National Economic and Social Plan: Motion (Resumed).

Wednesday, 17 October 1984

Dáil Eireann Debate
Vol. 352 No. 11

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The following motion was moved by the Tánaiste on 10 October 1984:

That Dáil Éireann approves the policies set out in the National Economic and Social Plan—Building on Reality.

Debate resumed on amendment No. 1:

To delete all words after “Dáil Éireann” and substitute the following:

“deplores the failure of the Government's National Economic Plan to provide a strategy for reducing the overall level of unemployment; condemns the continued refusal of the Government to establish tax equity, and particularly its failure to ensure an adequate return from the business, farming and self-employed sectors; expresses serious concern at the additional cutbacks proposed in the public service; regrets the failure of the Government to take into account the principles expressed in the recently published Irish Congress of Trade Unions document, Confronting the Jobs Crisis; and believes that the plan is basically a restatement of unsuccessful [2576] social and economic policies pursued by previous Governments”.

Minister for Industry, Trade, Commerce and Tourism (Mr. J. Bruton): Information on John Bruton  Zoom on John Bruton  Let me start by mentioning some of the new measures this Government are introducing to help create jobs. Firstly, a national linkage programme is being introduced to help sell more Irish goods to Irish industries. Secondly, three innovative schemes are being introduced by CTT to encourage export marketing by firms. Thirdly, a new scheme of grants to firms to import technology from abroad is being put in place by the IDA. Fourthly, an enterprise allowance scheme is already helping unemployed people to set up their own businesses. Fifthly, a social employment scheme to give unemployed people a chance to do useful work for the community will be introduced as indicated in the national plan. Sixthly, there will be a mixed training and work scheme to help long-term unemployed people to develop their skills so that they can compete better for jobs and overcome the grave disadvantage that people of long duration of unemployment have in finding jobs again. Seventhly, proposals to develop the natural resource sector of the economy through a mixture of private initiatives and public investment are outlined in the White Paper on Industrial Policy. Eighthly, a number of new tax measures have been introduced, culminating in the reduction on excise duty in respect of spirits, to help the cost competitiveness of the tourist industry in Ireland and, finally, there has been a new focus on industrial costs which clearly have destroyed many jobs in the past. A special monitoring group have been established and I am glad to say that our inflation rate is falling, both in absolute and in relative terms.

All these measures will be delivered in a more efficient manner than ever before. The duplication of effort between education and training is being sorted out with the assistance of the Ministers of State at both Departments, Education and [2577] Labour. The management committee on industrial policy are already at work simplifying the delivery of State services to industry. The aim is to get better value for money and more return in job creation from the funds available.

Meanwhile the Government are using their presidency of the EEC Council to create a better climate for industry, both in Europe and in Ireland and to help it develop and compete on world markets. In the past week alone, at meetings of the EEC Council which I chaired, EEC Ministers have approved:

(1) Plans to simplify customs procedures within the Community to reduce trade costs and delays.

(2) Plans to open up telecommunications markets to suppliers from other member states. This measure, approved on Monday, gives major new opportunities to the growing and efficient Irish electronics industry.

(3) A new scheme of EEC financial aid to help standardisation and research within the data processing industry in Europe has been agreed. This will provide EEC funds to help open up European markets to Irish suppliers amongst others. It will also give European industry, as a whole, economies of scale, through access to a wider market, which will help it compete with Japan and the US on world markets.

This is a major record of achievement, three major initiatives approved by the Council of Ministers in the early days of the Irish Presidency and the Council of Europe Industry Ministers and provides a basis for further work between now and the end of the year. Indeed, I would say that these achievements in the European Council, all in the last week, must represent amongst the best achievements in any such short period of time in the industrial area in Europe since the Common Market was founded. I am very glad that this took place under the Presidency of Ireland.

We are, however, aiming for further progress before the end of the year to get aid for minerals exploration in Europe. [2578] Ireland is one of the European countries where there has been least mineral exploration. Clearly, a system of EEC aid to get companies to devote funds to mineral exploration where at the moment so much of their funds is being absorbed in existing explorations would be of great advantage to us. I am hopeful that we will get agreement on that before the end of the year and also on a further range of measures to strengthen the information technology industry within Europe, which again is an area in which Ireland has a major advance interest in that we have a very large electronic sector and our exports are already growing. Clearly, if the market in Europe can be widened and strengthened, they will grow even further. There is thus a strong complementarity between the Government's national industrial policy to which I referred earlier and the work which Ireland is helping to progress in Europe during the six months of its EEC Presidency.

May I turn now to the plan. We have heard many criticisms but little in the way of realistic alternatives. Clearly, the plan is building in a sound foundation. This year and last year the Government's budget was on target, mainly because the Government's pay strategy within the public sector worked. This is in marked contrast with the performance of the previous Government in the early eighties, when it was a miracle if their budget was on target and their pay strategy never seemed to work. They made small provisions for pay and then had to add in Supplementary Estimates for substantial sums of money during the year. Clearly, it does not create a sense of credibility, either internationally with the budget or internally as far as public sector employees are concerned, if the Government can so easily be blown off course as were the previous Government in regard to their budgets. We have succeeded in the last two years in having our budget and our pay strategy on target and we shall succeed in doing both of those things again over the next three years in the context of the national plan. That does a great deal to restore confidence in the [2579] way in which the economy will work and in our ability to achieve our objectives.

It has been said that the objectives of the plan are not ambitious enough. Some complain that the plan has not reduced taxation, reflated public expenditure and created enough jobs. Some critics say that it is based on over-optimistic assumptions. Other critics say that its appraisal is too pessimistic. I would like to discuss some of these criticisms. By giving the House some of the background to why the Government chose the strategy set out in Building on Reality I would hope to assist those people who are genuinely concerned to choose how realistic are the alternatives which are said to exist.

The first objective is to halt and reverse the continuing upward spiral in unemployment. Despite the expected future decline in employment in agriculture the plan outlines policies which will lead to a net increase of about 45,000 in the numbers employed by 1987. The achievement of this objective will mean that new jobs will be sufficient to meet the growth in the labour force, a rate of growth which is exceptionally high in comparison with other developed countries.

It would be wrong for the plan to abandon the best expert advice in favour of aspirations which were not firmly based on realistic analysis. Some speakers have questioned the validity of the calculations underlining the projection of the jobs needed to meet the growth in the labour force. It is hardly surprising that there should be some confusion in this area. In recent years we have seen published various different projections of the future growth in the country's population and in its labour force. For this reason, the Government, in preparing their plan, took special steps to clarify this conflicting situation.

There are two main reasons why different projections existed: the information available at the time when the projections were made; and also the judgment of the researchers in making the projections.

[2580] As results from censuses of population, labour force surveys, passenger movements and so on became available there was an opportunity to revise and adapt earlier projections and there is nothing wrong in doing so. For example, two years ago only preliminary results of the 1981 census were available. This year we have a detailed breakdown of the population by age and marital status. This information makes it possible to make much more detailed and up-to-date calculations of the numbers likely to enter and leave the labour force.

There is, also, an important element of subjective judgment of the likely future trend of population and labour force growth. Questions arise, for instance, like the following. To what extent will married women stay in the labour force or re-enter it, and at what age? At what age will young people leave full-time education? These are all questions which require judgment and therefore projections are no more than projections. They are not certainties, they are not prophesies, but projections.

Given the potential for confusion and the different views which existed in this area, the Government, earlier this year, asked a committee of experts to advise them on future trends in the population and the labour force. This committee brought together the best expertise available among independent researchers and the civil service.

The committee's report, completed only last July, was used as the basis for the projections in the Government's plan. It is on the basis of the committee's report that the plan projects an average annual rate of labour force growth, for the next three years, of 15,000.

Although this figure is more up-to-date than previously published projections, it is, in fact, not radically different from them. There is general agreement on the key role that manufacturing industry must play in future economic growth. It will be an important source of employment in its own right and the demand should provide for the services.

A striking feature of the industrial policies pursued by successive administrations [2581] has been the widespread consensus which has existed on the approach taken. The White Paper on Industrial Policy, which forms an integral part of the overall strategy in the plan, represented a combination of a review process which included reports from Telesis, from the National Economic and Social Council, the main State agencies and extensive discussions in my Department. In this way, and in many areas of detail it has significant common ground with the recent ICTU proposals Confronting the Jobs Crisis. In that report Congress stated:

A National Plan must contain a strategy for job creation through industrial development, based on the Telesis strategy and the recommendations of NESC.

This is precisely what the White Paper does. It draws on those two documents. The industrial strategy is based on channelling grants and incentives where they will promote the biggest increase in incomes and employment to Ireland. The emphasis will be on the building of strong, competitive firms by using grants selectively. The legislation to be introduced will build a much higher degree of selection into industrial grant giving than has been the case in the past. The National Development Corporation will be given a role as far as investment in firms is concerned to help build up the strength of a number of indigenous Irish companies. This is meeting one of the objectives which has been urged on the Government by a variety of sources.

The White Paper stated that there would be a reduced emphasis on grants for investment in fixed assets and machinery and greater emphasis on grants to remove the key constraints to the development of strong exporting companies, in particular the costs of export marketing and the acquisition of technological know how. In future there will be no grants for firms which are neither exporting nor producing import substitutes unless they, at least, provide high technology inputs for internationally trading firms.

[2582] The need to strengthen the financial structure of firms and to ensure that the maximum benefits are captured by the domestic economy have also been addressed. Measures have already been taken, in the 1984 Finance Act, to improve the availability of venture capital. The development of linkages through the national linkage programme has been maintained already.

The role of the State as a direct investor is being put on a more coherent basis with the establishment of the National Development Corporation. The corporation will give a new commercial and strategic focus to public investment in industry.

Some commentators have criticised the targets for job creation in manufacturing industry. The White Paper sets out to create a net addition of between 30,000 and 60,000 jobs in manufacturing in the next decade. This is a highly ambitious target when set against the experience in other countries where the numbers of jobs in manufacturing is actually falling.

It is too facile to argue that, because the share of manufacturing in total employment is significantly lower here than in other countries either now or in the past that there is necessarily scope for even more substantial increases in industrial employment. This line of argument omits to mention that, despite our relatively short industrial tradition, our industries must compete with the industries which use the capital intensive technologies of today, and not somehow with the type of labour intensive manufacturing industries that used to exist in more advanced countries 20 years ago.

Mr. Flynn: Information on Pádraig Flynn  Zoom on Pádraig Flynn  This plan has pleased nobody: workers, the unemployed, farmers, industrialists or professional groups. It is a very lack-lustre effort and is merely a hodge podge of pious hopes supported by fudged generalities and vague assumptions. It is hardly a rallying call to the nation to overcome the depression which pervades every sector of the community, to stop emigration, to stop the brain drain and the investment drain, [2583] to contain the slide into the black economy or to restore confidence to business generally.

At first glance the Government document seems to have achieved the important Coalition objective of staying in office, but increasingly all sections of the community, and particularly the economic correspondents and political watchers believe that the plan leaves too many unanswered questions which must inevitably destroy any political possibility of survival by the Coalition. The Government are not entitled to modest ambitions in dealing with the country's not so modest difficulties. A modest response does nothing to satisfy the national job crisis. The next generation of Irish citizens will condemn this generation's willingness to accept political survival responses in preference to dynamic progressive initiatives even to the point of risk taking in the national interest. This generation's emigrants will curse the Coalition for destroying their birthright in the cause of political expediency.

The situation of the jobless has become so drastic that we now have 22 per cent more unemployed than the total industrial workforce. We are not just living with an underprivileged minority. The national reality is that we have a depressed underprivileged majority. It has not gone without notice that following the announcement of the plan, commentators generally disregarded the blatant Government U-turns on many of their stated objectives and Coalition proposals for a joint programme of action, their change of policy on the size of cutbacks announced two months ago, their budget deficit decline time scale, their foreign borrowing and national debt position, their attitude to selective tax cuts; in short, everything that made it possible for them to have their electoral success in the last election. If the main plank of the Coalition's joint programme can be so easily abandoned, did that programme really stand for anything in the first place except political posturing? In the credibility stakes they must rate very low indeed.

[2584] Why are they not castigated for the national confusion they have caused or is it that financial rectitude is a movable feast depending on the party practising it at the particular time on the survival needs of the grand Coalition alliance? This plan is nothing more than a national plot by two political parties struggling to retain credibility with a disenchanted electorate. The Leaders of the Coalition should more properly be called the national undertakers.

There is poverty on a wide scale. It is all embracing and is impinging on the life style of every sector of the community. This poverty is not just being endured by the social welfare beneficiaries and the old, but also by the new poor — the families of the former middle classes made unemployed and redundant through factory closures and liquidations. There were 700 closures last year with the prospect of an even greater number this year and still no response from the Government to check the erosion of business confidence and create the climate necessary for investment. The Government will not recognise that commercial life and business feel threatened with continuing assaults on their profits. We have created an environment where profit is a dirty word, where the successful businessman instead of being congratulated is viewed with suspicion and becomes the object of intensive and debilitating investigation.

An Ceann Comhairle: Information on Thomas J. Fitzpatrick  Zoom on Thomas J. Fitzpatrick  I take it that the Deputy is speaking from notes.

Mr. Flynn: Information on Pádraig Flynn  Zoom on Pádraig Flynn  Yes. No wonder the black economy is the major growth industry in the economy today. The trauma of families reduced from comfortable living standards to abject poverty has not been recognised by this plan and catered for. The brain drain and skills drain must not be allowed to go unchecked. The expectations of this increasing number of specialist type of unemployed have been dashed unceremoniously. The need for expanded schemes of retraining is self-evident and opportunities should have [2585] been identified to utilise the existing expertise of unemployed middle management and technician grades to reduce our imports bill through a real import substitution campaign. There was genuine expectation from all sections for innovation and bold policies, even adventurous new initiatives. Nobody expected an economic miracle overnight, but a little hope and foresight other than bad news was expected.

The economic and statistical assumptions of the plan are already proving inconsistent with the facts. It is not good enough for the Taoiseach's press secretary to say yesterday that the six economists, or the seven, whichever you like, left without knowing anything about the economic plan which was being drafted by the Government Departments over the past number of months. It is preposterous to suggest that while these people were engaged in economic discussions in those Departments, according to certain spokesmen they knew nothing about the plan or its formulation. If they did not know what was going on, what were they doing in the economic sections of the Departments of the Taoiseach and the Minister for Finance? The press secretary said he was putting out the statement on his own behalf. This is not the first time he was used by the national handlers to face-save the Government. It is time the Taoiseach and the Minister for Finance came clean and defended themselves instead of leaving it to the hired hand in the press office.

Questions are being raised all over the country about the doubtful statistics incorporated in this so-called plan. It is well known in financial circles in this town that Department of Finance experts and other people in the financial institutions are questioning and raising doubts about the statistical basis of this plan, and no satisfactory explanation has been given for the past six months concerning the £500 million black hole, the milk subsidy debacle or disparity between the figures in the work force as brought to the attention of the people in the labour force survey as against the plan figures and the industrial White Paper figures.

[2586] I refer the Minister to something that was printed by his own party in October 1982 in the jobs in the eighties Fine Gael policy plan, and I quote: “If an economic planning document is to be trusted, the assumptions it makes must be checked and approved by an independent agency.” I would like the Minister or the Taoiseach to say what independent agency checked the figures as incorporated in this plan. I challenge him now to put that commitment given to the people in 1982 to the test by submitting the statistics challenged in this House yesterday to an independent agency; then we will know where the real truth lies. The strong indication from the US is that interest rates will rise next year. Nobody expects the US budget deficit to continue increasing at the present rate and any sizable fluctuation in the wrong direction could have devastating effects on the planned targets resulting in corrective action having to be taken at an early date. No international forecaster is prepared to predict the American economic scene next year. Nobody was able to predict the US interest and exchange rates over the past two years, and it is extraordinary that the crystal ball gazers of the Coalition can predict what US treasury policy will be for the next three years. Maybe the Coalition people have arranged with the US treasury that the Irish plan will be considered before they make their next move, but I hardly think so. The thing is so ludicrous that the plan is displayed aptly with a sick joke label by economists and businessmen in this country.

Great public and Coalition importance has been placed on the child benefit scheme announced as an answer to the blunt instrument to be used on the food subsidy at such great cost to the poor and under-privileged and with such little gain to the Exchequer. It is suggested that the child benefit scheme will replace children's allowances and tax-free allowances for dependent children. However, the figures are worth checking. At present a recipient gets £12.05 per month for each child plus £100 tax-free allowance per [2587] annum which works out at approximately £8.33 per month. For a family paying income tax at 45 per cent under current regulations, an income of £15.80 per month per child would come to the family. Under the child benefit scheme, which stands at £30 per child less income tax on the same amount at £14.10, the net benefit is £15.90. Therefore, the benefit would be 10p per child per month for people in the 45 per cent tax band. However, you also must deduct the £6.33 lost per family per month due to the removal of the remaining food subsidies. Add this to the fact that all families to date have lost the first £6.33 per month due to the first half of the subsidies being cut and one begins to realise how misleading the whole question of this proposed child benefit scheme is. Even the Tory monetarist Government baulked at going so far. No doubt the Minister for Health and Social Welfare, Deputy Barry Desmond, will be pleased to have outdone Mrs. Thatcher, but for Labour Ministers to tolerate policies that deliberately lower the standard of living of the less well off is traitorous to the ideals of socialism and confirms that the Labour Party have traded in their red badge for the blue of Fine Gael monetarism.

It is dishonest to seek to confuse the taxation issue by suggesting that there will be a taxation standstill while everybody knows that price rises are out of control. Every food stuff and essential commodity has risen in price far beyond the inflation rate in the past year. With price rises averaging 14.5 per cent and new increases in fuel and energy costs the housewife is at her wit's end to provide a stable, balanced diet for her family. To the ordinary taxpayer it does not matter which way you take it from him, it is still painful. He sees a direct link between taxation and price control. The cost of living increases have far outstripped his wage increases and this relentless assault on the family budget has resulted in a significant lowering of living standards. The old, the weak and social welfare recipients are living in abject poverty. They spend proportionally more of their [2588] meagre income on food and fuel than any other class. They are at risk and will suffer considerable hardship this winter. The country owes more to its pensioners than a handshake and a “thank you” letter. There is an obligation on the State to allow the old and the infirm a dignified existence in reasonable comfort, not hypothermia and enforced poverty and hunger. There is an urgent need to review the free fuel voucher scheme for the coming winter and also to deal with the poverty cycle urgently and in a practical way. However, what can you expect from a Government with such a twisted sense of social justice that they think that reducing the price of a half glass of whiskey by 8p is more important than increasing the price of the loaf by the selfsame margin of 8p?

In a recent interview the Minister for Health and Social Welfare, Deputy Barry Desmond, said that there were no cutbacks in the quality of service being given by the health boards and that he was quite pleased at what he had achieved in the health services generally. Just what has he achieved? Costs are to go up by 15 per cent extra this year all round, 3,000 jobs are to go over the next three years, there is an embargo on recruitment in even the most essential areas of service. There is widespread curtailment of services, such as closed hospital wards, dangerous staffing levels at weekends, no locums are being appointed, we have a curtailed emergency service, curtailed transportation services, and medical cards are now available only to people on the breadline. Waiting lists are building up to dangerous levels in every health board area. Does the Minister regard this as achieving a quality health service? Does he realise that consultancy services are organising a mass protest to challenge his dictatorial attitude in the manning and running of the health services? The smug attitude of the Minister suggests almost a politically sadistic pleasure in devasting the health services. His directive will have to be challenged or people will suffer enormously during the coming winter.

The public pay decision must surely be [2589] a recipe for the most serious unrest. The demoralising effect on the public service will permeate every sector and will be counter-productive. Creating hostility to those being paid from the public purse is tantamount to saying that public servants are parasites on society and not entitled to living standards protection. How can you expect performance and productivity from the public sector when it is being implied daily that this sector is unwanted, ineffective, over-manned and overpaid? When one realises that the majority of those employed in the public sector are in security, health and educational areas one realises how indispensable that sector is and that it is idle talk to suggest that there will be a sizable reduction in the total number employed there or that it is possible to continue the services at their present level without paying the going rate in wage increases.

In the area of job creation the plan is disappointing and falsely based. The plan admits failure in being able to reduce unemployment by 1987, but from labour force survey figures is it not painfully obvious that there will be in excess of a quarter of a million unemployed after the three years of this plan expire? Add to this the staggering total of 13,000 per annum emigrating and we see just how undesirable the situation is, and the Government must stand indicted in accepting these figures as tolerable.

Any Government relying on emigration must feel more than a little hypocritical when they suggest that they are stabilising unemployment. A disproportionate number of the job targets are located in special employment schemes, they are listed at 25,000 persons and cannot be justified as a means of creating long-term sustainable employment. Temporary jobs can have a usefulness in dealing with amenity and environmental work. These activities were first introduced by Fianna Fáil, terminated by the Coalition and now reintroduced, but they are no substitute for soundly based jobs, based on manufacturing and on our natural resources.

Let us take a look at some of the areas that could turn around the job situation. [2590] Food imports at an estimated £800 million are at an unacceptable level and with the proper understanding of marketing, production and processing the food processing industry could virtually eliminate the majority of imports and add substantially to exports. Why not tackle this national scandal once and for all? Every £1 million of additional food processing creates 100 new jobs, and by replacing half of the imports in this area 40,000 new jobs could be provided here without any great difficulty. Add to this the potential for fish processing and the development of sea farming generally, and really long-term worthwhile jobs that would not be affected by recessionary winds could be created here. The potential in this area could be up to 20,000 jobs if we are to take the ratio from other countries of those working on sea and those working on land into account. Our high technology industries purchase £100 million worth of components every year and those components could easily be made in Ireland. Clothing imports last year amounted to more than £300 million.

That is an area where thousands of new jobs could be created if we had the proper incentive, the proper framework for investment and venture capital being made available to business concerns provided in the plan. It is well known that our economic growth depends on our export capacity, and employment will depend on the success of our exports. However, the plan does not contain the necessary framework or the incentives so that these matters can be attended to in the national interest. Ireland produces less than 1 per cent of the products purchased in Europe and yet during 1983 manufacturing employment fell by 11,000 persons. The biggest drop was in food processing and the traditional sectors such as textiles, clothing and footwear. There is no strategy to deal with the continuing decline of these industries and, generally, no strategy to restore our competitiveness. The cost competitiveness is within our own control and unless positive steps are taken to reverse the trend in costs the economy will not be able to benefit from [2591] the spoken-of world upturn when it comes.

Procrastination is only adding to the dole queues. Every other country in Europe has moved to tighten up its cost control, while we have stood idly by and allowed import penetration to smother key sectors of our home market, and reduce our real export potential.

The costs of our essential services are way out of line with our competitors and have to be examined. Our industrial, electricity prices are 25 per cent higher than in Europe and large energy intensive users pay 40 per cent more than the EEC average. The cost in real terms to Irish industry is £50 million and this is the equivalent of 5,000 people in manufacturing employment. These jobs would support the same number in the services sector. From that simple issue 10,000 new opportunities could be provided in our economy but there is not a word about that in the plan. This, and many other imbalances, should have been tackled in the plan but, unfortunately, no positive steps are identified to deal with anything. That is the criticism being levelled at the plan inside and outside the House. The plan is based on false assumptions, poor, doubtful statistics and no positive steps indicated in any area of economic activity.

A particularly pathetic section is that dealing with tourism, an export industry with minimum dependence on imports and enormous potential. The plan admits to the previous lack of clear objectives for the industry, but can only offer as a solution three specifics: (1) licensing of restaurants, (2) longer opening hours, (3) reduction of excise on spirits.

What a piecemeal response to an industry crying out for a political initiative. Everyone knows that the taxation regime is crippling our hotels, car-hire and coach services. We need a new prices image in the market place. A refurbishing grant scheme is essential if our hotels are to be maintained at acceptable international standards. This was promised here last year by the Minister for Tourism [2592] but now dropped. The VAT rebate scheme on purchases by out of State tourists continues to be an international embarrassment but if it was adjusted properly, it could create many thousands of new jobs, particularly in our craft and traditional industries which have suffered considerably during the recession. The Minister was asked on more than one occasion by every operator and agency involved in the tourist selling business to adjust that VAT rebate scheme because it was not working, but there has not been any response in the plan.

Access transport is critical to the industry developing but even this fundamental could only warrant a four-line platitude in the plan. There is no talk of new marketing or promotional strategies, new specialist tourism or multi-destination development. Nothing in the plan to praise or criticise, just a statement of goodwill and as you were.

An interesting point from the table of Public Capital Expenditure 1984-87 listed in the document is under the heading of Capital Investment in Tourism. It is stated at £11 million. However, it must be remembered that Bord Fáilte development programme is only £3.3 million and would it be that the Government have included EIB loans in getting their total?

The Government are not lending this money or guaranteeing it. It is a distortion of the real position. The equivalent of this practice in other areas of the economy would be to include what ordinary banks lend to private borrowers. It can only be suggested that if this practice was widely used in the plan, then it is not just falsely based but is grossly misleading and incorrect.

It is interesting to take note of some of the comments by both parties when dealing with the matters under consideration in the plan and check if they have complied with their commitments. The Fine Gael-Labour Programme for Government, 1981-1986 states that jobs must be protected and created and investment for new job creation must be maintained and increased. It also states that giving aid immediately to vulnerable sectors would be a priority. Such sectors [2593] would have been suffering from lack of competitiveness and inflation, for example, manufacturing, tourism and agriculture. How does the plan live up to that commitment in the programme? How does it live up to the Fine Gael-Labour Programme for Government of December 1982, when it stated that the most urgent problem was that of unemployment? It also stated that unemployment as it stood then at 170,000, with 50,000 of the unemployed under 25 years of age, was alarming. One would have expected that as a response to their own stated commitment there would have been a positive element in the plan to create the necessary infrastructural development and investment climate to live up to the commitment given to the people.

Look at their budget deficit statements over the years. The Labour election programme in 1981 stated that foreign borrowing was dangerously high and and the budget deficit was out of control. The Fine Gael-Labour Programme for Government 1981-1986, states that the Government's national plan will have the aim of eliminating the budget deficit over the next four years. All these things were set out in black and white on behalf of the Coalition but they have been thrown overboard. It does not matter what they do to their commitments. They can sail away and posture before the electorate and hope to gain their confidence. The Labour election programme for 1981 stated positively that the introduction of price subsidies to reduce inflation would be an inseparable link in the new approach on income determination. Not alone would they protect food subsidies but increase them. We all know what happened in that regard. I should like to hear Labour Members justify their stand on these matters.

The signs are there—there is growing disillusionment in all sectors, among the unemployed, among youth, trade unions and business. This plan has not answered the challenge and the political epilogue of the Coalition is now being enacted. You deserve to go and go now.

Mr. Taylor: Information on Mervyn Taylor  Zoom on Mervyn Taylor  If there is one thing that [2594] this country has had a plethora of in the course of the last few years it is plans and programmes. We have had the Joint Programme for Government, the White Paper, this plan, Fianna Fail's The Way Forward and others. With such a mass of plans my one regret is that Clondalkin Paper Mills are not operating to produce the paper on which to set out these plans.

What surprises me about these plans is the degree of credence which so many people give to them. People come to the conclusion that because these things appear in print in a plan they will therefore be fulfilled. We should know from bitter experience that they represent in all little more than pious aspirations and that the expectation of seeing these plans fulfilled to the letter is something that can be discounted altogether. I thought in my innocence that when the Coalition came into being — it was not a Government which I voted in favour of undertaking, that is no secret — the joint programme which formed the basis for the Government would be implemented and would be, so to speak, the constitution of the Government. After two years we find that that constitution is to be supplanted by a new document and that the crucial factors in the joint programme are bypassed.

The Fianna Fáil response to the plan has been less than constructive. It has concentrated on catch phrases some of which I picked out of Deputy Haughey's speech: “national scandal”, “unhealthy development”, “costly mistakes”, “monetarist” and so on. The truth is that in none of the Fianna Fáil contributions I came across did I see any real disagreement with the essentials of the plan. Take the farm tax for example. Do I see in any Fianna Fáil contributions a statement that if they were in power they would impose a realistic farm taxation system? Do I see in any of their contributions a statement to the effect that if they were in power they would impose a more realistic capital taxation system? These are the essentials the economy needs if the thousands of jobs, so glibly trotted out by Deputy Flynn, are to be achieved. The creation of jobs does not drop down from [2595] the heavens. They must be financed. No matter what the colour of the Government, new jobs must be financed and that finance must come from somewhere.

In the present economic climate there are three possible sources of finance to provide these necessary jobs. One would be to increase existing taxation, income tax and VAT. I do not think anybody would realistically advocate that. The next alternative would be to have a realistic system of capital taxation. I advocate such a programme. It is not forthcoming from the Government and would not be forthcoming from Fianna Fáil. We have only to look at their record and the joy they derived from abolishing the wealth tax which had been brought in by a previous Coalition Government and the cheers that resounded from those benches when that was done. To look to them to raise funds for jobs from a realistic capital taxation system is totally unrealistic. The third alternative is to have a realistic farm taxation system. There is no commitment from Fianna Fáil to bring in such a system. They are subject to precisely the same pressures and lobby in their party as were Fine Gael. The intense farm lobby we saw nakedly portrayed by the farmers would be brought to bear no less severely and with no less effect on Fianna Fáil as it was on Fine Gael.

To bring about equity in the taxation system a message must go forward to the people. If the people require, as I believe they do, an equitable system of taxation under which all sections of the community including farmers and the owners of capital wealth would have to pay their fair share so that necessary jobs can be provided they must vote for it. It will not do to speak about it, request it, call for it, or march for it. The only way to achieve it is to vote for it. If one message is to go forward from our history to date culminating in this plan that is the message. The two major parties will not suffer a reasonable system of farm taxation or an equitable system of capital taxation to be implemented in law.

[2596] On the question of farm taxation, a system is being introduced whereby farmers with upwards of 80 adjusted acres, in other words, the upper echelons of the farming community or the wealthy section of farmers earning substantial incomes from 80 adjusted acres, which in real terms is more likely to be 120 or more acres, are not being asked to contribute anything in terms of farm taxation. According to the plan those farmers are to be charged a farm tax but we find that the entire farm tax they are to pay is to be credited against their income tax. That is precisely the same as saying that they have no ultimate responsibility for any farm tax. If, say, they pay £500 in farm tax and their income tax bill is £2,000, the £500 is taken from the second figure. The industrialist pays rates on his premises and it has been said that he may credit the amount involved against his income tax but there is a subtle difference between the two situations because the industrialist takes credit for the rates he pays as against his profits before his income tax is calculated. He does not deduct the full amount of his rates from his income tax bill, yet that is what is provided for in the tax system we are talking of.

I have called for a realistic level of taxation from the farming community and also for a land tax to encourage proper use of this vital natural resource but the result is disappointing. We can well understand why so few protests are being heard from the IFA about these details. Professor Brendan Walsh has expressed the opinion that the total tax take may fall as a result of the measures announced in the plan. The Labour Party would contend that land tax in respect of the larger farmers should be allowed as a deduction before calculating income tax and not as a complete offset.

We turn now to the second aspect of the farm tax whereby farmers below the 80 acre adjusted level are to be exempted from income tax. I am opposed totally to the principle of declaring any group to be exempt automatically from tax. The plan is emphatic—and I have heard the Taoiseach emphasise this also—that the principle [2597] ought to be that income from all sources be taxed. It is in pursuance of that principle that short term social welfare benefits are to be brought into the tax net. They are income. One may argue for or against including them but if one accepts the principle that income from all sources should be taxed, that must apply equally to farm incomes. We should not accept the automatic exemption of any category from tax.

I can visualise many opportunities for loopholes in this farm tax arrangement. I can think of situations in which farmers would subdivide their holdings into ones of fewer than 80 acres so as to benefit from the exemption.

Mr. E. O'Keefe: Information on Ned O'Keeffe  Zoom on Ned O'Keeffe  Is the Deputy for or against the plan?

Mr. Taylor: Information on Mervyn Taylor  Zoom on Mervyn Taylor  This would apply particularly to those farmers who are doing well and we know that this year has been a good one for farmers.

Mr. E. O'Keeffe: Information on Ned O'Keeffe  Zoom on Ned O'Keeffe  The Deputy ought to buy a bit of land. Will he be voting for the plan?

Mr. Taylor: Information on Mervyn Taylor  Zoom on Mervyn Taylor  There is an important distinction to be drawn between taking all farmers with fewer than 80 adjusted acres out of the tax net automatically and saying that farmers with fewer than 50 acres do not generally have a taxable income and will not in general be put to the expense of proving this nil liability. The Revenue must be free to pursue a farmer who is making a good income whether, for example, from an intensive pig unit on a holding of ten acres, from intensive cattle farming on a holding of 40 acres or from extremely profitable dairy farming on a holding of 60 acres. To achieve equity of taxation in this field one test must be applied and that is that the PAYE worker must be able to look at his counterpart in the farming community earning more or less the same income as he and be able to say that the farmer is paying more or less the same income tax bill.

[2598] I am bitterly disappointed that the concept of the national development corporation, as enunciated in the Joint Programme for Government, has been down-graded substantially. The promise in that programme in this regard was that the national development corporation would be established as an early priority of the parties in Government, that the corporation would be a major vehicle for job creation through direct State investment in profitable commercial projects geared to import substitution and to export markets. After two years in office the Government have not yet established a national development corporation. According to the joint programme the first priority of the corporation was to be the initiation of job creating projects and the stimulating of projects involving industrial employment within the existing public sector. We were told that priority in the capital programme would be given to new projects to be undertaken by the national development corporation and that an initial equity capital for new projects was envisaged at £200 million to be taken up by the corporation over a period of years with a borrowing limitation of £500 million. That was the concept of a national development corporation I wanted to see but I fear that the profile of the national development corporation that now appears in the plan is a substantial downgrading of what is required to create jobs. It will require State intervention to create these jobs.

The White Paper entirely failed to tackle the central failure of private enterprise to get its act together in Ireland and its inability on its own to provide enough jobs to meet the needs of our expanding population. The philosophy of the White Paper to throw more money at private companies in the hope that they might create more jobs rather than to go out and create real jobs in a direct way through productive State enterprise has been all too clear.

I am not talking about nationalising every lame duck; I am talking about the State on its own, or in partnership with private enterprise or the co-operative sector, developing new and productive [2599] opportunities that would show a profit and lasting jobs. This would require the State sector being given the commercial freedom to go out and compete with private enterprise without the cloud of denationalisation hanging over its head. The joint programme envisaged that situation, for example, in connection with the concept of the corporation forming a viable national drug company to manufacture and supply the General Medical Services with drugs and thus effect substantial savings. In his contribution Deputy Kelly asked what would the national development corporation do. It could manufacture paper and drugs; there is a wealth of commercial activities the corporation could do if given the means to do it, as promised in the joint programme.

I am one of those who called for a modest reflation in the economy and for avoidance of the excessive deflation which would be involved in phasing out the current budget deficit by 1987. I welcomed the decision of the Government to aim at a target of 5 per cent of GNP in that year and not to inflict too harsh a dose of deflationary medicine during a period of recession. However, the assumptions on which the strategy of the plan rests depend very much on guesses about movements in the American economy and what happens to interest rates. I share the reasonably optimistic view of the situation taken by the Government in drafting the plan but I would have preferred to have seen a range of assumptions spelled out. This plan is meant to be a three year plan. I do not want to see any further nasty surprises inflicted on the Irish people, such as the announcements over the August bank holiday weekend that, due to unforeseen circumstances in international affairs the cuts on food subsidies were necessary. This plan is called Building on Reality. Let us have the reality, let us spell out the possible range of outcomes. If the assumptions in the plan undershoot or overshoot by 1 per cent, what are the contingencies in such an eventuality?

The plan is said to be based on a [2600] number of assumptions. One of those is that American interest rates will fall and another is that American economic activity will continue at a high level. It seems to me that those two assumptions at least are mutually exclusive. You can have one but I fail to see how you can have both because the only thing that will bring about a reduction in American interest rates is if the American economy deflates so that the call for money in the marketplace there will be reduced. If the economy deflates, interest rates in the normal course would be expected to come down. However, we cannot have it both ways. We cannot expect a reduction in American interest rates and a continuation on a high level of economic activity.

On the question of public spending cuts, the Government have dodged hard decisions. They are relying on public service pay curbs, on a standstill in the expenditure of local authorities and on cuts in health service numbers to bring finances into order. I am relieved we have not seen the swingeing attack on public services and public spending that some commentators forecast and called for but I am less than happy with the way the problem has been approached and the way the issues have been fudged. For example, can we afford to spend even more on the disease eradication scheme which T.K. Whitaker called “the greatest financial scandal in the history of the State”? Can we afford to subsidise private fee-paying secondary schools to maintain their privilege and élitism? Can we continue to afford an agricultural advisory service costing £16 million a year when the recipients of that service are not paying their fair share of tax? Can we continue to spend money on luxuries like the FCA when thousands of families are living in poverty on inadequate social welfare incomes? Is £30 million for a new runway at Dublin airport a priority when the roads serving huge areas of population, such as Tallaght, are inadequate and when we lack housing, roads, sanitary services, community buildings and social infrastructure in many parts of the country? In hard times I would expect a look [2601] to be taken at priorities so that services for the poor and public service employment could be protected and where inefficient or low priority projects that predominantly benefit the better off would come lower down in the queue.

On public service pay the Government have taken a gamble. They have reappointed the arbitrator. Are they going to ignore the awards of the arbitrator or do they know in advance what will be his independent awards? In hard times it is perfectly reasonable to expect the higher paid public service workers, particularly those on incremental salaries, to take a back seat. Is it reasonable to expect the bus conductor, the road sweeper, the hospital cleaner, all of whom take home subsistence incomes in the region of £100 a week to provide for their families, to take a reduction in real take-home pay? The local authorities will soon face a crisis with regard to their financial situation on the figures buried in this plan. I agree there are no major cuts at central Government level but I fear the cuts will be carried by the local authorities. I know that in my area Dublin County Council are trying to administer the fastest growing area in Europe out of a static revenue. There are 50 families a week moving into Tallaght. They need bin collections, road maintenance and public open spaces just like the older established areas but this cannot be done from a static budget. We have had promises of local government reform but these will ring hollow if local authorities have to lay off workers and run the affairs of expanding areas such as Tallaght on diminished budgets. I am talking here only about basic services. We also need a real input of facilities into these new communities, particularly for families in areas, many of whom have as high as a 60 per cent unemployment rate, living miles from shops and having all the teething problems of new communities with no services. It may be imaginative to offer the long term unemployed social and environmental job opportunities, but are we to see the situation in which local authorities will discover they are being offered part time workers under this new plan, with finance to employ [2602] them, without having sufficient finances to maintain their normal, full time workforce?

There is one comment I must make about the concept of the 10,000 new temporary jobs being provided at a minimal net cost to the Exchequer which, as far as it goes, is to be welcomed. One wonders why we had to wait two years of this Government's term of office before such a project was implemented. If a scheme of that nature can be implemented now to provide 10,000 part time jobs then it could have been done six months, a year or even 18 months ago. One wonders at the moguls in the Department of Finance who implement and presumably go along with a proposal to provide a tax regime on VAT here which means that drink and other items are imported wholesale from the North of Ireland and Britain. They have seen their mistake and seek to rectify it in this plan. Surely that should have been obvious at the time it was implemented.

My main criticism of this plan is in relation to jobs. I fear that the jobs strategy rests on the shaky foundation of an inadequate industrial strategy. On the public spending side I foresee major problems ahead for low paid public service workers and in relation to local authority services and employment. While I welcome the fact that social welfare services are being maintained and that public spending generally is not being reduced as drastically as had been forecast, no real attempt has been made to recast public spending and taxation policy in favour of the less well off sections of the community.

The message that must go out is this: if our people want equity in taxation, a fair balance in the fields of farming and capital taxation, then there is one way only in which that objective can be achieved, that is for them to vote for political parties who include those objectives in their policies so that the members of the community can have confidence that those objectives will be attained.

Mr. Daly: Information on Brendan Daly  Zoom on Brendan Daly  In speaking on this document I want to be constructively critical. [2603] I want to make a number of general points and then speak about two specific areas which I feel have been neglected in the document and where I and many others would see huge potential were proper plans devised and decisions taken, that is in the overall development of our natural resources. Any document put forward on our economy at this point that fails to come to grips with the development of two of our basic natural resources—I speak of our fisheries industry, both inland and sea and of our afforestation and timber business—constitutes a weak plan. This would have been a healthier, more soundly based document had the Government concentrated on highlighting and developing policies which would have tacked and dealt with those major resources at present not being fully utilised. They carry huge potential for job creation and general benefit for the economy if only the necessary decisions were taken now for their development.

I was amazed at the approach adopted by the Minister for Finance in the House last evening. In the course of his remarks he appeared to be critical of the leader of my party and of the spokespersons from this side of the House who had already spoken. Indeed, he appeared to concentrate on an analysis of our document The Way Forward rather than on the new plan of the Government before the House. Of course it is obvious that the Minister recognises that what is being advocated in this new plan constitutes an updating in many respects of what is contained in our document The Way Forward. In the document Building on Reality 1985-1987 I was particularly interested in Appendix A; Sectoral Development Committee, in regard to the work in which they will engage in regard to the development of our natural resources. Anybody reading page 39 of this document under the heading Sectoral Development Committee will see that it represents almost a complete replica of page 49 under the heading Sectoral Development Committee, paragraph 15 of our document The Way Forward.

[2604] It will be obvious to anybody studying both documents that the files were taken out in the Departments of the Taoiseach and Finance and examined carefully on what had been done in 1982. It is obvious that there have been whole chapters, paragraphs taken almost line for line, word for word from our earlier document, sometimes transposed to make them appear somewhat different. This new document by and large constitutes an updating of The Way Forward merely with a change of emphasis in some respects. For example, in some places there has been more emphasis put on social areas. Of course there is room for the development of social policy which can run side by side with the implementation of an economic plan. This would be a sounder plan had there been articulated more detailed policy decisions, had there been more information given in relation to the Government's strategy on the development of our natural resources and other matters of that nature. There might well have been produced at the same time a social document in which the Government might have indicated which were the priority areas in relation to social developments.

In any further contributions he might make on this plan the Minister for Finance would be well advised to deal with what is contained therein rather than what is contained in our document The Way Forward. Rather he should deal constructively with what he sees to be the policy of his Department, or indeed in teasing out the difficulties there appear to be within his Department. There has been a Government admission within the past 24 hours that seven people with economic qualifications have left his Department within the past 12 months, leading people to wonder whether the whole economic input of that Department into this document is not unsound or incomplete in some way. The Minister for Finance would be well advised to sort out whatever problems there are that appear to be forcing economic advisers from his Department. He would then be in a position to give more careful consideration to the points of view he is [2605] endeavouring to put across.

Even though this new document recognises in its very first lines that the major problem confronting the country at present is unemployment it recognises also that, at the end of 1987, the unemployment problem will be worse than at present. It appears to me that we have now a set of proposals from the Government contained in this document which set out to tackle the major problem of our economy but which admit that, at the end of the day, they will not be resolved but rather are likely to be worse.

There has been a series of attacks on this document from the trade union movement. They have been constructive in clearly identifying its shortcomings and their views must be taken seriously. Peter Cassells of the ICTU stated in a balanced and reasonable way that the plan contained no real measures to deal with the unemployment crisis, that the jobs mentioned in the plan were half jobs or temporary jobs and that it was likely that we would see during the period of the plan huge emigration, probably in the region of 35,000 people. The IDA project about 3,000 jobs in the period while the plan acknowledges the need for about 13,000 jobs. These are the views of a responsible trade unionist who has a detailed knowledge of the economic area and much experience of dealing with Government. He throws cold water on this plan and this represents a damaging indictment.

Mr. Bill Attlee of the FWUI described it as a confidence trick. The woodworkers union were openly critical of it, as were the unions representing the ESB officers, local government and public service officers. We have heard critical analyses from trade union officials on radio and television. They recognise, as we do, that if there are major economic problems to be resolved the Government must devise the solutions and identify the way to deal with them and should not admit that at the end of the day the position will be worse.

Very little effort has been made by the Government to put forward a realistic [2606] plan which would stand up to careful analysis and identify the policies to deal with the problem areas. It is obvious that the bulk of the Government's time during the past two years has been taken up by internal disputes and disagreements about whether we should have food subsidies and other issues of this nautre. They merely updated The Way Forward and added some areas of social concern while not facing up to the problems which now confront us.

People are totally dissatisfied with this Government in many other respects. Youth unemployment has now reached a critical stage and thousands of young people are being forced to seek employment opportunities outside this country. We cannot tolerate this situation. I would ask the Government to examine as a matter of urgency how this emigration trend can be halted. This is a crisis of enormous proportions. Young people are coming to Deputies for advice, saying they intend to look for opportunities abroad. This is something we have not experienced during the past ten or 15 years and I appeal to the Government to take measures which will make it possible for the best of our young people to stay in this country and find employment.

I mentioned at the outset the development of our natural resources, especially sea fisheries. The seas around us present us with a national challenge which can be faced up to in a positive way during the next few years. In terms of technology, competence and performance since we joined the EEC our fishing industry has been a remarkable success. There have been difficulties from time to time and problems and disappointments in the industry, but we have seen a dramatic improvement in the development of sea fisheries and the whole fishing industry since we joined the EEC. The Common Fisheries Policy which was worked out in the EEC after six years of complex and difficult negotiations means that we have an opportunity during the next ten or 20 years to develop this industry still further and improve its performance. It is regrettable that only a few lines have been devoted in the economic plan to the [2607] development of the fishing industry, at a time when the industry is going through a crisis and in need of confidence and stability. It is a major disappointment that the policy of the Government in relation to acquaculture seems to be aimed not at developing the industry but at putting a brake on expansion. There is no indication of what the Government plans will be except for a vague reference to a White Paper which will be published at a later stage. The time for a White Paper is long past and it could have been incorporated in this plan.

The result is that those involved in the industry are not sure what their future will be and have no guidance as to the areas in which they should expand and develop. Instead of securing their future the plan seems to indicate that there will not be a place in the industry for many of the people at present involved. The plan states that the Department of Forestry and BIM should embark on an immediate programme to identify the size and structure of the fishing fleet. It states that this is likely to entail the retirement of some boats from the fleet. In other words, we are not to see any consolidation or expansion in the existing fleet but rather a curtailment of that fleet. A clear indication is given that we will see retrenchment rather than development in the future. This is not the way I would wish to see the industry progressing. Those involved in the industry would share that view. We imported in 1982 about £30 million worth of fish which could have been caught and processed here. Ministers are being forced to seek opportunities for the export and marketing of fish abroad while at the same time we are importing fish which could have been processed here, with a resultant loss of jobs, of revenue to the State, of secure employment in the industry and of the prospect of future jobs.

If there is one area which needs urgent attention it is fisheries development. It is not good enough to read in this document that a White Paper to deal with fisheries development will be issued at some stage. The Minister and everybody in the country [2608] knows what is needed to deal with our fishing industry. It is time we were given a clear indication of how we can tackle that basic weakness and we should be able to see a prospect of an expansion in the sea fishing industry, creating employment opportunities for many young people and ensuring that there will be a future in this industry for many people who feel threatened that they will lose their jobs.

There is a need to examine the financial structure of the fleet and there may be a need to diversify. There are many areas where research needs to be done. We need to search out new fishing grounds, develop new fisheries and identify non-traditional species. Much work needs to be done in the area of cost saving techniques to benefit the fleet. All these things can be done with the help of people already in the industry. In my opinion there is no need to retire anybody from the fishing industry because there is scope for further development and expansion. This is what we want to see in an economic document. There is a need to make some of our vessels larger. This will encourage young people to get involved in the industry. This problem is not being tackled in the economic plan.

The enlargement of the Community is another threat to this industry because of the negotiations on the admission of Spain and Portugal to the EEC. The fisheries industry is worried about what is likely to happen in the event of these countries joining the Community. It would be very damaging to the industry and its prospects for the future if those countries are admitted leaving the detailed negotiations to be worked out at a later stage. This would have a very adverse effect on our industry. I am asking the Minister for Fisheries and the Minister for Foreign Affairs to ensure that in any enlargement of the Community the detailed negotiations are worked out well in advance so that here will be control over the Spanish boats. We have to be assured that non-traditional fishing areas for these boats will be protected so that no further damage will be done to an already damaged industry.

[2609] There is widespread anxiety in the Community at the way these negotiations are being conducted. There is widespread fear that the Common Fisheries Policy, which was worked out in detail after years of hard bargaining, will be undermined before it gets an opportunity to succeed if Spain is allowed into the Community without decisions on quotas, the CFP and so on being negotiated in detail before entry. I am not against the admittance of Spain and Portugal to the Community, but I am against their being admitted if negotiations are to be concluded at a later stage. There is a responsibility on the Minister for Foreign Affairs and the Minister for Fisheries to ensure that our fishing industry is protected in the event of any enlargement of the Community. The Commission proposals do not deal with this issue to our satisfaction. In my view, those proposals are totally unacceptable and unworkable and there is an urgent necessity to get back to the negotiating table and to ensure that the Irish position is safeguarded.

Our inland fisheries are in a chaotic situation, but I do not want to dwell on this at length. The monthly meetings of the North Regional Fisheries Board had to be abandoned because there is not money to pay their attendance fees. The fisheries boards have statutory responsibilities and it is a disgraceful and scandalous state of affairs that there is not money available to them. There is great potential in this industry and there are prospects for creating employment as well as providing amenities for tourists. These inland fisheries are being threatened because there is not enough money for the members to meet. We cannot allow this situation to develop further and the Minister must take steps to deal with this crisis which will jeopardise this multimillion pound industry and put the future development of our inland fisheries at risk. This will be very damaging for the people, the tourist industry and job creation. The Minister must give the boards the money to do the job they were set up to do or find another alternative.

On page 66 of this document there are a few lines devoted to forestry. We all [2610] know that the State has invested approximately £500 million in timber development since the foundation of the State. In this document it says a review body will be set up to look at the structure of this industry and somebody else will look at new ways of disposing of timber. That should have been done over the last ten years. In the last 12 months the Minister set up his own review body but I do not know that they have been doing because we have not seen anything from them. Whoever wrote these few lines on page 66 deserves a medal in my view. It says:

The overriding objective in the exploitation of the State-owned natural resource will be the maximisation of the benefit captured by the State on behalf of the community.

Whoever wrote that should get a prize for gobbledygook because I cannot make head or tail of it. The timber industry needs a commercial orientated State-sponsored body which would exploit the potential of forests in which we have invested to the tune of about £500 million since the foundation of the State. Our natural resources are now being handed over — as happened in Scarriff — to foreign interests to do the job which should be done by us. I do not exclude business people from some of the blame in this respect. They are critical of politicians but we can be equally critical of some Irish business interests which sit back and allow foreign interests to take over a natural resource like the timber industry.

There are Irish business people with finance at their disposal who have the expertise and knowledge to provide many jobs in the timber industry as at present it has not been exploited to the full. Thousands of jobs could be provided for Irish people and there is plenty of money to be made. Unfortunately, Irish businessmen have failed to recognise the potential in this area and have allowed foreign interests in to do the job which they should be doing. We have a £30 million construction industry market here which is being supplied by foreign imports. I see nothing in the economic [2611] plan which indicates how we can deal with the major problems. The basic weakness is that there is no plan for our national resources and no future plans except that committees will be set up some time in the future.

Minister for Education (Mrs. Hussey): Information on Gemma Hussey  Zoom on Gemma Hussey  Before I speak on education, I should like to say that I listened with great interest to Deputy Daly's remarks about the development of forestry and the timber industry in general. Coming as I do from a county which produces 30 per cent of our timber I can assure Deputy Daly of my keen interest in the development and exploitation of our forestry and timber industry. I should also like to assure him that, before long, he will be pleased with Government initiatives in this area which, I agree, are very badly needed.

I am very glad to be able to take this opportunity of participating in this debate on the national plan. Its publication represents a unique and significant event in the planning of our economic affairs. The plan carries its own particular authority as it has drawn on the collective wisdom of many people both inside and outside the political system and both inside and outside the public service.

It was widely recognised that a clear indication of Government action over the next three years was greatly needed. This plan meets this expectation and enables all sectors in the economy to plan in a meaningful way against a backgroud of stability and certainty.

As Minister for Education I am particularly pleased about the recognition that the plan gives to the importance of education. Education has always been a top priority in the minds of our leaders, who down the years sought to promote and advance the liberty and dignity of the Irish people. “Educate that you may be free” was the dictum of Thomas Davis. Pearse regarded native control of the education system to be of paramount importance to the emerging sovereign people. It comes as no surprise, therefore, that the education provision looms [2612] large in the thoughts and policies of the present Government. That we have succeeded in maintaining and where perceived necessary, enhancing that provision, is eloquent testimony to this Government's determination to do right by our young people — and not only that but to do right by our older people who seek their second chance.

Education is a huge industry. It requires massive injections of money to maintain and extend its permanent plant. It must meet formidable labour costs in salaries, wages and allowances. It must also provide student support to the fullest extent possible. It must supply current costs of maintenance and materials. It seeks by careful subvention to ease the burden on the weaker sections of our society.

Small wonder then that I find myself responsible for a current budget of £1,000 million, the largest it has ever been and the third highest budget of all Government Departments.

The remark might legitimately be made: “Surely with such massive resources at your disposal, your task must be comparatively easy”. Alas, this is not the case. The funds available to me are sufficient to ensure the viability of the system and to enable certain advances to be made in areas of greatest need. But pressures are everywhere and can only be assuaged on a selective basis of priority. Hence the necessity not only for resources, but for resourcefulness in policy and in action.

This points up the importance of the strategic planning outlined in the programme for action which I had published in January of this year — a programme which predates the overall national economic plan but whose provisions and commitments are incorporated in the more recent document. In other words, education has been accorded its rightful place in the programme for Government, now and in the future.

Education, it has been said, is a precious thing and cheap at the price, but the price to be paid is considerable. There is no such thing as free education. Let us take a look at what the education of each [2613] child cost the taxpayer in 1983:

—for every primary school child £550 was needed.

—for every post-primary school child nearly £1,000.

—at third-level the subsidy varies from £2,100 to £5,000 depending on the nature of the college attended.

I do not intend to make invidious comparisons between the varying unit costs of the different systems at second and third levels. Each system is funded in accordance with its own specific activity and terms of reference. However, it should be noted that every family with children at school or college at whatever level receives a subsidy from the community per annum to the extent of the figures I have quoted.

In talking about the cost of education it is important for parents to realise the extent of the subsidy which is in effect a hidden subsidy lost in global vote figures published in Books of Estimates.

At current rates, by the time a child goes through eight years of primary school, five years at post-primary and three years at university the State will have paid out a sum of the order of £20,000. In any one year a family with four children, one at primary school, two at post-primary and one at third level will receive an annual subsidy of some £6,000. These are substantial sums for the community to meet through paying taxes. These family subsidies will not only be maintained by the Government, they will be progressively increased over the period of the national plan in the lines set out in the action programme.

At primary level, which is a priority area, an enrolment increase of 1/2 per cent per annum is anticipated. This will generate a corresponding increase in cost of the normal overall servicing. In addition, however, provision has been made for a continuing special initiative in disadvantaged areas, to the extent of a half a million pounds in each year of the plan.

This special initiative, which I introduced in the current year in respect of selected areas in Dublin, Cork and Limerick, will enable resources to be channelled to other areas of great need [2614] in the form of additional books, teaching materials and equipment and home-school liaison activities. Additional remedial teachers will also be provided where they are most needed. This is one of the most important interventions to be made, as it has been identified that disadvantage shows its greatest effects in the early years in the primary school.

I am concerned to ensure the continued viability of the primary school library service and the plan makes provision for a 50 per cent increase of grants in this respect.

On the post-primary side, the plan, in accordance with the programme for action, will allow for the re-introduction of the scheme for the provision of remedial teachers, with additional guidance posts for schools in disadvantaged areas. There will be improvements in the free books scheme and, as at primary level, increased investment in in-service training.

I have succeeded in making a new and significant advance in the field of post-primary education by getting the support of the European Social Fund for a major series of vocational preparation programmes. These are aimed specifically at a target group of young people who have been of particular concern to me — those who have consistently dropped out of school at 15 years of age, often without any certificate or qualification and who form a disproportionately large group among the unemployed. It is a source of particular pleasure to me that vocational preparation programmes are now widely available for this group of young people in both vocational and secondary schools. This is the first time that secondary schools have had the opportunity to participate in such programmes and, indeed, for many years the secondary school management and teacher unions were calling for this provision. An allowance of £300 is payable to each of the some 19,000 students now involved in these programmes.

European Social Fund support is also enabling many more thousands of young people in regional technical colleges to attend technician courses with the benefit [2615] of grants. This is a major development which will be a significant boost to young people and their parents, especially in rural areas. In this first year of the new scheme 12,000 young people are in receipt of grants to attend these courses, an increase of 8,000 or 200 per cent.

I would like at this juncture to say a word about the Curriculum and Examinations Board which I set up on an ad hoc basis last January. This top level body of educationalists have set to work with verve and vigour on the reform of our curricula. They have already issued a major document, Issues and Structures in Education, which has created great interest in the educational world. I should like to take this opportunity to congratulate the chairman, officers and members of the board on their expedition and dedication

When the board eventually gets under way as a statutory body, which I expect and hope will be in 1986, it will proceed to take on the responsibility of running the certificate examinations. It is my firm expectation that the inspectorate will have more time to concentrate on their inspection duties which will instil a new vitality into the work of the schools.

But, of course, the Government recognise that curriculum reform cannot be achieved without investment in in-service education. A considerable increase in funding for this was given in 1984 and further increases are provided for in each year of the plan. The demands of change pose great challenges for teachers who are called upon to face in quite new directions from those to which they have been accustomed over their years in teaching. I know of and welcome the readiness of the teaching profession to rise to such challenges. For our part, the readiness to provide the necessary funds is apparent in the plan. To invest in in-service education is to invest in improving the quality of the education service generally.

If I may turn now to the provision for adult education, I am moving to put a firm foundation under the adult education provision. The national plan promises [2616] an additional £1 million by 1987 to fund community education in disadvantaged areas and courses in literacy.

For the first time adult education is being recognised as an educational sector in its own right by the provision in 1985 of separate budgets in each vocational educational committee area. These budgets will be administered by local boards on which the voluntary bodies will be adequately represented, in accordance with the recommendation of the Commission on Adult Education.

At third level, it is the policy of the Government to provide education for as many young people as possible and the level of real resources will be increased by about 5 per cent by 1987. Priority in funding will be allocated to academic developments geared to a changing society, with the emphasis on new technologies such as micro-electronics, new information technologies and biotechnology.

I have been speaking mainly about the current provision and now I would like to turn to capital provision. We have already had much comment about the greatly increased capital provision for education and much of the £32 million or 38 per cent increase in capital provision envisaged in the plan will be invested in third level projects — a fair indication of the Government's commitment to this sector of education. Many major new projects will be undertaken with priorities established from among the following:

Dublin Institute of Technology and its expansion.

The first phase of the new Engineering School for University College, Dublin.

Trinity College, Dublin's Clinical Science facilities in conjunction with the new dental hospital.

The second phase of the National Institute of Higher Education, Dublin. Third phase of the National College of Art and Design

and, most importantly, new regional technical colleges in Tallaght, Dún Laoghaire, Blanchardstown, and, outside the Dublin area, in Thurles and Castlebar.

[2617] This is an enormous capital expansion, by any measure.

In the area of student support provision has been made for an increase in the maintenance element by 10 per cent in real terms and income limits for eligibility by 5 per cent in real terms from September 1985 and, most significantly, both will be indexed to the rate of inflation subsequently. It is also proposed to introduce a tapering mechanism to provide a part of the tuition fee to those just outside the limits for eligibility. This scheme is in line with our commitment to help the less well off at all levels. The House will recall that it was the Coalition Government in 1981 which last made major improvements in the grants system.

In order the better to enable all these advances to be made, certain housekeeping economies are required, as outlined in the plan already.

Higher education fees will increase somewhat faster than inflation in each year of the plan. It should be remembered, however, that those in the lower income groups who qualify for grants have their fees paid and thus are not affected by those increases.

School transport charges will be raised. However, the exemptions granted to the children of medical card holders will still apply.

New students in primary colleges of education and colleges of home economics will be charged separately for tuition and accommodation and the higher education grant scheme will apply to them. This removes an anomaly affecting the financing of these sectors of higher education.

I have spoken of the need for resourcefulness in the implementation of the plan. This has particular application in relation to the cost-effectiveness of the third level sector and the incidence of rationalisation required to enable it to cater for as many students as possible. These matters are being actively pursued with the various interests involved in relation to the specific programme outlined in the plan.

The third level is the apex of the educational pyramid and as our population [2618] explosion surges through the system it is at this level, where the unit costs are highest, that the pressures are now beginning to be felt. The capital building programme which I have referred to is solid evidence of the Government's commitment to meeting third-level needs.

Government commitment must however be augmented by positive effort on the part of the suppliers and receivers of third level education in order to achieve the level of productivity required to meet the incessant and increasing clamour for accommodation in our institutions of higher learning. The need for resourcefulness is nowhere more apposite than in this area. We must constantly pursue ways and means whereby our available plant and resources may be utilised to optimum measure. Innovative and imaginative strategies should be formulated and implemented with determination and, of course, with a prudent regard for standards. I will give full backing to any proposals which seek to maximise our productivity in this regard.

Since 1983, I have tried to exercise a steadying hand on the educational tiller. Through the action programme and the national plan, our course has now been charted and our voyage plotted through what I might describe as the choppy seas of necessary economic stringency. What we now need is the co-operation and commitment of all the partners in education — parents, management, teachers and students. Given that reasonably fair wind behind us, we can set out with a sober but buoyant optimism, with confidence in ourselves and in our ability to meet and master any difficulties in our way.

It is in this spirit that I look forward to the national plan unfolding in the next three years, with particular reference to its educational input. I see the period as a time of practical progress, innovation, flexibility, adaptation and ingenuity, an opening of many windows on the world at work and reality for all young people.

Looking still further forward, for the world will not end in 1987, I see the momentum thus created, together with what additional wisdom we gather along the way, carrying us handsomely into the [2619] next decade and, indeed, the next millenium.

What we must avoid is rigidity and complacency. We must retain an openness to new ideas and attitudes, an acute and searching awareness of the needs of our young people in a rapidly changing world and an ability to marshal and deploy our available resources in response to those needs. This we can do, given the co-operation of all concerned. Let no one doubt our ability to meet the challenges.

Last week I heard something on the radio and I do not know who said it. I heard quite clearly something said by somebody quite influential to the effect that to be under 25 years of age in Ireland today was to be discriminated against. It was an unthinking, unfeeling, unknowing remark. This country cares about its young people. This Government care about young people and have established a rapport with young people, perceive their needs and are directing their energies and talents to fostering their advancement throughout the educational system and elsewhere.

The Government have given a warm welcome to the report of the National Youth Policy Committee, a committee which was set up by the Taoiseach in response to concern about the formulation of a policy for our young people, the first time this national concern was ever responded to. That committee included membership drawn mostly from young people, nominated by young people. Its detailed recommendations, many of which concern education, will be given a most sympathetic hearing in the immediate future. It was encouraging to read the results of the survey which indicated that young people are, by and large, optimistic about Ireland's future. We should take care not to dampen that optimism which is such a renewing force in our society. The young people of today are alert, responsive, caring and responsible. It ill becomes anyone to dim their hopes with charges of discrimination. “Mol an óige agus tiocfaidh sé”. With proper encouragement and prudent provision of resources [2620] in their favour they can move any mountain in their path. It is this Government's firm intention, in the Taoiseach's words, to dust off the JCBs to help them do just that.

I recommend the national plan with confidence to the House.

Mr. O'Kennedy: Information on Michael O'Kennedy  Zoom on Michael O'Kennedy  While the Minister for Education is in the House I should like to take this opportunity to congratulate the new Secretary of the Department on his appointment. Having regard to the forward projections given by the Minister, the question arises whether there were within the Department the experience, commitment and expertise which I witnessed in my time. Were there people in the Department with the calibre to take on this very responsible job which will extend beyond the Minister's period of office? If we were to have an appointment in this new era of techno-culture which we are now launched into, and to which our programmes for education must be directed, it is open to question whether someone with experience in the Department of the Public Service, as distinct from experience in Departments dealing with industry, or energy, or technology would be better equipped for the appointment. It was the Minister's decision. I trust that the interests of our educational development will be served by the appointment and I wish the new appointee every success.

A difference between the Government and the Opposition is that we have not got the facility of having script writers to prepare our stuff. By the time I have finished I hope the typed version from my one secretary will be available for the press. I want to concentrate on three or four main aspects of the problems facing the country, the potential of the country and the manner in which this Building on Reality document ignores the realities in a whole range of areas.

Two years ago we had no plan but we had a commitment. We had many and varied commitments. Now we have what is called a building on reality plan limited to three years and not projecting beyond three years. The expected maximum span [2621] of this Government's life is the only issue with which the Government seem to be preoccupied. The problems did not begin today. They began two years ago and they have become more acute since then. The problems and potential will not cease in three years time. Those are two fundamental deficiencies in the preparation of this plan. With 170,000 unemployed two years ago this Government, as their first priority without any plan, promised “firm and decisive action to halt and reverse the growth of unemployment”. Today with 215,000 unemployed, an increase of over 45,000, the same Government as their first priority assert the need — and note the similarity of the words — to “halt and reverse the continuing upward spiral of unemployment”. They then project a further growth in unemployment after the experience of building on reality for three years.

The Government are consistent in their terms. The refrain is the same. The first priority is to halt and reverse the growth in unemployment. As the young boy said, “Words mean what I say they mean”. They mean what the Government say they mean. Halting and reversing mean increasing unemployment. It would be laughable were it not tragic for the countless thousands of our young people who are so redefined in this new dictionary of Government terminology, and the hordes of our young people who are emigrating in 1984 Irish style.

Two years ago when PAYE taxes yielded £1,450 million, the Government asserted that “the proportion of tax derived from PAYE on wages and salaries will be reduced”. Today when those same taxes swallow up £2,000 million, the Government in their second objective assert the need to “ensure that the recent rapid rise in the burden of taxation is halted”. The favourite word is “halted”. The Government's interpretation of it is quite the opposite from the interpretation of anybody else. If we apply the Government's definition of halting or reducing the level of taxation it can only mean that, after three further years of building on reality which we are now [2622] promised, the PAYE taxes and contributions will account for somewhere in the region of £3,000 million. That, probably in the light of the Government's interpretation of halting, reversing and reducing in the last two years, is a conservative estimate. For that reason I will revert to plain speaking.

A fundamental problem is that the hostile tax climate here is suffocating any additional employment growth. I agree with the analysis that employment growth and taxation are inter-related, but the current hostile tax climate is suffocating any additional taxation growth. The Minister for Finance, who constantly preaches competitiveness — and who can disagree with the need for competitiveness? — day in and day out, is the very Minister who by increasing the labour costs of employers and reducing the net wages of employees through the imposition of penal levels of tax, PRSI and levies, has ensured that the competitiveness which he preaches to all and sundry cannot be achieved. Both the employer and the employee have lost in the face of the Government's voracious appetite for additional taxation ——

(Interruptions.)

An Leas-Cheann Comhairle: Information on John J. Ryan  Zoom on John J. Ryan  Deputy Kelly, you spoke last week. Please allow Deputy O'Kennedy to speak.

Mr. O'Kennedy: Information on Michael O'Kennedy  Zoom on Michael O'Kennedy  I believe Deputy Kelly had an hour to speak for some strange reason and I have only half an hour. Both the employer and the employee have lost in the face of this Government's voracious appetite for additional taxation which now in total taxes amounts to £6.1 billion, 42 per cent of our GNP and more than double that of four years ago. With these levels of taxation is it in any way surprising that the only growth area in our economy is the black economy? This I asserted last year and in the previous year, and it is growing with the growth of the burden of taxation. Let us look at some of the elements that contribute to it. PRSI was introduced as a social insurance scheme but under this [2623] Government it has become an anti-employment levy in line with many of the other levies they have dreamt up and imposed to fund State agencies and activities that do not produce the jobs on the ground at the end of the day. In this instance it is significant that the Government have ignored totally the recommendations of both the National Planning Board, whom they set up, in relation to PRSI contributions and the Commission on Taxation, which I set up — and that might have some bearing on their attitude to that commission.

In this and many other areas there is a grave bias in our taxation system — apart altogether from the total burden of the crushing taxation — in favour of capital against labour costs at a ratio of approximately three to one. That has been staring the Government in the face for the last 12 months. Yet they say their first priority is to generate employment or reduce unemployment. The Commission on Taxation in this instance recommended that the taxation system should be neutral between capital and labour costs and they were concerned only with taxation and taxation structures. The Government are meant to be concerned with much more — employment generation, a place for our own people in their own area, the dignity of employment about which we hear all around us. We all mouth clichés, do we not? This Government, who have that responsibility, oppose any such neutrality between allowances for capital and tax on labour, and they have unleashed a bombardment of taxation weaponry against increased employment. Is this, for instance, the explanation for the scandalously low projection of 2 per cent growth in manufacturing employment against the forecast of 8.5 per cent annual increase in industrial manufacturing output? Are we interested just in expanding output without saying what that means in real terms in increased job opportunities?

In passing let me say that we all take credit for what others have achieved from time to time. I suppose it is fair to [2624] say that we all tend to blame others for some of our faults. That is the pattern of public life, but I wish this Government would recognise that the buoyancy in our manufacturing exports at this moment, and for which they have been claiming considerable credit in the last two years, is due almost entirely to the high technology industries and the pharmaceutical and paramedical industries introduced by the much maligned Fianna Fáil Government between 1977 and 1981, particularly in the period from 1977 to 1980 when we had growth, low borrowing and a generation of activity that is now accruing to the benefit of the nation.

The Government also ignore the Commission on Taxation in other areas and they ignore also the National Planning Board which they established, but it beats everything when the Government ignore themselves. We can judge the Government only by their own stated aims in whatever policies they present. I am talking about the White Paper on Industrial Policy, paragraph 5.21, where they said, and I quote:

Many indigenous companies in the traded goods and services sectors have capital structures which rely too much on debt finance and State grants, and too little on risk or equity capital.

It goes on to conclude that “This low level of equity has been a major constraint on the development of indigenous enterprises”. I happen to agree with this conclusion, that too much debt and too little equity is a major constraint against development of indigenous enterprises and against the creation of long-term jobs, but the masterpiece Building On Reality ignores the issue completely. It does not even address the issue, just as the Minister for Finance — I almost called him what he is, Minister for Taxation — in the course of his address to the House yesterday made no reference whatsoever to taxation or taxation proposals. When toward the end of his speech I queried whether he would have anything to say on this area, which is the major problem facing the country at the moment, he said that one of his colleagues would tell us about this during the course of the [2625] debate. It is an extraordinary admission from the person responsible and equally an indication that this Government have no comprehensive programme for taxation review.

The Commission on Taxation, the National Planning Board and the White Paper on Industrial Policy all spell out the reality that our current tax system is one of the major reasons that Irish companies are undercapitalised and over borrowed. The Government do not wish to know. Our tax structure and the penal levels imposed by this Government combine to erect formidable if not insurmountable barriers against the creation and maintenance of long term employment. We have and have had the highest levels of taxation in Europe. Yet the Government have no proposal to reduce the overall level within the period of this plan. I set up the Commission on Taxation four years ago and since then the average tax take from the self-employed and PAYE workers has more than doubled. Here let me say in passing that one of the consequences of the penal levels of tax is that it is turning people in on themselves, turning the PAYE workers against the self-employed, farmers against workers and workers against farmers. There is no sense of national cohesion. Everyone is reacting to the burden of taxation, trying to escape what might be seen as a fair share or trying to reduce what in many cases is an undue burden. The Minister himself belatedly has had to acknowledge that the PAYE increase over the last four years has doubled in terms of tax. So also has the tax on the self-employed doubled. For all too long there has been a tendency to ignore the contribution of the self-employed in a climate for development and activity but now we find the Minister having to acknowledge that at least the PAYE sector and the self-employed have that much in common, they both share the burden of the crushing increase in taxation.

The system — I am not talking about the levels because they were much lower four years ago when I set up the Commission [2626] on Taxation — was in need of reform four years ago but it is screaming out for reform now. The contemptuous dismissal by the Government of the proposals of the Commission on Taxation as being not practicable is a scandal. The one paragraph dismissal of the detailed analysis, contributions and proposals of a very expert group is nothing short of scandalous in the light of the fact that this is the major problem facing the country. Is there any justification for treating such expert and committed members of the Commission on Taxation in this scandalous fashion? Is it because the Government have aggravated the problem which the commission were established to solve?

I should now like to deal with another level of taxation, indirect taxation. The Minister for Finance in the House has consistently derided any suggestion from Fianna Fáil that the levels of excise duty and indirect taxation were causing any revenue loss. The Official Report of Dáil proceedings on the Committee Stage debate on the Finance Bill this year, and last year, is so full of those assertions from the Minister against proposals put forward by me that I will not burden the House, much less those who report the proceedings of the House, by going back through it. We called vote after vote on those issues and the Minister not only refused to listen to us but denigrated the arguments made by Members on this side and derided any suggestion that there could be a revenue loss. Now, belatedly, because the words mean what he says they mean, or what the Government propose them to mean, a different view is being taken. There has to be, apparently, a revenue loss now which confines itself only, it appears, to the level of excise duty on spirits. The main fact is that the argument for a lower level of excise duty on spirits can be strengthened in relation to a lower excise duty on beer. Has the Minister not heard from the brewing industry or the drinks industry that in the last two years the level of consumption of beer has dropped by 20 per cent? That is not my figure but it can be verified by [2627] any check the Revenue Commissioners make at the appropriate level of duty charged. That is the reality of the position.

The fact is that the level of the price of beer has had a very damping effect on our tourism trade, particularly from Britain. It is because of our close proximity to Britain that the regular tourist is aware of the huge gap between the price charged for drink here and at home. In many cases visitors from there have been discouraged from coming to Ireland. The position with regard to petrol is similar. A check with any of the retail petrol outlets in the last two years will show that the level of consumption has dropped by something less than 20 per cent. That drop has taken place because of the level of excise duty. The same is true of household and electrical goods. The Leas-Cheann Comhairle and I are aware that a long established industry in our home town has gone into liquidation, like many others in the last six months — I am referring to Castle Brand — because of the high level of VAT on household goods. I pleaded with the Minister in regard to that rate and I called many divisions in the House on it. All members of the Government parties, Labour and Fine Gael, voted to maintain the level of 35 per cent on household goods because, obviously, it is necessary today but when the liquidation inevitably occurs tears are shed. We hear Members crying when people go to the North to buy videos, television sets and electrical equipment. The evidence is staring us all in the face but the reality is that the Minister ignores that evidence in every area except, for some reason, in the area of excise duty.

For that reason there has been a consequent loss not just in employment in those areas but, in the interest of the Exchequer, in revenue. The Revenue Commissioners are skilled at drawing a measure as to what the taxpayer can take but, for one reason or another, the Minister seems to have ignored whatever advice he must have got from the Revenue Commissioners — all his predecessors got the advice from the Revenue [2628] Commissioners — not to impose such levels. As the Minister acknowledged in the House yesterday our levels of indirect taxation are the highest in Europe. Do we think that will be kept a secret from our European partners or from the tourists we would like to attract here? Are we fooling ourselves that the Government's way of bridging a budget deficit has to take precedence over any other consequence to the economy and our people?

Why is it that the Minister for Finance did not make any reference to that? I would have thought that the first obligation would have been to the whole issue of taxation. I accept that he made one reference to it in his opening remarks when he said that the Government plan had two central objectives, to increase employment and to halt the rise in taxation both direct and indirect. From thereon the Minister did not mention one word about taxation. That is a shameful dereliction of duty on the part of the Minister who has been responsible for heaping on the levels of tax we are now suffering from.

Under the Government, to deal with foreign borrowing, we were promised that the level of borrowing would be reduced but the total foreign debt of the State has soared in two years. It has soared from £7 billion to more than £10 billion now. The commitment of the Government to reduce our foreign debt dependency rings somewhat hollow in the light of that. However, Building on Reality does not set out any strategy for reducing the burden over the next three years. The Minister for Finance deliberately departed from the long established practice of all his predecessors of maintaining a prudent mix in our external loan portfolio and in a headlong rush to dollar borrowing has risked the very solvency of the country for years to come. The rate of increase in our total foreign indebtedness in the last two years by £3 billion is enormous. For instance, for this year alone dollar interest rates have added an extra £500 million to our debt servicing cost. Since the Government took office our currency has depreciated against the [2629] dollar to which we shifted by about 35 per cent while we have maintained a stable relationship against EMS currencies which the Government deserted. With growing deficits in the US economy at present the long term projections from Treasury experts — the Minister may pick and choose what may happen on any particular day and he will find that the indications are against him — are for increased interest rates in the United States. Yet the Government in Building on Reality are building on the assumption that during the period of this proposal exchange and interest rates will remain stable. If that is the basis on which they are building surely at least they would have adopted a more judicious programme of borrowing. I am not talking about the purpose of the borrowing but the strategy and the range of borrowing. Our trade deficit with the United States is 2:1. That is the reality. Our trade deficit with the Federal Republic of Germany and with Holland is in surplus. The Government insist on borrowing in dollars. What prudent businessman would engage in such folly, the consequence of which is that we must borrow more to pay the existing debt? We cannot earn it ourselves because of our deficit with the United States. We must borrow more to pay for our increasing tax burden.

The Government should, in this year of our EC Presidency, press immediately for establishing the ECU as a currency within the EMS which was launched during the period of Fianna Fáil. I am not saying that it was their initiative. The intention was that the ECU would be established as a central European currency and an acceptable international exchange denomination. There is a compelling case in the EC now for such a development which would enable us to have an EC domestic debt. Our EIB loans would be in ECUs. They could be rated in a separate category from external debt such as dollars, yens and so on.

There must be constant scrutiny of foreign borrowing. We cannot discharge our responsibility by simply imposing extra [2630] taxation on people to meet growing interest repayment costs. Open debate on this issue is now imperative and is our basic duty.

How do the Government propose to hold unemployment by penalising investment in employment? How do they propose to generate employment by reducing investment in our productive resources — agriculture, fisheries, forestry and so on? How do they propose to reduce borrowing by increasing our dollar debt? Will they bring their borrowing strategy before the House? Have they any plan for increasing growth and employment opportunities? Do they intend to look at the levels of excise duty and indirect taxes in the manner I have proposed?

All the reports we have over the last two years might have meant something if the Government had listened to some of the central suggestions in them. In the absence of any action by the Government they only serve to confuse. I hope the Commission on Taxation which, by universal judgment, has done a remarkable job, will not feel obliged to relinquish their responsibility in the same way as the Government have relinquished theirs.

Mr. McCartin: Information on Joe J. McCartin  Zoom on Joe J. McCartin  While waiting for my turn to speak I was heartened to see one of the chief Opposition spokesmen on the benches opposite. I looked forward to the contribution he would make. There are many of us who are not absolutely satisfied that this plan contains the solution to all our problems and that here and there other solutions could have been proposed. One looks in particular to Opposition spokesmen to fill an odd hole here and there and put a bush in the odd gap which exists, but having listened to Deputy O'Kennedy I am just as disheartened as ever. What we heard was the negative jargon about all the things that are wrong and the mistakes that were made. There were no proposals or solutions put forward. It was the same old song we have listened to for years. It was the same rhetoric which has brought about the depression which exists at [2631] present. This depression was lifted slightly by the publication of this plan. It gave the impression that whether their policies be right or wrong, the Government at least sat down and thought about the road ahead. They did their best to establish their goals and objectives for three years ahead. We have identified problems and if we can improve on the targets the Government have set, we will have something on which to congratulate ourselves.

The people generally are disillusioned, particularly the young. They are disillusioned with politicians and their perception of where the economy is going and what opportunities there are for them. There is an impression that the country is in a very bad state. Young people are not justified in feeling that way. People of an older generation are not justified in telling young people that this is the position and giving them the impression that they are an unfortunate generation of young people who have fewer opportunities, fewer of the world's goods and who are living in a country which is not as good as the one in which previous generations were brought up. That is wrong.

We have failed to realise our potential and make the progress we could have had. We failed to capitalise on the great asset we had of young, educated people who could have contributed so much. On the other hand, the country is better off than it ever was. It is as well off as it was five years ago and infinitely better off than the country of 15 years ago. Our standard of living has increased. Our standard of education has improved. There are opportunities for young people to get a fairly adequate education with less hardship. They are transported to school. They have more opportunities to travel and learn through a medium which reaches into every home. Young people are educated up to the age of 17 years and live in homes which are up to a high standard. They have the comfort of central heating, running water and sewerage [2632] facilities. It is wrong to give them the impression that they are a most unfortunate generation. It is a mistake and a disservice to democracy.

The first thing that must be realised is that we have had as good an economic growth rate as our trading partners over the last ten years. We are recognised as a successful industrial nation. In today's Irish Times a publication called Euro Money states that we are in thirteenth place out of 27 industrial countries for industrial performance. That is not a bad position.

We could point to progress made in other areas. This positive side must be pointed out to young people who think they are badly disadvantaged. We recognise that in relative terms we have not grown richer by comparison with other industrialised nations. The gap between us and Germany, Switzerland, Netherlands and the US is widening; nevertheless our standard of living has continued to improve almost steadily over the years with the exception of the last three. We must redistribute the opportunities that increased wealth has given us and we must accelerate that growth so that further opportunities will be created for those who do not have a chance to work at present.

The previous speaker spoke of the hordes of young people leaving the country. We can only hope that this is a temporary situation; but, if they must go for a year or two and if they learn from their experience abroad, they can return here when the economic climate improves so much the better for that experience and better equipped to contribute to the further development of our economy as in the case of many others who went away but who returned and contributed much to the upswing in our economy in the seventies.

Mr. O'Kennedy: Information on Michael O'Kennedy  Zoom on Michael O'Kennedy  They will hardly come back better equipped from the streets of London. The Deputy might listen to some of those who work there.

Mr. McCartin: Information on Joe J. McCartin  Zoom on Joe J. McCartin  They can learn in the [2633] streets of almost any European city. When I spoke here shortly after the introduction of the last budget I expressed the view that there was an over reliance on what might happen in other economies — for example, the projected performance of the American economy. Yesterday the Minister referred to the projections for other European economies. While the greater proportion of our trade is with the EC, what happens in the US economy can affect what happens in the Community and to that extent the US situation is important to us. It is obvious that our economy is affected by what happens in Germany and Britain.

On that last occasion on which I spoke I warned against relying on an improvement in the American economy to solve our problems. The Minister replied that the best he could do was consult with the best advice available to him and to settle on projections that might or might not prove right. The Minister — and the Opposition, too — may well have sat down with the learned doctors and experts who may be in a better position than the rest of us to make these projections, though I submit that their guess is about as good as mine. I read in The Financial Times of Monday, 15 October what American businessmen think about the future of their economy. The article in question refers to a meeting of US business executives in Hot Springs, Virginia. These people meet there every year to review prospects for the economy and, according to the report in The Financial Times, they say that high deficits in the Federal budget and in foreign trade put the economy in jeopardy, that both will reach unprecedented heights next year and that this could well derail the business cycle upturn. Three of the economists in question talked about a recession in 1985 while it is reported that half the committee expect a recession in 1986. They went on to say that the budget deficit will be of the order of almost $200 billion in 1985. This illustrates my point about not basing our expectations to too great an extent on projections in world economies.

[2634]Mr. O'Kennedy: Information on Michael O'Kennedy  Zoom on Michael O'Kennedy  I agree entirely but that may well mean higher and not lower interest rates on the dollar. The Minister is expecting lower interest rates in that context.

Mr. McCartin: Information on Joe J. McCartin  Zoom on Joe J. McCartin  Yes, but as I have pointed out already, development of the ECU would go a long way towards resolving that problem. We cannot take from Europe everything that is nice and reject everything else. We are there to play our part. The development of interest rates on the dollar has not affected interest rates in Germany to the same extent as has been the case here despite our being in the same monetary system as the Germans. This brings me to a point that I have made many times, that is, that we could make a better effort at managing our economy in a way that it would be affected to a lesser extent by these outside influences. If our inflation rate is so different from that of our main trading partners we must look at our currency and ask whether it is realistic to maintain its parity in the light of developments in recent years. Such a review might bring us to making a change that would provide a solution in terms of our competitiveness.

If we take our three main trading competitors — Britain, Germany and the US — we find that our economy is of the order of 0.33 of those three combined. That is my own estimate. This means that what we export would be 0.15 of their entire economies. Therefore, regardless of whether these economies expand or contract, our exports will not be affected to any great extent. What matters is whether we can compete with our competitors inside those economies, who naturally will be fighting to hold their own domestic markets, or whether we can compete with those outside who are fighting to increase their share of those markets. Instead, then, of looking so closely at the projections for those other economies we should consider more the question of our competitiveness and ask ourselves whether our position in that regard is improving.

Since the introduction of the last [2635] budget the Government have claimed, rightly, that inflation has been reduced to 8 per cent. This is considerable progress when one realises what the corresponding figure was two years ago. However, we must recognise that our inflation rate is still double the rate of that of each of our three main trading competitors. That is a very serious consideration. We must recognise that we continue to lose in terms of competitiveness. Consequently, instead of congratulating ourselves on the progress we have made we must look at the problem that remains, that is, the fact that we are losing to the extent of 4 per cent in terms of competitiveness in some sectors. This has not happened so much in the industrial sector in which there are some very competitive newly established industries that are not likely to be hit, but our economy generally is losing out in this respect.

In real terms the position of the average citizen in Ireland has improved in the past ten years. There have been improvements in economic and social conditions, in the range of social services, in the standard of education and in living conditions; but we must ask what are our main problems. First, there is the problem of unemployment and secondly, there is the problem of the disillusionment and humiliation that our people experience because of our not being able to realise our full potential as a country. Despite having more natural resources than any other EC country we are becoming poorer than people in the better-off regions of Europe. Even countries such as Spain have passed us out in terms of GDP per capita.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.


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