Wednesday, 22 July 1981
Dáil Eireann Debate
Mr. Sherlock: I would like to point out that at about 2 o'clock today I had to get on my feet and ask if I was going to be allowed to speak on the budget debate. I had been here since 10.30 a.m. I was informed by the Chief Whip for the Opposition that there was an understanding or an arrangement whereby a Government spokesperson will speak and then an Opposition spokesperson will speak, but it was conceded that Deputy Kemmy was allowed to speak. Does that system apply? Do I get a chance to speak in this debate? I did say that I would not be speaking for very long.
Minister for Industry, Commerce and Tourism (Mr. Kelly): The reason Deputy Kemmy spoke this morning was that I let him in when I should have been speaking myself. I do not regret having done so, because I had the benefit of listening to his remarks. I felt a little saddened, as I have heard such remarks before, and I have even said such things myself when I was talking about the quality of the debate here on one of these stock occasions such as a set of budget resolutions. He complained, with a lot of justice, about the way he had heard Deputy Gene Fitzgerald speak. He complained about his routine aggressiveness. He complained also about Deputy Flor Crowley for a slightly different reason. If Deputy Kemmy thinks he has heard the limit of Deputy Fitzgerald's range he is in for a surprise. If Deputy Fitzgerald reverts to the form he showed in the Twentieth Dáil, he will make the acquaintance of Deputy Gene Fitzgerald's ranting and raving up and down the scale, like a coloratura foghorn, which could be heard out in the street. No matter what the occasion or how little the excuse, it will be sufficient for that Deputy to behave in the way I have described. However, he was quick to take the point about Deputy Flor Crowley's interventions last night. They came as a surprise to myself. I had lost sight somewhat of Deputy Crowley over the last few years. He was in temporary eclipse in the Seanad; but yesterday, like a very full moon emerging from behind a bank of cloud, he was back here again with his usual jovial malignance, peppering speakers on this side of the House with what were intended to be unhelpful interruptions. That is the form of the two gentlemen whom Deputy Kemmy heard last night. They are not alone. None of us is perfect in regard to decorum in debating here, but the two he mentioned are particularly obnoxious offenders. However, I am afraid the Deputy is only starting to hear what they are capable of.
Mr. Kelly: I hope that nobody on that side of the House thinks the word “professor” is in any sense a gibe or a jeer. I remind them that their own party was founded by a professor, or if it was not I am not aware that he ever had any other form of profession.
Mr. Kelly: Deputy Lenihan here this morning, followed after a short interval by Deputy Flynn, gave a marvellous impersonation of a man genuinely indignant. He was indignant, as was Deputy Flynn almost speechless with indignation, about the “savagery”— the word “savage” was the most over-worked word in his vocabulary — of our impositions and about the limited and modest scale of benefits which the budget announced here yesterday contained. Nowhere in the speeches of these two Deputies was there the slightest sign of recognition that it was their own profligacy, and that of their party, that has left us in a situation that a Government here have no option but to produce a budget which we know is going to be unpopular.
Deputy Flynn asked rhetorically if when I was walking around my constituency — I have not had much chance to do so since late last night — I ever thought of stopping ordinary voters and asking them what they thought of this budget, because if so I would get a very unpleasant answer. I do not need Deputy Flynn to teach me that truth. I accept that if I stop the next ten people I meet in my constituency I am going to get sour looks from seven or eight of them. Everybody on the side of a Government who have tried to rescue this country from a swamp into which it was plunged is going to get that sort of treatment. I have no doubt that it was in large part a similar effort which put out the first Government we had in 1932; and I have no doubt that it was an effort, very lacklustre but of a similar kind, which put Fianna Fáil out in the General Election of 1954, when they, in an attempt to uphold standards of financial probity which are now only a subject for laughter to people like Deputy Lenihan, cancelled food subsidies, took other unpopular measures and found themselves put out very soon after.
I do not delude myself that the country is full of such spartan, Cincinnatus-like austerity and willingness for self-sacrifice that they are going to be cheering us on for this budget, which is certainly unpopular. I also do not deceive myself that blaming our predecessors is going to go more than a certain distance. It certainly will not need emphasis with the more intelligent of them, but I have no illusions about the difficulties we will have in putting across a budget like this and in taking the measures which will have to be taken, not just this year but probably next year too, although I genuinely and honestly have no idea of what dimensions they may then assume. It will depend on how we get on for the remainder of this year.
I have no doubt we are going to have difficulties in selling these and in recruiting popular support behind them. If we pay the political penalty, let it be so. I do not think there is anything necessarily dishonourable in being on the Opposition benches, although some gentlemen over there bear it with a very poor grace. There is nothing necessarily dishonourable about being in Opposition, even for most of one's time in politics. It is a  function upon which democrats should look with more indulgence than they look on the other side of the House. I take all these political hazards in my stride.
We have to do this job. We asked the people for their votes. They put us in a situation which I would have wished to be a bit stronger. I would have liked to have a better grip of the Dáil; but we cannot choose now. The people made their choice, which seemed to be clearly against the outgoing administration. But, I freely admit, it is not as unambiguously in favour of the Coalition as I would have wished. We are going to have to work very hard to make them like it and want more of it. There is no point in being little boys about this, making vainglorious, blustering speeches about a budget of this kind, thrust upon us though it was, that, say, Deputy Flynn or Deputy Lenihan would make if they were still in Government.
Having said that, I enjoyed Deputy Lenihan's speech this morning. There are only a couple of things I want to carp at. He took up a point made by the Tánaiste at the beginning of the day in regard to the last Government having run away prematurely, having blown the whistle on itself with a good year still to go. You know Deputy Lenihan's style, hands revolving in opposite directions and the general atmosphere of good-humoured spoof that he projects. He said most Governments “have tended to last about four years”. The Government in which he served “was no different”. That is not so.
The Government I worked for in the 20th Dáil had a paper thin majority. We frequently had a majority of just one. We stayed in for four years and three months. It is an open secret — if it is not I am going to give it that status now — that there was friendly disagreement in the Government as to whether we should go in the summer of 1977 or wait until October or thereabouts.
Mr. Kelly: I do not think anyone would  have expected the Government to last into the last half-year of a five-year stint. My recollection is that the Government were divided roughly half-and-half on that issue. We could without any bother have stayed until October. I am not trying to make out that the result would have been much different — it would probably have been a bit different, because we knew that the inflation rate was coming down steeply. We were able to see two or three quarters ahead; and the quarterly figure next released after we were put out showed a quarter's increase of 1.1 per cent. When did we next see that?
We knew these were factors which might have justified our staying on for a while, and giving ourselves more of a chance; but I accept that we had become unpopular, for reasons some of which no doubt we were to blame for, and we went out. The question of going at the four year mark when the legal term is five was never present in any discussions. It turned out to be four years and three months; but it was touch and go between one or two members of the Government, who were in favour of the summer rather than the autumn, that it was not four years and seven months. The last Government, which has just been defeated, ran for three years and ten months; and it was not running with a paper thin majority. They did not have a Whip who tended to get palpitations every time the Division Bell rang, as it did almost 400 times in the 20th Dáil. He was able to sit back and not worry if there was a meeting over in Government Buildings and not one of the Ministers heard the bell. He could still win. That is the Government which ran after three years and ten months. Why did it run? It ran because it could hear the cracking of the foundations and the crumbling of the masonry as the house started to fall in. They showed a clean pair of heels while they could. We are now in there, I will not say with the house in ruins around us, but trying to patch up a very shaky, deeply damaged and very much devalued structure.
Mr. Kelly: Deputy Lenihan's speech reflected no understanding of the fact that it was the profligacy of his Government that brought us to this pass, which would not have been reached if the last Government had behaved with ordinary prudence — I will not say if they had behaved with the prudence which Fine Gael would have shown with the old-fashioned button-boots conservatism and reactionary celluloid-collar frame of mind which Deputy Lenihan likes to impute to us. They would not have reached this pass at all if they had even behaved with the prudence which Mr. de Valera or Mr. Lemass would have shown, or which Mr. Lynch in his earliest incarnation as Taoiseach would have shown. It would not have reached that pass if the standards which were still respected here until about 1971 or 1972 had been upheld. Prudence was not shown. Instead of that, what was shown was what Deputy Lenihan described as “their concern for people”. It was “the people they were interested in, not the figures”. He said they “did not go in for account-book economics, that was not the game they played”. He plays a different game altogether, it is the people he is interested in. That is why he has unemployment 15,000 higher than it was when we left office; and even that figure was one we were not too pleased with.
Mr. Kelly: That is why he had a trade deficit figure which is about ten times, in terms of ratio to GNP, the EEC average. It is why he has a budget deficit figure which is miles above the EEC average. Both of these deficit figures are all-time Irish records. He has an all-time record State debt. These are proud achievements for the Government which is “interested in people”.
He also said, and before someone tries to delete it from the record, — I am not suggesting it is possible, but I know it has been tried once or twice, — somebody should excerpt and highlight what he said about his Government “not being  obsessed by deficits”. They were not “panicked by trade deficits, or by budget deficits”. They were “trying to keep people in employment”. They failed very badly in that. It was the larger dimensions of political philosophy that Deputy Lenihan was inspired by. Trivial things holding him to the ground when he had his head in the stars, things like the balance of payments deficit or the budget deficit, he could not be expected to be bothered about that. Only reactionaries are bothered by things like that.
I want to remind Deputy Lenihan and his friends that Germany is governed by a coalition in which the by miles preponderant element is a socialist party. They are not a buttoned-boot crowd at all; they do not go in for celluloid wing collars. I have never seen Chancellor Schmidt being accused of being a stick-in-the-mud. I have never heard him compared with Ernest Blythe or anything of that kind at all. Funnily enough, he cares about deficits, both on the trade side and on the budget side. You will not find him running anyone into the Bundestag — unless, of course, he has a joker in the pack like Deputy Lenihan, which he well may have — you will not find him sending in someone to try to make a virtue out of recklessness, trying to form a league which would praise the behaviour of drunken sailors and hold it up as being exemplary.
The Governments of Holland, Belgium and Denmark are, I think, all Coalitions, the composition of which tends to vary from time to time. I think I am right in saying that they usually have a predominant socialist or similar element. Funnily enough, they do not share the Lenihan philosophy, either.
Milton Friedman is a name which I hear being made fun of by people over there. They seem to regard him as a joke figure, and Thatcherism as a joke word too; although I was under the impression, until a couple of months ago, that the British Prime Minister was top-cat with Deputy Haughey. I do not quite see how her name should now come to be used as a butt for instant abuse and belittlement.
If I may be permitted to do something which the Opposition have done without  asking anyone's permission, to express a view about the way the English economy is run, the English economy is not the one on which to try such radical medicine. Too much of it is too old and too sick. They have an industrial structure and a population structure which are completely different from ours. Problems in every dimension are different. What is being tried there is possibly too tough a medicine. It is like taking a man with a raging temperature and putting him outside on a snowy day in the hope that that will bring down his temperature. It is too tough
I do not think that the medicine which this Government are trying to apply — not by choice but because they have been forced into it — is too tough. Naturally, we are taking a chance. We must take a chance. There is nothing for it but to take a chance. Anyone can think of any number of similes and metaphors from all sorts of desperate situations for comparison. When the ship is sinking, swim for it; when the house is burning, jump for it. That is our situation. It may be that we have misjudged the jump, or have not placed the air mattress properly under the window, or have overestimated our power to reach shore. It may be that we will flounder and be in difficulties, but we must make these efforts. I have not heard any other suggestion made from the opposite side of the House, let alone from an independant commentator.
Indeed, the independant commentators brandished around in here very often take different points of view. I think it was Deputy Haughey who said that if there were 450 economists, they would have 450 different solutions, and I agree it may be so. Certainly, I have often thought it strange that the science of economics is so little exact, in spite of all the brain power devoted to it. One would think that there should be no such a thing as a recession at all in the world. Nonetheless, what ever the mutual differences, our economists are united on one theme, and that is that the last Government were going the wrong way and have been doing so for four years, and that their failure to improve this economy, to rescue it or  protect it from the world recession, was directly attributable to their behaviour in 1977-78, at the time of the previous election and what flowed from it.
Mr. Kelly: The last time I saw Deputy Fitzgerald we were confronting one another, either in here or outside. I was so flippant then as to construct a figure of speech in which a comparison emerged between himself and the late Field Marshal Rommel, both of whom were strategists. I often enough get abusive letters — almost always unsigned — but I keep them, nonetheless, because I have an eye for handwriting and I always hope to get a letter in the same handwriting which will be signed by somebody who is looking for something.
Mr. Kelly: Very shortly after this episode, I got a letter from a lady whose name was signed to it, in which she said “Dear Mr. Kelly, I am disgusted at your comparing Deputy Gene Fitzgerald, Minister for Finance, with the late Field Marshal Rommel. I consider that comparison of yours insulting and offensive — to Rommel”.
Mr. Kelly: I want to mention something which Deputy Haughey said this morning, that the time to reduce the budget deficit is when the economy improves. In other words, he considered that we were bringing in this budget at the wrong time, that we should have waited for the economy to improve before trying to bring down the deficit and that these hard measures were too hard to ask the people to bear. They may be tough, but the fault for that lies with the other side.
Deputy Haughey this morning pinned himself to the proposition that the time to reduce budget deficits is when the economy improves. The economy, by general consent, improved in 1977-1978; and I think I have the authority of Deputy Martin O'Donoghue, who very generously acknowledged — and I recalled this more than once — in the bulletin of the Department of Foreign Affairs that that improvement was very largely attributable to the very modest wage agreement which the last Coalition Government had succeeded in establishing in 1976 and 1977.
It takes a bit of a lead-in for the economy to get out of a recession and by common consent, 1977-78 and, to some extent, 1979, were good years, by the standards of the seventies, strong years. These would have been years in which, on Deputy Haughey's theory, it would have been appropriate to start reducing the budget deficit but what, in fact, happened? The budget deficit for 1977 was 3.75 per cent of GNP at £201 million, in 1978 the deficit had risen to £397 million, in 1979 it had risen to £522 million and in 1980 it had risen — admittedly very slightly and very slightly down in real terms — to £547 million. The estimate for 1981, depending upon which figure you choose, is anything between almost  £800 million and almost £1,000 million. Nobody would call this or last year good years, but certainly 1977 and 1978 — and perhaps 1979 — were good years by the standards of the seventies. What happened under the direction of the Fianna Fáil Government was certainly the reverse of what we are now hearing should have been done.
In the very same set of years, take a look at total Exchequer borrowing, which, after all, is the whole reason why one worries about a deficit. If one could make up a deficit by mining gold out of the ground, there would be no need to worry. However, a deficit means borrowing. In 1977 the Government borrowed — and I am speaking about the total end-of-year borrowed figure — £545 million, in 1978, £810 million, in 1979, £1,009 million. Where is the consistency there? I suppose I am a foolish man to look for it, when we are dealing with a former Taoiseach who told the people, shortly after his accession, that the level of deficit and borrowing simply could not be sustained. That was absolutely the last we heard of that point of view. It sank without trace, so far as concerns his Government's conduct of the economy.
Last night, Deputy Gene Fitzgerald was thundering away. By the way, Deputy Kemmy said this morning — which was the one good thing he had to say for Deputy Fitzgerald — that it was unfair that Deputy Fitzgerald had to respond to a budget statement at no notice. That is a fair enough point. We can all make a knock-about speech, but it does not give a serious spokesman a chance to respond properly to a budget speech if he has only literally read it through for the first time, distracted, no doubt, by interruptions. Deputy Kemmy suggested an hour's adjournment. That is not a bad idea, and I would be open to that idea if anyone is interested in it.
Deputy Fitzgerald, when responding last night, thundered away repeatedly about where was there one penny in this budget for employment? He particularly focused, in that context, on what he took to be an embargo, — and I do not complain about that word, it is not a total embargo, but a limit — on public service  recruitment. Firstly, there are in fact, certain measures — I admit freely that they are not dramatic measures — but measures specifically directed to support industrial employment, contained either in this budget or definitely flagged for, at the latest, the 1981 budget, the beginning of the year.
Mr. Kelly: Any hardness in this situation results entirely from Deputy Fitzgerald's behaviour and that of the previous caretaker Minister for Finance, who was put in for a year to mark time until he could be sent to Brussels. If it was the Office of Public Works that would be an objectionable procedure, but when it is the Department of Finance it is scandalous.
Mr. Kelly: The halving of the hydrocarbon tax for industry is a measure which could be so described. It reduces industry's costs. I am humble enough to admit that I am only a beginner in this field but I read the hand-outs of the Confederation of Irish Industry. I accept they must look after themselves and that there must be a certain amount of self-interest buried in what they say, just as there is in the utterances of trade unions, farmers or anybody else. Nonetheless, when they have a persistent message which seems to make sense I am inclined to believe it. Their message all along has been that industrial costs, through Government action, have been made too high. We have gone some distance to try to remedy that situation by cutting the hydrocarbon tax which put an additional impost of about £50 million on industry at the beginning of 1980.
I hope that in the near future we will carry out the promise we made of reducing the PRSI contribution in manufacturing industry and tourism from 10 per cent to 8 per cent. That will be a visible lightening  of the costs which industry has to bear and consequently an opportunity for them to be more competitive. That has a fall-out in terms of greater employment.
The public sector pay is what I want to focus on. Deputy Gene Fitzgerald seems to think that because one may be saying something severe about public sector employment it is a threat to employment generally. The contrary is the truth. If you can borrow enough money there is no trouble renting blocks, filling them with desks, putting people behind those desks and calling them jobs. No doubt something can be found for them to do.
It would not be too much to express our present desperate financial situation in terms of an inadequate control on the growth of the public sector in recent years. I do not put all the blame on Fianna Fáil for this, but I put a very substantial part of the blame on them. Since we left office just over four years ago the number of non-industrial civil servants — I am not counting the Garda, nurses, teachers, the Army or health boards — has grown by over 9,000. When we left office the figure was just over 45,000; it is now 54,000. Even in 1977 many people thought the figure of 45,000 was too big. The total public sector — I do not want to be understood as saying there were not some parts which did not need to be enlarged, notably the police force and no doubt others — has grown by 31,000 people.
I will take a flying guess at the average salary of a public sector employee — some will be paid three times this amount and others might be paid only half but I am taking a guess and if it is a poor average someone can correct me — being, say, £8,000. This would mean that the extra annual wage burden carried by the State in consequence of the expansion which has taken place in only four years is a £250,000,000; and that is only for wages. That army of 31,000 has to be housed, heated and the appropriate parts have to be uniformed. There is overtime, travel and subsistence expenses and all kinds of overheads, the ratio borne by which to the crude wage figure I could not guess, but I would not be too far out in saying it could be £350,000,000 rather  than £250,000,000 at least when these overheads are taken into account. That figure is so huge that, extended over a small number of years, the cumulative budget deficit situation can be virtually entirely attributed to it.
That is a crude exaggeration. I know I am putting it in primary colours by explaining it like that. But it seems mysterious that Deputy Gene Fitzgerald should not appreciate that a reckless expansion of the public service, merely because he had agreed to it as an easy way of appearing to be making jobs for school leavers, restricts the State's capacity to invest in productive and wealth-creating employment, because in the end it threatens jobs rather than creating them.
These are not jobs which create wealth. A job which creates wealth has the spin-off effect of creating more employment. A job which consumes wealth does not, or if it does, it does it only indirectly and with much less powerful force. Every pound invested in a needless expansion of the public service — and I am alive to all the arguments we heard from Deputy Flynn earlier about the young boys and girls of Mayo who could no longer expect employment in the public service — does direct injury to the national economy and is a threat to a real expansion of the economy in terms of productive and wealth-creating industry, agriculture and those services which are exportable.
In 1980 industrial employment fell, as will be visible in the IDA report which will be issued in a few days, by about 9,000 and the volume of exports in April 1981 compared with April 1980 fell by about 8 per cent. These are sad recessional figures. The only way we know — and there may be geniuses on the far side who know some other way — of rescuing  that situation is by trying to make Irish industry and tourism, which has also had a bad time this year although it may not be beyond rescue, is by pressing all the time to deliver a product which is competitive, whether it is an industrial product or a holiday. That is the only way we can get ahead. No doubt it can be done in the short-term by borrowing.
While on that subject I want to say that the kind of statements we heard during the election campaign about this country's “creditworthiness” are misplaced. A country's “creditworthiness” has nothing to do with the security a bank or an ordinary lending institution expects from a debtor. When a foreign institution decides to lend money they do not ask about security as a bank does. They ask: are the Government likely to continue paying the interest? Are the Government likely to go on servicing this debt and giving a return on the investment? So long as that calculation is answered favourably, irrespective of the size of the national debt or of the constricting effects on expansion, employment and genuine wealth creation, the Arab money will flow in. As long as they judge the point has not been reached where an Irish Government will default on their debt, or that they will ask for rescheduling, as some countries not very far away have had to do, and so long as they do not get a lower return than originally anticipated, they will go on lending. They are not worried whether Fianna Fáil or Fine Gael are in power, nor do they care about the standard of services provided for our people. They have only one criterion: will Deputy Colley, Deputy Briscoe, Deputy O'Toole or myself, whoever is in charge of this Ministry, keep writing out the interest cheques? The moment a situation develops of instability where a doubt and question mark hang over the economy's capacity to sustain a Government who will keep on writing these cheques and absorbing so much of their national income, the tap will be turned off. The advice I have been getting — I am perfectly certain the advice Deputy Colley received was no different — is that that moment in the nature of things can arrive very suddenly and without warning.  That, among other things, is what we want to avoid.
The burden represented by the national debt together with the size and costliness of the public sector is not understood by the public. They do not realise that half or more of the national budget goes on public sector pay. They do not realise even more dimly that 31p in every Revenue £ goes on paying interest on the State's debts. When we left office in 1977 that figure was 21p in the £. The geniuses opposite have succeeded in adding 10p in the £ to the proportion which is absorbed in the annual national revenue by payments of interest on debt, increasingly on foreign debt. At least if it were domestically raised debt the interest money would stay in the country and tax would be progressively creamed off; the money would be re-cycled at home. That is not the case with money which is paid out in yen, dollars and deutschemarks. The public do not understand this when they clamour for “infrastructure”.
There was a period of horror when the word “infrastructure” was very big with Fianna Fáil. Things which the old button-boot brigade in Cumann nGae-dheal had done in the twenties, because they considered it any Government's duty to so them, such as repairing the roads and installing telephones, suddenly became “infrastructure”. I thought we would live to see the day when we would hear people talking of filling in the pot holes in the infrastructure. They were barely able to do that by the time they finished.
The artery through which money can be forced to pay for roads, railways, airports, schools and hospitals is being furred up. It is developing sclerosis; there are fatty deposits in the artery; and the channel left for the flow of financial blood is being narrowed with every passing year. Every time the national debt is increased, a new debt is incurred, a new obligation to pay interest is incurred, that sclerosis becomes more marked. Every time the public service is needlessly expanded, every time a chance to rationalise is lost, every time an unproductive or counter-productive practice in the  public service is allowed to become consolidated, that artery is constricted still further. Slán beo to the £25 million rationalisation plan we heard about from Deputy Gene Fitzgerald during his January budget. It has sunk without trace.
We must get this message through to the public. It will be unpopular and will cause all kinds of antagonisms. It will give us the most awful problems of equity. Anyone who has done me the honour of listening to my contributions over the years knows that I have alwaus said — and said more forcibly than I have been given credit for by people who think that Fine Gael are a stick-in-the-mud, old-fashioned party when it comes to financial matters — that we must avoid the situation in which burdens are seen to be carried most grievously by the poorer people. It is not good enough to lecture trade unionists about how they must exercise restraint on small incomes, while people who are better able to bear burdens get away relatively painlessly. I have never been in favour of that. Everyone here knows that I personally was in favour of the wealth tax, and could see no good reason for scrapping it. I think I am the only dissentient: but my party are against it and it will not be resurrected. No one need take fright at my saying this. I have always taken the view that equity in taxation is absolutely vital, and we will have the most awful headaches in producing equity so that burdens will be seen to be fairly applied and fairly carried between all sides. It has been acknowledged that a move was made towards that yesterday by a couple of innovatory items in the budget speech; but to continue the impetus which these moves represent without destroying private enterprise or incentive in industry and agriculture will be a most dreadful headache. We may go down under the strain. I do not under-estimate the size of the burden facing us and I hope that we will be able to conduct ourselves fairly and decently and with courage——
Mr. Kelly: Go raibh míle maith agat.  Tá criochnaithe agam. I hope our efforts will win the support and understanding of fair-minded people, including the very large number of fair-minded people who I know exist in the party opposite, despite the postures which history and the ethos of their party require them to strike.
Mr. Colley: I regret that Deputy Kelly's speech had to come to an end. I always enjoy listening to him, although I will confess that towards the end he began to lose some of his audience. Certainly the earlier stages of his speech were vintage John Kelly and I enjoyed it. Some of it I must confess, I would even agree with.
Mr. Colley: There were certain parts with which I would disagree fundamentally. In view of the way in which this debate has gone, the first question that arises is whether this budget was necessary. The Minister for Industry, Commerce and Tourism has been speaking as though it were self-evident that the budget was necessary but he must accept that the figures on which he and his colleagues base their case are by no means factual. They are figures which are projected forward and some people quite close to the scene in the Department of Finance are somewhat at a loss to understand the basis for the projections which result in a projected deficit of £950 million. To say that the projected deficit is not factual is not to say that there is no basis for concern; on the contrary, there is a basis for very considerable concern. We are in a serious situation. We are going through a world recession largely triggered off by an enormous increase in oil prices, relatively far greater than in the previous oil crisis.
All that is common ground. There is no argument about the fact that we are going through a serious world recession and the fact that our economy, largely as a result of that recession, is in a serious situation. Whether or not action should be taken now or not all is a matter of some dispute. In this connection I notice  that references to the budget deficit and how it is likely to turn out suggest that the budget deficit envisaged earlier this year in the first budget introduced by the previous Government was somehow tossed aside and ignored and that the figure now emerging is coming without reference to any known factors other than a profligate attitude on the part of the previous Government.
If one looks at the economic review and outlook issued recently by the Department of Finance one would find a breakdown of portion of this in pages 15 and 16. It itemises some details of items over and above those provided for in the budget introduced by the previous Government. The amount for social welfare involved £77 million, the amount for agriculture £45 million and for transport £29 million. That was a decision by the previous Government not to pass on the increase in fares which was imminent but to discharge it out of the Exchequer which in effect meant out of borrowing by the Exchequer. Similarly a sum of £58 million was mentioned in relation to ESB charges on the same basis. There is a reference to other items, which are not specified, totalling about £150 million. But the items I have mentioned were the result of a deliberate decision by the previous Government, not something that just cropped up because of bad house-keeping or accounting.
If one takes the ESB charges as an example of the problem that arises here as to whether or not this budget is necessary one will get a good idea of the issues involved. On the one hand a decision not to impose the ESB charges which will be very substantial but to meet them out of the Exchequer cushions the economy against very serious economic and social problems which would arise because of the imposition of substantial increases in electricity charges on top of the already steeply increased charges for electricity and other forms of energy. The impact of steep increases in the ESB charges are of serious economic and social import. At a time when the economic situation is difficult and when the situation of unemployed people is extremely difficult a strong case can be  made for trying to ride out the storm by cushioning people against the worst effects of the energy crisis which is the root cause of the increase in the ESB charges. On the other hand the argument can be made that one should let reality and market forces prevail and that failing to do so is trying to shield people from the reality that would ultimately take over. That argument has a considerable monetarist tinge but it is a tenable argument. I mention this because the two points of view in the circumstances in which our economy finds itself and in terms of the world recession are legitimate arguments which could be put forward in good faith. The question of whether or not this budget is necessary and whether it is necessary at this stage is something that can be argued in good faith either way.
What cannot be contested is that the decision to bring in this budget by the Government is one that has been largely conditioned by political considerations. They have been paramount in the decision to bring it in. In case I am misrepresented in this, I have not said that there is not an economic case for introducing this budget. It is arguable either way but whatever the arguments economically, the over-riding argument in the Government's mind has been political. I say that because the programme which the Government intended to embark on is one that presents considerable economic difficulties. The most obvious difficulties arise where one is talking about making certain income tax concessions and paying for them as one goes, by substantial increases in indirect taxation. One is immediately faced with a number of political and economic difficulties. If one is committed to a programme like that but has the opportunity of blaming the difficulties that arise on one's political opponents it is very difficult to resist that temptation. This Government not alone did not resist that temptation and did not attempt to resist it but grasped it gratefully with both hands.
As soon as this Government were elected I said to a number of my colleagues, “they will bring in a very harsh  budget; they will blame it on Fianna Fáil; then they will adjourn the Dáil for about three months hoping that the mud will stick on Fianna Fáil and they will then come back and try to get the benefit of the revenue from the impositions they have made and utilise it for their own political advantage”. Many people in politics would regard that as a legitimate political ploy and maybe it is. But it does not prevent us from pointing it out. It confuses the issue as to the real economic situation and what action the economic situation requires. The over-riding argument in this area is a political and not an economic one. It should not be so. The over-riding argument should be economic.
The most significant aspect of this budget from the point of view of the consumer — and probably ultimately from the point of view of the economy — will be the deliberately generated inflation it contains. There is a range of taxes provided for in this budget which, at the best of times and in a budget intended to cover a full years' operations, would be very substantial. The Minister for Finance has told us that the effect on the consumer price index of these additional taxes will be an increase of 3 percentage points. In making that calculation he did not allow for the actual increase to the consumer in many cases being higher than the increased tax because of increased mark-ups, a phenomenon with which Ministers for Finance have had to contend. It is one they would very much wish to be able to avoid, to ensure that increased taxes represent the sole amount of the increase on particular commodities but they cannot do so; that is a fact. Inevitably, in many of these cases, the actual increase in price to the consumer will be considerably more than the increase imposed by the taxation concerned.
Mr. Colley: Decided by Fianna Fáil not to be imposed but to be paid out of the Exchequer, as I said earlier, by borrowing by the Exchequer, the case for which I referred to earlier. It is a quite respectable case and the Minister need not refer to it in that way. There is a quite legitimate, respectable case to be made for it whether one agrees with it or not. The fact is that these charges will now be imposed.
In addition to that we find that there are a number of other charges going to be imposed. Unfortunately they are not specified - we do not know exactly — but it is clear from what has been said in regard to agriculture, for instance, that there will be changes made there which will either increase charges or reduce services substantially.
Hospital and prescription costs will be borne to a greater extent by those users who are able to pay for them; appropriate changes will be made from 1 August in hospital charges and in the Health Boards' drugs refund scheme.
We do not know what is involved in this. We do not know whether it means, for instance, in the case of the Department of Justice that the extra gardaí who were being recruited are not now going to be recruited. But it is reasonable to assume that in a number of cases there will be increased charges for services. Those, in conjunction with the ESB and CIE increases, and the increases arising from the various taxes imposed, not least in relation to all aspects of motoring but above all the increase in the basic rate of VAT from 10 per cent to 15 per cent will add up to a sizeable and significant increase in the cost of living in the consumer price index. The increase in the VAT rate applies to all of the most basic necessities other than food and clothing.  It will affect the poorest as well as the richest people in the country.
In addition to those increases it would appear — again there is a surprising lack of precision in a great deal of what the Minister for Finance said — that there will be an increase in charges under the PRSI, that there will be a levy increase this year under the PRSI. It appears also that this year there will be a levy imposed for the Youth Employment Agency. Even though I suspect that agency may not be operational to any noticeable degree this year it appears that the levy will be applied to incomes this year.
Therefore we have very substantial increases in taxes. We have increases in ESB and CIE charges. We have increases in services of various kinds, like the health services and others I have mentioned. We have levies proposed to be applied to people's incomes under at least two different headings, and all of these are to happen this year. So we are talking about a very substantial increase in costs and a substantial deduction from incomes without any adjustment in income tax which was promised as the method of counteracting the effect of the increase in indirect taxes. I find this whole aspect of the budget almost incomprehensible. I say that because I have a great sense of déjà vue about this. I stood on these benches before and told the Coalition Government, after a number of budgets they had introduced, they were simply fuelling inflation, making it almost impossible for restraint to be exercised in wage claims. They did not listen until belatedly, in the budget they introduced in 1977, they started to do some of the things we had been urging on them. But it was too late. They had done the damage and the public told them what they thought of them. I have no great hope that the Government will listen to me on this occasion either, but I feel it incumbent on me to point out to them some of the consequences of what they are doing. If there are huge increases in the consumer price index, which is what we will get — it is very difficult to put a figure on it because of the lack of precision in what has been said by the Minister for Finance — I would be surprised if that increase as  a direct consequence of this budget, were less than five percentage points. If one adds to that the deductions from income I have mentioned, then that represents a substantial onslaught on the pockets of ordinary people.
The kernel of the economic consequences of this lies in whether or not attempts will be made to compensate people in wage claims for what the Government are doing. This is of course no new problem; this arose in the past under various governments. Under the previous Coalition Government the then Minister for Finance, Deputy Richie Ryan, in an effort to demonstrate the effect of segregating increases in the cost of items arising from taxation and from other causes, arranged for the production of a consumer price index free of indirect tax increases. As far as I know that is still being produced. Who pays any attention to it? Nobody. I tried to persuade the Irish Congress of Trade Unions, in relation to increases in taxation on such things as alcohol and tobacco being devoted to job creation, that they should not seek to have them compensated for in wage claims but I was not successful. There is no evidence to show that this concept of not claiming compensation for increases in the consumer price index will be accepted. Maybe it will but all the evidence I have suggests quite clearly that it will not be acceptable.
The proposals put forward by Fine Gael during the election campaign depended on the acceptance of that idea and the proposals put forward in this budget are, in effect, Fine Gael proposals and depend crucially on that. Serious as the position will be if we have only to contend with the consequences, which I have outlined, directly on what was imposed in the budget yesterday, it will be as nothing to the consequences if compensation is sought for those in wage claims so that the price of every commodity and service goes up accordingly, quite apart from any other causes for increases. If that happens inflation will reach astronomical proportions and will get completely outside the Government's control.
 That is why I regard this aspect as by far the most important and the one with the greatest potential for damage to our economy and that is why I find it incredible that the Government should have embarked on that. Perhaps they are already in a position to ensure that such compensatory claims will not be made but I doubt very much if they have managed to do that. I believe if they had we would have heard about it yesterday from the Minister. We have to assume that no such arrangement will operate. This means we will be back to the situation we were in under the previous Coalition Government except, I am afraid, it will be worse judging by the impact of what is involved, multiplied through all the other goods and services and claimed in compensation in wages, with consequential increases in the price of other goods and services.
I mentioned that the Minister for Finance was rather imprecise in a number of things he said. I would like to get some elucidation on the capital savings the Minister has in mind. He referred to this in his budget speech after dealing, first of all, with the Public Capital Programme and then with items outside that programme. In regard to the Public Capital Programme it would appear that he provided for an additional £30 million expenditure in respect of local authority housing and an unannounced sum in respect of the farm modernisation scheme, so that the additional expenditure is £30 million plus. It appears from the table given in the document, Principal Features of Budget, that the reduction proposed in expenditure on the Public Capital Programme is £42 million. That suggests that there will be a saving of £72 million plus on the Public Capital Programme, that is an additional expenditure of £30 million plus and a reduction of £42 million giving a total of £72 million plus. On the non-programme side the reduction appears to be £134 million. We have no indication of where these savings will be made. The House and the country are entitled to get some indication of the areas involved. I suspect that what is involved will affect employment. If the Government wanted this budget and the  measures in it to be evaluated on a fair basis they should have ensured that the relevant information was available. It is very relevant to know under what headings the Government propose to save those very large sums of money on the capital side. We should be told that.
We have, in addition to that, the reference in the Minister's speech to the non-programme side and the demands from semi-State bodies which have been cut down by £134 million. There is no indication given about what semi-State bodies were involved, what they are demanding money for, what they are getting money for and what they will not get money for. We are talking about very large sums of money and I suggest we ought to have been told what this is all about, what are the implications, particularly for employment. One of the items the Minister was concerned with, and the Minister for Industry, Commerce and Tourism was also concerned with it, was public sector pay. The Minister dealt with this at some length and announced certain things amounting almost to an embargo in regard to certain aspects of recruitment and so on. I do not disagree with the Minister for Finance in placing great emphasis on the impact of public sector pay, which quite self-evidently is a very important item in the budget.
However, I could not help thinking about certain things when I listened to this concern and the statements by the Minister for Labour in regard to a current dispute within the civil service and also his statements as to why he will not meet the union concerned and why they ought to adhere to the agreed conciliation and arbitration procedures. Then I think about the present Tánaiste, Deputy O'Leary, and I remember his marching up and down outside the office of the then Minister for Posts and Telegraphs with a placard protesting against the failure of that Minister to meet a union that was in dispute in the Post Office at that time and were not adhering to agreed procedures. I think how much times seem to change when some people assume office.
I do not recall that merely for the sake of underlining the change of stance by  the present Tánaiste but also because I think it worth recalling in relation to that particular strike in the Post Office — a very difficult one it was — the stance adopted by the Government then and that all of those — including the present Tánaiste, but by no means him alone — who adopted the attitude they did adopt have a great deal to answer for. When we hear about the problem now arising regarding public sector pay each of us should recall the attitude we adopted at that time in regard to that strike which was a crucial one in relation to public sector pay.
In the statement of the Minister for Finance there is a small item — some cynic said it was put in to satisfy Deputy Loftus; perhaps it has nothing to do with him — a reference to Wood Quay. When the Minister referred to that, and the protection of our heritage in that context, what has he in mind? Does he propose to introduce measures which would have the effect of obliging us or, if they had been in operation would have obliged us to ensure that there would be no building on Wood Quay? Is that what he had in mind?
Mr. Colley: I am well aware of what he did in that area, but I am asking about Wood Quay because that is what he spoke about in his speech. I should not like to yield to the Minister for Finance or anybody else in concern about preserving our heritage. Wood Quay is now really in the past, but it was very interesting to see how it was exploited by so many people who tried to obscure the facts from the public. The facts are that there has never been in this country and in few other countries an archaeological site on which so much time, professional effort and money were spent. That was not what was being sought. It was being sought that the site be preserved, that nothing be built on it. The fact that a museum was to be built there was swept aside. Is the Minister for Finance now  saying that the Government intend to introduce legislation which would have the effect of preventing building on a site such as Wood Quay. There are many other sites similar to Wood Quay in Dublin, as is well known. If that is what he intends, they will never be developed. On the other hand, if he intends to ensure that there are adequate resources, financial and professional, to ensure that such sites are adequately, archaeologically investigated, classified and collated, I applaud his attitude. But if he intends to do the kind of thing that was being urged by Deputy Loftus and other people at the time, then he should have spelled it out and justified it to all concerned.
One of the most noticeable omissions from the budget has been provision for the creation of jobs. A number of provisions have not been spelled out, and I suspect that they mean the loss of jobs, but few if any of the provisions will create jobs. There is reference to the levying of incomes for the purpose of financing a youth employment agency. We hope this youth employment agency will be successful but it appears that the levy will be applied this year and it does not appear that it is going to create any or certainly many jobs this year.
There is talk about reducing costs on industry almost at christmas thereby helping to create jobs. It is a far cry from the kind of programme the Fianna Fáil Government embarked on. Not so long ago I heard Deputy Kelly, now Minister for Industry, Commerce and Tourism, talk in passing about the policies pursued by Fianna Fáil in 1977 and 1978 being the cause of the present difficulties to which he was referring, I have had to speak about this on a number of occasions and I do it again without apologies. The facts, as distinct from the propoganda that comes from our political opponents and others who should know better, are that Fianna Fáil created far, far more jobs than were ever created before in our history. The great bulk of those jobs was in the private sector, not the public sector.
What confuses the issue for some people is that unemployment is so high  today. There are two major factors there to be considered. One is the world recession that has affected everybody, very adversely in most cases. The other, and the very important one in respect of our case, is that vast growth in our work force, the great increase in the number of young people coming on the jobs market. That is one of the great strengths of this country, one of the hopes for the future. But, because of that, the new jobs created — in which people are now working — are not properly reflected in the unemployment figures. If we had not done what we did the figure for unemployment today would be well over 200,000.
Mr. Colley: The Central Statistics Office have produced figures to show that there was a net job creation of 80,000 jobs in the three years after we came into office. That is allowing for redundancies and all other losses of jobs. Nothing like that had ever been achieved here before.
Mr. Colley: I am not surprised the Minister wants to quibble about words. The fact is that jobs were created. The important point is that the budget presented yesterday makes no attempt to tackle the problem of jobs for young people, but I suspect it provides in an underhand way for the loss of many jobs for young and older people. Time will tell what will happen about this. I regard the budget presented to us yesterday as indicating a very ominous future for the people in regard to prices and jobs. I am afraid we  are going to embark once more on the same old programme we had to go through before of telling the Coalition how to go about this job. They are not going to listen, but we will tell them just the same. In the end we will have to take over the job and do it again.
An Leas-Cheann Comhairle: The Chair understands that an undertaking was given to Deputy Sherlock that sometime during the afternoon or evening he would have an opportunity to make his contribution. The Chair did not understand it was to be just now.
Mr. Sherlock: I had a discussion with the Ceann Comhairle regarding this matter. Earlier in the day Deputy Kemmy was allowed to speak before the Minister for Industry, Commerce and Tourism and then there was a further speaker from the Opposition. I appeal for 15 minutes now to make my speech.
Mr. O'Toole: Perhaps I may help by saying that that is the situation. The time given to Deputy Kemmy was taken from Government time. May I take it that, if I give way to Deputy Sherlock, that time will be taken from Opposition time?
An Leas-Cheann Comhairle: The Chair cannot give any such assurance. The Chair would remind Deputy Sherlock that, perhaps unfortunately for him, the tradition here is not one that seems to cater for Independents but rather for parties, Government and Opposition. I am interpreting here the tradition of the House. The tradition is that in the earlier part of the debate those people described as first speakers for the Government and Opposition are called. However, it was my understanding that later in the day Deputy Sherlock would be called, but it was not that he should be called now. Perhaps the Deputies would await the Ceann Comhairle.
An Ceann Comhairle: I feel the Independents should get an opportunity to speak in this debate. I suggest that I hope that both the Government and Opposition would each consider giving half time to the Independents. They have a say in this House and they must be given an opportunity to speak. I had a talk with Deputy Sherlock and I had hoped we might allow him in for 15 minutes.
Mr. O'Toole: I have no objection except that when Deputy Kemmy spoke today the time he took to make his speech was taken from Government time. Before the Ceann Comhairle came to the House I had suggested that the time given to Deputy Sherlock be taken from Opposition time.
Mr. Moore: We have 78 Deputies to cater for on this side. I think the Government should be gracious enough to give Deputy Sherlock an opportunity to speak. He has been in this House for hours waiting to speak. We have adhered to the order that was agreed, I suggest it is quite in order to call Deputy Sherlock now.
Mr. O'Toole: I am not interested in the crocodile tears of Deputy Moore for the Independents. I am asking that some decision be made in relation to the time to be taken from Opposition and Government.
Mr. L'Estrange: Has that been agreed? We believe the Independents are entitled to their fair share of time. The Government side and Fianna Fáil are almost equal in number and, therefore, the time given to the Independents should be taken equally from both sides. As long as that is followed everything should be in order.
The budget has been described as a mini-budget, but that is not correct: it is a savage attack on working people. The increase in VAT, in CIE fares and ESB charges will impose further hardship on them. The cut-back in public expenditure means a job freeze in the public sector. The country is in serious financial and economic difficulties as a result of private enterprise, governments serving exclusively the interests of private enterprise. The bulk of the projected deficit of £950 million is a result of the Government having to borrow money abroad at high interest rates for the day-to-day running of the State. The failure of this and previous Governments to spread the tax burden has meant a greater dependence on foreign borrowing and a greater burden on the PAYE sector.
The budget proposal to levy the banks to the tune of £5 million is an effort to deceive the PAYE sector into believing that a serious attempt is being made to spread the tax burden. It is clear that if the tax loopholes were closed the banks'  contribution would be in the region of £40 million annually.
The increase in VAT from 10 per cent to 15 per cent will impose hardship on already over-burdened working class people because it will affect items such as medicines, medical equipment, children's food, tobacco, cigarettes. The worst feature of the proposals is the cut in public spending which will affect, among other things, the health services. I should like to emphasise that this is being done when many people do not have full eligibility for health services, because the income limit is far too low, and do not have the wherewithal to pay doctors or to buy drugs which are prescribed for them. This situation will now worsen because in many instances the second phase of the national understanding has not been implemented. To increase the cost of living at this time shows complete disregard for the needs of people in that category. The Government have failed to realise that there is another system which, if implemented, would not impose such a burden.
In reply to my question yesterday evening, the Minister said there would not be recourse to capital taxation because it would take too long to implement. Is it fair that while so many wealthy people get off scot free, this fiercely harsh imposition should be put on the workers? This budget is about taking money from some people. The working class will pay the bulk of the money the Coalition now want to raise. This makes the budget a class issue as well as a political issue. We have a situation now in which people who pay health contributions do not, because they are in excess of a certain limit, have any benefit to get from the health services. The PRSI is to be increased by 1 per cent. If that increase were to be devoted to providing a free health service for the people — I understand that that 1 per cent would give a free health service — I would agree with it because it is a way to distribute fair play. That is not being done. No consideration whatever has been given to it.
Throughout the debate there has not been mention of resorting to the only fair way to raise the money needed, namely,  a tax on capital, on wealth, property and idle agricultural land. The Labour Party have been silent on the issue of direct versus indirect taxation, despite repeated calls by the ICTU and affiliated unions. This silence is a scandal because there is more scope for raising tax from wealth and property than by any other means. The 1981 Fianna Fáil Budget projected that only £65.7 million would be raised through the various forms of wealth taxes, such as estate duties, resource tax, stamp duties and capital taxes. Thus Fianna Fáil were saying that of the total taxation needed to run the State, the wealthy should only pay 2½ per cent of the total. Instead, £1,400 million was to be raised on spending which would hit the working class and £1,154 million in direct taxes which at the present time is paid largely by the PAYE worker. There-fore, the PAYE worker is to be taxed directly on his income and indirectly when he eats, drinks or consumes any item that has to be sold across a counter.
We do not deny there is a crisis. The current budget deficit is running at £950 million and the balance of payments deficit is forecast at £1,500 million. My party say that the way to tackle the problem is not through the monetarist policies proposed by the Coalition parties in this budget. We are aware that Fianna Fáil in office would be attempting now to foist the same policies on the working class.
The serious problems left by Fianna Fáil must be solved by socialist means. The full power and resources of the State must be used to direct the economy along a new road breaking fundamentally and finally with the past.
Most people realise that Fianna Fáil and Fine Gael merely exchange partners at each election. Different sections of the rich are represented by Fianna Fáil and Fine Gael. But what is constant is the burden borne by the working class. Most people can see that the private sector is not creating jobs and productive wealth. Therefore, we must act on the logic of our experience and embark on long term programmes that will release the creativity and productivity of the State sector. This means planning the economy so that  the State will make the profits, that the idle rich will disappear from the pages of history so that every penny made by the State will be a penny put back into production. The long term solution calls for socialist planning now. But in the present arrangement of class forces the task of a working class representative is to point out to the ruling parties that their policies will not work and will make the lives of working men and women more unbearable.
In exposing the propaganda of the ruling parties we find behind them the propaganda of their real masters, the FUE, the IFA and the IMI. One of their favourite big lies is that the wealth base is too small to tax in Ireland. What are the facts?
The facts are that on a conservative estimate the total value of productive wealth in Ireland in 1981 is £35,000 million. This produces a capitalist income this year of £2,500 million. This huge sum, virtually untouched by tax, is spread among a few hundred ranchers, tenement owners and property speculators. This mountain of capital thrown up by the working class is to be left untouched in this mini budget while the Coalition quarries at the dwindling hillsides of workers' wages.
We want that mountain of capital to be taken up by the State and put to work, and while we use that capital to create jobs we want to give the working class a breathing space by freezing the prices of three essential commodities — food, fuel and transport. In particular we repudiate the medieval prospect opened up by Deputy Kelly, the Minister for Industry, Commerce and Tourism, of increasing CIE bus fares at a time when the Government refuse to subvent CIE's rapid rail expansion programme.
The key to a better life is to remove the scandal of wealth without taxation. But, apart from the ethical and moral degradation caused by great wealth untouched in the midst of public squalor, there is the question of its sheer wastefulness.
A striking example is the two million acres of Irish agricultural land lying fallow. Another example is the great derelict  lict sites that blight our cities. We want to winkle out the owners of these lands and these sites and recall them from Spain, or from Cheltenham, or from oil speculation back to the real world. A resource tax and a land tax with sharp teeth will awaken them from their dreams of betting pools or infinitely moving oil shares. Use it or pay for it will be the message. A proper land tax of not more than 1 per cent would not only raise £300 million but would help to start land moving on the market so that younger and more enterprising farmers would have the opportunity to plough the fallow land and turn it into agricultural wealth.
There is no argument against wealth taxes to which we will listen sympathetically except those based on simple principles of justice and fair play. There is the question of a direct tax system. At present PAYE workers pay £17 in every £100 earned. Employers and farmers pay £7 in every £100. If employers, farmers and self-employed were taxed at the same rate as PAYE workers, the revenue raised would be close to £350 million, or one-third of the deficit which so pre-occupies the public mind.
The Opposition party are saying that what the Government are doing is totally unnecessary. This shows beyond any doubt the hypocrisy of the system and the failure to tackle the problems. It is well known that there is wholesale tax evasion. If the Opposition party are correct in saying there was no urgent need to introduce a budget at this stage, why was this time not used to go after the tax evaders and to introduce a wealth tax? The Minister admits that he will be looking into this matter. This would have the effect of giving working people confidence in the fact that they have a share in the country, and that consideration will be given to the needs of that section of the community. I am very disappointed at the failure of the Labour Party to do anything about this. I hope the reaction of the workers will not be to take to the streets to get their rights.
Minister for the Gaeltacht (Mr. O'Toole): Am I correct in saying that today the Government side gave time to Deputy Kemmy? The Ceann Comhairle's suggestion is that there should be some agreement and that the Opposition should act magnanimously and give 15 minutes to Deputy Sherlock.
An Ceann Comhairle: This is a sad situation. The Government decided the amount of time to be given for the debate. The Minister will continue in the amount of time available to him, and I would hope that the Whips might reach an agreement to give Independents their rights in this House.
Mr. O'Toole: Ó tháinig an Comhrialtas i gcumhacht trí sheachtainí ó shin, táimíd ag obair go dian ag iarraidh cúrsaí airgeadais an Rialtais a chur in ord agus in eagar. I rith na trí seachtainí sin chaitheamar suas le 50 uair a chloig ag pléigh leis an fhadhb seo, agus is soiléir anois ón ráiteas a thug an tAire inné cén toradh atá ar an obair sin.
Ón staidéar a rinneamar ar chúrsaí airgeadais an Rialtais, fuaireamar amach go raibh an rud ar fad imithe ó smacht agus muna ndéanfaí rud éigin sar i bhfad go  mbeadh cúrsaí i bhfad níos measa, agus is ar an gcúis sin a bhí orainne, a bhí ar an Aire Airgeadais, cáinfhaisnéis a chur os comhair na Dála tráthnóna inné. Ba léir dúinne sa Rialtas, muna dtógfaí an chéim seo, go raibh caighdeán maireachtála muintir na hÉireann i mbaol agus, go deimhin, neamhspleachas muintir na tíre i mbaol.
Ní hamháin go raibh gníomh éigin cosúil le seo riachtanach láithreach ach go gcaithfí rudaí nár chuir áthas ar bith orainne mar Rialtas a dhéanamh láithreach. Is mór againn an t-ionracas agus an macántacht i nghóthaí Rialtais. Ní raibh de leigheas againn mar sin ach pleananna a leagan síos agus a chur i bhfeidhm céim ar chéim, fiú amháin muna bhfuil an Freasúra anseo agus daoine eile ró-shásta leis an méid atá déanta againn agus an méid atá ar intinn againn. Ach cheapamar sa Rialtas go gcaithfí an scéal a chur go soiléir os comhair an phobail agus os comhair na Dála agus sin atá á dhéanamh faoi láthair. Ní chuireann duine ar bith fáilte roimh cánacha breise, ach is minic a aithnítear nach mbíonn a mhalairt le déanamh agus níl aon rogha ann ach cánacha a ghearradh.
Is é an chéad rud a rinneamar ná na Meastacháin uile a scrúdú go mion agus fuaireamar amach go raibh easnamh nó go mbeadh easnamh beagnach £950 milliun punt ann ag deireadh na bliana seo. Sin suim airgid atá i bhfad níos mó ná mar a leagadh amach ag tús na bliana seo, i mí Feabhra seo caite, nuair a leag an Rialtas amach £515 milliún punt mar easnamh san cháinfhaisnéis. D'éirigh linn £148 milliún a bhaint den chaiteachas reatha a bhí measta. Go deimhin, ní gan stró a rinneamar é sin sa dara leath den bhliain so.
Ba mhaith liom a rá chomh maith, ar ndóigh — agus níl aon tagairt dó ó mhuintir Fhianna Fáil — gur chuireamar ar fáil inné, chomh maith le ardú liúntais leanaí agus liúntais shóisialta eile, fóir-dheontais bhí, cúnamh breise d'fheirmeoirí, deontais fheabhsúcháin do thithe a chur Fianna Fáil ar ceal bliain go leith ó shin, deontais mhéadaithe do mhicléinn oll-scoile agus plean in aghaidh na bochtaineachta.  In a dhiaidh sin, bhí orainn iompú ar chánacha indíreacha le breis airgid a fháil, agus maidir le cánacha indíreacha, ní ar ioncam ach ar chaiteachas a ghearrtar a leithéid agus tá rogha ag an duine cuid mhór den am gan a leithéid de chaitheachas a fhulaing, agus ar an gcaoi sin tig leis an duine dul as na cánacha sin. Sílim, go deimhin, gur féidir leis na cánacha ar fad a chur ar leataobh. Ach tá rogha aige cuid mhór den am.
Féachfar chuige — agus seo ceann de na geallúintí — nach mbeidh ardú eile i mbliana ar na praghsanna a bhaineann leis na príomh-earraí — bí, arán, plúr, bainne, im agus margairín. Beidh deontas feabhsucháin ann arís do thithe. I 1977 dúirt Fianna Fáil go ndéanfaí meadú ar na deontais sin, ach ní amháin nach ndearnadh meadú orthu ach cuireadh ar ceal ar fad iad i Mí Feabhra 1980. Beidh cúnamh breise ar fáil ar bhóithre beaga agus laghdófar an cháin bhreis luacha a bheidh le híoc ag conraitheoirí. Mar a dúirt mé, tá deontais méadaithe do mhicléinn ard-oideachais. Tá sé sin fógraithe cheana féin ag an Aire Oideachais. Laghdófar an cháin ar ola a úsáidtear i dtionscal, rud a chuideoidh go mór le tionsclaíocht na tíre. Tá gearán ar siúl ón taobh thall den Teach i ngeall ar seo. Ba mhaith liom cur i gcuimhne do mhuintir Fhianna Fáil gur ghearr siadsan cáin i 1980 ar ola tionsclaíochta, agus tar éis na cánach sin bhí an leibhéal is aoirde taobh istigh den EEC san tír seo. Tháinig cáinfhaisnéis 1980 ach níor baineadh pingin amháin de sin i níor ardaíodh é nach níor baineadh tada de.
Dúramar i rith an toghcháin go n-ísleofaí 50 faoin gcéad den cháin a cuireadh air i 1980. Tá sé sin déanta sa cháin fhaisnéis seo chun cuidiú le tionsclaíocht agus le fostaíocht. Chomh maith leis na buntáisti a bhfuil airgead curtha ar fáil dóibh, tá clár leathan leagtha amach ag an Rialtas. Déanfar ath-chóiriú ar an gcóras cháin ioncaim an bhliain seo chug-ainn. Seo geallúint eile a tugadh. Cuireann sé áthas orm a rá go gcomhlíonfar an gheallúint sin, ach caithfear a thuiscint nach féidir bun-athraithe a reachtáil sa chóras cánach i lár na bliana. Caithfidh tú fanacht go dtí cáin bhliain eile chun a leithéid a dhéanamh. Níl aon dul siar ar  gheallúintí sa chás seo. Níl siad á gcur ar athló, mar ní raibh ceist ar bith i rith an toghcháin go dtabharfaí na hathruithe seo isteach díreach. Dúramar go mbeadh na hathruithe ann ach nach mbeadh siad ar fáil díreach anois.
Tá breis airgid curtha ar fáil chun tithíochta, agus sa chás seo tá scéim nua le tabhairt isteach ag an Rialtas maidir le hairgead a chur ar fáil do lanúnacha óga go mbeidh orthu tithe a thógáil. Tabharfar spreagadh úr do dhaoine chun airgead a choigilt agus cuirfear leis an duais-chiste a bhíonn ann do dhuais-bhannaí, agus mar sin de.
It gives me no great pleasure to stand here on the first day I have spoken as a Minister and defend the budget. The facts are that the present position was forced on us because of the state in which we found the economy. Having scrutinised the expenditure in each Department on coming into office we had no option but to introduce the budget. I cannot understand why speaker after speaker from the Opposition kept harping on the necessity for the introduction of the budget at this time. To give some idea of the contradictions we find in the arguments put forward, Deputy Colley said we were afraid — I was accused yesterday on radio of being afraid — of the Labour Party and Independents. We did not go far enough in certain respects. We could have done what would have been regarded as absolutely and totally irresponsible and waited until next February. We did not but decided to act responsibly and in doing so put our ministerial heads on the chopping block by telling the Dáil and the country that if we were defeated on any of the votes the Taoiseach would dissolve the Dáil. I do not regard that as fear. It is acting responsibly and we should not seek kudos for that.
It is our job to act responsibly and to be seen to do so. If that demands courage, so be it. We have been told and, from the far side of the House, have always admitted, that there is a serious world recession surrounding us at present. Deputy Colley, a man for whom I have great respect and a man of vast experience in different ministries, would  seem to suggest we should allow this recession to go over our heads and do nothing. If we can in any way through internal management reduce the effects of that recession we have an obligation to do so. The Government are now doing that.
During the international recession we have been experiencing Fianna Fáil seemed to take the view that we would survive that recession and that it would be time enough to pick up the pieces after the recession had ended. I do not think anybody accepts that kind of philosophy as being sensible especially in the context of the economic mess in which we have found the country. Deputy Colley, a man who is very strong on the subtleties of the English language, admitted that there was economic justification for the budget but went on to say that the motivation behind it was political. It does not matter to the consumer what the motivation is, whether it is economic or political. I would prefer to believe that if there was economic justification for the budget that was much more important than having to defend it on political grounds.
This budget has been introduced for economic reasons. There is no justification for putting one's political head on the block for political reasons but we had no option other than to introduce this budget. There have been repeated statements from the other side of the House during the day that there is in the budget a lack of precision. That may be so and I am sure the Minister for Finance when winding up the debate will reply to this as well as to the many other matters that have been raised. Lack of precision is one thing but a lack of honesty is something very different. While many allegations may be made as to the motivation behind the budget and the figures contained in it, I do not think that the honesty and integrity with which the problem has been approached can be questioned. The facts are that the provisions made in the Estimates, as we now know them, were false. They were based on a false premise. The £515 million provided in the Estimates for the purpose of meeting the deficit on the current side was also miscalculated. We know now that the figure  is almost twice that. If we failed to take action now to bring that massive excess under control we would be facing a starting deficit next February of massive proportions.
One could not but note the alacrity with which Deputy Colley was able to skirt around certain years. He defended vehemently the economic approach of Fianna Fáil in 1978 and in 1979 but did not have a word to say in this respect so far as 1980 or the first half of 1981 were concerned. However, that is nothing new but it shows what is happening on the other side of the House. Indeed, it is a very sensible approach because the activities in the economic sphere and in the financial management of the economy during the past year-and-a-half cannot be defended by anyone.
The merits of bolstering up the ESB have been propounded by Fianna Fáil speakers. There is a statutory obligation on the ESB to pay for themselves, as the former Minister who raised this question should know. I do not wish to make odious comparisons but we do not want to find the ESB in the same unfortunate position as CIE by reason of not being allowed to pay for themselves and of not allowing the consumer to pay for the service being provided.
What we found in Government was that a mass of price increases had been upheld and justified but were waiting sanction. For political reasons all these increases were held up with the result that what faced the new Minister for Industry, Commerce and Tourism on his first day in office was a list of these increases, representing in terms of the CPI, something of the order of 2 per cent. The outgoing Cabinet went before the electorate on the basis that everything was all right though they knew that these services were daily sinking deeper into debt. The deferment of these increases were in the interest of political expediency. Deputy Colley is of the opinion that the increases in this budget will result in an inflationary spiral. I hope he will be proved wrong. The Government have been very careful to select the least inflationary items in order to ensure that the  end result will not have this undesirable effect.
The Minister for Finance has mentioned a 3 per cent increase in the cost of living as a result of the provisions in the budget. We are prepared to allow the CSO to calculate their figure in their time and we will accept the figure they publish. There will be no question of our seeking the shelter of the allegation of having been given misinformation by civil servants, as was the case when rash statements were made by the Leader of the Opposition when he was Taoiseach. A miscalculation of over 6 per cent was made by him in his first utterance on the first day of the election campaign. Then he comes along and apologises for having been misinformed. How could a man of his experience do that when we are giving the facts? They will be the facts and no apologies will be made and we will not have to revert to the excuse that misinformation was given.
This budget is to many people possibly unpalatable, but it is absolutely essential. All independent economic commentators will agree that any further delay in taking the necessary action or taking the first step — and this is the first step towards putting the economy back on the rails again — would be highly irresponsible once the people given that responsibility were in possession of the facts. As soon as this Government came into possession of the facts they did take the necessary action.
As I said, it gives me no pleasure to stand here defending a budget when many more palatable things could be said and done by any Government in office. The economic state of the country allows very little option but to take the hard road initially. Once people realise that the corrective action has been taken, I am quite sure they will see the sense in co-operating and not endeavouring to expect too much from a national cake, as has happened for too long, because the end result of that would be going back to where we started: into massive borrowing and a state where we cannot sustain our present standard of living. That was the reality which faced this Government and  that is why we are forced into taking this action now.
Ba mhaith liom a rá mar Aire na Gaeltachta go bhfuil cúram na Gaeltachta orm agus chomh fada agus is féidir liom go ndéanfaidh mé no dhícheall fadhbanna na Gaeltachta agus muintir na Gaeltachta a réiteach. Tá a lán fadhbanna ag baint leo agus ag cur as dóibh. Tugadh geallúintí do mhuintir na Gaeltachta cúpla seachtain ó shin agus ba mhaith lion a rá anseo go gcomhlíonfar chuile gheallúint a tugadh don Ghaeltacht agus dá muintir. Tá dhá chomhlacht reachtúla faoi mo chúram, Board an Gaeilge agus Údarás na Gaeltachta. Beidh mé ag tacú leo chomh fada agus is féidir liom chun leas na Gaeltachta agus na Gaeilge a chur chun cinn. Sin é an fáth atá mé anseo, agus déarfaidh mé anois go ndéanfaidh mé mo dhícheall an job sin a dhéanamh chomh maith agus is féidir liom.
Dr. Woods: This is a bad budget which in these early days after a general election could be described as an unprecedented rape of the electorate during the honeymoon period. I do not say that without giving some thought to what I am saying, because we are faced here with a budget of many deceptions from a party who went to the electorate claiming to have all the honest people, all the people of integrity and intelligence, all the best of all that is going. Nevertheless, they come here to present us with a budget which was inevitable because of the statements they made beforehand. I am not surprised at the kind of budget it is. It is a confused budget with many elements which will interact unfavourably on the electorate and will not be seen or felt fully by the electorate for some time. These interactions are skilfully laid and were put carefully to the House here yesterday so that we and certainly the electorate would not recognise too readily the elements they contained and perhaps, above all, so that the Independents here would not recognise too readily what is involved in this budget.
This is and will be seen in time to be a blatantly cowardly budget. It does not address itself to the real potential of our  country. It does not have the confidence to invest in our young people. Instead, it follows the very well-trodden path of deflation and conservatism. That, again, is not surprising, given the people who introduced it; but it is not what the young people of this country are looking for at this time. It indicates a Government who do not believe in the capacity of our young people to repay that investment. I listened to the Minister for Finance yesterday saying that the young people would not be able in the future to repay the kind of investment being made by the £1,700 million capital investment programme to provide jobs and create opportunities for them now, this year. Yet that rather than promises for the future is what we need. It is quite clear from what the Minister for Finance and the Taoiseach said that the Coalition Government do not believe in the capacity of our young people to repay that investment. The Coalition Government have so often stressed the marvellous asset our young people are, so well-educated, trained and prepared to take on the challenges of present-day life, given the appropriate leadership, stimulus, support and investment. These they are not getting from this Government and this will become clearer to everybody as time goes on. The Government keep on quoting this very simple, trite concept of housekeeping, maintaining your budget in the home, and they cite the need to avoid deficits and borrowing.
But I ask this House: what house or family will not invest in its children? Will parents not borrow for housing and for education? Will parents not borrow for their children to give them a start in life? So, also, must the nation borrow, within reason and within limits. What then was the purpose of this budget exercise which was foisted on the electorate during what can be regarded as the honeymoon or the shell-shocked period? It is a budget in which a deficit of £947 million has been projected. Even the simplest student of economics, the simplest leaving certificate student, or you could go back practically to the primary certificate, would recognise the dishonesty in the way in  which the Taoiseach and the Minister for Finance projected and guesstimated to create the worst possible situation that they could envisage, the most dismal economic figures, to justify their actions in this budget.
I know what is done in the background. I have experience of what has been done here. I am quite familiar with the way in which anything that could be found was thrown into this guesstimate to suggest the blackest possible picture. That is what has been done, nothing more sophisticated or elaborate. The fact that it was no more sophisticated or elaborate is borne out very clearly by the fact that, within a day of taking office, the Taoiseach could declare that there was an enormous deficit.
Two things were proposed. One was this fantastic guesstimate of £947 million which has succeeded in catching everybody's imagination. The second was the assumption that there would be no Government action of any kind in between. Of course, normal Government action would have been based naturally on the half-year period. Last year, when those figures were available, we had several rounds of meetings with the health boards to revise and recheck their figures and any drift which was occurring in them. This is something which every Department would do and the Department of Finance would ensure that this was done when the figures came to light. Nevertheless, the budget deficit figure, which has been sold to the population has now, under the measures proposed here, been reduced by £160 million. But if we look at this we find that this reduction includes CIE and ESB increases which account for £67 million. Surely the Government are not suggesting that their predecessors planned to have no increases in these areas? It was made quite clear that a more detailed examination would have to take place before the kind of increases which were being passed on to the consumer would be agreed in these two areas.
Why so much activity then, to gain what seems like so little in terms of this proposed reduction in the theoretical budget deficit? The normal half year  measures would have achieved and could have been used to achieve reductions of this order. The real purpose in the budget is that it is an advance budget for 1982, to gain new revenue for the Government for political purposes. It is preparing a base to have even further greater incomes and revenues to the Government in that period. Its effect will be highly inflationary. It will add 5 per cent to 6 per cent to the CPI. The Minister for Finance, when questioned here last night, made it quite clear that the 3 per cent to which he referred would only cover his little piece, the excise and tax duties. He said he was not responsible for Deputy Kelly's aspect. I accept the whole concept of Cabinet responsibility. The Departments are not responsible but the Minister surely shares co-responsibility with his Cabinet colleague, the Minister for Industry, Commerce and Tourism, Deputy Kelly, for the consequential increases which will occur at his end. He has succeeded in getting everyone to talk about 3 per cent when he admitted last night that the 3 per cent only covers his aspect. He also specified very clearly that the 3 per cent is only the tax and the excise content. It does not include other elements like increased CIE and ESB charges and increases in a whole variety of other things, including health charges and prescription costs.
There is a list of other increases involved to which he referred but about which he did not give any details. It will lead to inflation rates of 22 per cent to 23 per cent. It is to be combined with what we said it would be combined with, an attempted wage freeze in the public sector. The Minister will have considerable difficulty in implementing that proposal made by the Taoiseach on a number of occasions before the election. This would be a disastrous mix for the economy and it will lead to increased unemployment which is a tragedy at a time when substantial investment had led to a stablisation of unemployment in what is a very difficult situation for us with our rapidly growing young population.
The housewives were conned. The floating voter who happened to believe in the package which was put up by Fine  Gael — mind you she did not vote for the Gaiety Theatre package — now finds she must pay first in increased taxes and prices and then maybe later she will get the £9.60 back, from her husband no less, as a tax credit. Assuming that all the other things go well, her husband's tax credit will come back to her.
The students were conned also. They found, to their dismay, that the grants which had been talked about so much, especially by Fine Gael speakers in UCD, were not to apply to those who were in college already and who did not have current grants. A student there, who is just over the previous limit, and would now come well within the new limits, will not benefit. That student is aware that he or she was conned into voting for Fine Gael on the basis they would get those increases. I have spoken to them. Members of the Government should speak to them. They were misled by this Government of such enormous honesty and integrity. In addition they now find that, not only were they misled there, but they also face a 30 per cent increase in fees.
No-one so far has really looked at the impact of these impositions on people at different income levels. I asked some questions, because I had some idea of the results, and got some information in advance from the Minister for Health on the kind of increases which would be imposed in that area in particular. From some figures which I know I can estimate the likely impact of the extra taxes — the combined effect of the extra costs — on the annual income of a person in the £5,000, £10,000, £15,000, £20,000 and £25,000 income bracket. I call these taxes, because that is what they are. Although the present Government like to talk about levies and other niceties, they are basically taxes. The Coalition do not want to talk about taxes because they told the electorate that they would reduce taxation. That is something which comes after you first have paid more — another part of the confidence trick which the Fine Gael Party, in particular, have played on the electorate.
Take the health charges, which are plus 1½ per cent. I mention these because the  Minister for Finance, although he has not given the details here has given them separately in answer to questions and has told us that they will not come into effect until later. When we take their impact into account, along with those which are coming in now, the levy of 1 per cent from September on and the 3.75 per cent which is also being brought in on incomes over £8,500, together with the other increases which have come with this budget, we find that for a person on £5,000 annual income the health charges will cost an extra £75 per annum, the levy of 1 per cent £50, the 3.75 per cent will not bring anything in for people of that income, so there is a total of £125 extra.
If we add to these the very barest, most meagre and essential extra motoring costs, together with the remainder of the CPI and some CPI costs which are not included in these levies, plus the increased ESB charges, we get a total of £575 extra, or £11 per week, for the person on £5,000.
If we do the same exercise with regard to a person with, an annual income of £10,000, the health charges amount to £165, the 1 per cent levy £100 and the 3.75 per cent will amount to £56, giving a total of £321. Take into account approximately £200 for essential motoring — and that is a very modest increase compared with what the motoring organisations are currently estimating — the £100 for the other CPI increases and the ESB increase of £150, that comes to £771 extra, or £14.80 per week for the worker on £10,000 a year.
If we go to £15,000 bracket, the extra health charges — which are not, of course, going to do anything for health but go into the general taxation package — will amount to £290, the levy of 1 per cent £150, the 3.75 per cent begins to bite a little more here and will account for £243, giving a total of £683. Take the motoring increases, CPI and ESB and you will get £1,283, or £24.60 a week. Perhaps now the Members of the House are beginning to see why I talked about the rape of the electorate in the early aftermath of the honeymoon period of the election — or not so much the election as the Gaeity Theatre document.
Dr. Woods: ——£415, the levy of 1 per cent will take £200, the 3.75 per cent really begins to bite here and takes £431, which totals £1,046. Take the motoring, CPI and ESB and it amounts to £1,646, or £31.60 a week.
I shall go as far as the £25,000 income, as a matter of interest. The health charges here take £540, the levy of 1 per cent £250, the 3.75 per cent bites a bit harder here too and takes £618, coming to a total of £1,408. Take essential motoring costs, although there may be even an increase on this because of the car make which may be larger and travelling further in many instances — that will total £2,008 or £38.60 a week.
Dr. Woods: The reality is that those people do pay substantial taxes. That reduces their gross income considerably and these charges are levied on their gross income, so there is a bigger impact than would appear at first glance. One might think that people on £25,000 a year would not feel the extra £2,000 a year, or £38.60 a week. But of course they do not really have £25,000, because taxation sees to it that this figure is very substantially reduced. The same applies to the person on £20,000 and £15,000.
These are very substantial charges which the electorate are being asked to bear. We have also the extra health  charges, prescription charges, the drugs refund scheme, which is being increased, and a whole range of other charges spread all over the place. One would need a little more time to gather all the information, but I have given enough to indicate very clearly that this is a savage impost on the electorate at each of these income levels. These levies are a disguised tax increase. They are ways of getting extra tax. Take the effect of the 1½ per cent, 1 per cent and 3.75 per cent increases alone and it transpires that this is a complex way of putting on an 8 to 14 per cent income tax surcharge. The people who are claiming that they are going to reduce taxes are actually putting on tax surcharges. That is what is being done in the budget. It is not, honestly, called a tax, but is basically a tax which is disguised, and that is its impact.
The Minister for the Gaeltacht mentioned the ESB charges and said that you must let the ESB increase their prices. Of course, they must have a price increase, but must they always get the price increase they look for? Are they always to come to the National Prices Commission and say, “Here, rubber stamp that”? In fact, the Minister for Industry, Commerce and Tourism told us earlier that he will speed these things up.
That is great news. He said nobody will have to wait for increases. If they want increases they can be shoved up the line. I do not think it is reasonable to keep increasing prices. I am speaking particularly for the lower income groups because I deal a great deal with them. I have people coming to my door because their electricity supply has been, or is about to be, cut off. I have been making special arrangements with the ESB staff for these bills to be paid, but it is becoming increasingly difficult. Increasing oil charges are making this a more difficult situation which must be looked at seriously. It cannot be dismissed flippantly as the Minister for Finance did yesterday and as the Minister for the Gaeltacht did today, but in a less flippant way. He said we must be serious about this, knuckle down and pay up without asking any questions.
We were sent here to ask questions. As an ordinary elected Member I want to  ask why the ESB need these increases. If we look at their accounts we will see a long-standing anomaly. It shows the way they interpret the Electricity Act. The Minister for the Gaeltacht said they had a right to protect themselves and to ensure they have enough money to do that. In their report of their accounts for 1978-79 and 1979-80 we see in their electricity income and expenditure accounts the following headings — income from sales and miscellaneous; expenditure: fuel, operation, maintenance and local charges; general charges, depreciation — the normal depreciation found in company accounts — and interest and other costs.
Further down we have an amortisation charge. This is unusual and will not be found in other accounts which show normal depreciation. This shows the borrowings which are being written off. This method of double accounting has continued for some time, but what does it mean in money terms? In 1979-80 the combination of the different kinds of depreciation comes to £23,563,000, and amortisation to £20,771,000. Even so the ESB show a loss of £9 million. We must be concerned that there is a loss and that the consumer must pay these charges. Other companies do not have the double allowance of £23 million and £20 million. If the ESB did not have this double accounting system their accounts would show they made a profit of £11.6 million. Bearing this in mind we must ask if this system should be continued on a permanent basis. Should the consumer be asked again and again to pay increased charges to cover the ESB's heavy borrowings as well as covering depreciation? They have a substantial cash flow coming forward and this is one area which must be looked at. This leads me to ask why there must be a surcharge. This is another political gimmick which is being foisted on us by the Minister for Finance, without addressing himself to the basic costs we are supposed to be meeting. I ask him to look at this before he gives permission to introduce these increases.
If this means this House must interpret the Electricity Act and convention then  let them come back and we can decide what the wording should be. Increased ESB charges will make a very big impact — I do not have time to go into them in detail — and will mean an increase of £2 to £3 a week for the average family.
Let us look at what the different sectors will contribute. This is a very inequitable budget. Take the health charges. The PAYE sector will pay £76.4 million, the self-employed £5.2 million, and farmers £5.4 million, giving a total of £87 million. We know it will be difficult to collect the £5.4 million from the farmers and that it will be difficult to collect all the money from the self-employed, for many reasons, but we know it will not be difficult to collect it from the PAYE sector for obvious reasons. If we add the levy of 1 per cent we find the figure is £51 million for the PAYE sector, £1.73 million for the self-employed and £1.8 million for farmers, giving a total of £54.5 million. If we add these totals we find the PAYE sector will contribute £127.4 million, the self-employed £6.93 million, and the farmers £7.2 million giving a total of £141 million. At this stage we can say the PAYE sector are contributing 90 per cent. From questions I asked in this House I know it will be difficult to collect this money from the farmers because in many cases they do not have the money. There are PAYE people who do not have that money to contribute but because of the efficiency of the system they will contribute nonetheless.
Now we will look at the 3.75 per cent on incomes over £8,500, which is to bring in £18 million. There is nothing there for the self-employed or the farmers. The VAT increases from 10 per cent to 15 per cent are expected to yield £188 million. The PAYE sector will contribute about £169 million, the self-employed £11 million, and the farmers £8 million. The breakdown of those figures is only a very rough estimate based on the PAYE sector contributing 80 per cent, the self-employed 10 per cent and farmers 10 per cent. We know that both the farmers and the self-employed can recoup a certain amount, so I took 5 per cent off each, leaving the remainder with the PAYE sector. That last point may be subject to  some correction but the other figures have been given by the Government. We find that the PAYE sector contribute £314 million, the self-employed £17 million and farmers £15 million, giving a total of £346 million. Overall the PAYE sector contribute 94.7 per cent. This is the broad base of which the Minister speaks. It is grossly inequitable and demonstrably so.
I now turn to our budget target of an increase of 5 per cent in the cost of the health service. There was nothing hidden about this and it was not in any way misleading. The measures taken by this Government will have an inflationary impact on the health services and on social welfare and Supplementary Estimates, which would have been necessary in any event, will now have to be increased considerably.
It has been suggested that the previous Government were careless in their approach to the economy and aspects of the Estimates. In 1980 we introduced considerable economies in the health services in areas such as energy saving. There was an adjustment in wages for nurses and others following the findings of a review body and the Labour Court. It is clear that nurses were for many years grossly underpaid and consequently adjustments had to be made. The policy in 1981 was to have a series of meetings with the chairmen and chief executive officers of the health boards. I take this opportunity to thank them for their work earlier this year. The health services are inadequate at present due to many factors including years of neglect, lack of input of money and the tremendous growth of the population. In 1979 71,000 babies were born, the highest number since records began.
Dr. Woods: Last year the figure was even higher, and the Minister for Health will have to deal with this problem. Care must be provided for these babies, and their mothers are demanding high standards. Nobody wants to die too soon and  anyone admitted to hospital wants first-class medical attention. Better care is being provided and the survival rate has greatly improved. Consequently the elderly, the mentally handicapped and those involved in accidents have a good survival rate. Many new techniques have been introduced and there have been developments in out-patient facilities and community services. However, because of our population growth there are great strains on these services.
We carried out an in-depth analysis in each health board area. The Secretary of the Department of Health visited the management in each health board area. The public should not be fooled into thinking that the homework was not done; it was done more thoroughly than for many a year. The result was overall savings by the health boards, voluntary hospitals and homes and the GMS payments board. The Minister can see the relevant figures. We decided on a stand-still budget based on prudent management and an estimated inflation rate of 15 per cent. Further savings would have involved reductions in staff and the curtailment of services. We took a number of measures relating to longer-term savings. We carried out drug studies and an examination of the GMS. The 5 per cent target could not be achieved in full this year but we must now consider the impact of this budget.
Electricity charges within the health service will be greatly increased. Hospital costs, prescription costs and the cost of the drug refund scheme will also be increased. The increase in VAT will have a major effect, as will the increase in petrol and diesel costs. All this amounts to a huge increase in costs.
Social welfare beneficiaries are particularly hard hit. The ESB increase will be between £2 and £3 per week. The CIE and VAT increases will also have a heavy impact and the overall CPI increase will be between 5 per cent and 6 per cent. From October old age pensioners are being offered 5 per cent, less than the budget increase in inflation. Widows, deserted wives and the unemployed are to receive 3 per cent. Our leader dealt very effectively with that point this morning.  A widow under 66 years of age will receive an increase of 80p per week from next October. I do not need to say much more to illustrate how derisory are these increases and how ridiculous they are compared to what we did before this Government came into office.
Dr. Woods: In relation to schoolbooks and the VAT increase, I would ask the Minister to consider registering the boards of management for VAT so that they could at least recoup the greatly increased costs there. It is done with farmers and others.
The people have been misled by the Coalition who have reneged on their promises. Instead of what they were promised the people have now got taxes in disguise. The ordinary workers and middle income groups will bear the burden and the PAYE sector will carry 94.7 per cent of the increases. I am concerned about the health services because of the inflationary impact of this budget. I know that the Minister indicated that he plans to bring incomes savings there which will reduce services. In relation to social welfare the increases are derisory and will not go even half way to meet the inflation brought about by this budget.
Minister for Labour (Mr. Kavanagh): In my first speech to the Dáil as a member of an Irish Government I wish publicly to express my consciousness of the honour that has been conferred on me. That honour also reflects on the people of my own constituency of County Wicklow who have not had representation at Cabinet level since the days — about 24 years ago — of another Labour representative of the county, Mr. Jim Everett. For my part I pledge to work unstintingly in the Ministries of Labour and the Public Service and to contribute fully to Cabinet discussions so as to ensure an improvement in every facet of the lives of the people of this potentially great country.
Speaking in the House yesterday on the supplementary budget the Minister for Finance expressed the Government  aim to bring our aspirations and demands in the area of incomes into line with the international value of what we produce. In the absence of any further addition non-agricultural wages and salaries under the present national understanding will this year increase by 17 per cent which is more than double the average figure expected in other EMS countries. The Government aim to solve the problem that this poses by agreement. In our programme we said that free central bargaining ought to remain the way in which to determine money incomes. The welfare of the community requires that such bargaining should have due regard to its economic and social effect.
It will be my objective as Minister for Labour to do all in my power to secure improvements in the climate of industrial relations. This is a key area on which our progress towards the attainment of our economic and social goals will largely depend.
The present industrial dispute in CIE, which has resulted in the cancellation of bus services in Dublin and the disruption of services in certain other areas, has arisen from a long standing claim for increases related to productivity. Negotiations on various aspects of the claim have been going on for over two years but these negotiations have proved very difficult.
A disturbing feature of the present industrial action is that it appears to have been taken before all the procedures available were gone through. In this regard I would like to impress on employers and trade unions the need to adhere to the spirit and the letter of the dispute procedures and machinery which are available. As far as CIE are concerned we must always be mindful of the high level of public finance which is involved. In this regard the total subvention for the current year amounts to £74 million.
As an attempt to alleviate the hardship being caused by the present dispute the Government have arranged for the Army to provide a limited service and this service was introduced on Monday last. As Deputies will be aware, the Labour Court are at present investigating the unions'  claims and hopefully this investigation will lead to an early resumption of work. I understand that negotiations in the Labour Court are at an advanced stage so I would not wish to make any further comment on this dispute now.
It will be my policy not to intervene directly in the issues in disputes. It should not be any part of the job of a Minister for Labour to tell employers or workers how much should be paid for any particular job. These are matters for employers and unions to agree and, failing that, to avail of the various dispute settling machinery which is available.
It is my intention to limit my involvement in strikes to the job of encouraging the parties to disputes to use the agreed procedures and machinery for the settlement of disputes and to ensuring that the machinery is adequate to the job.
For the private sector the most important institution for settling disputes is the Labour Court. It consists of 12 members who are paid full time out of the taxpayers' money and between them they carry the onerous national responsibility of settling all disputes which occur. It may be that over the past four years the court have felt that their responsibility was being shared by Ministers. In the most recent oil dispute, not one but two Ministers unsuccessfully intervened in the dispute and arguably prolonged the strike by at least a week. I will expect the Labour Court to handle all such disputes on their own initiative in future. If the court feel they need greater resources to deal with these problems I will see to it that they get all the necessary help to carry out their functions expeditiously.
I intend at an early date to introduce legislation covering two of the commitments set out under the heading “Industrial Relations” in the Government's programme. The first covers the extension to all sectors of the economy of the legal immunities enjoyed at present by trade unions in the private sector under the Trade Disputes Act, 1906. The legislation on this item should be relatively straightforward. The second commitment to give full legal protection to the existing arrangements set up by the Irish Congress of Trade Unions for “all out” pickets involves more complex legal and constitutional questions and will require discussion in some depth with the interests concerned. In considering this question, I am conscious of the degree of order which has been imposed on the Irish industrial relations scene by the ICTU's policy on “all out” pickets.
The current national understanding is due to end for early starters on 30 September next. As indicated in the Government programme, we are committed to the active encouragement of free collective bargaining at national level. A recent report commissioned by the FUE which recommends some far-reaching changes in centralised agreements on pay policy will require careful study. The Government's approach to how the discussions on a further national pay agreement should develop are set out in the section of our programme headed “Anti Inflation Programme”. I will be indicating later some aspects of this policy relating to public sector pay.
The discussions promised in the programme about the future role of the industrial relations institutions and measures for improving procedures and practices of industrial relations and personnel management will also be initiated as soon as possible. On the institutional side, the discussions will have to deal with the Labour Court and their conciliation service, the rights commissioners, the Employment Appeals Tribunal and the Employment Equality Agency, as well, perhaps, as such bodies as joint labour committees, joint industrial councils etc.
As all these agencies have their role and functions defined in a variety of statutes it is obvious that the setting up of a single industrial relations bureau to incorporate them would involve extensive amending legislation or perhaps a completely new statute. Wide ranging discussions will need to be undertaken in this matter. Their aim will be, as stated in the programme, to improve efficiency and minimise delays and also to avoid disputes by tackling the root causes rather than the symptoms.
 There is no doubt in my mind, even as a result of my brief experience to date as Minister for Labour, that there is a vast amount of room for improvement in our industrial relations arrangements. The Government are anxious to provide such improvements in the institutional arrangements as will help to improve our performance in industrial relations. They will however be anxious in the forthcoming discussions to secure the full support of both sides of industry for any institutional changes decided upon.
The Commission on Industrial Relations which was set up under the previous Administration have now completed their report. I shall arrange to have the report laid before the Dáil and published after it has been given initial consideration by the Government. Due account will be taken of the commission's views in the further development of policy in this area. It is relevant to point out at this stage that the ICTU representatives on the commission suspended participation in proceedings of the commission in accordance with a decision taken in the Annual Delegate Conference of ICTU in 1979. Accordingly, the ICTU members did not participate in the commission's work from then on, nor have they subscribed to the report, a factor which, of course, makes the document less valuable than it might otherwise be.
It would be my earnest intention to press forward with the discussion with employers and trade unions on these very important issues so as to lead to early agreement about institutional changes and the promotion of any required legislation in the near future. I hope that I will have all round co-operation in this effort to make some improvements in an area where progress is difficult to achieve but is badly needed.
As the Taoiseach has already announced, the Government propose to proceed immediately with the setting-up of the Youth Employment Agency which was promised in the Government's programme. Administrative arrangements for the establishment of the agency, as mentioned by the Minister for Finance, are in hand.
 I visualise that the agency will establish close relationships with the Departments and agencies carrying out activities related to the employment and training of young persons. At present the three Departments operating employment schemes are Labour, Education and Environment. The main State bodies concerned in this task are AnCO, CERT, the IDA, SFADCo and Gaeltarra Éireann. With regard to funding the agency, I propose, as indicated by the Minister for Finance, to introduce in the autumn legislation to provide for a 1 per cent levy on incomes.
The financing of the agency and its operation will obviously be an issue of considerable importance and is a matter which will have to be dealt with by legislation. In the meantime, however, financing can, if necessary, be dealt with through an additional Estimate or a Supplementary Estimate. When the proceeds of the youth employment charge are available it is my intention that the agency should assume responsibility for the channelling of these funds to the various bodies concerned. The agency will also be asked to look into the question of expansion of the various schemes already in operation and the setting-up of new schemes which will help to solve the serious unemployment situation in relation to young persons. At the same time it will be important for the agency to ensure that the schemes and training programmes being funded by it are those best suited to the needs of young people having regard to employment opportunities. I will be asking the agency to keep the various youth employment activities under constant review with regard to their relevance and effectiveness.
The Government's programme contains the target that 20,000 young people who are without employment for six months will qualify for certain forms of training, work experience and so on. Under the existing training schemes run by AnCO and CERT and the employment schemes operated by the Departments of Labour, Education and the Environment, over 20,000 young persons will be catered for in 1981.
The figure I have given does not  include young persons who secure employment in jobs created as a result of the IDA and other job creation agencies. However, a proportion of the 20,000 young persons already catered for would not have been unemployed for six months prior to participation in the existing schemes.
The speed at which employment and training schemes currently in operation can be expanded will of course vary significantly with the nature of the various schemes. For example, work experience placements can be expanded quickly if employers generally co-operate in taking on the trainees. The Work Experience Programme has proved a very useful scheme and has led to permanent employment for a high percentage of participants. AnCO are also in a position to respond urgently to the needs of the young unemployed through its Community Youth Training Programme and the use of external training facilities in outside firms. These measures are the most flexible available to AnCO as the expansion of training centre activities are likely to take somewhat longer. The process has to be slower because premises, equipment and trainers have to be provided. Nevertheless, AnCO will be in a position to expand their training centre activities somewhat in the near future as new centres and extensions to existing ones are now in course of construction and, in some cases, nearing completion. Training by AnCO has also had good employment results and a high percentage of those trained have been placed in employment within three months of completing a course. Investment in training is probably the best long-term investment in the youth employment area but other schemes are also valuable, particularly as short-term measures.
The best estimate I can give of the current unemployment of persons under the age of 25 is that, excluding the current crop of school leavers, there were somewhere in the region of 40,000 young persons unemployed at the end of the school year. Of course, a significant proportion of this figure would not have been out of work for six months. This is offset by the  fact that those of this year's school leavers who are unable to obtain employment in the next six months will be added to the potential clients of the agency around the beginning of 1982.
While the Government in their programme have given particular priority to the employment needs of young persons, it must also be borne in mind that we have substantial unemployment in our older workers and that their needs must not be neglected. There are particular categories with especially severe unemployment problems — for example, middle-aged and older workers who lose their jobs and the long-term unemployed in areas such as Wicklow, Wexford and Dublin inner city. The Government will be anxious to ensure that the emphasis on youth unemployment will not be to the detriment of those categories, that their needs will continue to be catered for and indeed, if resources permit, that the schemes to help them will also be strengthened.
The financing of expanding activities under youth employment schemes will be very greatly helped by the availability of funds from the European Social Fund. In general, Ireland can recover 55 per cent of the cost of such schemes from the fund. I am hopeful that the expansion of the schemes which will take place this year will qualify for aid from the fund under applications which have already been submitted to Brussels. Applications for fund assistance in 1982 will be submitted in October and will reflect expansion of programmes which is visualised as necessary.
The European Social Fund is due for a major review by the end of 1982 and discussions on the matter will be initiated at the Council of Ministers meeting in the second half of this year. The fund has made an excellent contribution to the development of training services in Ireland since we joined the Community in 1973 and more recently has given assistance to the cost of various youth employment schemes. I will be pressing in the discussions about the future of the fund for the introduction of more extensive aids bearing directly on employment and in particular on youth employment  so that our expanding programmes for young persons will continue to benefit to the maximum extent from aid from the fund.
My programme for legislation relates to the promotion of new laws and to the amendment of existing laws. This work will be carried out in full consultation with the ICTU and with representatives of employers. I am not yet in a position to indicate finally all that I will be able to do but my programme will include the following:
1. I propose to implement the commitment of the Government in the 1980 National Understanding to promote legislation to reduce the statutory limits of working hours. The broad aims of this legislation will be to reduce excessive overtime and create additional jobs. The original commitment was for the introduction of this legislation during the first parliamentary session of 1981 for early enactment. I am now taking up this commitment with a sense of urgency and intend to introduce appropriate legislation in the next session of the Dáil.
2. I propose to promote, as soon as the Bill can be prepared, laws for the protection of workers engaged in off-shore installations. This legislation is long overdue and my intention is that it also will be introduced in the next session of the Dáil.
3. I propose to carry out a comprehensive review of the following social legislation with a view to setting to right some problems which have come to light in the course of their operation: Anti Discrimination (Pay) Act, 1974; Protection of Young Persons (Employment) Act, 1977; Unfair Dismissals Act 1977; and Employment Equality Act 1977. This review will be put in hands immediately and I would propose to introduce amending legislation with as little delay as possible.
4. A substantial code of regulations in relation to dangerous substances is under examination. My intention is to expedite the making of these regulations. The Dangerous Substances Advisory  Council, which was set up recently, will have their role to play in this difficult area.
5. Within the next two years I will be introducing measures for the protection of workers in cases of insolvency of employers. These will guarantee the payment of wages and related entitlements to workers in cases where the employers fail to meet their commitments due to insolvency or bankruptcy. The measures will be in line with EEC laws and will bring Ireland into line with our fellow members in the EEC.
6. Perhaps the most significant non-pay item in the second national understanding for working women was the commitment to introduce a statutory scheme of paid maternity leave by April of this year. I intend to complete that commitment by supplementing the provisions already on the Statute Book with two sets of regulations under the Maternity Protection of Employers Act, 1981. The first will safeguard the legal rights given to women under the Act by setting out how a case may be brought before the EAT where there is a dispute about entitlement. To facilitate women having the necessary medical check-ups both before and after their baby is born, the second set of regulations will entitle them to take time off from work for the purposes of ante and post natal care.
In the recent election women made clear their demands for more equal participation in all areas of Irish society. This Government are responsive to the aspirations of women and intend to help them realise their ambitions. In any event it is a waste of our national assets not to use fully in all areas of Irish society the intelligent contributions of women.
The improvement of the status of women is high on my priority list for a campaign of action. Therefore, since taking up the post of Minister for Labour I have looked critically at what can be done to achieve progress.
Apart from the responsibility for women as workers, the Department of Labour have a co-ordinating role vis-à-vis other Departments on all aspects of women's rights. The Commission Report on the Status of Women produced to  Government in May, 1973 has been the Bible of the women's movement. It has been of inestimable value in setting out what needed to be done as a charter for Government. In the decade since its production, much has been achieved.
I intend to examine carefully what is left to be done and what I can do in co-operation with my colleagues in Government to complete the action indicated in the recommendations and suggestions in that report. Excellent though this report is, it may not now reflect comprehensively the needs of women in Irish society in 1981 and a new charter may be necessary. We have the basis for it here in the plan of action put forward by the United Nations at their conference in Copenhagen last summer. It could be the basis for a national charter here.
I intend to have consultations with the Council for the Status of Women, which is the largest grouping of women's organisations and all other interested bodies in order to set down clearly what the demands are at this time and frame a plan of action for Ireland. I know that the council have already been deliberating this matter and I expect that we will have useful co-operation here.
At that stage I intend to have consultations with my colleagues in Government who have special responsibility in areas where action is necessary on women's rights — family law, social welfare, health and education particularly.
In regard to my area of special responsibility in the Department of Labour we have the legislative framework of equal pay legislation, equal opportunity in employment legislation and maternity leave legislation. The procedures for redress are there through the services of the equality officers, the Labour Court, the Employment Equality Agency and the Employment Appeals Tribunal. It is my intention to look carefully at how the procedures for redress are working and how effectively the procedures have been affecting the aims of the legislation. Amendments to the legislation have been suggested by the Employment Equality Agency and the Labour Court and the equality officers and the amendment to the legislation is part of my programme  of new progressive legislation. It is of particular concern to me that women should be fully aware of their rights under legislation and take the necessary steps to secure their rights. In this the role of the Employment Equality Agency is very important. It is my intention to ensure that the Employment Equality Agency will be given the necessary resources to carry out their mandate of working towards the elimination of discrimination in employment and promoting equality of opportunity in employment between men and women in every possible way. I will also ensure that the strength of the equality officer service is adequate to cope with the demands placed upon it.
In a study of women in paid employment carried out in EEC countries it came to light that one in four know about the provisions of national law relevant to issues that concern them. We must make sure that in Ireland all women are made fully aware of the details of legislation for equal pay and equal opportunity and that they are active in looking for their rights and using the procedures that have been laid down in the legislation.
Women themselves have a big part to play in speeding up the programme of eliminating discrimination by working through their trade unions and voluntary organisations and co-operating with the Employment Equality Agency. Indeed, women should be deeply involved in trade union affairs, not alone on women's affairs but on all issues important to workers.
One of the major contributing factors to the appalling rise in the budget deficit in recent years has been the spiralling increase in the Exchequer pay and pensions bill. As Deputies are aware, the bill grew by 24.8 per cent in 1979, 33.5 per cent in 1980 and on the evidence available it was set to grow by a further 25 per cent this year. A major part of the growth is caused by the level of special pay increases — over the two year period 1979-80 they actually cost more than general increases under the national understanding pay agreements. It is quite impossible, in the present state of the country's finances, to allow that spiral to continue.
 In the January budget, the then Minister for Finance set aside £80 million to cover the cost of improvements in pay and pensions. He went on to appeal for restraint in the pursuit of claims for special increases. There has been no sign of that restraint. The cost of special increases to which the Government are committed in the public sector is already well in excess of that £80 million which the former Minister provided — and the year is only half over.
The flood of special claims shows no sign of abating and indeed some groups who have received special increases within the past two years are already coming back for more. Many of those who benefited under these claims, and indeed most of the spokesmen who presented the claims, are aware that the kind of pay inflation which we have seen over the past few years cannot be sustained. Normally sensible people who conduct their personal finances in a prudent manner appear to ignore the damage which their actions on the pay front are causing to the community at large.
This, in my view, is the crux of the matter. Because of the extent to which borrowing was resorted to by the last administration to finance the budget deficit, thus postponing the day of reckoning, public servants, and indeed the community at large, appear to have lost sight of the fact that “special” pay increases have to be paid for. A special pay increase for the public service means a tax or price increase for everyone in the community including those who are least able to bear it. The longer the tax or price increase is delayed the more severe is the final impact. If the consequences of “special” pay increases in terms of increased taxation or charges had been more immediate and more clearly appreciated, the rate of increase might have been slower and less damaging.
One of the most difficult problems this Government face is to try to bring people both in the public and private sectors to a realisation of the hard and unpalatable facts which face us as a community. We will not be deflected from this task.
We have now reached the point where  further resort to borrowing would be disastrous and where we must meet cost increases out of revenue. The Minister for Finance has outlined the manner in which this will be done. He has made it clear that the Government will honour special increases already sanctioned and firm offers or formal commitments which have already been made and that they are anxious to accept, if at all possible, findings in cases currently before the Labour Court, an arbitration board or a review body.
It is clear from the figures he gave yesterday that there is simply no money available to meet any other claims and the Government has no option but to ask public sector employers to invoke clause 6 of the agreement on pay policy. It is the Government's desire that immediate negotiations should take place with unions representing public servants with a view to agreeing an alternative arrangement which will take account of the community's inability to find the resources to meet further special increases without risk to jobs and the viability of the economy.
In addition, I am anxious to discuss with public sector unions the general question of the present method of determining public sector pay, and in particular whether existing arrangements for conciliation and arbitration should be modified or supplemented. I hope that all the parties to these discussions will approach the task in a constructive manner and, in particular, with an appreciation of the fact that we must ensure that the arrangements for settling pay in the public sector take full account of the resources available to the community and the necessity to protect existing employment and to create new employment.
I re-echo the remarks of the Minister for Finance when he adverted to the problems being created by the loss of competitiveness in the Irish economy generally. As he said, we must find a way, as a community, of bringing our aspirations and demands in the area of incomes — both in the public and in the private sectors — into line with the international value of what we produce. I have no doubt that the vast majority of Irish  workers would accept that objective as being fair, reasonable and indeed essential in the interest of preserving their own jobs and creating new jobs for our expanding population.
As set out in the Programme for Government 1981 to 1986, the determination of money incomes is of critical importance to the rate of inflation, through its impact on the competitiveness of the economy, job creation and the structure of public finances. This process will, we hope, be founded on free, collective wage bargaining.
The Taoiseach, the Tánaiste and I had meetings on 20 July with the Irish Congress of Trade Unions and with the Federated Union of Employers and the Confederation of Irish Industry at which, amongst other issues, the provisions relating to incomes policy in the joint programme were discussed. These provisions envisage, as the Minister for Finance said in his budget statement, a new approach to central wage bargaining with the aim of reducing inflation. It is intended that further meetings with the social partners will be held in the near future to consider the matter in greater detail.
I hope that everyone will accept that, in the interest of the community at large and, particularly, the young and the unemployed, the Government's programme is the most realistic way in which to solve the problem of wage inflation both in public and private sectors. If we do not solve the problem of wage inflation then we will not be able to solve our appalling employment problems and the outlook for the future will be very bleak indeed.
All our efforts to grapple with the problem of inflation can be put at risk if unions refuse to abide by agreed procedures for resolving disputes and embark instead on industrial action whether in the form of full scale strike or in more limited forms. Such action is all the more indefensible when the groups concerned are in secure employment and have agreed machinery readily available to them for resolving disputes in a peaceful fashion.
The need to insist on a responsible  approach to industrial relations by public service unions is being highlighted at present by the industrial action being taken by clerical staff in the civil service which is disrupting social welfare payments and the examination results. This action is a clear breach of the national understanding and the agreed negotiating procedures and seems to reflect a belief by some of those concerned that militant action is the most effective means of achieving increases over and above the standard increases in the national understanding. This approach, which would make the public the pawns in ongoing struggles for better pay and conditions in the public service, must and will be resisted.
I have made my position in relation to the present industrial action quite clear on a number of occasions. I regard it as unreasonable and unnecessary because very fair offers over and above the standard national understanding increases have been made, aimed at bringing these groups into line with other comparable categories; the offers would cost up to £8 million a year, a very substantial figure particularly in present circumstances and, finally, the action is inflicting on less well-protected sections of our society inconvenience and hardship which are completely out of proportion to the matters at issue with the association concerned, the Civil and Public Services Staff Association.
One point I am particularly adamant about is that I will not engage in direct negotiations. I would regard that as a disastrous move from the point of view of civil service industrial relations generally. All negotiations will have to take place within agreed procedures. The association presented their claims under agreed procedures and there have been negotiations on the claims on that basis. The avenue open to the association is to complete these negotiations and if they are still dissatisfied with the response on all or any of their claims let them have the outstanding issues put to arbitration. Meanwhile the staff should call off their industrial action which is hitting at some who in terms of employment and income are far worse off than they are.
 As the Minister for Finance mentioned in his Financial Statement, the numbers employed in the public sector in its widest sense have now topped the 300,000 mark — the highest figure since the establishment of the State. Over 30,000 included in this figure were added in the four years from 1 January 1977 to 2 January 1981.
The figure of 300,000 is very large in relation to the total working population and the rate of increase in recent years gives rise to concern at the growing numbers whose pay must be met directly or indirectly from public funds. In addition to paying for the civil service, the Defence Forces, the Garda Síochána and those in the educational area, the Exchequer also bears the cost of the staffs of health boards and, effectively, of the staffs of voluntary hospitals. The Exchequer also carries the cost of the staffs of the non-commercial State-sponsored bodies and bears the greater part of the cost of the pay of local authority employees. To the extent that the commercial State bodies are not viable entities either because they have to be subvented directly from the Exchequer or are indirectly subvented because, for example, they enjoy a monopoly or a near-monopoly position, the pay or part of the pay of their staffs also represents an unavoidable charge on the public. The Government believe that this unchecked expansion of public sector employment cannot continue and they have, therefore, decided to stabilise numbers at the levels employed on 21 July 1981. There is one major and minor exception to this decision.
The first exception relates to new productive and self-financing employment which can be undertaken in the public sector. I have always believed that, with the talents and skills available, there is no reason why the public sector should not be able to undertake, with success, the production of goods and services complementing or in competition with the private sector on a commercial basis. I would envisage, however, that the commercial criteria to be applied to State enterprise would be as strict as those applying in the private sector. With this  end in view, the Programme for Government 1981-86, makes provision for the role of State enterprise in economic growth. Resulting productive employment where the cost of additional staff is recovered from charges made to the public for the additional goods or services they provide will be exempted from the limitation on numbers in the public sector.
The second exception is a limited provision related to staff for whom the recruitment process has reached an advanced stage and is a transitional arrangement to meet problems which might otherwise arise.
These measures will be applied across the whole public sector by the Ministers responsible. To explain its operation, I might describe its application to the civil service, for which I am directly responsible. At the latest count, there were some 57,000 people employed in the non-industrial civil service. Having examined the position, I am satisfied that this number should be adequate to discharge the tasks required by Government for the foreseeable future. This, of course, does not mean that the number in each section in each department will remain unchanged. Public needs change rapidly and, indeed, the new and expanded services which this Government intend to provide will require staff for their administration. This staff can and will be provided within overall total numbers. In the first place, as new schemes and programmes are required, examination of existing services will reveal areas where the need for some services has ceased. Secondly, given the large increase in numbers in recent years, I have no doubt that, by more efficient administration, most areas of the civil service can yield economies in staff who will be redeployed to provide the needed new services. The management services staff in my Department and in the organisation units of other Departments will be charged with securing the economies necessary.
I am satisfied that these arrangements will not lead to any undue burdens being placed on the staffs of Departments and  that by maintaining staffing at existing levels the service to the public will continue to be at a high level of efficiency.
In this connection, I should mention that the Department of the Public Service are well advanced in a programme of radical improvement of the public service to make them more responsive to public needs, more cost-effective and more efficient. A very important part of that programme is the development of good systems to ensure that Government plans are carried through into departmental policies and priorities and that the money spent by Departments and State-sponsored bodies is spent with economy and to greatest effect. I entirely agree with the comments of the Public Service Advisory Council in their seventh report on the importance of systems of that kind. I need hardly say that any programme which results in worthwhile economies in the current critical budgetary situation will have the wholehearted backing of the Government and I am confident that my Department will have the full co-operation of the civil service as a whole and of their staff unions in the task I have mentioned. In spite of the size of the problem, we are not seeking to cut back on numbers as would have resulted from a more drastic approach to the situation in which we find ourselves.
I would stress that this approach to our problems will enable employment opportunities for school leavers and others to continue as vacancies arise. While the precise numbers vary from year to year, recent trends show that about 3,000 people leave the civil service each year for various reasons — mainly retirement on reaching the retiring age. Applying this figure to the public sector as a whole, we can expect some 15,000 job opportunities to arise each year. This is a very considerable figure and, as the Government proceed to put the economy in order and to develop the other measures in their programme related to employment, I have no doubt that we will have laid a firm foundation for national development based on the creation of productive and sustainable employment.
These measures are taken with the objective of safeguarding our economy  and the well-being of our people. In the remainder of this year, there should be a saving of some £6 million in the provisions made for additional posts in the civil service in 1981 and the application of the measures to other areas of the public service should substantially increase this figure. For the future, the limit on public service numbers should ensure that the process through which an increasing proportion of our national increase is spent on public administration will have been halted. As the totality of the measures we are now taking begins to take effect, there should be an increasing increment of public funds available for productive employment leading to greater national wealth in which all, including the less privileged who must depend on the social services, can equitably share. I should like to deal at length with this problem but I have not sufficient time.
The two Departments for which I have been given responsibility present a daunting challenge. With the co-operation of the social partners and the public as a whole, I believe I will be able, through the programme put forward by the Government, to ensure that the problems that exist, particularly in the area of industrial relations, are minimised in the coming year. I know I can count on the co-operation of many people providing they are satisfied that the actions of the Government are fair and equitable in all areas. In the months to come I will have a full legislative programme from my Departments to put before the House.
Mr. Nolan: I did not realise that my successor in the Department of Labour, Deputy Kavanagh, would be speaking before me in this debate. Secondly, I did not know he would have a script. If I had known that I would have asked for a copy because there are many matters in it to which I should have liked to refer before I make my speech on the budget. I should like to congratulate the Minister on his appointment. Even though we belong to different parties we have served our country for a number of years in the European Parliament. Though we may have differed in our national political  views we had one thing in common, namely, we were working for our country. At the time of the European elections we were contestants on different sides. The Minister was successful candidate but I was not successful in that election. I became Minister for Labour and now Deputy Kavanagh has that portfolio. I would like to offer him my best wishes and congratulations. The Minister said in his speech and I agree with him:
It will be my policy not to intervene directly in the issues in disputes. It should not be any part of the job of a Minister for Labour to tell employers or workers how much should be paid for any particular job. These are matters for employers and unions to agree and, failing that, to avail of the various dispute settling machinery which is available.
That is also the policy of Fianna Fáil. It was my policy when I was Minister for Labour and it was the policy of Deputy Gene Fitzgerald who was my predecessor. Later, the Minister said that two Ministers had intervened in the oil tanker drivers dispute and he said they had prolonged it. There was a similar dispute at that time at the sugar factory at Carlow. The tanker drivers dispute had been going on for two years and as a result the country was being brought to a standstill. Industry, private motorists, indeed all the people depend on oil, and the country was in danger. The Labour Court had asked both parties to get together but one of them refused.
Any Government or Minister for Labour could not stand aside in a situation like that. Incidentially, we did not intervene as between employers and unions on the question of the wage increase that should be given. We met each party separately in an effort to get talks going. To show how difficult the situation was, it took 75 meetings in a period of five days to get the parties to agree to sit down and talk. In that connection I wish to record my sincere thanks to the Labour Court for the speed with which they got to work. I should like to thank both parties involved in that dispute and to record my sincere thanks  to the ITGWU for arranging a ballot throughout the country of the 800 drivers. All that was done in 72 hours. I trust the Minister was not insinuating that we were wrong on that occasion.
The Minister appears to be leaving the House. If he is walking down O'Connell Street this evening and if he asks those he meets if they are satisfied with the manner in which he is handling the bus dispute, he will find they will say that they are not. As the Minister was quoted in the press, I did not expect him to rush in with a fire brigade intervention. I do not think anybody expected the Minister to do that, but the Minister cannot stand idly by and see workers walking to their work and old age pensioners trying to get about. He should be seen to be active. He is not coming well out of this situation.
Mr. Nolan: The Minister referred to paid maternity leave. I will take credit for that, and so can the Fianna Fáil Government. By our legislation last year we ensured that a working woman who becomes pregnant will be given 14 weeks paid maternity leave and be assured of her job when she goes back.
Mr. Nolan: This has been the first time in the history of the State that we had a mini-budget and a maxi-budget on the one day. We will call it a budget of 21 July 1981, and we are looking forward to the budget of September. The taxes on cigarettes, petrol, beer and spirits were effective today but on 1 September we are to have the 5 per cent increase in VAT which in a full year will bring in £188 million. In my reckoning that means £3.5 million per week, or £1 per week for every citizen of the State. When we get to next October, according to an economist writing in today's paper, a man, wife and two children who have a standard car will be paying £9.50 per week more.
That is an interesting figure juxtaposed  with the election campaign promise of Fine Gael of £9.60 per week to housewives, just 10p more than what the family I instanced earlier will be paying out next October. I have yet to learn how that £9.60 is supposed to operate. I read a statement that if a man is paying £500 a year income tax this promise will refund that £500 to the wife at home. A married man with five or six children would have to earn £8,500 a year before the wife would qualify for the £9.60, but the wife of a small farmer or a small shopkeeper earning less than £8,000 would not qualify.
I understand the Minister for Agriculture will be the next speaker. I should like him to tell me who will qualify next April for this £9.60. Will all women who work at home qualify, and if not, why not? Is a small farmer's wife not as much entitled to benefit as the wife of somebody earning £40,000 a year? The manifesto says that the wife of somebody earning £20,000 or £40,000 will get the £9.60 by way of a refund or £500 of the income tax payable by her husband. That is my interpretation of it. Unless the husband is paying £500 per year in income tax his wife will not qualify. If this scheme is introduced and those are the conditions, Deputies from Donegal, Dublin, Kildare and Mayo will be asking questions about a man paying £350 in income tax whose wife is not getting the £9.60. They will want to know why not. This should be explained to the public and to the House.
From the statement made yesterday by the Minister for Finance one would think that we never had a budget deficit until Fianna Fáil took office four years ago. However, I must compliment the Minister for Finance. He said:
The Leader of the Opposition said today that in 1975, about mid-term of the last Coalition Government, as a percentage of GNP, we had the highest budget deficit ever since the State was founded. It is no harm to put that on the record. Listening to people on television and radio and  reading the press for the past few weeks in the build-up to this massive and brutal budget we had yesterday, one would get the impression that this was the first time the State ever had a budget deficit.
It was stated in this debate yesterday that in our budget we increased the price of spirits, cigarettes and petrol more than they were increased in yesterday's budget. If we did, we used quite a lot of that money to pay for aids for farmers, to reduce income tax by £60 million, and to give £111 million to the most sensitive area, that is, to social welfare beneficiaries. We gave an increase of 25 per cent to social welfare recipients.
In yesterday's budget the Minister for Finance gave an increase of 5 per cent to pensioners over 66 years of age, and an increase of 3 per cent to others. After he read his budget statement he issued a blue document showing the main features of the budget. I see in that document that the dependent children of a blind pensioner will get an increase of 5p per week.
Prices are going up today and the price of petrol and oil will go up in a few days. The increase in VAT takes effect on 1 September. The children of a blind pensioner will not get this massive increase of 5p per week until October.
This is fantastic coming from Fine Gael. Maybe the shilling affects Fine Gael because once in this House a Fine Gael Minister reduced the old age pension by one shilling, 12 old pence. This fantastic increase was sold well on television. I looked at the 9 o'clock news last night and we were told that the only people who will gain are the social welfare beneficiaries. I do not want to go into the details but most social welfare beneficiaries will get around 75p or 40p or 30p. When we are talking about millions of pounds it is an insult to a blind person with a family to offer an increase of 5p per week.
Probably the Minister for Agriculture has not held office long enough for him to realise that there is an outcry in Laois,  Carlow and Kilkenny to have those areas declared disadvantaged areas. The Minister said the terms of the disadvantaged areas scheme are being modified. My interpretation of that is that there must be no intention to extend them. I sincerely hope the Minister for Agriculture will ensure that those areas are declared disadvantaged areas. We have them in east Carlow, along the Wexford-Carlow border, along the slopes of the Black-stairs Mountains, Mount Leinster, right up along Laois, the Kilkenny border and the Castlecomer area. I am satisfied that these areas are as backward — with due respect to Deputy Gallagher who has just left the Chair — as some of the areas in Mayo and Roscommon which have been declared disadvantaged areas. When the Minister is replying I hope he will remember I am not just saying this. I am quoting from the statement made yesterday by his colleague, the Minister for Finance.
There is no definition of who is able to pay. As public representatives we know of many people who should be entitled to medical cards but who do not have them. There is something implied in it and perhaps it is a reduction in the financial qualification.
If there are substantial savings in the Department of Justice one does not recruit more gardaí. No one will deny that in the present climate we need to improve our security forces. As far as I can see in order to have substantial savings in this Department one would have to cut down on the recruitment of gardaí as this is where the big expenditure is.
 In the Department of the Environment £30 million was provided for housing. This Department caters for sanitary services, roads and housing. We must have proper roads if we are to expand industrially. As there is a 15 per cent increase in traffic on our roads there is need for by-passes, bridges, the improvement of arterial roads and so on. If water and sewerage are not provided houses cannot be built. If there are substantial savings in this Department over the next six months then roads and sanitary services must suffer.
Who will suffer under the Department of Education if substantial savings are implemented? Students. The Minister for Education announced that there would be increases in grants amounting to £2.6 million but we see in today's papers that university fees have gone up so that students will be no better off. If there are substantial savings what will they do? Get rid of teachers, not provide necessary schools, not provide extensions to schools, equipment, cutback the bus service and so on.
We need our Army to come to our defence and I congratulate them on the wonderful work they have done in the Lebanon and at home in aid of the civil power. If there are to be substantial savings in this Department it means that as members of the Army retire they will not be replaced. If that is not the case, equipment will not be updated. If there are to be savings one must cut out something. I am sorry that the Minister did not define “others”. Possibly he did not like to mention agriculture. Perhaps there will be some savings there but God help the Minister if there are when the IFA get after him.
Mr. Nolan: No. I would not be in favour of less spending on agriculture. It is our basic industry. A lot of employment  in Carlow depends on agriculture. If we give aid to farmers to produce more we will have factories to process what they produce.
The Minister met a deputation of workers from Erin Foods recently. I was very concerned when I saw a reference to a cutback in the capital monies to semi-State bodies. We spoke about £70 million but the amount that would be required now is far higher. As far as I can recall the Government will give them only an extra £12 million. On 21 May 1981 the board of the Irish Sugar Company decided to submit to the Minister their capital requirements. The Minister informed us that it had not yet come before the Government but I am sure the Minister is aware there is need for a major capital injection into the Sugar Company. They need new equipment and so on. I do not know the exact figure but it is in excess of £12 million. Perhaps I will find a fourth budget before I am finished.
It is also stated that “the Minister for the Environment is studying the possibilities of enabling local authorities to gain access to new sources of revenue, other than rates”. The sources of revenue open to them at present are the money they get from the Central Fund and the rates they get from businesses and farmers. A new form of local taxation is to be introduced as nothing else can be interpreted from this. That is another budget as far as I am concerned.
This imbalance in the economy must be corrected and the Government have, therefore, decided that the numbers employed in the public sector will not be allowed to exceed the numbers employed on 21 July 1981.
If anyone running a business introduces new schemes it means extra work and personnel. Nobody running a department or public service can say: “I will have the same work force but will do far more work”. Take the example of £9.60 being paid to stay at home wives. When that comes into force there will be 280,000 applications or thereabouts coming in to the Minister. They will have to  be processed. I could not even guess at the number of staff that will be required in the Department of Social Welfare to deal with the applications nor have I any idea how many extra staff the Revenue Commissioners will require to answer queries from the Department of Social Welfare to know if Johnny Murphy paid £500 in income tax because they have an application from his wife. How can the Minister expect to reduce staff and at the same time impose extra work on that staff?
We are told that certain changes are to be made in the Farm Modernisation Scheme so as to bring about savings. Surely this means that somebody will suffer in the process. However, the Minister for Agriculture may explain later how these savings are to be made. We are told, too, that an additional £12 million will be provided to meet the demands from the semi-State bodies.
As a former Minister for Labour I naturally welcome the setting up of the Youth Employment Agency. Already there are four special schemes in this sphere. These are the community youth training programme, the temporary grant scheme for youth employment, the environmental improvement scheme programme and the work experience programme. Two of those programmes were the direct responsibility of the Department of Labour while one is operated by AnCO and the other by the Department of Education. I hope that this Youth Employment Agency will co-ordinate the efforts of all these other youth employment schemes, which are working excellently.
The number of young people who participated in the Community Youth Training Programme in 1980 was 2,071, while 11,000 young people participated in the work experience programme. Last year alone 7,258 young people took part in that scheme. What is more gratifying is that, of all those who participated in these various programmes, between 80 and 85 per cent obtained jobs.
During the coming recess of the Dáil we can be confident of having many little budgets, but we shall not have the opportunity  of debating them here at the time. However, we can be assured of being in for a rough time. I believe the economists when they say that the cost of this budget, when the various provisions have been implemented will be £9.50 per week in respect of the average household of a man, his wife and two children and where a standard car is in use. In these circumstances I urge the Minister to give to housewives as soon as possible the £9.60 per week that they have been promised.
Minister for Agriculture (Mr. Dukes): It was my intention to deal mainly with the agricultural aspects of the budget but I shall reply also to some of the points raised by Deputy Nolan. At the outset, though, I should like to express the great sense of privilege I am experiencing by being in the position of making my first speech to this House from the front benches on the Government side. I look forward to being in this position for some time and to discharging my duties in this office in the manner in which such duties have been discharged by all previous holders of the office.
Mr. Dukes: I thank the Deputy. Regarding the issues that have been raised by Deputy Nolan, there is one point I would make in particular and this relates to the way in which this budget has been framed. The Deputy made reference to a number of measures in the budget which were foreseen. These are measures which are designed to reduce the current budget deficit and measures which are designed in so far as possible to reduce the weight of public finances and of uneconomic activity. In all of those measures we find reasons for criticism or for regret.
Deputy Nolan seemed to be totally unprepared to deal with the problem of choosing between different ways of using available resources, but that is one of the main duties of Government and it was one of our main concerns in recent weeks  in examining public finances. The first problem was to bring public expenditure under control so that we could use tax-payers' money in a way designed deliberately to achieve certain ends and not in a way which would simply mean that expenditure on given schemes or operations would run out of control. We are not necessarily of the view which Deputy Nolan seems to hold that more expenditure always means better expenditure. There is the problem of choice and there is the problem of the total availability of public finance. Those are the problems to which we have been applying ourselves in considering those areas of expenditure in which cuts could be effected.
We have been concerned in making reductions in the forecast levels of expenditure but in ways which would not hinder the effectiveness of various public programmes and which would assure us that we would get better value for the moneys which would continue to be spent. That is a simple point which must be taken into account. It is regrettable that it was not taken more seriously by the previous administration.
Deputy Nolan raised also the question of our discussions some days ago with a deputation from the Irish Sugar Company workers. At this point I do not wish to anticipate the Government's decision in that regard. As the Deputy has pointed out, the company have submitted a plan to me. I will be submitting that plan to the Government together with a number of recommendations and observations and until all of this has been considered it would not be proper for me to speculate on or to examine the matter further in this House.
On the matter of interpretation, Deputy Nolan has been referring to selected parts of the Budget Statement and also to selected parts of this party's election programme. Without necessarily agreeing, I can understand that the Deputy might find it difficult to interpret some point or other, especially if the interpretation did not seem to provide the answer that he would like to get. I am bound to say to Deputy Nolan that his interpretations in some cases are highly imaginative and not at all in line either with what is  written in the programme in question or with the explanations that I and my colleagues gave during the election campaign.
A deeper discussion of the question of the £9.60 per week for the housewives who stay at home would be in anticipation of next year's budget and perhaps this is not the point to go in detail into what we proposed. It has been explained very frequently during the election campaign and I am sure Deputy Nolan was in a position frequently to hear the explanation.
Mr. Dukes: I am sure also that he was in a position to hear in some detail the explanations that were given of the passages concerning that measure which figure in the Government's joint programme. Therefore, it would not be entirely wise, given the subject of our present debate, to devote any more time in the House tonight to that matter. Deputy Nolan can be assured that we will be getting back to it and we will have the opportunity of putting his mind at ease as to the interpretations that are to be put.
Mr. Dukes: Deputy Nolan asked about changes in the Farm Modernisation Scheme, which I will deal with in a few moments. He also raised the question of staffing levels in the civil service and the relationship between what was said in the statement of the Minister for Finance on the question of staffing levels and of providing new schemes or improving existing schemes. It is not necessarily the case that if you want to do something new or extra you must inevitably hire more staff. It is, first of all, a question of increasing productivity; secondly, there is the question of carrying out given tasks more efficiently; and, thirdly, there is the matter of putting an end to some activities which have outlived their usefulness. All of these are ways of carrying out different works without necessarily having to  increase the total number of people involved. I am sure the Deputy has met situations like that before and will not be too surprised to find that such can be met in the public service.
Coming back to the agricultural aspects of this budget, the Government here are commencing the implementation of those items in the Government programme which deal with the problems we face in the agricultural sector, and our budget proposals deal with those problems on three fronts. The first point I would make relates to yesterday's agreement in the Council of Ministers which provided further funds for the Western Drainage Scheme, which is currently in operation, and also set up a system of EEC aids to give interest subsidies to farmers who now have development plans under the Farm Modernisation Scheme.
The second point is that, as I have mentioned briefly, the budget deals with the problem of getting our public finances into order so that Government action can be aimed consciously at dealing with the real problems that face us in an orderly way, and so that we can make a start on getting at the real roots of inflation, which is one of the main problems facing agriculture, as also is the case with all other industries in this country. However, the effect on agriculture in recent years has been exacerbated by the fact that we have not had in the last couple of years the same overall rate of price increase that we had been used to in the earlier part of the seventies.
The third leg of our approach to the agriculture problems facing us at the moment is that the budget and its associated measures provide extra funds for a number of operations we propose to carry out in relation to agriculture. We also re-arrange the use of expenditure already provided for in order to concentrate the resources in those areas where they will have the most immediate impact on the level of agricultural production. The picking and definition of measures that can have a rapid impact on the level of agricultural production is a matter of primary importance for us because we now have a situation where, given the  decline in our breeding herd and in the rate of certain key inputs in recent years, the prospects for increasing the volume of agricultural production have been jeopardised for some time to come and our main aim is to deal as quickly as we can with that situation and to overcome it.
I will deal in detail first with the EEC measures which were agreed yesterday. I preface my remarks by saying immediately that these two measures agreed yesterday — that is a further extension and increase in the amount of funds available for the Western Drainage Scheme and the provision for a Community scheme of interest subsidies to farmers with development programmes — were given a political commitment by the Council of Ministers of the Community at the last fixing of farm prices last April. I am happy that we have now secured a fulfilment of that commitment in the shape of those two measures.
The drainage measure is in two parts. The first part of that is an increase in the amount of moneys available for arterial drainage in the west of Ireland in the catchment areas of three rivers which will allow us to carry out the work on these three rivers, as has been provided for in the original plan. An extra £20 million has been provided over a period of five years to carry out that work. Involved here was an increased allocation of funds to deal with the fact that the cost of the work which had been planned back in 1977 has increased substantially in the meantime and it was evident that it would no longer be possible to carry out all that was planned within the financial provisions that had been made in 1978.
The second part of the drainage agreement which we got yesterday was an increase of 50,000 hectares, or 125,000 acres roughly, in the area which would qualify for field drainage under the scheme. The scheme previously in operation had provided for aids for field drainage for 100,000 hectares. Roughly that area is now covered by schemes approved and it seemed desirable that we should increase the total area covered by that scheme. We got agreement on that yesterday so that we can look forward to  further progress in the total drainage programme in the west. The importance of this, as the Deputies will know, is that drainage operations of this kind have a very substantial and immediate effect on the productive capacity of land. There-fore, I am very happy that we have managed to get agreement on these extra measures because that will make a very rapid difference to the productive capacity of land in the western areas and, there-fore, to the income possibilities of farmers in that area.
The second measure on which we got agreement in the Council of Ministers yesterday is a scheme of interest subsidies for farmers who have development plans under the Farm Modernisation Scheme, that is, for developing farmers as they are defined under Directive 159. This is a very timely measure. As Deputies know, we have a very serious situation on many farms, where farmers who are operating farm plans, whether they be development plans in the sense of the directive or their own plans in the case of commercial farmers, have run into trouble with the level of their financial commitments as a result of very rapid and substantial increases in interest rates over the planned period. I am sure Deputies understand quite easily that a farm plan which is costed out on the basis of a 12 per cent interest rate quickly becomes uneconomic or unprofitable when the interest rate increases to 18 per cent, 19 per cent, or even more in some cases.
We, therefore, decided that we should look at means of alleviating the burden of interest on farmers involved in farm planning. As part of the commitment given at the last EEC price fixing session, which I referred to a few moments ago, the Commission agreed to put forward a proposal on interest subsidies for developing farmers. That was agreed yesterday. That provides for a further 5 per cent interest subsidy available to developing farmers, both in relation to outstanding loans on existing farm plans and for new loans incurred on the basis of farm plans for a two-year period. The European Community will fund the cost of that measure in part. Fifty per cent of the cost of that subsidy will be met by the  Community in relation to subsidies for farms in the disadvantaged areas and 25 per cent of the cost of the subsidy will be met by Community funds again in relation to subsidies given to farms outside the disadvantaged areas. I recognise that there is one difference between that final result and the proposal as it was put forward by the Commission, the difference being that the original proposal envisaged that a 50 per cent rate of Community participation would be made available in respect of the subsidy on loans outstanding on farms outside the disadvantaged areas also. That proved to be a major point of difficulty in the discussions and, taking all the circumstances into account, it seemed prudent to withdraw a little on that aspect of the scheme in order not to jeopardise our chances of securing agreement on the scheme now.
I had two reasons for doing that. One was the fact that we need this scheme fairly rapidly for the people concerned and, secondly, I did wish to have some finality on the Community scheme because, as Deputies will know from the Government programme, we propose also to operate a similar scheme for farmers other than those in the development category. We could not proceed with the definition of the national level scheme without having very clear agreement on what was going to be the content of the EEC scheme. Those are the two EEC measures, the first of our three-pronged approach to the problem which I have mentioned.
The second part of our approach is to try to deal with the effects of inflation on the cost of farm inputs. One of the main problems faced by farmers in the last two or three years is the fact that we have had a rapid rate of increase in farm input costs, a rate which has not been matched by the rate of increase in farm prices. It is a period during which the effects of inflation on farming have become even more acute than they were previously. That is something which the agricultural sector shares with the exposed sectors of the economy generally. It is a problem which is addressed by the anti-inflation programme set out in our programme for Government which aims, among other  things, at securing a situation in which cost increases in our economy generally are related more closely to what the exposed sectors can bear, than has been the case up to now. It is very clear from the experience of the past few years that, if the exposed sectors of our economy, including agriculture, have to bear the same kind of rate of cost increases as we have in the sheltered sectors of the economy, they are in serious danger of losing their capacity to compete, not only in export markets but also with products which we import and which compete with products produced at home. For that reason and as far as agriculture is concerned, it is of primary importance that we get the rate of cost increase under control because, without that, we will find it much more difficult to get the kind of increase in farm output which we need, not only to increase farm incomes which would be our primary objective, but also to protect the jobs of those working in our food processing industries and other industries related to agriculture and to have any hope of increasing employment in these sectors.
The third part of our approach is composed of the specific measures proposed in this budget in relation to agriculture. I preface my remarks by giving a brief run-down on what the expenditure side of our proposals is comprised of. The original Estimate for the Department of Agriculture for this year came in net terms to more or less £170 million. This House quite recently passed a Supplementary Estimate for £35 million and, based on our examination of the situation in the Department in the various schemes we are running, it seems we will need a further £30 million or so before the end of this year to keep going with the schemes that are there. This is a clear case where the original Estimate and the Supplementary Estimate, both prepared before this Government came into office, were inadequate to run for the full year the full range of policies in operation at the time of the change over.
I know there are difficulties in relation to agricultural expenditure in that a great many of the schemes run by the Department of Agriculture are open-ended. It  is extremely difficult to say at the beginning of a year how much they are going to cost. One can never accurately predict what the uptake of the various schemes is going to be. In a number of cases, for example, the livestock headage payments under the disadvantaged area scheme and the farm modernisation scheme, the original provision was inadequate and we have to provide extra finance in order to keep those schemes working at the level which is demanded by the farming community. We have also made provision for new measures which are included in the Government programme, including the cost to the National Exchequer of running schemes in which there is an element of EEC finance. In approaching expenditure generally, we take the view that it is necessary, not only to look at the needs of agriculture and the various schemes which we have running, but also to try to keep expenditure within the limits dictated by the economic situation. We have, therefore, carried out a very careful appraisal of expenditure and resources and we have tried to concentrate expenditure in those areas which have the most direct impact on production.
Another factor which we have to bear in mind is that some constraints arise from EEC membership, in that there are a number of cases in which proposals which we put forward must be notified to the Community authorities. We cannot simply go ahead regardless until we have secured agreement or, at least, lack of objection on the part of the Commission.
Mr. Dukes: This was pointed out in our programme which was published before the election and which, I am sure, Deputy MacSharry had the opportunity of reading on a few occasions during the election period.
I would point out, also, that the question which I have just raised, that of national aid, is a rather important one for this country. It was raised yesterday by the current Council presidency, that is, the UK Minister, but there is a wider point here for us which is that, as an  exporting country, we need the gurantee that Community markets will remain open for our products. We, therefore, need the guarantee that the rules of the Common Market are applied fairly strictly. I am aware that one often hears people talking about the facility which other member States seem to have in breaking EEC rules and that if they can do it, why can we not? That is a very understandable point of view and one with which there could be a great deal of sympathy from time to time. On the other hand, if we acquiesce in flagrant breaches of the rules, or are seen ourselves to be one of the member States which plays fast and loose with the rules, we have more to lose than the larger member States. Given the state of our public finances and the size of our economy, we cannot afford to compete with much richer economies as to how much national aid we can give to various products. I make the point because it is one of the considerations which we must have in mind in our approach to agricultural expenditure and one which, as I say, we pointed out in our pre-election programme and, indeed, in the Government programme.
One of the specific measures for which we are this year providing funds is an increase in the ewe subsidy payable in the disadvantaged areas. The present rate of subsidy is £6.50 per ewe. We propose to increase this to £9.50 for every ewe in the mountain parts of the disadvantaged areas, up to the first 150. We propose also to maintain the rate of £6.50 on the next 50 ewes. We are putting a limit of 200 ewes on the number eligible for subsidy. The reason for this limit, quite simply, is that in relation to the cattle headage payments and beef cow headage payments there is a limit of 30 livestock units. The figure of 200 ewes corresponds to a figure of 30 livestock units. In the present circumstances, it makes sense to apply the same limit, in terms of livestock units, to the sheep scheme as applies to the cattle scheme.
In addition, we would provide for a ceiling on the amount of subsidy obtainable by any beneficiary who has a mixture of cattle and sheep. That ceiling would  be £1,750. The change there is, of course, that there is no ceiling on the amount of subsidy which can be received by any beneficiary under the present scheme.
The total cost of that measure, we estimate, would be approximately £2½ million this year and that £2½ million comes out of the additional £8½ million mentioned in the statement by the Minister for Finance as being extra funds available for expenditure in relation to agriculture. The other £6 million of that we propose to use to finance the national interest rate subsidy to which I referred earlier. We have already, in the total amount of expenditure, provided for a pre-budget increase. We have already allowed a sum of £5 million for the State's contribution to the EEC subsidy scheme which was agreed yesterday. We are allowing a further £6 million for the interest subsidy which we propose to pay to farmers in the commercial category and the other category who will not benefit from the EEC subsidy scheme. The precise form of these two schemes is now being worked out and I hope to be able to make a full announcement quite soon on the exact shape of the EEC scheme which we intend to operate and of the national scheme which we will operate for people not covered by the EEC scheme.
Mr. Dukes: The £5 million is part of the figure to which I referred earlier, when I said that we calculated that we would need an extra £30 million this year to cover schemes that were envisioned at the stage when the changeover came. As the Deputy knows, it was prudent, at least, to expect to have to make some provision for this country's participation in the cost of running the EEC scheme, because it had been expected. It had been hoped that we would get agreement on the EEC scheme at the July Council session. In relation to other specific measures for agriculture——
Mr. Dukes: It is not in the first Supplementary Estimate of £35 million which the House passed a couple of weeks ago. It is, as I say, in the further £30 million which needs to be made available in order to keep the then existing schemes in operation, and to meet the foreseen expenditure before we started implementing any new policies. To make it quite clear to the Deputy, we needed £30 million on foot of those items which were foreseeable, before implementing any new policies and we are making £8½ million extra available to implement the new items of policy which I have just mentioned.
Mr. Dukes: In relation to farm costs, the Deputies will have noted that we are proposing to reduce the rate of value-added tax on contractors' charges from 10 per cent to 3 per cent as of 1 September. This measure will be welcomed by farmers as a relief coming at a very appropriate time. In addition to that, we are increasing the flat rate reimbursement of VAT to farmers from its present level of 1 per cent to 1½ per cent. We are doing this for two reasons. First, there was evidence for some time that the flat 1 per cent rate was inadequate to cover the costs actually incurred by farmers and, secondly, we have increased the rate in order to offset the increases in VAT on farm input announced in the budget statement.
I have just outlined the first measures  which we propose to implement on foot of the Government programme in the agricultural sector. In addition to those measures. I am taking action immediately to set up, first of all, a special committee on food processing, to advise on policy measures in this sector, which will allow us to get greater benefits out of the undoubted quality of our products and out of processing those products. All of us in this House would agree that a great deal of progress still remains to be made in our food processing, both in terms of the range of products being manufactured and in terms of the total amount of VAT and, therefore, the total amount of employment gained from our agricultural production.
In addition, I will be proceeding almost immediately with setting up the machinery required to draw up a four-year plan for agriculture. We propose, as far as possible, to run our agricultural policy on a coherently thought-out basis and want to make sure that we have before us targets which are at once realistic and clear, to which farmers and the food industry can work. Finally, I am immediately setting in hand a study on grain handling because, as Deputies will know, at every harvest we find problems with handling our output of grain, problems which need not necessarily arise if we had a more co-ordinated approach, on the part of both farmers and the grain trade, to dealing with our production. The implementation of other measures in the Government's programme for agriculture will follow later.
I come now to the reorganisation of our spending which refers to possible changes in the farm modernisation scheme, to which I referred in reply to remarks made by Deputy Nolan. We aim to direct a greater proportion of total spending in that scheme towards uses which will have a direct impact on production. Given that we do not have a bottomless purse, that means we will inevitably be diverting expenditure from uses which have a less direct impact on the level of production. For example, we propose to limit the grants provided now under the group fodder scheme to silage  making machinery. At present those grants are available for both haymaking and silage making machinery and experience shows that most of the expenditure goes on haymaking machinery. Given the obvious desirability of increasing the production of silage and changing the emphasis in favour of silage rather than hay, we believe it would be appropriate to change the conditions under which these grants are given and to make them available only for silage making machinery.
Another of our proposals will be to ensure that in the farm modernisation scheme the grants are given for buildings which are not over-elaborate and we will be laying down specifications for buildings which will qualify for grants. This is already happening because farmers have been doing that themselves over the last few years, given the financial pressures that were on them. As I said, we propose to modify the standards for buildings in order to get better value for the money going into the scheme and to increase the emphasis on the more directly productive uses of the funds made available.
We also propose to suspend the grants for mobile equipment. This is one of the smaller parts of the scheme which, in our view, is less valuable than other parts and in the interest of better value for limited amounts of available public funds we propose to suspend these grants.
In spite of those measures it is evident that the cost of the farm modernisation scheme is increasing, and for a number of reasons with which Deputies are well acquainted. Given the financial circumstances in which we find ourselves, we therefore propose to bring about a modest reduction in the overall level of grants. I should add that all the changes I have been talking about, that is changes in the uses for which money will be made available and in the level of grants to which I have just referred, will be implemented in 1982. We cannot do it in 1981 because most of the payments that will be made this year are on foot of development plans which have been approved already and it would be wrong to change the rules in the middle of the game. The  changes I am talking about will be implemented next year.
Mr. Dukes: Details of all these measures will be announced in due time. Even given the changes which we propose to make in the farm modernisation scheme, we will still be spending over £40 million on that scheme and on the western drainage scheme. This represents a very considerable commitment by the State to measures designed to improve the productive capacity of agriculture and to assist farmers in planning their output.
On the reorganisation of expenditure, we have been looking at our expenditure in relation to bodies covered by the Vote for my Department and, as has been pointed out by the Minister for Finance, we will be making certain economies in relation to those bodies. There is another point to which I will give some consideration, although it is not a matter which produces economies immediately. I will be conducting a review to see whether any rationalisation is possible among the bodies which have been set up to deal with various aspects of the horse industry.
Mr. MacSharry: On a point of order, could the Minister tell us where in the budget it said there would be changes in the disadvantaged area scheme, the sheep subsidy scheme and the headage grants? Is he announcing now——
Mr. Dukes: For the Deputy's information, I have detailed the changes in the sheep subsidy scheme and the western drainage scheme but I am not sure if there is any other point in the disadvantaged areas scheme I have not dealt with. If there is, it is an oversight.
As I pointed out, we have provided a significant amount of extra expenditure for agriculture, even given the very difficult economic circumstances with which we are faced. We have done this because we believe that one of our national priorities must be to increase as rapidly as we can the volume of production in this sector. We have shown that we are not going to proceed with indiscriminate increases in expenditure in any area of agriculture. I wish therefore to take a very reasoned approach to spending in this sector. For that reason I hope Deputies will adopt the same approach in agricultural debates here. I propose to adopt that kind of approach in my dealings with representatives of the main farming organisations, the bodies finance through my Department's Vote and the various other bodies which have contributions to make in this area. While we are taking a very critical look at the way we are spending this money, it is also a very constructive look and that is the way we intend to proceed.
Mr. N. Andrews: I want to congratulate the Minister for Finance on the splendid delivery on his budget speech yesterday. When his speech was examined and analysed by political commentators it transpired that it was indicative of the confidence trick which Fine Gael perpetrated on the electorate in their pre-election programme. The trick was somewhat similar to that perpetrated outside the Galway races by the three-card trickster ripping off the punters. I do not say that lightly because since my entry to this House in 1977 I have always said that people who are elected here have the best motives in the world. Each Member has the best interests of the nation at heart. I believed that until the recent election when I canvassed my constituency and was told at one door after another “We believe Fine Gael. We believe the promise that they will give us the £9.60, improve the standard of living and stabilise prices”.
 Deputy O'Malley referred yesterday to the lies in the Fine Gael advertisements. On Tuesday, 9 June The Irish Times carried an advertisement with the heading “Fine Gael Nail the Lies”. The Minister for Agriculture should not smile cynically. This is the lie which was published and which the Government are living. Let me tell them how they came into power on a lie, a confidence trick.
Mr. N. Andrews: We delivered. The first lie was that Fine Gael would strictly control prices of petrol, beer and spirits. Yesterday's budget effected massive increases, not affecting Members or anyone earning over £10,000 a year. These increases affect the working man. When one examines the paltry increases in social welfare payments one really sees the true colour of the Fine Gael blue. Blue paper, blue theories and the leopard will never change its spots. According to today's edition of the Evening Press the little luxuries of lite will cost £82 per week when the full impact of the budget take effect on 1 September. A person consuming a modest three pints per day will have to pay an increase of £6.85 per week. The old age pensioner gets an increase of £1.55 per week. Do the parties opposite not feel ashamed? I know that the situation is difficult and certain measures must be taken, but could they not have been a little more generous to the weaker sections?
 I will now discuss the second lie for the benefit of those opposite who have broadened the base of Fine Gael and swept into power at the expense of former Deputies Horgan and Quinn and others in the Labour Party. Fine Gael nailed the lie that everyone will pay more tax and stated that all tax payers with incomes under £50,000 would have more take-home pay. How much more will they take home after the Minister's budget? Who is telling lies? You are telling lies and your Government is a lie from beginning to end.
I see Deputy Richie Ryan strolling into the House, a decent and honourable man in his day who told a few fibs or white lies. He is getting the taste of the front bench again, the feel of what it was like.
Let me come to another point in this lying programme, namely, that rates will not be reintroduced. During the election campaign I took part with the present Minister for Finance in a radio programme where this matter was discussed. Deputy Bruton pointed out that there was no question of the reintroduction of rates, even though he had previously said that this should be done and that there was no justification for their abolition.
He also denied that in Government Fine Gael would introduce a levy. This morning on radio he talked about charges for planning permission, street lighting, dustbin collection and information from the county council. Will this be called rates, a levy or charges? I have no doubt that ultimately this Government will continue with the big lie and reintroduce rates under another name. Rates will be introduced by way of a levy or charge on the citizen who approaches the county council for information or services. That is what the Minister said on radio today although he denied it yesterday. The Minister denied a lot of things yesterday. When we teased out the budget we discovered that the Minister did not know what he was talking about, that he had taken his brief from the Taoiseach, the man with overview and he was caught out in a number of figures yesterday and today on radio. He is the Minister responsible for the future welfare of the nation. Deputy Bruton's delivery was par excellence yesterday but the problem was that when we got down to the nitty-gritty we saw the inadequacy of Fine Gael thinking.
The Minister for Agriculture referred to the food processing industry which was one of the first things I referred to when I first came into this House. I said that that industry had not received adequate support and that we had untapped resources in it. I am glad to hear that the Minister is in the process of following up that line of inquiry into developing the potential of food processing. Many thousands  of jobs could be had in that field.
The pre-election programme favoured the better off elements in society. But as far as the poorer sections are concerned this budget is an act of political terrorism. This morning I walked through a working class part of my constituency and people who would not have talked to me three weeks ago approached me to tell me that they were terrified as to their ability to pay for these increases. The poor will suffer but it will be no problem to the better off people although they will be somewhat affected by it. When I say the poor, I mean anybody earning under £10,000 a year, paying a mortgage and trying to rear and educate children. An advertisement in The Irish Times prior to the election said that the Fine Gael anti-inflation plan would hold ESB, postal and telephone charges down, would increase child benefits by £3 per week, would pay £9.60 direct to the wife at home and went on to ask could one afford not to vote for Fine Gael. The Minister for Finance, Deputy Bruton, and Fine Gael have given us our answer. Had they known the truth the people could have afforded not to vote for Fine Gael. Fine Gael came to power on a lie.
My constituency colleague, Deputy Kelly, is one of our finest orators, a man who chooses his words carefully. On a radio and television programme he spoke about contamination and when tackled repeated that he would not be contaminated by the ragamuffins in the Labour Party, with their false ideology of the left. When the Deputy was tackled a third time he said “what I meant was `diluted”'. What he meant was contamination. That word “contamination” cost Labour their Gaeity Theatre partners seats in Dublin South, a seat in Dublin South Central and a seat in Dublin South East. Indeed, it cost the Labour Party their leader. Deputy Kelly says——
Mr. N. Andrews: The Minister, Deputy Kelly, made a speech in this House on 4 February 1981, as Deputy Kelly in  which he said that the punters wanted the earth because they were skilfully told that they could have the earth if they voted Fianna Fáil in 1977. Did not Deputy Kelly learn very quickly? Within four years, £1,000 million worth of promises. The Minister promised them the earth but he gave them a pickaxe and a shovel. Was it not the same Deputy Kelly who went to a coffee morning with the silk stocking brigade in Dundrum during the election and who when asked how he would pay for these promises said to the darling matrons in Dublin South, “I am sure you will understand that it may not be possible to meet our commitments when we see the financial chaos of the balance of payments deficit?” Deputy Kelly was telling the truth but neither he nor the Fine Gael Party were telling the truth to the electorate. He and his party had deceived the people down along the line. The astonished matron said, “Isn't he so honest?” Is not Minister Kelly so honest? They came to power on the basis of one lie followed by another. The Minister for Finance. Deputy Bruton was a Mr., an unemployed candidate in the last general election who appeared with me on radio.
When asked how he would pay for the promises set out in this deceptive, lying Fine Gael document, programme, manifesto, whatever one likes to call it — and I am glad to see that nobody on the far side of the House is denying that it was a lie, because it was a lie from beginning to end — when asked how he was going to pay for it he became confused; he did not know how he was going to pay for it and said he would have to wait until they got into Government. Yet they had thousands of pounds worth of advertisements in the newspapers saying what they were going to do but not how they were going to pay for it. Now we know how they are not going to pay for it. The Fine Gael programme was not an innocent lie. It was a dishonest, total lie to the Irish people. How they can ever again face the electorate with promises of any kind I do not know. In 1973 they did the same thing. In 1977 they did not because they did not know what they were doing then.  The have now broadened their base as a party but they have lied so terribly to the Irish people that they stand condemned. I would suggest to them that, having examined their good, upright consciences, they should consider getting out, going before the people on the programme they put before this House only yesterday — this savage budget, these impositions of taxes. VAT and everything else that militate more against the working people than any other budget ever did. It hurt the old age pensioner, the people relying on social welfare more than any other section of the community. As I said yesterday, it is a savage anti-people, anti-worker budget, one that ill becomes any Government. It shows a total lack of imagination.
Mr. N. Andrews: Rising prices and unemployment must be tackled immediatley, it was contended. These rising prices were imposed in one fell swoop, not 3 per cent, 4 per cent or indeed 5 per cent. They have added a minimum of 7 per cent to the consumer price index. There is another of their promises out the door, and they can smile all they like.
Mr. N. Andrews: Prior to the budget we were told that the country faced a very difficult situation, that the balance of payments deficit was running out of hand. How could anybody in their right mind go before the Irish people and place a programme that promised £1,000 million in goodies then come back into this House and not only not give it to them but take it from them?
Mr. N. Andrews: Paul Tansey, a man about whom I know nothing — I would not know him if he were up in the Gallery — a writer in The Irish Times, speaking about the Fine Gael proposals prior to the election, described them as a scheme cobbled together by Fine Gael and as being neither fish nor fowl. He contended there were no grants or credits allowed to the poor in the proposed introduction of tax credits. To the poor, to the medium poor, to the rich or the near rich, there are no tax credits. It was such a “con” trick it is hard to believe they can lie happily in their beds night after night, then come into this House, stand up and try to justify it. A family man, with two children, living on an income of £3,000 a year has no chance of gaining any concessions whatsoever according to Paul Tansey. But the fact remains that a family man with two children on £5,500 a year will gain no benefit whatsoever. Such is the level of savagery of their monetarism.
Mr. N. Andrews: The real difficulty I have is: how in the name of all that is holy can the Labour Party support them? How can the socialist alternative of the eighties support them? How could the Tánaiste after the election go the Gaiety and justify joining them, the socialist alternative of the eighties? What did he care? I will tell the House what he cared: he cared as much about the Labour Party as he cared about his leader. He cared as much about the Labour Party and he will give the Labour Party as much loyalty as he gave Frank Cluskey. If I were the Taoiseach, Deputy Dr. Garret FitzGerald — an honourable and decent man, too — I would not turn my back too quickly on the Tánaiste. In fact, I would not get up out of my seat if he was sitting beside me because that man co-ordinated the defeat of a most honourable man, former Deputy Cluskey——
Mr. N. Andrews: An honourable and decent man defeated by a cabal in the Labour Party, by the loyalists, by the Tánaiste, Deputy Michael O'Leary. I want to say to the Labour Party that if they expect leadership from Deputy Michael O'Leary, the Tánaiste, they have their work cut out for them. They will get none. They will get the same kind of loyalty Frank Cluskey got. And, if the Labour Party think they will get any loyalty from Fine Gael, let me tell them that there was no compassion shown when Deputy John Kelly referred to contamination, stole the thunder in Dublin from the Labour Party, stole their voters and saw to the defeat of former Deputies Frank Cluskey, John Horgan and Ruairi Quinn, and broadened their base at the cost of the Labour Party.
Mr. N. Andrews: I am not shedding tears for anybody but I very much regret that the people believed the confidence trick Fine Gael perpetrated on them. Fine Gael have broadened the base of their party at the cost of the Labour Party. Fine Gael have some very odd people in their party as a result of that, people who would not normally feel safe with them. Long may the Fine Gael Party keep them. The Labour Party socialist alternative is amach an fuinneog. Why is it out the window? It is because Fine Gael are taking them on the right and Sinn Féin, the Workers Party are taking them on the left. There will not be much left of  them after the next election. Will the Deputies listen to what Michael Mullen, the leader of one of the greatest trade union groups in the country said about the Fine Gael proposals prior to the election? He said they were dishonest and deceptive. He indicated that no one should be fooled into believing that the Fine Gael tax proposals represented reforms.
Mr. N. Andrews: If it hurts the Minister of State it may be eased by the fact that he stole the thunder and he now has the little old State car and he can drive around in comfort. I am glad to see that the Minister for Industry, Commerce and Tourism was not interested in taking up the offer of a State car. I want to come to the Fine Gael environmental plan for Dublin, entitled A New Deal for Dublin. When I saw this I said, “Is this not fantastic? We will have a new environment, we will have free buses from one canal to the other, we will have a great city and all the derelict sites will be wiped out”.
Mr. N. Andrews: Deputy Briscoe is a member of Dublin Corporation and he knows what the facts are. Not only do we not have a free bus service but we have not any bus service. Fine Gael put the country back on its feet quite firmly because there is no bus to be got anywhere.
Mr. N. Andrews: This city has been  paralysed. The city centre traders are near to bankruptcy. The Deputies on the far side of the House can laugh at the city centre traders going bankrupt but they are not making any effort to correct the situation. We have not a bus service. The few tourists who come are stranded. They have to take taxis, but that is all part of the old Fine Gael thing: if you can afford to come to Ireland you can afford to take a taxi. What do tourists need a bus for? The workers in the suburbs cannot get buses to town. They have to walk or depend on the good will of their neighbours. The Army are providing a service three weeks after the strike began. Where were Fine Gael for the past three weeks?
Mr. L'Estrange: That was the time when Fianna Fáil were appeasing everybody when a general election was in view. We will be paying a long time for Fianna Fáil's give-away tactics and winning the election.
Mr. N. Andrews: The Minister for Labour sits in his office looking over his shoulder at the trade unions and at the business people unable to do anything about this unofficial strike. He should resign because he is not doing his job. Why has the CIE strike not been settled? Why did it take so long to get the Army to provide a minimum service for the workers of the country? Why are Fine Gael so anti-worker and anti-people? The Minister of State can laugh but he knows I am giving the facts.
Mr. N. Andrews: Whom are this patch-work Government, made up of bits and pieces, some elected and some not elected, fooling? We were told that an annual fine would be put on people who have derelict sites around the city of Dublin. Dublin Corporation own most of those derelict sites and if they do not own them the finest financial supporters Fine Gael ever had own them. Who runs Dublin Corporation? Fine Gael and Labour do. Will they fine themselves? I do not believe they will any more than I believed their promises beforehand. They were very convincing and sold very well. I congratulate Fine Gael for lying to the people. There is no reason why those derelict sites cannot be taken care of now. Dublin Corporation and Dublin County Council are controlled by the Coalition and have been for years.
Mr. N. Andrews: The Tánaiste worked hard to see that Mr. Cluskey would not be leader after the last election, and he succeeded. Instead of having to carry Deputy Cluskey screaming from this House he and others in the Labour Party arranged that he would be defeated at the polls and thus make way for Deputy O'Leary, now Tánaiste, to take over as Leader of the Labour Party. Deputy  O'Leary has succeeded in his main ambition in 1977 to become Leader of the Labour Party so that he could ultimately become Tánaiste, bag his Mercedes, take a shot-gun with him down to Meath and join the hunting, shooting and fishing gang there. There he is, happy as can be, but he does not give a damn about the Labour Party or Fine Gael.
As I said earlier, “Turn your back lightly on the man”. I think everything necessary has been said about the budget or will be said later. The lies have to be nailed as was mentioned when this advertisment was put in The Irish Times. Members opposite should read it. I hope they do not have it over their beds because they will not have an easy conscience with it. Let me refer to the Taoiseach, Deputy FitzGerald, an honorable, decent and compassionate man, a man who, we are led to believe, has the answer to all our problems: “To all supporters, old and new I give an unqualified assurance that the programme which we will implement in Government will be the Fine Gael programme, The aims which we have as a Government will be the aims we express in our programme. Fine Gael are prepared to forego office rather than compromise on the fundamental elements of the programme we have put forwared.” On that basis the Tánaiste stands condemned.
Mr. R. Ryan: I hope I can enjoy a joke as much as anybody else. Listening to Deputy Andrews one would think he came from the entertainment and not from the accounts department of RTE but this whole debate if I may speak with all due humility has been farcically treated by Fianna Fáil.
Mr. R. Ryan: I notice the Deputy mentioned that earlier. Many participants in  this debate have not lived up to the gravity of the situation. We have had at least half the time of this serious debate filled with no more than sneers, jeers, jokes and laughs. As a traditionalist I have always argued against television being brought into Parliament but as years go on and I witness the sniggers and jeers, the laughs and cynical smiles and hear the puerile contributions made by Members like Deputy Niall Andrews and some members of Fianna Fáil, I say the sooner television comes in and remains here so that people can see what is going on the sooner we will get some sense of decency, reality and seriousness and some exhibition of courage. We might have problems dealt with seriously—not as a matter of strategy about how to win a football game depending on how slippery the ground may be or on which way the wind is blowing—or what dirt can be used on an opponent in order to injure him—but we might have the problems of our people properly dealt with as the people who sent us here have a right to expect. If doing that means that you do not win out electorally at least you will have the comfort of doing your job properly in the way in which our young people would want it done. That is idealism. Idealism is a philosophy which endeavours to achieve the best; cynicism is a philosophy which laughs at the world and expects the world to comfort only the cynics. That is what we have from Fianna Fáil.
I had not intended to open my contribution in that angry mood but I have heard so much of the trivial debate that Deputy Andrew's remarks were just about enough to burst whatever patience I had left. Our people do not want us to be scoring petty debating points over one another. We can leave that to the pubs. I went into a pub on the way home last night. The jokes were as good as they usually are on budget night. I was invited to join the company, to pay for the last cheap drinks and sit amongst them so that I could be hammered. That leg pulling is fair enough in a place of relaxation and entertainment. Parliament is supposed to rule, to consider matters seriously. It is not the place for public house jibes. Fianna Fáil are a party of cheap  jibes and that is why they are unworthy to hold office.
It has been a tiring, wearisome, puerile debate. I can understand the embarrassment of the Opposition; they created the mess that this Government have to clear up. I would ask that the country ponder over the question that was being asked everywhere—in the media, on television and radio, in pubs and in private conversation—four years ago when in 1977 our Government were defeated in a general election. Everybody asked did the Government get their timing right? Would they not have been wiser to delay the general election until 1978 so that people would see what subsequently happened, that the economy was sound and was improving, employment was increasing, the net burden of taxation was falling, the life style of everybody was improving and Government expenditure could be safely increased without adding to the national debt?
There was no argument from our successors that they entered into Government and found the cupboard bare. They could not say it. Nobody would have believed them. They would have been shown to be liars. They did not dare say it. What they said was that we were not spending enough, that we had over £300 million already borrowed which the miserable Minister for Finance would not spend on a splurge. We had Deputy Colley getting into his aeroplane, pulling the throttle open, saying he would get the economy zooming forward and upwards. He shot it up all right but it came down in a short time like a burst balloon, fallen flat. With all the moneys they then borrowed they could not get it up in the air again, not even a foot from the ground.
I am on public record as having disagreed with my own party after the Donegal by-election when I said, we should say to the Government, to Deputy Haughey in particular: “we are disappointed, but we recognise you have a mandate to govern; you have a majority of 18 with which to govern; govern until 1982.” But they did not exhaust their mandate. They ran out on their responsibilities. They hoped they would get  away with it just before the people realised how bad the situation was. I support the clear indications given yesterday by a courageous, brilliant and refreshing Minister for Finance, Deputy Bruton. He revealed the true figures yesterday. May I say with all humility that I was only £50 million wrong because ten days before the election I forecast that the deficit this year would be around £1,000 million? I used the word “around” to allow for a margin of error. I think I am entitled to say that I was on target. This is a reality. The former Taoiseach knew it. The Department of Finance knew it and told the Taoiseach and the Government the real figure.
I cannot acept a slur by any Government and especially that delivered by the former head of the Government, a former Minister for Finance, Deputy Haughey, who said he had been misinformed by the Department of Finance who had told him that the annual rate of price increase was ten per cent instead of 18 per cent. That is a mis-statement of the facts by Deputy Haughey. Neither can I accept other criticisms that I have seen in recent days of the Department of Finance, that they have suddenly changed their opinion because their latest outlook and review of the economy in 1981 is so gloomy compared with earlier ones. The political head responsible for reports of the Department of Finance is the Minister for Finance. He gets drafts from his Department but he has the final word. He alone may decide what figures and statements may be included. He may decide that there is over-estimation or under-estimation by his officials. He is the person responsible for all the text, not the officials. To the best of my knowledge officials have always honestly and honourably discharged their function of giving correct and objective advice. If Ministers reject advice and fiddle figures and publish in the name of the Department reports that are not in accordance with the facts given to them, the blame and the shame lies with those responsible, namely, the political heads. As everyone knows the real head of the Department of Finance while Deputy Haughey was Taoiseach was Deputy Haughey. It was  not the poor, unfortunate Deputy Gene Fitzgerald. He is very good at shouting the cheap remark but he is not very literate, poor fellow. I am not going to question his capacity to be numerate because that might be too embarrassing. That is the embarrassing reality—
Mr. R. Ryan: I will withdraw my criticism as to literacy and numeracy and will leave the facts to speak for themselves. In the name of this Parliament, I want to redeem the good relationship between parliamentarians and public servants who have given objective and honest advice to all Governments. We cannot accept that any office-holder should abuse his position to impugn his civil servants——
Mr. R. Ryan: I will deal now with another aspect of deliberate or incompetent miscalculation. Notwithstanding the additional money borrowed from aboard and the still unknown money that was committed secretly in the weeks before the election, many services were not provided this year because they cannot be paid for. In 1977 Deputy O'Donoghue, who was then a Minister in the Government, said it was better to dig holes and fill them up again rather than having people idle. Now we have the holes, not having paid men to dig them, but we have not the money to pay men to fill them up again. That is the result of the failure to provide money for the most humble service, a highway to allow citizens to pass and repass.
Our most needy people, the sick and injured, the impoverished, the mentally and physically handicapped, have been left short of money that was promised and committed. Many of the facilities provided in the days of the splurge cannot  be used. I am talking about empty hospitals, clinics and homes that cannot be used because they do not contain even the basic furniture necessary. Three weeks before the election a new labour exchange was formally opened with a great fanfare, but the Minister could not get either a telephone or furniture for the premises. On the morning of the opening a telephone was rushed to the premises and was put in with the loose cable ends dangling from the table and a parcel of official paper put against it to give the impression it was connected to the wall. Fortunately a journalist endeavouring to contact his newspaper discovered the subterfuge and disclosed why the telephone did not work. This kind of dishonesty I find quite sickening and deplorable. I see smirks of shame on the faces of a few people opposite but not as brazen as when Deputy Andrews was speaking.
What is the reality in relation to the health services? On the hospital end where honest estimates stand at £477 million, there is a shortfall of £44 million. But that is not the whole story. The general medical services, the private hospitals and nursing homes and the homes catering for the mentally afflicted have been left short of millions of pounds. There is something contemptible in the extreme in doing as Fianna Fáil Ministers did. I know of one case where some months before the general election invitations were sent to all and sundry to come to the opening of a new home for the mentally handicapped. Among those invited were the unfortunate mentally handicapped children who had been enrolled for the home. They came with their parents, and the photographers were brought in to make sure the great occasion was recorded for the press and television. They all assembled with the Minister, the photographs were taken and published. The day after the home was closed and the children have not since crossed the threshold because furniture and facilities were not provided and teachers and nurses were not recruited to look after them. That is only one case I know of — I do not know how many tens and hundreds of such cases arose. These shabby incidents were  repeated time out of number across the country. Yet Fianna Fáil have the audacity to say that the money is there. We know the cost of actual omissions. We have not yet counted half the cost of the promises and commitments and of the misleading of the people that occurred in the past four years. We may never know.
Mr. R. Ryan: Many of us are long enough in the tooth not to always expect what Deputy Colley in his innocence some years ago urged, namely, high standards in high places. We have come to expect from Fianna Fáil the lowest standard in many ranges of their activities but I think that in the past few years they have stooped even lower than I, with all my experience, and I suppose some cynicism, had come to expect from them. The result is an appalling debt that unfortunate young people particularly will have to pay because they will have to bear the lion's share of the enormous debt incurred in the past four years. More than half of this money has been spent without significant advantage to the people but with much harm. Most of it was spent in a way which fuelled the fires of inflation to such an extent that it will take us decades to cool the fires of extravagance that Fianna Fáil set alight. It took courage for the Government to produce this budget — courage of an unusual degree and the kind not expected of politicians. I want to point out that this cannot be the end of the action that is necessary to get our budget, our economy and society right.
Understandably on a budget, there is concentration by some speakers — not so much from the Opposition this time — on figures, without sufficient appreciation of the consequences of the various items of expenditure, saving and so forth. Today, for instance, there was considerable comment in a number of cases about the depressing effects of this budget. Allegations have been made that it will lead to fewer jobs. In my opinion, it will have the reverse effect.
It is significant that Ireland, with its  highest rate of inflation, its highest Government deficit, its highest rate of Government borrowing, also has the highest rate of unemployment in the European Communities. There is a direct relationship, an inescapable connection, between Government expenditure and the rate of inflation, and it is because that fundamental truth has been ignored since 1977 that we have a situation in which our rate of inflation has lost more jobs in Irish industry, commerce and on farms, throughout many services, than were created by the Government in the public service. The Government service has been inflated by 10 per cent in numbers since 1977. But the loss of employment in the private sector, what is called the open vulnerable economy where people have to compete with the rest of the world for the sale of their labour, their services, their goods, has been greater. The productive end of our community has shrunk to support a public sector which while performing in many cases useful and essential services, is frequently not generating the wealth necessary to sustain those services.
As I have said on many occasions in the last four years, we had from Fianna Fáil policies which were as wrong as wrong could be. The world economy was improving substantially in 1976, 1977, 1978 and 1979, but while we were in office for half that period we did not, during a natural healthy expansion of our economy in line with world economy, spend as though we were in the depths of depression. But our opponents entered Government at a time when the economy was in boom. They pumped in money like drunken sailors at a bar trying to impress the girls around them, not caring that they had people at home whom they were obliged to support, not caring that they were incurring debts and not caring about the morality of the whole exercise.
I emphasise that part of the depression at present is and will always be when it occurs in Ireland — just as an improvement — attributable to world circumstances. But instead, of saving for that rainy day, instead of cooling people's expectations in a time of boom, the former Government spent when things were  booming, inflating peoples' expectations. They paid increases in wages for beyond what was necessary to keep in line with the cost of living. The result was that, instead of achieving what they had promised — a 3 per cent reduction in imports — they actually increased the importation of non-essential goods by 9 per cent. The additional money which was mis-spent by them, instead of benefiting Irish jobs and the Irish economy, was borrowed abroad and left abroad to buy cheaper foreign goods and services to compete against Irish producers. A more lunatic policy one could not conceive. If a first or final year student of economics were to suggest that one should borrow in order to hand the money back to the lender for goods which the leader would supply you with and that you could sustain your economy by so doing, the student would quickly be failed, and rightly so.
In my opinion, the most encouraging part of the Minister's speech yesterday was his return to a theme which he has spoken about on several occasions. When I was Minister for Finance I advocated more information should be given to Dáil Éireann and the public about Government expenditure. He was one of those who supported me in that agrument, publicly and privately. Since we left office, Deputy Bruton published a paper and delivered a number of speeches on that theme. I am convinced he was on the right lines when he spoke about the need to publish Government Estimates several months in advance of their being debated in plenary session.
I was disappointed when he spoke about postponing the publication of the 1982 Estimates until November next. This is the time of the year when Departments are drafting their Estimates, when the Department of Fiannce request all Departments to produce their Estimates before the end of July. I believe the time has come when the Department of Finance should publish the Estimates as and when received from other Departments. Then the electorate would understand who are the big spenders. The electorate would see who are making the big  demands. At the time of the publication of the Estimates when received from the Departments, the Department of Finance should publish a clear statement of the kind of taxes that would be necessary to finance the generous expenditure proposals being made by spending Departments. This would be the most effective way of establishing beyond any dispute the direct connection between taxation and expenditure.
Until such time as the spending Departments are exposed to the same kind of criticism as the Department of Finance are subjected to, we will not get a proper appreciation of Government finances. Far too much attention is given to and far too much drama is related to budgets, be they annual or supplementary budgets. It is because of that drama, which is solely a British practice, that the finances of this country and Britain are so astray. In other countries of the EEC the practice is to publish the Estimates six months or longer in advance of the year to which they relate.
Unless we publish the Estimates early, then the electorate will not comprehend the consequences of the pressure from spending Departments for more and more money. There is something wrong with a system of democracy in which a spending Minister is not regarded as a hero unless he spends more and more money and in which a Minister for Finance is not regarded as a hero unless he borrows the money to feed the enormous appetites of the spending Departments. That is the type of democracy that gets itself into the kind of mess in which we are at present and in which Britain has also been for so long.
We therefore should carefully consider the need to publish Estimates when drafted by individual Departments. Then the debate can begin, not merely between competing members of the Cabinet, not only secretively between officials in the various Departments, but in public. This is the surest way of promoting understanding of the enormity of the bill and the need to cut it down. It is a recipe for sanity.
In a country which considers itself to be radical and reformist — I offer this  thought to a government which I regard as being both, and that is why I support them — we should consider seriously whether all old policies and practices are good, whether they meet the needs of today. I believe that in many cases we would find expenditures and programmes which began half a century ago or less are not suited to the requirements of today. Annually a Minister or Department offering the continuation of old programmes should be obliged to justify them.
Unfortunately we tend to accept that the only expenditure requiring justification is a new expenditure. All too seldom do we criticise existing expenditure. In fact, if there is a proposal from a prudent Minister in any spending Department or in the Department of Finance to cut back on an existing programme, the unfortunate Minister is subjected to jeers and boohs and howls and criticisms, angry deputations and delegations and protest motions and condemnatory resolutions of all kinds, although in fact he may be doing something which will be of considerable benefit to the economy as a whole and to many of the previous beneficiaries of a worn and inefficient scheme. A country will not thrive if what is old and inefficient is untouchable.
That is why I say we need to see Estimates many months in advance of Budget time to have them considered by committees of the House instead of debated in the kind of ragged, scattered, puerile speeches which we have heard on many occasions in the course of the discussions yesterday and today. I would remind the House that the Joint Oireachtas Committee on State-Sponsored Bodies, which very many members of the House opposed for a long time is proving to be quite a significant success. That is the view of members, journalists and the public in general. It has been expressed on many occasions by our friends in the Fourth Estate. Semi-State bodies, which previously used to squirm under secret dictats from Ministers and which were obliged to engage in programmes which they knew were not desirable or efficient  and in many cases were quite contrary to the objectives for which the companies were established, are in many cases delighted with the work of the Committee. Semi-State bodies have been released from the dead-hand control of Ministers and Departments. Where they are in difficulties they are able to explain and justify their difficulties to the committee. On many occasions, I noticed in the Committees reports, Semi-State bodies receive support from all parties in this House and the other House for recommendations they had been advancing without success to the Departments for very many years. While a Dáil Budget Committee will certainly throw additional work on Deputies, I believe that Members will find far more job satisfaction in sitting on such a committee reviewing proposals of all kinds for State expenditure and not being confined as at present to looking historically at past expenditures to check whether they were in accordance with the authority given for them.
The kind of budget preparatory activity I propose takes place in most advanced and progressive parliamentary systems but not in the British one. There are many people in Ireland — not merely those who engage in mob riots — who would argue that we should not copy British example. We follow slavishly the worst example of one of the most inefficient Parliaments in the world. If there are those among us who believe we should follow what is worthwhile irrespective of origin we should look at some of the committee systems which have operated in the British Parliament over the past decade or so. They have at least made a move into the twentieth century. We who regard ourselves as a reformist and radical country find ourselves with a neighbouring conservative country moving ahead of us.
We have occasion to hope from what we heard from the Minister for Finance  yesterday. He does not want to preserve his Ministerial dignity in splendid isolation. He does not want to perserve his personal Ministerial supremacy. He knows it is a myth. He wants to share responsibility. Any person who has ever been in Government, and particularly in the Ministry of Finance, knows that the myth of the all-supreme Minister for Finance went out long before this State achieved freedom. It is good that responsibility for taxation should be understood by all the people's representatives so that there would not be any taxation without the representatives of the people being fully involved and held responsible for that taxation. Opposition as well as Government.
When we were in Government from 1973 to 1977 Deputy Colley, who was then the Fianna Fáil spokesman on Finance, refused to participate in any committee which the Government might establish for the purpose of reviewing the State's finances. When he became Minister for Finance we renewed the Budget Committee suggestion and again it was spurned. We understand now why. The Government of the day would not have liked us to know the mess they were making of the economy and finances of the country.
We now have an honest Government ready to explain everything and wanting the people to understand that there is a limitation to the readiness of the people to pay taxation and that there is also a limitation to the capacity of the country to borrow. That cannot be understood without wider knowledge and without a more sensible approach to the problems facing us than the puerile contributions from the Opposition throughout this debate.
I am disinclined to ask the Minister for Finance to make any reduction in his taxation proposals, not because I would not want to see them lower but because it would not be a responsible thing to do at this time. Yet there is one specific case which I believe needs attention. It was my ambition when Minister for Finance to abolish value-added tax on newspapers, periodicals, books and particularly  school books. We cannot justify this taxation on information. Freedom of information is a very important aspect of the democratic way of life. We should provide education at the lowest possible cost. Almost uniquely in this country we tax even school books. There may be a couple of countries in which there is value-added tax on school books but I believe the rate does not exceed 6 per cent.
I know that administratively it is argued by the Revenue Commissioners that it will be very difficult indeed to distinguish between school books and non-school books. That I can well understand. I was asked by Church authorities when I was Minister for Finance to relieve value-added tax from recordings of sacred music which might be used in churches. It seems a very simple thing but when you get down to deal with it administratively you find it is very difficult to distinguish between rock music which might be played in discos and music which might be suitably performed in the Church on Sundays, particularly having regard to the modernisation of many Church services in recent times.
There will be difficulties in relation to classification of school books on the one hand and books which are not school books on the other hand. We would like to encourage children at school to read all kinds of proper books. It would be better than nothing, however, to have some group of qualified persons in the Department of Education verifying what are deemed to be school books or even freeing from value-added tax only those books specificaly on the syllabus. It would be better to have that than to have the present situation in which we have value-added tax on school books. That has always been my view from the time value-added tax was introduced. If it had not been for the financial stringencies of our days in office I would have done it. Certainly we should not increase the rate of value-added tax on school books from 10 per cent to 15 per cent particularly at a time when school books and all books, many of which are published and printed abroad, have to carry not merely the value-added tax but also a disadvantage  of cost arising out of the difference between the £ sterling and the Irish £. The burden is increased by the fact that value-added tax is charged only after the cost of the book is increased by the variation between the Irish £ and the £ sterling which can vary from 30 per cent to 33 or 35 per cent. There is this value-added tax at present amounting to 13 per cent of the price of the book published in Britain. If we make VAT 15 per cent the position will become very much worse, with currency surcharges plus VAT adding well over 50 per cent to the cost of a book from abroad.
Therefore I would plead with the Minister to look at this area. I know the difficulties. I would appreciate his anxiety to try to help and I believe he would receive the support of all Members of the House if as the price of relieving school books he had to make some other adjustment in value-added tax or some other tax. I believe we should not be taxing books which are essential to the education of our children. The same applies in relation to newspapers and periodicals. The free flow of information should not be subject to a tax of this kind, when, as of now in the midst of the depression, newspaper incomes have been slashed, primarily due to reductions in advertising and so forth, and when they are also affected by very substantial increases in the price of newsprint. In recent years the cost of newsprint increased faster that the price of oil. Newspapers and periodicals should be relieved of VAT. I should like the Minister to let us know the cost of relieving school books and newspaper from VAT. If as a consequence he has to put on some alternative tax, the country would welcome it. He would be doing the right thing. Knowledge and its acquisition should not be taxed.
Deputy Moore tried to provoke me by suggesting that when I was Minister I was not a friend of the public sector. We asked the public sector to face the realities of life. We requested people in employment to accept their responsibility to contribute towards the costs which would have to be borne by the community as a whole if those who were unemployed were to obtain jobs. I do not think  we were being unfriendly to people employed in the public sector or anywhere else when we made that responsible request to them. I make it again tonight. I made it before when I was in Opposition. Any person who believes, as we in Fine Gael do, in Christian democracy accepts responsibility as an individual to help others. We also believe that all people should help one another. That is the essence of Christian democracy. We make no apology for that and if for so advocating we are to suffer the sneers and jeers, laughs and insults so be it. We can easily wear that. Much greater than us was subjected to insult for laying down His life. In accordance with the principle of Christian democracy we urge people to be modest in their demands and expectations and to share with others. That is the essence of Christian democratic philosophy which has Fine Gael, with their colleagues in the Christian democratic movement in Europe and throughout the world, urging the world to be concerned for others. That was the reason why we are delighted to reverse the despicable move which Fianna Fáil made when in office when they reduced the contribution Ireland was making to the improverished, starving, dying people of the Third World. The cost of so doing will not be taken into account by the Niall Andrewses of this world as they laugh and snigger at the efforts of the Government to do social justice at home and abroad in accordance with Christian democratic principles.
We claim no glory for ourselves. Our people are Christian and democratic and believe in sharing. It is sad that since we became in Ireland enriched in material things in recent years that sense of neighbourliness and helping one another has suffered. That is no reason why those of us who have responsibility for leadership in public life should behave as if we should encourage or follow this downward trend. We have a duty to uplift the people, to remind them of their obligation and of the happiness of giving instead of taking from others all the time.
The public service are capable of responding to a request to contribute their share. They are prepared to be  patient and, if not, because they are being misled by political opportunists who suggest to them that they need not be, they will find as they now know that there is a limit to the readiness of the community to pay taxation to pay them. The consequence of not being prepared to be moderate in pay demands will only increase the number of unemployed and the burden of taxation. If these things do not sink in we will have the puerile debate which some Opposition Members have made this debate in the course of the last few days. If they do not sink in the outlook for the country would be extremely dismal.
I am not a prophet of gloom. I am a realist. I have confidence in the genuine faith of the people. The people are capable of responding to the right kind of leadership which they will get from this Government. If they reject us for giving them that leadership they will pay the price of the massive unemployment they suffered over the last few years and which unfortunately may possibly get worse for a short while because it will not be possible for us to correct the consequences of the worst economic policy ever inflicted on the country. We used accuse the British of badly ruling us and of bad financial management. What we experienced at the hands of Fianna Fáil over the last few years was much worse that what the nation was ever subjected to by foreigners which caused our forefathers to rebel against inefficient and corrupt rule.
Mr. Briscoe: I was thinking of the line: Oh, that God would give us the will to see ourselves as others see us. Having listened to Deputy Ryan, who was without doubt the greatest disaster as a Minister for Finance that this country ever had to experience——
Mr. Briscoe: No Government ever received such a rejection at the polls as the Government of which he was Minister for Finance, the most senior Minister. Now with the wisdom — or lack of it, who knows? — of the leader of his party,  he has not even got a Cabinet post. He comes in here and gives a hysterical out-burst. Whether it was the pent up frustrations of his emotions, I do not know. He did not behave in a manner I consider added any dignity to the House of which he purports to be so proud to be a Member. His behaviour was most unbecoming.
This is the man who, when he was asked questions as Minister for Finance on many social issues, showed no compassion whatever for the less well off sections of the community. He presided over enormous unemployment and during the four years he was in Government the number of new jobs created amounted to 14,000 as against 80,000 created by Fianna Fáil. These facts speak for themselves. I know that any words we speak have very little relevance to what will happen over the length of time that the Coalition are in office.
Mr. Briscoe: What speaks volumes is the way the lives of people are affected by a change of Government. I dread to think of the future that lies ahead for young people and those in social welfare classes, particularly old age pensioners, with the winter coming on.
Mr. Briscoe: Deputy Ryan was angered and incensed by the speech made by Deputy Andrews because he showed an advertisement that appeared in The Irish Times of June 9 which stated Fine Gael nailed the big lies. The first lie — Fianna Fáil said huge increases on petrol, beer and spirits; Fine Gael will strictly control the price of these items. The policies pursued by Fianna Fáil were the correct ones.
Mr. Briscoe: I should like to refer to an address delivered by our leader to the Fianna Fáil Parliamentary Party and which was reported in The Irish Times of 24 June. In that address the then Taoiseach said that in the current situation Fianna Fáil award high priority to protecting employment and creating new jobs. He said that our policy of high productive investment was the only way to achieve these objectives. Deputy Haughey went on to say that by developing our productive capacity to the fullest extent possible and by utilising our economic infrastructure as rapidly as possible we would ensure the new jobs necessary for our growing population. The then Taoiseach pointed out that the policy was endorsed by the ICTU and he went on to suggest that the only course open to any Member of Dáil Eireann who does not wish to accept the monetarist approach was to re-elect a Fianna Fáil Government. Incidentally, that word “infrastructure” has been mocked here today by the Government side who have been using it as if it were a new word they had just learned.
Mr. Briscoe: We now have a Coalition who are in Government on the basis of promises made but we maintain that these promises would cost £1,000 million to implement. Again, though, Fine Gael come up with the big lie that all the experts accepted the Fine Gael costings but I would ask Deputy O'Keeffe what in fact were the costings? He is not answering.
Mr. Briscoe: Fine Gael have not at any stage published the costings of their promises. On 29 January in this House the then Leader of the Opposition predicted that the budget deficit would be £561 million. However, Deputy FitzGerald now Taoiseach, was prepared to promise benefits that would cost the tax-payer somewhere between £800 million and £1,000 million. We may well ask who was codding whom? It is obvious that Fine Gael have no intention of ever fulfilling the claims they made before the election.
Deputy Ryan referred to the question of the removal of VAT from books and periodicals and he reminded us that he had had questions from us on many occasions in this regard while we were in Opposition between 1973 and 1977. It has been my opinion always that VAT should not apply in the case of any educational material. I am hoping that this party will produce, perhaps, a Private Member's Bill framed at having VAT removed from books. In such event I trust that we would have Deputy Ryan's support.
Mr. Briscoe: Perhaps some special arrangement could be made regarding the registering of boards of management in regard to VAT and in that way we might be able to overcome this difficulty that the Revenue Commissioners appear to have in respect of any question of not charging VAT on school books. What-ever about the question of newspapers, priority should be given to books in this matter of VAT.
The Minister for Industry, Commerce and Tourism referred repeatedly today to our having apparently run out of office after less than four years. The position was that the Opposition continued to call on Fianna Fáil to go to the country.
Mr. Briscoe: We stand over our policies. I would remind the Minister of State that a majority of the OECD countries, with France being the most recent one in this respect, now favour our type of economic policy, that is, the policy that gives priority to new economic activities and to employment as distinct from the deflationary economic policies being implemented by Fine Gael.
Mr. Briscoe: They have always been good at criticising but they cannot take criticism themselves. The inflation rate, which possibly would have reached about 17 per cent in this year, will now end up anything between 22 and 24 per cent as a result of the latest inflation. The average household which pays perhaps £60 to £80 every two months on the electricity bill will now be faced with an extra amount of from £16 to £24. To use that often-used phrase statements by “independent commentators” are to the effect that yesterday's budget is going to cost the average working family £12 a week extra on their bill for all the various costs.
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