Coicís ó shin tháinig mé anseo le tús a chur leis an díospóireacht ar thuarascáil NESC, agus ó shin i leith bhí díospóireacht bhreá sa Seanad. Ní bheidh ar mo chumas anois, san am atá ar fáil agam, freagra chomh cuimsítheach agus ba mhaith liom a thabhairt ar an díospóireacht sin, ach beidh mé ag plé leis na mór-cheisteanna a hardaíodh.
First, I might deal with the question that was raised by Senator Neville and bring him and other Senators up to date on what is happening in the whole area of free movement of persons and in the area of drugs. I do not know if he is aware or not, but the Council of Justice Ministers have already appointed two groups to report back to the Council. One of these is a co-ordinators' group on the free movement of persons with particular reference to terrorism. The second is a co-ordinators' group on drugs. Both of those are looking at the whole effect that the free movement of people is going to have on those particular areas which are of major concern to all member states, not just to ourselves. They will be reporting back to their Ministers, who in turn, of course, as we know, will report to the internal market Ministers.
It is undoubtedly true that the present time is a most exciting and dynamic period in the EC's development. The Community, after years of stagnation and indecision, is now beginning at last to recover its original momentum and confidence. This is already beginning to be felt on the economic front, with economic growth in the EC now continuing strongly. Real output is expected to expand this year by over 3 per cent and to continue at around this level into next year. These growth rates are higher than in any of the last nine years, with the exception of 1988. Employment is also increasing rapidly. Almost two million net additional jobs were created in 1988 and another two and a half million to three million are expected to be created in 1989-90. As a result, the unemployment rate at EC level is expected to be below 9 per cent next year. The prospects opened up by the internal market have been an important factor in this recovery.
In order to gain the full benefits from these achievements and opportunities, economic policy efforts, as emphasised in a recent Commission document, need to be pursued in two principal directions:
(i) Improvements in the fundamental determinants of growth in the medium term so that all Community countries regain a high level of employment. This is particularly necessary in those countries which need to catch up and will be first to benefit from the Structural Funds.
(ii) Improve further the convergence towards monetary stability and the compatibility of macro-economic performances with sustained and balanced growth. This is necessary so that the recovery of the last seven years does not founder on a resurgence of inflation or unsustainable external or budgetary imbalances. In addition, greater convergence is necessary to achieve greater stability of exchange rates which is also a condition for successful completion of the first stage of the EMU.
The economic policies which we have been pursuing so successfully since 1987 are fully in line with these considerations. The substantial increase in unemployment of nearly 150,000 people in the early to mid-eighties is now being reversed. Unemployment has fallen by nearly 30,000 since March 1987, with most of this fall occurring in the period since the Programme for National Recovery was implemented. From April 1987 to April 1989, total employment grew by 10,000 according to official estimates. Underlying this figure is a gain of 35,000 in employment in the private sector offset by a decline in the public sector.
The continued creation of new jobs and the maintenance of existing ones is the primary objective of the Government's economic policies. To allow continued progress to be made requires a rigorous adherence to the objectives and spirit of the programme. If this is done we can look forward to further improvements in our employment performance.
The original vision of the EC founding fathers is now coming closer to being realised. The Community, as it is developing, will become not just a successful unified economy, able to compete more successfully with its trading partners, such as the US and Japan, in the process, it can also become a model for political co-operation between democratic nations. As borne out by developments over the past year, especially in recent weeks, its attractions for neighbouring countries, whether in the EFTA group or in Eastern Europe, is growing stronger and its influence for peace and justice in the world at large is increasingly recognised.
Our economic future clearly belongs in our fullest participation and on an equal footing with our partners in the Community's further development along lines that serve our interests. Expanding on the themes which I outlined in my address opening this debate, our participation in this development is predicated on the basis that is accompanied by policies that:
reduce the wide regional disparities within the Community; avoid creating or exacerbating social divisions in our society; foster family farming and a vigorous rural economy; provide more effective protection to an increasingly threatened environment; establish an economic and monetary union with the accompanying common policies needed for successful integration and an expanded Community budget; strengthen Europe's capacity in science and technology; and nurture and encourage European culture and intellectual life.
There is, of course, no question of seeking to impose a uniform type of society throughout the Community or of asking our citizens to abandon the rich diversity of their cultures or historical traditions in order to embrace some homogenised European identity. Indeed, those who laid the intellectual foundations for the Community always recognised that cultural diversity was its very essence and one of the distinctive elements which distinguished it from the world's super powers.
I am pleased to note that this strategic approach, which is the one recommended by the NESC and the one which the Government are also pursuing, has also received the board support of Senators during this debate.
I am, however, particularly disappointed that, in her opening remarks in this debate, Senator Avril Doyle launched a vitriolic attack, which was based on totally false premises and inferences, on the Taoiseach and on the Fianna Fáil Party. The House will recall that specifically Senator Doyle charged that my party, when in Opposition, voted against ratification of the Single European Act back in 1986. This is totally untrue. Given the gravity of the charge and the personal attacks which Senator Doyle made against the Taoiseach's integrity, it is important that I respond on this and set the record straight.
The then Fine Gael-Labour Coalition Government did not submit the Single European Act for ratification in the Dáil until very shortly before the deadline set and agreed by all EC partners for its coming into force, namely, 1 January, 1987. This was despite the fact that the SEA had been signed in February 1986 and had been agreed in all its essential details at the European Council in December 1985, almost a year previously. This inordinate delay has never been explained but it is reasonable to surmise that this stemmed from internal divisions between the Fine Gael and Labour parties then in Government.
In an explanatory White Paper on the SEA, which was published only following repeated pressure from my party, the possibility of any constitutional difficulty with the SEA was firmly ruled out. This was confirmed subsequently in the Dáil by the then Minister for Foreign Affairs, Deputy Peter Barry.
I wish to point out to Senator Doyle that my party have always been positively committed to this country's active participation in the EC. This approach has been consistently followed and never subjected to the U-changes and turn-abouts which she alleged here in this House.
Although we were critical of some aspects of the way the negotiations on the SEA had been conducted, Fianna Fail's position was to support ratification. We had been presented with an unwelcome choice which was stated in the Dáil on 9 December 1986 by our Leader as follows:
It is not possible, now that we have arrived at the ratification stage, to reverse what was agreed during the negotiations. What we must try and do now is preserve what we can in the new situation.
Our attitude at the time was influenced by the precarious state our economy had reached under the then Coalition Government's mishandling, the fact, as now very well documented in the NESC report that regional disparities in the Community had not been narrowed and by the then Government's stance on EC negotiations which seemed to be based on the assumption that we were not entitled to press our interests and that instead we had to accept passively and uncritically what was being proposed.
At the time, and here I am still talking about December 1986, all that was available were textual commitments on cohesion and convergence. As we know from previous experience and negotiations on EC matters, these were not of any great particular benefit unless backed up by solid commitments to increase the size and effectiveness of the Structural Funds. However, in February 1987 the European Commission presented their proposals for the reform of and the doubling of the Structural Funds and these were instrumental in making Fianna Fáil support for the Single European Act much more positive.
The other major difficulty we had related to the SEA's provision for closer co-operation on matters relating to "the political and economic aspects of security". Fianna Fáil sought to have Ireland's policy of military neutrality clearly acknowledged so as to leave no doubt or ambiguity among our EC partners, but this was refused by the then Government.
To ensure that Ireland's interests on these two fundamental matters were protected, we proposed a Declaration to accompany our instrument of ratification of the Single European Act but this was lost in the Dáil by 71 votes to 73. The Government motion affirming the terms of the SEA was subsequently passed without a division. The charge that Fianna Fáil voted against ratification of the SEA is, therefore, totally incorrect. My party's fears were, of course, subsequently confirmed with the Supreme Court judgment on 9 April 1987. As a result, the entry into force of the SEA throughout the Community had to be delayed by six months. The damaging effect of this country's standing could have been avoided had my party's advice been accepted.
I would hope, that Senator Doyle will now accept that she was totally wrong in her charges and would have the good grace to apologise for her unfounded and personal attacks and charges.
I should now like to turn to the proposal that an all-party Oireachtas committee should be established on the implications of the 1992 internal market programme. It has also been proposed that a committee be established to examine and report back on the NESC report. Such committees would merely duplicate the elaborate and extensive arrangements for consultations and debates already available and we on the Government side do not, therefore, see that any useful purpose would be served in their establishment.
In my address opening this debate, I outlined the strengthened EC co-ordination arrangements which we introduced on my party's return to Government in 1987, beginning with my own appointment which involves fulltime Ministerial responsibility in this area. This continues under the present Government. I also went on to highlight how these arrangements were subsequently enhanced further through the European Bureau and the regular meetings of the Committee of Ministers and Department Secretaries. Additionally, we have the Central Review Committee under the Programme for National Recovery as well as the Sectoral Development Committee.
This debate has been used again by Opposition Senators to launch a fresh round of attacks on the innovative arrangements which we introduced for sub-regional participation and consultation in the preparation of our National Development Plan. In responding to specific comments and charges made by Senator Myles Staunton, I should make it clear that, ahead of the EC's Council agreement in this area, we decided in the autumn of 1987 to move towards a programme and co-ordinated basis — as distinct from the project-byproject approach which had prevailed up to then — to ensure that we would be well positioned to avail to the maximum possible extent from the increased assistance from the EC Structural Funds.
The continued sniping by the Opposition, who when in Government consistently refused to introduce any regional arrangements in the use of Structural Funds moneys, is difficult to follow at this stage. The arrangements which we introduced, went further than was necessary under the EC regulations. This we did out of our concern and commitments given to ensure that regional and local knowledge and experience were drawn on, so as to exploit fully all opportunities and make the most effective use of the increases in the Structural Funds. These arrangements had the support of the social partners, through the Central Committee of the Programme for National Recovery and were also welcomed by the European Commission.
This was the first time ever that a national plan was broken down into regional components. Responding to a specific comment from Senator Staunton, I would direct his attention to Chapter 6 of our National Development Plan. There a summary is given of the objectives and strategies as identified by the regional groups and which, in turn, have been taken into account in our development strategy and operational programmes. As will be clear from the financial tables in that chapter, which contains a detailed sectoral and financial breakdown of expenditure, each region will benefit substantially from the development measures and Structural Funds expenditures planned.
Moreover, we have decided to continue these sub-regional arrangements in operation, save with one modification. In the interests of greater effectiveness and interaction, the advisory and working group for each subregion will now be merged into one group, whose function will be to be regularly informed and consulted in the implementation of our operational programmes. As a further and important innovation, the new groups will elect their own chairpersons and secretary and the Commission will now also be represented. Each group will meet at least twice a year.
Considerable publicity has been given to our decision to turn down the Commission's proposal of assistance for Community development. In response, I should like to make it clear that this would not involve additional EC assistance above the levels as now agreed in the Community Support Framework. I should also emphasise that, in the preparation of our National Plan and supporting operational programmes which we forwarded for approval to Brussels the Government fully recognised and took account of the importance of encouraging local development initiatives. Already, State agencies such as the IDA, SFADCo, Údarás na Gaeltachta and FÁS provide a comprehensive range of services to support small business and development initiatives by local community groups. The increased resources which we will be getting from the funds will greatly enhance the capacity of these agencies and, in the circumstances, a separate source of funding would not result in the most effective and efficient use of these resources.
I have already outlined the detailed consultations at national and regional levels which we initiated in the preparation of our National Development Plan and, as I emphasised, these will be continued. The NESC report, which we have been debating in this House, following a similar debate recently in the Dáil, was prepared specifically on the Government's initiative.
At the political level, in addition to the usual parliamentary procedures available in both Houses for debates and information on EC affairs, an additional important role is provided for TDs and Senators through the Joint Committee on the Secondary Legislation of the European Community, which is being reconstituted at present. This committee will, I am sure, do much valuable work during the present term of the Houses of the Oireachtas. I am particularly anxious to ensure that, with a positive and co-operative spirit on all sides, a satisfactory way can be found to ensure that that Committee's reports lead to debates more often in both Houses.
On the CAP, the agricultural issues raised in the NESC report have, understandably, figured prominently in this debate. The Taoiseach has already in the debate in the Dáil given an assurance that the Government will seek to influence the evolution of the CAP along the lines recommended by the NESC. I should also mention that the Minister for Agriculture and Food has established a group to review the agricultural situation and outlook. This group will have consultations with the various farm organisations and experts and will submit a report to the Government in the first half of next year.
The emphasis in the structural policy of the EC on aiding the family farm and on supporting income of farmers in the less-favoured areas needs to be strengthened. The basic EC structures regulation is implemented in Ireland through the farm improvement scheme. Under this scheme, which was introduced in 1986 in replacement for the farm modernisation scheme, grant aid of £29 million has been paid to date to some 33,000 farmers undertaking investments amounting to £185 million. Our National Development plan 1989-1993, forwarded to Brussels last March, and the Community Support Framework drawn up as a result provide for the continuation of this scheme. Compensatory payments — or headage payments as they are more generally known — are also paid and are a most effective method of increasing the income of farmers in less-favoured areas and so stabilising the population in such areas. In the current year some £57 million is being paid in headage, of which the community is contributing 50 per cent.
On the questions raised in the debate relating to the extension and reclassification of the disadvantaged areas, on 4 February 1987 the then Government submitted to the EC a proposal that all Ireland's less severely handicapped areas be reclassified to more severely handicapped area status. The EC turned this proposal down because they stated no evidence had been produced to justify this widespread reclassification. It was made quite clear to this country that such evidence would have to be produced to justify any large-scale reclassification or, indeed, any designation of areas as disadvantaged for the first time.
If the EC insists — as it does — on evidence in the form of the required economic data to justify reclassification of areas already designated as handicapped, then it will insist even more so on such evidence to justify the designation of an area as handicapped for the first time. The criteria laid down for such designation in Ireland are (a) stocking rate must not equal or exceed 1 livestock unit per hectare (b) the percentage of ploughed land must not exceed 7.8 per cent (c) family farm income must not exceed 80 per cent of national average (d) population must not exceed 27 per square kilometre (e) at least 30 per cent of working population must be engaged in agriculture. These are cirteria set by the EC and it is completely unrealistic, as was suggested in this debate, to suggest that they be blithely ignored in a submission to the EC to have all of the country designated as disadvantaged.
The Department of Agriculture and Food are at present processing the data obtained from two survey exercise on computer. When that processing is completed, proposals will be submitted to the Government to approve the lists of areas deemed eligible according to EC criteria for inclusion or for reclassification. It is hoped that this can be done before the end of 1989 and, following Government approval of the lists, we will immediately make a formal submission to the Commission.
It is difficult to estimate how long it will take to obtain EC approval or when payments can be made in the new or reclassified areas. Senators can rest assured, however, that we will make every effort to expedite EC approval and that the necessary funding for headage payments will be provided in due course.
In addition to these horizontal steps, a number of regional measures have been operated in recent years, tailored to the specific requirements of Irish small farmers, such as the western drainage scheme. The western package was extended further last year to provide for farmyard pollution control schemes and a scheme of grants to assist farmers in housing animals. These schemes were designed with the needs of the small farmer in mind. Earlier this year the pollution control and animal housing scheme was extended to the country as a whole by way of an operational programme approved by the EC Commission, and again the scheme is designed to meet the needs of the small farmer.
It is fully accepted that, with changes in the CAP and restrictions on production in traditional sectors, there is a need to diversify agriculture and to assist farmers to engage in non-traditional enterprises. A first step in that direction was taken earlier this year with the introduction of an agri-tourism programme in the less-favoured areas. This will be elaborated and expedited when the operational programme for rural development, at present being drawn up by the Department of Agriculture and Food, is launched, probably early next year. Meanwhile, of course, a pilot programme on integrated rural development is already in operation in 12 selected areas throughout the country since October 1988. On completion of this two-year programme, the Government will have gained valuable experience in the field of rural development and this will assist in determining how the policy is to be operated for the future.
The importance of co-operatives in Ireland is evident from the fact that cumulatively they account for an annual turnover of well in excess of £2 billion. There is no doubt that they have had a profound influence on the development of Irish agriculture, particularly in the dairy sector. The nature and extent of the changes which have occurred in the operation of the EC milk régime, notably the imposition of milk quotas, combined with the prospect of the completion of the internal market leaves our milk industry with no option but to reorganise itself. Rationalisation and reorganisation have been advocated not alone by the Government but by the Irish Co-operative Organisation Society in its publication Strategy for the Irish Dairy Industry published in 1987. Ultimately, however, restructuring is a matter for determination by the industry itself but it should be remembered that restructuring is not an end in itself but rather a means to an end. The object of the exercise must be to arrive at a situation where our milk industry can produce, process and market our national quota to the best advantage.
The co-operatives have shown already that they are prepared to adapt to the changing and challenging circumstances and this is reflected in the exceptional performance of the dairy sector in recent years. Nonetheless, I have no doubt that the co-operative movement realises that much remains to be done in the re-adaptation process and for the emergence of a revitalised and strengthened co-operative structure.
An important issue raised in the debate has been the need to expand the beef cow herd. We are making significant progress in this area. After several years of decline I am delighted to see that the breeding herd is now on the increase.
The attractive package of grants available for beef cattle will underpin further development. This includes headage payments and the special beef premium. The changes in the beef regime mean that we have to rely much more on the return from the market rather than on EC support. A particularly welcome development has been the special arrangement between some factories and farmers to produce once-calved heifers. This is a great example of co-operation between farm and factory and I would like to see more initiatives in this area.
In this period of rapid change we have emphasised to the Council of Ministers and to the Commission that the agreement to give special recognition for our beef industry must be implemented in full. While cattle prices are not now as high as they were last year they are — with the assistance of some price supports — higher than they were in any other of the last five years. With low inflation and high investment we are poised for national economic growth. Against this background, the beef industry faces unique opportunities as the supply of calves from the increased breeding herd will be coming on stream in the run-up to 1992.
We are, of course, participating constructively in the present Uruguay Round of multilateral trade negotiations. Along with our EC partners, we have made it very clear on numerous occasions that we are not prepared to abandon the basic principles of the CAP and the Community's capacity to maintain a viable rural society.
The Community's attitude to the recent US paper, which has the general backing of the Cairns Group, is that this would be a retrograde step for the GATT negotiations and for the progress achieved in the April mid-term agreement. It is a turning back to the position adopted by the US at the mid-term review in Montreal. It is difficult to assess why the US has produced such a controversial paper at this crucial stage of the negotiations. They have said that it is a "negotiating document" so perhaps this can be exploited when the proposals from all contracting parties, including the Community, are being examined with a view to deciding on the commitments which have to be made. It is indeed difficult to see farmers' representatives in the US Congress accepting the scope of these proposals. The Community for its part has already submitted proposals on short-term reform and the Commission is now working on a long-term paper. While the latter paper will obviously have to contain some difficult commitments, the Commission has repeatedly stated that the fundamental principles of the CAP cannot be called into question.
Ireland has adopted a consistent approach throughout all of these negotiations in that we are prepared to undertake commitments as long as they do not undermine the fundamental mechanisms of the CAP, thus seriously affecting farmers' incomes and curtailing export trade; credit is obtained for the reform measures the Community has put in place in the last year; there are balanced commitments from all contracting parties.
In addition, in our discussions with the Commission we have stressed the need for supply and price discipline on world markets if balance is to be sustained. We see little point in the Community continuing to cut production if other parties move in to take advanage of this situation and thus undermine world prices.
The Community, both as a major exporter and importer, has a real interest in the liberalisation and stability of world trade and we recognise the need for reform. We are confident that our producers, processors and traders have the ability to exploit the opportunities which will be available to them in a more liberalised and stable trading system. The Minister for Agriculture and Food ensures that all the interests involved are kept informed of developments in the negotiations through the special GATT group which he established last year.
Since the Commission's original tax proposals were formulated and presented in 1987, progress has been slow. Because the debate touches on sensitive economic, budgetary and social questions and because tax systems differ widely across the Community, it has not proved possible to achieve a consensus as yet on a definitive tax package. Nevertheless, this is a key element of the total 1992 programme which will have to be pushed ahead with all possible speed. Obviously, it will be one of the important dossiers on the negotiating table when Ireland assumes the Presidency in January next.
As I have said, while progress to date has been slow, some useful work has been done since the Commission adopted a revised approach to harmonisation earlier this year. Regular and intensive discussions have taken place under the French Presidency within a special ad hoc working group set up on the instructions of the Council of Finance Ministers in June last. This signifies the urgency that attaches to the work. Firms as well as Governments must have a firm basis on which to prepare for 1992. Some advances have been made. These have been in regard to the structure of the VAT system.
The major decision taken by the Council of Ministers is to retain zero-VAT rating of exports instead of adopting the Commission proposal to tax all goods at the exporting country's rate. This decision means that there will be no need for a clearing house mechanism to ensure that the appropriate tax is transferred to the country in which the goods are consumed. This is a welcome move from the Government's point of view and, equally importantly, from the viewpoint of Irish exporters who were concerned about the impact of the Commission's proposal on their competitiveness.
There is also general agreement that, both in relation to VAT and excises, effective control arrangements must be put in place to prevent tax evasion. These arrangements must be consistent with the need to reduce the burden of administration on both traders and tax authorities. Detailed work in this area will continue under the Irish Presidency.
The latest discussions in the Council of Finance Ministers show that agreement on the thorny question of VAT rates is still difficult to achieve. This is to be discussed again in December. The whole question of rates of excise also requires detailed discussion on the basis of the new proposals, involving minimum rates of tax, from the Commission.
Senators will be aware that harmonisation in the context of 1992 could involve an unsustainable revenue loss for Ireland. This fact has been explained and elaborated upon in Council discussions and there is evidence that the extent of our problem is recognised both by our fellow members and by the Commission. There will be pressure on us to align our rates closely with those in the UK. At the latest meeting of the Council of Finance Ministers it was agreed that the particular situation of Ireland will be the subject of specific arrangements on the basis of Commission proposals within the general tax harmonisation framework. The Government will be endeavouring to ensure that these arrangements take full account of our special position while enabling us to participate effectively in the advance towards the single market.
I was very pleased by the level of interest shown by Senators in this debate. Of course, this is not surprising given the central importance of the subject matter of the NESC report in our national life. As will be obvious from what I have said, I cannot agree with each and every one of the views expressed in the debate but, nevertheless, I would like to express my sincere gratitude to all the contributors.
Tá mé buíoch de na Seanadóirí ar gach aon taobh den Teach as ucht a raibh le rá acu sa díospóireacht. Glacaim buíochas leat féin freisin a Leas-Chathaoirligh, as ucht do chomhoibriú.
