1988 Estimates for Public Services and 1988 Public Capital Programme: Motion.

Tuesday, 20 October 1987

Dáil Eireann Debate
Vol. 374 No. 3

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[644]The Taoiseach: Information on Charles J. Haughey  Zoom on Charles J. Haughey  I move:

That Dáil Éireann takes note of the 1988 Estimates for the Public Services (Abridged Version) and of the 1988 Summary Public Capital Programme.

It is widely accepted that the action taken by this Government since March represents a decisive turning point in our affairs. The problems of the economy are being tackled, and confidence is returning. We are working our way towards a better future, increased employment and improving living standards. The 1987 March budget was a decisive first step. Financial targets are being rigidly adhered to, interest rates have come down and both industrial production and exports are rising rapidly.

In the last ten days we have taken two further major steps to secure recovery. They are the Programme for National Recovery agreed with the social partners and the publication of the Book of Estimates for 1988. Both are integral to the Government's strategy. The broad financial objectives which we must set ourselves for the next three years were set out and agreed by the social partners in the programme, in particular the requirement that the relationship of the national debt to GNP should be stabilised and that consequently Exchequer borrowing would have to be brought down to between 5 per cent and 7 per cent of GNP. The programme provides for moderation in pay, for income tax relief and a commitment to job creation. The Book of Estimates for its part provides the basis on which an appropriate budget for 1988 can now be framed in accordance with the overall strategy and the economic realities.

The 1987 budget made significant progress towards our objective of reducing dependence on borrowing. Our work in preparing the 1987 budget showed us that expenditure would have to be reduced further in 1988 to halt the deterioration in the public finances. Ministers, therefore, [645] initiated an in-depth review of all spending programmes in their Departments immediately after the budget.

It was clear that the normal Estimates process, by itself, would be inadequate to procure an adjustment on the scale required in the overall level of expenditure in 1988. That process traditionally secured savings in the levels of expenditure proposed by Departments as a routine exercise but what we had to do in present circumstances was to ensure that every single item of expenditure could be fully justified on its merits. If it could not be so justified it had to be either eliminated or reduced to a level where it could be. This involved the most detailed, meticulous and objective review of the whole range of Government expenditure ever undertaken.

What we sought was a major and significant reduction in Government spending while maintaining services which are essential at the best possible level. We had to identify schemes and programmes which had outlived their usefulness, or were no longer serving the purpose for which they were originally intended, were duplicating some other service or which were in effect a luxury we can no longer afford. We sought to identify and protect priority areas where services were of vital importance and curtail expenditure in other — lower priority — areas.

The first notable feature of the 1988 Estimates is that they have been published well in advance of the next financial year so that they can be properly debated and so that Departments and other bodies administering public funds know well in advance their allocation, and are able to plan their expenditure accordingly. In the 1987 budget expenditure reductions had necessarily to be implemented at short notice. That is not the position in 1988. There will be no excuse for saying that the Departments and agencies have not time to adapt and adjust to changes and reductions. The early publication of the Book of Estimates was attempted only once before, by the last Fianna Fáil Government in November 1982. While the Coalition published a White Paper outlining good [646] intentions some years ago they were not, in fact, able to achieve anything in the four years they were in Government. The early publication of the Book of Estimates is an important landmark for the future, and a really significant achievement given the number of extremely difficult decisions that had to be taken. Now that the precedent has been established and we have shown that it can be done, we must ensure that this reform will be adhered to in future.

The critical situation of the public finances is well known to everyone. In the last four years the national debt doubled from £12.5 billion to £25 billion. We are now paying over £2.1 billion or nearly the whole of the revenue collected from PAYE just to service the debt. The debt is now equivalent to £28,000 per household, the equivalent of a substantial mortgage. And there was very little to show for all that massive borrowing. The unemployment situation deteriorated, emigration soared and taxation increased to excessive levels.

It is that millstone, the enormous cost of servicing the national debt, that is at the heart of our economic and financial difficulties. It is the principal reason for our present high tax rates, rates which involve 44 per cent of income tax payers now paying at more than the standard rate. The level of Government borrowing and the cost of servicing it are the major cause of our high real interest rates which, despite recent reductions, are still excessive and an impediment to investment. They are also a direct cause of the substantial financial outflows from the economy each year. They make us a high-cost economy. They are the single biggest constraint on further growth and development.

When we came into office we saw clearly that existing policies were not getting on top of the problem. Last autumn a serious loss of confidence caused a flight of capital and sent interest rates soaring. The situation had been reached where it was no longer possible to make economic progress on any front unless the fundamental financial problems were effectively tackled. Action had to be taken [647] urgently and, no matter how much irritation or disappointment that action may understandably cause, there is, I believe, a general appreciation of what has to be done. The recent developments on the financial markets underline for us in a very dramatic way, if that were necessary, the need there is for us to put our own public finances on a secure and sound footing.

The 1987 budget was a milestone in the recent history of the public finances. The reduction in borrowing which the budget set out to achieve this year represents the largest reduction achieved in recent memory. That is no small achievement. Because of this dramatic reversal of the slide to disaster there has been a significant reponse throughout the economy; lower interest rates and reduced capital outflows; substantially increased exports and a greatly improved balance of payments. Confidence is slowly but surely returning right across the board.

Fianna Fáil will always seek a great future for this country and her people. We want to place Ireland in the mainstream of European and international development and not be a depressed region on the periphery of Europe subjected from time to time to a large flood of emigration. In the long term our political independence rests on a viable developing economy. I know and appreciate that the course we have to follow is a tough one, but it is an absolutely essential one. The things we all want, good incomes and employment, high quality public services, a caring system of social welfare and health, all depend vitally on our maintaining sound public finances.

In this small country we must try to resolve our problems together in co-operation and understanding and not at each other's expense. We can achieve nothing by deeply dividing our society. It was for this reason that we engaged in consultations with the social partners in order to establish a framework within which further progress could be made towards getting the economy and the public finances back on course.

[648] Our approach has been to seek the broadest possible consensus on national objectives, and to invite participation by the social partners in deciding, without prejudice to the Government's responsibility to govern, how the principles agreed by them in the NESC report can best be implemented. Experience has shown that reductions in expenditure carried out in isolation and not related to an overall strategy which includes measures to promote development, to improve equity and to relieve the tax burden, would not command the degree of acceptance and support which is required for a major improvement in the economy. The nature of our difficulties is such that they must be tackled now, in the short term, with the greatest possible degree of unified national support.

The expenditure allocations for 1988 involved many difficult but necessary decisions. They reflect a balanced package of measures arrived at after the most careful consideration of all the options. A wide range of services is affected as the Government has sought to distribute the burden fairly across the board, husbanding scarce resources and protecting the weaker sections to the greatest possible extent.

The Estimates represent one side, a very important side, of the budget and of overall economic strategy. Government expenditure has been increasing steadily for most of the last 30 years. This trend could not continue even a year longer without a devastating impact on all our future prospects.

Already in this year 1987 Government expenditure has been reduced from 56.6 per cent of GNP to 55.2 per cent in 1987 and there will be a further substantial fall next year. This sustained fall is in marked contrast to the long-term upward trend of earlier years. It is one of the most significant changes in fiscal policy for decades. This is the first year in modern times that the expenditure Estimates are well below, in nominal terms, expenditure in the previous year. The nominal reduction is £412 million and the underlying reduction is nearer £500 million. I think it is accepted that the reductions for 1988 [649] are spread across the board and do not fall disproportionately on any one area of activity.

We have been scrupulously concerned to ensure that the burden of adjustment is borne by those better able to bear it. One of the very few areas to show no appreciable reduction at all, and even a slight nominal increase is the social welfare area. We have been able to implement one of the important recommendations in the Commission on Social Welfare Report, the extension of the free fuel allowance to the long term unemployed, as well as proceeding with the extension of treatment benefits to the spouses of insured workers. In agreement with the trade union movement the interests of the low paid and of those on social welfare have been protected in the Programme for National Recovery and to the greatest degree possible in the Estimates. The Government have made a commitment in the programme to maintain the overall value of social welfare payments.

A number of the policy measures we are implementing are designed to improve equity in our society and to reduce social divisions by providing more and more equality of opportunity. Greater equity in taxation is being sought by measures like the new withholding tax, the taxation of farmers on the same basis as the self-employed generally, and the extension of PRSI to farmers and self-employed.

I wish to emphasise strongly that the Book of Estimates for 1988 as published will ensure that essential services are maintained. It was to be expected that vested interests affected in different areas would of course react vociferously. In some cases economies have had to be made which any of us would have wished to avoid and in other cases we have to stretch our limited resources very thin. Contrary however to the impression being created we will still have a sound educational system, an excellent health service with the best specialist care available to the public patient, an extensive social welfare system that provides for old and disadvantaged, and a reasonable [650] provision for the maintenance of essential local authority services. There is no question of the many social advances of the last 20 years being seriously undermined. On the contrary, the action we are now taking to restore the public finances is absolutely necessary to protect for the future the basic structure of the services we have been able to build up and to ensure that we will be able to keep them financed in future years. The choice was between providing a level of services that we can afford to pay for or keeping a structure that would soon collapse because it could not be sustained.

We have identified a clear need for a major rationalisation of State agencies and services. The structure that has grown up over the years has become far too cumbersome with too much overlapping and duplication. We were not prepared to accept, without close examination, that all of them are still essential, or that their activities could not be scaled down. There are simply too many State agencies and authorities, each with their own heavy burden of administrative overheads. In some cases they are carrying out tasks in an elaborate environment that could be much more economically performed as normal functions of their parent Department. In other cases they were set up for purposes which have long since been accomplished. In some economic and social areas there are a number of agencies doing basically the same job. We simply have not got the resources to support this elaborate superstructure of agencies. We therefore examined the functions of all State agencies in a drive to eliminate duplication, overlapping, waste and non-essential activity. We also looked for areas where those who use a particular sevice should in fairness contribute more directly to the cost of that service.

It is quite untrue to suggest that we are protecting the administrators at the expense of the services. In January 1988 Civil Service numbers will have dropped by 6 per cent compared with January 1987. Over the whole Exchequer-financed public service, the reduction in numbers this year will be 9,000 which is four [651] and a half times the 2,000 achieved in the entire lifetime of the previous Government. What is happening is that the reduction in the cost of pay is proportionately greater than the general reduction in expenditure which indicates that the balance is in favour of the preservation of the services. We can only have a public administration and a level of services that we can offord to pay for. It is in nobody's interest that we live beyond our means and keep going further into debt. This has nothing to do with ideology; it is simply a hard fact of economic life and survival.

There has been inevitable criticism of the job losses in the public service which are necessarily involved in major reductions of Government expenditure. Here the answer is the same. We cannot continue to employ more people than we can afford to pay. And we have formulated satisfactory redundancy provisions for those who will leave the public service.

In the Estimates volume, it is clearly stated that provision for the lump sum payments is not included and will be the subject of subsequent arrangements. The Government are discussing with the Central Bank appropriate arrangements that might be made to enable the cost of these redundancies to be met exceptionally and over a period. When these discussions have been concluded the House will be given full details. For the moment the full cost of redundancy lump sum payments cannot be ascertained and it is not therefore possible to finalise the arrangements.

In the Programme for National Recovery we have identified in some detail where the opportunities for job creation are to be found. I would like to reiterate that the Government are absolutely committed to the creation of employment within the economy, and to achieve and if possible exceed the projected sectoral job targets in employment. The job projections show what we believe to be attainable on a realistic assessment. We know what we want to achieve, sector by sector, and in most cases specific policies for this purpose are already in place. We [652] have succeeded in getting agreement among the social partners to a public service pay agreement which is very moderate and realistic having regard to the general economic situation and the state of the public finances. Public service pay for 1987, which was already decided before we came into office, was 6 per cent above the figure for the previous year, 1986. That 1986 figure exceeded the target in the Coalition proposals in Building on Reality by £127 million and was largely responsible for the massive overrun on the current budget deficit in that year. I totaly reject as nonsensical the criticism which has been made of the present agreement. It is a sensible and moderate increase and infinitely preferable to the disruption that a unilaterally imposed pay freeze would have caused.

I do not think that sufficient emphasis has been placed by some commentators on the provisions for pay in the agreed programme, even though it has been widely hailed and endorsed in trade, in industry and in agriculture. A pay pause of six months after the expiry of the current pay agreements in the public sector will apply. The Estimates were framed on the basis that no further general increases would apply in 1987 and this position will now be realised when the current agreement expires.

How can anyone seriously criticise a provision in the programme which imposes a limit of 2.5 per cent on pay increases throughout the economy for the next three years? This definite limit enables the Government to approach the next three budgets with one of the principal elements satisfactorily settled. A significant feature is the agreement of the trade unions not to engage in industrial action in pursuit of claims in excess of the pay terms of the programme, which should contribute greatly to industrial peace.

The pay provisions of the programme contain a clear bias in favour of the lower paid. This is the first time that this has happened for many years. As I have already indicated, taking into account the 2.5 per cent agreed, the estimated total cost to the Exchequer of pay and pensions [653] for 1988 will not exceed the estimated outturn for 1987.

I believe that this provision for moderate pay increases covering both the public and the private sectors for the next three years is one of the most important achievements of the Programme for National Recovery. Everyone knows that economic and social planning must include a pay policy which for the period involved establishes the level of pay increases. This aspect of economic and social planning is crucially important because salaries and wages represent 80 per cent of gross national product. Realistic planning therefore must be based on a clear understanding about the development of pay during the period of the programme. Uncertainty about pay can upset any programme. A recent study, by one of its chief architects, of the failures of Building on Reality shows that the failure to achieve the pay objectives of the plan was one of the main reasons why its fiscal objectives were never realised.

Certainty about pay enables the public finances to be coherently planned since pay represents almost half of Exchequer expenditure. In the private sector which is facing increasingly competitive trading conditions, certainty about the evolution of pay over three years in an atmosphere devoid of industrial disputes and unrest provides the best possible basis for investment in and the development of individual enterprises. This firm planning basis coupled with lower interest rates now provides the best opportunity in a decade for investment decisions leading to greater output and efficiency and increased employment. This is why one of our foremost economists considers that the pay agreement in the programme represents “a significant change in the economic environment”.

Some spokesmen for the Opposition parties seem to favour overcoming our economic and social difficulties and achieving industrial peace by a general pay freeze. Let them tell the House whether in fact that is their position. Do they seriously think that that is a sensible approach?

[654] The approach of this Government, the trade unions and the employers, is far more sensible. We have agreed on a moderate pay increase over the three years which is related to the position of the Exchequer and the economy as a whole. It is an increase consistent with our objective of stabilising the national debt/GNP ratio and consistent with the objective of the private sector to remain competitive with our international competitors. It is also consistent, when taken with the tax concessions, with the social objective of helping to protect the living standards of families as much as possible.

There has been some criticism of the distribution of expenditure reductions as between current and capital. But we had no alternative to making reductions both on the current side and on the capital side if we were to achieve the overall target we need. I must point out that in this year's budget we reduced the current budget deficit by 1.7 percentage points and now have the current budget deficit at its lowest level since 1980. We are in fact therefore concentrating heavily on reducing borrowing for current expenditure as distinct from capital expenditure.

I accept in principle that it is desirable to the greatest extent possible to maintain productive public investment. But the compelling need to reduce the overall level of Exchequer borrowing dictated that we must have the reductions proposed on both capital and current account.

There has of course been very substantial capital investment since 1980, which has cleared many of the major infrastructural bottlenecks and deficiencies. Major investment programmes have been carried through in energy, telecommunications, housing, school-building, hospitals and communications. There is of course a great deal to be done in some areas; to improve our roads network and to reduce environmental pollution, for example, but we have reached a stage where a strong case can be made for scaling down considerably, for the moment, some categories of infrastructural expenditure. In [655] current circumstances all capital expenditure must be rigorously reviewed against its potential economic return. Important productive investment will as far as possible be maintained. In particular, we will do everything to support industrial investment and employment. All the promotional agencies will have to make the maximum possible use of their budgets and concentrate their resources where they are most effective. We do not accept that reduced budgets for an agency necessarily means reduced effectiveness; rather does it ensure that funds are concentrated where they are most effective. The taxpayer is entitled to full value for money in every area of the public service.

The Estimates for 1988 are an essential step towards restoring the country to economic health. If we fail to take these steps now, the hardship will be much greater in the long run, with reduced employment, exorbitant taxation and heavy reductions in public expenditure that would be bound to affect much more severely the least well off. High public spending, high taxation and high borrowing are no longer available as policy options.

As a Government we have had to initiate a major departure in fiscal policy. The situation we found on taking office left us with no alternative. In fact what we are now doing is consistent with the financial framework set out in our election programme which combined a stringent financial framework with development policies. The financial policy objectives we set out in that programme, however, have in the event required remedial action on a scale not previously envisaged.

One of the most encouraging developments this year has been the increase in the officially forecast growth from 1 per cent to just under 2 per cent. It shows that the deflationary effects of budgetary policies are being offset by increased economic activity, and indeed it would seem that a strategy based on reduced [656] expenditure rather than increased taxation can have these very positive indirect effects.

The Book of Estimates is of course only one side of the Government's financial strategy for 1988. The Government's strategy for the 1988 budget and the general thrust of economic policy in 1988 will be outlined in the 1988 budget. The main objective of this budget will be to continue the adjustment process initiated this year and to introduce new selective developmental incentives where possible. Next year's budget will, therefore, take us nearer to stabilising the debt/GNP ratio by 1990. The recently published Estimates for 1988 are the principal factor in deciding the shape of the next budget. But the various pay, social welfare and income tax proposals in the Programme for National Recovery will also form an important component of the budgetary arithmetic. Even when all these known factors are taken into account, we foresee the Exchequer borrowing requirement showing a further significant fall next year. The 1988 Estimates and the Programme for National Recovery must be judged in this light and when they are, it becomes clear that they dovetail into an overall strategy aimed realistically at bringing about economic and financial recovery.

The Programme for National Recovery represents a major national achievement in tackling our economic and social problems in a realistic and effective way and makes an important contribution to improved confidence. I would like to congratulate all the social partners involved in the negotiations on their responsible approach at this difficult time and on their ability to agree on a realistic medium-term strategy. There is now in this country a broad consensus on the extent and nature of our economic and social problems and the approach required to tackle these problems effectively. This consensus was first articulated towards the end of last year in the very significant National Economic and Social Council study —A Strategy for Development 1986-1990.

NESC put forward an integrated set of [657] recommendations to deal with our current problems in the areas of macro-economic policies including public expenditure control, the reform of the taxation system, the promotion of traded goods and services and the progressive removal of major social inequities. The council recognised that the achievement of a more rapid and sustainable rate of growth and the correction of the chronic imbalances in the public finances will require a considerable degree of sacrifice from society but they made clear that it is essential that such sacrifices are shared equitably across all sections of society.

It is significant that when the NESC study was published the previous Government issued a statement welcoming the report saying that “NESC's views are broadly in line with the Government's own analysis of both the outlook and the requirements for progress”. Some of the major points in the NESC report, in particular the necessity of stabilising the national debt/GNP ratio, were incorporated in the Fianna Fáil election programme, and subsequently on behalf of the incoming Government on 10 March 1987 I endorsed the NESC report in the Dáil.

The Programme for National Recovery builds further on the foundations provided on the one hand by the NESC study and on the other the principles set out in Fianna Fáil's own programme. It translates the principles and recommendations agreed by all the social partners in the NESC study into the firm action that must now be taken to give effect to those same principles and recommendations. Consultation by the Government with the social partners ensures the widest possible support for the steps that must now be taken and it also ensures that the sacrifices required in the short-term to restore stability and growth to the economy will be shared equitably across all sections of the community. Given the very difficult economic situation facing the country the Government are firmly of the view that our success in overcoming these problems will only come about if the talents and abilities of all sections of our community are fully mobilized in a [658] great, unified effort. We will continue to consult with the social partners in the implementation of the programme for that very purpose.

The programme provides for the maintenance of the living standards of those on social welfare. Given the necessity for continuous expenditure restraint this commitment underlines the importance the Government and the social partners attach to the achievement of social equity.

The moderate increase in public service pay negotiated under the programme, together with the voluntary redundancies envisaged, will make a major contribution to restoring stability to the public finances. There is, of course, room for debate as to where precisely the reductions needed in public expenditure should fall. To assist that debate I would like to enunciate the principles by which the Government were guided in deciding on the general pattern of reductions. These were, one, the need to protect the most vulnerable sections of the community when implementing the necessary policies; two, the need to ensure fairness between different sections of the community and, three, the need to maintain, to the greatest extent possible, the incentives for people to engage in the enterprise and undertake the effort needed to restore growth and stability.

The high rates of income tax that prevail here at relatively low levels of income are a major disincentive factor. We have agreed, therefore to reduce income tax by £225 million over the period of the programme. In that context we will also be making significant progress in achieving the Government's objective of bringing two-thirds of income tax payers on to the standard rate. Farmers will now be taxed on income on the same basis as other self-employed income tax payers. Ultimately the effectiveness and fairness of any tax system will be judged on the operation of the system of tax collection and enforcement. The Government have already allocated additional resources to improve further this side of our tax system and we will continue to give a high priority to combatting tax evasion.

[659] An efficient revenue collection system is also an essential element in achieving the Government's aims of bringing about a tax structure suited to our development needs, and closing the gap between revenue and expenditure.

The Programme for National Recovery sets out a series of specific measures to achieve equity in the tax system.

The Revenue Commissioners are to draw up, as a matter of priority, a programme and timetable for the reduction and elimination of arrears. The Government are committed to the introduction of a form of self-assessment for corporation tax and income tax for the self-employed; the details of a new system extending tax clearance conditions to the payment of certain grants and introducing a requirement to give tax numbers on application for all grants are close to finalisation. The Law Reform Commission have been examining the whole area of debt collection and the Government will consider their recommendations immediately on receipt with a view to identifying what additional steps can reasonably be taken to speed up the process of tax collection.

The economic difficulties which have beset the country have meant a major increase in the numbers dependent on social welfare benefits. To cope with this increase presents a major difficulty in managing the budget, the extent of which is very often ignored by commentators in this area. Social welfare recipients are among the most vulnerable in our society and the extent to which those in real need can be protected from the sacrifices now required will be a measure of our sense of responsibility as a community. The Government are committed to doing this under the national programme. The overall value of social welfare benefits will be maintained and special provision made, within the resources available, for greater measures for those receiving the lowest payments.

Our economic and social prospects ultimately depend on the further development of the productive sectors of [660] the economy, agriculture, forestry, fisheries, manufacturing, tourism and other internationally traded services. The programme has a strong developmental dimension. It identifies those areas of the economy which offer the best opportunities for growth and development. These are also the areas with the greatest potential for job creation. The Government will be concentrating on these over the next three years to see what further initiatives can be taken to accelerate their growth and expansion.

The measures already taken since the Government took office and those now being put in place under the programme will immeasurably improve the climate for investment in the traded goods and services sector of the economy. Interest rates have already fallen and this has contributed greatly to an improvement in the operational costs facing Irish enterprises. Confidence in the Government's handling of the economy has already brought forward a significant number of investment projects.

Tourism is set to break all previous records this year in terms of increased visitors and revenue. Bord Fáilte predict that visitors this year will be over a quarter of a million up on last year generating over £90 million in increased revenue and over 3,500 additional jobs. The Government acted quickly and effectively at the start of the season to boost the industry this year through the provision of investment incentives and cheaper access transport costs and we will reap further benefits from these measures in future years. We will publish a new development programme for the industry in the coming months, building on what has been achieved this year and reviewing policy with a view to recovering market share lost in previous years and making the tourism industry a much stronger instrument of job and wealth creation.

The manufacturing sector must remain at the centre of any programme for national recovery. We have now developed in this country a cadre of young, well-qualified, professional managers who can supervise a significant take-off in the development of the [661] indigenous sector of Irish industry — a sector which has to date, with a few notable exceptions, failed to achieve its full potential or to fully exploit the opportunities for development on home and export markets.

Manufacturing exports from this country represent only a little over one per cent of the EC market. In many markets our share has actually fallen in recent years. Without the contribution of overseas firms located here our export performance would be very disappointing indeed. As a small nation relying for jobs on our exports we must go all out to change the present unsatisfactory situation. We have, accordingly, outlined in the national programme the steps the Government will take in contributing to this.

The State industrial promotional agencies have already been looking at new job creating opportunities in a number of specific sectors of Irish industry including the food industry and bio-technology, wood-processing, fish-processing, clothing, electronics and mechanical engineering. Job-creating projects in these and other sectors will be further developed under the programme.

The location of new overseas investment here will continue to be promoted on a specialised basis. Over the past three or four months there have been clear signs of a recovery in interest by overseas investors, and “site visits” by potential investors have increased as the determination of the Government to tackle the fundamental problems of the economy became clear.

The financial services area is another example of a sector which the Government identified as one of significant employment potential. Since taking office the Government have moved expeditiously on the development of the Custom House Docks site. Very great interest has been shown by investors in the development of the site and has resulted in eight substantive submissions for the full development of the site within the parameters set out in the Authority's planning scheme. The interest expressed in the development of the site and the [662] impressive nature of the submissions received bear testimony to the potential and attractiveness of the site for inner city redevelopment. The submissions are at present in the final stage of evaluation, and development on the site will proceed before the end of the year.

Total construction investment in the site will amount to £250-£300 million. Over the next four years up to 1,500 construction jobs will be provided at peak construction. Serious discussions are under way with 40 key companies who plan to establish in the financial services sector in which it is expected that some 7,500 jobs will be provided over the next five years with additional employment in support services. The development of the site will include a range of commercial, residential and recreational facilities of top-class design which will revitalize this part of the city and enhance the role of Dublin as the capital of our country and as an important international centre.

The Government are very conscious of the continuing vital importance of agriculture to the economy and has put a whole new emphasis on quality food production. A notable feature of our Programme for National Recovery has been the involvement of the farming organisations in the negotiations with the social partners. Lower interest rates, too, will be of particular benefit to farmers.

The latest available data from the Central Statistics Office in this regard is for July 1987 and it shows agricultural output prices up by over 5 per cent on the same period last year with input prices down by over 2.5 per cent. This evidence that the cost/price relationship has moved significantly in the farmer's favour is a very welcome development. The Government have established Roinn na Mara with a view to reversing the systematic neglect of marine matters in previous years. The main marine concerns, fisheries, shipping, harbours, marine safety, conservation, recreation and amenity aspects have been transferred to the new Department with the purpose of co-ordinating policy and planning, downstream economic development and legislative [663] reform. A start has been made in all these areas.

Policy objectives are being set for the fishing and aquaculture industries, and strategies and programmes to achieve these objectives are at an advanced stage of preparation.

The Government are determined to exploit with greater vigour our natural resources. Oil exploration has tapered off in recent years, and despite a large number of wells drilled over the past 12 years no oil province has been definitely established. Despite some revisions in terms by the previous Government, the relative attractiveness of Ireland was not being maintained. I made it quite clear during the election that our licensing terms would have to be made fully competitive with those offered by other producers in Northwest Europe, and that we have now done. We need to give a new impetus to oil and mineral exploration. That is the primary national consideration and we believe the nation will derive considerable benefit from these changes which would not have materialised otherwise.

In our Programme for National Recovery, we promised that we would put science to work. This Government have implemented a new approach to science and technology aimed at producing rapid results in terms of growth. In appointing a Minister for Science and Technology we paved the way for the initiation of many new science and technology programmes in 1987. These programmes, which will be further developed and expanded in 1988 include a national programme in biotechnology, a new national programme in advanced manufacturing technology, a new “teaching companies programme” and a pilot programme in the south east region to utilise and bring together the human technology skills in the region towards its economic and social development.

We are looking very closely at the concept of a national science park, which will bring together the talents and facilities available in our third-level institutions [664] with the appropriate advanced technology industries which require or benefit from that sort of interaction.

The Government are anxious to exploit the development potential of the commercial State companies. Where any agency can bring forward projects which have a clear prospect of providing an adequate rate of return the support of the Government will be assured. Such projects can be financed by the State company itself or the National Development Corporation or involve joint ventures with private sector enterprises, which can bring financial or business resources to the project which would not otherwise be available. Such joint ventures can be extremely useful in bringing forward the development of infrastructural projects.

In the context of the Government's Programme for National Recovery we asked the State companies to submit proposals for new development projects which would create employment and be commercially viable. A list of the projects received are included as an appendix to the programme, some of which show considerable potential. At present the projects are being evaluated with a view to supporting those which satisfy normal criteria of economic viability.

We will be making every effort to ensure that the Government's approach to national economic recovery and to putting the public finances on a sound basis will have the full understanding and support of the European Community.

The performance of the Irish economy in the eighties has been disappointing not merely by reference to our own performance in earlier decades but also by reference to what other economies have been able to achieve in more recent years. The current overriding problem that we face with the public finances has contributed to, and has been exacerbated by, the weak performance of the Irish economy. Between 1980 and 1986, real GNP fell by about 2 per cent, a consequence both of sluggish output growth and the increasing drain of debt service payments abroad.

The Government have now set out [665] clearly their strategy for correcting the public financial imbalances both in 1988 and over the years to 1990. We have stated clearly that we will do so in a way that will not give rise to or exacerbate social inequities, that will allow an improvement in the incentive to work through reducing the impact of personal taxation, that will reduce interest rates, arrest the outflow of capital from the country and restore confidence in the general overall management of the economy.

The Government have now clearly set down specific, well targeted development measures to improve the economic performance of the economy and to contribute in an important way to increased job creation. The essential requirement for this process which links it firmly to the Government's public finance strategy is to restore confidence to the country and to the economy.

The most important thing in restoring confidence is to let everybody see that the Government are governing, that they have a clear view of the economic situation and what needs to be done to put it right, that their policies and actions are directly aligned on that aim and that they will implement their policies with firmness and consistency and not be deflected by difficulties or criticism.

We are recovering from a long period of low morale and uncertainty and a sense of failure. Most of the mistakes made in the past in fact arose out of a genuine enthusiasm for economic development but, as a result, we now have to undergo a difficult, corrective process. We have to get back to the realism of living within our means, of identifying clearly in the different areas exactly what we can afford and what we cannot.

Returning confidence must be based on a realisation that the Irish economy is still one with enormous potential if our resources and our affairs are properly managed. We have considerable natural resources awaiting intelligent development. Among our major advantages is the fact that we are a full member of one of the major economic communities in the world.

[666] The policies which we have adopted are dictated entirely by the fiscal and economic realities. I wish to state again categorically that they are not being undertaken for any ideological reason or political motives. They are not policies of the left or the right, but policies dictated by the sheer necessity of economic survival. All over the world governments with totally different political philosophies are all compelled to follow the same course of action that we are following because they have no alternative but to do so in order to survive.

Some are already well on the way to solving their difficulties. I have been talking in depth with the Prime Minister of Australia. His Labour Government have had to tackle exactly the same economic problems as we have and they have done this by steadily reducing Government expenditure, wage restraint and specific programmes of sectoral development.

Fianna Fáil have never been a party of the right, but a party of social progress. We have been the architects of social advance and that advance will be resumed as soon as our present difficulties have been overcome. But it is in nobody's interest to have waste or duplication or a structure of services which are unrealistic because we cannot afford them. The reductions in Government expenditure needed were of such a magnitude that they had to be comprehensive and far-reaching but we have sought to the greatest possible extent to protect the weakest sections of the community.

The time is now right for investment in Ireland. The Government are providing the context in which positive investment decisions can be made with renewed confidence. The increase in confidence which is taking place has created the right kind of climate for individual companies and institutions to start actively considering investment again and they are, in fact, doing so.

Many of the basic indicators of the Irish economy are now favourable. Inflation is running at less than 3 per cent, which is below the rate of many other EC member states. The balance of trade is now running a surplus of well over £1 billion over [667] the last 12 months, and the volume of industrial exports is expected to grow by about 12 per cent in 1987.

The Government are relentlessly pursuing the achievement of soundly-based economic recovery. We are getting the public finances right. Overall, through decisive action on the public finances and through decisive positive Government we have created a new climate and a new belief in the very process of government itself. We cannot simply force development and growth to happen but, with the active support of all the principal participants in the economy, I am confident that we can succeed in getting economic recovery perhaps sooner than many can at this stage foresee. We are on the right road. I challenge anyone, inside or outside this House, to prove that we are not.

I also ask this House to face up to the reality and the requirements of our situation with maturity and responsibility. Future generations of Irish people would not forgive us if we did not do our duty to our country now without fear or favour and no matter what the political consequences for any of us might be.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): I move amendment No. 3:

After “programme” to add “and Dáil Éireann notes in that under the terms of the Estimates, major reductions in the level of public services will occur, and will, therefore, undertake an indepth examination of the Estimates as presented to it by the Government with a view to allowing those members objecting to individual proposals to put forward fully costed alternative proposals which will yield a similar saving in this and subsequent years, and for this purpose directs the Committee on Procedure and Privileges to immediately present amendments to Standing Orders governing Estimates debates to allow:

(a) amendments to subheads in individual Estimates to reduce the amount provided;

[668] (b) amendments to the subheads in individual Estimates to increase the amount provided if the amendment contains within it a proposal to reduce another subhead, in the Estimate, or in the same group of Estimates, by the same amount thereby ensuring that the overall provisions of the Estimate for this and subsequent years are not increased overall;

(c) amendments to increase provisions for particular subheads, as set out at subparagraph (b) above shall not have effect if, within two weeks of their being passed by the Dáil the Minister for Finance certifies for reasons stated, to a Committee of Public Expenditure that the proposal designed to achieve savings to compensate for the proposed increase will not in fact achieve the savings claimed;

(d) where the Minister for Finance makes a certification within the terms of subparagraph (c) above he shall, if requested, give oral evidence in public before a Committee of Public Expenditure to explain the reasons for his certification.”

On 2 September 1987 Deputy Alan Dukes, Leader of Fine Gael, addressed the Tallaght Chamber of Commerce. In the early stages of his speech he said:

The essential task facing us in Ireland today is to find successful and sustainable ways of: 1. Expanding employment. 2. Stimulating economic growth. 3. Eliminating deprivation in our society and 4. Removing inequities from our economic and social system.

Later in his speech he went on to say:

What I am saying is, quite simply, that when we strip away all the rhetoric and get down to what really matters in the day to day lives of ordinary peple, the resolution of our public finance problems is the essential key to everything that we want to do in the economic and social fields, to everything that we want to do to provide for our [669] people the conditions in which they can live their lives in the way that we believe is right.

In other words, what I want for the Irish people cannot happen until our debt burden is under control.

The first question, therefore, that arises for the Fine Gael Party on examination of these Estimates is to what extent do the Estimates for the Public Service, as published, help to bring down the debt burden and keep it under control? The Estimates provide for a reduction of £485 million in relation to the amounts which would have been required in 1988 to provide services at their existing level. We are not surprised at the magnitude of the cuts. I have stated on a number of occasions during the year that cuts in the order of £500 million would be required to make the kind of progress necessary to control our debt in 1988. Consequently, we will not be opposing the motion, to note the Book of Estimates, as we believe that the total amount of money provided for the supply of Government services is all that this country can afford in the next 12 months. We will not have the full financial picture until budget day, but the picture now emerging, provided no dramatic changes are made in the budget, would suggest that the Exchequer borrowing requirement could be reduced by about 2 per cent of GNP next year. An EBR of between 8.5 per cent and 9 per cent of GNP is now on the cards with a current budget deficit which is only marginally lower than this year.

The Tallaght speech also enumerated the criteria against which we would measure the forthcoming budget. These criteria are worth recalling and again I quote:

specifically it means that, if in 1988 the Government produces a Budget which: 1. opens the way to a reduction in taxes and particularly to a reduction in personal taxes 2. brings about a significant reduction in the current budget deficit below the figures targeted for this year 3. holds out a strategy for real [670] employment expansion in future years and 4. does not add to the burden of debt service cost in future years, I will not oppose the general thrust of its policy.

These are the criteria against which we propose to measure the budget and against which we will measure this Book of Estimates as an integral part of that budget. While we welcome the overall thrust of the Book of Estimates, we deplore the so called programme for economic recovery. It is neither a plan nor a programme and will not lead to economic recovery. It is a public service pay agreement dressed up to look like a national plan. It has a fungus of promises attached to it but it is merely a dickied up public service pay agreement, and a bad one.

The blunt facts are as follows. The pay concessions together with the commitments in social welfare and the tax relief promised in the programme will cost over £200 million next year. This is about equal to the £ to the cuts on the current side on public expenditure as published in the Estimates. What is given in the programme is taken away in the Estimates. Consequently little progress will be made in reducing the current budget deficit and the real progress which is being made in reducing the Exchequer borrowing requirement will rely almost totally on slashing the public capital programme.

Some questions immediately emerge from this. Why would the Government increase the amount of expenditure by £200 million on Friday only to cut it back by £200 million on the following Tuesday? No ground has been gained in that reduction by this device but the scene has been set for a huge increase in unemployment. The pay agreement provides a direct trade off of jobs for higher pay. Pay increases are being provided for those at work at the expense of the jobs of their collegues and of fewer opportunities for school and college leavers. Consequently the programme will result in a massive worsening of services for the taxpayer as fewer people are paid more money to [671] provide the same service which, of course, they cannot provide.

The central concept now behind Government pay policy seems to be to control payroll costs by trading jobs for any increase in pay regardless of the consequences for the effectiveness of the delivery of the service involved and the consequences in terms of loss of jobs and of job opportunities in the public service. The consequences of the pay deal in primary education is a very good example of what I have in mind. Thousands of teachers will be made redundant but vacancies will not be filled because the Government have given increases to the teachers who remain teaching and they cannot afford to increase payroll costs by filling the vacancies. On Sunday last I listened to a few young graduates from St. Patrick's College of Education, Drumcondra, on a radio programme and they seemed to have very little hope either for their own job prospects or for the future of their profession.

I had a particular interest because I graduated from that college a long time ago. As always in situations such as this, they blamed the politicians. It is worth pointing out to them and others and, indeed, to many people in the public service that this deal was negotiated by the social partners and the Government. The ICTU delegation was led by their president, Mr. Gerry Quigley, who is general secretary of the INTO. Other teacher leaders were in attendance together with other trade union leaders. The social partners framing this programme agreed to trade jobs for extra pay. They traded the job opportunities of students in colleges for increased pay of existing public servants, and they did it with their eyes open. Already many teachers and student teachers are lobbying politicians and asking them to oppose the education cutbacks, particularly those in primary education. I advise them to take up the matter in the first instance with the trade unions at their own branch meetings.

While I am dealing with the redundancy package aspect of the pay agreement I would like to discuss the financing [672] of the package. While an increased allocation for public service pensions in expectation of a high takeup of the redundancy programme appears across all Votes, no provision has been made in the Book of Estimates for the lump sum element of the redundancy package. We are told on page 5 of the Book of Estimates that the lump sum redundancy payments were not included in the budget. We are told that they will be the subject of subsequent arrangements. Despite questions to the Taoiseach and the Minister for Finance both during Question Time and on the Order of Business last week, we are still not informed in this House on what these arrangements are.

It is an open secret that the Central Bank make profits. The bank transfers a proportion of these profits to the Exchequer each year but keeps some in reserve. It seems to me that the Government want to put an arrangement in place to enable them to dip into these reserves to fund redundancy lump sums amounting to approximately £120 million over three years. If this is the case, why not announce it? As far back as July of this year when the Minister for Finance announced the public service redundancy package he indicated that some form of Central Bank funding would be involved.

Three months later the Government are still not in a position to make an announcement about the matter. Government spokesmen have suggested that the delay arises from the fact that, as there is no indication yet of how many public servants will avail of the redundancy package, it is impossible to cost it. The Government had no such difficulty on the current side of the Book of Estimates where they have included an amount for the extra amount of pensions that will arise from a number of public servants availing of redundancy terms. If they can cost it in terms of pensions I cannot understand why the global figure in terms of redundancy lump sums cannot be spelled out here in the House as well. Therefore, that cannot be the explanation.

It is beginning to appear now that the [673] Central Bank are not a willing collaborator in this scheme and the Government are trying to coerce them into handing over some of their profits which they need in reserve to fund what the Government should be funding themselves out of revenue. It will not inspire confidence in those who lend us money if the Government are seen to be playing fast and loose with the Central Bank. If what I am saying is incorrect the Government can easily prove me wrong by announcing in this debate the precise details of the arrangement with the Central Bank which is to fund the redundancy package to the tune of £129 million.

Indeed, the Taoiseach was very short on specifics. He prided himself on the fact that it was the first time since 1982 that a Book of Estimates was published so early. I would like to remind him and the House that when that Book of Estimates was published in 1982 it contained £100 million worth of cuts that subsequently were found not to carry the policy decisions necessary to make the reductions which purported to be in the Book of Estimates. The Taoiseach today has made a very general speech, many sections of which we have heard before on occasions such as this down even to the same form of words, but he has been very short on specifics. I want to make sure that when Ministers come into this House they not only tell us how much is being taken off each subhead but they inform the House precisely what their policy decision is which brings about saving. It did not happen in the past and the Taoiseach has done nothing to bring it about today. I hope he lives up to the commitment he made on the Order of Business to the leader of Fine Gael and gets his Ministers in and lets us hear the policy decisions and evaluate them when we match them against the cuts.

I would like to return to some other elements of the public service wage agreement. It has little or no application to the private sector apart from making business life more difficult. Pay settlements in the private sector in this round are averaging 5.8 per cent. It is clear that private companies will continue to make [674] their own arrangements with workers at local level as they see fit. It has an implication for private industry on the margins of profitability. It is obvious now that regardless of whether they can afford it, the least private companies will have to pay will be 2½ per cent or 3½ per cent for lower paid workers.

The public sector also seem to be walking outside the margins of the agreement. Pay claims already conceded amount to about 5 per cent and even since the publication of the plan we have seen the sugar company settling for around this amount.

The big question which now arises is if the public service pay agreement will stick for a three year period. All the machinery of negotiation remains in place and there is nothing to prevent a union from lodging a claim in conciliation and proceeding to arbitration with the hope of getting amounts in excess of 2½ per cent per annum, which is the figure which has been agreed. The agreement allows for this. As I understand the agreement it provides a mechanism whereby trade unions can lodge claims through the existing negotiating machinery and there is a commitment in the agreement that 40 per cent of the amount which might be awarded on special claims will be paid not later than July 1989 with discussions taking place to arrange the payment of the other 60 per cent. On the one hand this might be looked at as a fail safe mechanism to enable minor claims which might cause severe aggravation to be negotiated. On the other hand, it can be interpreted as an invitation to the trade union movement to lodge claims in excess of what has already been granted and under pressure from their members over a 3 year period they are very likely to do so. The pay agreement was a bad deal but now that it has been made the Government must stick with it. Any attempt by them to disengage from the agreement or to repudiate it will result in widespread industrial disputes and any subsequent settlement would be in excess of what has already been agreed. What is now supposed to be a ceiling would very quickly become the floor. The fact [675] that it was negotiated in the first place has to be deplored but, once it is there, there is no point in making a bad situation worse.

The balance of cuts between the current and the capital budgets is wrong. While little or no progress is being made in the current budget deficit, the whole weight of controlling the debt is now being carried by the capital budget. To take £400 million out of the economy is deflationary and causes unemployment. Some cuts are more deflationary than others. The Social Welfare Votes suggest an average live register next year of 256,000 persons. As this is the average, peak unemployment could reach 270,000 during the year. Our labour force is increasing by 30,000 persons each year. This is now cancelled out by the 30,000 emigrants which are noted in the Programme for National Recovery. It is clear that the Government envisage a further decline in jobs represented by the live register average of 11,000 persons more than this year's outturn. That is proof that the Government consider this Book of Estimates to be massively deflationary. The natural increase in the labour force is 30,000 and it is being cancelled by emigration of 30,000. If 11,000 jobs are to go across the private sector, that is the evidence that this is a very deflationary Book of Estimates.

In talking about the numbers unemployed we must note that public servants availing of the public service redundancy package will not qualify for unemployment benefit, and even those who leave the service without pensions, with only the benefit of the lump sum, are unlikely to qualify for unemployment assistance in 1988 and therefore will not appear on the live register. Therefore, the total increase in unemployment allowed for in the Social Welfare Vote, applies to jobs outside the public service. Public servants on redundancy are not entitled to unemployment benefit. Those who do not have pensions will not be entitled to unemployment assistance so, when they have spent their lump sums, [676] they will trickle back on to the live register, perhaps in 1989 and 1990. We are talking about a huge increase in unemployment which cannot be explained by the redundancy package the Minister is putting forward.

The balance of cuts between the current and the capital budget exacerbates this situation. In regard to the current budget, what has been taken on the Book of Estimates swings has already been given away on the Programme for National Recovery roundabouts. The axe falls on the capital budget. This is not the correct balance. There is a tendency to pretend that if a rose is a rose, a cut is a cut and that differences between capital and current expenditure are more semantic than real, and that to defend the capital budget at the expense of the current budget is spurious. I do not agree with the analysis that gives rise to this belief. Much of our capital investment in the past was bad investment because there was not a great return but we have had good investment too in our telecommunications system, in the improvement in our roads network and in our investment in education. All of this is showing a real economic return.

Cutting the capital programme has a number of effects. It deflates the economy. It reduces activity in the building and associated industries. It causes unemployment especially of the unskilled or semi-skilled and in those trades relative to the building industry. I am sure people on this side of the House will be pointing out the examples of this type of cut in the Book of Estimates over the next four days. This kind of deflation reduces living standards. Much of our capital spending has no economic return, but it has a huge social return in terms of living standards. The provision for housing, for education, for hospitals, for sanitary services or for anything which contributes towards social infrastructure is of great benefit in terms of living standards and to cut it can have very damaging effects. This type of cut often prevents the poorest of our citizens from enjoying the services which the rest of us consider essential and take for granted. [677] Expenditure on housing, on running water, on bathrooms and toilets, on decent classrooms for our children and so on is vital. Many people here will assume that everybody has a bathroom but they have not, nor have they all got toilets. To cut something like the grant for group water schemes will affect misfortunate people who are still going to the well with a bucket. That is hardly social progress. There might not be great economic return on the investment but there is a huge return in living standards. When the backbench Fianna Fáil Deputies discover that cut the Minister and the Taoiseach will be so informed in no uncertain terms.

If we look at the summary of the Capital Programme for 1988 we can see the magnitude of the cuts in the social infrastructure. Capital for housing is down by 30 per cent, capital for education is down by 44 per cent, capital for hospitals is down by 28 per cent and capital for other Government construction is down by 10 per cent. More important than any of these categories I have mentioned are the cuts which affect the economic infrastructure of the country, the cut in investment which would have given a real economic return. These kinds of cuts inhibit our capacity to produce the kinds of goods and services which are internationally traded and on which our future depends. There are many cuts in this category in the Book of Estimates. There are cuts in the Department of the Marine, in forestry, in the food industry, in agriculture, in science and technology, in the IDA, in SFADCo and in Córas Tráchtála. These cuts are chopping off the legs on which the economy was supposed to run, if we are to believe the promises contained in the Programme for National Recovery. The Taoiseach in his speech said we would grow because the agencies will work harder, because we will have more investment, more research, more science and technology and because we will grow more trees, and develop agriculture and mariculture. Yet in every Vote the investment is slashed. Perhaps the Minister for Finance when he speaks will explain how, if one is cutting the very [678] life blood of investment in the economy, we can get the kind of growth that is being projected on the other side of the House? In the programme there is a whole fungus of promises on employment together with sectoral job targets but the means which would give any possible hope of achieving those targets in the Book of Estimates is being slashed right across the subheads. The Social Welfare Vote, allowing as it does for a live register of 270,000 at peak, almost 30,000 up on this year's prediction, speaks for itself. We must remember that the programme has discounted any growth in the labour force, because now 30,000 emigrants per year seem to be Government policy. Deputy Lenihan let that particular cat well and truly out of the bag when he spoke recently. The Government, of course, had an alternative, but by making the concessions they made in the programme they were left with no alternative but to cut investment in the Book of Estimates.

We are all agreed in this House that there are two major problems, the problem of the national debt and the problem of unemployment. Progress is being made in stabilising the debt, but it is being done in a way that exacerbates the unemployment problem and ensures largescale emigration and widespread poverty. We are heading for 300,000 people unemployed together with 30,000 emigrating. The trauma, the sorrow, the anguish, the frustration and the sheer poverty which result from this will be socially devastating for the country.

Deputy Alan Dukes, in the second part of his Tallaght speech, said:

I cannot accept any course of action which would make those who are already deprived bear the whole burden of the effort required to resolve our problems. Our concern must be with the needy, not the greedy and our action must recognise that, until we can all truly participate both in the resolution of our problems and in the benefits of that resolution we cannot say that we will succeed.

Choices have been made in the Book [679] of Estimates. Even on matters of debt control there are different routes to the same station. The unemployed, the poor, the young and the underprivileged cannot be asked to carry the burden which stronger shoulders should bear. We will await the budget with interest.

One of the major disappointments in the Programme for National Recovery and in the Book of Estimates is the lack of commitment by the Government to any real reform in our taxation system, particularly the income tax system. We want a programme which opens the way to a reduction in taxes, particularly personal taxes. The budgetary picture which is now emerging barely comes within the margins of this requirement in the Tallaght speech. The amount allocated in the plan to give tax relief over the next three years is very small indeed. In the 1986 budget the income tax concessions granted by the previous Government cost £120 million. The tax paying public scarcely noticed the concession. Against that background I doubt very much that the concessions now being mooted will satisfy anybody. There is no commitment in the programme for Government to long term tax reform. On the contrary I doubt that the totality of the reductions promised in the programme will equal the extra income tax take resulting from buoyancy of taxation over the next three years.

I would like to move now to the amendment which I have put down and I would like to move it in the spirit of the Taoiseach's appeal in the last paragraph of his speech:

I also ask this House to face up to the reality and the requirements of our situation with maturity and responsibility. Future generations of Irish people would not forgive us if we did not do our duty to our country now without fear or favour and no matter what the political consequences to any of us might be.

That is great stuff. Shall we put it to the test? The amendment reads as follows:

After “programme” to add “and [680] Dáil Éireann notes in that under the terms of the Estimates, major reductions in the level of public services will occur, and will, therefore, undertake an indepth examination of the Estimates as presented to it by the Government with a view to allowing those members objecting to individual proposals to put forward fully costed alternative proposals which will yield a similar saving in this and subsequent years and for this purpose directs the Committee on Procedure and Privileges to immediately present amendments to Standing Orders governing Estimates debates to allow:

(a) amendments to subheads in individual Estimates to reduce the amount provided;

(b) amendments to the subheads in individual Estimates to increase the amount provided if the amendment contains within it a proposal to reduce another subhead, in the Estimate, or in the same group of Estimates, by the same amount thereby ensuring that the overall provisions of the Estimate for this and subsequent years are not increased overall;

(c) amendments to increase provisions for particular subheads, as set out at subparagraph (b) above shall not have effect if, within two weeks of their being passed by the Dáil the Minister for Finance certifies, for reasons stated, to a Committee of Public Expenditure that the proposal designed to achieve savings to compensate for the proposed increase will not in fact achieve the savings claimed;

(d) where the Minister for Finance makes a certification within the terms of subparagraph (c) above he shall, if requested, give oral evidence in public before the Committee of Public Expenditure to explain the reasons for his certification.

[681] This amendment agrees to note the Estimates, but it also notes that major reductions in the level of public services will occur. If this amendment is passed Dáil Éireann will be enabled to undertake an indepth examination of the Estimates as presented to it by the Government and those members objecting to individual proposals will be given the opportunity to put forward fully costed alternatives which will yield similar savings in this and subsequent years.

What we are saying is that if we agree with the Taoiseach and respond to the last paragraph of his speech, will not the Taoiseach also respond and give some choice to the Members of this House? Obviously the Government and the Minister for Finance must decide the level of overall Government expenditure. There is no quarrel about that. Obviously the Government — and I think it is proper that they should — would also decide the amount of money required to run each Department. But within the Department I cannot see why this House, by majority vote, would not have a discretion to switch money provided no extra cost was incurred overall and provided the thing stands up.

When we debate the Estimates here individually they are debated on a take it or leave it basis. We can agree or disagree but we cannot make changes. I am saying it is time to move in the direction in which Parliaments right across Europe have moved, where some discretion not as to overall spending but as to the priority of spending, would be given to the House. Obviously a mechanism would have to be put in place to achieve this end. Standing Orders at the moment prevent us from doing this so my amendment suggests that the Committee on Procedure and Privileges will be directed to change Standing Orders to enable us to proceed in this fashion.

I know any Minister for Finance will be worried that someone will get up here and propose a cut on one side of the Department's vote and an increase on the other and that the two will not match. So the amendment provides a mechanism whereby the Minister, by a method of [682] certification, can veto a switch of money on the grounds that the sum does not add together and, in effect, there will be increased expenditure either in this or in future years and we ask him to explain why to a Committee on Public Expenditure. I understand the Taoiseach intends to set up such a committee in the near future.

I know this diminishes to some degree the authority of the Executive. Power would be switched in a small way from the Executive to the Parliament. But in a parliamentary democracy, is that a bad thing? Is it a bad thing if it is tied in as closely as I am suggesting here?

There is one last point I would like to make on this amendment. We have a minority Government now. We may have majority Governments in the future or we may have minority Governments until the end of the century. This provides a mechanism whereby a working arrangement can be made as to the priority of spending where a Government do not have an overall majority and I suggest it should be looked at seriously. We are quick to look at Denmark as an example of what has been achieved in economic recovery and I understand that the Government in that country, which consists of a coalition of four parties, is a minority Government. Effectively, they have to negotiate their budget through parliament. It is difficult for them but they are succeeding and doing a better job than we are. I ask the Taoiseach, as a response to his appeal at the end of this speech, to look at that suggestion carefully. It is contained in our amendment and we intend to vote on that amendment. However, that does not mean in any way we are not accepting the overall figures as put forward by the Government because we do accept them.

I find it a bit churlish at times —“churlish” is probably the wrong word because I do not mean to be offensive to the Taoiseach — that, when the Taoiseach enumerates the achievements of the Government, he does not find it fitting to point out that the fact that the inflation rate is down to its present level is due to the work of the last Government over [683] four years. When we went into Government the inflation rate was more than 20 per cent. The improvement in our balance of trade was due to the policies of the previous Government over four years. When we went into office in 1982 there was a deficit in the balance of trade which amounted to more than 13 per cent of gross national product. That was a massive gap between our imports and exports. Our economic, industrial and financial policies brought about that dramatic improvement. Nothing has been done by the Government since March of this year which has had any effect whatever in the monthly surpluses on the trade figures. Policy initiatives do not work that fast. The Government will get credit for what they are doing now next year but the Taoiseach should give credit to the previous administration for the policies he is now enjoying the fruits of.

There has been talk about shipping policy and it should be remembered that Deputy Jim Mitchell put that together when he was Minister but it is being claimed now as a success of the other side of the House. We have many extra tourists here because Deputy Mitchell, by licensing other air companies, reduced the fares. This is a pet project for those on my right and they get excited when one refers to aeroplanes or airports.


Miss Harney: Information on Mary Harney  Zoom on Mary Harney  People are leaving the country, not coming in.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): The extension of the free fuel scheme to the long term unemployed was in the pipeline when we left office and it arose out of a decision in Europe. To be claiming credit for initiatives which the Government purport to have taken when there is no connection between the initiatives and the result is a bit of a cod. The first positive thing the Taoiseach should do when he leaves the House today is to look for the floppy discs of the word processor that produces these scripts and burn them. He should have new speeches drafted [684] because wedges of this type of material are on the cut and paste system in the personal computer and have been moved up and down.

Miss Harney: Information on Mary Harney  Zoom on Mary Harney  It is the same speech.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): The Taoiseach should find the floppy discs and throw them in the fire. He should have a proper speech prepared for the House and get rid of all the time-filling material.

I recommend the amendment proposed by our party. Apart from giving all Members an input into the expenditure priorities of the Government it will be a piece of Dáil reform which will not go amiss and will bring us into line with other European countries. I will leave it to the Taoiseach to measure the merit of what I have said. We agree with the overall figures but we think the Government are going seriously wrong in the balance between capital and current expenditure. In our view unemployment, and the unemployment problem, have not been touched.

Mr. McDowell: Information on Michael McDowell  Zoom on Michael McDowell  At the outset I should like to congratulate the Taoiseach, and the members of his Government, on bringing before the House a set of Estimates at this time of the year. I do not think it should be under-estimated as an achievement. I am aware that unkind words were spoken about the 1982 effort to do the same thing but I know from my knowledge, and things I have heard and listened to, that a huge effort of political will was necessary to bring about this change in public finance procedure. I should like to warmly congratulate the members of the Government on their achievement in bringing this about. They are sincere congratulations from me because this brings to the House some sense of accountability and responsibility in relation to what transpires on the public financial front.

I should like to congratulate the Government on their determination and decisiveness in turning about a spiral of indebtedness which they inherited when [685] they took office. It would be very begrudging of me not to note in the first few sentences of my remarks something which should be stated by more Members, that there has been a change in climate by the Government, that there has been a change to decision rather than mere division and that there has been a change for the better in the way in which the finances of the country are being conducted. They have been characterised by political decisiveness which has only recently emerged on the political stage. I could be churlish and detract from that by pointing out that there was a change of heart of massive and Pauline proportions but I will not do so. It is a welcome development and one which our party salutes unequivocally.

The debate is one which suffers from certain technical difficulties. For constitutional reasons the Dáil cannot and should not be asked to approve in a lump the Estimates for 1988. The solemn constitutional duty which falls on this House to examine Estimates individually, and on their own merits, still holds true. The Dáil cannot, and by this debate does not, seek to endorse, approve or evaluate the merits of each and every Estimate which is contained in the abridged Estimates we are discussing. On this occasion we are being asked merely to note the proposed Estimates for 1988. We are not being asked to approve or disapprove them globally or individually.

At this juncture I should like to make it clear that the role of the Progressive Democrats in the debate does not amount to any endorsement of the individual Estimates contained here. I should like to make it clear that we intend during the debate not to sit on the fence, not to abstain in the vote at the end. We have thought long and hard about the implications of the way we cast our votes. It is easy to note an Estimate in an empty and hollow way but we have decided to cast our votes in favour of the proposal — leaving aside our amendment — based on our view that the overall targets which the Estimates reflect deserve support. Politically we must speak to the Irish people from the Chamber with an [686] unequivocal voice which rejects opportunism and is clearly seen to do so.

I am indicating to the Dáil that the Progressive Democrats intend, if the motion stands unamended despite our best efforts to amend it, to vote with the Government to note the Estimates. That is not a gesture of approval of their individual component parts but it is an unequivocal, and I suggest courageous, gesture on our side to suggest that we are not being a party of opportunists, a party who are trying to have it both ways and that we are not going to nitpick our way through the economic debate. We are signalling clearly to the Irish people that in general terms the figures the Government are aiming to achieve are ones which we endorse. We are signalling that their macro-economic strategy is one with which we are in fundamental agreement, as far as we understand it.

On a previous occasion we explicitly signalled that we were not in the business of signing or endorsing any blank cheque for any budget, or part of any budget, in advance. We are not prepared to lay down minimum criteria for a budget and say that any budget which conforms with those minimum criteria is one we will support. We regard our role and our mandate as Deputies as one which requires us to examine every budgetary proposal on its merits and not to indicate in advance, for our own political purposes or for some general political purpose, an unqualified approval of any budget which conforms to those basic minimum criteria. We take this view because we believe it is our duty to use whatever political leverage is in our grasp, whatever political power we have, whatever influence we have over decisions of this House, not simply to ensure that whatever budget transpires from the budget debate next January and February is one which conforms to minimum criteria, be they established in Tallaght or anywhere else, but that this country gets the best budget which conforms to the criteria which we know to be necessary. Therefore, we shall oppose measures which we believe are wrong and will do so to the maximum of our capacity.

[687] For our part, we are not subject to the same political imperative that seems to govern others in this House to avoid political turbulence at any cost. We felt it more important to put this Government more in the direction that we believe the country should follow by every move at our command including, in the ultimate, the threat of forcing the Government to choose between doing what we believe is correct and facing the electorate. That is our decision and we accept responsibility for it. We believe it flows from the nature and the composition of this Dáil and that it reflects the views of the people as reflected in the manner in which they cast their votes at the last election.

We do not, of course, relish the possibility of an early general election, nor I suppose would any commentator think it a likelihood in present circumstances but, equally, we do not flinch from our mandate and we are not about to abdicate our function in this House. Therefore, we cannot accept the logic — if I may call it that — of the Tallaght philosophy. It seems to be a tactical manoeuvre rather than a stance on principle. It appears to be a suspension of or abdication from a political role which was thrust by the people on the Members of this House as a political mandate at the last election. We do not think that any such abdication or suspension of role is necessary, or in the interests of this country.

It is our intention to vote for the resolution that these Estimates be noted. As I have said, we do so quite clearly underlining that it is not an approval, that the Constitution does not allow this House to approve any individual Estimate, that the Constitution requires this House to examine each and every one on its merits and we reserve and will exercise fearlessly as we consider it necessary, our judgment on every single Estimate based on what we consider the national interest to be.

I want, if I can, to reflect for a moment on the macro-economic targets which the Government seem to be pursuing. At the moment it appears the Government have brought about a situation in relation to [688] decisions they have made on spending which will enable them to reduce the Exchequer borrowing requirement to a figure of between 8½ and 9 per cent in the year 1988. The exact details and the extent to which it falls below 9 per cent depends on political judgments to which we are not privy and which are not being revealed to us. It is part of a process which, according to the Taoiseach when he spoke on the Adjournment debate here last June, was designed to bring the Exchequer borrowing requirement into rough conformity with the nominal growth in gross national product by the year 1990. In fact, that is an ambitious target and, as some commentators have pointed out in learned journals since, it goes further than simply stabilising the ratio of debt to GNP. As enunciated by the Taoiseach, his plan to equalise the Exchequer requirement growth with the growth in GNP brings us to the stage where this country would be entering what is called a virtuous circle as opposed to a vicious circle, where, in fact, the debt problem would be a diminishing one rather than one which was merely stable and which accounted for a proportionate growth each year.

I want the Taoiseach or the Minister for Finance to indicate whether the Taoiseach was using shorthand politically when he expressed that ambition or whether he was merely talking about stabilising the debt-GNP ratio. Was he really talking about equating the growth in the Exchequer borrowing requirement with nominal growth in GNP, or was he mistakenly being over-ambitious? Are this Government determined to bring down the Exchequer borrowing requirement not simply to 7 per cent which would achieve roughly what the stability formula requires but to bring it down to a lesser figure of 5 per cent which would permit us to begin to role back the influence of indebtedness in our economy?

The second point I want to make is this. Much has been made in this House of the effect of interest rates and their effect on the Irish economy. Much has been spoken about creating an environment whereby reducing interest rates, [689] economic growth and investment will be sustained. There is no point in pursuing a policy of low interest rates if we are to be a victim of every international fluctuation without any Governmental influence on our interest rates structure. I ask the Minister for Finance who is here to day to indicate during the course of this debate his plans to decouple Irish interest rates from those prevailing in the UK which seems at the moment to have a great influence over our economic affairs.

In particular, I ask him to set out, in as much detail as he feels he can at this stage, the measures which he feels he can and will take to free Irish exchange rates to permit the Irish £ to be traded in internationally, to permit foreign currency securities to be traded in in this country so as to give his Government a genuine, independent measure of control over interest rates and their movements by economic action. I appreciate that we are in a small open economy and that to a large extent interest rates are determined by factors which are beyond our control because of our size, relatively speaking, to the international economy of which we are part. I do believe there is room for the Government to set out in detail their proposals in relation to interest rates and their programme to assert some kind of influence, if not absolute control, over Irish interests rates and to set out a programme for decoupling Irish interest rates.

There are individual features of the Estimates which have caused considerable concern to us. Without going through all the Votes or through all the Estimates one which stares us in the face as legislators is the balance that has been struck in education cutbacks. The fact that primary education is to bear the brunt of the cutbacks in education is something which is hard to understand, particularly in view of the fact that for those who are least advantaged in our society and those who are likely to suffer most from cutbacks, it is the only education they will ever receive. I stated, as a matter of conviction, that no-one can see a series of educational cuts which focuses more heavily on primary education [690] than elsewhere as being socially progressive, or as caring for those most disadvantaged in society. It seems that the balance has been struck wrongly in relation to education and this party will more and more forcefully get across to the Government and to the people the injustice being done by attacking primary education in particular in the context of cutbacks in education.

Likewise, the decision to close the National Social Services Board is a fundamental mistake, not because of huge economic importance but a mistake of thinking, philosophy and desire to change the Irish political system. The National Social Services Board is a bridge between voluntary organisations and those who are disadvantaged; it is a bridge between Government and voluntary organisations. It is a fundamental mistake, for a small amount of money, to close down that institution which does so much when the consequences will be that the politics of clientelism, the politics of the stroke, of doing favours which people should have done for them as of right, will be encouraged by that decision. It is a mistake and we are opposed to it.

Likewise in relation to the Ombudsman, the decision to cut back in relation to the vote of the Ombudsman seems to be inexcusable. As an enlightened, progressive measure, the institution of the Ombudsman was one which is a landmark of recent political development in Ireland. For a couple of hundred thousand pounds, to entirely emasculate and destroy the administrative future and potential of the Ombudsman's Office seems to be another fundamental mistake.

I am also a little at sea as to the Government's public service employment targets. We are not being told who are going to take these redundancy terms. We are not being told what the Government's plans for a reduction in the size of the public sector, Department by Department, are. Why not? Why are we not entitled to know if there are planned reductions in the size of the public sector and whether any decisions have been made as to where these reductions would [691] be made? If those decisions have been made, and here I am talking about the permanent Civil Service, why are we not being told the philosophy and the thinking which lies behind them and what the intentions of the Government in carrying them out are?

Let me say this to the Minister for Finance. There has been a good deal of foot dragging by the permanent Civil Service in relation to the implementation of this scheme. Unwritten instructions have been circulated to the effect that this scheme of redundancy in the public service is not to radically affect the permanent Civil Service. The lack of a coherent and stated public policy in relation to the manner in which public sector employment is to be introduced reflects the indecision and political struggle between Ministers and the permanent civil servants rather than a desire to keep secret from the electorate the purposes of the Government in this matter.

Deputy Noonan referred to the Central Bank and its role in relation to financing the public sector redundancy lump sum payments. To be honest, it is not a huge scandal that Central Bank funds are to be applied in this way. Payment of a lump sum for any industry in the country must constitute either a current or a capital item. While these payments in general are desirable as part of the necessary business of reducing the size of the public service, to leave them off the balance sheet and to invent a new method for financing them which does not recognise the fact that this institution is supposed to approve all Government spending and to do so by way of departmental Estimates, public capital programmes and public current programmes is a bit of self-deception which fools nobody.

We are entitled to know, in relation to an item which could amount to £100 million or £150 million and which can be quantified — despite what the Taoiseach may have said about it in his speech — how it is proposed to finance it, the amount of moneys in question and how this is supposed to be done. More than [692] that, we are entitled to be consulted in relation to it. It is a fundamental principle of parliamentary control over Government expenditure that this House would be consulted and would exercise control over it. If these items do not appear in the public balance sheets as an expenditure, either capital or current, it would seem that we do not have that necessary control and the Constitution is being trampled on.

In his address to this House the Taoiseach referred to the social partners. At the time the Minister for Finance moved the Finance Bill I pointed out that there was no programme in it for radical tax reform. I also pointed out that the Minister's hope that proposals for tax reform would emanate from consultations with the social partners was a forlorn one. I believe that more and more as time goes by. The Taoiseach suggested that there is to be a reduction of £225 million in income tax during the course of this plan. I suggest that that is totally and completely untrue. The burden of income tax on the community at large will increase over that period. Whatever the script writer or whoever is responsible for the Taoiseach's speech may say — perhaps it was Mr. Cronin or perhaps it is mere poetry — there are not going to be cuts amounting to £225 million in income tax, there is going to be an increase in income. tax. The amount of the so-called concessions which have been negotiated as part of this plan will not amount to an overall reduction and we will see from the figures which will be presented for each of the years of the plan that the burden of income tax will have in fact increased.

The Taoiseach also called on the contributors to this debate to indicate what their attitude is to public service pay. He posed a fundamental question which was to the effect that those who are against the wage agreement negotiated in the context of this so-called national plan should state whether they are in favour of a general pay freeze and suggested that they owed it to the rest of this House to indicate their positions in respect of this matter. That was the challenge fairly and [693] squarely put by the Taoiseach and I now intend to take it up.

Let me say this in relation to public service pay. A general pay freeze is no business of the Government. Control over the payments to public servants who are under their remit is their business. It would have been far better if the Government, instead of conceding the wage agreement, had not permitted any increase in payments to the public service and not allowed incremental or special increases and had in lieu of that tackled the burden of taxation on employment by, for instance, taking away PRSI on the first £1,000 or £2,000 of income. That would have been much more progressive and would have dealt with those who will not receive any wage increase due to the impecunious state of their employers, with those who are hardest hit by taxation, with those who are not paying any income tax and for whom this £225 million worth of concessions will mean nothing because they are not even in the tax brackets. It would have dealt, too, with those who will not receive the £4 increase because their employers cannot afford to pay it. It would amount to relief justly given to those who most need it. That would have been far more preferable than the posturing which went on in relation to public service pay in the context of this national agreement.

Deputy Noonan made much play of the distinctions between capital and current spending. There is no point in extolling the virtues of capital rather than current spending without examining the nature of that capital expenditure. Building hospitals which we cannot afford to staff and building institutions which we cannot afford to run have no significance economically and building things that will not yield an economic return to the country at a time when we cannot afford to borrow for them simply does not make economic sense. I tend to agree with the Minister that, as between current and capital items, it is not correct to say, as Deputy Noonan suggested, that the balance was wrongly struck, that the current and capital programmes are nothing more than artificialities when we come to [694] look at the exact boundaries between one category and another, that what we should have been looking at were the public capital programmes which would yield an economic return and those which would yield none. Building schools and hospitals cannot be justified by virtue of categorising them as capital reforms.

The Taoiseach indicated in his address that 44 per cent of taxpayers are now paying tax above the standard rate. That is a remarkable figure because it suggests that in the past 20 years, by failing to index our tax system and by making it more and more progressive, we have brought surtax to the masses. The Government's programme on which they were elected and to which they continue to make rather vague genuflections is, at some future date to convert the tax system into one where two thirds of people will pay at the standard rate. That means reducing that 44 per cent to 33 per cent. It has to be stated — and I will never tire of saying it — that the Government's programme for radical tax reform constitutes a programme for changing the marginal tax rate of 10 per cent of taxpayers only. That is not a programme of radical tax reform. It sounds great but it means nothing. One is talking about one in ten of taxpayers' marginal rate. It can be achieved by relatively small changes in the taxation system and will not suffice for the radical reform of taxation this country really requires.

Another point I want to make is in regard to the question of growth. It is quite clear from the figures put before us on occasion that growth in our circumstances is being driven by export growth. The deflationary effect of these Estimates being implemented — if there is to be growth in GNP — will require to be offset by a very buoyant demand for our international exports. I sound a note of warning in relation to that because international economic circumstances today are so dramatically different from those which obtained on Friday last. International economic conditions are so variable we cannot afford to assume that all growth can come from international [695] export-led growth. At some stage we must tackle the problems which apply inside our economy, tackle the inhibitions to growth at home.

I suggest that some of the elementary factors that militate against growth must be tackled by this Government at some stage whatever the political cost, for instance, the political cost of challenging the situation which obtains in relation to the Electricity Supply Board under which Irish rates of electricity charges are so much higher, are so prohibitively geared against use of a primary power source in production, the prohibitive rates which apply to Irish telecommunications and transport costs. All of those are matters in respect of which the Government will have to show a great deal more political flint and steel and be willing to confront some interest groups in order to bring about change.

I have got to say this about the general approach of the Government to industrial relations. I believe there is an axis in this Government consisting of the Taoiseach and the Minister for Labour which is totally against any form of confrontation whatsoever. Nobody wants confrontation for its own sake but there must be occasions on which one will shape up to an issue and decide one is not going to flinch. So far the record of this Government in that area is not good. Even in relation to the public service pay deal done it seems to me that the Government backed down in the face of what was a very ephemeral threat of industrial unrest. It appears to me that the public service unions have pulled a fast one not only on their union colleagues in the private sector and those who are about to lose their jobs as a result of what has been negotiated, but also — and much more fundamentally — have pulled a fast one on the community at large because they had not got the ammunition in their locker of which the Taoiseach was so afraid. They were not buying off a great winter or three years of discontent.

The public has finally come to see that there cannot be more concessions such as special pay awards by the Civil Service [696] arbitrator on occasions. There is the political will, if the Government are willing to capitalise on it, to prevent such payments out of funds we do not have. It requires some degree of political courage to galvanise that political support and make it stick. It appears to me that the Taoiseach and the Minister for Labour, in particular, seem to believe in a philosophy of fudge and retreat from shaping up to real issues. I do not know how they will reduce manning levels where they are superfluous or where there are too many people in vital public utilities. I do not know how they are going to shape up to those issues if they do not have the political courage even to express their aims in the matter on paper.

I note also that the Taoiseach has apparently established as the Bible, the New Testament of his economic philosophy, the NESC report. I ask the Taoiseach to look at one passage in that report which relates to the difference between gross pay roll costs to employers and the net value of take-home pay to employees. The figures show — and these are already two years out of date — that, as a result of our PRSI and tax system, for an employee who is on one and a quarter times the average industrial wage — that is somebody earning approximately £15,000 per annum — for every £1 he takes home it costs his employer £2; in other words there is £1 of payroll taxes for every £1 of take-home pay. If that is not seen as a major inhibitor of economic activity, or employment creation and willingness to participate in the labour market, I do not know what is clear evidence of it. Some day, some time, the mandarins of Merrion Street will wake up to the fact that the tax system, on a micro-economic basis, is the single greatest inhibitor of economic activity in this country. It prevents people being willing to work, to employ others and from being willing to take risks with investment. The tax system is something we cannot afford to long finger, as something which can be reformed in, say, five, ten or 15 years time. Reform of our tax system — and this party state this as a [697] fundamental belief — is a necessary part of the process of economic recovery.

In relation to the Programme for National Recovery, the amendment which the Progressive Democrats have put down, in particular, focuses on the fact that the extra £100 million which will be caused by a combination of public expenditure, of permitting incremental pay increases to be paid, of permitting the payment of special awards and the payment of the moneys provided for in the plan by way of wage increase constitute an opportunity lost. As Deputy Noonan said, there is no way that anyone can obscure this — those £100 million mean jobs lost and have always meant jobs lost. When the trade union leaders who were party to that agreement signed their hands to it they signed away the jobs of many of their members and the prospects of many young people in our society today. There is no shying away from that; they must live with it. It is a political, economic fact and now it is a social fact which is perceived. It is simply wrong to suggest, as has been done here, that the parties to that agreement deserve congratulation.

With all due respect to them the employers' part was a walk-on, walk-off part. They simply witnessed what happened and noted what occurred. The public sector unions got what they wanted, that was, to secure a wage increase for those who would retain their jobs. The Government bought off what I believe was a fundamentally unreal threat of industrial unrest and paid a very high price in jobs for so doing. That toll of jobs is something this party believe must be underlined. One must recognise that, when one talks about a figure of £100 million, one is talking about moneys which would have been available, for instance, to keep more primary teachers at work had not the Fianna Fáil Party encouraged those involved in education to seek to have the arbitrator's award paid to them despite the parlous economic state of the country, that one is talking about the moneys that would be available to keep the National Social Service Board in existence, to keep the [698] Ombudsman functioning. One is talking about all of these funds which were written off in the face of what I believe was an unreal threat.

I believe the Programme for National Recovery is not a programme at all but rather an elaborate and well conceived public service pay deal. When I say that I mean it is elaborate only in its pretentions. It is baroque, it is like an altar piece in a continental church, it is overstated. When one looks at it, it seems to mean something until one comes close up to it when one finds that all that glisters is not gold but gilt. All the statements and commitments to job targets turn out to be things which are mere aspirations. If I may say so, we have entered the period of the economics of the Book of Genesis where the Government feel it is permissible to say: let there be jobs and there will be jobs; let there be growth and there will be growth. With all due respect to the Taoiseach, he may think of himself as somebody politically omnipotent but the physics and cosmology of the Book of Genesis are something which do not apply to the Irish economic situation and are unlikely ever to do.

Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  Even under the great C.J.

Mr. McDowell: Information on Michael McDowell  Zoom on Michael McDowell  I have to suggest, in moving the amendment in my name, the text of which is before the House——

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  Technically you do not move the amendment, you discuss it. One amendment has been moved and your amendment will be discussed in tandem with it. I wish to clarify that point and the same will apply to Deputy Spring.

Mr. McDowell: Information on Michael McDowell  Zoom on Michael McDowell  In speaking favourably on my amendment I want to suggest that this House would do itself a grave injustice if it accepted glibly the remarks made by the Taoiseach about the success of his so-called national plan. It would be a grave injustice because the people at large know that fundamentally it is political candyfloss. It has no substance. It [699] is highly spun. It was born to the strain of Mise Éire. It was brought before the Irish people with great pomp and circumstance but I suggest it represents a lost opportunity for restraint. Where restraint was possible, we lost the opportunity for restraint and in its place we have produced the ultimate political illegitimate child. The fact is that politics is the art of the possible but on this occasion politics for ignoble reasons has fathered a false consensus. It is a consensus to which this party will not be a part. The signs are that already the trade unions involved in the consensus regard it as a fundamental error on their part. Their members are now seeing how false the consensus is. The majority of the Members of this House, I believe, from varying different points of view, see how false is the consensus which seemed to be embodied in that agreement. This House at the time of noting these Estimates should also lay down a very definite marker that it rejects the falsity of the Programme for National Recovery— the public service pay deal, that it rejects its falsity and regrets its cost and therefore should take on board the amendment of the Progressive Democrats.

I wish to deal briefly with the amendment put forward by Deputy Noonan, in the name of Fine Gael. The suggestion is that this House should amend its own procedures so that it would be possible for those Deputies who are not in Government, who are not supporting the Executive, on whom the Executive is not reliant for the time being, to put forward amendments and have them voted on, amendments that would allow the transfer within Votes — so as not to increase overall public expenditure or indeed the size of any individual Estimate — moneys from here to there, in other words that there should be costed capacity to change the pattern of public expenditure over a year. It is, of course, superficially attractive that that should be the case. It is of course superficially attractive that this House should take to itself, rather than require the Executive of the day to take [700] responsibility for, the shape of the Estimates put before the Dáil. I believe it is wrong in one respect that the whole constitutional basis of the country is that the Government take responsibility for the Estimates and their implementation. I do not think it would be a good idea, and my party will make their attitude clearer to Deputy Noonan's proposal when we have considered it at greater length, for a Government to be forced to implement Estimates they were opposed to. The whole idea of parliamentary government and of the executive control of public finances, subject to Dáil scrutiny, is that that Government carry forward their programmes in accordance with their priorities and are judged on that. The peculiar circumstances of this Dáil, that a Government are in a minority without a formalised alliance that allows them to consult with any portion of the House in the formulation of their Estimates, should not be the occasion on which governmental responsibility for public finances is watered down. It is ironic that a Government who have broken a mould in one respect, in that they have finally become decisive, should be asked to surrender some of their decision-making powers to a party who were gloriously indecisive when they had the reins of Government until very recently. That is not meant to be a crib at Fine Gael, it is meant to just point out a fact, that it is wrong to seek a share of decision-making from the Opposition when they could not make a decision when they sat on the Government benches.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): With the majority of the House.

Mr. McDowell: Information on Michael McDowell  Zoom on Michael McDowell  In those circumstances the Fine Gael amendment deserves close scrutinty. As I indicated at the beginning, the Progressive Democrats will vote for the Government resolution. We will do so to note the Estimates. This is not to be taken, and I repeat this, as approving any individual Estimate or its size. We are doing so to establish that we are not taking the easy way out, that we are not simply riding on the coat tails of a [701] Government who, on the public finances, are taking overall decisions with which we agree. We are making it clear that we share the general thrust of where the Government are trying to bring the economy in terms of the public indebtedness and we are willing to take our share of responsibility on that account. We will be fearless in using our judgment, to the ultimate if necessary, to oppose any individual item on which we disagree.

Mr. Spring: Information on Dick Spring  Zoom on Dick Spring  I cannot guarantee to the House such illuminating biblical references — perhaps in that context the Cistercians were not as successful with me as I assume the Jesuits were with the gentleman on my left. Those with a sporting background believe that the best form of defence is to attack but it would seem, in relation to the Estimates being discussed, that the Progressive Democrats have decided that the best form of attack is now defence. Be that as it may, I wish to move the following amendment to the motion before the House, and if you are telling me that technically I cannot move it I will recite my amendment for the benefit of the record. The amendment reads:

After “Programme” to add “and Dáil Éireann notes in particular that under the terms of the Estimates 16,000-20,000 public service jobs will be lost, which will seriously affect the extent and quality of the public services; the live register will rise to 356,000 monthly average in 1988; at least 1,200 more hospital beds will be closed and other essential health services will be dismantled; the pupil teacher ratio in primary schools will worsen dramatically; the vital services provided by the National Social Service Board, the Health Education Bureau and An Foras Forbartha will disappear; young people will be discriminated against in their access to training, education and welfare services; expectant mothers will be deprived of certain maternity payments to which they are now entitled; people suffering from disability will be [702] deprived of long duration payments and will pay tax and PRSI on the first 13 weeks; child benefit will be cut; a new housing crisis will develop, with both public and private home construction halved; Ireland's contribution to the Third World, already small, will be cut by 28 per cent; the role of the Ombudsman will be greatly reduced; the ability of our largest industry, agriculture, to contribute to the development of our economy will be seriously weakened by the removal of essential advisory and research services; the capacity of our tourism industry to grow will be greatly inhibited; the contribution possible through State-led industrial development will be drastically reduced: Accordingly, Dáil Éireann, in noting the Estimates, declares also that it has no confidence in the Government, because these Estimates will promote deflation and further unemployment in our economy, give rise to inequality, injustice and poverty; and because they fail to address the fundamental issue of the provision of financial resources on an equitable basis to meet the cost of essential economic and social services”.

I would like to quote from a short article in last Sunday's, Sunday Independent, a newspaper I do not often quote from, in which the author expresses some surprising thoughts:

We now have an underclass. The words “poor” or “deprived” are no longer adequate. Through recession and successive cuts that affect an already deprived group of people — at least one-third of our society — we push them down further and open up a huge gap between the “have” and the “have nots”.

Now this is where a contradiction comes in. There is conspicuous wealth around us for all to see. Each day brings a fresh crop of new deals, takeovers, or whatever. Hundreds of millions of pounds, even billions, have been added to Stock Exchange share values in just a few years.

[703] Millions mentioned everywhere — companies sold, companies going public, individuals making millions, whizz kids making millions by shuffling paper around and calling it “financial services”.

This article was written by a man who describes himself as a right wing capitalist but who is dismayed by what is happening in our country. He is one of an increasing number of such people. How could it be otherwise? One only has to look around to see poverty and hardship, the real sense of despair which is growing in our so-called Republic. Those who have eyes to see can no longer comfort themselves with the thought that there is no other way forward. More and more people are beginning to realise that there is something rotten about a society which has no room for social justice, even in the context of financial constraints.

Speaker after speaker in this debate will no doubt trot out the same clichés. If they are on the Government benches they will argue that there is no alternative to the vicious and inhuman cuts contained in the Estimates we are discussing. They will praise the merits of the Programme for National Recovery of which these Estimates are an inextricable part, holding their hands over their hearts while they insist on its honesty and sense of purpose. If they are on this side of the House, many of the speakers in the debate will begin by saying that they agree with the overall thrust of the Estimates, but they will then go on to try to make some political capital by attacking aspects of the cuts. They will try to hammer home their own new but already jaded and banal cliché —“macro right, micro wrong”.

Throughout the debate, we will hear a great deal about the debt we owe to foreign banks, but we will not hear too much about the debt we owe to that quarter of a million people who are out of work. We will not hear too much about the debt we owe to our young people, whom we are committed to cherish by our Constitution. We will not hear too much [704] about the debt we owe to the old, the handicapped, or to people living alone.

And when all the talking is over, most of the Deputies in this House will either troop sheepishly into the Government lobbies, or sit on their hands. The Estimates will be noted, and injustice and inequality will take another step forward. The Deputies who vote for the Government, and those who abstain, will all be saying the same thing. They will all be saying that the ideal is dying. You can call that ideal by any number of names — the ideal of the Republic; the ideal of a Just Society — whatever you choose to call it, on Friday next a majority of this House will hammer a nail into its coffin.

I know that the Labour Party amendment will not be carried, but it will be put to a vote. Those who support it will do so because they recognise that there are other debts apart from the one we owe to foreign banks. Those who support it will do so because they still believe in a Republic — a Republic where equality of opportunity is not to be made secondary to penny-pinching, a Republic where justice will never take second place to selfishness. They will be a small number of Deputies — not enough to make a difference to the outcome — but their vote in this House will be cast for the Republic. All the fine words from all the so-called Republicans on the other side will not disguise the fact that the majority are going to vote for inequality and for injustice.

The Taoiseach has already told us that anyone who argues that there is some other way of dealing with our problems is misleading the people. What arrant nonsense this is. What he has not told us, but what more and more people are coming to realise, is that this is not an economic exercise but a political one. This is the same Taoiseach, after all, who told us that the people were tired of all this talk about cuts, who told us that “if economics is the dismal science, then politics must be the science of hope”. The politics we are witnessing here is the politics of expediency.

It is expedient for this Government to seek to out-do all the gurus of the [705] economic right. The only political mandate for Fianna Fáil is the one that the right have made them a present of. For as long as Fianna Fáil keep the right prisoner, and for as long as the right is convinced that the well-heeled should not be asked to help solve this country's problems, the poor will have to pay. For as long as the poor are asked to pay, there is no prospect that this country's problems can be solved. You cannot solve the debt problem by creating a whole series of social problems. You cannot create justice by trying to turn this into a society of yuppies and financial services. You cannot create equality by sacking one teacher in ten, and giving the rest 2.5 per cent and a few extra sticks of chalk.

That is why we have to waste our time debating what is essentially a phoney exercise. The vast majority of people know now, even if they are not yet ready to admit it, that the Programme for National Recovery is a con trick, and not even a terribly clever one at that. To listen to Government Ministers on radio and television, offering their unconvincing explanations, and protesting that everyone's dreams will come true if we all just tighten our belts a little further, is small comfort to the growing numbers of people who have nothing left that they can do without.

If it was not clear before that the entire programme the Government have developed is a house of cards, it is becoming clearer every day. Examination of one instance alone would be enough to illustrate the point.

When the Government announced in early summer that they were going to bring the self-employed and farmers within the PRSI net, I regarded the news with a certain degree of scepticism. I have a certain amount of experience of the very powerful farming and political interests that have prevented this idea being successfully broached in the past. However, the Minister for Social Welfare stated that the total yield from this move would be about £90 million, at the proposed rate of 55 per cent. The hostility of the IFA and the ICMSA at the time was fairly muted — clearly they were [706] biding their time for the moment when their influence would be strongest.

That influence was to be seen in the statement in the Programme for National Recovery, that “the Government have decided to introduce PRSI for farmers and the self-employed in 1988 on the basis of income as assessed for income tax purposes”. This proposal was drafted by those involved in the most ambiguous terms possible. It was designed to keep the main farming organisations on board for the Taoiseach's final stroke of joining the signatures of all the parties to the document.

The trouble with trying to be all things to all men is that sooner or later you are going to be found out. The ICTU understood the proposal to mean that PRSI was to be levied on gross income, exactly as in the case of PAYE workers. The ICMSA understood likewise, and had the honesty to say so to the Taoiseach before they parted company on the day the agreement was signed.

The IFA got a cynical reassurance from the Taoiseach that gross income will be redefined as net income, even though this does not appear anywhere in the text. The ICTU were told not to worry, the rate of PRSI would be increased so the yield would be unchanged. But the IFA do not want to know about that. They know that any attempt to discriminate against them by using a higher rate of PRSI would be unconstitutional, and they know it cannot happen. So before the ink was dry on this deal, the IFA had secured a massive concession from a Government desperate to have their names on the dotted line. The bully-boy tactics so often associated with the leadership of the IFA had won again. In return for agreeing to associate themselves with the other social partners, they have been handed back about £40 million in PRSI relief. If they are brought into the PRSI net now, farmers will get the benefits that other insured workers get — for a fraction of the contribution. And this was inserted into the document under the heading “Greater Social Equity”.

I note that the Irish Congress of Trade Unions have written to the Taoiseach [707] demanding that he clarify the position. To the best of my knowledge no reply has been forthcoming to date. They are also seeking reassurances that the same contribution will be sought from farmers and the self-employed as from everyone else. The Minister for Social Welfare might clarify this point in his speech. Many people are wondering why this matter ended up in such a mess on the day the deal was signed. It warrants clarity because we are led to believe that this deal will see us through to three years of economic activity. People are entitled to know the exact basis of the deal. If the Taoiseach is genuinely committed to greater social equity he will make his reply public. The public are entitled to know. If, as I suspect, he cannot confirm that there will be full PRSI liability, all trade unionists should take that into account when deciding whether to support the programme as a whole.

Elsewhere, I have described the Programme for National Recovery as a series of contricks within a contrick. I believe, as I have said, that it should be rejected. I cannot accept that it is possible to pick and choose the elements we like — to accept the pay rise, say, and campaign against the job losses. Within the public services in particular, there is a deliberate trade-off between jobs and vital services, on the one hand, and small pay increases on the other. I believe there are many public servants now, especially in the caring professions, who are questioning whether the choice they are being invited to make is worth it.

Many teachers, for instance, — and I know this from experience — are saying now that a 2½ per cent rise is not worth having to watch and be part of a system where increasingly only the children of the rich can be guaranteed a fair chance at education. Many health workers are questioning if it is acceptable that patient care should suffer, or that their work mates should be fired, or that access to health care should become more and more difficult, in return for a very modest pay increase.

[708] I am not arguing here that public servants should be asked to give up this pay agreement. I do not see any good reason why public servants, who make a valuable contribution and who are subject to the same financial pressures as anyone working in the private sector, should be singled out as scapegoats. My party will not be supporting the Progressive Democrats' amendment to the motion which seeks to do just that. What I am saying is that the public service, and public servants themselves, and perhaps most of all the essential functions they perform, are being asked to pay a very heavy price for a pay increase which will not even keep them abreast of inflation, and which will not, whatever the proponents of this agreement might argue, advance the relative position of the lower paid. By the end of the first year of the operation of the agreement, assuming it lasts that long, the lowest paid public servants will have received an increase of £4 a week; while, for instance, a principal officer in the Civil Service, who is not at the maximum of his or her scale, will have received about £26 a week. In this area, as in so many others associated with the activities of this Government, the better way of dealing with the real problem was ignored. At considerably less cost, a cash increase across the board would have made real inroads into the low-pay problem and would have enabled many of the social problems now being exacerbated to be avoided altogether.

I would question, however, whether this Government have any real interest in generating just and fair solutions. The Government that can blithely give away the country's oil and gas reserves in the middle of negotiations about the resolution of our problems are not, in my view, a Government who have earned the trust they so badly need.

That scandalous decision was among the worst this Government have made in a very short period. All sorts of foolish arguments have been put forward — such as that a smaller percentage of something is worth more than a larger percentage of nothing. Arguments like this miss the point. We will now, as a result of the [709] changes this Government have made, get absolutely no return whatever from the development of any foreseeable oil find. This Government have made a present of perhaps £70 million to a small group of individuals. We cannot even be sure, given the conniving attitude expressed so far, that any oil developed will be landed in Ireland.

What is most serious about this development is that there has been, up to now, a certain level of national consensus about how we should view our natural resources — even parties that did not really believe it were prepared to pay lip service to the notion that the natural resources of Ireland belonged to the people of Ireland. In the breaking of that consensus, and in their cold-blooded decision to give those resources away, Fianna Fáil have committed what I have already described as an act of economic treason, one for which I believe they should not be forgiven by the young people and by the people at large.

They are good, of course, at paying lip service. Another example of this is the apparent lengths they have gone to reassure the Irish Congress of Trade Unions that they have no designs on privatising our semi-State industries. Many statements were made over the past few weeks particularly when the plan was announced, that this Government have no plans to privatise any semi-State industries. But the question must be asked: how are those assurances to be reconciled with the reported comments of the Taoiseach and other Ministers that they are considering “without any hangups” the possible sale of the Irish Life Assurance Company?

This is another potentially sinister development. The media are being told on a daily basis, by the management of Irish Life among others, that up to £200 million could be raised for the State by the privatisation of the company. The truth is that this company is worth a great deal more than £200 million, at least twice that amount. There is a campaign underway to undervalue the company, and the only motivation possible behind such a [710] campaign is to make a financial killing for somebody.

I am aware that Irish Life have at present some £200 million in free reserves over the solvency margin, which would be allocated between the policyholders and the company in the event of privatisation. But, in addition, the company have accumulated very substantial profits and now have hidden reserves of some £310 million, from a base of some £2,000 million working for policyholders. These hidden reserves have never been mentioned before, and their existence means that the company is a great deal more valuable than its management says it is. The question must be asked why has there been such an obvious attempt to undervalue the company, unless there is an interest in selling it cheaply? The value of Irish Life is of course only one of the issues that arise in relation to the possible privatisation of that company. There are many others, which I have dealt with in the past in this House and elsewhere.

The Fianna Fáil obsession with the financial institutions and with financial services generally, is an area that requires additional comment. I believe there are very few people in this country who are not deeply uneasy about the way in which this whole sector operates. For instance, the Sunday papers last week carried a full page advertisement for one of our building societies. The message of that advertisement was very clear — is said, if you have lots of money to invest, we have ways of hiding it for you. The entire emphasis in the advertisement was on confidentiality. It was an invitation to hot money — no questions asked.

Is this what this country needs right now? Does this country need all this talk of financial services as being the panacea for all our problems? Day after day we are being told that the new financial services centre in the Custom House Docks will create the prestigious jobs we need, and will attract the sort of investment we need into the country. I have yet to hear a Government Minister, or anyone else, who knows exactly what financial services even means. And yet, if we are to believe [711] all the hype, the Holy Grail is to be found in 27 derelict acres of Dublin dockland.

But is it? Are we really going to see 7,500 extra jobs in this area; or are we going to see a small number of firm's being given substantial tax breaks to re-locate from Dawson Street to the docks? Are we going to see substantial new investment, or are we going to see more loopholes for the exclusive use of the wealth-skimming establishment of Dublin? Will the development of the area mean new life and new opportunities for the disadvantaged community that lives there, or will it mean the breaking up of the community? Are we seeking highly mobile capital to locate here, with no guarantee that it will last longer than a year or two? Are we making ourselves dependent on highly competitive ventures, which might well fail in the extraordinarily competitive environment in which they will be operating? Despite all the glamour and mystique, are we getting ourselves hooked on an illusion in relation to financial services?

We are being dragged headlong into a new development here without any explanation of all the issues involved, without any safeguards to assure us that all of this hype will really lead to a major contribution. In all the political parties in this House we have accumulated a great deal of experience in the financial sector. “Service” is not a word we have tended to associate with that sector in the past — especially community service. Few of us would have said before now that patriotism was high on the list of priorities of the financial sector as we have seen it operate.

Indeed, I believe that we in this House should be demanding two things in relation to this whole area. We should be seeking a full inquiry into the operations of our existing financial institutions, with a view to determining the extent — the very large extent, in my view — to which their contribution to the national good can be improved.

We should be demanding that the Government produce a full White Paper [712] on the development of the financial services industry. There is a huge variety of questions that need answers, if we are to be satisfied that this development is really in the interests of all the people of this country, instead of being an opportunity for the very few to skim more of the country's wealth off the top. Next year, to attract the kind of investment that the Government envisage, the people of this country will forego about £30 million in corporation taxes, at a time when corporation taxes are already diminishing dramatically and the PAYE burden is rising more and more steeply. Surely the people of this country are entitled to a full explanation as to why this is necessary and desirable, and what the long term implications are. They are entitled to be told what safeguards their Government are building in to prevent abuse, and what opportunities and spin-offs will exist for them. In the absence of that kind of clear, detailed exposé of this new area, the commitment to the development of this mysterious sector must be looked at with a great deal of scepticism.

There is one final, essential, point that I must make here. This debate is taking place against a background of panic on the world's Stock Exchanges. There are a number of aspects to that situation to which I must refer. First, the developments that we have witnessed over the last few days reveal a lot. They reveal the basic weakness in some of the economies most affected. Commentators have known for some time, for example, that the Japanese Stock Market was greatly overvalued, despite all that country's economic successes. It has been said many times in the past that a crisis was inevitable in the American Stock Markets, because of the fundamental problems that economy is facing, with a combination of very large borrowings and an imbalance of trade. These are the economies to which we are looking in the hope of attracting investment.

The developments we have been witnessing also say a great deal about the instability inherent in the financial world, and particularly the financial services world. Great fortunes have been made [713] by the people who shuffle paper in this world, but they have been made by people who are playing a form of Russian roulette. Now the gun has gone off and, whatever happens to the high-flyers in the next few weeks, ordinary people have to go on making a living. We can see now that paper shuffling, no matter how it is hyped up, is not wealth creation.

Other issues arise too. It is particularly interesting — and I hope instructive for some Deputies in this House — that by the end of yesterday, the value of many of the State enterprises nationalised in Britain was 40 per cent below its peak, greatly inhibiting their capacity to borrow and invest, and perhaps even threatening the future of some of them. Those who keep talking about how easy it would be for State companies to attract new investment here if they were privatised conveniently forgot to tell us that there is a down side to that equation also which many of those industries will now face in the context of the Stock Exchange collapse in Britain.

It is still too early to say whether there are long term implications arising from the disturbances of the last few days. There may well be. The crash in 1929 occurred principally because most of the speculators of the day were gambling with borrowed money. Their losses led in turn to bank collapses, with a resultant world-wide crisis. If the same pattern is followed today — and we must hope it is not — the situation for a country which is heavily in debt to those same banks could be very bleak.

By the same token, we must surely take note of the lessons for a system of economic management which ignores the need to plan, which relies exclusively on speculators and on a climate of confidence for investment, and which is more and more dependent on low interest rates.

Above all, the lesson we must learn is that our people are entitled to know what is going on. I mentioned earlier the need for a White Paper on the subject of the financial services industry. Surely the events of the last few days must reinforce that need? I hope the Government will [714] take note of this point before we go down the road of financial services.

There is still a great fear that we are obliging banking institutions which are already located in this country, on the basis of making the Customs House Docks site attractive from the point of view of tax relief and more attractive than the locations they already have in this city. If we are to become dependent on this highly volatile world, the people are entitled to know what is happening. There is only one way in which that can happen — and it may not be 100 per cent foolproof — to establish a committee of this House or a White Paper to be published by the Government before we venture down the road on which the Government seem to be totally relying at present for any new incentives or job creation. It is essential that this House is better informed.

I have had discussions with many Members of the House about what they believe will happen in relation to financial services and I do not believe many of them are well informed on what will happen, the opportunities and the very basis upon which this site is being created. We have not been informed of the consequential knock-on effects in relation to the existing management of our financial affairs by the banking institutions already in this country. The Government must clarify these matters and give the House an opportunity to examine the issues before we commit ourselves to the building programme under discussion and the tax relief involved. As the protectors of the taxpayers we are entitled to discuss the ramifications of the proposed Customs House Docks site and the financial services which will be operated from within that site.

I would like to say a few words about some particular aspects of the Estimates. The Government established a commission to inquire into health funding: that in itself says a lot. This is a Government which have never devoted any time to thinking about what kind of a health service we need in this country — what the mix should be between hospital and community care; what rights of access [715] people should have; what minimum level of service it is essential to maintain; what priorities there should be as between different types of care; what level of training is necessary to keep going. This Government have never thought about any of these things — but they have thought about how much it should all cost. The bottom line has been how much we can pare off the cost without actually killing anyone.

In a recent document, the Catholic Bishops' Conference made a number of points very forcibly. Among other things, they reaffirmed that a decent, accessible level of health care is a basic human right. They pointed out that there is growing inequity in our system of health care. They recognised that there is increasingly a two-tier system in operation and that the State, which is failing to provide adequate care for people on low incomes, is subsidising this development to a massive degree. They say:

The ultimate result can only be a residual and deteriorating service, with the best professionals leaving the public system altogether, not only because of the earnings attraction of the private system but because the environment and facilities of the public system will not permit a level of excellence in care.

In this situation there will truly be a “poor service for poor people”. The unacceptability of this is all the greater given social class differentials in health status: “the poorer members of society are sick more often and die younger”.

These points, I would emphasise, are made by the Catholic Bishops' Conference in a thoughtful and well-argued submission to the Government. This submission was made before the Estimates were published.

What has this Government's response been? The cuts they have unveiled in the Estimates this year are, in fact, three times greater and more savage than those of last year. Last year's Estimates led to hardship on an unprecedented scale for many thousands of people — I have to [716] say that this year's Estimates will kill people. The Government have gone too far. The health service will not be able to sustain the cuts that have now been made, which are stood over by the Government and which the House will accept before the week is over.

I repeat — unless this Government can be persuaded, or forced, to change their minds about the cuts they are now making, people will die. They will die in hospitals and they will die because they are unable to get into hospitals. There are parts of this country now where patients are being accommodated in corridors, where wards are left unattended at night, where patients have to be carried up several flights of stairs after intensive surgery. There are hospital staffs all over the country working under stresses and strains that this year will become finally intolerable. I cannot emphasise the point enough — our health service cannot function with the level of resources that have been allocated to it under the present Estimates.

This is not a case where anyone in this House can say they agree with the overall thrust of policy, but they would implement it differently. The bottom line here is that too much is being taken out of our health service. Those who believe they can hide behind the assertion that they would make minor changes here and there are missing the fundamental point. Every Deputy in this House who supports the Health Estimate is going to bear a very heavy responsibility.

The same is true of education. How can any Minister for Education, particularly given the performance of the present Minister for Education in this House for the last four years, come before this House and pretend that our primary sector has enough resources? How can you have too many teachers in this sector? What are this Government trying to do? It is already the case that the primary sector is the poor relation of the education system, with overcrowded classrooms, inadequate facilities and no back-up. The long-term implications of what this Government are doing to the primary sector are horrendous. They will [717] increase disadvantage and inequality in our community and will ensure a legacy of alienation and hostility to the structures of society in the areas of most disadvantage in our country.

In general terms this Government are sowing a whirlwind. The documents they are asking this House to note are a testament to injustice and selfishness, and the so-called plan of which they are a part is a monument to division. Their whole approach is an insult to planning, and a dangerous portent for the future of this country.

I am asking this House to reject this document and this approach. I am asking Members of this House to ask themselves seriously if the time has not come to reject a society built on injustice and selfishness, and instead to set about the task of planning and building a society built on justice and equality.

I would direct members of the Fianna Fáil Party and members of the public who keep a close eye on the development of politics to read some of the statements — they do not have to read them all because the amount of repetition would bore anybody — made incessantly and inanely over the past four years by the then leader of the Opposition, Deputy Haughey, now Taoiseach, attacking the efforts being made by the Government of the day. I ask members of the Fianna Fáil Party how they can justify to their activists or their Cumainn throughout the country their actions in Government and how they can equate those actions with the statements made by the Minister for Education. It is not enough to say to the Irish people: “Now, I am the Minister for Education”. The voters and the electorate are entitled to logical explanations as to why actions in the area of education are being taken.

I say to the Minister for Social Welfare that people are entitled to explanations when the benefits for which they have contributed for many years in their working lives are being reduced and taken away from people who, through PRSI and taxes, have been paying hand over fist for many years. I do not know how the Minister for Social Welfare can justify [718] his actions to these people. There seems to be a view expressed by Members of this House that people get sick deliberately and that people have accidents at work deliberately so that they can get benefits from the schemes which were originally set up to protect workers' rights and to give them some basic entitlement and dignity when accidents happen at work or when, through no fault of their own, they are sick. We are not only cutting back on the medical care which will be available to those people, we are now cutting back on the benefits to which they are entitled. If three years' stamps were required last year in order to obtain benefit, five years' stamps will now be required. I cannot understand how the Minister for Social Welfare can stand over these decisions to dismantle entitlements which have been built up through years of negotiation on behalf of the working people in our community — workers who are in many cases on very meagre salaries and who have difficulty in coping and providing for their families.

It would appear that, under the terms and the tenor of the documents that have been unfolded by the Government — the so-called plan for recovery and the Estimates — these people who are already living in difficult circumstances will now have foisted upon them higher school transport charges and worsening conditions for their children in schools, particularly in the primary sector which all Members of the House will agree is the sector which we have a basic responsibility to protect. We hope that all children in our society will at least have the benefit of primary education but we are now ensuring that, while they may still have access to primary education, the quality of education will be reduced and there will be increased pressures on teachers, described by a member of the INTO last week as crowd control instead of teaching.

That is not an exaggeration. Classes will consist of 40 and 50 pupils. A teacher once explained to my mother when she complained about the quality of education that he was lucky to know her son's name because there were 51 other pupils [719] in the class. Unfortunately, that will be the position again, having made progress in the past 15 years. I say to the Members of this House and to the members of the Government that that is not good enough. People are entitled to a fair deal. They will give their response to the Government when the first opportunity arises, be it in terms of local elections, European elections or any other election.

The course which the Government are pursuing is the wrong course because it is based on the notion that we cannot afford justice or equality. If Members of this House who will voice their disgust and their objections to individual aspects of these Estimates are against them, they cannot have the luxury which they are seeking, that they accept the overall Estimates but there are nicer or easier ways of implementing them. You either accept the lot or you accept nothing. That is the proposition before this House. On behalf of the Labour Party, I urge the House to reject these Estimates. They are not the solution to the problems facing the country and they are not even a signpost to the right direction to solve the problems. I urge Members of this House, particularly those who do not have any formal ties with the Government of the day, to reject the motion before the House and to support the Labour Party amendment.

Minister for Social Welfare (Dr. Woods): Information on Michael J. Woods  Zoom on Michael J. Woods  Listening to Deputy Spring I can only think that he has a hard neck to speak in such a way having witnessed an increase of almost 100,000 in the unemployment figures in the four to four and a half years in which he was in office. The Government, of which he was a member, failed to bring in any form of PRSI for the self-employed, which I am sure he would like to have done, in the course of that period.

Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  Has the Minister got a script.

Dr. Woods: Information on Michael J. Woods  Zoom on Michael J. Woods  I have and I will refer to it in a moment.

[720]Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  May we have copies of it?

Dr. Woods: Information on Michael J. Woods  Zoom on Michael J. Woods  I have not started on it yet. I say to Deputy Spring that as far as PRSI is concerned we will be implementing the measures as planned. There are various elements in it and it is slightly more complicated than the Deputy seems to appreciate.

Mr. Spring: Information on Dick Spring  Zoom on Dick Spring  You would not need a Ph.D. to understand it.

Dr. Woods: Information on Michael J. Woods  Zoom on Michael J. Woods  No, you would not need a Ph.D. The man in the street will understand it fairly clearly. One of the elements in it is gross income. You could not charge PRSI on total gross income and likewise you could not charge PRSI on total net income. Nevertheless, there are other elements involved. The National Pensions Board are in the course of finalising a report on that matter which I will have at the end of this month. My officials are currently doing an actuarial study on it also. It will, of course, have to relate to the cost of providing the services and will result in savings to the Exchequer against the outgoings that are there at present.

Debate adjourned.

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