Financial Resolutions, 1991. - Financial Resolution No. 6: General (Resumed).

Wednesday, 6 February 1991

Dáil Éireann Debate
Vol. 404 No. 7

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Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  Deputy Dick Roche was in possession and he has almost ten minutes remaining.

Mr. Roche: Information on Dick Roche  Zoom on Dick Roche  When the debate was adjourned I was touching on some social welfare changes in the budget which I felt were commendable. I was referring specifically to the change in the pension payments signalled in the budget in the form of the pro rata pensions for persons on mixed full rate and modified insurance contributions. I am sure many Deputies feel that the social welfare anomaly is a scandal, it has always been a scandal and is one which should never have been allowed to happen. It causes great pain and hardship to a declining group of people. I commend the Minister for his [1885] efforts to end it and I hope we will see a conclusion on this matter now.

Before moving away from social welfare payments I would like to be a little parochial and thank the Minister for Social Welfare for specific decisions relating to two resource centres operating in my constituency. The Minister has again decided to fund the Little Bray Family Resource and Development Centre this year to the tune of £11,000 and this is on top of an additional generous grant made last year of £10,000. For that I am profoundly grateful. The Minister has also made a decision that the St. Fergal's Ballywaltrim centre which operates from Oldcourt in Bray is to receive funding this year, next year and the year after and I am even more grateful for that.

I want to turn to the taxation matters dealt with in the budget. Over the last three years there have been significant improvements in our taxation system. It is worth recording yet again that the levels of personal taxation were at their highest when Fine Gael were in command of the Department of Finance or, perhaps, when the Department of Finance was in command of Fine Gael. Since Fianna Fáil Ministers returned to Merrion Street in 1987 both the top rate and the standard rate of taxation have been cut by 6 percentage points. That, by any standard, is welcome. In the budget there have been other improvements in personal taxation. They, too are welcome. Major reforms have been introduced throughout the tax administration system over the last three years, most notably the extension of self-assessment to companies, the self-employed, farmers and, now, on the capital side. The incidence of tax evasion has been cut back and evasion measures now, for the first time in many years, have the fullest political backing.

The tax base has been widened successfully over the last few years. Some would argue that the tax base has not been widened fast enough. This criticism has been around for a number of years and it certainly has some element of truth in it. The charge that the taxation base has not been widened sufficiently quickly [1886] comes most frequently from our friends on the left. It is instructive, therefore, to remind ourselves as to what happened when the left had an influence in the shaping of budgets. When Fine Gael and Labour were in Government the yield from capital taxes increased by a mere £13 million. Between 1987 and 1991, under Fianna Fáil Ministers, the yield from such taxes is projected to grow to a total of £87 million, £54 million more than when the left were in office, a more than 400 per cent improvement. Some would say that we still do not have enough levied on the capital taxation side. I would not necessarily disagree with that, but I am merely making the point that when those who most frequently push forward the argument about expanding the tax net were in a position to influence these matters they did considerably less well on the issue than we have done over the last three and a half years.

The figures are even more dramatic on the corporation tax side. While Labour and Fine Gael were in office corporation tax increased by £26 million. Between 1987 and the end of this fiscal year, under Fianna Fáil, the corporation tax yield will have increased by £270 million, ten times greater than the previous four years and way ahead of the rate of inflation. Again, I would accept the proposition that is very frequently put forward that corporations in this State are still relatively lightly taxed and I would also accept the proposition that there is much room for improvement. I would like to underscore the point again that in the last three and a half years more has been done in this area than was done in the preceding four years.

I wish very strongly that there should be a continuing broadening of the tax base because it is only by broadening it that we can achieve the kind of tax equity we all want and lessen the burden in particular on PAYE payers and, at the same time, retain and improve expenditure particularly on social services and transfer payments to the less well off. I find it difficult, however, to accept finger-wagging admonitions from Labour and Fine Gael in this regard when they were [1887] so impotent when they were in Government.

The Workers' Party, of course, have never been in Government and, therefore, can preach at all three of the main parties.

Mr. Spring: Information on Dick Spring  Zoom on Dick Spring  They might be even yet.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  Was Deputy Roche not Martin O'Donoghue's adviser?

Mr. Roche: Information on Dick Roche  Zoom on Dick Roche  That is correct. I was a civil servant and as a civil servant I was no more responsible when he got out of control than I was when the Deputy got out of control.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  The Deputy was the author of the disastrous 1977 manifesto and we will not let him forget it.

Mr. Roche: Information on Dick Roche  Zoom on Dick Roche  Over the last decade The Workers' Party in particular have continuously called for increases in expenditure while failing to support local authority budgets. This indicates something of their attitude in general to the whole process of Government. In my own area, for example, The Workers' Party are the second largest party on one of our local urban councils and councillors have been instructed to oppose modest increases in Bray UDC local revenues. The yield from those increases has been put into worthwhile social expenditures such as the improvement of playing facilities in Oldcourt and Fassaroe estates and grants to local youth clubs such as the Wolfe Tone and District Youth Club. The point I make here is that while Fianna Fáil, and in fact Labour and, more reluctantly in recent times, Fine Gael have been willing to support extensions of the tax base even at local level, that willingness has not come from The Workers' Party who are most loud on this issue.

I want to finish on the taxation side by turning to one measure which the Minister announced in the budget and which I hope he can now re-examine. I refer specifically to the proposition regarding [1888] the business expansion scheme. I agree with many commentators that this scheme has attracted a degree of abuse. I agree also with the Minister's philosophy of husbanding his tax resources and concentrating any tax concessions on the PAYE workers. If revenue is to be handed back or foregone, then the lion's share of that benefit should most correctly go to the PAYE payers.

As the Minister said in his budget speech the business expansion scheme is costly. Benefits under the scheme cost the Exchequer £40 million in 1989-90 and there have been many blatant abuses. The most notable use of the scheme was to provide tax relief on secure asset-backed investments. This was never the intention of the BES. The measures the Minister is taking in the budget are aimed at focusing the scheme at smaller companies, which is right. The Minister is also extending the modified scheme for a further two years. Both measures are welcome.

I would, however, ask the Minister to look again at the way the changes are being introduced. Over the last few days I have received calls from quite a number of hotels in my constituency. These are small family businesses. Their plight should be put on the record here and I hope it will be borne in mind by the Minister. For example, the La Touche Hotel in Greystones recently changed hands. It is now a family business in the process of expansion. A considerable amount of money has been invested under the BES. Land for a project has been bought. All in all, a £750,000 project is under way and that project will be in danger if the shutters come down dramatically on the BES scheme. As that project was in process when the announcement was made it would be worthwhile giving some consideration to a means of alleviating the hardship that will be caused. The Grand Hotel in Wicklow is another case. I have a letter from Declan Roche, its manager — no relation, I hasten to add——

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  There is just half a minute left, Deputy.

[1889]Mr. Roche: Information on Dick Roche  Zoom on Dick Roche  ——and he makes a very similar case. Land was bought and major investment made. The BES project brochure has been printed. It would be a great tragedy if some way could not be found to ameliorate the hardship that will be caused to schemes such as this. I accept the Minister's wisdom in curtailing the BES projects but I feel as the announcement was made, some allowance has to be made for schemes that are in process.

Generally this is very fine budget. It comes at a very difficult time and it is a budget that has a great deal to commend it. It helps to continue the good policies which have been in place for the past three years. It helps also to alleviate social hardship and I have no doubts at all that it will receive from the community and from the House the support that it deserves.

Mr. Spring: Information on Dick Spring  Zoom on Dick Spring  Needless to say, I will be saying some things that are quite opposite to those said by Deputy Roche, particularly in his final remarks. Let me say with regard to the curtailment of the BES scheme to which he referred, that the lack of notice and the manner in which it was executed seems to display an amazing degree of lack of co-ordination between Cabinet Ministers, where one Minister who is charged with the promotion of tourism is launching the schemes the week before the budget and his colleague, the Minister for Finance puts paid in the budget to the effort being made by those small companies looking for funds.

In relation to the points made by Deputy Roche on the increases in corporation tax and property tax I would like to check the figures in relation to the percentage of overall taxation, but where the Government set out to increase the tax take from those areas which I believe is very necessary, I can assure Deputy Roche that I will be publicly grateful to the Government and I will give them my support, which will be in direct contrast to the efforts of the Fianna Fáil Party [1890] when they were in Opposition between 1982 and 1987.

Mr. Roche: Information on Dick Roche  Zoom on Dick Roche  I was not here.

Mr. Spring: Information on Dick Spring  Zoom on Dick Spring  While the Deputy was not here on that occasion let me tell him that his colleagues led by Deputy Haughey could not attempt to give any support to any increase in taxation on any area. It was one of the major difficulties and frustrations of that period that the Fianna Fáil Party went into opposition for the sake of opposition irrespective of the merits or demerits of the issues put before the House, and that was regrettable from the point of view of politics.

One wonders why one would bother speaking on this budget because the general conclusions of the populace and the commentators is that the budget was a sham and a charade, little more than a holding exercise, an operation in marking time while we wait to see what effect external influences are going to have. The Government could be forgiven if they had come out and just said that the budget was a holding operation. If the Minister for Finance had come into the House and explained that he was under tremendous constaint and that he was not going to make any significant changes, then I believe one could have more respect than having had to sit through one hour and a half of nothingness.

What is most offensive about the budget is the pretence that this exercise in book-keeping is going to have profound, social and economic consequences. The reality is that the Minister has approached this task as if he were trying to decorate a room with only one old newspaper as his raw material. He has stuck scraps all over the wall, and then stood back in admiration as if he painted the roof of the Sistine Chapel. If he had eyes to see, he would know that all he has is an untidy mess.

Everyone knows that this is the case and I would have to say that I have found it somewhat disappointing that the trade union movement, in particular, have felt constrained to be so muted in their [1891] response to this budget. Individual trade unionists to whom I have spoken are deeply disappointed, particularly at the measures announced for the long term unemployed. I know the trade union movement as a whole are clinging to the longer agenda implicit in the Programme for Economic and Social Progress but I would have to say there is an awful lot of ground to be made up in the wake of last week's budget if the aspirations in that document are to become a reality. I will not pass any comment on the pay aspects of the programme, as that is primarily a matter for judgment by the trade unions, but the other aspects of the programme, if they are real at all, are primarily a matter for comment and evaluation in this House.

As for the budget itself, would it not have been better all round if the Minister had come into the House and said, “look, this is not a year where there is money to throw around. Instead of spreading the few resources available so thinly over the entire community, I am going to concentrate on just two priorities, one economic and one social priority.” If he had done that, he would be able to defend his budget on grounds of a commitment to justice in the face of scarce social resources. Obviously, there would be still be offended interest groups and individuals, but if he picked the priority areas carefully I believe he would have been able to engender a broad base of support particularly among people — and they are the great majority — who recognise that things are difficult but who have not stopped caring about the needs of others.

In the Minister's position, I would have chosen to concentrate the resources available on finding real and significant measures to help to create a pathway back to work for the 100,000 people who are long-tern unemployed. I would have added to that the imperative need to address the crisis facing people with mental handicap.

Instead of picking a couple of priorities, and concentrating on them the Minister has, as I have said, made a highly [1892] unsuccessful effort to fool people that this budget is going to mean something in their lives. There are many examples of meaningless and petty changes within the budget; I could spend a lot longer than 20 minutes in listing them but some of them are very obvious, the income tax reliefs that the backbenchers on the Government side have been speaking about. According to the Government's own figures income tax yields would have gone up by about £250 million this year, if no changes had been made in the budget. As a result of the changes the income tax yield will still go up by about £200 million. In other words the PAYE community as a whole will end up paying substantially more tax anyway after this budget. I do not know how anybody in their right minds could call that tax relief? While it may look good to pay increases in basic social welfare slightly above the rate of inflation, those increases will not come into effect until the middle half of the year. By then increased VAT rates will already have begun to bite and they will bite more deeply at lower ends of the income spectrum. Local authority rent increases, already mooted by the local authorities in the past ten days, will take care of any benefits left over for many thousands of families.

In every year that Fianna Fáil have been in office except one the child benefit has been frozen so that its purchasing power today is considerably less than it was in 1986. This year they did nothing more than apply the higher rate of child benefit, at present applicable to the fifth child and beyond, to the fourth child. That represents, on average, an increase of 40p per child per week. That is only for mothers of four children. Mothers of three children will see no increase in their child benefit and the larger the family the smaller the increase will be on average. In the case of six children, for example, the increase is as low as 27p per week.

In the Programme for Economic and Social Development the Government admitted for the first time that there is a growing housing crisis and identified 19,000 families as being in need of housing at present. In the view of any Member [1893] of this House who has experienced the hardship being suffered by families at first hand this is a very conservative assessment. What is the Government's response? They are going to do all sorts of things, take all sorts of initiatives except build houses. For the fourth year in a row they are not going to build any new houses. Meanwhile the queues grow and the existing public housing stock is ageing and inadequate. We will soon have protest on the streets about this issue, an issue that we had thought we had seen the last of in the mid seventies and eighties.

Perhaps nowhere is the meaninglessness of the budget more apparent than in relation to the issue of health. This falls under two headings which need to be addressed separately. They must be addressed against the background of perhaps the worst crisis ever in the health services. Health services have been pared to the bone in the past three years. The hardship that the cutbacks in health have caused have been recited too often in this House for me to repeat them, but I would like to convey to the Government the anger that is in our community at the scale and extent of the health cutbacks. That anger arises not just from the inconvenience of queuing or the hardship of pain suffered on a waiting list, or the frustration of having to pay, often from very small incomes for essential services that we have all become accustomed to as a right, but also from the loss of dignity involved in seeking access to services to which people no longer feel entitled.

In Victorian times, charity was inflicted on the poor — that is to say people who had nothing were made to feel like part of a lower order by the way in which charity was doled out. There was no concept of rights in those days. No feeling that decent shelter, good education, basic health care were part of the citizen's entitlement and the community's obligation. We are rapidly approaching that concept again in Ireland and have already reached it in the area of health care. I never thought that in my time in politics I would see the day when I would have to argue for the right of access to health care. I thought that time was long past. [1894] But as I work in my constituency, as I come in contact every day with people who are hoping that their turn in the queue will come for some basic treatment, as I see the way in which people are becoming resigned to the fact that they have no right to treatment because their income does not warrant it — as I see what is happening, as every other Member of this House can see what is happening if they care to look — the anger that I feel at a Government who have deliberately chosen to undermine that right of every citizen grows.

How have the Government chosen to respond to the health crisis, and to the anger that surfaced again after publication of the Estimates? What is the bottom line? The bottom line is that after the budget, there will be £2,300,000 less in the Estimates than there was before the budget.

That is the first figure that gives the lie to what the Minister for Health said in this debate earlier today. It gives me no pleasure to say that the Minister for Health seriously misled this House in his contribution to this debate only an hour or two ago. His own Government's figures, published annually in the revised Book of Estimates, show that his claims of real increases in health spending under his administration, as opposed to reductions under the previous Government, are false and misleading. Health spending was maintained under the previous Government at 7 per cent of our national wealth, and it has been falling steadily ever since this Minister came into office. I would recommend to him, that before he makes false and spurious claims to the House about health spending, he should stop to examine the Government's own figures on the matter.

Against that background, the changes in health eligibility announced in the Programme for Economic and Social Progress have to be regarded as a joke, and, unfortunately, a sick joke at that. To announce something on the basis that it is going to be broadly welcome in principle, and then to expect it to happen without any negotiation, and above all without [1895] any resources, makes a nonsense of the principle.

The changes in health eligibility have to be looked at in the light of the following facts. The number of people entitled to a free hospital bed will be exactly the same after the extension of entitlement as it was before. That means that the shortage of beds will be, at the very least, as acute as it has been for the past three years. The measures proposed are being taken without any consultation with the legitimate interests involved, including consultants. Consultants are perfectly entitled to object to such fundamental changes in their conditions of employment being imposed without any consultation whatsoever — they are essential public servants as well. Doctors — and they are many — who believe in treating all of their patients on the same site, to the highest possible standards, fully backed by their junior doctors in training, have effectively been told that they are no longer to be encouraged to see paying patients in public facilities. As a result, these measures, as they are outlined, will drive many consultants who now see patients in public hospitals to do more and more of their work in private hospitals. If that does not happen, the only other possibility will be that more private beds are allocated to consultants within public hospitals but they will have to come from within the existing overall allocation of beds, thereby leaving even fewer beds available for public patients. Either way, the net result will be that the separation of medicine into public and private will become a permanent feature of our health service, a classic two-tier situation.

If the top echelon of income earners take up the entitlements that are now being extended to them, and for which they will be paying an extra health levy, without any extra resources being put into the system, the only possible result will be longer queues. If, on the other hand, the top income earners maintain their position in the VHI in addition to paying the extra health levy, the only reason can be that they want to retain [1896] their capacity to jump the health queues. If this happens, the Government will be formally sanctioning and subsidising the practice of queue jumping in the health services. Undermining the morale of the providers of any service will reduce the quality of that service. Medicine is no different. The net effect is that the Government are further underwriting private health care in private hospitals by these measures, discriminating in favour of the owners of such buildings and the doctors who work in them.

Quite clearly, this plan must fail. When it does the Minister is going to try to come back into this House at some time in the near future and make a scapegoat out of the consultants. I want to say here and now — and I say it as one who carries no brief for any interest group — that consultants are not the problem here. The problem is a Minister who is living in a world where nobody suffers, where nobody has to wait, and where charity will do as a substitute for rights. In other words, he is living in a world that the rest of us have left behind, and he has ceased to be a representative of the people who elected him.

If the Minister for Health were to do nothing else, he should surely be committed to ensuring that by the time he leaves office, there will be no person with a mental handicap in need of residential accommodation who does not have that accommodation immediately available to him. Even that most basic of humanitarian motivations seems to have passed him by. Last year he provided, he says, an additional 140 residential places, and this year, on the same calculations, there will be another 70 places. I have to say again that it is difficult to believe the Minister. Every agency, every voluntary organisation, every health board, are reporting a major gap between the places available on the one hand, and the need on the other.

Let us not just think about that need in terms of statistics. At a recent public meeting in Dublin, one parent told 500 others about her child, her 22 year old severely handicapped child, who had not stopped screaming once in the 22 years [1897] she had lived. That mother was resigned to the suffering of her child and herself, but told of her worry that her husband would not be able to bear it much longer. How can we as a society turn to a mother like that and tell her that there is nothing to be done? How can we say to the mother of another child I met recently — the mother of a quadriplegic, brain-damaged, doubly incontinent child with acute stomach ulcers — that we are working on a seven-year plan to address her problems? That is what the Government have been offering.

One of the great clichès of Government in the last few years — first introduced, I have to say, by Fine Gael — is that we cannot solve problems by “throwing money at them.” The Minister repeated that clichè half a dozen times here this morning. Of course, nobody can ever challenge a clichè of that sort. But I say, why not? When are we going to recognise that the right of people with a mental handicap, and their families, to live full lives as equal citizens of Ireland can only be met if the community applies resources to the task. The greatest irony of all is that our community is ready, and willing, to deal with the issue of the rights of people with a mental handicap. If the Minister does not believe he has to mandate to put money into this area, he is fooling himself, and us, again.

The creative accounting he has done to create some “funny money” in this area is one of the most meaningless aspects of this budget. A sum of £8 million pounds has been provided for a range of community services, all of which are in urgent need, £1 million of that for the area in the most desperate need. Only 10 per cent of the total is extra money. Half of the total must come from the national lottery, thereby depriving other areas of resources, and the remaining 40 per cent must come from other cutbacks in the health areas, cutbacks the Minister conveniently forgot to mention in the course of his address here today.

Before concluding, I want to refer to one piece of good news for some people in the Estimates and the budget.

[1898]Acting Chairman (Mr. M. Barret): Information on Michael Barrett  Zoom on Michael Barrett  The Deputy has two minutes left.

Mr. Spring: Information on Dick Spring  Zoom on Dick Spring  One group of hard-pressed and deserving citizens at least are going to do well out of public expenditure next year. I refer to that unfortunate group known as “consultants”— and I am not referring now to medical consultants, but to the rather more amorphous group of people who offer expert advice on every subject under the sun to Government who already employ highly-paid expertise of their own.

There are times, I readily admit, when independent advice is necessary for the proper conduct of the decision-making process in Government. I think many members of this House would be surprised to realise the extent to which this has become a growth area. In the current Book of Estimates, for example, no less than £15.5 million is set aside to provide consultancy services to the Government. In a year in which we cannot afford more than £1 million for services for people with a mental handicap, this figure deserves close scrutiny.

There is another, more disturbing, aspect to this money as well. There are increasing signs that the money available for consultancy services is being increasingly concentrated in the hands of a few individuals — and indeed that is becoming a form of political patronage, increasingly open to abuse. In the case of one company in particular — NCB — there are serious questions to be answered.

The allocation for the Department of Tourism and Transport under the heading of consultancy services this year will be £360,000. In 1987, it was £315,000. In that year, NCB was engaged to advise the Department on the strategic options in relation to Aer Lingus. No report was ever published and no fee was disclosed.

The allocation for the Department of Energy this year is £216,000. Between 1988 and 1989 the amount allocated was about £640,000.

Acting Chairman:  I will have to ask the Deputy to conclude.

[1899]Mr. Spring: Information on Dick Spring  Zoom on Dick Spring  I will conclude in about 30 seconds. The vast bulk of that was paid to NCB for a report in relation to Tara Mines — again, a report that was never published.

NCB, in association with Goodman Sachs, advised the Government on the restructuring of Irish Life — and has now been appointed by the Government as adviser in relation to the sale of their holding in Irish Life. No fee has ever been disclosed, but the amount allocated to the Minister for Finance to hire companies like NCB is now in excess of £10 million. I understand that NCB, for additional fees, have advised the Department of Finance on the transfer of various holdings within the Department.

In addition, the principals involved in this company are either a member or, in one case, chairman, of some of the most prestigious State bodies — Aer Rianta, Bord Gáis and the Custom House Docks Development Authority. Finally, I understand that NCB will shortly be appointed as brokers to the Irish Sugar Company. I am not alleging any wrongdoing here but what I am saying is that in the first place, it appears that a very large amount of money is being made available and is being concentrated in the hands of a small number of influential and wealthy individuals. This is happening at a time when the resources for other essential areas are being squeezed and, more to the point, it is happening without any accountability. The money involved in these contracts is too great to allow that lack of any accountability to continue any longer.

In conclusion, we are now engaged in a meaningless debate about a meaningless budget. The time of this House will be taken up for weeks on a debate which will serve little useful purpose. I strongly suggest that we should now agree to confine this budget to the dust bin in which it belongs by winding up this debate, at the earliest opportunity and beginning again to address the serious economic and social problems facing this country and which were not addressed in last week's budget.

[1900]Mr. Jacob: Information on Joe Jacob  Zoom on Joe Jacob  Deputy Spring wants the budget debate to be wound up now that he has had his say. That is very commendable.

In the normal course of events the Government must, in preparing the budget take into consideration all aspects of the domestic, social and economic situation while at the same time bearing in mind those external elements which may influence the destiny of our country and people. These external elements have taken on a totally new dimension this year. As a small country Ireland is immediately vulnerable to influences outside our control. Therefore, major global events must be uppermost in the minds of those responsible for planning our social and economic future. While the Gulf War is not the only factor about which the Government must be mindful it is, of course, the major one and potentially the most dangerous one. A large part of the world is at war. Our partners in the United Nations are at war and those countries which constitute our major markets are at war. It is in that context that the Minister for Finance and the Government had to consider the contents of the budget.

The recently negotiated Programme for Economic and Social Progress has rightly been a major influence on the budget. Its forerunner, the Programme for National Recovery, was hugely successful in spite of the criticism of it, which I vividly remember, by those on the opposite side of the House and those in other fora when the programme was put together some three years ago. Thankfully and happily the prophets of doom have been proven very wrong. I have every confidence that the Government will be successful in achieving the targets set out in the new programme, which hopefully will be ratified shortly. The most important and meritorious target in the programme is the creation of 80,000 jobs. Even though our major macro-economic efforts have proven so successful and are working extremely well, it is regrettable that more jobs have not been created. This is very distressing. Therefore, I wish the Government well [1901] in achieving the job creation target set out in the programme.

The programme is dependent on an ambitious level of growth in the economy. I agree with being ambitious in this regard. We must approach the future ambitiously and with a positive attitude. We must never again go down the road of borrowing. We have learnt to our great cost that this is the road to ruin. Debt means slavery and is a millstone around the necks of our people and will continue to be a millstone around the necks of their children and their children's children. Therefore, I was greatly encouraged by the Taoiseach's statement when he presented the Programme for Economic and Social Progress that there would be no question of ever again allowing public spending to increase as a percentage of GNP.

Economic growth since 1987, when Fianna Fáil came into office, has been excellent, averaging 4 per cent over the period 1987-90. This reflects the economic management expertise of the Taoiseach and his Government. Lossmaking, tired and worn out institutions were cast aside. The innovative and realistic approach adopted by the Government has paid good dividends. Inflation at 2.7 per cent at year's end reflects a performance which is superior to that of the major economic forces in Europe. For example, the inflation rate in France was 3 per cent while that in Germany was 3.1 per cent. Our performance in this area has been magnificent.

The budget emphasises the importance Fianna Fáil have traditionally afforded to the care of the old, unemployed and needy in general. General increases of 4 per cent in weekly rates keeps recipients ahead of inflation. Increases of up to 11 per cent have been provided for people on the lowest rates. Among the improvements in the social welfare area with which I am most enamoured are those relating to the family income supplement and the carer's allowance. The increase in the rate of the carer's allowance to £50 and its extension to incorporate the recipients of DPMA represents a major improvement. I am glad the scheme is [1902] being extended to include the recipients of DPMA as this was one of the main reasons why applicants could not qualify for the carer's allowance. In fact, 27 per cent of the applicants who were not eligible for the carer's allowance were recipients of DPMA.

Deputy Spring spoke in a rather derogatory way about the treatment of children in the budget. All I can say to him is that he must not have examined the budget carefully. There has been a major emphasis on children in the budget. If the Deputy takes the various improvements into consideration he will see, by doing a simple sum, that £40 million has been provided for children.

I compliment the Minister for Social Welfare, Deputy Woods, on his continuing efforts to streamline the entire social welfare system. When the Minister took office four years ago the social welfare system was like a maze and there was extreme confusion. The Minister has ironed out the anomalies in the system and streamlined it. For instance, when he took office four years ago there were 36 different rates in the child income support system but now there are only three rates. He has kept up with the times and simplified the system so that the people who need to be looked after have been provided for.

Agriculture is going through a particularly difficult time at present. The value of gross agricultural output is around £5.5 billion or about one-third of our total manufacturing output. Employment in the food processing sector represents nearly 25 per cent of all those employed in manufacturing industry. That puts into perspective the absolute importance of agriculture to this country and the vital necessity not only to preserve but to improve the industry. The uncertainty generated by the ongoing GATT negotiations and by the impending changes in the Common Agricultural Policy has given rise to very low morale in all sectors of the industry.

I listened attentively to Commissioner Ray MacSharry on the radio last Sunday. He said in the context of the proposed changes in the Common Agricultural [1903] Policy that Ireland can emerge a net gainer. I have every confidence in Commissioner MacSharry and our able Minister for Agriculture and Food, Deputy Michael O'Kennedy and I believe they will continue to use their considerable expertise to uphold the interests of Irish farmers, Irish agriculture and our food industry in general. I have a particular interest in striving to ensure that the lot of young farmers is improved and that all possible assistance is put in place to give them every motivation.

In this context I welcome the improvements outlined in the budget concerning the capital acquisitions tax and the installation aid scheme. However, I would urge the Minister for Agriculture and Food and the Minister for Finance to continue to monitor and seek to improve all relevant mechanisms and avenues so that our young farmers in particular have the proper motivation and incentive. Such action has never been more important than it is at present.

I am disappointed that the submission on the extension and reclassification of the disadvantaged areas which was sent to Brussels has not yet been returned and finalised. While I understand that my constituency of County Wicklow will fare very well from this review, I emphasise to the Minister that there is great anxiety about the delay involved. I am heartened, however, by the fact that the improvements in the disadvantaged areas situation will be retrospective to 1 January 1991. It is also of the utmost importance that the appeals mechanism be secured as an integral part of the new situation and that the retrospection factor also applies to successful appeals.

We have set a target of doubling tourism in this country over a five-year period and great progress has been made to date in achieving that target. It is regrettable, however, that while Structural Funds are available for tourism-related projects — and this is very welcome — the fund does not provide marketing support. Ultimately, it is on its marketing that the success of the industry depends. In this [1904] context I welcome the provision in the budget to allocate £1 million to Bord Fáilte for the express purpose of marketing and promotion. Because of the Gulf War our North American tourist market will most probably be affected this year. We must, therefore, look to the UK and to Europe.

This may be a blessing in disguise as it is my firm conviction that the British and continental tourist can be substantially more lucrative than his North American counterpart. It is vital, however, that we substantially increase these markets. Revenue from overseas tourism is estimated at £1.14 billion for 1990. The Government target is to double tourism by 1993. If that target is achieved, overseas tourism will be worth some £1.5 billion by 1993. The outlook for tourism in Ireland is very bright and the industry can continue to improve right into the next century.

Excellent work is being done by the catering training agency, CERT, in preparing young people in the most professional way for this industry. Graduates of all types coming out of CERT training course are having no difficulty in finding employment. Indeed these skilled, highly-trained young people will be the lifeblood of the industry in the future. However, it was interesting to hear the clear warning recently issued by the chairman of CERT, Mr. Jim Nugent, in relation to the pay and conditions of employment being afforded to the graduates of his training agency. This warning should be carefully heeded. The incentives of decent pay and conditions must be there for these people who are vital to the future of tourism. They must be allowed to share in the benefits of growth in the industry.

In my own constituency of Wicklow great efforts are being made in the promotion of tourism. We have in recent years realised the value of the God-given natural beauty of our county which is deservedly called the Garden of Ireland. In this year of 1991 we will be acknowledging the centenary of the death of Charles Stuart Parnell whose ancestral [1905] home is in the magnificent Avondale Estate adjacent to my own home town of Rathdrum. Many events, cultural, sporting etc, are planned to mark this centenary year. We in Wicklow feel that this is of national and indeed international significance and consequently it is hoped to attract many tourists to our county and to our country. It is further hoped that sufficient interest will be generated this year to ensure that Irish and Wicklow tourism will benefit in the years ahead.

In Wicklow while there are some excellent hotels, these are too few and too limited to cope with the escalation in tourism business that lies ahead. However, there are some excellent people who are in the very throes of improving this situation. A number of hoteliers have incurred considerable expenditure in planning and are preparing to effect major improvements to their establishments, thereby providing improved facilities for our tourists and increased employment for our people. These plans have been delivered a severe blow with the announcement in this budget of changes in the business expansion scheme. I can fully appreciate the need for making such changes. The ordinary taxpayer, the PAYE taxpayer, should certainly not have to contribute to large public companies. I know that is not the intention of the Minister in making these changes. However, in legislating to exclude parties who do not deserve to qualify, sometimes the genuine people are precluded also, and that is what has happened in this case. I would appeal to the Minister that provision be made to ensure that meritorious projects such as those I have mentioned, which are up and running and on which substantial amounts have been spent, are facilitated. I have instances of three such hotels in Wicklow, about which representations have been made to me, the Glenview Hotel, Tinakilly House Hotel in Rathnew and the Grand Hotel in Wicklow. These are meritorious projects of the type of which I have been speaking. I have passed very comprehensive details [1906] of these projects to the Minister for Finance, and again I appeal to him to examine the matter very carefully with a view to these people being accommodated.

I would like to address the matter of our need to provide infrastructural developments in order that we as a small country on the periphery of Europe are adequately geared to meet the challenges of the Single Market. Modern sea port facilities are essential as are first class road systems. I am satisfied that major investment is going into the primary road network and that the Government fully realise the importance of this. However, only a handful of ports — the major ones — are being treated with the same level of urgency. Irish ports particularly on the east coast require substantial assistance to ready themselves to provide the facilities necessary to support industry. These ports have declined as traditional export industries declined and, apart from one or two major ports, have not regained the state of development compatible with the new requirements of the Community market.

I am particularly heartened by the efforts of the various port authorities and local effort to revitalise these ports. I would compliment the ports of Arklow and Wicklow in particular. Their gallant efforts mirror those of similar ports around the country. However, a port such as Arklow or Wicklow, in the aftermath of a recessionary period, cannot possibly maintain its standards much less effect improvement without substantial financial assistance.

I am convinced that our peripheral location in which we are unique, now that the Channel Tunnel has joined the UK with mainland Europe, entitles us to special treatment by the European Community to enable us to reach the competitive standards that are required. I would ask the Minister for the Marine to consider this matter. In so doing I would like to thank that Minister most sincerely for coming to Arklow last year when we experienced major difficulties after the storm. He examined the harbour there and saw what was needed. At the same time he examined the position with [1907] regard to the north beach at Arklow where £8 million worth of private dwelling and commercial property was at risk. The Minister was good enough to provide almost £1 million to address that problem and work has now been carried out in that area. That is a credit to the Minister and I thank him most sincerely for it.

I would like briefly to address the question of law and order. While crime seems to be under control in the cities it has extended to rural Ireland where the problem has escalated. In my constituency of Wicklow I receive constant complaints in this regard. I realise the Minister has done good work up to now in reducing the levels of crime and I would ask him to continue to monitor the situation. I have received complaints about the western area of my county, the Baltinglass area, the Blessington area which is on the periphery of Dublin and my own area of Rathdrum where a major crime was committed last year with the killing of a clergyman. Such crimes should not be allowed continue. We must tackle the problem. I thank the Minister for the measures he has implemented thus far and I would ask him to continue to monitor the position with a view to further reducing the levels of crime. The measures he has taken include recruiting an extra 1,000 gardaí over a three year period. I would ask him to ensure that a fair share of those resources are directed at counties such as Wicklow which have particular difficulties in view of their close proximity to the city of Dublin.

I want to say a brief word about forestry and to compliment the Minister sitting in front of me for overseeing the setting up of Coillte Teoranta. I repeatedly asked the Minister of State, Deputy Smith, when he had responsibility for that area — and I ask the Minister who now has responsibility — to bear in mind the importance of looking after the small timber men. I spoke about this in the House and other fora and they must not be forgotten.

Decentralisation of Government Departments is proceeding well. As I said before, we do not have to be 100 or 200 [1908] miles from Dublin to decentralise. We are not 100 miles from Dublin but, when Coillte Teoranta decide to decentralise, we should like to welcome them to Wicklow to set up their offices within the premier forestry county.

Acting Chairman:  You must conclude now, Deputy.

Mr. Jacob: Information on Joe Jacob  Zoom on Joe Jacob  I compliment the Minister on the budget and the performance of the Taoiseach and the Government on their truly magnificent job of national economic management over the last four years.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  That was the most animated travelogue of County Wicklow I ever heard. However, Declan Roche, the manager of the Grand Hotel, will be a bit miffed as Deputy Roche mentioned him by name and Deputy Jacob did not. He merely mentioned the hotel.

As regards the disadvantaged areas scheme, I thought I had put all County Wicklow into it in 1985 but I must have omitted little bits and pieces.

Mr. Smith: Information on Michael Smith  Zoom on Michael Smith  The Deputy did a good job in Waterford.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  Yes, it is underprivileged and needed assistance. With regard to the disadvantaged areas scheme, there is some disturbing news emanating this afternoon from Brussels about the Commission's approach to the scheme put forward by the Minister for Agriculture and Food. I hope it will not cause any problems and will not reduce the area of land which will, ultimately, be accepted by the Commission. I am sure we will learn more about that over the next couple of days. I was one of the advocates over the years, since my last submission in February 1987, that all Ireland should be classified as disadvantaged.

One of the reasons for this, as mentioned by Deputy Jacob, is that we are the only island nation in the EC and we suffer a distinct disadvantage nationally because of our isolation, additional transport costs and our distance from the [1909] marketplace. We have a case for requesting that the whole island be declared disadvantaged, seriously or moderately.

Another matter referred to by Deputy Jacob is an outside influence which could affect us internally to a considerable degree, the tourist industry. We are dependent on people coming from abroad to visit Ireland on holidays or on business. The budget calculations could well be upset if there is another international crisis — as is the case in the Gulf at the moment — continuing throughout 1991. The war may be concluded within a matter of weeks or months but the repercussions of events in the Middle East may linger for not just months but years. They could have a most depressing effect — as they are having immediately — on our tourist trade. All we need is another couple of Lockerbies or similar air disasters to make us very isolated. Our calculations for revenue coming in would be seriously distorted.

I wish to refer to another element, external and internal, the evolving situation in agriculture. We depend primarily for our income from agriculture on the European Community and in the last few weeks the most frightening proposals have come from the EC Commission which, if implemented in full or in part, will damage our economy out of all proportion. I am amazed that the reception in this country for those proposals has been so muted. If those proposals had been put forward by a Commissioner who had previously belonged to the Fine Gael Party, if they had been received by a Minister for Agriculture from the Fine Gael Party or, if a Fine Gael Government were in power, we would either have been lynched or run out of the country. Instead of a national outcry from all sectors there is a kind of half welcome for the proposals in certain quarters. Certainly we do not have the kind of resistance or criticisms which the proposals should have received. It is astonishing that people can be cowed into so little — or no — reaction. “Cowed” is the word to use. I find it difficult to believe that we are now witnessing the dismantling of the Common Agricultural Policy before our [1910] very eyes, brought about by our Commissioner in Europe, without a whimper from the Government. It is quite unbelieveable, but true. However, I will not let it happen without expressing my disapproval and my total resistance — and that of my party — to these pretty awful proposals.

Remember that this country depends on agriculture for 10 per cent of its gross national product, way in excess of any other industry. This country also depends for its employment content to the extent of 20 per cent of the total labour force employed or working in the agricultural sector or in allied industries. As I said, the proposals from Brussels, if implemented in full or in part, will seriously damage the economy of the State. This timid approach cannot be allowed to continue. We must put up a fight.

When I was Minister for Agriculture and represented this country in Europe for four years, I was constantly goaded and harassed and told that if anything affected the interests of Irish farmers or the economy I should not hesitate to use the veto.

Acting Chairman:  I wish to remind you, Deputy, that you have strayed from the budget as you are now talking about agricultural policy.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  The Common Agricultural Policy is an integral part of the budget and there is a specific reference in the Minister's speech to the EC budget.

Acting Chairman:  The Deputy must confine his remarks to taxation, expenditure and financial policy and other matters only in so far as they are connected with financial policy. That does not include agricultural policy.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  Of course it does. In our financial policy we pay approximately, according to the Minister's statement, £29 million per annum.

Acting Chairman:  I do not mind the Deputy making a passing reference to it [1911] but I cannot allow him to continue to debate agricultural policy.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  According to the Budget Statement delivered last week we pay £29 million per annum to the European Community as a direct contribution and receive in return several thousand million pounds.

Acting Chairman:  I cannot allow the Deputy to continue to debate agricultural policy which is a matter for another day.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  Why? I must object as agriculture is one facet of the budget. How can we talk about a budget without referring to each item in it?

Acting Chairman:  I have allowed the Deputy to make a passing reference but he has gone on to debate agricultural policy. I cannot allow such a debate.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  I was making the point that our agricultural industry, which is central to the economy and the budget, is endangered by decisions being taken in Brussels. What this House should be most concerned about is that these decisions contravene our vital national interests. If we, as Members of this House, cannot advocate the defence of our vital national interests we should not be Members of this House and what we will end up with is a dictatorship. We must resist anything which will damage our vital national interests and must use the veto to protect ourselves from irreparable damage.

If such damage occurs we will discuss a different kind of budget next year. We joined the European Community in the belief that we would gain considerably from our agricultural activities and in the knowledge that we would lose a sizeable number of jobs in traditional industries such as textiles, clothing and footwear and in not so traditional industries such as car assembly. We joined with our eyes open but now the very reason we joined, to benefit from the Common Agricultural Policy, the benefits of which would accrue to agriculture and associated [1912] industries, is being undermined. I defy anyone on this island to tell me to stop speaking about the imminent danger.

If the price structures of commodities such as beef, milk, cereals and sheep are undermined then our economy will be grievously undermined. We must see to it that those price structures are protected. However, it is being advocated in Brussels at present that the supporters for those typically Irish products, which account for over 90 per cent of our agricultural production, be eroded. I should point out that last year, when the proposals made were quite modest, the agricultural sector suffered a drop in income of 16 per cent. However, this year the proposals are far more severe. Not alone do we have the Commissioner's severe proposals but also those deriving from the GATT negotiations. We can be sure that as a result of the two the agricultural sector will suffer a considerable drop in income. This may be of the order of 16 per cent or 26 per cent, yet people are being told not to talk about it, that it is not to be discussed, that we are to take it lying down. Others may be prepared to do that but I am not. I want to see some action, some resistance, public debate and the nation getting up to say we are not prepared to accept proposals which will damage our economy and we want to protect our vital national interests. We do not have the industrial riches that the Germans, the French and the British have.

This is the only country in northern Europe which has a high component of its gross national product tied up in agriculture. The Greeks and the Portuguese do not mind if the proposals from Brussels are severe so far as our products are concerned because there are no severe proposals to reduce the price of wine, olive oil, fruit and vegetables. They are laughing up their sleeves because the proposals are aimed specifically at us. Farming is the backbone of our society and it is our job to defend that structure. I am sure the Minister of State, Deputy Smith, will give me his full support on this seeing that he is a member of the [1913] farming community. We must resist draconian proposals if they are going to affect our people, economy and country. Tens of thousands of jobs are at stake.

Let us do a simple equation and take the figure for the number of people at work as being in the region of one million people and take 20 per cent of those as being employed in agriculture and ancillary industries——

Acting Chairman:  As the Deputy has only a few minutes left, I would ask him to deal with the budget. We are debating taxation, expenditure and financial policy. If the Deputy wishes to debate agriculture he will have an opportunity to do so on Committee Stage of the Finance Bill.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  I am confining my remarks to the economy.

Acting Chairman:  I am sorry, but the Deputy has strayed from it.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  The budget did not address the problem we are confronting and only fiddled with the agricultural industry.

Acting Chairman:  The Deputy has only two minutes left and I would be greateful if he confined his remarks to the budget.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  The budget tinkered with the problems confronting the agricultural industry. The amount of money allocated to agriculture in the budget is minute compared with the amount of money that comes to our economy through agriculture from the European Community which is enormous. We cannot discuss one budget in isolation as, the national and EC budgets are enmeshed, as was quite clearly stated in the Budget Statement. It seems that we are trying to evade the central issue which is the potential damage to the economy. It was most disturbing to read in yesterday's newspapers that following the meeting of the Council of Agriculture Ministers on Monday the Minister, Deputy O'Kennedy, stated that he was uncommitted in [1914] so far as the Agriculture Commissioner's proposals are concerned. I have never come across such disloyalty on the part of any Minister in my years as a Member of this House. We must be committed——

Acting Chairman:  The Deputy's time has expired.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  ——and limit the amount of damage. We want a damage-limitation exercise on these proposals.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  First, I congratulate Deputy Deasy on his recent appointment as spokesman on agriculture for the Fine Gael Party. I would like to congratulate him also, before he goes, on the stance he adopted on the Larry Goodman affair. Larry Goodman is a county man of mine and I must say Deputy Deasy adopted an attitude which was very reasonable in all the circumstances. I compliment him on that.

I listened to Deputy Spring's contribution and I think he found it very difficult to hide his disappointment that the Programme for Economic and Social Progress had been put together quite recently. He mentioned that the unions had been dormant in regard to this budget and he referred to it as a holding budget. I make no apologies for the fact that this budget is a holding budget. It is a holding budget because the ground was laid since 1987 to put the economy back in order. The Programme for Economic and Social Progress was an amazing achievement in that it agreed a ten year programme in a very short time. The Irish Congress of Trade Unions proposed that the Government enter into an agreement, or a set of agreements, over a ten year period and the Government freely accepted. That put paid to many of the arguments the Labour Party and The Workers' Party could dictate to the people outside this Chamber over the next few years, and is one very important element of future stability for the economy.

Deputy Spring said that while he had no truck with consultants and particular bodies, consultants are not the problem [1915] in the health area. If there is any problem in the health area, consultants are a major part of that problem. The consultants have allegedly asked for £100,000 salary each. No one, particularly Deputy Spring if he espouses socialist principles, could stand for such a salary given the salaries paid elsewhere. If you go to a consultant the first question he asks is whether you are a member of the VHI.

This budget is a continuation of what is set down in the Programme for National Recovery which came to an end quite recently. Since 1987 we have had economic growth of about 4 per cent. Compare that with the early eighties when there was absolutely no growth in the economy. We had a 10 per cent increase in investment in the last few years, while in the early eighties we had no increase in investment; in fact, this was not the country in the EC to invest money at all. Since 1987 we have had a huge balance of trade because of the sound financial state of our economy over the last couple of years. The EMS has stabilised because we have aligned the IR£ with the German mark, and the fact that we have a stable IR£ has been of benefit to the area Deputy McGahon and I come from. We have the lowest inflation in the EC; in the early eighties we had the highest inflation rate.

The people on the far side cannot accuse us of making a mess of the economy. Their contributions so far in this debate have shown that they want to talk about everything but the budget — Deputy Deasy is a classic case in point. They want to digress. We saw that when we were debating the reduction in the higher VAT rate. The Deputies on the far side of the House were particularly eloquent about the slight increase in the lower rate of VAT which applies to far fewer goods and services than the higher rate of 23 per cent, which is now down to 21 per cent.

We have an unprecedented level of peace in the workplace. We have had very few strikes in the last couple of years. Compare that with the years of the [1916] Fine Gael-Labour Coalition when there were strikes every day. Our Exchequer borrowing was very high, now it is the lowest for 40 years. Compare that with the dark years of the early and middle eighties. Our foreign debt has been reduced as has our foreign borrowing.

Since 1987 employment has risen by about 40,000. Compare that with 1982-86 when 50,000 people fell unemployed, and there was a reduction in employment; between 1988 and 1989 redundancies fell by about 13,000 compared with 30,000 in 1983-84; and emigration has fallen yet again. Some may say that is because opportunities in England and America are fewer than they were, but the younger people are staying here because there are more job opportunities for them.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  Not in our county.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I am pleased with this budget first which initiates the implemention of the Programme for Economic and Social Progress. It also targets the lower paid and less well off. Despite what certain people outside this House would say, it continues to reform the taxation system and, of course, in the budget there is extra spending for health, education and housing.

As I said, the Programme for Economic and Social Progress is a ten year programme. The fact that it has been put to bed so easily by the social partners and the Government shows the level of commitment of employers, unions and the Government to ensure we have stability on the financial and industrial scene, over the next few years. It goes without saying that the Programme for National Recovery which came to an end recently increased our competitiveness in the foreign markets, and that, ultimately will lead to more job opportunities on this island.

In the last number of years social welfare benefits have increased well ahead of inflation. The general 4 per cent increase in social welfare given in this budget — and in some areas an 11 per cent increase in the very low paid social [1917] welfare areas — brings us in line with the recommendations of the Commission on Social Welfare. We have tried over a number of years to achieve the level suggested in the Commission on Social Welfare.

The family income supplement started in a very small way. That is being developed and increased in this budget and shows the commitment of the Minister for Social Welfare and the Cabinet to home in on the less well off who are taking home a low wage. The fact that the FIS leaflet will be issued with the tax free allowance certificate to every earner is good because it will alert more people who are low paid to the fact that the FIS is there and they can take it up.

Child benefit has been increased and this is targeted particularly at larger families. The carer's allowance which was initiated last year has been a very good scheme. While I accept there may be teething problems, it is a very good scheme that Deputies on both sides of the House asked for. I have no doubt but that, as the years progress, that scheme will be of much greater benefit and will be extended, as it has been in this budget.

Most Members will be aware of the problems of mixed insurance. A number of people have approached me who were becoming ineligible for social insurance because they were involved in this mixed insurance cover. I note that the Minister for Finance has given a commitment that the Minister for Social Welfare will be introducing legislation in this respect — on which I compliment him and the Government. The fact that social insurance hence forth will be applicable to part-time workers is to be applauded. If ever there was a party who were good to workers I have to say it has been the Fianna Fáil Party. We are introducing progressive legislation in this area ahead of a number of our counterparts on the European Continent. I refer to the legislation dealing with part-time workers introduced by the Minister for Labour. In his Budget Statement the Minister for Finance indicated that his colleague, the [1918] Minister for Social Welfare, will be introducing social insurance for these part-time workers so that henceforth they will receive all the benefits full-time workers have enjoyed to date.

Taxation has been reformed in a big way. We began in 1987 with the tax amnesty which was an unmitigated success. Since then self-assessment has been introduced which has been extended under the provisions of this budget. It is a wonderful system which means that more people avail of self-assessment because they want to do so. Indeed, it is a system which lends itself to much less abuse. Perhaps Deputy McGahon might think of self-assessment on the betting side.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  I am not in the legal area.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  He was caught out before.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  Deputy McCreevy led me into it.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The Minister has continued to reduce the top and standard rates of income tax and has widened the tax base. Therefore, to maintain that the taxation scene has not been reformed is not true. The Government must be given credit for reducing the income tax bands in recent years.

In this budget the Minister has also extended the self-assessment procedure to capital gains tax. I do agree with previous speakers that there is a way in which more money could be obtained by way of capital taxation if only we examined the possibilities more thoroughly. The Minister said it was intended to introduce an amnesty with regard to capital acquisitions tax on which I compliment him. I do not know whether his officials have examined the possibility of allowing people avail of the amnesty in that area. Something that has not been noticed by many people in this budget is the fact that the Minister abolished the two top rates of capital acquisitions tax, leaving the top [1919] rate at 40 per cent, constituting a realistic approach to inheritance and gift tax.

In his Budget Statement the Minister referred to 1992, the various problems that the Single Market will entail for this country but also the opportunities it will present. He mentioned that there were left 700 days between now and 1 January 1993. Deputy McGahon and I are aware of the problems that will be encountered by the Customs and Excise officials and Customs clearance agents on the implementation of that Single Market in 1993. Thereafter there will be no need for a Customs post in and around the town of Dundalk or on the Border. This means that the people who now work, as State employees, as Customs and Excise officials, will have to be redeployed, either by accepting redundancy or in a decentralised office which had been proposed but has taken some time to come to Dundalk.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  The Deputy should leave that one to me.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  As the Deputy knows only too well, his Government cast aside the decentralisation programme in 1982. Had that programme been implemented at that time we would have had that office in Dundalk long ago. Unfortunately Customs clearance agents are not in as advantageous a position as Customs and Excise officials, State employees, who will have an opportunity of redeployment, redundancies or whatever. Customs clearance agents are private employees. When the Border restrictions no longer apply those Customs clearance agents will become redundant. We should remember that Customs clearance is one of the larger employers in the Border area in and around Dundalk.

With regard to health I was pleased to note that the Programme for Economic and Social Progress has stipulated a seven year programme, and allocated a sum of £8 million for community care in this budget. Much more money needs to be allocated for that purpose. The Government's priority is right in allocating [1920] money to that area because not sufficient has been done for our elderly, mentally handicapped or physically handicapped.

The elimination of category II to hospital entitlement will be accepted by most people as being a good decision. The scaremongering engaged in, particularly on the part of hospital consultants — that it will create an enormous strain on our hospitals — is a falsity. The Minister has said that private patients requiring non-emergency operations will have to occupy private or semi-private beds in hospitals and not use public hospital beds. That is something we would all wish to see happen.

We have encountered enormous problems on the education scene over the years so that the commitment in the Programme for Economic and Social Progress and begun under the provisions of this budget is to be welcomed.

The business expansion scheme has been of particular interest to me because, as Deputy McGahon will know, the Cooley alcohol factory in County Louth has been reopened with 70 employees, people who would otherwise not have had jobs. By and large it was reopened by moneys made available under the provisions of the business expansion scheme. People had been contending that the business expansion scheme was a bad one, but that is one example of a factory that is up and running as a consequence of its provisions, something that should be encouraged.

With regard to the contention that the provisions of the business expansion scheme should be abolished with regard to hotels, I accept what the Minister has done and what a number of speakers have said here earlier. The Minister might limit the provisions of that scheme with regard to hotels. He might re-examine its provisions and reintroduce them in areas not of major tourist potential. There are areas with hotels that do not warrant the provisions of the business expansion scheme whereas along the Border and other areas outside Dublin, in the southwest, additional help is needed and the provisions of that scheme might be of some benefit to them.

[1921] I was disappointed that the Minister imposed another 10p on the price of a packet of 20 cigarettes. The Carrols cigarette factory is one of the major employers in the town of Dundalk. This latest increase has put the squeeze on them. There has been a take-over of that company and, hopefully, their future will be rosy. However, if this price trend continues budget after budget I am not too sure that that will be a good thing for that company.

I must compliment Deputy McGahon on his role as spokesperson on Border areas. He has done a lot of shouting about Border areas in recent years. I listened to Deputy Dukes with interest debate the budget on the first day in regard to excise duties and so on, when he continued to comment on Border areas. I well recall Deputy Dukes, as Minister for Finance, coming and having a cup of tea in the Lisdoo Arms Hotel saying what he would do for Border areas. Yet he went off and forgot about them. The Deputy will have to acknowledge that.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  What about your own party?

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I would again say that the budget speech is peppered with references to Border areas, and it makes a lie of the statements made by Deputy McGahon that no Government considers the Border areas. All the Deputy has to do is look at the budget speech. It mentions the fact that the PAYE allowance has been given to cross-frontier workers — something for which I have lobbied over the last number of years.


Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  It also mentions the introduction of a new traveller's allowance, the introduction of a new 48 hour rule that will be of tremendous benefit to the Border areas.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  You must be joking.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Finally it has reduced [1922] VAT considerably on items which will stop the flow of traffic across the Border.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  Pigs might fly.

Mr. Finucane: Information on Michael Finucane  Zoom on Michael Finucane  In this budget we can see proof that the Government can no longer tackle the twin problems of unemployment and emigration. The latest unemployment figures show a dramatic increase with over 241,000 people on the live register. When one includes over 25,000 people who are training or who are on social employment schemes in order to keep them off the live register, the magnitude of the problem can be seen. The ongoing monthly increase in the numbers unemployed show the necessity for radical measures to tackle long term unemployment. Over 100,000 people have been out of work for a year. A Central Statistics Office analysis of these 100,000 show that 47,000 people were unemployed for more than three years, another 20,000 for one to two years and a further 33,000 for two to three years. Of the 100,000 about 75,000 are men. When one adds on dependants, about 150,000 people the total numbers affected by long term unemployment increase to about 250,000. The implications of this are frightening.

Unemployment impacts on the opportunities of children. In recognition of these children the social welfare increases in the budget are derisory. The highest rate of monthly child benefit applying only to the fourth child is a minor concession. The proposed social welfare allowances will help to feed the children, but other needs will be given through sacrifices by the parents and it is usually the mother who has to make those sacrifices. Some small initiatives announced in the recent budget will do nothing to redress the current situation and it is about time this problem was analysed on a more serious basis and remedial action taken.

In the Programme for Economic and Social Progress the Government have projected a yearly increase of 20,000 jobs. Of course, these job projections are based on gross numbers without an [1923] allowance for redundancies. Now, because of the faltering economies of both the USA and the UK many of our emigrants have returned home and are looking for jobs. I am sure all Deputies have had visits from these to their advice clinics. Indeed, the number of emigrants who stayed on at Christmas is symptomatic of that decline. Many of those returned emigrants are in the unskilled category and job opportunities for them are scarce.

It is time that we had innovative thinking on our industrial policy. That innovation is not to be seen in the latest budget where the job-creating bodies under the Minister for Industry and Commerce have experienced cuts. SFADCo experienced a cut of over £1 million, the IDA, £1.3 million and Science and Technology £1.65 million. Indeed, in my own area, the mid-west region where the Minister lives we had the ludicrous situation over a short time when the present Minister for Finance when he was in Industry and Commerce extended the remit for overseas marketing for industries to SFADCo. Subsequently the present Minister withdrew that responsibility and handed it back to the IDA. Now we have a fragmented approach in the area to overseas job creation with no proper functional regional office of the IDA.

The recent NESC report published in September last promoted the necessity for a change in strategy. There is no commitment for change by the Government if the recent programme and the budget is any indication.

In the area of taxation the Government are long in aspiration but lacking the commitment to taxation reform. We continue to tinker with the present system. The minimalist effects in the changes of the rates of tax will be quickly eroded by pay increases and many will lose out. Indeed, an overall analysis of the budget gives credence to the statement “What the Minister giveth the Minister taketh away”. The Minister has pulled a very slick one in abolishing the upper income limit of £16,700 where the health contribution of 1.25 per cent applies. This [1924] has been done, as he states, to provide funds for all free consultant treatment and free public beds in public hospitals. We all know that the present health boards cannot cope with their current demands due to severe financial constraints. Does the Minister think that members are going to desert the VHI to avail of a service which is already creaking at the seams? Already one third of current VHI subscribers, opt for private consultant care, even though they are eligible for free consultants. All that this change will mean for those over this salary level is increased deductions, and the present waiting list for the public hospitals will not be extended further, we hope.

I will refer also to the deposit interest retention tax introduced by the Fine Gael-Labour Government and which was, at the time vilified by the Fianna Fáil Party. In Government they have seen that the DIRT tax generates a lot of revenue. There is one area that causes concern to me and that is the DIRT tax as it applies to old age pensioners. We all know that it is possible to get a tax refund if one claims in the subsequent tax year but many pensioners are fearful of claiming the DIRT tax back because they are afraid it will interfere with their current pension allowances. This is brought to my attention by accountants and banking interests. In an effort to establish how many old age pensioners were eligible for this DIRT tax, and how many claimed it back, the Minister in a reply which I received today said it was not possible to quantify that. There must be a simpler mechanism of implementing this DIRT tax in relation to old age pensioners. In many cases old age pensioners pay accountants to attend to the paper work. There is a lot of finance in the Exchequer as a result of old age pensioners not retrieving this allowance. It is an area which the Government should address.

The present housing policy of the Government is disastrous due to the drastic cutback of finance. The waiting list for houses has increased to over 19,000 and therefore, more of our population have to rely on mortgages. It would have been [1925] a retrograde step to have reduced the mortgage interest relief further and I am glad the Minister did not do that. The Government have progressively reduced mortgage interest relief from 1987, from £4,000 to £3,200, a reduction of 25 per cent. Ten years ago that relief was at £4,800. This has been happening even though there has been an escalating cost in the prices of houses. Now that many people are taking our endowment mortgages which have a life assurance element, what do the Government do? They reduce from 50 per cent to 25 per cent the life assurance tax relief, thus penalising those families who have taken the initiative to house themselves. In so doing he could also penalise further the insurance industry which has a total employment content of over 9,000.

The Minister justifies the VAT changes by stating they were to bring us into line with our EC partners. Therefore, there is a reduction from 23 per cent to 21 per cent, which is to be welcomed. However, there is an increase from 10 per cent to 12.5 per cent on a wide range of goods. These increases will especially hit the old and the lower income groupings as items such as fuel for heating, light and power will be affected along with other items. When VAT is increased it reduces the purchasing power of households. It would be beneficial if the Government had indicated what VAT harmonisation target was their objective. The EC Commission, in their most recent document on the economic consequences of fiscal harmonisation in Europe, state that in principle there should operate only two rates, a standard rate between 14 per cent and 20 per cent and a reduced rate between 4 and 9 per cent. Therefore, the increase from 10 per cent to 12.5 per cent is surprising unless the Minister is striving for one rate only. It would have been helpful if the Minister had fully clarified his long term intentions. Because of the lack of policing to ensure previous VAT reductions were passed on, what safeguards does the Minister intend to introduce to ensure the latest [1926] VAT reductions are passed on to the consumer?

In order to help the lower paid the Minister has made minor adjustments. It is difficult and understandable that the motivation of those who are working in the low income group is often affected when they compare the social welfare entitlements of those who are unemployed. There is an urgent necessity for a detailed study of the linkage between social welfare concessions and taxation at work to ensure that those at work are adequately compensated for their endeavour and not caught in a poverty trap where fear of overtime may often be a deterrent to earning pay as they may lose out on their medical card and other concessions. There is no incentive for a person on social welfare to move into lower paid employment. There is an urgent necessity to integrate the tax and social welfare systems and to analyse the poverty traps.

The cruellest disappointment in this budget has been reserved for farmers. They are already frustrated due to what is happening with GATT and, more recently, the recommended draconian CAP proposals. President Bush would certainly say that Saddam Hussein is a tyrant and a bully boy. He is, of course, but the Americans have also used bully boy tactics in relation to the GATT talks. We should not accept this. In all areas outside agriculture they stand to benefit considerably.

When one considers these changes are being advocated by an Irish EC Commissioner and a former Minister for Agriculture, their annoyance is understandable. It is widely known that these changes will have a recessionary effect on the industry. The Government's aspirations on the importance of agriculture have a hollow ring. The minor change in the adjustment from 50 per cent to 55 per cent on agricultural relief in the capital acquisition tax was derisory as this is an area which has caused a lot of concern to young farmers. Now that farmers are paying tax in the current year there is justification for extending the [1927] PAYE-PRSI allowance to them, but this is still denied to them.

Another anomaly for farmers and other self employed occurred when PRSI was introduced. Those of them in the 56-65 age bracket on 6 April 1988 would not qualify for contributory pension as they could not adhere to the ten-year period. The injustice of this is that they will have to pay PRSI contributions to old age at 66. They will then qualify for a much lesser non-contributory pension but the sting is that this will be means tested. Surely an effective mechanism can be found to ensure these farmers and self employed are entitled to contributory pension.

The ongoing delay in the funding of the extension and reclassification of Ireland's disadvantaged areas is a scandal. The survey of the areas was started in January 1989 and now in February 1991 we are still awaiting EC approval. With a little more effort and understanding by the Government there is no reason farmers should not have received their headage payments during 1990. The ongoing delay is deplorable and one hopes the Minister will ensure an early finalisation of the submission.

The introduction of veterinary charges from zero to 12.5 per cent will increase the average farmer's expenses from £80 to £100. Instead of increasing the confidence of farmers by our Government being sympathetic to their plight, they have shown a complete lack of sensitivity to the farming crisis.

The Government since 1987 have made great play over the fall in Exchequer borrowing. It is worthwhile analysing this. The fall in Exchequer borrowing has been mainly achieved by public sector pay restraint, increased tax revenue and a slight decrease in unemployment during that period. This decrease in unemployment has been mainly achieved due to more people being on training and social employment schemes. About 8,000 people were put on pre-retirement pension to remove them from the live register.

Many special pay increases have been [1928] deferred. The folly of staying off the payment of these increases over the 1987-90 period has come to haunt the Government. Was it sensible in previous budgets not to have provided for this situation? I contend that it was not, as now these constitute increases which the public service are entitled to and they will have a new impact on the finances this year.

Independent economists feel this borrowing requirement will be considerably increased and the Minister in the budget would appear to have inflated some of the projected revenue returns for 1991. The Minister referred to the privatisation of Irish Life this year and stated that the sale proceeds will be used to reduce borrowing and thus help ease the burden of the national debt and of debt servicing costs. It is interesting that economists project he could possibly have an overrun of £200 million. Regarding the privatisation of Irish Life a figure of £60 million has been mentioned.

Surely it is apparent that in order to get to the successful conclusion of the Programme for Economic and Social Progress the Government were prepared to promise anything to the social partners. This budget has been framed within the parameters of this programme. Are the Government serious about the long term implementation of this programme? After all, enshrined in the agreement is the statement that implementation is, “subject to the overriding consideration that the final parameters continue to be observed”. It is difficult to see this being achieved as the budget is deceptive on analysis. It is framed to act as a small palliative to the Progressive Democrats, their partners in Government. Most of the measures within the budget had already been pre-announced so the people were conditioned to it. However, the Government have shown in the budget that they lack ideas and imagination and have displayed their inability to respond to the serious problems which confront us. They have failed especially to respond to unemployment and taxation reform and the many other important issues which needed to be addressed.

[1929]Mr. O'Donoghue: Information on John O'Donoghue  Zoom on John O'Donoghue  I listened with wry amusement to Deputy Michael Noonan, the spokesman on finance for the main Opposition party, when he spoke about old hangers. He referred to the Taoiseach sitting in an old banger with the windows closed while the Minister for Finance tinkered away with the engine. Of course, when one thinks about it, it is not very remarkable that Deputy Noonan should have spoken about old bangers because nobody should know more about old bangers than the same Deputy Noonan. He was the chief mechanic under the greatest old banger in the history of the State when it was driven by that daredevil himself, Deputy Garret FitzGerald. Well, that old banger blew up leaving a trail of destruction in its wake, but not before the petrol attendants, Deputy Spring and his colleagues had retired from the pit. Deputy Spring today, and of course Deputy De Rossa, would know that their old banger blew up somewhere in Eastern Europe in the middle of 1989 and they have been running around the country looking for used cars ever since.

A certain weekly radio programme has recently been entertaining us with light hearted impressions of a variety of public figures. It is a healthy thing, of course, to pause occasionally and laugh at ourselves, and even at our most sacred institutions. In our profession, politics, we are perhaps inclined to take ourselves a little too seriously at times. However, I am certain that the initiaters of the “Scrap Saturday” programme never visualised for a moment that one of their creations would actually become incarnate, but they reckoned without Deputy Michael Noonan, the Fine Gael spokesman on Finance. They should have left him alone because, lo and behold, with the sight of the television cameras he has become an outstanding comedian and is now coming to rival Bugs Bunny nationally. The programme makers have only to use the Deputy's scripts from his budget speech and his subsequent party political broadcasts as something not to be taken seriously and, accordingly, ideal for their next show.

[1930] Just in case somebody may not have a sense of humour I find it necessary to refer to some of the things that Deputy Noonan said when he had access to the nation via radio and TV. He referred to this year's borrowing requirement as if it were a brand new type of monster created for the first time by this Government. The effect of it, he said, would be to add £7,660 to the national debt for every child born in 1991, a nice birthday present, he observed. This was a shattering revelation indeed, calculated to strike terror into the heart of every couple expecting a happy event this year. Can you imagine the unfortunate people wringing their hands and exclaiming, “where are we going to get £7,660?” As a cheap political gimmick, this one certainly took the biscuit.

However, let us adopt this ridiculous criterion for a moment and ask, by the same token, what kind of birthday present the Fine Gael Party were offering just four years ago. You will recall that early that year, for a merciful short few weeks, we had the rare phenomenon of an undiluted Fine Gael Government, born when the Labour Party finally decided to desert the sinking ship or, as I said earlier, when the petrol attendants left the pit to leave the old banger to go on its own. After four years of their stewardship they presented what was to be the budget for 1987. Their opening borrowing requirement was no less than £2,028 million or, to use Deputy Noonan's type of reasoning, more than £33,700 for every child to be born in that year. If we were to continue with this ridiculous scenario, and there is no reason we should not, if only those parents had waited four more years, look at what they would have saved. Deputy Noonan's party political broadcast was tremendous radio comedy. He suggested that the only hope for Ireland was to put Fine Gael in the driving seat. Can anyone imagine a more horrific nightmare when one recalls the last time they occupied the position? They only had a provisional licence and it would appear that they are never likely to pass the driving test no matter how many licences they have.

[1931] After more than four years in power they had driven so far off the road that by the time the old banger blew up the front wheels were already over the precipice of bankruptcy and we were on the verge of putting ourselves at the mercy of the International Monetary Fund. So much for old hangers. They presented us with an opening budget deficit for that year of £1,294 million, or seven per cent of GNP and, as I have already said, an opening borrowing requirement of £2,028 million or 11.7 per cent of GNP.

When the Taoiseach, Deputy Charles Haughey took over the driving seat we were to witness what was, by any standards, a miracle of economic management. Presented as he was with the Fine Gael Estimates, the then Finance Minister, Deputy MacSharry, immediately set about tackling these appalling figures by cutting the deficit and borrowing requirement by close on £300 million. The lesson here is, of course, that it was extremely fortunate that the chief mechanic was changed.

After 12 months of prudent and courageous management the figures under these two headings came in £20 million and £70 million under target respectively. When the present Minister, Deputy Albert Reynolds took office, the astonishing recovery continued without pause, and we have now reached the stage where the current deficit has dropped from 7.4 per cent of GNP to one per cent and borrowing from 11.2 per cent to two per cent. This dramatic change in our fortunes has been brought about by a combination of factors. First we had a Government who had the courage to take a succession of sometimes unpopular decisions, in contrast to the Fine Gaelled Coalition who talked endlessly about courage and then acted spinelessly. Then we had the Programme for National Recovery in which the social partners, comprising many people of vision and patriotism became involved with the Government in democracy at what I would describe as its most effective. Finally, [1932] and most important, we had the recognition by the majority of our people that what we were doing was right, even though it demanded many sacrifices.

Coming up to the 1991 budget we read and listened to the gloomy forecasts from various commentators. They reckoned that the combined effects of the Gulf War, the new political situation in Germany, and the prospects of deepening recession in Britain and the United States would force the Minister to either make further draconian cuts in expenditure or resume borrowing on a massively increased scale, or even both. Let it be said that there were political parties in this country, major political parties, who were hoping that would occur. This, of course, has not been the case. The prudent and skilful management of our economy for the past four years has resulted in our being able to withstand these external pressures to a much greater degree than we would have visualised a few short years ago. Despite all the present difficulties the tax and social welfare elements of this budget are quite remarkable. In four years we have reduced the standard and higher income tax rates by 6 per cent as well as reducing the top rate of VAT by 4 per cent. In addition we have managed to maintain the practice of increasing social welfare payments at rates higher than inflation.

Despite all the posturing by Deputy Noonan and others on the Opposition benches the fact remains that these things have been done while at the same time reducing borrowing and current deficits on a massive scale. The recently negotiated Programme for Economic and Social Progress means that the climate for further development in all areas can be maintained. My own earnest hope — shared I am sure by every Member of the House — is that the most significant part of this progress will be the generation of much greater levels of employment. Many thousands more people are at work now than four years ago. However, I am convinced that the vast increase in company profits have not been matched by anything like a similar growth in jobs. [1933] This is something which has to be addressed. It is up to many employers to realise that in the long run a shorter dole queue will be to their advantage.

In general terms it was a budget that any Labour Minister in any part of Europe would be proud to present because it addressed the plight of those people most in need in Irish society. It is rather ironic then that the Labour Party and The Workers' Party saw fit to criticise virtually every element of it.

The fact that the social welfare increases are 4 per cent means that social welfare payments remain ahead of inflation. This in turn means that those at the bottom of the scale, those who are disadvantaged and those who are needy, are increasingly becoming better off under this Government. That is an excellent achievement against the backdrop of the desperate state of the national finances.

If I were to have a criticism, and of course I have some, it would be that I am very concerned about the situation facing non-contributory widow and widower pensioners. While the budget introduced provisions for tax relief for working widows and widowers it did not give a matching benefit to widows and widowers who are not in a position to work. While these people received an increase, there is very little doubt that the disparity between working widows and widowers and non-working widows and widowers has broadened and I think the question of widows and widowers with non-contributory pensions should be looked at again.

Let us be perfectly honest. We have a housing problem at present which has to be addressed in the context of the finances available. If I were to venture to make a suggestion on it within the constraints facing us it would be that of those on the public housing list there would be at least 20 per cent, if not 30 per cent, living in homes which could be made habitable. In particular, the homes of the elderly could be done up to advantage. I strongly urge that the housing list be looked at nationally with a view to ascertaining what percentage of those on the public [1934] housing list are living in accommodation that could be made habitable. It is possible without any doubt — and the assistant county manager in County Kerry confirmed this recently at a meeting — that a grant in the region of £10,000 for a house in such a category as I have mentioned would, in the long term, save the Exchequer further funding. The housing problem has to be addressed because it will not go away. In my opinion it has to be solved now.

I often wonder how bureaucrats in Brussels and officials in the Department of the Environment define “peripherality”. For example, would they consider that a person living on Valentia Island or the Great Blasket Islands is living in a peripheral region? Is it their view that to be living on the periphery one has to be living on the east coast? I ask this question because the programme on peripherality was published recently and, from reading that dramatic document, one could not but be led to believe that these people consider peripheral regions to be anywhere in this country which is not a peripheral region within the ordinary and accepted meaning of that term.

Out of the national primary roads fund, for example, contained in the Operational Programme on Peripherality, the princely sum of £5 million out of a total of several hundred million pounds was given to County Kerry for major road improvements, even though we have 64 miles of national primary route. Do the people in the Department of the Environment and the people in Brussels consider the Ring of Kerry to be a peripheral region? Clearly not; they think “peripherality” means that you are classified as peripheral provided you live within 50 or 60 miles of Dublin city. I would like to inform them from this House this evening that they have got their definitions wrong and I would strongly advise them to buy a copy of the Oxford Dictionary and read it extremely carefully before they get around to making the next allocation of road moneys or any other moneys in this [1935] country. I say that without fear or favour because everything I say is true and anybody who would disbelieve such a ridiculous scenario need only read their comments in the programme on peripherality.

We have a problem in the health services.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  The Taoiseach did not know that.

Mr. O'Donoghue: Information on John O'Donoghue  Zoom on John O'Donoghue  Let us be quite clear that no matter which Government are in power in the future we will have trouble financing the national health service. Since 1988 the amount of funding that has been made available for the health service has increased by 20 per cent, and the net increase is believed to be in the region of 6 per cent. What is wrong? Why do the Southern Health Board and other health boards complain that their allocations are down so many millions of pounds again in 1991? I think the problem is that we have become more sophisticated in the treatment of patients.

Technology has improved beyond our wildest expectations; of course, our expectations have matched the advances in technology which have been achieved. It seems to me that we will have a continuing problem with the health service. This problem has to be addressed. Five, or certainly six, years ago the question of a knee joint replacement or an elbow joint replacement was not common place; in fact, it was not heard of in this country. I could give further examples. Ten or 15 years ago open heart surgery such as by-passes, etc. were not common place or perhaps even heard of in this country. In my opinion this technology and expertise will continue to improve — and I sincerely hope it does — but it means that each successive Government for the foreseeable future will have an Achilles' heel — the health service.

I can understand the frustration of people such as my old friend Deputy Michael Higgins, and others on the left [1936] of centre of Irish political life, although I consider myself to be left of centre though not extremely left of centre. It occurs to me that the Labour Party and The Workers' Party — we will leave aside Fine Gael and the old banger machine for a while — oppose every budget. They remind me of a sadist at a boxing fight egging on the fighters to beat one another to death when it is clear that both, or at least one, should throw in the towel. False dreams and Utopian ideology ignore the practicalities of life and only serve to injure further, and inflict further suffering on those whom the same ideology and dreams are purported to assist.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  I listened with very great interest to what the last speaker had to say as I have listened to other speakers on this budget so far. I can assure the Deputy who has just spoken that Labour's concern is not one of a spectator at a boxing match. It is very interesting to note that at the foundation of the State, and before, the social and democratic programme of the First Dáil was written by the Labour Party in the vain hope that the independence that this country had secured would lead to the creation of a society and a State which was caring and which had aspects of egalitarianism as its constituent principles and so forth. Again, on the occasion of the first Fianna Fáil Government in 1932, which was supported by the Labour Party, Mr. de Valera decided to steal some of their programme and tried to throw a social cloak over his political ambitions.

Throughout the history of this country Labour, and the parties of the left, have given expression to a simple fundamental principle, that our independence should be used to raise the living standards of every person here. That was an aim of citizenship, something to which one might aspire. It was of course, Mr. de Valera who said quite early in his political life “I am afraid that the majority will have to do with primary education”, while his own family were educated to third level. It is a pity the last speaker has [1937] disappeared from the Chamber because I would love to talk to him in detail about the betrayal of the Republic over which Mr. de Valera presided.

There were people here who believed in an independent Ireland that could be characterised by social equity, by a sense of principle, by a sense of opportunity and by something that might be celebrated. Ireland of the limited opportunities, of the class divisions, the class-based access to health, education and housing and of emigration was one to which the party opposite made a unique contribution between 1932 and 1948, and afterwards.

We are here to discuss the budget and I want to raise a few questions about it. This debate is regarded by many of the people who speak here as a grey period in parliamentary life — rather like the weather — with one budget speech after another. I have some sympathy for this view because in many ways parliaments all over Europe, and particularly this one being the pale shadow of the House of Commons in many people's view, lived with the mystique of the budget for a long time. The Lord Chancellor in Britain gets a peck on the cheek from his partner in life and holds up his brief case for photographs. We almost do the same thing in Ireland though we have stopped holding up the brief case and I notice it has become thinner.

Mr. McGahon: Information on Brendan McGahon  Zoom on Brendan McGahon  What about the Americans?

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  I have not gone into that because I am not sure whether we are a more restrained society than the neighbouring island who would be that bit more repressed. There will be another day Deputy McGahon, so the Deputy should restrain himself. One might say that the mystique that surrounds the budget has long disappeared. The budgets in recent times are of less significance in relation to the economy than they were in the past. This has been so for a number of reasons. At different times in the past [1938] when one talked about excise and revenue it was of much more significance whether one increased the price of the pint, cigarettes or whatever or whether one imposed tax on commodities. In the period between those traditional type budgets when a Government could fall or go out of office on a half-a-crown for the older people, the PAYE system was introduced. The PAYE sector carry the burden of 90 per cent of the taxation that is paid here. The taxation they pay is distributed. We distribute about the same amount in industrial promotion grants as we do to education. The public are interested in that. What is in the budget for such people? There were other people who were interested also.

I would like to keep my comments short about this rather farcical event we had on 30 January. It brought the fading mystique of budget day to a nadir. After the Minister's long speech, which was seen on television — I, like others, welcome the fact that the public can scrutinise our proceedings — a few pennies were gathered here and scattered there but nothing fundamental had happened or changed. One would have imagined one was not living in a country with 18 per cent unemployment or where there is such a high degree of poverty and child poverty in particular. One would have imagined one was not living in a country that had housing lists that accumulate to 20,000, and in which there had been a massive retreat from the provision of public housing. One would not imagine one was living in a country where the waiting lists for every basic kind of surgical operation had extended. The suggestion was that there was something admirable about doing nothing.

I have a few fundamental questions to put to the Minister, and his financial advisers, in the light of the major press conference the Minister gave after his budget presentation. At that press briefing he said it was not the business of the State to create jobs. I regard that statement as one of the most historically significant political statements ever made by a Minister for Finance. For years we have been told by the Confederation of [1939] Irish Industry, the Federation of Irish Employers, and the representatives of the private sector, that they are not in the business of creating jobs. Now we have the Government saying, through the mouth of the Minister for Finance, Deputy Albert Reynolds, at a press conference immediately after the budget, “we are not in the business of creating jobs; what we create is a climate of investment.” Any one of the 220,000 and 250,000 people who are unemployed might well ask the question when they see the first televised budget, “who then is responsible for creating jobs here”? Back will come the tired old answers we get year after year from the parties of the right, the ultra conservative party on this side of the House and the quasi-party of the right, the Progressive Democrats, who, like a chameleon can change their colours and, of course, the populous who were converted to stringency in Fianna Fáil.

Who is responsible for creating jobs? The answer comes back, “we create a climate of investment”. I invented the term for that school of economics that was called the climatological school. They are the people who do not have the discipline to do the work in relation to economic planning and fiscal management but who come out with shibboleths and cliches.

I will translate into real economic terms what they are saying. They are saying, “give us low interest rates, good export growth and low inflation and automatically jobs will be created.” The Government got low inflation, lower interest rates and good export growth but they did not get the jobs because there is no directive principle of job creation at work in their strategy. It is as if they are tidying the house up for a visitor and the job creation principle, which should be at the heart of any Government concerned about employment, has been relegated to the position of one of the characters in Waiting for Godot— when we have set it all right something will happen. That is the significant point, and let everyone mark it, of the suggestion by Minister [1940] Reynolds — the Government are not in the business of creating jobs. I want to refer to the implications of that for our industrial policy. We on the Left are often accused of being impractical but I will be very practical. I expect that after 1992 many companies in Ireland will be in danger of being taken over by European companies. Indeed I would go so far as to say that this will affect some of our major banking institutions. What strategy does the Minister have for developing indigenous companies, something I argued for in years gone by? If we want to have linkages and to spend taxpayers money where it will have the maximum multiplier effect, and create the greatest number of jobs, we should try to develop strong, indigenous companies which have the ability to research, produce a product, market effectively and establish niches in the external traded economy. How will the Minister protect such industries after 1992?

Where has he discriminated, even in his taxation policy which is directed at that sector, between the speculative and productive aspects of investment? If one is to be taken seriously, one should welcome certain aspects of the budget. I welcome the fact that social welfare increases will be kept above the rate of inflation but clearly they are not anywhere near the levels recommended in the report of the Commission on Social Welfare. I welcome the extension of partial protection to part-time workers. I certainly welcome the fact that there will be more teachers in the classrooms. However, in regard to the key issue of employment creation and investment, which is at the back of it, where is there evidence of any strategy? It is not only I who have noted this aspect of the Irish economy. It was in fact the distinguished former Senator and public servant, Dr. Ken Whitaker, who noted some years ago that the rot set in in the seventies, that is, it became more rewarding for Irish investors to speculate than to invest in productive activity and get a return from their capital.

I will stick to the question to which I want a reply: when will the favourable [1941] conditions be right and where will the jobs be? What directive principle will the Government use to translate their favourable climate into actual jobs and where will those jobs be? The money from Europe, just over £3 billion, which will be invested here between now and 1994 will create 10,000 jobs.

I listened to the previous speaker talking about peripherality as if he did not know what it was. He knows very well that the reality is that there is not anything like the semblance of a regional policy in Ireland. I am not a bit confused about questions on peripherality. The reason the Deputy was confused is because it will work like this. He referred to the recently circulated report on roads investment in this country where for every £3 put up nationally we will get £7 from Europe. What was beginning to bite into the Fianna Fáil backbencher's heart is that to get the £7 and spend the £3 the county roads would have to be allowed deteriorate so that the national road network could be improved, thus giving the people who want to build toll roads a heyday. This is upsetting some of the cockles in the hearts of the rural Fianna Fáil backbenchers.

What is marvellous about this affected naivety is that people do not know what is happening. When the Minister goes to Europe — the previous speaker made many references to this — he will be asked what he is doing about unemployment. I am sure the Spaniards will be very anxious to listen to what we have to say. Spain is the only other country in the EC which has a higher rate of unemployment than Ireland. If the people in Brussels tell the Minister they want to help him, what proposals does the Minister have? A very watered down EC Council Resolution of 29 May contained this reference to unemployment:

Whereas, in its Resolution of 19 December 1984 on action to combat long term unemployment, the Council considered that specific measures should be employed to take account of the serious problem of long term [1942] unemployment, requiring both individual and joint action by governments and both sides of industry at local, regional and national levels, which should be supported at Community level...

Where are the Irish proposals for the long term unemployed which would be supported by the Community? What initiatives have we taken to discriminate in favour of the long term unemployed? How are we to get such people back into the workforce? The same EC Resolution stated:

...a response is called for at Community, national and local level, involving the Commission, governments, employers and trade unions, in order to make actions in favour of the long term unemployed more effective.

Is the Minister going to say: “our employers have long said it is not their duty to create employment and as I said at a recent press conference after my budget, it is not my duty either”? What would the Europeans think of such a statement by a Minister from a country which has the second highest unemployment rate in Europe?

For those who might have expected some relief in taxation, this budget can hardly have been an ecstatic experience with its little dribble of concession in direct taxation for some people, which is more than compensated for by the clawback in the extension of VAT and indirect taxation. There are two basic principles at stake in the reform of taxation. One is that the Government must have the courage to extend the tax net. This would mean thinking of including those who are not paying tax at present. That could have been done but the parties in this House support the view that we in Ireland should never have a wealth tax, a source that could be yielding £20 million now. A wealth tax was supposed to be a massive disincentive, something that would discourage people from investing or working in Ireland. In their January newsletter [1943] the Confederation of Irish Industry said, “Corporation tax rise poses threat to investment”. They need not have worried. It did not come. There was no extending the tax net into capital or corporate areas. There was no rising of those two taxes and therefore no significant relief in relation to the PAYE sector.

I will finish by saying — this is not the least important but perhaps the most important point — that we are living at a time of what might be called tripartism in relation to planning the economy. There has been a great deal of talk about inviting the social partners in, but there is a representative group about whom we should be concerned, that is those who are unemployed, those who are dependent on State benefits in one form or another. When are they going to sit at the table and contribute to social planning? Is it not time that they did? It is they who would make the case for public housing, low income, fundamental tax reform and assisting to combat poverty.

I want to make a very interesting point, not an ideological point but an immensely practical one. It is said that in the new Programme for Economic and Social Progress there are a certain number of values that are shared. The social democracies that have low rates of unemployment, whatever political parties are in power — if one is talking about Austria, Finland and Sweden, which had an economy ridden with unemployment in the thirties — have one significant feature irrespective of changes in Government, that is, they have put unemployment as their major single problem and they have placed job creation and job sharing as the primary target of social and economic policy, realising that with job creation and access to income, come the far wider forms of participation that are important in society. Every one of those social democracies had that transcendental aim, but in the Irish case, the reason this budget has been such a disastrous and hopeless experience is that it has not been accepted yet by the parties of the right [1944] that unemployment should be considered our No. 1 problem.

Mr. M. Kitt: Information on Michael P. Kitt  Zoom on Michael P. Kitt  I regret that the Minister's budget speech has been described by various commentators as a non-event and a very boring budget. I do not think the Minister has been given full credit for bringing in this budget against the backdrop of war in the Gulf and the fact that economies particularly in the USA and in many major western countries, are in recession. The Minister has made a considerable achievement in increasing social welfare benefits and reducing income tax while at the same time reducing the projected borrowing requirement as a percentage of GNP and making a further reduction in the standard rate of VAT. That is a considerable achievement, and I am sure Deputy Higgins would not mind too much if the Minister got some photocalls for it: Deputy Higgins is Mayor of Galway and I am sure he gets his share of photocalls.

The most welcome measure in the budget is the 4 per cent increase in social welfare benefits — a similar increase is being provided for health boards — putting them ahead of inflation. The Minister for Social Welfare has been very successful in getting increased expenditure for his Department. Over £3 billion in a full year has been allocated to the Department of Social Welfare: that is the first time the £3 billion barrier has been broken. The Minister for Social Welfare has also brought in a very good package for children costing £41 million. The minimum rate of child benefit has been increased to £12, an increase of 9 per cent, and from October next the higher rate will be payable to the fourth and subsequent children.

I would like the Minister to consider retirement pensions. Many small farmers have benefited from this scheme but they have to pay into the scheme for ten years before they qualify for the contributory pension. The Minister has an option of allowing those farmers to buy extra years to make up the ten years or, alternatively, to give a fraction of the pension to those [1945] who have not contributed for ten years. For example, if a farmer has seven years contributions he could be given seven-tenths of his pension.

I hope the Minister will also look at the operation of the free schemes and the qualifying conditions for those schemes. I cannot understand why similar criteria should not be introduced for all these schemes. Some pensioners may receive free electricity and television allowances but are not entitled to free telephone rental. I hope that a common standard of assessment will be brought in for eligibility for these schemes. I am not saying that free schemes are the answer to all the problems of the elderly. I know many elderly people have financial and housing problems, but where the free schemes are available I hope the conditions for eligibility will be standardised.

I particularly welcome the improvements in the family income supplement. This scheme gives practical help to families. The Minister has increased the income limits and extended the scheme to cover children between 18 and 21 years of age where the children are in full-time education. This budget is orientated towards helping the family and will help people all over the country.

Some of our semi-State bodies cause problems, particularly for people in rural Ireland. Only today we heard an announcement by An Post about the proposed closure of post offices and changes in the delivery of mail in rural Ireland. I understand that what is envisaged is 1,000 job losses and the closure of over 500 sub-post offices. This has been tried on a pilot basis in my county of Galway. The idea of a letter box or a number of letter boxes at the head of a road where a number of families live is not a good idea. Many families including elderly people may have to travel up to a mile to collect their post. All kinds of problems arise, for example, letters are put into the wrong letter boxes and letters are stolen. If An Post want to speed up the delivery of mail, I would not object, to having a letter box outside a house, with the consent of the householder, where the [1946] person can see the postman delivering the mail. However, I strongly object to this proposed massive closure of sub-post offices not only in terms of job losses but also because we will be losing a vital service in rural Ireland. It is ironic that at a time when we have a very successful national lottery and post offices are doing extra business as a result, this proposal is made for the closure of over 500 sub-post offices.

I would make a similar point in relation to Telecom Éireann. We have been talking in this House and elsewhere about telephone charges. We want competition to help the business community and yet all these changes are taking place by stealth in Telecom Éireann. In the west dial codes cover a very small area and there is discrimination against the people who have to pay much more than the local charge if they want to ring Galway city from the western parts of Connemara.

Debate adjourned.

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