Dáil Éireann díospóireacht -
Thursday, 6 Feb 1997

Vol. 474 No. 5

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).

Minister of State at the Department of Social Welfare (Mr. Durkan)

Before the debate was adjourned last Thursday, I referred to the inconsistency between the two Opposition parties and between members of the main Opposition party in terms of their reaction to the budget. Fianna Fáil claimed the budget is of no assistance to those in the lower income group while the Progressive Democrats said it is of no benefit to those in the middle income group. Members of Fianna Fáil put forward both points of view. What worries me most is that two parties which aspire to forming a future Government should hold such diverse views on the important matter of whether the economy is being properly handled in the long and short-term interests of the public.

The Minister for Finance and the Government have struck the right balance. If the parties in Opposition were in Government during an election year would they do what they suggested the Government should have done in this budget? Would they hand out money to everyone to buy votes?

Mr. N. Ahern

Has the Government not done that?

Mr. Durkan

If they are willing to do this, they have no part to play in Government during the foreseeable future. That is the kind of attitude which left the country in bondage for 15 years, made it subservient to other countries and treated the public as second class citizens: we could not hold up our heads because of what had happened in 1977.

If further proof is needed, one has only to look at other jurisdictions. I am not an economist but the one golden rule I have learned is that if the economy is doing well one does not throw more money at it. Economic experts throughout the world marvel at our economic performance, and this speaks volumes. If the reverse was the case, what would the Opposition parties say? Those parties should address their very obvious problem. Given that they say the opposite to what economists throughout the world are saying about our economy, I would like to know where they are going, what their answers are and what they intend to do if they are returned to Government. It would be dangerous to return them to Government given their past performance in office. The public recognises that the Opposition parties have a very serious credibility problem and knows full well it is not in its interests to sink the economy to buy votes. This sort of policy does nothing for the credibility of those in public life.

The budget is caring, well focused and conscious of the needs of the country in the medium and longterm. The economy has been managed in an exemplary way in recent years. The function of Opposition parties is to oppose but one would expect them to adopt a balanced approach. Very few countries have enjoyed the same level of economic success as this country in recent years.

The budget has something for everyone. It gives an incentive to the unemployed to seek work and to employers to take on more employees, while the reductions in PRSI and taxation encourage those at work to proceed in a positive fashion. I do not understand how one Opposition party can say too much money was spent while the other believes not enough money was spent. What exactly does this mean? Does it mean one party would spend more and the other would spend less? Would they pay out more by way of income tax concessions and, if so, to whom would they pay them and at what cost?

What would have been the effect of that? Would it have been for any purpose other than to gain electoral supremacy in an election year? The Opposition should talk positively about this budget because its parties have a role to play in promoting Ireland's image at home and abroad.

I congratulate the Minister for Finance, my departmental colleague, the Minister for Social Welfare and the Government in general for producing a blueprint that will lead this country into the next millennium in a positive and constructive way. Future generations will look back with pride and say that the right measures were taken at this time and the correct balance struck. They will savour the fruits of the positive decisions taken now.

Mr. Callely

I welcome the opportunity to participate in the budget debate. I am concerned about a number of problems currently facing the country. The Government had an opportunity to contain expenditure over the past two years. If it had adhered to its self-imposed targets it would have had an additional £500 million to give back to hard-pressed taxpayers. The Government should have been more responsible in relation to expenditure, given that the national debt is currently in excess of £30 billion and set to increase by an additional £2 billion arising out of this budget. That is regrettable.

Many people will agree that the biggest problem currently facing the country is our huge national debt. Our first priority is to meet our requirements in that regard and make the necessary payments. That is an enormous burden which I have referred to in the past as a ball and chain around this country's neck in terms of taxpayers getting real value for money by way of major tax reform. If we can address that problem we will be in a position to address the other related issues.

Much play was made by the Government of social welfare increases in the budget but on examination it is obvious that it contains little for social welfare recipients. There was a public outcry last year over the miserable social welfare increases and that is the case this year also. We have heard a great deal about increases in child benefit but child dependants of social welfare recipients, who may have received a miserable £3 increase, did not receive anything. There are other such examples in the budget, including the reduced entitlement to the butter voucher scheme.

Much play was made by successive Governments of funding for our health services. Hospital services are currently facing a serious crisis. People awaiting urgent elective surgical procedures must wait months before they are seen for consultation.

Another crisis facing this area is the threatened industrial action by nurses. From speaking to many nurses, who are professional and caring individuals, I know they do not wish to take industrial action but are being forced to do so by the Government. Many hospital procedures have been cancelled because of the threatened strike. Patients have been notified but they have not been given alternative dates for those procedures. That is regrettable.

I call on the Government to urgently address this matter by responding to the demands of the nurses' unions which are warranted because of the pressures experienced by the nursing profession. The threatened strike will cause further chaos if it occurs, and the longer the Government allows the issue to go on without a resolution, the greater the problems we will face in our hospital services.

The Government should think about the plight of an elderly person who has waited 12 or 18 months to be called for an elective procedure and who was informed in the past number of days that the appointment is cancelled due to the threatened industrial action by nurses and that an alternative date will be given in due course. That procedure has probably been put back a number of months rather than weeks. Hospital administrators should now take the necessary action to notify patients awaiting elective surgical procedures that they have been cancelled due to the threatened industrial dispute. The Government should intervene at this late stage and take the necessary action to resolve this dispute and prevent further chaos in our hospital services. There are long waiting lists for urgent treatment in our health services. The position is particularly serious for the elderly for whom there is insufficient long stay accommodation or community support services. We should ensure services are available for the elderly because they have paid into the system, participated in the workplace and helped the economy develop.

Yesterday I received a letter from a constituent about the appalling treatment his 83-year-old uncle received in one of the main accident and emergency hospitals on the north side of the city. He spent hours waiting on a trolley and was then threatened with discharge even though he was very sick. This is not an unusual letter to receive from a constituent. People encounter similar difficulties in hospitals, particularly in Dublin, on a regular basis.

The Government is well aware of these difficulties. A number of meetings have been held with those who run the services and they have clearly outlined the problems. Periodically the Minister throws a few pounds at the problem but that will not solve it. Health professionals have described what is provided as "appropriate step-down facilities". I urge the Government to address the problems which occur all year round in our accident and emergency hospitals. During the winter months an outbreak of influenza puts pressure on hospital beds and during the summer months wards are closed because of annual holidays. A properly planned programme must be devised to meet the demands of our accident and emergency services.

A number of Dublin hospitals have been closed recently, but the beds have not been transferred to the new hospitals. The population of Dublin, particularly in centre areas, is increasing. The Meath, Adelaide and National Children's hospitals are due to close and services are to move to Tallaght Hospital, the plans for which are already being revised. If difficulties are being encountered with the physical plans for that hospital at this early stage of its development, perhaps we should reconsider the reports on the provision of services after the three hospitals close. Additional funding is required for extra car parking facilities at Tallaght Hospital even though it has not opened yet. The original plans did not provide for sufficient car parking at the hospital. As similar difficulties arose in respect of the hospital in Mullingar and Beaumont — relatively new developments — I am baffled the same could happen with Tallaght Hospital. Additional funding has also been sought for an extension to the accident and emergency department because the proposal in the original plans will not meet the demand.

The Minister should acknowledge the increase in population in inner city areas, which is obvious from the number of cranes in the skyline, and provide adequate hospital services to meet the increasing demands. The Eastern Health Board, as the statutory health authority, has indicated a desire to purchase the Meath Hospital. That would help fill a vacuum in hospital services, including the provision of a possible accident and emergency department, in the inner city.

I encourage the Minister to closely monitor the development of our hospitals. If we miss the boat now, the buildings will be sold and we will not be able to adopt a proactive approach in regard to our health services. Will the Minister communicate with me in regard to the Meath Hospital and the need for additional beds and funding to provide health services for the citizens of Dublin?

There are also long waiting lists for orthodontic treatment. Some people have been waiting years for treatment. As we have the expertise in this area, it is only a matter of utilising it properly. There should be greater flexibility in the system. People with disabilities may not require medication but may periodically require appliances, in some instances only every three or four years. These can be expensive. A mother contacted me recently in connection with her son who requires a simple foam ring for his head to keep him in balance and prevent him from going under water while swimming, an exercise he enjoys and the only kind that gives him full movement. It costs £75.

The Minister and the chief executive officers of the health boards must look at the cost of such appliances. Medical card cover must be provided for those who need them, regardless of considerations of their income levels. The present strict guidelines oblige some to appeal to the chief executive officers who consider their income levels. While these could be relatively high, allowance is not made for other demands faced by a household with a disabled person.

Are we denying cover to the profoundly handicapped children of parents whose incomes exceed medical card eligibility guidelines and who require much medical care and attention, whether it be institutionalised or at home? Are we compelling them to make medical card applications, which include supplying the local director of community care with information on the disability of the individual and the income of the household? Where the director has no option but to deny a medical card they must then appeal to the chief executive officer. They are obliged to undertake these procedures even though it is recognised that their child will require long-term medication and intermittent use of appliances. Much time is also wasted in this, as public representatives, health board members, programme managers and chief executive officers become involved. The issue must be addressed.

When elderly people in need of appliances are discharged from hospital they must wait for an assessment by occupational therapists, which takes time. It is crazy to allow this, especially when the hospital authorities identify the appliances required. I have raised this matter at local health board level and progress is being made. However, a direction from the Government would save money and time. It would also ensure more comfort for those discharged from hospitals and in need of appliances.

Before I was elected to this House I heard name calling of Ministers for Health within the health system, which was appalling. I will not engage in it because we should focus on the provision of services. The present industrial unrest is exacerbating the chaos in the health services. The Government should consider the points I have raised, rather than throwing money at problems. Much research has already been done. It is now time to put the step-care provisions in place, such as the step-down facilities and the other matters to which I have referred. We must also ensure there are adequate places to meet the demand for health services.

Last week I tabled a number of parliamentary questions to the Minister for Justice regarding the prison service. I was shocked to learn that 4,000 prisoners got early release while 4,780 prisoners availed of temporary release. We have a serious problem with crime, including the lack of appropriate detention places, especially for juveniles.

It is regrettable that there is such a vast number of early and temporary releases. Prison staff have raised the matter, and the appalling situation regarding overcrowding. Rather than delaying projects, such as the building of Castlerea and the delay in the use of units at the Curragh, which I pushed for, the Government must indicate that serious attempts are being made to ensure that perpetrators of crime found guilty by the courts will go to prison, will stay there and will pay their debt to society. We must give this message clearly. It is not there at present and it is farcical to read of the amenities and facilities which are available to prisoners but not to law abiding citizens.

I attended a meeting this week in a Christian Brothers school in my constituency which has 800 pupils. The brothers have put a huge amount of the trustees' money back into the school and they are seeking a gymnasium which would cost the small sum of £500,000. The school has a staff complement of 60 and three physical education teachers but no gymnasium for 800 pupils and no changing or shower facilities. I informed the meeting that the prisoners in Mountjoy Jail have ball facilities in the yard, a physical education teacher to instruct them individually or on a group basis and gymnasium and training facilities. The current Minister has also provided swimming facilities for them. It is difficult to weigh it up.

The response to one of my questions to the Minister last week in relation to the library facilities included the list of the daily and weekly magazines and newspapers which are available to prisoners. The list included The Irish Times, the Irish Independent, the Star, the Sun, The Farmers' Journal, Ireland's Own, Woman's Weekly and the Beano and the Dandy. When I outlined the list to the parents' council, the meeting erupted in laughter. There is something wrong with the Government if gymnasium and other facilities are made available to prisoners but not to 800 young pupils.

There are many other areas in my constituency where the Government is not spending money appropriately, particularly in relation to the provision of public service vehicles and the development of the public service network. I encourage the Minister to respond to my proposals regarding the development of the DART service.

Minister of State at the Department of Finance (Mr. Coveney)

I wish to share my time with Deputy Boylan.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Coveney

I wish to respond to some of the points made by Opposition Deputies. Deputy Cowen asserted that the budget took little regard of considerations relating to the proposal to join economic and monetary union a most important policy issue for the country in the years ahead. However, I do not understand why the Deputy made that assertion and I reject it.

The criteria for entry to economic and monetary union includes a serious reduction in the debt towards 60 per cent of GDP. Under the Government the debt percentage has fallen from 88 per cent to 73 per cent and it is targeted to fall to 69 per cent at the end of 1997. By any yardstick, we are comfortably complying with that requirement. The next criterion involves inflation. The inflation rate which we must be beneath is approximately 2.5 per cent and our inflation rate is approximately 2.2 per cent. It is not a matter for complacency but it is well under control. We must have a general Government deficit less than 3 per cent and the target this year is 1.5 per cent. Most other EU states which are hoping to be among the first group of countries in economic and monetary union are having great difficulty keeping below 3 per cent. However, Ireland's target is 1.5 per cent. The other criteria include stable, low interest rates. Historically, Ireland has never been in better shape on that issue. A stable currency remaining within the EMS bands is also required. Ireland is at the top of the band. The Deputy's assertion that the budget disregarded considerations relating to economic and monetary union is not true and I reject it.

Deputy Cowen also stated that the tax package was not significant in light of the current tax buoyancy. The package, at almost £300 million this year, is the largest in the history of the State. The Deputy's comment that it is not significant and his party spokesman, Deputy McCreevy's statement on budget day that it was dangerously generous highlights an inconsistency which is difficult to defend. Deputy Cowen said the public is especially disappointed with the continuing tapering of mortgage interest relief. He must have a short memory because that concept was introduced by Deputy Bertie Ahern when he was Minister for Finance and it is generally considered fair and reasonable by all parties in the House. I do not understand the Deputy's criticism.

Deputy Cowen said that the general increases in social welfare should be limited to the cost of living. However, Deputy Joe Walsh said he welcomed many aspects of the social welfare package but that much more was required. I fail to see a consistency between those two distinguished Fianna Fáil Front Bench spokesmen. If one took a position half way between the two, we must be about right. The social welfare package indicates compassion in addition to working within affordable limits.

Deputy Walsh criticised the Government for failing to implement in full the measures proposed by the commission on social welfare. However, the Government has made more significant progress on that than any of its predecessors. It is totally committed to its implementation within the timeframe of Partnership 2000. The Deputy also said the Government, obsessed with self-preservation, had tried to maximise tax giveaways in an election year. Deputy Cowen said the tax package was not significant but Deputy Walsh said the Government maximised it for election rather than economic reasons. The inconsistency is startling.

Deputy Cullen referred to the explosion in public expenditure and the miserable reduction in the standard tax rate. Effectively, the standard rate reduction is not 1p, as he stated, but 2p because of the reduction of 1 per cent in PRSI. While I admit and accept that public expenditure is higher than the Government's target and it is a reasonable criticism to make, it is not consistent, relative to the facts and the performance of previous Governments, to refer to it as an explosion.

The Deputy, who has a strong interest in the development of small and medium sized businesses, also commented on the failure to provide more corporation tax reductions. I do not understand the logic of the Deputy's argument. The Government has, over three budgets, reduced the corporation tax rate for small businesses from 40 per cent to 28 per cent. That is far and away the most significant focused tax reduction made by any Government in recent times. It is directly focused on small businesses with profits of up to £50,000.

Deputy Cullen also said the Government is pushing our economic and monetary union qualification criteria to the limit. I already dealt with that aspect and it does not bear serious examination. While I am not complacent about the matter, we will have some difficulty on the inflation front because the rate at which the economy is growing is bound to stoke up some inflationary factors. That is certainly occurring in the construction industry in Dublin. I am not in the least complacent about it. The Government is focused on the economic and monetary union criteria which we will meet reasonably comfortably. Deputy O'Dea referred to inflation as a serious problem and I take his point, but nonetheless he has exaggerated.

Deputy Dempsey commented on the failure of my party to impact seriously on the budget deliberations. The budget sub-committee of the Cabinet which discussed much of the framework for the budget — obviously the Cabinet made the final decisions — comprised the leader of my party, the Minister for Enterprise and Employment and myself representing Fine Gael, the Leader of the Labour Party, the Tánaiste, and the Minister for Finance representing the Labour Party and the Minister for Social Welfare, Deputy De Rossa representing Democratic Left. There was proportionate representation of the parties in Government and the overall package was roughly in line with that proportion of 3:2:1. One could argue that matter for ever, but I reject out of hand the notion that Fine Gael did not have a serious hand in framing the budget.

Deputy Quill said that we should do more for the needy and make more tax cuts. In fairness to Fianna Fáil, it did not make the case for massive tax cuts while at the same time doing more for the needy. The Progressive Democrats proposals avoid all the hard choices in terms of spending, yet favour a massively greater tax package. I do not see how that party will make a comfortable partner; the Fianna Fáil Party is much more responsible in its approach to those matters. The Progressive Democrats received much favourable comment by the public — anybody who favours massive tax cuts will find themselves in that position — but that party will be uncomfortable to deal with if it insists on doing more for the needy while making massive tax cuts. That would be impossible.

Deputy Quill referred to Progressive Democrats budgets in the past, but there is no such thing because the Progressive Democrats Party was the junior partner in Government with Fianna Fáil. The assertion that it delivered more tax cuts in less favourable economic circumstances does not stand up because the present tax package, which has been criticised as too generous, is the largest by far in the history of the State. The Deputy said that if Fianna Fáil and the Progressive Democrats had remained in power the higher rate of tax would be 40 per cent. I do not know if that would be at the expense of the lower rate or how it would be paid for. Nobody would deny the desirability of reducing tax rates from 48 to 40 per cent and 26 to 20 per cent, but everybody knows that is not possible in the short-term except at the expense of some other area.

Deputy Quill said that the tax regime is a barrier to the attraction of multinational companies, but that flies in the face of what is happening at present. There never were as many international companies setting up in and around this city and to some extent around other large cities. In the past six months there has been a boom in multinational companies, household names from around the world, setting up here. Deputy Quill also referred to the lack of Fine Gael influence on the budget, which I have dealt with.

Deputy O'Donoghue made a plea for more spending in the area which he strongly represents. He sought additional resources in the area of crime prevention, in other words, more spending, yet that is an area in which the Progressive Democrats proposes to make cutbacks.

Deputy O'Hanlon said that there are no specific measures in the budget to reduce the national debt. The Deputy did not listen to the Minister because for the first time in the recent history of the State the budget provides for such a reduction, and there is much more to be done in that regard in the years ahead. The Deputy referred to making adequate provision to tackle problems raised by the reduction in EU Structural Funds post 1999. If he looks at the three year projections he will see that the Minister for Finance has included prudent contingency provisions. It is not easy and it would be very unwise in terms of negotiation to give specific figures for that purpose because that would give away our strong negotiating position. In terms of the three year projections, even in the final year there is a contingency provision which will, I hope, cushion any such development in that regard.

Deputy Ned O'Keeffe suggested that the Government, in its tax proposals, should have sought to abolish levies. I find that surprising because the levies, which amount to 2.25 per cent, were introduced by previous Governments led by Fianna Fáil and the cost of abolishing them would be £400 million in a full year. While it would be desirable to abolish the levies, and it must be faced up to in some measure in the years ahead, it would have the effect of swallowing up more than the entire package of one year. The levies impact least on the less well off; the higher one's income the greater the impact of the levies. Any budget that would seek to abolish the levies would be very one-sided, but I accept the desirability of reducing and ultimately abolishing them.

Deputy O'Keeffe put forward the proposal to offset pre-trading expenses against tax liabilities for small start-up businesses. That is being done. He said that corporation tax should be further reduced for small businesses, but the previous reduction in the rate from 40 to 28 per cent over a couple of years is significant.

Deputy Andrews claims there are no incentives for tourism in the budget. Tourism prospers most in an economy where there are low interest rates, a stable currency, low inflation, a stabilising factor in terms of wages and costs which results from Partnership 2000, and an expanding economy, all of which are self-evident. Tourism is prospering and will continue to prosper as long as the Government and its successors continue that framework.

Deputy Michael Smith made a plea for the reinstatement and expansion of farmyard pollution schemes as a boost to tourism. There is a measure in the budget to provide generous capital allowances for farmers investing in such schemes.

Deputy Seamus Brennan raised the issue of the establishment of an EU compensatory fund to provide assistance to member states suffering in the event of currency turmoil. That is a double-edged sword because if it were introduced we would also have to contribute. As ours is a well-managed economy, it would be likely that we would pay into that fund rather than receive payments from it, so that is not a good idea.

Deputy Haughey referred to the stamp duty increase as an anti-Dublin and anti-young people measure. That is incredible, given that we are removing service charges and RPT, which were both seen to be adversely affecting Dublin. Those two reductions are the single biggest pro-Dublin measure that any Government has taken in recent times so I reject his suggestions. I do not know how he can suggest it is anti-young people because stamp duty does not apply to new houses and very few young people buy houses for more than £150,000.

Deputy Callely referred to several issues, one of which is prison accommodation. That is my area and this Government, in a very accelerated prisons programme, will provide 800 additional prison places in just over two years. That programme is well in hand.

The leader of Fianna Fáil recently proposed increasing overseas development aid spending significantly. I welcome that but it is an additional commitment to public expenditure by a party that is criticising us for excessive spending.

Mr. R. Burke

Is the Minister of State saying this Government is opposed to the commitment to increase overseas development aid, in line with Deputy Bertie Ahern's proposal, to between 4 and 5 per cent in the lifetime of the next Government? That is still heading toward the figure of 0.7 per cent overall which is the UN target. Does the Minister of State object to that?

Mr. Coveney

I did not say I objected. I welcome it in many respects but it is a commitment made by the Deputy's party leader, who criticised the Government for public expenditure excesses. He glibly made a commitment to an additional £52 million under one heading.

Mr. R. Burke

Not glibly.

Mr. Coveney

Neither was the commitment made in this House. This relates to spending; this Government, as the Deputy knows, has also committed itself to ultimately achieving the target of 0.7 per cent. I accept we are a long way from that target.

On the document referred to as Budget by Deputy Michael McDowell, it is not credible to put a set of figures forward that avoid all the hard choices, apart from introducing the idea of a tax package of £475 million gross in 1997 against the Government's figure of £293 million, which was supposedly too generous. The method of saving £200 million and contributing to that package is in the most extraordinary document I have ever read.

The document states that on public service productivity, £55 million is to be saved on the following: a comprehensive deal for the whole public service, a reduction of 3,750 posts that are unspecified, no reduction in Gardaí, teachers or health professionals although they account for well over 50 per cent of the public service and overtime reductions of £30 million, with a particular focus on the prison service, where Deputy O'Donoghue wants to spend further moneys. There is to be a miraculous reduction in live register numbers by control measures, saving £115 million.

It is absurd to suggest £200 million can be saved without making a single specified hard choice. That is what the Progressive Democrats are offering and they will make very curious partners for a more responsible party like Fianna Fáil.

Mr. R. Burke

Fine Gael and Democratic Left make lovely bedfellows.

Mr. Coveney

Democratic Left are good partners and I say so from experience.

Mr. Boylan

I support this outstanding and progressive budget. This rainbow coalition is working well and has introduced policies that are bringing benefits to all the people. With a rising tide all boats are being lifted.

Contrast that with the policies of the Progressive Democrats, where the rich get richer and poor get poorer. That creates unwelcome divisions within society. Everybody should share in the wealth and the policies outlined in this budget will give people confidence they will get a fair deal, or, as per the Ford slogan long ago, "a square deal". That is especially true of people on low incomes or welfare. They deserve the benefits they will get from this budget. I am delighted social welfare payments have been brought forward to 1 May. There was a stigma on social welfare recipients although they could not get work because the jobs were not there due to the failure of successive Governments to create a climate for jobs to be created. Those people depended on social welfare, but in budget after budget, payments were made in August or September while tax changes for people fortunate enough to have work came in during April. This was a very sore point.

Agriculture is still the bedrock of the economy and I am delighted with the number of initiatives in farm development. There is encouragement to pass on farms to younger farmers, relief on stamp duty and various other benefits. The EU package of grants relating to the control of farm pollution has unfortunately been suspended but I hope it will return. In the meantime, the tax benefit of 50 per cent in the first year and a further 50 per cent in the following seven years for farmers making investments in farms coupled with REP, will be very important in encouraging others to invest in care for the environment and in modernising agriculture to meet the demands on it without getting too intensive. Intensive farming may have caused some current problems. I compliment the Minister of State, Deputy Coveney on his excellent work in Government. We are fortunate to have a man of his ability.

There should be more emphasis on family life. The housewife is entitled to recognition through payments from the State. I have nothing against the wife who goes out to work; in many instances it is necessary. However, there seems to be a belief that the housewife at home has nothing else to do, which is wrong. She is the most important person in the country, particularly when we see problems with young people. They may not be related to the fact that some mothers cannot stay at home but where the wife can stay at home, she should be encouraged to do so during the years the children need the parents' influence. There should be a State contribution and Dr. Garret FitzGerald had such an idea. Unfortunately, it never came to fruition and seems to have been buried somewhere. The economy has improved and we should protect family life. In that way we can deal with many current problems. Multinational companies are flocking to this country. They have confidence in the Government because it has vision and is led by the Leader of Fine Gael. Such trust is important in business and foreign investors have that trust in the Government.

The computer and electronics industries are providing thousands of jobs that will give our young people a future. Companies such as Intel and IBM which are established here have been very successful and provide worthwhile, well paid employment for our skilled young people. The educational system, particularly the regional colleges, has provided those skills. While the universities and professions have a role to play, many parents had the foresight to realise that the regional technical colleges would provide young people with the skills for future employment.

The regional technical colleges and the institutes of technology have provided the skills for jobs in these companies who have, in turn, sent out the signal that the Irish workforce can produce products comparable to the best in the world. These multinational companies have no allegiance to the country. They set up here because they see Ireland as a base where they can manufacture their products and have ready access to European and world markets. They have confidence in the Government and its Leader. They no longer see Ireland as a banana republic but a country with skilled young people to take up the jobs they can offer.

I am proud to be a member of a party of the Government which has brought forward this budget. I look forward to many budgets in the future from the Government in its present form.

Mr. R. Burke

At two weeks remove from the introduction of the budget and the hype which surrounded it created by the numerous Government handlers, who tried to portray it as a panacea for all the country's ills, it is easier to make a calm reflection on it. By any judgement of whether it was prudent in terms of the public finances, whether it tackled the jobs crisis for the long-term unemployed, whether it was fair to the family or whether it showed proper concern for the less well off, this budget has been a failure.

The Minister of State, Deputy Coveney, spoke of the Fine Gael input to the budget. He rejected any suggestion that it had not played a serious part in framing it. It is obvious from an examination of the budget that Fine Gael is a bit part player in this sordid theatre that is the tripartite Government. It is led by the Labour Party, pushed along by Democratic Left and Fine Gael make up the numbers. It has had no input which is obviously a source of deep concern to its more responsible electorate.

Mr. Durkan

Observed by the Opposition.

Mr. R. Burke

They would be concerned at the lack of financial prudence in regard to public expenditure shown over the lifetime of this Administration. When the Government was formed it promised to raise public expenditure by 2 per cent above inflation per year or about 6 per cent in total to date. There has been an increase in public expenditure of over 20 per cent in that time. It has lost the opportunities for the radical tax reform which is needed and for a package to look after the less well off.

The Government talks of the budget as a radical policy. However, during the term of the Labour Party Minister for Finance there has been a 1 per cent reduction in the standard rate of tax over three budgets. This at a time when the economy has been booming thanks to the stable foundations for growth provided by Fianna Fáil from 1987. At a time of unprecedented growth this supposedly reforming Administration has reduced the standard rate by only 1p in the pound.

As a result of the budget the Government will take in £1 million extra in tax every day. If there was any serious political will we would be on the brink of eliminating the Exchequer borrowing requirement, thus freezing the amount paid on debt interest, in many cases to foreign banks. Instead, the cost of debt servicing this year is set to rise by £200 million to £2.56 billion — equivalent to about 50 per cent of income tax revenue. If this coalition Government is re-elected it proposes to borrow a further £2.2 billion. This is irresponsible and unacceptable.

All parties should agree in principle to cap the national debt at £30 billion and reduce it. The national debt was just over £1 billion in 1973; it now stands at £30 billion and the Minister for Finance, Deputy Quinn, plans to add another £2 billion by 1999. It is irresponsible for this generation of politicians to pass such a burden to our children.

What is being done for the family with regard to crime and lawlessness, job creation for the long-term unemployed, assistance for business and agriculture and for social welfare? The Government gave a 40p per day increase to social welfare recipients, yet it claims this is a great reforming budget. It was anything but that because the Government had frittered away the opportunities available through irresponsible increases in public expenditure. This Government lacks a cohesive foreign affairs policy. The Taoiseach speaks of his goal of working towards a federal Europe. A Government White Paper on foreign policy was published recently and there was no reference to a federal Europe in it. Fianna Fáil believes, and it has been the policy of successive Governments through the years, that we should continue to take a pragmatic approach to the development of Europe. We should actively work for a closer Europe, but not for a federal Europe and what that means for sovereignty. Europe is very important to us and should be crucial to our foreign policy, along with the reformed United Nations, but this Government speaks with various voices on this area.

The Government is totally divided on the question of European defence. It does not have a policy, as was seen in its White Paper, yet the Taoiseach comes into the House and speaks about a common defence policy. What is involved in a common defence policy? Mr. Douglas Hurd, former British Foreign Secretary, said that common defence within Europe means that if the Greeks and the Turks go to war over some island in the Aegean Sea in the morning, the rest of Europe will be at war in the afternoon. The Irish people do not want that, nor do most Labour Party voters. As to what DL voters want, that is a matter for themselves.

The Taoiseach speaks on behalf of his Government and says we want common defence. I reject it. Fianna Fáil wants to play a role within Europe and the general affairs council. We want to make our forces available to the EU on the basis as we do to the UN. We have a proud peacekeeping record with the UN since the early 1960s when at the request of the Security Council we first sent troops to the Congo. Over 45,000 army personnel and gardaí have served abroad in that time. We assess individual cases on the need for humanitarian aid, peacekeeping personnel and emergency relief but the Taoiseach wants us to go much further. He wants us involved in a common defence of Europe. We will play a role but it should not be that one.

I put down a question to the Minister for Foreign Affairs on his view of common defence as distinct from the Taoiseach's. It was ruled out of order on the basis that it impinged on collective Cabinet responsibility. Of course it is about Cabinet responsibility but the Tánaiste, Taoiseach and Minister for Social Welfare like to speak with different voices and then tell us about the cohesion of the Government.

Irish people have strong views on the issue of neutrality and are committed to the principle of military neutrality. There will be no change with Fianna Fáil in Government on the question of military neutrality or the use of our forces and there will no joining in Partnership for Peace and no extension of membership of the Western European Union beyond our present observer status without putting the question to the people in a referendum. At present, we have an insidious, creeping change by the Tánaiste who is trying to include us in Partnership for Peace and the Taoiseach who wants to go further and bring us into common defence. That is not the way forward the people want and it is important that we have a clear statement from this Government.

The Minister of State, Deputy Coveney, questioned the commitment of Deputy Bertie Ahern to overseas development aid, a commitment made at a conference on human rights held recently by Fianna Fáil. He committed Fianna Fáil in Government to increasing overseas development aid to between 0.4 and 0.5 per cent of GNP as we head towards the target of 0.7 per cent set down by the UN. He also indicated that matter would be reviewed in the context of increasing it further depending on the growth of the economy. This is a serious commitment on behalf of the people and reflects their view that we should be sharing our blessings and our growth with those less fortunate around the world. Every time a request for emergency relief is received, the people, through our non-governmental organisations, subscribe generously. They will want the Government to act in their interests through taxes on the basis of increasing overseas development aid. I am proud of that commitment and I worry when I hear Fine Gael querying this commitment through the Minister of State, Deputy Coveney.

I refer to issues of concern to my constituents which reflect greater concerns in society generally. Ireland recently held the EU Presidency. It was important that we handled that Presidency well on behalf of the Union and that we used the opportunity to push forward some national interests. Duty free sales is a matter of major concern in my constituency which affects jobs in the manufacturing and services industries. During the Presidency the Minister for Finance presided over the Council of Finance Ministers and did not even succeed in getting the duty free issue on the agenda. One of his back benchers is bleating about the future of duty free sales now that the Presidency is over. Labour should have done something about duty free sales in our airports during the Presidency. This matter is of vital importance not only to the hundreds of people in Dublin Airport whose jobs are affected but to the distillers and the manufacturers of other products sold in the duty free shops in Dublin and throughout Europe.

We should strongly press for an extension of the duty free system past the projected closure date, which is coming fast. We should not allow ourselves to be sidetracked by some of the larger member states which have particular interests. Ireland is the last country in Europe without a land frontier to the mainland — the UK is connected through the tunnel — and duty free facilities are crucial to our tourism trade, airport revenues and employment, and the sales of our manufacturing companies. Even at this late stage, I appeal for some action or even an indication of interest, which was sadly lacking during the Presidency when the Labour party and the Government had an opportunity to do something about this.

We had a debate over the last two nights on the present shambles within CIE because of management and board decisions. The train services available to the people of north County Dublin are appalling. People attempting to board the train at Balbriggan, Skerries, Rush, Lusk, Donabate, Malahide and Portmarnock are being treated like cattle. One young lady felt faint because of the overcrowded train at Lusk and had to be taken off. The service being provided is a disgrace — it is inadequate, overcrowded, undependable and dangerous from a health point of view. There have been train derailments; thankfully the incident before Christmas involved an empty DART but it could just as easily have been an overcrowded commuter train at 8.30 a.m. Something serious must be done but the Government has made no indication of having a policy for upgrading the train service to the people I represent in north County Dublin. There is a commitment to extend the DART to Malahide — when that will happen is another day's work — but that does not take into account the concerns of the rest of my constituents, who are currently not receiving the service to which they are entitled.

The threatened nurses' strike is of national importance. How did the Government allow this position to develop? Why was the strike not settled either in the context of Partnership 2000 or well before it during last autumn? The negotiation skills shown by the Government have been abysmal. The 26,000 nurses have a deserving case but they are being abominably treated. We should not leave things until the last moment in the Labour Court. I hope the dispute is resolved in the next few days because the last thing we want is a nurses' strike.

Retired nurses deserve recognition in the resolution of that dispute. The principles of relativity and indexation have been accepted since the 1960s, when they were introduced by my then colleague, the late George Colley. It is an important principle for State pensioners generally but it is of crucial importance in the context of the nurses' dispute. The principles of relativity and indexation for the pensions of retired staff must be recognised and honoured and if they are broken in any settlement it will be a sad day, not just for retired health care staff but for State pensioners generally. Our retired nursing staff worked hard all their lives in difficult jobs and are entitled to receive recognition from the State for the work they put in on behalf of patients. Their rights as pensioners should be recognised.

As regards pensions in the health area, the care workers play a crucial role in providing back-up to hospital nursing staff and without their assistance hospitals could not continue. They are being disgracefully treated in their present pension arrangements. They receive £1 per week for every year of service, so if one works for 40 years as a care worker your pension will be £40 per week. We are supposed to have a booming economy — every morning on the radio we hear about various growth patterns and percentage increases — and we claim to be a caring society, but where is that reflected in our pension schemes for nurses and care workers?

We are told the matter is being reviewed by the Minister for Health, who will reach a decision before July. How convenient that it should be postponed until then, when the dogs in the street know that there will be a general election before that. Those care workers deserve better from the Minister and the Government. Their legitimate claim should receive serious consideration and I demand that their case get attention.

The horticulture area appears to be the Cinderella of the Department of Agriculture, Food and Forestry. The Department is not interested if it does not have four legs but horticulture is an important industry in my constituency and should be as important nationally. Given the quality of our soil, we should not import vegetables we could grow at home. Horticulture is an area that needs special attention. During Fianna Fáil's time in Government a Minister of State was responsible for horticulture, but that was abandoned by the present Government which knows nothing about horticulture.

Nineteen ninty-five was a very bad year for tomato growers. Since then they have lobbied continuously and made a very strong case, which has been accepted in principle, for a 50p subsidy per box of tomatoes grown in this country. That amounted to about £650,000. Given overall Government expenditure and wastage in so many other areas, and the present growth in the economy, the legitimate claims of the tomato growers should be met.

One final point relates to security. The Oberstown complex, which houses many young offenders, some on remand, some in detention, is located in my constituency. The number of breakouts there is a source of continuing concern and distress to the residents in the area. The residents have submitted a list of demands to the Government but no action has been taken on them. One in particular relates to the need for a security fence around the former Trinity House. I make a special plea to the Government for funding to provide this badly needed security fencing. It has been requested in Government reports, but it has not been constructed. If the people of the area are carrying this burden on behalf of the rest of the country, they deserve security and peace of mind in their homes and as they go about their business. I request that urgent action be taken on the provision of this fencing and the other requests made by the Lusk Community Council on behalf of the residents in the area.

Two weeks after the hype created by the handlers, this budget can be seen for what it is. To take 1p off the standard rate of income tax after three budgets is not radical reform. It is merely a stutter.

Dr. Upton

This budget has been introduced in a period of unique economic progress which has been presided over by the Minister for Finance, Deputy Quinn. The data speaks for itself.

Mr. R. Burke

Dr. Upton deserves an audience for his contribution. He should not be talking to an empty House.

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

Dr. Upton

I wish to share my time with Deputy Kathleen Lynch.

This budget was introduced in a period of unique economic progress, presided over and well managed by the Minister for Finance, Deputy Quinn. The figures speak for themselves — growth rates for 1996 are at 6.1 per cent with a forecast growth rate next year of 5.5 per cent; there was a 9 per cent increase in manufacturing output in 1996 with 10 per cent forecast for next year; an average growth rate in manufacturing output of 11.5 per cent in the 1993-6 period; employment has grown by 150,000 in the past four years and is now at the highest level ever recorded. In addition, unemployment has declined by 38,000 since 1992, reaching a level of 182,000 this year and forecast to decline further next year.

While unemployment is still unacceptably high in some parts of Dublin, and especially in parts of my constituency, it is noteworthy that levels of unemployment in Dublin are somewhat above the national average. However, it does bear saying that in the past year or so quite a number of very spectacular and significant industries have located in Dublin and in the greater Dublin area. That level of progress should be seen in the context of the successful renegotiation of Partnership 2000. That framework document lays the foundation for a continuation of the huge levels of progress that have been made over the past few years which can continue until the turn of the century and into the new millennium.

In terms of the tax proposals, it is noteworthy that it is proposed to return to taxpayers in the order of £1,000 million between now and the completion of that programme. That represents, in practical terms, a tax saving for the average taxpayer in the order of £1,000 over that period. That is very significant. In this year's budget there is a tax return to taxpayers in the order of £400 million, which means about £400 a year per taxpayer. A married worker with four children will get an increase of about £14 a week. That is very significant progress by any standards which nobody could seek to diminish or ignore. It is huge progress and compares very favourably with what has been achieved in the recent and more distant past.

Welfare increases in the budget are twice the level of inflation, with an extra sum of £114 million being made available this year. While the absolute sums which people receive are small, it is fair to point out that welfare changes over the past four or five years have been well ahead of inflation. Inflation since 1993 was in the order of 10 per cent. During that period, child benefit increased by 90 per cent, old age pensions increased by 18 per cent and unemployment assistance and benefit increased by 23 per cent. That represents substantial progress in real terms, well ahead of inflation, which nobody should seek to diminish.

I am particularly pleased by the child benefit increases which are spectacular and exceptional by any standards. They are very worthwhile for two reasons. First, they promote employment and, second, they are pro family. Those are both very valuable aspects of those changes.

These spectacular improvements, which have been achieved while the Labour Party has been in Government, have been the target of an unremitting attack from Ireland's only real party of the right, the party which has modelled itself on the policies of Margaret Thatcher. It is the party with all the answers to our economic problems. Its nostrums are based on a simple recipe — cut taxation to the bone.

That is quite appealing at a superficial level but where will the inevitable cuts which must follow the logic of what is being proposed fall? That party, despite incessant bleating about openness, accountability and other politically correct lingo, will not say where the tax cuts will hit. Let us have some openness from them on where those cuts are about to fall. Let us hear it tell public service workers what its preoccupation with excessive spending on the public service means in practice. Let us hear which jobs in the public service will be lost and which services will be cut back.

It would not be out of place to carry out a brief examination of the broad dimensions of the budget so that we can see where some of these parameters lie. Social welfare expenditure next year will be £4,576 million. Is that party proposing to cut back social welfare? If the answer is yes, let us hear it and then be told the specifics. If the answer is no, it means that 30 per cent of the budget will be left static. Is it going to cut back next year's health expenditure of £2,424 million? If it proposes to do that it is quite in conflict with the caring facade it presents to the public when it talks about health concerns. Is it saying that education, the great source of future prosperity, should receive less? Is it really saying that the foundation stone of progress should be reduced? Let us hear from that party on those questions because those three main headings in the budget account for 58 per cent of taxpayers' money. If it proposes to make cutbacks in those areas let us hear the specifics.

In addition, 16 per cent of the budget goes to service international debt. Given that it is a party of economic propriety and proper behaviour, I am certain there would be no question of it suggesting not paying back the national debt. Is it proposing cutbacks in the remaining 26 per cent of the budget, in areas such as EU payments which generate a huge benefit for us? Is it proposing to cut back security? I have not heard any radical proposals from that party in that area. Is it proposing to reduce expenditure on the environment, tourism and so on?

The reality is that if what it is proposing were implemented it would be a recipe for social chaos. Its proposals will murder the social cohesion which laid the foundation for, and has been at the root of, the huge progress made over the past few years.

Mrs. O'Rourke

What about the nurses?

Dr. Upton

Do the Progressive Democrats really expect anyone to accept that the social partners will stand by and allow social progress to be wrecked in that manner? That party should take a break from its constant mantra which resonates with blame and failure, with which it seems preoccupied. That is no help in terms of making progress. Those simplistic proposals, which I accept can have a superficial appeal, are really disastrous.

It is also worth asking what the Progressive Democrats achieved when they were in Government. One of their achievements was a remarkable level of brinkmanship. It was a fairly dull week when they did not take their partners to the edge of the cliff and say that "If you do not..." there would be a grave situation. Many grave situations arose in that period.

Mr. M. McDowell

"We have come for a head — yours or Harry's".

Miss Harney

Who said that?

Debate adjourned.