Will the Leader clarify if there are time limits for speakers on this Bill?
Temporary Holding Fund for Superannuation Liabilities Bill, 1999: Second and Subsequent Stages.
Question proposed: "That the Bill be now read a Second Time."
I propose that the spokespersons and all other Senators should have ten minutes each and Senators may share time.
Is that agreed? Agreed.
The purpose of this Bill is to enable this year's Exchequer allocation of £3 billion for pre-funding of social welfare and public service pensions to be held in a temporary fund pending the enactment of sub stantive legislation next year providing for the establishment of pension funding arrangements on a permanent, ongoing basis. Over the past decade or so we have witnessed an extraordinary transformation in Ireland's economic and budgetary performance.
The medium term outlook is also quite promising, with growth expected to average over 5 per cent in the next three years and the economy heading towards an historically low level of unemployment. On the basis that public finances will continue to be managed prudently and that our international competitiveness is maintained, we can expect to achieve significant budget surpluses over the next few years.
The transformation in our economic position has been assisted in no small measure by favourable demographic conditions but this is set to change over the next half century with the gradual onset of an ageing population. In Ireland today, for every person over 65, there are five persons of working age. Current demographic projections show that by 2025 the ratio will have increased to 25 per cent, that is, one person aged 65 or over for every four persons of working age. However, more dramatic changes will occur over the following 25 years, so that by the middle of the next century the ratio will have risen to 50 per cent, that is, one person over 65 for every two persons of working age.
This ageing process is occurring across Europe but in many European countries it is proceeding at a more advanced pace than in Ireland. In both Germany and Italy, for example, the comparable ratio will rise to roughly 30 per cent by 2010 and nearly 50 per cent by 2030. The average ratio for the European Union is forecast to rise to 40 per cent by 2030 and 50 per cent by mid-century. The fact that Ireland lags behind the EU in the ageing process is something we can turn to our advantage.
The demographic changes that lie ahead will have major implications for the Exchequer cost of pension provision, that is, social welfare pensions and public service pensions. It will also significantly affect the cost of health care provision. While long-term projections are unavoidably tentative, an indication of the potential scale of the problem was presented in a report published in July this year by my Department – the report of the budget strategy for ageing group. The group estimated that on the basis of current pay-as-you-go policies, by 2025 the Exchequer cost of broadly maintaining the current level of pensions and health service provision will have risen by about 4.5 per cent of GNP or over £2.6 billion. By 2050, this cost will have risen by 7 per cent of GNP, that is, by over £4 billion.
Of course, long-term forecasts such as this can never be accurate. We simply cannot predict the economic, social and technological changes that will take place over the next half century. The projections to hand may prove too pessimistic or they may be too optimistic. However, to sit back and do nothing in the hope that it will be all right on the night is not consistent with prudent and responsible Government.
The House will be aware of the decision taken by the Government, announced last July, to set aside 1 per cent of gross national product annually from the budgetary arithmetic towards the Exchequer costs of social welfare and public service pensions in the future. In addition, a major portion of the proceeds of the Telecom flotation is being allocated for this purpose. In all, the Government is setting aside £3 billion this year for pension funding. I will explain the make-up of this sum in a moment.
In the year 2000, a further £1.15 billion which is due from the Telecom sale will also be allocated for pension funding, along with the 1 per cent of GNP allocation for that year, estimated at £635 million. Thus, by the end of next year, an estimated £4.8 billion will have been set aside for pension funding purposes, with further allocations to be provided in subsequent years.
The Bill enables the payment of up to £4.3 billion into a temporary holding fund in 1999. This sum is made up as follows: 1 per cent of GNP in the current year, equal to £582 million on the basis of my Department's latest estimate of GNP; the flotation of Telecom Éireann raised £3.667 billion and the Government has decided to use £1.25 billion of this sum to pay off Exchequer liabilities to the pension funds of Eircom and An Post, reducing the proceeds of the sale to £2.417 billion; these Exchequer liabilities are in respect of service of staff of the companies in the former Department of Posts and Telegraphs. This sum, £2.417 billion, is being allocated to the temporary fund. When added to the £582 million referred to above, payments to the fund come to £2.999 billion. Interest realised on the sum of £2.999 billion in the current year comes to an estimated £16 million and this also is being allocated to the fund. Further accrued interest of £19 million will be credited to the fund in the new year. This brings the total to be paid to the fund this year to £3.015 billion.
It may be noted that section 1(3) of the Bill will permit payments to the fund of up to £4.3 billion. The reason for the higher sum is that, at this stage of the year, the payment to the Eircom pension fund has not been finalised, while the payment to the An Post pension fund has only just issued from my Department. It is anticipated that the payment to the Eircom fund will be made shortly. The higher figure is there merely as a precaution. Should there be a hitch in finalising these transactions this year, the amounts in question could be paid into the temporary holding fund.
Section 1(4) provides that moneys in the fund will be placed in deposit accounts or invested in other short-term financial products within or outside the State and that any income arising therefrom will be held or reinvested by the fund.
Section 1(5) in an important provision which ensures that moneys may not be withdrawn from the fund without further legislaton expressly authorising this. It provides a guarantee that the £3 billion which is now being allocated to the temporary fund cannot be accessed by the Government without the House having an opportunity to debate both the funding policy which the Government has adopted and the arrangements that the Government proposes for implementing that policy.
The accounting arrangements in relation to the fund are contained in sections 1(6), 1(7) and 1(8). Accounts will be prepared by the NTMA and audited by the Comptroller and Auditor General and the accounts as audited by the Comptroller and Auditor General will be laid before each House of the Oireachtas.
Section 2 provides that control and management of the fund be delegated to the National Treasury Management Agency by Government order. The NTMA is a State agency possessing the systems and expertise to manage such a large sum of money and the Bill provides that the task of managing this money may be assigned to the agency. In its role as manager of the Exchequer account, the agency is currently managing the proceeds from the Telecom flotation and the 1 per cent of 1999 GNP allocation for pension funding. These moneys have been placed on short-term deposit by the NTMA with various financial institutions to mature at various dates in 1999 and 2000. These institutions conform with the counterparty risk criteria specified in guidelines issued to the agency and with the agency's own internal counterparty risk limits. Section 3 contains the short title of the Bill.
This Bill is an interim measure and Senators will have the opportunity of fully debating the pension funding issue when I bring forward substantive legislation in the new year providing for the establishment and management of two separate funds, one for social welfare pensions and one for public service pensions. This legislaton, which is currently being prepared in my Department, will provide for annual Exchequer subscriptions to the funds and for subsequent drawdowns from the funds to meet Exchequer pension costs. It will also set out arrangements for the administrative control and management of the funds as well as a high-level investment mandate within which this is to be exercised. Accountability in relation to the operation and performance of the funds will also be a key provision. It is envisaged that the legislation will facilitate the transfer of moneys in the temporary holding fund to the permanent funds and provide for the winding up of the temporary fund.
This legislation and the substantive legislation I intend to introduce in the new year will mark a new departure in the management of our public finances. With the budgetary surpluses now at our disposal we have a major opportunity to provide for the secure retirement of current and future generations. Let us not squander this opportunity.
I commend this Bill to the House.
I welcome the Minister to the Seanad on this occasion, which is happier than the last occasion on which he visited the House.
This Bill provides for the setting up of a temporary fund into which this year's allocation for pre-funding social welfare and public service pensions will be deposited. At a later date next year, the House will be asked to enact legislation to provide for the establishment of pension funding arrangements on a permanent basis and at that time we will have an opportunity to discuss the different aspects of the management of this kind of pension fund.
It makes good economic sense to plan for the future, especially in relation to pensions. As with the individual, the earlier the State begins to contribute to a pension fund the greater the benefit and the better the result will be. We are fortunate in Ireland in enjoying very favourable demographic conditions compared to our European partners. Some European countries, such as Germany and Italy, will have serious problems over the next 20 years servicing their pension needs. It will require up to 20 per cent of their GDP and that will be a serious problem.
Ireland will not be faced with such a serious problem until the middle of the next century. In the meantime, we must provide for our ageing population. We need to provide not just pensions but also for the care of the elderly. I am a member of the Eastern Health Board and the board is conscious of the need to provide for the elderly. In the last five years it has provided 500 beds in purpose built nursing homes. Yesterday I attended the opening of a 50 bed unit in Ballymun. This work will, and must, continue because by 2010, 195,000 of the population in the Eastern Health Board region will be over 65 years of age. They will constitute a costly demand on the Exchequer. Providing pension funds for the elderly is one issue but providing services for them is also important. It will be one of the biggest financial drains on the State in coming years and I hope provision will be made for it.
If we continue to operate on the pay as you earn basis, in 25 years the cost to the Exchequer of mounting pension funds and health services will be approximately 4.5 per cent of GNP or over £2.5 billion. It would not be prudent to continue funding pensions on that basis. It makes good economic sense at a time of budget surpluses to make provision for social welfare and public service pensions. It is envisaged that 1 per cent of GNP will be set aside in the fund each year. The Minister will also make a major contribution to the fund from the proceeds of the sale of Telecom Éireann. As future State assets are sold, and there was discussion on the Order of Business about the sale of Aer Lingus, will the Minister by sympathetic to making further similar contributions? It is important that the fund is built up over the next 15 years.
When will we start withdrawing from the fund? When will it have reached a deposit level which will allow us to start making withdrawals? Will there be two separate funds, one for social welfare payments and one for public service pensions? I am delighted with section 1(5) which provides that the money in the fund cannot be touched by a Government unless the Houses legislate for it. The Minister will be familiar with the old road fund in which money was deposited from road tax receipts for the upkeep of the roads. Of course, every Minister for Finance raided that fund—
Until recently.
—so we are providing that something similar cannot happen in this case.
I wish to refer to private pensions, although they are not relevant to the Bill. Many people contributed over the years to pension funds in the belief that they would get a pension of approximately £20,000 on their retirement. However, due to low interest rates, the most they will get is £12,000. That is causing severe problems. How can that be dealt with? I acknowledge the measure introduced in the budget under which the income tax allowance for people over 65 years of age was raised from £13,000 to £15,000. I hope the Minister will continue that process over forthcoming years. When the elderly get a return from their savings they should not have to pay tax on it.
The measure before the House is prudent. I look forward to discussing in detail how this fund will be managed at a later date, when the permanent legislation is introduced.
I compliment the Minister for Finance on his handling of the national finances since his appointment to office. He has presided over the most successful period in the history of the State with regard to its public finances. This Bill is another forward looking step in the innovative policy he has introduced into the Department.
The greatest worry of a middle aged person or a person approaching retirement age is that there will be adequate provision for their twilight years.
I am fast approaching it.
The Senator looks healthy. There are many more years left in him.
He is happy with the provision made by the Senator.
They worry that they will have adequate finances to support them in their final years. The step being taken by the Minister is good housekeeping. It provides for the two areas of responsibility which the Government will have in the future, people who retire under the social welfare system and those who retire from the public service under the superannuation system.
If measures are not implemented now, the burden on future Governments would be similar to that which was experienced by previous Governments in terms of servicing the interest on the national debt. Many commentators have pointed out that if we could have invested the money we were paying in interest on the national debt in infrastructure and job creation in the 1970s and 1980s, many positive things could have been done for our young workforce at that time. That was not to be, however. We were obliged to meet our international responsibilities and pay the interest on our debts.
Thankfully, as a result of good housekeeping, those repayments are no longer a major impediment to this Government and will not be for future Governments. Similarly, unless we put in place the mechanism to operate a fund to provide for pensions, it would become a burden on the State in the future. I compliment the Minister and the Government on bringing this legislation forward.
The Bill will ensure that a portion of the fund, which might not be capable of being dealt with fully in the primary legislation, can be put into a holding fund and will not be interfered with until the proper funds are in place as a consequence of legislation that will be introduced in the future. It is important that the legislation provides that interference with the fund cannot take place and money cannot be drawn down from the fund without the approval of the Houses of the Oireachtas.
This legislation is of vital importance in the provision of pensions for the elderly and the retired but I agree with Senator Doyle that the wider issue is not exclusively pensions. There are many other issues involved in providing for the elderly, such as health care and the provision of services. We could be a little more innovative in this area. I have taken a keen interest in what is happening in this regard in other countries. One thing we lack and which could be self-financing is private health insurance for people in retirement. It is not something we have promoted or facilitated and the health insurance bodies – our own VHI or the new one BUPA – have not considered it either. Other countries are providing care for the elderly in areas other than health care, such as retirement complexes and rest homes. Not all the elderly, and fewer in the future, will avail of or feel they need to avail of what we now see as a nursing home or a sheltered home under a health care system. In the future, as is happening in other developed countries of the western world, people will be retiring into supportive situations and to do that, they must have some type of back up, such as insurance or a financial provision made in earlier years. I call upon the people in the health care system to look to the growing market of people who in their forties, fifties or earlier can afford to make pension provisions and provisions for retirement, health or support care. The Minister for Finance could be supportive of that initiative by means of a tax break if those involved in the health care area make such proposals. It is an area that the existing health care system or or a new operator who wishes to come in by means of a pension fund, should consider. There is an opening there.
It is predicted that in 25 years' time one in four people will be over the age of 65. This projection is based on current information and may not necessarily be the case in 2025. The whole area of employment and extra employment are factors that may change and, if so, that figure may not be as high. There is a major problem right across Europe. We will be in a better position than many European countries with regard to the ratio of people in the retirement category and those in the working category. If this economy continues its forward stride over the next ten years, we will hopefully not reach the one in four ratio because of the extra employment and more people in employment. The provision that is now made will be adequate and may even surpass the demand that will be placed upon the pension funds.
There is a sizeable amount of money involved – it could be up to £4.3 billion this year. It may not reach that figure but there is a definite commitment of £3 billion. It is important that the sale of the family silver is reinvested in the future. It is important that the Minister does that and sets aside a percentage rather than a GNP figure. Both funds will be managed by the National Treasury Management Agency. This company has been the success story of recent years. I compliment the Minister on his decision to bring forward this legislation and on his forward thinking on both public and private sector pensions. In years to come people will look back and say, "Wasn't he the man who planned for the future and made sure that the burden of pensions for our elderly was not ignored or put on the long finger?" I commend the Bill.
I welcome the Minister. I do not intend to strike a discordant note. I have a couple of suggestions to make about where the Minister could use this money better.
The previous speakers have described the Minister's approach to this Bill as prudent and good housekeeping. Far be it from me to disagree. We cannot fault the Minister on his logical approach to budgeting in terms of the overall annual Exchequer budgeting or how he intends to spend the money in this legislation.
The Minister has presented us with a scenario based on demographics in relation to Ireland and the European Union and he has quoted the report of the budget strategy for each group. Those demographics seem to give an extraordinarily distanced approach in the sense that we are talking about the year 2000 and then jump to 2025 and on to 2050. They are light years ahead in terms of the performance of the Irish economy at present. Only in the period 2000-25 are we projected to lose a ratio of working population to ageing population of between one and five at present and one and four in 2025. That is a good ratio projection which does not under any circumstances suggest any threat to our ability to fund the pensions. If there is not a problem, why fix it?
In Europe the situation is different. They are experiencing the problem the Minister envisages for us in a quarter of a century and a half century on. We are not comparing like with like. We have a buoyant economy and a young population. The main players in Europe do not have buoyant economies or youthful populations. We have not taken into consideration the need for a new, vibrant workforce which will surely come into this country. It is already happening. The numbers who are immigrating as distinct from emigrating have changed dramatically from 30,000 to 40,000 leaving in the 1980s to 30,000 coming back, with the existing 30,000 to 40,000 remaining. Our population will expand with these youthful people. Where are the projections? I do not believe there will be any change in our profile of youth to old age in ten, 15 or 25 years that will make a bit of difference to our figures or statistics and our financial requirements. Is the Minister not being too prudent in his approach? Do we need to take this measure and, if so, could we do it differently? Let me present a scenario to the Minister. What are the alternatives? Could the Minister use the money better? There is £4.3 billion available in windfall gains.
Reducing the national debt, which currently stands in the region of £29 billion, is one alternative. If one substracts the figure of £4.3 billion one is left with a figure close to £25 billion. One per cent of GNP will account for £582 million of the figure of £3 billion while a sum of £1.25 billion is required to meet liabilities in An Post and Eircom. The interest rate payable is in the region of 8 per cent, well over double the rate payable on short-term investments about which the Minister has spoken. There would be, therefore, a considerable net saving to the Exchequer from which the national debt has to be paid and pension liabilities met. If the Minister were to do as I suggest, savings in the region of £350 million to £400 million would accrue this year. If this was added to the £582 million available by way of 1 per cent of GNP there would be in the region of £1 billion available which could be placed in the pensions fund immediately. This figure would continue to grow annually and it would have the added benefit of being painless. The Minister for Public Enterprise, Deputy O'Rourke, announced today that she intends to sell off Aer Lingus, the money from which could also be used to reduce the national debt, leading to lower interest repayments and increased provision for pension liabilities.
This is one alternative which would make much more sense but it is not my preferred option. While it would be prudent and good housekeeping to do as the Minister suggests to take care of the elderly, we are not under any pressure to do so. This is a wealthy and prosperous country but our infrastructure ranks among the worst in the European Union. It is extremely bad. Let us look at the quality of the service provided by Iarnród Éireann, in which a strike has been called today. It takes over three hours to travel to Sligo by train at speeds of between 30 mph and 40 mph. This is outrageous and I must travel there tonight. The line is considered dangerous because of the condition and age of the sleepers. They are antiquated. Our bus services and roads are also inadequate. There is not a decent road between the two major cities on this island – Dublin and Belfast – or between any of the major urban centres. Neither do we have decent rail services. One would have been able to travel to Sligo much faster 100 years ago. What is going to be done about this? There are major areas—
I am sorry to interrupt the Senator but we are dealing with pensions, not rail services.
I am trying to offer the Minister useful alternatives. Inadequate provision was made for these areas in the national development plan.
It was the best in the history of the State.
Why would it not be?
The Senator should be complimentary.
Provision was made for works.
There has never been as much money available. We do not want to debate the budget.
The Senator should make a new year resolution to be positive.
I seek protection from the Leader of the House.
The Senator is most negative.
I am not. There is no need to make rash and uncalled for remarks.
Acting Chairman
I will provide protection for the Senator and allow him to conclude without interruption.
I will not take umbrage but I require protection from the Leader of the House. While what the Minister is doing is prudent and worthwhile, there are other priorities and areas in which the money could be used more effectively and produce a better return both financially and in meeting long-term needs. Future windfall gains should be invested in this way.
I thank Senators for their contributions and will endeavour to answer some of the questions raised. This is a temporary measure to place the moneys in a holding fund. There will be adequate opportunity to debate many of the issues raised when the substantive legislation is brought forward next year. The various policy options have yet to be determined. How the fund will be managed and the use to which the funds will be put will be addressed in the Bill proper.
Senator Doyle raised a number of specific issues, including future privatisations. The moneys placed in the holding fund now and early next year will eventually be transferred to the funds proper. This will be governed by the substantive legislation. While the Minister will be compelled to set aside 1 per cent of GNP each year, provision will also be made to allow him or her to add to this depending on financial circumstances. This may happen, for example, subsequent to privatisations.
The moneys placed in the holding fund now and early next year may not be withdrawn other than for the purposes to be provided for in the substantive Bill. It is my intention to put as much distance as possible between the funds and the Minister for Finance. There is a balance to be struck. The Minister must be accountable to the taxpayer who has contributed the money through the Dáil and Seanad. I do not want him or her when under pressure from his or her colleagues to dip into the fund when stuck for a few quid at budget time. This is a complex matter which will be addressed in the substantive legislation.
I note the desire of Senator Doyle that we should ensure future Governments cannot dip into these funds. That would be my desire also but one has to marry the complexity and balance between being responsible for the fund or taxpayers' money while at the same time have that arm's length area.
Senator Doyle asked whether there would be two funds. Yes, there will be the public service pension fund and the other pensions that will be paid out of a social welfare pensions area. It will be the intention, subject to allow the Bill be enacted, that the breakdown of the allocation would be of the order of two to one, two thirds for social welfare pensions and one third for public service. Even though – I pointed this out when I announced this last July – I am setting aside 1 per cent of GNP and I am giving it a big kick start with money from the Telecom Éireann flotation, we have estimated that that will go nowhere near meeting the demands on funds in the years to come. We calculate – even though checking and long-term estimations are somewhat difficult – that we would want to set aside 3.5 per cent of GNP each year to meet the proposed ageing and other health costs as years go on. Even though we are giving it a good start with the money from the flotation plus 1 per cent, it still will not meet what our estimated demands will be in the years to come.
Senator Doyle referred to private pensions. Members will be aware that I have made significant changes in my last Finance Bill in this area. As I said in my budget speech on 1 December, I am not finished with that area yet. I am willing to hear other contributions and iron out some anomalies. The Senator is quite correct that what has happened is that people could expect to save X pension based on annuity rates that, in the past, were related to higher interest rates. Lower interest rates have benefited everyone in the economy and allowed the economy to grow. I often wonder how Ireland survived when businesses and private individuals had to pay interest rates of up to 20 per cent when Germany had low interest rates. Yet we did survive. It is good for the economy that we are enjoying low interest rates. On the other hand, people who are in their retirement years, who are dependent on pensions which related to bond yields, have seen their income drop. Therefore, the expectations people would have had of their lump sums producing a pension on annuity basis of X amount cannot now be realised. That is part of the background of why I changed the arrangement last year to allow greater flexibility for the self-employed and proprietary directors. Although, as I have said previously, I had made up my mind that I was doing this in any event, long before annuity rates dropped to the level that they have in the past 18 months or so, it did give a further reason for doing so. I will address the matter again.
Senator Finneran made good points about the provision of health care. Members will notice in my speech and in earlier ones that I referred to the provision of health care in the future. Not alone will the ageing of the population affect pension provisions, it will affect health care provision as well. In my first budget and Finance Bill I introduced a special tax allowance that would allow people invest in the provision of nursing homes. This was one of my better ideas, totally dreamt up by myself. I gave a tax break which has been quite successful. Some of the financial institutions are now putting forward packages to allow people to invest in these opportunities. My provision has increased the number of nursing homes throughout the country. As the Senator correctly pointed out – and he has a lot of expertise in this area – this will be a problem in years to come. It is a problem now.
An area which has grown enormously over the past 15 years in my constituency has been the provision of private health care in the form of nursing homes. There will be an increased need for these around the country and one of the reasons is that the traditional way we looked after our aged has changed with changing societal conditions. When I was growing up in Kildare one person in the family cared for the elderly. In 98 per cent of the cases it was a woman who never married. She stayed at home to look after her mother and her grandmother. Then someone looked after her and life went on like that. Society has changed. Whether it has changed for good or evil is a matter for another debate. That method no long applies and we cannot expect people to do that. Therefore, the demand for health care for the aged and provision for looking after the aged has increased. If there are any other effective tax breaks I am willing to consider them. The tax breaks I have given so far are quite useful. If there are other tweakings I could do that would assist, I will be glad to look at them.
Senator Finneran made the point that it was a far-reaching measure. I would like to think it is. It was not forced upon me. It was not in the programme for Government. It was not forced upon by the Department of Finance. It is something I thought should be done over a long period of years.
In reply to Senator Costello's point, if we do not do it now when times are good we will never do it. There are 1,001 reasons Ministers for Finance should not do something like this. There are no votes in it for a start. If I thought of votes I would not be doing something like this. In the long term I am of the view that in 20 to 25 years time someone might stand up and say "Who was the Minister for Finance who thought up this in the first place?" People will not even remember my name but they will say I must have had some vision for the future.
I will not forget the Minister.
I would like to think that that might happen.
Senator Costello referred to the demographic distance of looking into the future. In actuarial terms 20 to 25 years is a short period. I can say from previous experience as a professional accountant in a private capacity that in pension provisions one takes an even longer-term view than that. Twenty to 25 years is a short time in terms of pension provision. With regard to the self-employed and proprietary directors, most people in that area find that they are in their mid to late fifties, having worked hard all their lives, without having made any provision for their pensions because they have been actively trying to keep their shop, farm or small business going. Then these people find that they are left with too short a time period to invest enough money to provide for a pension. There will be thousands of cases like this. So 20 or 25 years at 50 years of age is a very short period in actuarial terms. As I pointed out, Ireland's demographic position is different from that of the European Union in general but we will reach that position in time to come. I take the view – as I think most people would – that it is prudent at this stage to set up the mechanisms to provide for the time when things are different.
It is hard to know what the Labour Party believes about this because sometimes Labour Party people have said we should not pay off the national debt. Over the past year the Labour Party Leader, Deputy Quinn, has said it was a waste of time doing it, that I am hung up about paying off the national debt and that I should not do it at all. However, Senator Costello seems to suggest that it is a good idea to pay off the national debt. I agree with him. I have been able to provide money to pay off the national debt, provide money for pensions as well as funding the national development plan. Due to technical things we did last year with the portfolio, there will be a nominal increase in the total of the national debt but de facto it is coming down. There will be a budgetary surplus in 1999 just like I had last year and that automatically reduced the national debt. I project that we will have a budgetary surplus for the year 2000 and beyond while at the same providing funding for this area.
Senators need not get too excited about this. One of the insults that has been thrown at me is that I am financially right wing.
The Minister is prudent.
I am right wing in terms of my view of the national debt and prudent financial planning. I make no apologies for that. My approach to running the economy, which I have spoken about for well over 20 years, has turned out to be the correct one. All the daft economic policies, when the Fine Gael Party was in power for a lot of that time, led us down the road to rack and ruin.
Spend money carefully.
Richie Ruin.
Senator Joe Doyle was a colleague of former Taoiseach, Dr. Garret FitzGerald. On my way to Armagh the other day I heard Dr. Fitzgerald talking about me and the economy. He must gain his mandate from his singular success in managing the economy from 1982 to 1987, when he was able to double the national debt from £12 billion to £25 billion, have enormous budget deficits and an unemployment rate of 18 per cent.
The Minister is talking about his predecessors. What about Mr. Haughey?
On his mandate for making comments, Dr. FitzGerald could successfully talk on many matters but when he speaks on economic matters I give him no credence at all. When he had the opportunity, the policies he espoused led us into the enormous difficulties from which it took us the best part of ten years to rescue ourselves. Dr. FitzGerald's and my theories about economics have been totally opposed for years but mine have proved correct and Dr. FitzGerald's theories brought the country to economic disaster.
Senator Costello made the point also that this money could be spent on roads, buses and other areas of the national development plan. Everything that could have been included in the national development plan was included. I have been able at the same time to provide for the national development plan financially, provide for the pensions and also run a budget surplus which reduced the national debt.
The national development plan will not provide one extra yard of rail line.
He is working on it at the moment.
On the national development plan, there are provisions for every single infrastructural area in the national development plan. Some people think that the provisions in the national development plan are too generous because one could spend all the money but one might not get any increase in volume. There is a balance to be struck. One could produce millions in the morning to do certain things but if there are reasons why the work cannot be done, all that will happen is that one will bid up the price. No extra work will be done. Some economists take the view that there is probably too great an amount of money going into the national development plan and all that will happen is that the prices but not the volume will increase. One has to strike a medium and most sensible people will take that view.
I am thankful for the opportunity of addressing the House and I welcome the support of the majority Senators.
Question put and agreed to.
Bill put through Committee, reported without amendment and passed.