This morning we will discuss the 1994 Estimates for Public Services in respect of the Finance group, Votes 1, 2, 6-9, 11-17 and 45. Vote 10 for the Office of Public Works will also be dealt with on conclusion of the Votes in the Finance group. A proposed timetable for the discussion of the Estimates has been circulated to members and it is up to members whether they wish to adhere to it. The normal format of an opening statement by the Minister, followed by opening statements from Fine Gael, the Progressive Democrats and the Technical Group, will be followed by a general question and answer session on the Finance group.
Estimates for Public Services, 1994.
Vote 1 — President’s Establishment (Revised Estimate).
Vote 2 — Houses of the Oireachtas and the European Parliament (Revised Estimate).
Vote 6 — Office of the Minister for Finance (Revised Estimate).
Vote 7 — Superannuation and Retired Allowances.
Vote 8 — Comptroller and Auditor General (Revised Estimate).
Vote 9 — Office of the Revenue Commissioners (Revised Estimate).
Vote 11 — State Laboratory (Revised Estimate).
Vote 12 — Secret Service.
Vote 13 — Office of the Attorney General (Revised Estimate).
Vote 14 — Office of the Director of Public Prosecutions (Revised Estimate).
Vote 15 — Valuation and Ordnance Survey (Revised Estimate).
Vote 16 — Civil Service Commission (Revised Estimate).
Vote 17 — Office of the Ombudsman (Revised Estimate).
Vote 45 — Increases in Remuneration and Pensions.
Vote 10 — Office of Public Works (Revised Estimate).
I am glad to introduce the 1994 Estimates for the Finance group, including the Office of Public Works. The Estimates amount to a total of some £546 million, of which over £138 million is accounted for by the Office of Public Works. There are many aspects of these Estimates and I look forward to a constructive and informative discussion. For my part I shall endeavour to provide any clarification that members of the committee may require. Before turning to the main Votes in the Estimates I will refer to our recent economic progress and the overall position of the public finances. Some months ago we had a full discussion in this committee on the economy, so I shall only make a few remarks.
Over the three years to 1993 economic growth averaged 3.25 per cent per annum, compared to an average of about 0.5 per cent per annum for the EU as a whole. Last year inflation averaged 1.5 per cent, maintaining the good performance of recent years.
Employment has held up well, in spite of the difficult international environment of recent years. According to labour force survey estimates, non-agricultural employment increased by 16,000 in the year to April 1993. This is an increase of over 1.5 per cent and compares favourably with the EU, where total employment fell by almost 1.75 per cent in 1993.
On the budgetary front, the general Government deficit was 2.75 per cent of GDP last year, well within the Maastricht guidelines. Only one other country, Luxembourg, was within the guidelines. In the current year the economy is set to expand by 4 per cent, the best performance of any EU state. Consumer prices should rise on average by 2.25 per cent.
Employment growth of over 20,000, inclusive of special schemes, seems well within reach. This view is supported by trends in tax revenue and by movements in recorded unemployment in the first quarter. It is clear that the underlying trend in unemployment has been improving for some time. In consequence I expect unemployment this year may average some 285,000 or more than 9,000 down on the average for 1993.
With the balance of payments in substantial surplus, the budget aggregates moving in line with forecasts and reasonable expectations of a strong competitive position, Ireland is well placed to benefit from any upturn in the economies of our trading partners. There are some indications based on recent data from Commission Vice-President Christophersen, who said the prediction for EU growth for this year would be revised from 1.25 per cent to 1.6 per cent and predicted EU growth of 2.5 per cent next year.
As regards the overall state of the public finances I am glad to be able to say the underlying improvement in evidence since 1986 is being maintained. Developments so far in 1994 have been satisfactory. Revenue inflows, even allowing for a number of positive timing factors, are especially reassuring. This trend suggests a growing sense of confidence throughout the economy.
Given the overhang of Exchequer debt, prudent management of the public finances will remain crucial to our success for several years to come. I do not believe we can move away from the types of policies followed for the last seven years. I can assure the committee the evolution of both spending and revenue will continue to be monitored closely as the year progresses and as we plan for coming years.
Fiscal discipline has enabled achievement of economic growth throughout a difficult phase of the international economic cycle. It is essential to continue this discipline to ensure Ireland reaps the full benefits of the emerging international economic upturn, which is being forecast by the IMF, the OECD and the EU.
There was some comment recently that Government expenditure was rising unnecessarily. The implication is that Government policy has produced high levels of public spending which must be financed by high levels of taxation. The charge that there is insufficient control of expenditure is not borne out by the facts. Comparative figures for the EU show quite unequivocally that the Government has made significant progress in bringing order to the public finances and it has continued to maintain that order.
With regard to the Exchequer's borrowing requirement - the balance between revenue and expenditure - the record is clear. Our general Government deficit has been below the criterion of 3 per cent of GDP set in the Maastricht Treaty each year since 1989. This year's budget estimate is 2.7 per cent.
The purpose of maintaining this desciplined approach to the public finances is to provide the low inflation, low interest rate environment necessary for sustained growth and investment. The results have been impressive, as the economic data indicate. Since this is the morning when the Central Bank report was published and the country has received all the data, there is no necessity for me to go through all the indicators. Suffice to say they are all satisfactory.
We must not be complacent about the scale of the unemployment challenge we face, because it is still our big difficulty and neither this committee nor I would want to be complacent. Nonetheless economic growth has provided significant additional employment opportunities and we all hope that continues. The Government has no intention of allowing these hard won improvements to slip away. We are determined to continue maintaining proper control of the public finances in the future.
I turn now to the Estimates for 1994 for the Finance group of Votes, the subject of our meeting. The group comprises 15 Votes, including an additional Vote, Vote 45, dealing with increases in remuneration and pensions. This latter Vote covers the 1994 cost of the pay increases provided under the Programme for Competitiveness and Work, was agreed some months ago. In total the group comprises a net provision of over £546 million.
Vote 2 covers the Houses of the Oireachtas and the European Parliament. The Estimate, at just under £27 million, is virtually unchanged from last year. While there are increases in many of the subheads the overall Estimate does not show an increase. This is mainly because of exceptional costs in 1993 associated with termination allowances and superannuation payments for Members who retired or lost their seats at the last General Election. The 1994 allocation for these elements is £1.3 million below the 1993 outturn. I will refer in my later comments on the Office of Public Works Estimate to the major programme of works envisaged for the Houses of the Oireachtas.
Vote 6 is for my Department, the Department of Finance. The Estimate amounts to nearly £43 million, more than double the 1993 Estimate. The increase arises mainly in two following areas.
The major change in a new provision of £20 million for expenditure under EU initiatives-this has required a new subhead in the Vote. The initiatives cover development programmes supported by the EU. The provision is being made in the Finance Estimate pending later decisions on allocations between Departments. Also, administrative costs of the Department have risen, mainly because of salary increases and increments in 1992 and 1993. If these elements are taken out of the picture and account is taken of allowable additions, the figures show a 2 per cent reduction on 1993. This result is in accordance with the administrative budget requirements.
The Estimate for the Office of the Revenue Commissioners is over £134 million, an increase of £3.9 million on the 1993 outturn. The bulk of the Estimate, over £110 million, provides for pay and allowances for approximately 6,100 staff. The completion of the Single Market on 1 January 1993 necessitated major administrative and legislative changes. The Commissioners successfully introduced and took responsibility for the administration of the vehicle registration tax, the collection of trade statistics and the VAT information exchange system. The Custom and Excise service was also reorganised, with greater resources being allocated to prevention of drug smuggling.
Vote 15 provides for the Valuation and Ordnance Survey Office. The net provision of £8.8 million shows a decrease of 6 per cent on the 1993 outturn, due mainly to an increase of £0.5 million in receipts from sales of maps.
I have already referred to Vote 45 on increases in remuneration and pensions. The provision in this Vote is £85 million. This allocation covers the cost in 1994 of implementing increases negotiated in the pay agreement which forms part of the Programme for Competitiveness and Work. The new pay agreement covers a period of three years and provides for general increases, which, while totalling 8 per cent overall, will not add more than 7.5 per cent to pay costs over the period of the programme.
In the context of the new pay agreement, a mechanism had to be found for dealing with public sector claims which had not been processed to finality under the local bargaining clause of the Programme for Economic and Social Progress.I am pleased that the framework which has emerged takes full account of costs and their impact on the Exchequer. Any agreements reached must result in savings and in improved quality of service. I am happy to report that discussions with public service unions on new machinery for determining pay are now at an advanced stage and it is hoped to have new arrangements in place at an early date.
Finally, I turn to Vote 10 in respect of the Office of Public Works. The total amount sought for the Office of Public Works is £138.5 million, an increase of 34 per cent on 1993. This increase is in the main due to the Government's decision to provide an additional £20 million towards capital developments at the Ship Street buildings at Dublin Castle and at Collins Barracks, Dublin.
A sum of over £82 million is sought for the accommodation programme, by far the largest programme in the Office of Public Works's operations. Included in this sum is over £41 million for capital building works. This covers the cost of erecting new buildings as well as adapting and refurbishing others to meet the State's accommodation requirements.
The Government remains firmly committed to the decentralisation programme and in 1993 substantial progress continued with the completion of all the buildings in the first two phases of the programme. The final project in phase two, Limerick, was occupied by the first tranche of staff in June 1993. When fully occupied this will mean that over 2,700 staff will have been moved to 12 locations throughout the provinces. Phase 3 of the programme is now well under way.
Deputies will be aware from recent announcements that the Government approved proposals to provide additional accommodation for both Houses of the Oireachtas within the Leinster House complex. Planning for the two projects involved is proceeding with a view to commencing work on the Fisheries Yard development early next year.
The National Parks and Wildlife Service programme accounts for expenditure of over £10 million. This includes the cost of projects which will be part funded by the EU Structural Funds for tourism related projects. It is essential to provide the general public with opportunities to experience our natural heritage at first hand. This applies also to foreign visitors, many of whom come to this country to experience our natural environment.
A further programme provides over £7 million for the management and development of the Royal and Grand Canals, the Shannon navigation and the newly restored Shannon-Erne waterway. In all the network consists of some 700 kilometres of publicly managed inland waterways. All this system is navigable, except for the Royal Canal in Dublin city and between Mullingar and the Shannon. The Shannon-Erne waterway, formerly the Ballinamore-Ballyconnell Canal, links the two principal navigations in this country. The waterway has been fully restored and was formally opened earlier this week. The waterway will act as a catalyst for tourism and general economic economic development in Counties Leitrim, Cavan and Fermanagh.
A sum of over £17 million is sought for the programme for national monuments and historic properties. The committee will be aware that the Commissioners of Public Works have recently acquired Trim Castle, County Meath; Castletown House, County Kildare and the Main Guard in Clonmel, County Tipperary. The Government is committed to restoring these important sites.
Another programme of the Office of Public Works concerns the future development of Dublin Zoo. A comprehensive plan for the zoo has been completed and is being considered by the Government. A nominal provision is made in the Vote to allow for some State support for the zoo should the need arise.
The administration of the Office of Public Works gives rise to a provision of over £21 million. This covers staff salaries and other expenses and is governed by the administrative budget agreement. There are other Office of Public Works programmes which time does not permit me to cover. The Minister of State at the Office of Public Works is unavoidably absent today on Government business out of the country. He asked me to extend his apologies to the committee. I shall be pleased to respond on Office of Public Works matters later in the meeting.
I conclude by thanking you for your attention. I shall be pleased to hear the views of the committee and will do my best to answer any questions.
Like the Minister, I wish to comment on the general economic situation before asking questions about the Estimate.
If I might use an analogy about the current state of the economy and its prospects of substantial improvement, it is like a motor car travelling along and the Government, instead of steering the wheel and driving the engine, is a front seat passenger enjoying the view and basking in the reflected glory of good weather indicators such as Central Bank reports and ESRI forecasts. I do not detect any Government economic strategy for the economy from now until the end of the decade.
Public opinion is lagging behind in appreciating the new crossroads for the Irish economy. The changed circumstances and prospects of the economy mean there is a real choice facing the Government and the people in terms of the economic strategy we can take between now and the end of the decade. In the 1980s when we spoke about tax cuts in a particular area or on income it applied a corresponding reduction in public expenditure or an alternative tax increase. In other words, tax reform meant broadening the tax base by taxing another area, such as property. That is no longer the case. From now to the year 2000 we can talk in sensible terms about cutting taxes by about £1 billion without cutting public services and without applying tax increases in any other area. That is true on the basis of forecasts from the ESRI, independent brokerages, the OECD and the Central Bank and we should update political debate to that new level of awareness.
Unfortunately, however, that opportunity may not be presented to the person working on the factory floor. When one looks at the record of the Government one can see that from 1986 to 1990 real progress was made. Excluding debt service costs, from 1986 to 1990 the cost of public supply services fell by 1 per cent. However, over the period 1990 to 1994 the cost of supply services increased by 42 per cent and inflation was 11 per cent for that period. The cost of supply services went up by almost four times the rate of inflation. The Minister did not refer to recent criticism that this is a tax and spend Government, although according to the figures that is exactly what it is. Over the period from 1990 to 1994 — when public spending on supply services went up by 42 per cent — growth in the economy was only 26 per cent. If the Government keeps up this performance there will be no scope for tax reductions on income simply because it will all be absorbed, not in marginally improving public services but by greatly increasing public expenditure.
My party believes it is possible to plan for reducing taxes in the period from 1994 to 1999 by 3 per cent of GNP or, in 1994 terms, by about £1 billion. The secretary of the Commission on Taxation has costed how this could be done. However, it will only happen if there is a political strategy underlying such Government action. If such tax cuts were applied to income one can envisage the impact it would have on improving our competitiveness and enhancing our job prospects. By reducing that famous tax wedge on employment the cost of creating and sustaining a job would be greatly reduced and the non-wage element of our labour costs would also be reduced. There would be reduced demands for pay increases because net pay would be increased through tax cuts. Therefore, it is possible to have a consistent target of such tax cuts at 3 per cent of GNP while also reducing the debt to GDP ratio to 60 per cent by 2000.
There is no escape from the fundamental reality of sound economics, which is productivity led growth based on competitiveness. A central theme of such a move must be reducing taxes on work. The Tánaiste said cutting taxes will lead to a two tier society but I do not accept that. Cutting taxes on work will increase the numbers at work which is the greatest political, economic and social need today.
Exchange rate policy has not been given adequate public scrutiny. Over recent months the value of the Irish pound has appreciated against sterling; this morning one Irish pound is worth over 98 pence sterling. A number of serious questions arise about the future of our currency but this Government has not attempted to answer them. Since the EMS was de facto abolished with the introduction of the 30 per cent bands, we have a floating exchange rate and we are responsible for it through the Government and the Central Bank. Yet we have no policy to manage that rate. This cannot continue.
The value of the Irish pound is critical to all that is currently good in the Irish economy. The most important factor in giving us this growth is low international interest rates. Decisions in the Bundesbank underlie growth in fixed investment, consumer confidence, a reduction in the savings ratio and the level of consumer spending. We will lose competitiveness if our currency appreciates despite everything. Exporters are already complaining about the loss in competitiveness. There is also no escaping our interdependence with the UK economy. Forty-one per cent of indigenous exports go to the UK and only 35 per cent go to the rest of Europe.
Have we learned any of the lessons arising from the devaluation déb�cle? The most important one was that the markets could and did override the view of the Central Bank. The Central Bank and the Department of Finance thought it was possible to have the Irish pound valued at £1.04 to £1.06 sterling and maintain that value through high interest rates and overnight rates of almost 100 per cent. The markets taught them the lesson that that could not be done unless one was prepared to throw good money after bad.
What will happen if there is a single currency and Britain does not participate? Given Britain's poor balance of trade and balance of accounts, what will happen if sterling depreciates in the years ahead? The fundamentals of the Irish economy may indicate our pound could appreciate considerably against sterling.
Within these Estimates I am calling for the provision of a currency council because, due to the reticence of the Central Bank in debating these issues, there is no transparency. The council would comprise the NTMA, the Department of Finance and experts from home and abroad. It will decide on the best trade weighted strategy for the Irish economy.
One of its clear messages in the short term is that if only 6 per cent of our national debt is denominated in sterling and we have such a trade weighted link with it, we should increase the proportion of our national debt in sterling. Then in the event of a future crisis there would not be such a dichotomy between the thinking and requirements in the public service and in the exporting and trading sector on the national debt and the currency.
This is an accident waiting to happen. It will not occur today or tomorrow but it is inevitable, given the long term prospect of a single currency and the short term prospect of a drop in the value of sterling. We have seen the value of the Irish pound rise from 94 pence to 98 pence sterling. It will rise further and this will squeeze the margins of exporters even tighter.
The exchange rate policy is vital to our strategy on inflation, interest rates and the management of the public finances. When the Minister responds I ask him to give serious consideration to establishing an authority which would be transparent, give advice and encourage a national debate on this policy.
On the third banking force, the Department of Finance is currently studying a proposal to merge the National Irish Bank and the TSB. Undoubtedly a consultancy figure is included in this Estimate to pay Mr. Somers et al who are examining this proposal. We must ensure the lessons learned from the Greencore share sale déb�cle do not rise again. In the Greencore case the Department of Finance did not have adequate expertise in financial services. The public interest in the TSB is quite clear, the taxpayer must receive the best price in its sale, competition in the banking sector must be maximised and employment in the banks concerned must at least be maintained, if not enhanced.
The weakness in the proposal in the Programme for a Partnership Government to provide a new State bank merging the ACC, the ICC and the TSB was that there was no commercial rationale to the move. If these three banks were in the private sector no one would seek to join them. They do not form a homogenous group or make a natural fit. They all had plans for growth which require injections of equity but we all know the taxpayers are not in a position to fund such a capital requirement. There is no regional or geographic harmony between these three banks and the management of the ACC and of the TSB are opposed to any such merger. If we reflect on the £70 million writen off when winding up Fóir Teoranta, there is not much encouragement for another political State bank, which might be seen as a lender of last resort.
We have not seen the details of the proposed merger between NIB and TSB, although the Dáil must ultimately give approval to it. The proposal seeks to exclude the prospect of involvement by a different bank or building society. This is impossible to justify, not only in terms of maximising the price but in seeking the best strategic future for our banking services.
The Minister of State, Deputy Fitzgerald, is not here today but I have some comments on the National Development Plan. I am suspicious about the reasons for delaying the publication of the Community Support Framework, arising from the implementation of the national plan, until after 9 June. The delay is inexplicable because sources in Brussels say agreement has been reached between the Department of Finance and the EU Commission on the contents of the Community Support Framework. Are we being kept in the dark?
The Government should tell the electorate everything before 9 June so that they will know which projects are being shelved or dropped and the consequences for the taxpayers of picking up the shortfall of over £700 million in the funding to implement the plan. The only constant factor in this debate has been the consistently false claims by Government Ministers.
The Government should also clarify whether the country has to be subdivided to maintain eligibility. Because of the 75 per cent GDP per capita level necessary to get objective 1 status, the country may not be able to maintain that level of forecast growth, given the predictions. This means objective 1 status will apply to only certain parts of the country.
Vote 9 relates to the Revenue Commissioners. I am concerned at a recent decision by management in the commissioners to restrict overtime in the Customs and Excise division, specifically the national drugs team and the vehicle registration tax enforcement section. In 1992 agreement was reached for employees to do seven hours overtime in these divisions, so they would not work on an 8 a.m. to 8 p.m. basis. There was a flexitime roster.
This has stopped since 1 May and it has all the hallmarks of being penny wise and pound foolish. Last year between £50 million and £60 million worth of drugs were seized in the first year of operation of the national drugs team and over 1,600 illegally imported cars were seized, which yielded £2 million. The savings in overtime payments is a paltry £170,000. The illegal importation of drugs and cars is not on a nine to five basis. If the Government is serious about tackling this issue, it should intervene and ensure that enforcement is constant, effective and self-financing.
There is under provision in Vote 8, the Estimate for the Comptroller and Auditor General. Only £120,000 is provided for consultancy services. Given that public expenditure is £10.5 billion, these value for money audits should be greatly extended. A study should be undertaken in two specific areas. A league table of all local authorities and health boards should be established to ascertain which are the most cost effective and which give the best value for money, so that the worst can be encouraged to achieve the results of the best. The Government could give incentives to local government to become more cost effective and efficient.
The most significant development in public expenditure over the next ten years - this was highighted in the ESRI report- is the change in our demographic structure. There will be a one quarter reduction in the number of children at school between 1994 and 2004 and this will have direct implications for health, social welfare and education expenditure. We should now cost the dividends due to the taxpayer as a result of fewer child dependant payments, reduced paediatric care in hospitals and fewer classroom requirements. We should also determine the cost of additional care for the aged. Without a planned approach lobby groups will maintain expenditure in their areas and we will not have proper provision for the aged. This requires planning and, therefore, I ask the Minister to ensure that his Department undertakes a comprehensive study, along the lines of the ESRI report, of the savings to the taxpayer because of the change in our demographic structure.
At this time of year I am always reminded of the perpetual role of the Opposition spokesman. It is akin to the Minister driving along a country lane, when suddenly a mangy collie jumps out in front of the car which could give the Minister a fright or could cause an accident. However, it has as much significance vis-�-vis the workings of the engine and the direction of the car as the efforts of Opposition politicians in what happens here.
On the Vote for the Oireachtas I do not care if another £10 million is spent on elaborate proposals to fill in more missing teeth on the other side of the road because it will not do any good one way or the other. There are some drawbacks to it. The Oireachtas is a sham because it does not take itself seriously as a body which is separate from the Executive. It does not fund its activities properly, carry out the work it is supposed to do, research the material it processes, or exercise its judgment in an informed way. This is a failure of Parliament. My party pointed out on many occasions that the Seanad is a failure, but the Dáil is equally a failure as an institution because it is not working. Despite the improvements made by having committees, such as this one, the Dáil is a failure. Anyone who participates in its workings must be strongly aware of its shortcomings as a democratic institution.
Instead of giving money for buildings for Senators, TDs and their secretaries, it should be used for the enrichment and development of the legislative process. We need to do this because our Parliament is failing to carry out proper legislative functions. We are incapable of discharging the functions given to us under the Constitution. For example, in 1972 this Parliament voted to allow Ministers to implement European regulations and directives by statutory instrument. At the beginning of this Dáil, after the last general election, a foreign affairs committee was set up to review that delegated legislation. People, like me, protested that this had nothing to do with foreign affairs and that expertise on Bosnia and East Timor did not qualify me or anyone else to examine if a directive on food additives was being properly implemented in Irish law. However, I was ignored because those who made the decisions about the Oireachtas thought it would be neat if the old EC committee could be merged with the foreign affairs committee. It would be neat, and administratively convenient and I have no doubt someone in Merrion Street was happy he saved some money by that little expedient.
No European secondary legislation, draft directive or statutory instrument has been considered in the lifetime of this Dáil or scrutinised by any committee. This Parliament has failed in its duty, which is set out in statute and implied by the Constitution, to ensure that what happens in Europe is properly translated into Irish legislation. A serious Parliament would do what the Danish parliament did and establish a committee to liaise with the European Communities and to look at draft EC directives before they are translated into Irish law or adopted by the Council. A serious Parliament would have input when it mattered before the directives became binding on Ireland and it would call Ministers to account for the manner in whch they were or were not implementing EC law in Ireland. However, this Parliament makes a pretence in setting up such a committee, but it does not make any effort to implement what is pretended to be its function. That is only one example of how pathetic the Oireachtas is in carrying out its functions, but there are many others.
We do not have a system of Green Papers and White Papers followed by legislation. We do not have a system where Members of the Oireachtas, rather than Government backbenchers or members of the Opposition, have a serious input into legislation. I accept that the committee system has, on a few occasions, worked reasonably well because of Ministers' attitudes in the course of legislation. However, the Oireachtas is a failure in the vast majority of cases because it suits the Government of the day to keep it in suspended animation and to keep it as a non-functional Oireachtas where it cannot bother the Executive or make any trouble.
The Comptroller and Auditor General is responsible to the Oireachtas and not to the Government. Who in this House feels he is answerable to and in communion with the Parliament in the same way as the Ombudsman? I do not believe anyone thinks such a relationship exists and this is a big problem. To underfund the Ombudsman, as Deputy Yates said, is to tear up part of our own function because the Constitution envisages that he will report to us and that we will act on his reports and recommendations. The Comptroller and Auditor General's functions, through the Committee of Public Accounts, are more obscure and less effective in terms of controlling public expenditure and dealing with value for money than they ever were, even when one takes into account recent statutory changes.
When the Ombudsman Act was put in place in 1980, it was envisaged that the two Houses of the Oireachtas would confer among themselves and that each, by a separate resolution, would nominate one person to be appointed by the President who would be responsible to the Parliament, not the Government, for carrying out the functions of the Ombudsman and to ensure the administrative services of the State were properly conducted. The Ombudsman was made answerable to Parliament not to Government. A lot of effort was made to ensure that function was preserved in the dark days post 1987-89 and 1992. The independence of the Office was the subject of a continuing fight between the Department of Finance and the Ombudsman's Office in relation to resources. However, that fight is really between the Department of Finance and the Oireachtas. The Ombudsman is only spending money doing the bidding of the Oireachtas and reporting to it.
In that respect, it is unacceptable that the civil servant in the Department of Finance in charge of the public service division should be made Ombudsman. I will say that again on Tuesday when the matter comes up in the Dáil. It is about as reasonable as making a traffic warden a judge in the traffic courts or making the Garda Commissioner Director of Public Prosecutions. It is wrong in principle because the purpose of that office was that it should be responsible to Dáil Éireann, not to the Executive, and that it was to be occupied by someone who was independent in function and appointed by the Houses of the Oireachtas, not by the Government.
It is obnoxious that the Government decided at the Cabinet table who would be a worthy successor to the Ombudsman, instead of having a consultation process among the parties in the Dáil. It had no more right to decide that than to decide who should be the head of the Bank of Ireland. It has no function in the matter, it is not and never was a Government decision. Yet it nominated the head of the public service to tell the Dáil how it is functioning and that is wrong.
I want to state clearly and unambiguously where my party stands on a third banking force. We believe there must be more competition in banking and that it can only be done by encouraging a third player to break up the duopoly which is keeping up high margins and low efficiency in the banking sector. We also believe — we make no apology for this —that the State has no business and no interest, financial or otherwise, in taking a minority shareholding in the proposed third force. That is an ideological requirement and is not based on any sound commercial or political judgment.
The Taoiseach said yesterday — when accusing me of being simple-minded, which I took as a compliment — that if you had a minority shareholding in a bank, you could influence its policy because you would be at the board table. If that is the case and if it is justified, I suggest he buys a minority shareholding in AIB and Bank of Ireland. If that is what he believes, he should put up his money and try to influence the real players. What will happen is we will have a politically influenceable bank, which will make bad decisions. As Deputy Yates hinted, it will become a latter day or a resurrected Fóir Teoranta with Labour Party Deputies asking for assistance for every mutilated constituency business on its last legs — a type of hospice for dying enterprise. That is what will happen if the State takes an interest in the third banking force. We must avoid that. If it is to be commercial and compete and take on the big boys in any real sense, it will have to do so on its own merits, without the taxpayer being the patsy as a minority shareholder and without the dubious advantage of State appointed directors making their typical contribution to private business.
The State, which owns a fertiliser factory with an accumulated debt of £180 million, does not deserve to be trusted to run a bank. If we go back to the déb�cle of the Land Commission, we saw the incapacity of people to turn the ship of State around when it was going in the wrong direction. Given the accumulated debt in Bord na Móna, the idea that the State would decide to go into the banking business as a serious competitor with AIB and Bank of Ireland, even as a minority shareholder, is crazy and should be stopped. If Fianna Fáil has any guts, it should stand up to the Labour Party and say it is a stupid idea, even if it is reneging on one of its manifesto promises or provisions in the Programme for a Partnership Government.
This country does not want to blow another 40 per cent of whatever the capital sum would be. We do not want to be pressurised by National Irish Bank or anyone else to provide money on capital calls when a bank gets into difficulties because it is competing with the big fellows. We do not want the State negotiating with the Irish Bank Officials' Association and having its arm twisted to match the opening hours of existing banks. It is a delusion to believe that going along those lines will help in the slightest. If the State takes an interest in this bank, it will get deeper and deeper into trouble. We should get out of things we make a mess of and concentrate on governing the country.
Am I right in believing that in recent years senior people in the Land Commission had their salaries commuted? Did one individual, drawing down a High Court judge's salary, have it commuted for a large capital sum? Could the Minister indicate what the individual received for doing nothing and for retiring early? This is an example of what happens when the State gets into difficulties when trying to disengage itself from situations in which it should not have been in the first place.
I refer to remarks which were scripted, but not delivered, by the Minister about this not being a tax and spend Government. In the previous two budgets, public spending increased by 17.5 per cent and during the same period inflation hovered around 2 per cent per annum. Taking the two years together and an average of the inflation rate, there has been a 12 or 13 per cent increase in public expenditure in the past two years.
I agree with remarks by Dr. de Buitléar, the former secretary of the Commission on Taxation, that if this Government had, as a priority, a change in the tax system and if it did not regard taxation policy as the ultimate political residual — when one decides what one can afford, one then addresses taxation — we could instead have a system whereby if at the beginning of every budget we took what the tax rate and take would be the following year, we could then see what expenditure cuts or increases could be made. We should invert the process so that taxation would determine other issues, rather than the other way around, which seems to be the policy, especially when the Labour Party is in Government, that is, taxation is the residual, the balancing item in every budgetary process. By confining Government expenditure to a rate matching real growth rates over the next three years, we could generate a sum close to £1 billion to apply to tax reduction. That is a choice we can make if we are serious, but it seems that we are not.
In the context of the missing Euro billions, it is becoming clear from statements made by the Minister for Transport, Energy and Communications, Deputy Cowen, and the Taoiseach, but not by the Minister for Finance, that it is intended to make up any shortfall in the original plan by using increased public revenues from taxation or from some other source, and that we are stuck with that plan now even though we began on the basis that there would be no shortfall. Because of governmental pride we are now committed to paying for projects from tax revenue which we would never have thought of if we did not have Euro-funding to start with.
There would be no movement for a light rail transport system for Dublin if it was not being funded by Europe. There would be no appetite for a peat fired power station in the midlands if European money had not been available. No Irish Government would have decided to raise the money itself for that project.
What are people in the midlands to do?
What are the people in Dublin to do without their light rail transport system? The framework for expenditure agreed in the national plan was based on the proposition that it would be funded from Europe. It is completely wrong to say that it does not matter when that funding evaporates. To say that we will get it from somewhere else is drawing in all the resources that could be used to turn Ireland around and make it into an enterprise economy between 1994 and 1999 instead of blowing it on a so-called flagship project to save the political faces of Ministers. That is my point. Deputy Connolly may disagree with it but I believe in it very strongly.
The time has come to start the budgetary process every year with a statement as to where tax will be spent. At the end of the process we can see where that leaves us in relation to public expenditure. If we have that attitude, as Dr. de Buitléir said, and he is absolutely right, we could transform this economy into a pro-enterprise one within three to five years. If we do not do it, at the end of the 1990s when all this Euro-money has been spent and when Ireland has been, as Deputy Yates said, taken out of the league of receiving European money, our problems will have been compounded rather than cured.
I wish to reply to some of the points made by Deputy McDowell about the role of competition and the banking sector. Before I do that I wish to take up his very interesting point concerning the role of the Oireachtas. It is as well to use this forum to examine a question like that as it is to rehash the debate on the Finance Bill, although I could probably do that with some profit at the moment. There is a feeling that as we have a panoply of committees in place and have engaged in major Dáil reform, the place is functioning more efficiently, that the quality of scrutiny of legislation is much better, that the throughput of legislation is far higher and that we have made major steps forward in terms of Dáil reform.
The opposite is the case. The committee system, such as it is, has exposed the kind of parliament Dáil Éireann is. The fact of the matter is that all the power rests with the Executive. It matters little what the Opposition says on most questions because the Executive decides at the end of the day. Ironically, one of the reasons the Opposition is shackled on this one is because of the position taken up traditionally by the Leader of the Fine Gael party. Deputy Bruton who, when it was neither popular nor profitable, advocated Dáil reform. Deputy Bruton now feels that as we have got the cosmetics of some Dáil reform he must be seen to row in behind it. That is not the position, because the limited reform has not lent itself to better scrutiny of legislation or to more participation by Members of the Dáil. It has not done anything to rebalance the dynamic between Government and Opposition.
The committee system has turned out to be a very effective way of tying down the Opposition in a number of different rooms at the same time with limited or in some cases no back-up to enable them to contribute in a meaningful fashion to measures proposed by the Government with the support of the Civil Service. The resources imbalance between Government and Opposition in terms of making the committee system work threatens to undermine its very concept. In addition it has led to the unprecedented phenomenon since this Parliament first met, of Members absenting themselves on a regular basis.
Look at the voting pattern in the House now for any given measure and it will be seen that no matter how trivial or important, one third of the Deputies are absent on any vote or any given day. This is beginning to be institutionalised. If Fianna Fáil and Labour Deputies, because of the extent of the Government majority, choose to spend their time looking at cracks in footpaths, looking up at public lights in their local constituencies, attending funerals and glad-handing the populace, then Fine Gael Deputies, not unreasonably, feel that Opposition Deputies must compete. The effect has been a negative one for the work of this Dáil, so it is time, now that Deputy McDowell has raised the question, to look at the efficacy of the functioning of this Dáil in the light of our experience of the committee system.
I do not resent that somebody like yourself, Chairman, has effectively been given junior Minister status as a result of your chairmanship of this committee and that of your hard working colleagues who must preside over this tedium in other committees. You are quite entitled to it, but I do not think that Dáil reform is about rewarding loyalists on the backbenches of the Government parties. It is time we looked at how it has been functioning and at a lot of what we have taken for granted up to now. If the Leader of the major Opposition party, Deputy Bruton, was to take that view we might make some progress on it.
Deputy McDowell raised an interesting point about the merits of investment in buildings compared to investment in people and technology. Given the complexity of modern society and of some of the legislation that comes before this House, it is an absurdity that members of the Opposition are required to respond at very short notice. That is one of the effects of the committee system. For example, the Consumer Credit Bill was published and would have been enacted except for a hitch in the Attorney General's office in terms of amendments. If the Attorney General's office had been able to respond, the Bill would have been enacted before the many groups out there concerned with consumer credit became aware of the fact that it was published. When it was delayed, unintentionally, for four weeks, we were deluged with submissions from different groups who have inputs to make to the Consumer Credit Bill.
Breaking the House up into a number of committees and keeping the Dáil Chamber running at the same time in a House with a limited number of Members has meant that more legislation has gone through, but the quality of its scrutiny is less than under the old system. If there is to be an improvment there must be rebalancing of resources between Government and Opposition. Perhaps that £10 million targeted for buildings would be better spent on providing quality research and technological aids for Members of this House if it is to do its job as the electorate rightly expect us to do.
On the question of the third banking force, Deputy McDowell argued for competition in the banking sector but that competition ought not be provided within the State sector. It seems that it is Deputy McDowell who is being ideological rather than any proposal that might be under consideration by the Department of Finance. I do not think the Department of Finance is seriously considering any proposal for a third banking force in the State sector although it was a pledge in the Government manifesto.
What the Minister for Finance and Fianna Fáil mean by competition in the banking sector and what the Labour Party meant, at least at the time of the formation of the Government, is different. If the Minister was to switch ministries with the Minister for Enterprise and Employment, Deputy Quinn, and no public statement was made to that effect nobody would notice for a couple of years. When the Government was being formed the Minister for Enterprise and Employment, Deputy Quinn, being the author of the idea, professed to advance the notion of the third banking force in the State sector. What Fianna Fáil means by it now is that a new mini commercial bank will be developed along the lines of the major commercial banks, and it considers that competition. It will not work.
Deputy McDowell has not made a good argument as to why a third banking force in the State sector would not work. If one looks at the most successful economies in the world — Japan or Germany — the banks have a definite role in industry and in driving industry. They are required almost by state policy to do so. In France and Italy, for example, major state banks play a major developmental role in the economy. I wonder if it is true that a third force in banking in the State sector would not be effective. Why is there such a campaign against the idea? The commercial banks have run a good campaign. As an admirer of the dedicated civil servants in Merrion Street, I regret that the banks seem to have convinced them of their argument. I understand they even threatened the Minister for Finance that there would be large scale redundancies in the banks and additional use of technology if he was to proceed with allowing competition through a State bank.
The cartel — Deputy McDowell might refer to it as a duopoly — exists to the detriment of the consumer, especially small businesses. There is not real and significant competition in the banking sector. There is acquiescence in that the banks use the Irish client to make inordinate profits while they make sometimes imprudent investments abroad for which the Irish client is expected to pay. At the same time making seed capital or working capital available to industry is unheard of and unthought of in the Irish banks' philosophy unless it is a blue chip or an asset backed investment. As a result, the pro-enterprise society that Deputy McDowell argues for is not facilitated or encouraged by the banks.
Deputy McDowell seems to have no difficulty about the taxpayer being required to underwrite subsidies for small enterprise on loans provided by the commercial banks.
I do.
I am glad to hear it, because so do I. However, when one is confronted by small business which cannot get loans any other way questions have to be raised. There is a track record in this regard on the continent. We have acquiesced in the cartel operated by the high street banks for too long and the Minister ought to use this opportunity to see how we can bring about real competition in the financial sector.
I regret the way matters are going at the moment. The TSB is a ready made vehicle and would be the cornerstone of any third force in banking. Whether the Minister writes a cheque to the TSB for £100 million is of no significance because he would be writing the cheque to himself. All the money could be invested in terms of providing a bank that would not only discharge a commercial function but would have a developmental role in our industrial infrastructure. The matter has not been seriously debated and one of the reasons is that the party who advocated it in the first place now refuse to make any arguments for it. One cannot get the Minister for Enterprise and Employment, Deputy Quinn, away from the chambers of commerce circuit to make an intellectual or philosophical argument about anything. As a result there is no difficulty in Fianna Fáil having its way on this issue and we will be the poorer for it.
The third banking force would not be a Fóir Teoranta or a hospice for sick industry. It is Deputy McDowell's ideology — I know he was not in the Progressive Democrats at the time — used by Fine Gael and Fianna Fáil that argued for and created Fóir Teoranta and argued for its continued existence when it was abolished. It was a suitable vehicle for patronage in local constituencies when business ran into trouble but it was abused. We are not now talking about a rescue agency for sick industry, rather, we are talking about a developmental vehicle that would assist the development of small enterprises. I agree with Deputy Yates on the exchange rate policy. It is regrettable that a year and three months after the currency crisis the Minister for Finance has not told us his policy on exchange rates. We have again seen — sooner than some of us thought — pressure on Irish exporters as a result of the changing exchange rate between the punt and sterling. The Minister refuses to indicate which route he will take. There is little point in continuing to argue for, although we should continue to advocate a greater share of our exports going to countries other than Britain. More than one third of our exports are to Britain. We saw how vulnerable they were during the last currency crisis and, as yet, we have no clear decision from the Minister whether he is tracking the Deutsche Mark or following sterling or what his general approach is.
I do not know what lessons were learned from the review of the currency crisis. A committee of two or three wise men was set up to examine the currency crisis but the Minister has not published its report. It may be understandable that he has not done so but I would have thought that at least its findings ought to be allowed inform the public debate. It is up to the Minister to tell us its conclusions. He has not done so and we do not know where we stand on the matter.
I also agree with Deputy Yates on the question of concealing the Community Support Framework as agreed in Brussels between the Department of Finance and the Commission. It is unconscionable that a Government can conceal something as important as the new Community Support Framework from public scrutiny merely because there is an election in the offing. I do not agree with the shortfall figure of £800 million. It took us six months to get the Government to admit that there was such a shortfall. When one examines all the "jig-acting" that the Government is doing with deflators and the years taken for currency values etc. the shortfall is just over £1,200 million.
It is absurd to argue that a national plan published on the basis of £1,200 million which is no longer there, will not impact on projects. Of course it will have an impact on projects. It is disgraceful that the Government continues to refuse to tell us how it is reconstructing that national plan to take account of this reality.
Many people in this city would like to know exactly the position in regard to a number of projects. The proposed light rail link to my constituency may not have been contemplated, as Deputy McDowell said, by a Government living on its own resources. However, it is precisely the kind of infrastructural project for which the Structural Funds were intended to fill the needs of urban commuters. One can scarcely move through this city on certain days of the week. We should encourage people to use a commuter system which is acutely needed, especially by low income families. What is the position in regard to that project? Will it be announced next week or is it facing the axe? What will happen, for example, if only part or none of the £70 million promised towards the Tallaght regional hospital materialises? Will the Minister for Health have to find that money in the health budget?
A sunroof.
We ought to be told the answer to that.
Will the Minister for Finance comment on the story in yesterday's The Irish Times concerning the eligibility of Ireland to maintain its Objective 1 status? Is the Government giving its blessing to the route being touted by Irish Eurocrats — I presume they are different from other kinds of Eurocrats — that the only way to maintain eligibility for Structural Funds for Ireland in the future is to excise the Dublin region. I find that unthinkable, considering how the transfer of funds have been meted out over the past 21 years between Dublin and the rest of the country. On average, those living in Dublin city have got 40 per cent lessper capita funding that the rest of the country. The bulk of transfers have gone to large farmers, not to farmers generally. The balance between large and small farmers is wrong. However, it is radically wrong between Dublin and the rest of the country. Dublin has been the neglected and disadvantaged area as far as the use of Structural Funds over that 21 years is concerned. Proposing the excision of the Dublin region, rather than looking at the criteria for eligibility, seems absurd. The Minister should say if the Government supports that approach.
The current criteria for Euro funds does not take economic justice into account. One must balance region with region rather than looking at disparities within regions. Ireland is regarded as a poor region within the European Union, but we have some wealthy people. Similarly, there are wealthy regions with poor people. The criteria must be examined in terms of acknowledging the extent of unemployment black spots within wealthy regions. One must look at the criteria for eligibility and use the unemployment factor as a criterion within that region.
This is a major question. The officials are right to plan for conditions if the anticipated economic growth over the period of the next national plan is achieved. Our traditional record of translating that growth into employment must also be examined. It seems that getting anything less than 3 or 3.5 per cent economic growth in this economy contributes no net additional employment. If the unemployment factor is not taken into account as a criterion for eligibility, the value of the system is demeaned.
Like Deputy Yates, I would also like to hear the Minister's comments on the ongoing Customs and Excise dispute. A number of people contacted me about the impact it is having, especially in regard to the importation of illegal drugs to the State by people who do not observe a 9 a.m. to 5 p.m. working day. Nothing seems to be happening on this matter and I have been denied the opportunity to raise it in the House.
We are proceeding to the question and answer session and Deputies Connolly and O'Keeffe have intimated they wish to ask questions.
On a point of order, I would prefer Members from the Labour Party to have the first say.
Deputy McDowell should not deal with absent friends like that. Speakers should confine themselves to the groups of Votes taken; Votes 1,6 to 9,11 to 17 inclusive, and 45 or do Members feel there should be a question and answers session with these Votes taken in order later? Is that acceptable to the Minister?
Yes.
On the role of the Oireachtas, the principal reason Members have not contributed on many issues in the House over the years is heavy involvement in constituency work. Without that involvement Members will not be re-elected. That is the case in every constituency. Intense competition within constituencies causes lack of involvement at Oireachtas level. The volume of constituency work is not as high in other European countries but in Ireland, Members always seem to be on call to the electorate. I agree with Deputy McDowell that many Bills before the House have not been examined in the detail they deserve but he will agree with my explanation for that. An ex-Member once told me, "young fellow, be very careful when you are in here; you can talk yourself out of it as well". I took his advice and have tried to balance both types of work. I have some reservations about the £10 million proposed for improvements. Public representatives are not as highly thought of by the public as when I was first elected to this House. Indeed, we could be partly to blame. We have not been consistent — I refer to all political parties — on many issues. Deputy McDowell has reservations about the proposed peat generating station. The Deputy cannot have it both ways because the members of his party in the Laois-Offaly constituency——
I said that these projects could not be afforded by ourselves alone.
It is all right until it hits the back yard of the members of the Deputy's party.
The light rail system is in my back yard.
I am long enough in the House to read a situation. This matter will have to be considered in detail to ascertain if it is financially appropriate. In my part of the country we depend on the activities of Bord na Móna who laid off almost 2,000 from its workforce and we have been trying to pick up the pieces since.
On the currency déb�cle, it now appears that our currency is on the open market as all other currencies seem to be going their own way. In this respect, the economy depends on the way in which we now manage our affairs. The recent legislation on examinerships is a cause for concern, especially to the financial institutions, because companies raising capital today are now seeking personal guarantees from their directors. When the background to all of the financial institutions in the country are considered, it is evident why it was easy recently for the banks to agree to 50p in the £1 in respect of another organisation.
An individual or organisation with muscle is now in a position to dictate payment terms to a financial institution. This was evidenced by the activities of a health board recently. One financial institution quoted the board £300,000 to deal with its account, but when the board shopped around the institution reduced this figure to £80,000. However, the ordinary man in the street, trying to survive in a business does not have that muscle.
In recent years control of interest rates was taken from the Minister for Finance and handed to the Central Bank. The bank has been slow to reduce rates on the inter-bank money market and so on. In view of this, should not the Oireachtas, the Government and the Minister for Finance take control?
While there must be more competition among financial institutions, I doubt if it will be possible to bring institutions together to create a third banking force. The ACC bank is a semi-State company but its performance has not been too good. Its charges are high and its profit turnover is not good. Why have these charges not been reduced? Deposits are State guaranteed and in some cases it is only paying a rate of interest of 0.5 per cent on these. This rate should be increased to 1.5 per cent.
It is suggested that the bank will borrow money from the Central Bank, using its inter-bank rate. This will not happen because the bank's deposits are low and in view of this how is it possible to reconcile a differential between 10 per cent and inflation rate of 1.5 per cent? This is an indication that the charges placed on individuals and companies today are making business very expensive.
The payment in respect of catering and bar staff employed by the House covers more than pay and, presumably, includes seating, food and so on? In this respect I compliment the staff who do an excellent job. Are the contributions from those who subscribe to these services, such as payments for food and so on, deducted from this amount or is this payment a subvention in addition to the amount paid by subscribers?
I compliment the Minister and the Government on the low inflation rate of 1.5 per cent and on our economic growth rate which is 0.5 per cent higher than the annual average growth rate in the EU. It augurs well for the economy and its management that we are one of the best performing countries in the EU. It is a performance based on the management of the finances of the State and I compliment the Minister on the trend under his guidance at the Department of Finance.
I look forward to expansion in employment and industrial development. The country is performing well and confidence is building up. There is an air of freshness in the economy attributable to the financial management of the country.
We have a very successful financial services centre, which is one of the best in Europe. There is strong foreign banking involvement in it. A great deal has been said about a third banking force. All the banks in the financial services centre are well established and recognised worldwide and they should be given an opportunity to participate in such a force. I have strong reservations about State involvement in this. We should look at the history of the ACC, ICC and Fóir Teo. The ICC and ACC should be the banking groups in the State to provide risk capital for development in industry and agriculture. Fóir Teo had to be wound up because of its over exposure. The ACC, which is backed by State capital, looks after selective customers, who are good business people and are not risks. It is not interested in risk business. This is not the direction a State bank should take therefore, I do not see this as being a successful business. Money has to be repaid, no one owes us a free lunch.
On the involvement of National Irish Bank with the Trustee Savings Bank, I am saddened we will lose the TSB by giving a present of it to the Australians. The TSB is a niche bank. It has a capital and a strong current value. It has excellent sites around the country and does an excellent job. When we had high interest rates early last year, it dealt sympathetically and courageously with many mortgage holders. There is a role for it in Irish society. Even though it is now in no man's land and there are questions about ownership and so on, the TSB is one of our outstanding banks and should be seriously considered. It has been given a great deal of publicity in the newspapers and many people have spoken glibly about it and its involvement with another bank. Every country has a niche bank and the TSB is our niche bank and we should retain it.
No matter how many banks we set up, the cost of money will not change because of the competitive environment. We have too many banks. Many towns with 10,000 or 11,000 people have four to five financial institutions providing competition. A State bank would be conservative as regards risk-taking and a third banking force would not introduce competition to the market place. While we may knock the Irish banking system, it has worked well and has given a good service to Irish society, industry and agriculture. Much has been said about the Programme for a Partnership Government but a Government's programme is only aspirational.
If the banking system is not functioning well, that should be addressed by the Central Bank. There is no more conservative organisation than the Central Bank whose statements from time to time have been conservative and contained warning after warning. Many credit squeezes have been brought about by the financial tightness and policies adopted by the Central Bank and not by our domestic banks. The bottom line is one must pay for what one gets. I do not see any role for a third banking force as there is already plenty of competition. It is easy to borrow but is hard to repay.
On the strength of the Irish pound vis-�-vissterling some 35 to 40 per cent of our goods go to the UK market. The food export industry finds this difficult and its margins are being tightened. If we are to be competitive in that market, our currency must be valued at below £0.90 sterling. Some newspapers have suggested over the past few days that we could reach parity with sterling. If this happens we would become very uncompetitive. This would be to the disadvantage of our food industry. We must look at our currency and financial structure within the EU. I am convinced this is retarding development in the food industry where thousands of jobs can be created. We must look at this sector in terms of policy in the financial and currency areas vis-�-vis sterling and the Deutsche Mark.
On Vote 15 — Ordnance Survey — what is the policy of the Department towards the Ordnance Survey? It is run jointly by the Departments of Finance and Defence. There seems to be an internal row between the two Departments and members of the Defence Forces are being shabbily treated by management, which is the Minister's Department. There was a case recently of a member of the Defence Forces who returned from UN overseas duty and was left in a shed for eight weeks without any work. Is there an attempt to remove Department of Defence personnel from the Ordnance Survey? What is the basis of the problem? The person who had nothing to do for eight weeks has now been given a job, although he was not given his original post. It was a Mespil Road type of case. Management did not give him the satisfaction of going back to his old job but saw to it that he was given an equivalent job. What is the long term policy? Is there a move towards one Department taking over this function completely?
There is a 21 per cent increase in funding for the Civil Service Commission. Is it planning to do much recruitment and, if so, could details of this be given? I spoke recently to a person who applied for a job as a driver tester. There were several hundred applications, as there are for most jobs. There were six stages in the selection process: an interview, a driving test, a reporting test, an oral Irish exam, a final interview and a medical. It is important to have a proper screening process to select the right people but is the commission making work for itself? Is it necessary to go through so many stages? Most applicants were brought through these stages and few were rejected as the process went on. This procedure gives many people hope and they think they are being considered for posts but are not. How many people work in the commission? Why is a big increase in funding proposed? Is it for recruitment or for more bureaucracy?
What is the position on the reinstatement of widows who left the Civil Service? I know that the Labour Court ruling more or less said that it was discriminatory to employ such women without employing men. I am not arguing about that, but I understand that the Department of Finance received 100 or 200 applications before that date which they were to consider as the opportunity arose.
A number of people who worked in the old Department of Posts and Telegraphs seem to be excluded from the agreement. Telecom Éireann and An Post cannot take them on. How can the Department of Finance justify the exclusion of widows who worked in one Government Department? It is not their fault that the Government subsequently decided to break up the Department of Posts and Telegraphs into independent semi-State bodies. Since a line has now been drawn and nobody else is getting into the net, surely the people who worked in that Government Department should be included in the list of people who may be taken on?
I will endeavour to answer as many questions as possible. Deputy McDowell asked about Dáil reform. I have been a Member of the House for 17 years. I was assistant Whip responsible for my party's structure of committees. I was party Whip in Opposition. I was the Opposition Leader of the House when Deputy John Bruton was responsible for Dáil reform. I worked with him in the 1983-85 period. I do not agree with Deputy John Bruton on many matters but I agreed with what he was trying to do at that time.
There have been many changes in how the House is run which I notice in talking to party Whips and watching what happens in the House. As Minister for Finance I am involved in many debates, both in committees and in the House. When I first entered the House in 1977, if one wanted to speak as a Government backbencher one had to agree to speak for an hour, regardless of the issue. If one did not have the ability to speak for an hour, one did not get a slot, because the Whips did not want to know about people who could only speak for 20 minutes. The Whips now ask for about 15 minutes but it seems that many people are not capable of speaking for 15 minutes and debates collapse because of that.
As I know from when I was an Opposition spokesperson, an important Bill could be on the Order Paper for many months because it was not possible to arrange a Report Stage. It would be possible to arrange for a Second Stage because that could be taken on a Thursday when there were no votes but it was almost impossible to arrange a Report Stage. When I was Minister for Labour I managed to get through a great deal of legislation but it was quite difficult to do so. The committee system is a major move forward.
Deputy McDowell is right in saying that there is huge inconsistency. I had the pleasure of visiting other countries with Deputies John Bruton, Seán Barrett and John Boland to look at their systems. However, nowhere was there an attempt to run the committee system side by side with the full Parliament. That is where the system breaks down, as we saw on the Finance Bill and other legislation. The committee system is the right system but there are problems with coverage and so on. I know Deputy Yates felt strongly about this and I would not disagree with many of his remarks. We put in many hours of work and everything can be covered in half an hour in the morning. That is within our control and there were plans seven or eight years ago to move away from that. We are trying to have the old system and the new system which we picked up from other countries at the same time and that is creating difficulties. We looked at the position of information officers and I know that the present Whip is very keen to continue the process.
I would remind newer Members of the position on Question Time. When I was first elected one Minister answered at Question Time and kept going until his questions were finished. A Minister could be there for four days. Huge changes have been made in the system. Whatever its faults, the old system was an absolute disaster. Estimates were taken on Fridays and there was no question and answer session. I am not saying that the system cannot be changed and developed.
To correct one point, the Government is not delaying the CSF. The figures in the CSF are exactly as they were last October. It is not what the Government wanted on that occasion but there will be no change in the figures. In recent weeks, the Commission and the Minister of State and officials in my Department have been finalising the layout of the CSF and, more important, getting on with the operational programmes. As I understand it, the CSF will go before the Commission's full meeting shortly. Then it will go through the management team and be published. We will then have a month on operational programmes.
The figures are common knowledge; there is no change or question of the Government going to get less or more than we had last October. What is in the public domain is the actual position. The argument about whether we will be able to achieve it all between now and 1999 will remain after the publication of the CSF.
Deputy McDowell has made a fair point about how the Government can cover it all. However, I would remind him that by my actions for 1994, where I deducted £140 million of proposed expenditure from the original national plan, I have already indicated which road I am taking. That was there on the day of the publication of the Estimates. I included it in my speech that day and answered questions on it. The headline in The Irish Times the following day was, Minister takes out £140 million. Regardlaess of who says what, that is the road I am following.
If we make it up on the review in two years time or get additional money from the Community will be matters for another day. I am working on the basis of what happened last autumn but I think that we will do better in the review. Another important issue has come up in recent days is the change in Ireland's eligibility for Structural Funds. The bottom line is that Ireland is still an Objective 1 region which is defined as one whose development lags behind the rest of the Community. Under the current regulations, we will continue to be an Objective 1 region up to 1999. The post-1999 position will be looked at by the Commission in due course. I am sure the Government will seek to retain the Objective 1 status but that will be a matter for the Government in 1998 or 1999. As of now, it is not an issue which has arisen in any of the discussions.
Deputies Yates and McDowell made detailed remarks about the Government's expenditure. Since 1986, Government expenditure as a percentage of GDP has fallen by about nine percentage points from 51.4 per cent to 42.9 per cent.
In the same period the EU average has increased by nearly 3 per cent of GDP, from 48.9 to 51.7 per cent. We have done well regardless of the view one takes. In spite of the relative improvement since 1986 the Government and I remain fully committed to controlling expenditure.
I am concerned about increased expenditure in any area. A Minister for Finance is always trying to curtail the spending of his colleagues, agencies and so on. It has been acknowledged that the Programme for Competitiveness and Work is a step in the right direction when analysed against events in Europe. If we do not involve ourselves in excessive special arrangements, are successful in achieving our aims and establish a new structure, we will further control spending.
Public service pay is high but one must remember that there are many public servants. I am sometimes amused by attacks on public service pay. If the private sector was as good as they would have us believe, they could provide many of the services which are currently provided by the public service sector and we would not have to pay for them. It would certainly make it easier. As Deputy McDowell said, a fertiliser factory, the turf industry and the Met. office are all State services. The private sector would not touch these services and has never shown any interest in them but that is an issue for another day.
We should not be in the fertiliser business.
I agree, but as the Deputy knows when there is an attempt to sell services such as those involving steel or fertilisers there are not too many offers. Deputy Rabbitte's analysis of how the Government can resolve the problems in banking is correct. If the computers and the holes in the wall did all the work, bank charges would be lower but one would get rid of an entire workforce.
There was evidence of this in the case of B & I. Members met B & I staff last week and are aware of what is happening. We are moving towards a worrying position where Pandora will move out of B & I and have separate staff. I am no longer Minister for Labour but I gather that the concern of the trade unions is that the Poles and the Greeks will provide this service. We have to maintain a balanced view. I take a pragmatic view and examine each case individually but there is no easy solution.
I am not aware of the position in regard to senior staff in the Land Commission. I can tell Deputy McDowell that no senior member of the Land Commission has commutted his service for sums of money. One Land Commissioner has indicated that he is taking legal action seeking compensation for loss of office beyond what is provided for in the superannuation scheme. All other Land Commission staff retired or got the standard package available in 1988-89. There has been no change since.
All Members asked about the reduction in overtime spending and its effect on the drugs problem. My advice is that there is no cutback in the staffing and other resources available to the national drugs team. There is no question of restricting operations to 9 a.m. to 5 p.m. Additional resources were made available over the past year.
As part of the ongoing effort to keep expenditure to a minimum and achieve value for money, the commissioners regularly review expenditure under all subheads of their Vote. They hope to reduce overtime spending during the year and are satisfied that this can be achieved without diminishing the effectiveness of the national drugs team. There has been adverse reaction from the unions and others and discussions are taking place between the unions and the State through the normal industrial relations channels.
It should be noted that the reduction referred to is in planned overtime for this year. If additional overtime is necessary it will be provided for within the Revenue Commissioners Vote. To date the overtime spending of the customs national drugs team has been in excess of £113,000.
On the third banking force, the TSB has submitted a proposal to me and I have since met representatives from National Australia Bank, including the senior executive from Australia, United Kingdom executives and Irish officials. I also met with Ulster Bank and officials from the parent company, Nat West. I will shortly have a meeting with representatives from Woodchester. With regard to Deputy Yates' point, the Department intends employing an outside consultant to oversee the tendering process and advise on cost and how we should progress. We hope to do that in the next few weeks.
The Comptroller and Auditor General has already received high praise for the manner in which he has carried out his mandate to assess value for money. The Government supports that. The Government is also stressing strategic management within Departments to ensure improved results from the resources provided. The Comptroller and Auditor General Vote shows an increase of 43 per cent which indicates the support we are willing to give him for his additional role. This extra provision is directly related to his value for money role. The crucial point is that the Comptroller and Auditor General determines how he works and reports. He has made changes in the structure of his office and obviously prefers to use his staff rather than consultants. That is an understandable decision which I totally support. He recently recruited a senior staff member on contract rather than buying in skills which are more expensive. The office will be further reinforced during the current year by the transfer of resources from the local government audit service. I have no dispute with what the Comptroller and Auditor General wishes to do.
The strategic management initiatives formalises and builds on long term strategic and planning activities already in train in some Departments and offices. It is designed to enable the Civil Service and the wider public service to give a more coherent response to the economic and social challenges facing the country. The initiative is aimed at three areas: the contribution the public service can make to national development; the provision of an excellent service to the public; and the effective use of resources.
A co-ordinating group of secretaries is working in the area as well as individuals in Departments. The group will consider management with a view to making recommendations to Government on changes needed to enable individual secretaries to manage the Departments and areas under their control more efficiently and effectively. A date at the end of September has been set for the production of individual departmental strategy statements and the submission of the co-ordinating group's recommendations. It will prove to be a useful initiative.
Deputy Connolly asked about the bar and catering staff. The payment in respect of the bar and catering staff is a direct payment from public funds to cover the cost of employing the staff. It includes pay and employer PRSI. The cost is £375,000 and it is in addition to what is paid by the users which yields an operating surplus of £60,000. The system was introduced in 1988 to put the catering service on a sound operational footing and avoid escalating overall subsidies in the bar and restaurant. It makes it more accountable and has worked very well.
To date all members of the Army working in Ordnance Survey have been accommodated on their return from serving on UN missions abroad. For operational reasons it has not always been possible to return individuals to the duties they had before they left. They have however been returned to duties appropriate to their grade. The question of the appropriateness or otherwise of the Army presence in the Ordnance Survey as it heads into the 21st century is under continuous review. It has been the subject of recent discussions between the Ordnance Survey and the Department of Defence. The matter has now been referred to the Defence efficiency audit group, which is examining the Department and the Army. I understand it will make a recommendation on this matter.
On the Civil Service Commission it seems extraordinary that such lengths are gone to regarding recruitment. People come to my constituency clinics complaining about this matter. There is an increase in the overall figures because there has been a substantial increase in the workload due to the Garda trainee recruitment programme and other competitions due to be held, including those for clerical grades which have been advertised in recent months, and the continued upward trend in the numbers applying for all positions.
The statutory provisions permitting the reinstatement to their former positions of certain women who resigned from the Civil Service were challenged by the Employment Equality Agency under the terms of the Employment Equality Act, 1977. The Labour Court found them to be discriminatory and contrary to the principle of equal treatment. The court recommended that the relevant statutory provisions should be repealed. Having taken legal advice on the matter, I am satisfied that the practice of reinstatement must be terminated. I could not continue to operate a scheme which has been declared discriminatory contrary to both national and European law.
However, the applications submitted on or before the date of the Labour Court determination, 23 July 1993, have been processed. Any applicants who met the qualifying requirements on that date are to be reinstated. I emphasise that this approach has been adopted with regret. My Department vigorously defended the reinstatement provisions before an equality officer and the Labour Court with a view to preserving the existing practice. However, it was unsuccessful and in the light of legal advice, I have no option but to adhere to the present position. The Labour Court's determination has recently been challenged in the High Court by means of a judicial review. Further action concerning the formal repeal of the reinstatement provisions has been deferred pending the outcome of that review.
On currency matters, I was in contact with industry representatives and others yesterday. I met all the farming groups and we had a lengthy discussion about that matter and about how it affected the food industry. I have also spoken to many business groups in recent days. It would not be correct to say that there are serious difficulties with or concerns about the trends in the months ahead. Deputy Yates made that point.
The value of sterling has fluctuated on the foreign currency markets for some time. While the IR£ has appreciated against sterling, it is still well below the level against sterling at which it traded after the January 1993 devaluation. Against other currencies, its value is less than it was before January 1993. Overall, that is on a trade weighted basis. It is still somewhat below the level which obtained before the 1992 ERM crisis. As I stated last August, when the changed position came about in the ERM, price stability continues to be the objective of our exchange rate policy and that of the Central Bank. Policy is not designed to target any particular currency or basket of currencies. There is a process in place and the Kennedy committee recommended, on a trade weighted basis and against the mix, that it should be reviewed daily. That is done both at departmental level and in the Central Bank. Effectively, everything is watched.
As Deputies Yates and McDowell are aware, no currency in the new open, more free position states its policy categorically. Some countries are still experiencing grave difficulties. For example, the overnight rate in Greece was 200 per cent and Portugal is still in grave difficulties. The fluctuations and difficulties still exist there although it does not create problems for other countries. It relates to the position of particular countries.
We have gone through the arguments about the fact that 70 per cent of trade is non UK, while 30 per cent is with the UK. I accept Deputy Yates' point. We have analysed it and the 30 per cent tends to be made up of companies which have started exporting for the first time. In many cases, they are high employers, with low profitability. They are open to the various distortions and fluctuations and I would not argue against that point. However, we must bear in mind that the ability of industry to compete abroad does not depend solely on exchange rate levels. They must operate in a macro-economic framework and low interest rates, low inflation and pay moderation continue to be the keys in addition to the exchange rate.
I hope the Central Bank will soon work with this committee and appear before it. The Committee has sought this for some time. I undertook to deal with this during the currency crisis when the Oireachtas felt there was no direct dialogue between it and the Central Bank. The new Governor of the Central Bank took up office just three weeks ago but I discussed this issue with him in recent months. I hope a conclusion on this initiative can be reached soon. The committee is the appropriate place for such a move and it would be useful for discussion of interest and exchange rate policies.
Deputy Connolly questioned Central Bank charges. That is a hot issue in another jurisdiction regarding who fixes interest rates. Bank charges and interest rate charges are a matter for the Central Bank and I have no function there. The bank requires all licensed banks to notify bank charges and related terms and conditions and any changes. The Central Bank may direct the holder of the licence to refrain from imposing or changing a charge, term or condition without approval. The bank also requires holders to have readily available at all branches details of their charges. In the Consumer Credit Bill, Minister of State, Deputy O'Rourke, will bring forward some amendments in relation to the director of consumer credit who will also be involved in this area. This will prove helpful.
On currency, is the Minister saying that he does not have a policy or is it that he has a policy but he is not telling us?
There is a clear policy. The Central Bank and the Government have followed a policy of price stability since 1987. The bank has a clearly defined policy in terms of the mechanism and how it operates. For example, it has not intervened in the market except for one day. It altered its policy in August, given the new ERM position. People stayed back in August to develop it and the bank has followed that policy since then. Regarding the public aspect of the policy, since that period, the Central Bank has allowed the market to determine the position and it has not intervened. It intervened on one occasion last week. However, it signalled to me that it should not be read as a movement away from the policy adopted in August, which it monitors on a daily basis.
On the Ordnance Survey, it appears that there is no debate about the involvement of the Department of Defence. There is no function for a Department of Defence in a modern Ordnance Survey. We will not go to war. However, if anybody goes to war, he can go down to the local shop and buy a map and attack or defend whoever or whatever he wishes. People do not require maps any more to do that. The office costs £8.8 million and there are receipts of £4.3 million, which suggests it is not paying its way as a service. It should be capable of paying its way. Its maps, etc. are difficult to obtain because they are expensive and are not available in every shop. I do not understand why this service costs so much. Perhaps an all-Ireland ordnance survey service would be better than two separate services on this island, or perhaps we could, either by paying a subsidy or whatever, sell it off and get the work done under a licence with the State. I do not see any reason why it must remain part of the State's service.
There are offices in five locations, Kilkenny, Cork, Ennis, Longford and Sligo, and recently technology was introduced. The office cooperates with the Northern authorities and some of its recent work has been done on a joint basis, which — I agree with Deputy Michael McDowell — makes sense.
The mapping priorities of the Government and the present policy was decided in March 1990. It was agreed that urban mapping on the 1:1,000 scale would be maintained and updated, the production of the 1:50,000 series of tourist maps would be accelerated to produce 30 maps in the first three years, and the production of the former rural 1:2,500 series would be discontinued and replaced by a new 1:2,500 series derived from aerial photography, It is an updated service.
I accept what the Deputy said about costs. In addition to the salaries for the valuation and ordnance survey staff, the Vote also provides the salaries of the property arbitrators, the secretary of the land valuers reference committee and the staff of the valuation tribunal. The out turn for 1993 and the Estimate for 1994 includes significant allocations for overtime because staff must prepare aid maps for the CAP and GATT proposals.
It is about time the Minister's Department produced comprehensive public expenditure programmes in the bound volume which used to appear. I accept it is probably due to lack of staff——
Money.
——but in terms of accountability, and the Oireachtas being able to fulfil a scrutinised role, it is no good saying there is no staff. We vote the money to the Department of Finance and the Department is charged with justifying the expenditure to the Oireachtas. It was possible in the 1970s and 1980s to produce detailed documentation justifying expenditure so that people could understand where the money was going. If public expenditure has gone up by 17.5 per cent in the past two budgets, I cannot understand why it is impossible to produce something which was produced in the 1970s.
If the Deputy looks through the State directory of personnel in different Departments, he will see a plethora of staff who hold positions as special advisers, assistants and programme managers. If some of those could be engaged in writing those big blue books again, we would get on much better.
That has not been done for a number of years. I would be happy to consider any changes in the presentation which would help Members. I understand the production of detailed documentation took up a lot of staff time and I am sure — I am not being disrespectful to any colleagues — few people used the data. I will consider ways to help in the presentation of data, particularly for spokespersons and Members of the committee.
It does not need to be published and sold as a separate book. We live in a world of desk top publishing where it is difficult to distinguish between something which is produced on a once off basis and something which is not. The material in those books was helpful and could be updated. If it had been kept up to date, the changes each year would have been fairly minimal. It is a pity it was thrown into the waste paper basket.
This issue was raised last year and earlier this year by Deputy McDowell. My colleagues in the Department of Finance agree these books were useful. The Department of Finance is meant to give the lead to other Departments. However, its staff has been reduced by 150 over recent years and technology is now used in print rooms and in other rooms in the Department. I am not using that as an excuse. If a different way of presenting data which would help Members is suggested, we will consider it.
Since the Minister raised the issue of Civil Service numbers, how many people are now employed in the Civil Service, compared with the figures in 1986?
My Department employs 500 people, but it once employed approximately 700. The Civil Service employs approximately 28,000 people.
My understanding is that there was a significant decline from 1986, but it started to increase in 1989.
The numbers declined from approximately 30,000 to 26,000 and then they increased to approximately 28,000.
If the Civil Service numbers are increasing again — and perhaps there are rational grounds for this, but the last time I was in the Dáil £100 million was borrowed from the Central Bank to pay people to get out — that is——
staff increases — and it has been this way since 1987 — must be in defined areas. The only areas in the Civil Service which are allowed an increase are Revenue and the Department of Social Welfare. The numbers in the Civil Service have remained steady. The numbers in the Garda have increased, but the Defence Forces have remained steady. Numbers in education have increased quite substantially each year and numbers in health boards have increased in the past few years, but local authorities have remained steady. While there have been some increases since 1989 they were in the health and education services and not in the Civil Service. If they went to the Civil Service they applied only to the Department of Social Welfare or the Revenue Commissioners.
I am sceptical, It is said that everything is fine but the old trends are re-emerging.
I would be very concerned if staff drifted back to their previous locations. The staff who came out of the system in 1987 and 1988, under the scheme for which we got the loan from the Central Bank, came from all sectors. We all recall the public outcry about some of those areas. I agree with the Deputy's sentiments about a reversal but that is not happening. I realise that the general staff numbers in the Department of Social Welfare and the Revenue Commissioners went up in 1993. However, one must consider matters such as reports on cases for the health boards which require extra staff. Each such decision is costly.
Is there any directive from the Department of Finance on the expense of launching reports such as the Kilkenny incest report? It is inappropriate that hotels are hired for these occasions, backdrops are produced and glossy publications are prepared. The Minister spoke about staffing difficulties for the production of the books to which I referred earlier. I do not wish to be disrespectful but many reports these days get glossy treatment and the substantive material appears to be overlooked.
I will be glad to raise the Deputy's point with my colleagues.
Are there any questions on Votes Nos. 1, 2, 6, 7, 8, 9, 11, 12, 13, 14, 15, 16, 17 and 45? Any questions on Vote No. 10?
Is Collins Barracks now under the control of the Office of Public Works or is it still controlled by the Department of Defence? The Civil Defence was seeking part of Collins Barracks.
The Department of Defence still controls Collins Barracks with the exception of the Clarke Square area which is the first area to be renovated under the new plan. Proposals for that are being drafted. The Army has speedily and efficiently vacated that section.
I note that the Office of Public Works is undertaking restoration work at Trim Castle. I have said to Deputy Dempsey on occasion that if some imagination is used in the restoration, the castle will be a major tourist attraction. I hope that the architectural purists are ignored and it is appropriately restored. I realise that the castle has changed substantially in its history but I hope it is substantially restored so that it will be a tremendous tourist asset for County Meath. If the archaeologists are allowed to be too purist and the castle is conserved roughly as it is it will dramatically lose its tourist potential.
The inclination of the Office of Public Works is to keep places exactly as they find them, for example, the Rock of Cashel. However, more comprehensive restorations would improve the tourist potential of many of these places. There is an ideological purism in Office of Public Works which sometimes misses the point.
The Minister of State, Deputy Dempsey, has a particular interest in the Trim Castle project. I agree with Deputy McDowell that it could be excellent. However, Arthur Gibney is advising the Office of Public Works on the project and the committee is aware of his fine work.
If the academics do not tell him not to touch anything.
Would Deputy McDowell like the original wooden palisade to be restored at Trim?
Whatever is done should be exciting and dramatic. It should recreate the place as it was for the children who will visit it. We have many ruined abbeys throughout the country. Tourists much prefer to see a place that has been restored. FÁS did a fantastic job in restoring Drimnagh Castle and it is now a valuable tourist attraction. The Office of Public Works did a fantastic job on Ashtown Castle, entirely restoring the interior of what had become a Georgian house to its original state. I am sure many purists believe the Office of Public Works made mistakes in some aspects of that job. However, that does not matter. What is there now is far more interesting than what would have been there if it had been left in its ruined state.
That concludes our consideration of the Estimates for Public Services 1994 relevant to this committee. I thank the Minister, his officials and Members of the Committee for a valuable and informative debate. I propose the following draft report:
"The Select Committee has considered the Estimates for Public Services 1994 for the following Departments: Finance and Environment and all other Estimates relevant to these Departments. The Estimates are hereby reported to the Dáil".
Is that agreed?
Report agreed to.
Order to report to the Dáil accordingly.
The Select Committee adjourned at 12.38 p.m.