per cent compared to the EU average of 2.5 per cent.

During Ireland's Presidency, progress was made on EU external trade policy in the context of the inaugural ministerial conference of the World Trade Organisation, EU-US relations, Asia-Europe relations and EU-Canada relations. One of the primary objectives of the EU's external trade policy was to ensure a strong EU contribution to the ministerial conference of the World Trade Organisation, held in Singapore in December, and to achieve an outcome reflecting the Union's priority of consolidating and developing the multilateral trade system. This was achieved with the EU playing a very active role in the process leading to the adoption of a ministerial declaration of the WTO which addressed the issues relevant to the further strengthening of the multilateral trade system.

As vice-chairman of that group I attended 38 meetings during that period and had to resume the Council of Ministers of Trade of the EU on eight successive occasions. It was an outstanding example of partnership and analysis by the countries of Europe in that they were given up-to-date information on what was happening and had time to analyse it and give their views. That meant that Europe was in a very strong position to work with Commissioner Brittan in getting the declaration through the WTO.

In addition, a ministerial declaration on trade in information technology products was adopted by a number of WTO members, including the European Union. This provides for the progressive elimination of customs duties on agreed information technology products by the year 2000. Deputies may not be aware that two thirds of the people living on this planet have never made a phone call. This market is worth $500 billion and the fact that we have the sophisticated equipment and our people are educated to do the work increases Ireland's attractiveness internationally. We have the capacity to become a very big partner in information technology, which is a major market of the future.

In regard to EU-US relations, significant progress was made on the New Transatlantic Agenda launched in Madrid in December 1995. Highlights include the Information Technology Agreement which, when finalised, promises to liberalise more than $500 billion in trade annually, agreement in principle on a mutual recognition agreement on conformity assessment with formal negotiations to be concluded by 31 January 1997 and initialling of a customs co-operation and mutual assistance agreement. Significant progress was also made on Asia-Europe relations in the context of followup activities to the first Asia-Europe meeting — ASEM — and preparation for the ASEM ministerial meeting in Singapore in February 1997 which will be attended by the Tánaiste. From a trade perspective, the aim is to reinforce economic dialogue and co-operation between the two regions, with particular emphasis on the facilitation and promotion of two-way trade and investment flows. An EU-Canada summit was held on 17 December 1996 which endorsed the EU-Canada action plan and accompanying political declaration.

This budget will lead to a stronger, more competitive Irish economy. I am confident the various measures aimed at promoting enterprise, rewarding work and strengthening social solidarity, enshrined in the budget and in the new programme, Partnership 2000, will improve the well-being of all in our society.

One feature of the budget which is of particular importance to me and my county is the recognition by the Government of the valuable entity of the regional technical college campus in Castlebar. A sum of £600,000 has been provided to renovate the facility already leased by the Department of Education at the old St. Mary's Hospital, Castlebar. When work is completed next year we will have a state of the art, fully renovated, outstandingly equipped campus and I have no doubt the quality of the courses will stand up to any test. The ultimate test of a regional technical college is the quality of its courses and their attractiveness to students. One may spend a fortune on buildings, but if the quality of courses is not recognised by students it is of little value. I am very happy with the allocation of £600,000 in 1997 and whatever money is required to complete that section of the building will be made available in 1998.

I wish to share my time with Deputy Ó Cuív.

Is that agreed? Agreed.

One of the tests of this budget is whether, if this was not an election year, the Government would have introduced such a budget. The answer would have to be no. The budget is for one year only. There is no medium or long-term planning, no curb on public spending and no targeting of available resources. On a parochial note, there is no regard for the Border region.

The seeds of the boom in the economy were planted in 1987 when the Fianna Fáil minority Government took hold of the country's finances, which were totally out of control following a Fine Gael-Labour Government. I was proud to be a member of that Government which took difficult decisions in the national interest and I am proud to see the fruits of the work of that Government, the booming economy of recent years.

Despite the boom there has not been any reduction in the national debt since the Government came to power. It made the point that the national debt was reduced for the first time in 1996, but the reality is that since the Government came to power two years ago the national debt has increased by almost £700 million at a time when the economy is booming and the tax take has been very large, particularly in 1996. The Government set targets for public spending for its period in office. Its spending is already £500 million over that target. The targets set allowed for increases higher than the rate of inflation in the three budgets it introduced. That adds up to one thing only, that it is not possible for a Government made up of three parties with varying ideologies to set spending targets and adhere to them. If the Government is so reckless in good times when there is plenty of money in the Exchequer, it is questionable what it would be like if it were to continue in power for the next five years, particularly if there were a downturn in the economy. We will face a problem in 1999 when the present tranche of Structural Funds will run out. We do not know the level of funds we will receive after that. All observers accept that we will not receive anything in the region of the funding we received on the last occasion.

The Government does not appear to have made any provision for the rapid increase in the cost of public sector pensions. I understand the cost will increase from £560 million to £1.4 billion over a short period. That is something the Government needs to address as pensions are paid out of day to day funding.

The Government made great play of reducing income tax by 1p in the pound from 27p to 26p. That tax reduction was introduced by a Labour Minister after three years in office. That can be compared to tax reductions made by two former Fianna Fáil Ministers for Finance, our leader, Deputy Ahern, and prior to him, Deputy Reynolds, who over a similar period in much more difficult times were able to reduce the lower rate of income tax by 8p in the pound from 35p to 27p and the higher rate from 52p to 48p. The Government has nothing to boast about in terms of what it has done for taxpayers, particularly the PAYE sector.

The Government's decision to increase excise duty on petrol and diesel is irresponsible, given the massive amount of tax collected in 1996. Two serious consequences are that it reduces our competitiveness in business, which could be costly in terms of job losses, and it undermines the economy of the Border region. The cost of transport is high. This increase is a tax on jobs, it reduces our competitiveness and it also has an impact on tourism at a time when we are trying to attract tourists. That increase was not necessary because the Exchequer was awash with money and collected over £300 million more than was budgeted for last year.

The decision is particularly serious for the Border economy. The Minister of State, Deputy Higgins, earlier today referred to a time when petrol stations were closed leaving skeleton towns along the Border. That was the position in 1982-7 when a Fine Gael-Labour Government were in power and if it continues in power that will be the position again. The Government had closed the gap to the extent that many people in the north travelled south to buy petrol, but following the increase in the budget and the difference in prices they do not consider it worthwhile travelling.

The Government did not learn anything from what happened in 1982-7. It was interesting to listen to the Taoiseach tell us last Wednesday, the day the budget was introduced, that he could not understand why we were concerned about the increase of 11.5p in the price of a gallon of petrol. It would be interesting to compare the Taoiseach's failure to understand our concern about that increase with what our leader, Deputy Ahern, when Minister for Finance said about excise duty on petrol when he introduced the 1992 budget. He said:

The wide gap in petrol prices between here and Northern Ireland has been an important factor in cross-Border fiscal shopping in the past. ... Reducing tax differences clearly has a role to play in promoting an even closer alignment. Accordingly, I propose to reduce the tax on petrol by 2p per litre or 9p per gallon. ... The timing of this change should also provide a useful boost to the important tourist sector.

Those are the words of a man who understands the implications of increasing the price of petrol and diesel.

The Government is not committed to the Border region. It has not shown any sign of a commitment to it since it came to power. For the first time in the history of the State there is not a Minister or a Minister of State from a Border county. The United States and the European Union are committed to the regeneration of economies in the counties on both sides of the Border. The Washington Conference, the Pittsburgh Conference and European funding for peace and reconciliation all worked to help the regeneration of the Border economy. The Government has not done anything to ensure that the necessary infrastructure is in place.

My constituency covers a number of Border counties. Out of 14,081 jobs in overseas companies created here in 1996, 22 were located in Cavan and 25 in Monaghan. Given that 107 jobs in overseas companies were lost in those two counties, there has been a net loss of 60 such jobs. That is appalling. A Government that stands over that record, at a time when the United States and the European Union are putting support structures in place to help regenerate the Border economy, should be ashamed.

I call on the Minister for the Environment to build a proper road structure. A proper east-west road should be built from Dundalk to Sligo. The road system could be compared to the spokes of a wheel in that they all link up with Dublin. There is not a proper east-west road north of the Galway road.

The Minister for Education should sanction the provision of an outreach third level facility in Cavan-Monaghan to ensure a pool of graduates, say in electronics, who could take up jobs in hightech industry.

I am glad the Minister for Tourism and Trade is present. He and the Minister for Enterprise and Employment should address the factors underlying the statistics I gave to ensure that a fair share of jobs is located in those counties. The Minister for Finance should co-ordinate the activities of the various agencies to ensure proper results are achieved from funds under INTERREG, the Delors Package and the various agencies that promote the economies of Border counties and that it will not be the case that out of 14,081 jobs created in overseas companies only 22 and 25 will be located in Cavan and Monaghan respectively.

I was disappointed that money was not made available for investment in small towns. Successive Governments have been committed to decentralisation. While this policy has worked well along the west coast and in Cavan town it seems at county level there is a conscious policy to centralise everything in the county town. The Army barracks in Cootehill, for example, was closed and personnel moved to a new barracks in Cavan town. The ESB offices were also closed. There is an urban renewal scheme in Monaghan town. The Minister for Finance should introduce tax concessions to allow derelict buildings in small towns to be refurbished.

There is no responsibility on the Minister for Transport, Energy and Communications to look at the ESB's rationalisation programme. Why did the ESB negotiate with a commercial bank and not with An Post to collect electricity supply payments?

I welcome the improved capital allowance for farm pollution control but I am disappointed support has not been provided to help small farmers control pollution. I am also disappointed that the control of farmyard pollution scheme abolished by the Minister for Agriculture, Food and Forestry has not been reintroduced. The BSE crisis has been badly handled by the Government since the announcement in the House of Commons on 20 March.

I have talked at length about group water schemes since the Minister for the Environment made the decision to abolish water charges in urban areas, ignoring the interests of those living in rural areas in the process. This was followed by the announcement that responsibility for administration of the schemes would be transferred to local authorities which do not have sufficient resources to meet their present capital or current expenditure needs. Those involved in group water schemes do not want local authorities to assume this responsibility as they will have the power to place a limit on the volume of water supplied and will be able to charge farmers any figure they like. In seeking to correct his monumental blunder — nothing unusual for the Labour Party which has nothing to offer those living in rural Ireland — the Minister has succeeded only in making matters worse. It is not too late, however, for him to sit down with representatives of group water schemes to work out a fair and equitable scheme.

The Government missed a great opportunity to address many of the critical issues facing society. Because of the measures taken by Fianna Fáil in 1987 and following years, it inherited a booming economy and higher than expected tax returns. Because of the varying ideologies of Fine Gael, the Labour Party and Democratic Left, it fluffed this opportunity.

It seems the spirit of Joyce is reflected in the opening paragraph of the Budget Statement delivered by the Minister for Finance. He stated: "It is a budget about change, compassion and confidence". The only connection between these three words is that they all begin with the letter "c". It seems the need for alliteration was much more important than the reality. It was appropriate that the Minister should include a budget taken from one of Joyce's literary works, it was as relevant as some of the figures included in the Budget Statement.

On the expenditure figures, insufficient emphasis has been placed on the Minister's Houdini act. He has managed to keep the figures down in a clever way. As everybody knows, with sleight-of-hand one can prove almost anything with mathematics. The Minister will take in £60 million in car tax and give approximately the same amount to local authorities in rate support grants. To prove that he had not increased expenditure he reduced the length of the cycle and the expenditure figures would look much smaller and nobody would notice that the revenue figure had dropped by the same amount. This is a good trick to hide the fact that expenditure is rising and people are getting little value for money.

In many ways this is a budget for urban Ireland. While problems are being experienced in urban Ireland, if one analyses the figures, one will see it is not the people living in poorer areas who are gaining but the privileged in society. For the second year in a row it is the choice projects in the centre of Dublin which will benefit most. They will not do much, however, for those trying to eke out a living in the huge corporation estates on the periphery of the city and are of no importance to the people who live outside it.

Whatever else it may be about, this is not a budget about change, it is about giving away a fixed sum of money and giving something to everybody. It is a damage limitation exercise to ensure everybody feels they have been given something extra but there are no reform measures. There is a need for change in the tax and PRSI systems. One does not pay levies up to a certain ceiling, but once one goes above it by £1 levies are paid on the entire amount. Will the Minister for Finance explain the rationale behind this?

The system is full of anomalies. Year after year I have shown how many of these crinkles can be ironed out with revenue neutral measures. What is annoying is that, although everybody nods in agreement, the following year the Minister for Finance will add to the number of anomalies. This year there is a new twist in what is already a complicated system. Most ordinary people do not understand how it works. There is an obligation on us to ensure it is fair and understandable. It is not reasonable to expect ordinary people to be au fait with every peculiar rule and act as if they were computers.

The interface of social welfare and tax has become so complicated that I came across a case recently where, through a lack of knowledge of the social welfare code on behalf of an accountant and a tax misunderstanding, the person had to pay £1,300 too much in tax. I do not blame either side for what happened but the reality is that there is a hugely complicated list of what is taxable and what is not. Unemployment assistance is not, unemployment benefit and disability benefit are partly, and pensions are totally. If I go from disability benefit to an invalidity pension, in one different portions are taxable and in the other the whole income is. In trying to rationalise and make up our minds which it is, and whether all means tested allowances are not taxable and all other benefits are, we have reached a halfway house between everywhere. Lone parent's allowance is taxable and unemployment assistance is not. If we put most Deputies to a written examination on what is taxable, I doubt if too many of us would pass. We are then told this is a budget of change.

Eighty or ninety per cent of people do not have accountants to take care of their tax affairs. They try to make an honest tax return and want to understand the answers they get back. It seems to me that it is simple to construct a tax system that 80 or 90 per cent of the ordinary workers, including the self-employed but more importantly the PAYE worker, can understand. Why not rationalise it? Most of these steps can be taken if one puts one's mind to it. It is easy to model revenue in neutral ways if that is what is needed. Every year we go through the charade of talking about these issues and every year there is a refusal by the Government to do anything about it.

We have created an extraordinary social welfare system. I am delighted the Minister of Agriculture, Food and Forestry, Deputy Yates, is here because he has a responsibility towards the farming community. There is no point in going to Brussels and negotiating extra headage grants and ewe premiums if every pound of that which goes to the farmers in my constituency winds up in the pockets of the Department of Social Welfare. That is the system that exists. Do not tell me that the farmer with five, ten or 15 suckler cows or 50 or 100 ewes can survive and raise a family without some assistance from the State.

I have a question which needs to be answered in a fair and honest manner. How can the Government explain and justify the following? After the increase in social welfare, a farmer and his wife with one dependent child, living on a farm where the assessed income is £115.38 per week, would be entitled to the princely sum of £5.38. On the other hand, a single parent family with one dependent child with the same farm income of £115.38 per week would be entitled to £82.70 lone parent's allowance per week. Two people will be £77 per week better off than three. That is the situation the Minister has created since 1 January 1997. Can he explain the logic of that and how he expects three people to live on £77 per week less than two people can? This is not something he has inherited, which is normally the song of this Government, but is something he has created. I am not complaining about what lone parents receive because they need every penny of it. However, I cannot understand why married couples are so penalised, particularly those who are self-employed.

There was huge reform when the problem regarding dependent spouses working was recognised. At the moment when someone goes over the threshold of £60 and the dependent spouse is working, they lose the dependent spouse allowance which, after increases this year, is £40 per week. If someone goes up a pound they lose £40 and half the child dependant allowance. The Minister came up with the big reform of raising the threshold to £90, on a tapered basis. The logic of this should be thought about, particularly in the context of what he did, quite rightly, for single parent families. A person gets an extra £30 and it tapers off. When they get to £90, they lose £40 plus £6.60 for every child. Who will go from £60 to £90 in wages, to lose £10 plus £6.60 for every child? It is ludicrous and we wonder why people, when they reach the £60 threshold, will not work for less money. The increase to £90 is not doing any good because a person is still losing money. This is the 120, 150 to 300 per cent tax rate we have built into our system. Nothing was done this year for the marginal rate of tax those in the exemption limits pay, who are mainly either old people or those with big families. We are still taxing them at 40 per cent of the marginal rate, even though we reduced the basic standard rate of tax to 26 per cent. Why was that not reduced?

I must comment on the petrol price increase announced in the budget and the changes proposed by the Minister for the Environment to pay for the abolition of domestic water and sewerage charges. Most people in rural Ireland do not have public sewerage and only half have public water. If the Government thinks it can take over the group water schemes for £5 million, it will be waiting until the cows come home.

Can the Minister tell me, as a member of Galway County Council, when we have taken over these water schemes — if we ever get around to doing it, as we need £70 million in Connemara alone to bring our water schemes up to standard — where we will get the money to maintain them? Because the Government in Dublin hid and ran scared, it has left rural Ireland to pick up the tab. I am disappointed that the rural Members in Government bolted and allowed rural Ireland to pay for something they were giving to urban Ireland. Rural Ireland will pay and it will not have the advantage of the services and this Government will be remembered for it.

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

I thank Deputy O'Keeffe for getting a rousing reception for the start of my speech. I have been a Member of the House for the past 16 years and I have yet to see a more popular, balanced or progressive budget than this one. There is no doubt the budget is exactly what the country needs to maintain the overall record growth the economy is experiencing in Europe.

The economy continues to perform exceptionally well with output growth of 7.25 per cent last year compared to an OECD average of 2.5 per cent. This strong growth was underpinned by low inflation and a low interest rate environment. The expansion in the economy is indeed impressive, especially in the context of a relatively weak performance in the European economy and the negative impact of the BSE crisis on the beef industry.

The underlying strength of the Irish economy has been achieved by a focused approach to fiscal, monetary, income and employment policies by this Government. One of the most tangible, and certainly most important, benefits of this growth has been the increase of 50,000 in the numbers at work last year. The outlook for this year appears good with output growth of 6.5 per cent forecast. Inflation is likely to remain moderate and domestic demand should continue to grow. On the employment front, it is expected that the total at work will rise by a further 45,000 in the year as a whole.

As now seems imminent, the successful conclusion of Partnership 2000 provides the framework for social and economic progress and cohesion over the next three years. The agreement with the farm organisations, which forms part of Partnership 2000, provides a basis for ensuring the continued strength and competitiveness of the agri-food sector over the coming years.

The overriding concern in the short term is to ensure that the high animal health status of Irish produce is maintained, and that consumer confidence in livestock products is strengthened both at home and in our important export markets. Therefore, we have agreed in Partnership 2000 that the computerised animal monitoring system currently being developed in my Department will be fully implemented in 1998.

The production of low cost and high quality products that can compete in the more liberalised trading environment of the future is essential. The long-term competitiveness of the agri-food sector will depend crucially on attracting new entrants to farming, providing the necessary training, advice and research back up to all farmers, and encouraging necessary investment throughout the sector.

Partnership 2000 contains commitments to improve existing arrangements for education and training for farmers. It also makes provision for an independent review of advisory services to ensure an effective and efficient delivery of Teagasc programmes in this area. Incentives to encourage new entrants into farming include, among other things, a commitment to seek the continuation of the early retirement scheme after 1997. The agreement also provides for significant tax concessions to encourage investment and the early transfer of land.

The relatively high age profile of Irish farmers has been a persistent obstacle to structural change within the agricultural sector over many years. I am, therefore, pleased that this year's budget has ensured that a coherent set of tax incentives will be in place, which will greatly assist the entry of young people in to farming and encourage investment among farmers generally.

As regards farm taxation, the targeted set of measures agreed in the context of Partnership 2000 and announced in the budget includes the renewal of the special stamp duty relief for transfers of agricultural land and buildings to young trained farmers for a further three years. This concession will save young farmers some £4.5 million in a full year and will continue to act as an important incentive to the early transfer of land and, in turn, to structural change within the farming sector.

Farmers will also benefit from the increase in agricultural relief for capital acquisitions tax from 75 per cent to 90 per cent for those transferring land, buildings, livestock and machinery with effect from last Thursday. This and other incentives will further ease the transfer costs for farmers.

I am also conscious of the investment needs of young farmers and, therefore, I consider that the continuation of 100 per cent stock relief for young trained farmers for a further two years will continue to benefit new entrants who have to invest in building up stock numbers. All farmers can continue to avail of the 25 per cent stock relief which will release resources for productive investment for the upgrading and replacement of facilities necessary to reduce production costs and enhance efficiency.

Another important Government objective is to maintain an environmentally sound farming sector. During the discussions on the new programme, the farm organisations pressed strongly for the introduction of incentives for investment in necessary on-farm pollution control works. For some years I have been pressing for this in successive budgets. Some incentives were needed to encourage farmers within the tax net to undertake pollution related investment.

The commitment in Partnership 2000 to improve the existing capital allowances available to farmers for such investment has now been honoured. The budget has provided for a special one year accelerated capital allowance of 50 per cent of the expenditure incurred on necessary pollution control measures up to an expenditure limit of £20,000 with the balance of expenditure written off over the following seven years. This concession is favourable to farmers and I am confident that it will also make a significant contribution to the protection of the rural environment in the years ahead.

The commitment of small to medium-sized farmers to environmental protection is clearly demonstrated by the strong uptake of the control of farm pollution scheme which had attracted some 18,500 participants at the time of its suspension in 1995. To ensure that the momentum of on-farm pollution control investment is maintained over the coming years we agreed, in the context of Partnership 2000, to give priority to the reintroduction of the control of farm pollution scheme, along with the dairy hygiene scheme, if additional funds become available in the midterm review of Structural Funds.

Some other budget changes of benefit to farmers are also worth highlighting. The decision to increase the VAT refund rate again this year to 3.3 per cent from 2.8 per cent last year at a full year cost of £14.1 million will provide a welcome boost to incomes of farmers who are not generally registered for VAT but who are required to pay VAT on their inputs.

Tax paying farmers will also share the benefits of what has been, by any standards, a good budget. A further cut in the standard rate of income tax from 27 per cent to 26 per cent, coupled with the widening of bands, increased personal allowances and an increase in the income tax exemption limit should all put more money into farmers' pockets this year.

Certainly, the integrated package of measures for the farming sector in this year's budget should boost, income, promote on-farm investment, particularly necessary investment in environmental protection, and help to improve the structure of the Irish agricultural sector. The new measures, along with the renewal and improvement of incentives for investment and the orderly transfer of land, are important elements in the drive for improved competitiveness in the sector.

The food industry, and agri-business generally, will benefit along with the industrial sector from the general lightening of the tax burden in this budget. Specifically, the reduction in the standard rate of corporation tax from 38 per cent to 36 per cent, and from 30 per cent to 28 per cent on the first £50,000 of company income, will reduce tax on non-manufacturing activities. The increase in the threshold for lower rate employers' PRSI will also be very welcome to agri-business. Companies in this sector will also benefit from the substantial reduction in the "tax wedge" which will be achieved by the new income tax and PRSI rates for employees.

In addition to the £25 million special package of tax measures for agriculture in the budget, the Estimate for Agriculture, Food and Forestry provides for expenditure totalling £763 million in 1997 of which £376 million is from the Exchequer.

The overriding concern with competitiveness and environmental protection in this year's budget is also reflected in the Estimate. Some key features of this year's Estimate include provision of more than £101 million for REPS in 1997, a year on year increase of almost 80 per cent; provision of almost £63 million for the early retirement scheme, an increase over 1996 of 43 per cent; and a sum of almost £50 million provided for on-farm investment. The Estimate also provides for a 56 per cent increase in the grant level for institutional research and development in the food sector and reaffirms my commitment to enhancing the long-term competitiveness of one of our most important industries.

The maintenance of farm income in 1996 was a creditable performance against the backdrop of the BSE crisis. Inevitably, the benefits were not distributed equally across all sectors with very strong growth in output values in the pigs, sheep and cereal sectors, a very marginal decline in milk output values and, as expected, a sharp decline in output value in the beef sector.

Last year was, by any standards, a very difficult one for beef producers. However, every effort was made to maintain stability in the market and support producer income when the crisis emerged. The emergency market support measures adopted, the reopening of international markets and the recovery in consumer confidence within the EU helped stabilise the sector towards year end.

The negative impact of the BSE crisis on the income of beef farmers was partially compensated for by the special BSE package of £70 million which I secured in June of last year. The June compensation package also provided for an amendment to the rules governing the deseasonalisation premium, worth £16 million and currently payable, to guarantee its continuation this year. The additional £31 million package agreed in October will provide a further cushion to producers. Despite signs of a weakening of the international market for dairy products, milk prices were more or less maintained at the high levels achieved in 1995.

Since the 1992 CAP reform changes, direct payments have become a vital element of farmers' incomes, and 1996 was no exception. The Central Statistics Office advance estimate of income for 1996 indicates that direct payments of £873.2 million were paid out to farmers and these transfers now account for 42 per cent of aggregate farm income. These payments played an important role in maintaining farm incomes in 1996.

The outlook for 1997 is very difficult to predict. Unfortunately, the BSE crisis seriously undermined consumer confidence in beef in the EU and, while there has been a significant recovery in the consumption of beef in recent months, it is unlikely ever to return to pre-BSE levels. In view of this, the Agriculture Council adopted the Commission's proposals for a reform of the beef regime last October.

The reform package will be helpful in restoring balance to the market in the short term. Clearly, in view of the export orientation of the Irish beef industry, it is of major importance to it that balance is restored to the EU market as rapidly as possible. I was particularly pleased with the improvements in the extensification arrangements, which are worth some £15 million per annum to approximately 66,000 Irish beef producers without any change in their stocking rates. The paring back of the special beef premium quota to actual usage is a temporary measure for two years and it should have only a very limited impact on our producers. I am also very pleased that we managed to withstand considerable pressure from many member states for a reduction in the suckler cow quota because this protects the production base of our beef industry for the future.

While the beef reform measures agreed last October will be very important in removing surplus production, they are only designed to deal with the short-term consequences resulting from the BSE crisis. The Council of Agriculture Ministers in Europe believes that further changes in the beef regime are necessary to align beef supplies in the Union with the likely long-term level of internal and external demand while ensuring that the Union's ability to meet its international obligations will not be prejudiced. Accordingly, the Council has asked the Commission to come forward with further beef reform proposals by the end of April with the objective of having them agreed by the end of the year.

As agreed in Partnership 2000, the Government's approach to the reform of the beef sector will be determined by the need to protect the income of beef producers through price stability and to ensure that full compensation will be paid for any price reductions arising from the reform. We will also aim to ensure that any changes in the premium system will continue to favour extensive grass-based production and that the present structure of the beef support arrangements is maintained. In addition, particular emphasis will be placed on ensuring that Ireland's export opportunities are maintained, and that our ability to share in developing export markets is enhanced.

My immediate objective with export markets, however, is to ensure that traditional markets are all available for our beef. Clearly, the recent closure of the Egyptian market to live animals and the restrictions imposed by Russia are causes of concern. I assure the House that everything possible is being done to maintain access for Irish cattle and beef to all third country markets. On invitation from the Tánaiste, an independent team of Egyptian veterinarians were in Ireland last week to examine the BSE situation here in order to enable the Egyptian authorities to review the ban on imports of live cattle from Ireland. While I am happy with the progress of the visit, a final decision on the future of the ban will not be taken for some weeks.

As far as Russia is concerned, a delegation from the Department, headed by the chief veterinary officer, visited Russia last week to outline the position in regard to BSE here and the measures enforced by my Department to control the disease and to safeguard consumers. While the delegation was unable to dissuade the Russian authorities from extending the ban to five additional counties, it did succeed in persuading the Russian authorities to agree to a formula for lifting the restrictions. In the cases of Limerick and Cavan, both of which had four cases of BSE in 1996, the restriction will be lifted if no new case emerges between now and 1 May. It is quite clear in all our contacts that the increase in the number of cases to 73 last year, including cohort cases, is the sole source of our problems, not a lack of confidence in our controls. Therefore, future difficulties will be in direct relationship to the number of cases in 1997. More generally, it has been agreed that normal trading arrangements will be restored if there is evidence that the level of BSE has reached a peak in Ireland and the number of cases has declined.

While the extension of the restrictions is regrettable, I am confident that the full Russian demand for Irish beef in 1997, which will be significant, and is of the order of 350,000 steers, will be met by counties where the restrictions do not apply and there should not be any undue impact on producer prices. The Russian authorities have indicated that they are fully committed to the continuation of the beef trade with Ireland and it is important that this very critical market remains open to Irish beef.

I am also concerned about the recent 10 per cent cut in export refunds. My Department has made it clear to the Commission that the cut is unjustified and unnecessary at a time when the income of beef producers is still under severe strain, and I am seeking to have the decision reversed. This issue was raised at last week's Council of Ministers meeting and support was forthcoming from a number of member states for a quick reversal of the decision. The Taoiseach has raised the matter directly with President Santer, and he has also written to him seeking an immediate increase in the refunds. Commissioner Fischler undertook to examine my suggestions, and I am pleased that my suggestion for a shorter period of validity for export licences has now been adopted at the beef management committee last Friday, reducing the prefixation period to 30 days. I will continue to press for the restoration of the export refunds to realistic levels in order to guarantee reasonable returns to producers. The problem is that there have been very heavy volumes — over 40,000 — prefixed on the Continent at the lower level and the Commission's attitude is that if it can get refunds at that level there is obviously no need to increase them. Ireland has a special case, however, and I will continue to press it.

As we enter 1997, dairy markets are quite stable. Despite the intervention activity last year, stocks remain at very modest levels and will not impact on market sentiment. There are some good initial signs in terms of demand for our products in important export markets, such as Russia. On the other hand, there is every reason to believe that competition for markets from countries like New Zealand will continue to be keen. Also, the ongoing implementation of the Uruguay Round in the dairy sector will tend to increase competitive forces on the internal EU market. It goes without saying, therefore, that Ireland, with its export orientation, must remain competitive if we are to retain existing markets and capture new ones.

This year will see the beginning of the formal discussion at EU level on future policies for the dairy sector and the review of quotas. In anticipation of this, we have seen various ideas being aired both here and elsewhere. There are, without doubt, important issues at stake for us in the forthcoming negotiations which will commence when the Commission brings forward its analysis and ideas. In the meantime, continuation of the open debate and analysis within the industry can only be useful. Work will also continue within my Department, in consultation with the industry, with a view to making the best possible preparation for the commencement of these important negotiations. As indicated in Partnership 2000, the Government's aim in these negotiations will be to protect the role of milk production in the context of farm income and rural development and to ensure that the maximum national benefit is derived from milk production and due recognition is given to Ireland's export dependence.

I am hopeful that the good performance of the other commodities will be maintained into 1997. Pig prices and output were up in 1996. As the impact of the BSE scare has eased, demand for pig meat, and prices, has inevitably declined. In 1997 prices may not reach the levels of last year but output volume should increase.

Sheep prices also benefited from the difficulties in the beef industry with exceptionally good prices in 1996 pushing output value to an all time high. This is especially welcome after the difficulties in 1995. As long as the difficulties continue in the beef market we can expect demand for lamb to remain buoyant. Demand for lamb has increased by 40 per cent in the UK which means there are fewer UK exports into the key French market and this has given us more elbow room and a stronger position there.

Consumption of poultry meat is also up and the expectation is that output volume and value will increase again in 1997.

Cereal producers have now had two good years following a very difficult period. The outlook for 1997 depends crucially on two factors which are very difficult to predict at this stage — the weather and the world market. Initial indications are that world production will be up and, therefore, prices are likely to be under pressure. Nevertheless, with good weather there is no reason to believe our output value should not at least be maintained.

There is a good deal of uncertainty about income developments this year, some of which is fuelled by unnescessarily pessimistic speculation, but I see no reason for any panic or despondency. The agricultural sector may be sure I will continue to make every effort to ensure that 1997 is another good year for farm income and for the food industry.

Before concluding I want to say a few further words about the BSE problem. The House will be aware from my comments that, apart from beef and BSE, the agricultural sector is doing reasonably well. Obviously, there are real concerns and difficulties in the beef sector. I want to outline briefly my priorities for this year and the coming period in relation to BSE. I want farmers and the community at large to be aware that the Government is working on a concerted strategic plan of action. We have already established at Secretary level, the highest level in the Civil Service, in the Department of the Taoiseach, my Department and the Department of Foreign Affairs a group to focus on the most appropriate political follow-on to Ireland's third country markets, and the Egyptian, Russian and other efforts will continue.

The most important thing I can do is eradicate BSE from Ireland. We have made giant steps forward in the past 18 months in relation to extending the depopulation policy to cohorts and progeny, to take the depopulated meat out of the food chain and to cull imported UK animals irrespective of whether they have the disease.

We have taken the most stringent steps in Europe in relation to meat and bonemeal, which is the acknowledged method of transmission of the disease. If one is in the white meat business, one simply cannot have any contact with meat and bonemeal unless one is absolutely dedicated to it and has no bovines whatever, that is, as a feed compounder, farmer, distributor or whatever.

However, we must go further and we are in discussions with the Commission in relation to an approved eradication plan for BSE in Ireland. Specifically, I am very determined that we will make significant changes at the earliest possible date to the rendering industry. My Department has had discussions with the rendering and meat industry as well as the farm organisations over recent days to outline the urgency of our plans. This is to ensure, first, that every rendering plant is capable of the providing the 135º centigrade heat treatment with the highly pressurised system which is required by EU law from 1 April. This is essential. Specified risk material, that is, the 3,000 tonnes of sheep and cattle offal — the spine, skull, head, brains and so forth — will be taken out of the feed chain and incinerated. At present it forms part of meat and bonemeal. That will involve dedicated facilities to render it separately.

We are looking at a situation whereby 1997 will see major change for the rendering industry. I want to get approval for the Department's BSE eradication plan so we can tell the world that not only are we eradicating BSE, of which I am already confident, but that Europe is endorsing our eradication plan.

I have never controlled the price of beef and I have been very conscious of the fact that, with the green pound revaluation, the safety net price for beef under the GATT and CAP reforms of 1992 is 74p per pound, which would be totally unacceptable to anybody and would involve serious financial losses for everybody. The Department has submitted a detailed paper on intervention to the Commission to try to get a floor price well above that figure. It is talking to the industry and the Minister for Finance about the deboning allowance and other measures so that the meat factories can maintain the highest possible price. In addition, the Department is seeking an increase in the refunds.

It is very important that, unlike last October, the farm organisations and Opposition parties have been extremely responsible in recent weeks, and I pay tribute to them on that account. Farmers did not panic. Unlike last October, when farmers in counties Tipperary, Cork and Monaghan panicked because they could not sell their cattle to the factory quickly enough at 82p per pound and within six weeks prices had gone up by 5p and 6p per pound, this time people have not panicked and prices actually increased last week. Steer slaughterings are up 60 per cent so far this year on last year and they were up last year on the previous year. We can get through this in an orderly way. Price stability is my second priority and I am doing everything I can with the Commission. I was again speaking to Commissioner Fischler about these issues at 8 o'clock this morning.

Despite my best efforts the price of beef has been affected by the BSE crisis. Uniquely, due to the green pound revaluation and other factors, Ireland has been hit badly over recent weeks. It is my ambition to produce another compensation package for farmers modelled on the one last year comprising two parts: first, something of the order of £25 million for the green pound revaluation; and second, the £31 million BSE compensation agreed together with whatever national Exchequer figure can be added to it. No decision has been made but I will try to put together a sizeable compensation package. Perhaps it would be better to await market developments with a view to identifying the most needy based on price developments. I assure farmers I am determined to eradicate BSE, to do the best I can to ensure price stability and to produce a further package of compensation.

Beef is more important to our economy than agriculture is to the European economy. We are the largest exporters of beef in the northern hemisphere. We stand to lose more. Leaving aside the fact that we have had only 194 cases of BSE while Britain has had 168,000 cases, we have more cases of BSE than any other country in Europe and this have caused our problems. The big increase last year as well as the age profile of those cows have caused a problem.

This is a national problem and we are all in this together. I look forward to working constructively with everyone in the agriculture and food sector to deal with those problems and to deploy the full resources of Government to ensure farmers' concerns are given top priority at the Cabinet table and in Brussels.

The Minister might convert the House and his Labour colleagues but he will not convert the farming community.

Once again we have a huge media circus covering the budget on radio, television and in print. The Minister lost a major opportunity to deal with the most important matter now facing us.

The Minister is to be congratulated on making some changes in the budgetary process. I understand the 1998 budget is scheduled by the Department of Finance for late 1997. The Minister has been helpful in shortening the length of the annual financial statement. The word "budget" in business connotes planning and control. In the case of Government, we are not dealing with budgetary control in that sense. After the start of the financial year we are presented with a list of proposed payments and expected receipts for 1997. No adjustment is made for the fact that some of these receipts were earned in 1996 or that more while earned in 1997 will not be collected until 1998. The same points apply to the expenditure figures.

If a business produced a list of receipts and payments for the bank manager omitting novelties such as profit and loss accounts and balance sheets it would be interesting to see how far it would get. I note the three booklets produced on budget day — 84 pages in total — managed not to mention how much we actually owe. It can be worked out, but I see why the Minister does not want to produce a balance sheet. Businesses could not do that, not only because of the bank manager but because they need information and planning to control their operations and stay in business. Business does not have the luxury of enjoying a captive customer, for example, the taxpayer. Government has the ability to increase prices without consultation. The business person who is also a taxpayer does not.

While this system of public accounting is used also by other Governments, compliance with the Maastricht Treaty definition has to do with accounting skills as much as what actually happens in the underlying economy. One of our leading European countries is actually using creative accounting methods so that its books will fulfil the Maastricht guidelines. I am talking here about Government accounting in Europe in 1997. Estimates of cash receipts and payments for the next three years are welcome and I commend the Minister on this but I would also like to see some accounting for the substantial differences between previous Estimates and actual performance.

There is a huge hullabaloo every year about the annual financial statement of the Minister for Finance in which he announces changes that represent movements in the two per cent to three per cent range in expenditure over the previous year. There is nothing about the other 97 per cent and happily for the Minister, for a week the Irish world focuses on the 2 per cent-3 per cent change. For the other 51 weeks nobody looks at the 97 per cent of expenditure either. The position is that last year's expenditure has to be increased this year. It does not seem to matter that some of it might not recur or might have been exceptional. It must be continued and increased.

The characteristic of the Minister's last three budgets is that they are all a little bit good and a little bad. In his first Budget Statement, the Minister claimed it was a radical budget and used inspirational rhetoric. Nothing radical has occurred — the rhetoric has become jaded.

There have been good things. The car scrappage scheme is a great success. As I pointed out in an Adjournment Debate last year there is still a big gap between "a real old banger" and the cost of a new vehicle. To get these "crocks" off the road requires extending the scheme for a further two to three years.

The inequitable and unfair residential property tax is to be abolished. However, it will be replaced for many by an equally unjust and inequitable Dublin Targeted stamp duty tax. The cost of living is considerably higher in Dublin than elsewhere and to this is added the extra stamp duty tax.

The Minister has recognised the opportunity to greatly assist small business and the importance of this sector to our nation's economy. However, he has not followed through with a substantial help to the sector. Small improvements in a delayed timeframe, while better than nothing, are not enough.

There are two matters under which the reign of the Minister for Finance, Deputy Quinn, may be judged. He may introduce another budget this year, if a new Government does not take office until after 14 December 1997, for reasons well understood by Members.

Napoleon liked lucky generals and Deputy Quinn is certainly a lucky Minister for Finance. This makes it more disappointing that the nation was not able to benefit from his undoubted abilities. From Fianna Fáil the Minister inherited national finances in a strong shape. Our economy has benefited greatly from a strong export trade, coupled with low interest rates, and got a huge bounce from our devaluation in January 1993 within the European Monetary System. The Minister has made reductions in rates of tax but the amount of tax paid by taxpayers has continued to increase. One of the principal reasons for this is the main item of public expenditure — public service pay. Since the Minister took office this has consistently exceeded all rates of inflation, a situation which will continue for the rest of the century. He has paid a high price for Partnership 2000. It would be good to hear he had already agreed it and will not be outmanoeuvred before it commences. It is against these huge increases that laudable comments about expenditure increasing by 2 per cent in real terms have to be examined. I do not wish to comment on press reports and I would prefer if the Minister would say if the 9.25 per cent increase for public sector pay meets his approval.

Public expenditure was the big challenge facing the Minister during his term of office. As this term nears its conclusion, the major problem and opportunity facing him and the nation is the single European currency. The Minister should have spoken about this and little else during the 70 minutes or so when the nation's attention was focused on him and no doubt he was also observed closely in 14 other European capitals. Our policy to date on European Union has been very simple. We joined the Common Market, then the EEC, when Britain joined in 1973 and then there was no distinction between the Irish pound and sterling. We have benefited greatly from the Common Agricultural Policy and before Greece and later Spain and Portugal joined, we got a special share of regional and Structural Funds which will continue to the end of the century or thereabouts. We agree with everything and get as much money as we possibly can and we have done very well. We will now join the single European currency if it goes ahead, even if the German and French people do not share the enthusiasm of their leaders. Joining the single European currency is undoubtedly an opportunity with many advantages. The Government seems to have decided that on the balance of advantage we should join. No doubt there are also a number of significant minuses to joining. However, we have been apprised only of one side of the argument. The Minister for Finance should have used his hour or so on Wednesday last, when he had the attention of the nation, to give us, as openly as he could, the pros and cons of joining. He may be right in assessing that the pros outweigh the cons but the rest of us would like to know the down side so that we can anticipate problems ahead. Does he feel that Germany is coming to the end of long decades of sustained growth?

The only reference of the Minister to the single European currency was a one liner to say we will continue to meet the entry requirements. Surely he does not intend to join without telling the rest of us lowly beings. Many people believe that the chances of Britain not joining economic and monetary union range between probable and definite. We should examine the position on the basis that the UK will not join. While there would still be advantages for us, joining without the UK would lead to a greater number of disadvantages. The Minister and his officials must apprise us of both sides of the argument. If the consequences of joining are all good, why are they so coy about putting forward both sides of the argument? It may be that the German and French political leaders are not correct about the benefits of a single currency and that the fears of the French and German public are justified.

It is important to recall that one of the principal reasons our economy is so strong and our currency is near the top of the EMS band is that we were able to devalue our currency four years ago. It is also important to remember that while we struggled to avoid devaluation during the winter of 1992-3 we did not receive much help from our friends. Joining economic and monetary union without Britain and Northern Ireland and without being able to independently devalue our currency may be the correct thing to do, but I would like to see the evidence. Like my party, I am open to change and willing to move forward. However, this is too grave a matter on which to be blindly led by the hand. We all want to see a stronger Europe, even if it means the introduction of 15 budgets and a reduction in the number of Ministers for Finance to one, with the venue to be decided. This is the most important matter facing us and it is what this debate should be about.

I wish to refer to the two previous budgets and some important matters which the Minister for Finance did not mention. The Minister for Finance represented us well during the Irish Presidency and was a charming host in Dublin and Brussels. His third Budget Statement, like the previous two, was beautifully presented, perhaps with less gravitas but with more gratification. All the budgets introduced by the Minister have had many good measures in them. Having held back in previous years, the Minister made a special effort this year to satisfy as many people as possible. I am sure he hopes that this feeling will continue until the next budget. He stressed, to the amusement of some, that this is not an election budget but rather a budget in an election year. Perhaps he is correct and he is only playing a John the Baptist role with the Messiah, his political master and cordial friend, in orchestrating another budget for later this year. This would enable a new Cabinet to take office in December.

No reference was made to some of the not so pleasant measures such as the reduction in mortgage interest relief and voluntary health insurance relief. The examples given in the table do not relate to people with mortgages or health insurance or to those who smoke or purchase petrol and diesel. Petrol has been increased by 11.25p per gallon while diesel has been increased by 6.5p per gallon — the ordinary man in the street understands the term "gallon" better than the term "litre".

We have been told that we will be better off as a result of the budget and will pay less income tax. If this is so who is paying the £4,926 million in income tax? This is an increase of £1,085 million on the figure for 1994, the year before the Minister moved to Merrion Street. Cuts in relief help the Government and during the Minister's three years in office he has increased income tax receipts by a massive 28 per cent. This is not a figure which should be ignored. Maybe I should adjust the figure for inflation in order to get the real figure, but 28 per cent sounds real enough to me.

The rate of VAT and corporation tax was also increased substantially, but we still need to borrow more money each year. The Minister has borrowed £1,701 million. The increase in 1997 is approximately 50 per cent higher than that in 1996. We are doing so well we can borrow more but is this wise or necessary? Should we not try to save something for a rainy day? There has been reference to a 2 per cent real increase in expenditure. During the Minister's tenure in office expenditure has increased from £11.2 billion to £13.4 billion, an increase of £2.2 billion or 20 per cent.

Given the level of borrowing and the fact that expenditure is exceeding the rate of inflation, how can we expect inflation to stay relatively low? Housing and mortgage interest represents approximately one quarter of the retail price index. The rate of mortgage interest relief has been reduced but everything else has been increased. Pressure on interest rates is perhaps only around the corner. In the old days the Minister could gladly have taxed the old faithfuls — drink, petrol and tobacco. When we had high rates of inflation the effect of these changes was not significant. However, this year the Minister was clearly and properly worried about the rate of inflation and had to leave drink alone, with only increases of between 7p and 11p on a gallon of petrol and 7p on a packet of 20 cigarettes. These increases alone cause a 0.2 per cent increase in inflation. I do not see how the well published growth in expenditure in recent years, together with continuing borrowings and the effect of this year's financial statement, will make it easy for the next Minister for Finance, who will come from this side of the House, to control inflation.

The Deputy wishes.

The public is waiting for this change. The grass-roots members of Fine Gael are so frustrated at the involvement of Labour in Government that they are almost willing to leave that organisation. There will be tears and gnashing of teeth during the counts at the next general election. There are plenty of people on the Opposition Front Benches ready, willing and able to enter Government.

I do not see any of them. Maybe they are not interested.

They are preparing the groundwork.

They have much ground to make up.

Fianna Fáil ran the country for years.

That is the problem.

It nearly ran the country into the ground.

We laid proper foundations but the Government made a mess of them. The Government will go down in history as having wrecked the economy in spite of low inflation and interest rates.

It is no coincidence that periods of high annual growth coincide with periods of low annual inflation. However, there are already some straws in the wind, as can be seen from the fact that the rate of inflation is starting to creep up and the Minister has projected a lower growth rate of 5.5 per cent this year, reducing to 4.5 per cent next year. According to the Central Bank, an independent body, inflation is projected to increase from 1.6 per cent to more than 2.3 per cent in 1997. As we know from experience, once inflation takes off it can go from a trot into a gallop, with many a canter in between. Regardless of whether this is an election year, it is the solemn duty of the Minister for Finance, irrespective of party affiliations, to keep inflation down. I appreciate that we have a three party Government, but there is only one Minister for Finance and he has to bear responsibility for this, in addition to the plaudits he enjoyed in recent days. It would be a right old bloomsday if the Minister let the inflation cat out of the bag.

The real level of the higher rate of personal income tax is 50.25 per cent. I will explain why I say it is 50.25 per cent and not 48 per cent. The principal feature of the budget is that the personal rate of tax remains at 50.25 per cent. There are far too many single people and couples paying tax at this rate. High rates of tax mainly hit city dwellers who enjoy higher incomes but who also suffer a higher cost of living and a lower standard of living. Proximity to the DART, the National Concert Hall and universities is not, as the Minister suggested, compensation for handing over more than half of one's income to the State. The reduction in the lower rate from 27 per cent to 26 per cent means these taxpayers will be £99 per year, or about three pints of Harp per month, better off. The Minister has never referred in his three budgets to the iniquitous 50.25 per cent rate of personal taxation. He has reduced the rate for companies from 40 per cent to 36 per cent and to 28 per cent for very small companies. The rate of capital gains tax has been decreased by 1 per cent to 26 per cent, while human beings remain stuck on a rate of 50.25 per cent. It is most unfortunate that many commentators refer to the 48 per cent rate as if the levies totalling 2.25 per cent did not exist or did not have to be paid in cash. The Minister should not allow inflation to take off and he should try much harder to control public expenditure.

The Minister's willingness to give £100,000 to help preserve the memory of James Joyce was a nice touch. In my school days, the late Canon Sheehan was a more favoured author. I understand James Joyce is more widely read in the United States than in the country where he was born.

He was the son of a Corkman.

Canon Sheehan was a good literary writer. He wrote famous books such as Glenanaar, My New Curate, Tristim Lloyd, and The Graves of Kilmorna. The Minister will recall that one of his illustrious predecessors initiated a tax exemption for artists here which has been a great success. Perhaps the Minister will consider an initiative to attract other important wealthy people, who are creators of enterprise, to our shores. Many of these people would be attracted to reside in our friendly country if they were to pay tax on incomes up to £500,000. That is a large income by Irish standards and tax on it should satisfy the greatest begrudger.

However, many people in the UK, the US and other English speaking countries earn in excess of £1 million annually. Attracting a small number of those people here with their ideas, flair and track record of achievement would not do us any harm. It is also sad to think that some of our past and present captains of industry, who have helped create considerable employment in this country, feel they have to live abroad for tax considerations, including taking account of the consequences for their family members. We attract writers and artists to our shores but should try to attract top business thinkers from around the globe.

I thank the Minister for helping people starting up in business. Expenses which the Revenue Commissioners classified as pre-trading expenses have not been allowed as a deduction for tax purposes against the income of the future business. This unfairly increased the cost of starting business for some people and in other cases a great deal of time was wasted trying to avoid this artificial distinction. I am pleased that the Minister has made this grey area white.

The Minister held on to the unfair, unjust and inequitable residential property tax until the last moment when he finally bowed to pressure from other Labour Party Deputies and supporters. The next general election must be held within 12 months. It is sad that the Minister should hold on to this tax for so long particularly as a man of his intelligence knows it is unfair. The cost of living in Dublin is much greater than in rural Ireland. The cost of getting to and returning from work is much greater in terms of time and expense; the cost of housing is higher; the cost of land is greater and mortgages are bigger and more expensive. Many single people working in Dublin come from rural Ireland and leave the city in droves by private transport every Friday. They had to pay residential property tax out of their taxed income which is a serious matter.

This also applies to stamp duty. If the Minister is using stamp duty as a crude vehicle to control house prices he should set a threshold of £250,000, not £150,000, which unfortunately buys very little property in Dublin or its environs today. It is an outmoded tax that is not based on earnings or wealth. It inhibits the transfer of property at a time when the world is moving towards a free market. It is a tax that has to be paid out of taxed income. It is a tax of the past and should be abolished. There is no capital tax on sales of family homes except this duty. The proposed 9 per cent stamp duty on second-hand houses, which will only apply in the principal cities in this country, penalises city dwellers, puts up the price of land, discourages the existing second-hand house market and encourages new house building. One has to take a 50 year view of housing stock. Are we right to encourage a market in new homes and discourage a market in older homes? The current reduction in the number of school children will result in a reduction in the number of first time home buyers. The Minister made little or no attempt to achieve savings in our growing public expenditure. It should not take a great effort to find savings that would replace the income lost from residential stamp duty. The 6 per cent and 9 per cent rates could be phased out over three years to make matters easier for the Minister.

Wages and salaries inevitably are higher in Dublin than in the rest of the country because of the higher cost of living in Dublin. This also applies to public and civil servants. In a neighbouring jurisdiction this problem is recognised by giving a London allowance for civil servants. Those who live in Dublin have to pay tax at a rate of 50.25 per cent because they have higher incomes. It annoys these people to be informed they are paying tax at 48 per cent. The Minister should remove the 2.25 per cent income levies. People who pay higher taxes do not have relief on mortgage interest as do those who pay the standard rate of tax. The tax threshold is higher for married people. This does not compensate for the cost of feeding, clothing, housing, heating and transporting a spouse and children. Why are more people paying more than half of their income in taxation? There are lower rates of taxation here but the real standard rate is an inexcusable 50.25 per cent. If companies pay 28 per cent and 36 per cent why do individuals pay 50.25 per cent? Income tax receipts have increased by 28 per cent over the three years of "Quinn Bloom."

The Minister donated £100,00 to the friends of James Joyce. I request similar funding for the unemployed. This sum is miserly but would be enormous for those who work on behalf of the unemployed. It would help them to research and communicate ideas to help the unemployed get back to work. In his previous budget speeches the Minister referred to helping the unemployed. Providing funds for their representatives would create workable and meaningful initiatives. The simplest and best way to help the unemployed is to develop an environment for enterprise to create more jobs. The biggest and most important sector where jobs can be created quickly and permanently is small business. The Minister makes frequent reference to small business and recognises its importance. It is symptomatic of his approach to do a little good here and there but never to seriously address any issue that his well intentioned ideas have not been turned into a practical and pragmatic action plan.

Two years ago in the budget debate I suggested he create a special 25 per cent rate of tax for companies in this sector with profits up to £100,000. That fell on deaf ears. Last year the Minister brought in a tax rate of 30 per cent on profits up to £50,000. The maximum saving in tax to any organisation would be only £4,000 and would be deducted from its tax bill over a year later. That is not the type of initiative which would encourage a small business owner to employ an extra salesman and buy a van or to employ an operator and acquire a new machine. The £100,000 threshold is a low figure but it would be a start. This £50,000 figure can be classified as better than nothing.

Family employees in small businesses continue to pay more PAYE than other workers. Most people would regard this as discrimination and a disincentive to enterprising people who, in many cases, have given up safe jobs. They have done this to better themselves and create work for other people and in the process have often had to put up their family homes as security. These businesses ask that the profits needed for the development of the business are not taxed. We need more good and permanent jobs in this sector. They could be created more quickly with the active support of a forward thinking Minister for Finance. Clearly the present Minister sees himself in that role but unfortunately his actions do not match his fine words. I propose that, rather than make small reductions in corporation taxes, the cuts should be directed solely at the small business sector. Are the big non-manufacturing taxpayers creating or shedding jobs? Banks are trying to reduce numbers. One new job created by every second small company would be magic as far as our unemployment numbers are concerned.

The Minister for Agriculture, Food and Forestry referred to farming and he painted a rosy picture. He then ran from the Chamber because I was here. The last matter to which he referred was BSE. Two green pound devaluations have taken approximately £130 million out of the agricultural economy. The agricultural community faces one of its worst years ever. Prices are falling, farmers are nervous and there is little point in the Minister trying to justify what he has done. He has achieved nothing in his short period in office, but his hands are tied because of the involvement of parties that have no interest in agriculture. Farmers should be properly compensated for the devaluation of the green pound. Barley prices have decreased from approximately £104 to £95 per tonne and milk prices will decrease by 10p per gallon, but the Minister said nothing about that this afternoon.

There have been major problems in the agricultural sector under this Minister. He failed to promote a proper live trade market for cattle. Cattle that are not suitable for processing here must be exported. The rural economy will suffer greatly this year. The Minister and the Taoiseach should try to put confidence back into the agricultural sector. The Minister referred to world production in cereals. It will not be possible to sell grain at harvest time because of a surplus.

That is in order.

During its campaign on the divorce referendum, Democratic Left used the slogan "Time to Face Reality". At that time we believed the people were ready to face the reality of modern Ireland, not as we wished it to be but as it is. We were proved right.

The budget is grounded in the same view. It is based on the reality that our society is divided, that the gap between rich and poor is great and that tax reform is too vital an issue to be left to the crude reactionary ideology of the right. That ideology is encapsulated in Deputy Harney's pronouncement that she is interested in helping only those who help themselves. That attitude defies logic. Why should only those who help themselves receive assistance? What about those who cannot help themselves? Do they not matter? Are they not citizens with rights and needs that must be respected?

I compliment the Minister for Finance, Deputy Quinn, on getting it right. The budget addresses the reality of modern Irish life. It helps those who need help as well as those who help themselves. It is part of the Government's long-term sustained strategy that will ensure high economic growth, high job creation, social cohesion and stable Government. The taxation provisions will make a significant difference to low and middle income earners who have carried the unfair tax burden for far too long. They have paid the price and they are entitled to something in return. It is widely acknowledged that this budget addresses that imbalance.

The budget is also confirmation of the Government's commitment to Partnership 2000. I am pleased the new agreement is receiving increasing support across the trade union movement. I also compliment the Minister for Social Welfare, Deputy De Rossa, whose social welfare provisions are significant. From the very young to the very old, greater supports have been provided. Targets laid down by the Commission on Social Welfare are being met. Families are being strengthened, the elderly are being protected and those out of work are being encouraged back to work. Poverty is being faced as a reality in our society. This economic system requires Government intervention to ameliorate its effects, which are not easy to overcome. If we abandon our role in tackling poverty, as the Progressive Democrats would like us to do, the inequalities will become more acute and corrosive. There is no single overnight magic formula to combat poverty.

I listened to Father Sean Healy of CORI denounce the budget and I do not doubt his sincerity. However, his position would be strengthened enormously if he examined the reality of poverty and the way we are dealing with it. The Government has introduced an anti-poverty strategy to ensure that all Departments play their part. Perhaps it is time Father Healy examined his department in this regard. He should consider the lack of a role for religious orders and voluntary bodies in providing accommodation for the travelling community. The report produced by the Catholic Social Service Conference, CROS-SCARE, states:

The voluntary sector generally has not seen the direct provision of accommodation for travelling people as its role even though this level of involvement is considered appropriate for every other disadvantaged group in Ireland.

I would welcome Father Healy's assessment on how religious orders and the voluntary sector might help to combat poverty in this way.

Social exclusion is a major challenge facing our society. It requires an integrated approach and appropriate mid to short-term measures to deal with it. In the case of travellers, access to health, education and other services depends on the availability of adequate and permanent accommodation. I am pleased the capital allocation to local authorities for new and refurbished traveller accommodation has been increased to £11 million in 1997, an increase of 83 per cent on last year's provision of £6 million. This substantial increase reflects the increase in activity following the adoption by the Government in March last of a national strategy on traveller accommodation.

Overall this year's budget provides more than £400 million for my Department's housing programme, an increase of 9 per cent on last year's provision. It allows me, as Minister of State with responsibility for housing, to again meet the Government commitment of 7,000 social housing starts annually promised in the policy document, A Government of Renewal. Taking account of the local authority housing programme and the full range of social housing measures, the needs of more than 10,000 households will be met in 1997. This level compares favourably with the figure of some 8,500 in 1994 and 6,100 in 1992. The capital provision of almost £175 million for this year's local authority housing programme will enable authorities to achieve some 3,900 housing starts and acquisitions. This year's allocation of £175 million is £16 million more than last year, an increase of 10 per cent on an already high figure and more than four times greater than that spent on the programme in 1992. This is a clear indication of the Government's continued commitment to the local authority housing programme as the mainstay response to meeting social housing needs.

In 1996 a full assessment of housing needs was carried out nationally. The results showed that at last the housing needs have stabilised and show a slight decrease. This is an important achievement in view of the housing record of previous Governments. In 1989 there were only 708 local authority house starts during the first year of the Fianna Fáil-PD Government and less than double that in the second year, while at the same time the budgets introduced by Fianna Fáil and the Progressive Democrats favoured the rich and better off. They were miserable levels of housing provision and created a backlog on the housing list with which this Government has to deal.

In the private housing sector things were no better under Fianna Fáil and the Progressive Democrats. Mortgage interest rates reached their highest level of almost 15 per cent. New house grants fell to their lowest level for decades. In 1990 the figure was less than 4,500. It is salutary to compare that with the track record of this Government. For the second consecutive year we have had record levels of house building in the private sector along with historically low interest rates. While no Government can claim credit for all factors relating to this success, it nails the lie once and for all that policies to deal with social exclusion, to provide investment in health and education and to increase the social welfare payments are inimical to economic growth.

As a Government we are determined to face all the political challenges that modern life presents, even the difficult ones such as the drugs menace that, through official lethargy and neglect, got a grip on our poor communities. The ministerial task force on measures to reduce the demands for drugs is an essential initiative already bearing fruit. A key recommendation of the task force is that my Department should introduce an estate improvement programme to assist local authorities in tackling environmental and related problems of severely run down urban housing estates and flats complexes. The allocation of £1.5 million to the programme this year and the commitment of a further £1.5 million in 1998 will have a real impact in the worst affected areas.

Debate adjourned.
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