Estimates 1991. - Vote 39: International Co-operation (Supplementary Estimate).

Friday, 5 July 1991

Dáil Éireann Debate
Vol. 410 No. 5

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Minister for Finance (Mr. A. Reynolds): Information on Albert Reynolds  Zoom on Albert Reynolds  I move:

That a supplementary sum not exceeding £600,000 be granted to defray the charge which will come in course of payment in the year ending 31 December 1991 for contributions to International Organisations and for certain Official Development Assistance, including certain grants-in-aid.

The debate beginning this morning is combining a discussion on the Estimates with a wider debate on the Government budgetary policy and the economy generally.

I welcome the opportunity which the debate gives me, and the Government, to place current developments in perspective and to refute once and for all the many spurious comments that have been made in this House and elsewhere to the [1006] effect that, with the publication of the Exchequer figures for the first half of the year, the Government's budgetary and economic policies are now off-course.

Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  I wish to raise a point of order.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  No, Sir, not now.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Yes, Sir.

Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  On a point of order——

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  The business of this day is under way. I am not entertaining it, Deputy.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  What is the precedent for not entertaining a point of order?

Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  May I raise a point of order?

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Is it on the business we have already discussed?

Mr. Sheehan: Information on P. J. Sheehan  Zoom on P. J. Sheehan  It is a sad day for democracy.

Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  It relates to a point already raised, on which I seek clarification.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Let us hear what the point is.

Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  The Leader of the Opposition has tabled a vote of no confidence in the Government at a time when there is record unemployment, the budgetary Estimates have over-run by £500 million and the Government are jackbooting the Estimates through this House——

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  That is not a point of order.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I wish to raise a point of order.

[1007]Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  These are the issues I want to address first and I will proceed to speak about the Finance group of Estimates proper later in my contribution.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I asked to raise a point of order.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Resume your seat, the Minister is in possession.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I asked to raise this point of order before the Minister began his contribution.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Deputy Higgins will resume his seat or leave the House.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Let me begin by saying that I reject outright the suggestion made both inside and outside this House over the past week that the 1991 budget was unsound from its inception.


An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Resume your seat, Deputy Higgins, or leave the House.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Hysterical condemnation of the budgetary over-run rings very hollow coming from the parties opposite while they continue to call day after day for increased spending on one service or another.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I am entitled to make a point of order.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Not now.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  That is a glaring financial irresponsibility coming from the other side of the House.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I am entitled to make a point of order, and I intend to do so.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  It is terribly easy to say, with the benefit of hindsight, that a budget slippage was predictable.

[1008]Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Sir, it is entirely out of order for you not to entertain legitimate points of order when made from this side of the House. Deputy Higgins wishes to raise a point of order.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Deputy Bruton, the points of order up to now have been spurious points of order.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  They have not been spurious.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Ireland has an abundance of hindsight decision-makers both inside the outside this House. Any forecast is based on assumptions which are open to be proved invalid after the event. I made it very plain at budget time——

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I am entitled to make a point of order.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  ——that this year we had to frame a policy against a background of unusual uncertainty and certain critical assumptions had to be made.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I have a legitimate point of order to make.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  This is a charade.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I sought to raise a point of order before the Minister responded.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I assumed an international slowdown would restrict our growth rate to not even half of the 1990 rate and I did not try to disguise the risk that it could be worse than I had allowed for nor the fact that this would adversely affect us. Again, I drew attention to the manner in which a slowdown could have repercussions for unemployment. Plainly, this would add to the costs of welfare provision.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Please, Sir, in the interests of all Members of this House, whom you represent, would you allow, in accordance with precedent, points of order to be taken? Please, Sir, I appeal to you.

[1009]An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  The Chair is anxious to facilitate Deputies and very anxious to uphold the dignity and decorum of this House. The Chair is very conscious also that certain Members threatened to disrupt the business of this House yesterday and this morning——

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  No, Sir.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  ——but, in case the Chair may be faulted in this regard, I will hear the alleged point of order by Deputy Jim Higgins.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  Let me say, first of all, that I have never obstructed the business of this House. You must concede that I have always stuck rigidly to the rules of the House——

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  A point of order, Deputy.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  I want to make the point of order that I sought to raise a point of order before the Minister got on his feet.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  I heard that.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  Yesterday, when the original order came before the House on the Order of Business it was for a structured debate on certain selected Estimates but insufficient in terms of time. That was the basis on which Fine Gael sought to renegotiate it. We sought additional time so that we could have a structured debate on certain selected Estimates. As part and parcel of that agreement, Fine Gael agreed to hand over its legitimate right to Private Members' time.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  This is a very long point of order.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  It is a proper one.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  Can I make the following point? It will be very short. In view of the fact that the Government [1010] subsequently welshed on their commitment to have a structured debate and, albeit, offered additional time for an omnibus, irrelevant and rambling debate to which there would be no conclusion——

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  The Deputy is embarking upon a speech. This is not a point of order.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  Let me make this point. I am now asking that Fine Gael's right to Private Members' time on Tuesday and Wednesday next be returned to us. I would ask the Government to make that gesture.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  We will take the motion of confidence then.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  The business of this day and next week has been determined by the House.

Mr. J. Higgins: Information on Jim Higgins  Zoom on Jim Higgins  Fine Gael are prepared to take the motion of confidence during that period.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Deputy Higgins, I have allowed you to make what you alleged to be a point of order but which in fact was not a point of order.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  A Cheann Comhairle, would you allow a debate on a motion of no confidence, which is a serious matter, before the Dáil, at the Government's request, goes on holidays for an indeterminate period? We believe we are entitled to have such a motion of confidence taken and we are prepared, if Private Members' time is restored to us, to use our time, if the Government refuse to give their time, to debate this motion of no confidence.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  That is not a matter for the Chair. Let the business proceed.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  May I appeal to the Taoiseach to accept that offer?

[1011]An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Let the business of the House proceed.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Is the Taoiseach afraid of the House and to have a motion of no confidence debated?

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  It is terribly easy to say, with the benefit of hindsight, that a budget slippage was predictable. Ireland has an abundance of hindsight decision-makers both inside and outside this House. Any forecast is based on assumptions which are open to be proved invalid after the event. I made it very plain at budget time that this year we had to frame policy against a background of unusual uncertainty and certain critical assumptions had to be made.

Mr. Flanagan: Information on Charles Flanagan  Zoom on Charles Flanagan  On a point of order——

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  I will hear no further points of order.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  This is ridiculous. Where is the Minister's script?

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  It is in circulation.

Mr. Flanagan: Information on Charles Flanagan  Zoom on Charles Flanagan  Can we have a copy of the Minister's speech?

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  That is not a matter for the Chair.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  It is on its way.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  This is ridiculous and typical. The Minister is reading a speech that he did not write himself and which he will not circulate to other Members of the House.

Minister for Social Welfare (Dr. Woods): Information on Michael J. Woods  Zoom on Michael J. Woods  That is ridiculous.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  That is absolute nonsense.


Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I will not give any response.

[1012]Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  This is the sort of debate that we are going to have for the next four days.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I assumed an international slowdown would restrict our growth rate to not even half of the 1990 rate——

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Where are they?

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  ——and I did not try to disguise the risk that it could be worse than I had allowed for nor the fact that this would adversely affect us. Again, I drew attention to the manner in which such a slowdown could have repercussions for unemployment; plainly, this would add to the costs of welfare provison. In the event, the recession in the United Kingdom and the United States has been deeper than anybody either here or internationally foresaw, investor and consumer confidence worldwide had taken a correspondingly bigger knock, and the fall-out of adverse employment trends abroad on the live register here has been greater than could possibly have been foreseen.

It is very tempting to say, at this point, that the way things have turned out is not a surprise, but it is quite a different matter to claim that this was bound to be the case. For example, who predicted that social welfare would cost about £66 million more this year than I had provided for in the budget? I recall general suggestions——

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  On a point of order, may I ask if copies of the Minister's script are available?

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Where was the Deputy?

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  They are on their way.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  I understand that they are about to be distributed.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I recall general suggestions that growth might be slower or faster depending on what forecasts one [1013] reads than predicted in the budget, and mention of certain risks, but who “got it right” about the specific areas where the budget would go off course? It is certainly a new situation for the Department of Finance to be accused of over-optimism. The pressure on public finances this year is not just an Irish phenomenon but is widespread internationally.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  A Cheann Comhairle, may I draw your attention to the fact that copies of the Minister's speech are being circulated in the Press Gallery? Is this in accordance with precedent?

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  That is not a matter for the Chair.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  It is a breach of privilege.

Mr. J. Mitchell: Information on Jim Mitchell  Zoom on Jim Mitchell  It is an insult to the Members of the House.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Budgetary slippage this year is also happening in many other EC member states — for example, France, Germany, the United Kingdom, Italy, Greece and Portugal. It is important to place things in perspective. I want to set out exactly where we stand on the budget front this year. The end-June Exchequer returns issued last Monday indicated that at the half way stage——

Mr. Enright: Information on Tom Enright  Zoom on Tom Enright  On a point of order, this House is guided by precedent. The Chair has got it wrong in this debate. The tradition in all my time in this House is for Minister's speeches to be circulated. The Government are showing poor regard for the House in not circulating the speech in an orderly fashion.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  I am anxious that the Minister's speech would be circulated although it is not a matter for the Chair. It should be circulated.

Mr. Enright: Information on Tom Enright  Zoom on Tom Enright  It is a matter of regret that the Chair has to be embarrassed in this manner. The Government are showing no regard for the Chair in this matter.

[1014] They are breaking with precedent. The same thing happened during the past few days——

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Deputy Enright, I have only to say that I share the Deputy's sentiments.

The Taoiseach: Information on Charles J. Haughey  Zoom on Charles J. Haughey  With your permission, a Ceann Comhairle, I intervene to apologise to the Members of the Opposition parties but, unfortunately, because of a computer breakdown the speech will be slightly delayed. It will be circulated in a matter of minutes.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  It is important to put things in perspective and I want to set out exactly where we stand on the budget front this year. The end of June Exchequer returns issued last Monday indicated that at the half way stage the Exchequer borrowing requirement stood at £813 million. This compared to the budget projection for the year as a whole of £460 million and to a first half outturn in 1990 of £508 million. Though, as I made clear on their release, the outturn for the first six months confirms that there is a slippage vis-á-vis the target, it is very easy to draw spurious conclusions from these figures. Two points must be borne in mind. First, the normal pattern of receipts and expenditure meant that the deficit in the first half of 1991 was bound to be larger than the annual figure. The Exchequer now tends to run a surplus in the second half and did so to the tune of almost £250 million last year. Second, as I have pointed out on more than one occasion in the House and elsewhere, there are clear reasons that the revenue trend should be significantly better in the second six months of 1991, and indeed there was an improvement between the first and the second quarter. It is for these reasons that I remain confident at this stage that the annual outturn will show a considerable improvement on the figures to date.

The main contributors to the disappointing budgetary picture over the first six months were tax revenues, where depressed consumption tax yields were [1015] rather lower than envisaged, and supply services, where emerging social welfare and health overruns and a delay in European Social Fund receipts——

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): On a point of order, Sir, the Minister is now going into a series of detailed figures which are difficult to follow without a script. May I ask the Taoiseach if the House could adjourn temporarily until the Department of Finance and the Minister's office produce the scripts?

Deputies:  Hear, hear.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): It is very unfair to us. This is very detailed matter and it is hard to follow. May we have a short adjournment?

The Taoiseach: Information on Charles J. Haughey  Zoom on Charles J. Haughey  I have already told Members that the script will be available shortly.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): This debate was scheduled for 11.30 a.m. and 25 minutes later there are still no scripts.

The Taoiseach: Information on Charles J. Haughey  Zoom on Charles J. Haughey  I have already apologised——

Mr. Currie: Information on Austin Currie  Zoom on Austin Currie  The Taoiseach said the scripts would be available in a couple of minutes. It is now 25 minutes later.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): The suggestion is reasonable.

The Taoiseach: Information on Charles J. Haughey  Zoom on Charles J. Haughey  I do not mind an interlude of ten or 15 minutes if it would help the Opposition parties.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Is that agreed? Agreed.

Sitting suspended at 11.55 a.m. and resumed at 12.05 p.m.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  The main contributors to the disappointing budgetary picture over the first six months were tax revenues, where depressed consumption [1016] tax yields were rather lower than envisaged, and supply issues, where emerging Social Welfare and Health overruns, and a delay in European Social Fund receipts boosted departmental expenditure. The last item mentioned — the ESF shortfall — is no more than a matter of timing. A large part of it arises simply from the slippage into July of about £50 million expected by the Department of Education in June. There are no indications that the major drift of Structural Funds which occurred in 1989 and 1990 will recur this year.

The more important components in the higher than expected first-half deficit are those which will actually influence the emerging overrun on budget for the year as a whole. These are worth looking at in a little more detail.

In expenditure an unexpectedly sharp rise in the live register occurred under the impact of an altered pattern of migration. Deep recession and worsening labour market conditions in the UK — and the US — have reduced the numbers of emigrants to these countries; indeed many people who had left Ireland in previous years are now returning home. The live, register is now expected to average up to 250,000 compared to the budget estimate of 228,000 which will add about £66 million to Social Welfare spending. Pressures on Health spending seem likely to result in an overrun of up to £25 to £30 million on this Vote, mainly due to higher than anticipated prescription costs under the general medical services scheme and other items.

On the revenue side we are looking at a shortfall of the order of £90 million in taxes, essentially because the yield in a few areas has been badly affected by the weakening of consumer confidence, notably on account of the uncertain international economic environment and the impact of the Gulf crisis in the early part of this year. The sharp fall off in the purchases of new cars from the high level of last year is likely to bring about a shortfall of some £50 to £60 million in the VAT and Excise tax heads. There will also be some other slippage on VAT, where there seems to be a shift in the [1017] consumption pattern out of standard-rate goods.

The deficiency in stamp duties is likely to turn out at about £15 million, reflecting the slackness of property market transactions earlier this year.

All in all, it is now estimated that the overrun EBR of 1991 will be some £200 million more than we expected at budget time. This is before any corrective measures are taken. The suggestion that we are faced with some sort of budgetary crisis this year is one that I must deal with. We have got to keep things in perspective. This means looking and dealing with the facts and not losing sight of the nature and origins of the slippage from budget figures; the size of the prospective overshoot in borrowing, and what this means for the level of debt.

Allegations that we have lost control of the public finances do not stand up under any of these headings by any criteria. First of all, a very substantial part of the overall drift from budget target can be laid at the door of unanticipated migratory trends, with their repercussions on the live register, and an unexpectedly sharp decline in the demand for motor vehicles. Between them these two developments are likely to affect the budget to the extent of well over £100 million as compared with the January Estimates. What is at issue here is, quite simply, the inevitable consequence of elements of a forecast proving wide of the mark. Given the particular components involved this had to affect the figures — if live register numbers increase, the social welfare spending will automatically follow. Economists will readily recognise these departures from budget as the workings of “automatic stabilizers”, which serve to dampen the effects of economic fluctuations.

A Deputy:  Tell that to the unemployed.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  They are different from the usual ones only in that the link between an adverse external development and its domestic budgetary consequences is even more direct. This does not mean that these consequences should [1018] be ignored — they have to be viewed also in the light of planned borrowing and existing debt — but the response must be based on the correct analysis.

To look at what is happening this year without regard to the position we faced a few short years ago and the remarkable progress that we have made would make little sense. We have got to put the emerging overrun in a wider context. We are seeing a tremendous amount of political and media interest in an emerging overrun on budget of about £200 million. That represents much less than 1 per cent of GNP. The very fact that there is this hue and cry about the slippage in this very difficult year internationally serves to demonstrate the solid progress that we have made over the past five years in improving Ireland's public finances through firm control of public expenditure.

The record shows that we have consistently outperformed our budget targets for Exchequer borrowing. In 1986, the last year of the Labour-Fine Gael Coalition Government, the EBR turned out £144 million ahead of budget target. Did anyone shout crisis then? We took borrowing down below each year's budget target in 1987, in 1988 and in 1989. We would have done so again in 1990, when the outturn was just £13 million more than the projection, if the expected EC Structural Fund payments had arrived on schedule. Winning four out of five is a good performance any time.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  You have won only one out of three.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I introduced three budgets in this House, in case the Deputy forgets. This one is not out at all yet.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  But it is not one out of five.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Let me again demonstrate our progress by looking at the record. By 1990 Exchequer borrowing, at £462 million, was reduced to 2 per cent of GNP, a reduction of £17 million. That compares very favourably indeed with the deficit of £2,145 million, or nearly 13 [1019] per cent of GNP, which was produced in 1986, which was also the last year of the Fine Gael/Labour Coalition. The annual deficit is now down to a level which compares very favourably with the EC average and is in line with the levels in the other narrow-band EMS countries. The overhang of debt, the debt-GNP ratio, which reached a high of 131 per cent in 1987 and 1988, has been brought onto a sustained downward path. It had been reduced to 111 per cent last year and will fall again this year despite the emerging difficulties.

On this sound platform we have been able to build a stable exchange rate policy and a low-inflation environment. These in turn facilitated Irish competition on international markets and helped us to maintain and increase employment by over 40,000 over the last three years in a climate of business confidence. As a result we can face into this difficult year with a great deal more confidence than could have been envisaged two or three years ago.

The improvement in the public finances has not impeded important tax reforms which redistributed the burden of taxation and redirected incentives which encouraged capital investment at the expense of labour. We have restructured company and capital taxation, and improved collection efficiency in all sectors while at the same time reducing the so-called “personal tax wedge”.

Back in 1987, tax pressure on the ordinary worker had become very severe. The three tax rates of 35 per cent, 48 per cent and 58 per cent were applied to taxable income in very rapid progression. Since then, of course, we have reduced the standard rate of income tax from 35 to 29 per cent and the top tax rate from 58 to 52 per cent, a decrease of six percentage points in each case. In addition, we increased personal tax allowances and rate bands so that taxpayers do not reach the higher rates so quickly. At the same time, we increased tax exemption limits and introduced a special child addition which, taken together with improvements in the family income supplement [1020] scheme, has made a real impact on the disincentive to work for those on low incomes.

These measures, together with our low inflation rates, enabled the negotiation of low nominal wage increases in both the Programme for National Recovery and the new Programme for Economic and Social Progress. This can only result in further improvements in the competitiveness of Irish industry. It is interesting to note that since 1986 Irish wage inflation increased by only 19 per cent as compared with 56 per cent in the UK — just about three times higher.

The 1990 and 1991 budgets have also taken on board the adjustment of indirect taxation in line with the requirements of the EC tax harmonisation process. The reduction in the standard rate of VAT from 25 to 21 per cent has impacted favourably on a wide range of consumer goods and professional services and means that our standard rate is no longer the highest in the EC. The increase to 12.5 per cent on selected 10 per cent rated items, which still leaves the rate on most services below that in the UK, brings a greater degree of neutrality to the Irish VAT system. Excise duties have not been increased, with the sole exception of tobacco, where the 10p per packet I announced last January was dictated by health and fiscal policy considerations.

I have been able to put this year's emerging overrun in context and point to a record of solid achievement in the management of the public finances. However, past achievements, impressive as they may have been, are pointless unless we can maintain the control of expenditure that has underpinned those achievements. I can assure the House that we are not going to rest on our oars at this critical point in the evolution of the public finances. The overhang of debt — due to the accumulation of very high borrowing in the past — has been, and remains, an important budgetary constraint; although servicing costs have been reducing steadily in GNP terms, interest on the debt last year pre-empted almost £2.2 billion, or 9.3 per cent of GNP. It is well worth stressing that, when [1021] these interest costs are excluded, the Exchequer has been in surplus each year since 1987. Indeed if the Fine Gael-Labour Coalition Government of the eighties had not doubled our national debt the Exchequer would now be showing a significant surplus not alone this year but every year.


Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  The overhang of debt from previous years not only took a large part of our current national resources out of our control — I know the truth hurts — but also left us continually exposed to adverse movements in interest and exchange rates. A 1 per cent increase in domestic and international interest rates cost the Irish taxpayer £75 million per year. We must continue to reduce that burden rather than opt for the soft short term options.

The overall budgetary objectives for the medium term are to maintain a significant rate of progress in reducing the debt-GNP ratio towards 100 per cent by 1993 and, as part of this, to achieve broad balance on the current budget for the first time in 21 years. In my 1991 Budget Statement I reaffirmed these objectives and indicated the adoption of new longer-term aims — to phase out borrowing altogether and to bring our debt-GNP ratio more into line with the rest of the European Community. I have no plans to depart from that budgetary profile. All interest groups expectations should be subordinated to achieving those objectives in the national interest.

The House is already aware that the Government have set in train a detailed line by line examination of the 1991 expenditure figures in all areas to see where they can be trimmed back to help alleviate the immediate problem facing us this year and the Government will be continuing that corrective process this afternoon. I can assure the House that the same diligent approach will be taken in determining expenditure allocations for 1992.

Let no one be in any doubt about the will of this Government to take the [1022] decisions necessary to secure further progress towards our budgetary goals. Continuing control of the public finances and in particular of current spending is an unavoidable reality that we cannot and will not side-step. We have not shirked that responsibility in the past and will not do it now. Let me remind the House that Government spending as a percentage of GNP has been brought down from almost 55 per cent in 1986 to just 41 per cent of GNP last year. I know of no other country that has recorded such a remarkable performance on the expenditure front.

This progress did not just happen; it came about through firm and committed action on the part of the Government of the day. We realised that expenditure had to be constrained because its growth was leading to unsustainable levels of borrowing and taxation both of which are still too high in this country. Over the past few years we have undertaken the most comprehensive and far-reaching review of State spending ever carried out.

The continuing justification for every major programme was called into question. Where such programmes were seen to have insufficient justification they were either curtailed or eliminated. This was not an easy course of action to follow, but it was the right course and one that had the backing of all of the social partners. It meant taking extremely difficult decisions — decisions that were, however, absolutely necessary if we were to turn our fortunes around. We will take difficult decisions again whenever the situation dictates it.

On the issue of expenditure control, the Exchequer pay and pensions bill at £3,422 million in 1991 continues to represent a significant proportion of Government expenditure and the reasons for maintaining strict control in relation to it are still very much with us. I can assure the House that the Government will continue in their efforts to control the growth in the public service pay bill and to achieve efficiency in the public service and eliminate waste.

Ironically, part of the reason for the growth in the public service pay bill in [1023] 1991 results from the relative success of public service pay policy in recent years. Under the elaboration of the 1987 public service pay agreement arrangements were agreed with the ICTU which provided for the postponement and eventual phased implementation of special pay increases. The phasing arrangements limited the immediate impact on the Exchequer in the years 1987 to 1990 of the cost of special awards to public service employees which had been outstanding for some time or which were in the pipeline. Many groups, such as teachers and junior hospital doctors, for example, are not due to receive the final instalment of pay awards until September 1992. This is almost two years after the expiry of the pay agreement under which the phasing arrangements were originally agreed.

This deferral of the implementation of special awards has contributed significantly to the task of rectifying the public finances in recent years, particularly during the life of the Programme for National Recovery. However, these awards, together with annual increments, are now having a considerable impact on the public finances according as their full annual cost falls to be met.

I want to put on record the Government's appreciation of the co-operation which we have received from public service employees generally over the last few years, particularly on the pay front. Nevertheless, the Government are acutely aware that our discretion over public expenditure generally, at a time when restraint continues to be required, is limited by commitments entered into on public service pay, not only in relation to special increases but also the general increases provided for in the agreement on pay and conditions which forms part of the Programme for Economic and Social Progress. For this reason the Government will continue in their efforts to limit, as far as is possible, the growth in the public service pay bill. We intend to [1024] examine how best to achieve this objective in the light of current budgetary realities.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  What does that mean?

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  At this point I would like to make a general comment. It is extraordinary how quickly some commentators focus on public service pay when difficulties arise in the public finances, as if the public service pay bill represented a soft option and presented an easy, ready-made quick fix solution to all our difficulties. They forget that the pay bill derives, firstly, from the number of people we employ in areas such as the health services, the education area, the security services and services to the unemployed and others who are disadvantaged and, secondly, from the rates of pay fixed for these employees through the agreed industrial relations procedures. These same commentators would be the first to react if any cut-back in the pay bill resulted in a cut-back in the level of services provided for the community. They really try to have it both ways. As far as the rates paid to these staff are concerned, these derive, as I said, from the system of collective bargaining and arbitration which applies in the public service. This system has served the public service and the community well over the years.

All this does not of course mean that I am completely happy with the public service pay scene. The scale of the pay and pensions bill and the extent of its growth do become very significant factors where the public finances have to be grappled with. A particular feature which does concern me is the speed at which, through various established paths and channels, increases secured by particular groups pass quickly to numerous other groups who have little in common in terms of role or function. Perhaps the time has come to have a serious look at the systems through which pay is determined in the public service and the age old basis for special relativity claims, which are overdue a full review in today's changing circumstances.

[1025] On the question of efficiency, I would like to remind the House that much has been done in recent years. Public service numbers have been significantly reduced, the efficiency audit group was set up, major efficiency studies in the Office of Public Works and the health area were completed, and there was a significant rationalisation of State bodies. In addition, a substantial investment in technology took place with the result that a number of our larger Departments are now as technologically advanced as many of the most progressive private sector companies. It is the Government's intention to press ahead with further measures in the area of efficiency and the elimination of wastage.

Turning now to economic developments, I would like to begin by stressing one simple message. Whoever else is “in recession” we are not. This assessment is not mine alone. Look at the latest independent judgments — for example, those of the OECD, the Central Bank and the Economic and Social Research Institute——

Mr. Farrelly: Information on John V. Farrelly  Zoom on John V. Farrelly  Ask the business people in the country.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  ——which are clustered tightly around an output growth rate of about 2 per cent, the range being from 1.75 per cent from the Central Bank to 2.25 per cent from the OECD. I might add that those in the financial community who make growth forecasts are also of the view that Irish output will expand this year — the lowest forecast I have seen is an estimate of 1.25 per cent.

I can understand that this modest anticipated progress is disappointing, essentially because we are measuring it against our much more rapid advances in 1989-90 when our economy grew by a cumulative 11 per cent. We must keep this slowdown in perspective. It is a very solid performance when viewed against the current international background. This year the OECD expects average growth among its member states to be about 1.1 per cent. The EC is looking to an average of 1.4 per cent. So what are [1026] all the outside forecasters saying? Again, I want to keep the message simple. All are suggesting we will outperform the OECD average this year. All bar one suggest we will outperform the EC average — and that one puts our anticipated performance virtually in line with EC members, on average.

Despite weaker international growth the statistics show a very credible growth in Irish exports. In the first four months of the year export volumes increased by around 4 per cent over the same period of 1990. Manufacturing output in the first quarter was up by 4.5 per cent in volume. These are quite encouraging outcomes. Even more heartening are the signs that the so-called traditional sectors are growing despite the unhelpful pattern of the slowdown. They are showing particular resilience against the background of the recession in our largest trading partner, the UK, where over 22,000 businesses have closed down over the past six months.

They are part of a pattern which suggests that the employment gains of recent years are being retained, indeed improved upon, even if more modestly than any of us would wish. They tally with the evidence of income tax and related receipts, which are well on course. We will have to wait for some months yet before we have employment figures for last April from the Central Statistics Office. I am confident that they will demonstrate — as the preliminary census results did, that employment trends have not been a factor in the increase of the live register.

These data, and the forecasts, all paint pretty much the same picture — of an open economy being hit hard by the international downturn. It is a downturn which affects Ireland more than many other countries. Two of our best trading partners are in recession — unlike us, they are experiencing falling output. Their recessions represent lower demand for our exports and lesser inclination to invest abroad — and in Ireland — as well as at home. Indeed, in the OECD area as a whole, GNP growth fell to 1½ per cent in the second half of last year; and [1027] there was little, if any, growth in the first half of this year.

The fact that, with recession or slowdown throughout most of the developed world, we are continuing to expand exports and manufacturing output is a strong endorsement of prevailing economic policies. Without the cost and other competitiveness gains which have been achieved in recent times, our ability to continue succeeding in international trade would have been that much less. The OECD forcasts, to which I have already referred, see us increasing our share in world markets for manufactured goods again this year. This is all the more credible given the major gains we have achieved in market share abroad in the past. Using the same OECD definitions, the volume of our exports of manufactures expanded some 5 per cent faster than the markets into which we sell those goods, in both 1989 and 1990.

Competitiveness, especially on costs, remains sound. The gains we have made remain in place. They are standing to us now, and will continue to do so as external markets improve and growth gathers pace. Indeed, if confirmation were needed, this week's balance of payment figures demonstrate yet again that we have well recovered the ability to pay our way even in the more challenging market conditions prevailing today.

Our inflation remains lower than in most of the developed countries. At a shade above 3 per cent, it is well below the forecast EC average for 1991, of 5 per cent and, in the context of the taxation provisions of the budget and the pay developments of the PESP, continues to underpin rising living standards on the basis of moderate income increases. I have no sense of complacency, however, about our performance. While I want to put the current slowdown into perspective that does not mean that we can sit back.

We have a major unemployment problem. The fact that it reflects the UK recession rather than a downturn in [1028] employment at home is no consolation, either to me or to those without jobs.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Blame John Major.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Our people will not thank the Deputy for his sneering attitude to one of the most serious problems in society.


Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I want to emphasise, however, the key source of the worsened live register trends. They are our clearest sign of the effects of the UK recession. The recent census figures show that net emigration in the year to April last fell by 30,000 compared with the year to April 1990. The rise in the live register in the same period was 32,000. There is an undoubtedly strong connection between the two figures. This change in migration patterns underlies the vast bulk of the difference between the current level of unemployment and that for which provision was made in this year's budget. In saying this I am not trying to suggest that in some sense or other the UK or other countries are to blame. I am simply presenting a fact of current economic life which we have to face up to and deal with.

For me, as Minister for Finance, it poses the question of financing the £66 million or more which the extra numbers on the live register represent in welfare payments. It challenges all of us still more on a personal level. Working together, we have to find ways to intensify the employment content of growth, and to speed growth itself.

The indications are that the worst of the international recession is behind us. Modest growth should get under way in the second half of this year, when the OECD predict that OECD-area GNP will grow at a annual rate of almost 2½ per cent. They expect an acceleration to 3 per cent next year.

Of course, there remains some uncertainty about the timing of the expected upturn. The consensus view — reflected in the OECD's forecasts — is that it will emerge in the second half of this year, [1029] and will strengthen through the first half of 1992. Naturally, there is greater uncertainty as to when precisely the upswing may commence in individual countries. Not all countries entered the downturn together; equally, no one expects a simultaneous recovery across the industrialised world, but all agree it is coming.

Whatever these uncertainties, the OECD suggest that the UK economy will record a growth rate of over 1½ per cent next year, and the US over 3 per cent. From our viewpoint, these forecasts suggest a remarkable turnaround from the declines of 1991 — of 1¾ per cent in the UK and ¼ per cent in the US.

At this time more than ever before we are well placed to extract the maximum benefit from this foreshadowed improvement. But, to do so, we must continue to maintain the disciplined approach which has been serving us so well. This means that we must ensure that nothing undermines the narrowing of interest rate differentials which has brought us so much benefit, both in investment terms and from the narrow budgetary viewpoint, over recent years. The differential between Irish and German interest rates has narrowed from 9 per cent in 1987 to just over 1 per cent today. We must similarly ensure that nothing undermines the competitiveness gains made; here, the aim must be to enhance our relative position — not simply to stand still relative to our trading partners. Furthermore we must seek to improve the functioning of the economy by structural improvements on all fronts. We must make the very best use of all our resources. We must minimise — if not wholly remove — such barriers to growth and development as still exist, where the purposes they serve have a lower priority than employment creation.

There are few easy options, if any. There never are. A headline this week in one of the evening newspapers referred to “Albert the Axeman”.


Mr. Farrelly: Information on John V. Farrelly  Zoom on John V. Farrelly  It should have been “Albert the Knife”.

[1030]Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Let me say, firmly, that if it is not to be “the axeman” then we will have to face up to the alternative, “the taxman”. The course our society chooses on spending determines the burden of taxation. We must pay our way. The Government have a policy of reducing taxes, not increasing them. Any attempt to put off the day of payment — resort to borrowing — would jeopardise Ireland's profile as an attractive investment location. It would undo our hard-won gains on interest rates. It would undermine the very objective that it might be supposed to serve — employment growth. We have learned the hard way that artificial attempts to boost growth just do not work. We have been down that road in the past and know that it is as ineffective as it is costly. There is no case for short term expediency. Our eyes, and our policies, must continue to be firmly focused on the longer term. If we do not put the future first, there will be far less `future'. Keeping to a successful strategy, one which looks to the future as ours does, is the surest guarantee of wellbeing for Ireland right through this decade.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  What about employment?

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Turning now to the Finance group of Estimates, I might first explain to the House that as usual——

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick East): On a point of order, the Minister is now moving on to specific Votes. We are all waiting for the Minister to announce where he is going to make cuts. When is he going to tell the House where those cuts will be made?

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  That is not a point of order.

Mr. Farrelly: Information on John V. Farrelly  Zoom on John V. Farrelly  This is a load of rhetoric.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick-East): The [1031] Minister has finished the macro-economic section of his speech and we still do not know what is happening.

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  We have heard much about the importance of Estimates and the Chair shares that view. The least we might do is listen to the Minister when he addresses the House. Deputies will then have an opportunity of replying.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick-East): I would like the Minister to clarify this minor point.

Mr. Roche: Information on Dick Roche  Zoom on Dick Roche  It is not a point of order.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick-East): The Minister is——

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  Deputy Noonan is being disorderly and he knows it.


An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  Deputy McCormack, your understanding of personalities outside the House is not in order either.


Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  In the unruly start of my address to this House I made it quite clear that the corrective process that just began last Tuesday would resume this afternoon and would continue for whatever period is necessary to make the appropriate adjustments.

Mr. Noonan: Information on Michael Noonan  Zoom on Michael Noonan  (Limerick-East): That is going to be difficult.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Nothing is easy.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  The House is not going to be told anything about it.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  We will not do the bank holiday flip as the Government did in 1983-84, with the food subsidies and [1032] so on. Fine Gael disappeared and left the Labour Party Leader, Deputy Dick Spring, to try to satisfy the people.

Mr. Roche: Information on Dick Roche  Zoom on Dick Roche  He did a good job, given the circumstances.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Yes, he did; fair play to him.

Mr. Farrelly: Information on John V. Farrelly  Zoom on John V. Farrelly  Are Fianna Fáil going to leave it to the Progressive Democrats?

Mr. Enright: Information on Tom Enright  Zoom on Tom Enright  Instead of a flip, this Government will do a triple somersault.

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  The Chair would be reluctant to accuse the Minister of inviting or seeming to enjoy these interruptions. The Minister, without interruption.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Turning now to the Finance group of Estimates, I might first explain to the House that, as usual, the Minister of State at my Department, Deputy Vincent Brady, will deal separately, later in the debate, with the Vote for the Office of Public Works. The Finance group as a whole consists of 15 Votes and the total net provisions sought for 1991 is almost £554 million, or £454 million excluding the Office of Public Works Vote. As is usual, the pay element of the various Votes accounts for a major proportion of the total expenditure of the Finance group — about four-fifths of the total. This is because most of the offices in the group are very labour intensive. For example, 84 per cent of the Revenue Commissioners' Estimate is spent on pay. Whereas that Office has very little of what we call programme expenditure, it is the work they do which enables most other expenditure programmes to proceed.

In regard to “Increases in Remuneration and Pension”, this is a global contingency provision to meet additional costs in 1991 of the general pay increase under the pay agreement which forms part of the Programme for Economic and Social Progress. It also includes any deferred special increases for which no [1033] provision had been included in the Abridged Estimates Volume. Allocations from this Vote will be made to Departments and agencies later in the year to meet any such costs to the extent that they cannot otherwise be met from their existing allocations.

As far as my Department are concerned, the bulk of the Finance Vote covers expenditure of an administrative nature. In general, I have tried to contain overall administrative costs in line with the Government's policy of reducing public expenditure. The greatest variation in expenditure occurs in subhead A. 2, Consultancy Services, where provision has been made, inter alia, for the costs associated with the flotation of Irish Life, Greencore and the possible sale of the State's shareholding in the Industrial Credit Corporation. As Deputies are aware, the recent Stock Exchange flotation of Greencore plc proved extremely successful. The sale of 27.4 million of the State's shares in the company at £2.30 per share realised £63.02 million receipts. This came into the Exchequer as a capital receipt, as included in this year's White Paper on Receipts and Expenditure and built into this year's budgetary arithmetic. Approximately 38 million shares, or 45 per cent, with a valuation at flotation price of £87 million, were retained by the State. Not only has this flotation allowed the State to obtain some return for its investment in the Sugar Company, during the eighties but it has also opened the way for the development of a major Irish-based food company able to compete and expand in the Single European Market.

A sum of £1.7 million was provided in subhead A.2 for the cost to the State of the flotation of Greencore. This Estimate comprised a number of items — for example, commissioners' fees, financial advisers' fees, publicity etc. With the flotation now successfully completed, it is estimated that its actual net cost to the Vote is £1.2 million, giving a saving of half a million pounds.

As the House knows, the Government decided in March 1990 to proceed with the restructuring of Irish Life to enable [1034] it to develop into an Irish-based international financial services company in the insurance field. The Government also announced their intention to reduce their shareholding in the restructured company from approximately 90 per cent to 34 per cent of the shares by a sale involving public flotation while retaining a “golden” or special share which would limit the size of individual private share-holdings after flotation and safeguard against takeover attempts.

The offer for sale of the Minister's shares was announced yesterday at an offer for sale price of 160p per share. This sale of shares will result in gross proceeds for the Exchequer of £270 million. As I said yesterday in announcing the share price, I am very pleased at the interest shown in the offer for sale and the recent roadshow presentations by the company, which were well received by prospective institutional investors both at home and abroad. The prospectus has been published and it is up to investors to make up their minds. I cannot go into any more detail on the offer because of both legal and underwriting arrangements.

The Estimates for the Department include a provision for the costs of the sale of Irish Life. The costs, which are substantial, include advisers, legal fees, marketing, receiving agents and underwriting. The appointments were made on a competitive basis and at competitive fee rates. The costs will not be finalised for some time.

As regards the Industrial Credit Corporation plc., no decision on the future of the ICC has yet been made. I have appointed Stokes Kennedy Crowley Corporation Finance Ltd. to advise me on the options available in relation to its future development and capital requirements. SKC are, in this context, examining the option of a sale of the State's shareholding in the ICC and will report to me on any developments in this regard.

The National Treasury Management Agency is now operational and the borrowing and debt management functions of the Minister for Finance have been delegated to the agency. The establishment of the agency will enable [1035] greater and more specialised resources to be applied to the vital and complex task of managing the national debt. This in turn should translate into savings on debt service costs and, in fact, the budget arithmetic for 1991 provides for a saving of £40 million this year by the agency.

As I have already remarked, expenditure under the Revenue Vote is largely on pay. However, there are some issues related to the Vote which will be of interest to Deputies. The Office of the Revenue Commissioners is included in the Government's decentralisation programme. The Government's commitment to this concept is prompted by the need to help reduce regional imbalances and provide a welcome economic boost to areas outside the capital.

Mr. Enright: Information on Tom Enright  Zoom on Tom Enright  If the Government keep the 550 sub-post offices open it will be a help.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  If I recall correctly, Tullamore is getting something. If they do not want it, they should send it back and we will send it somewhere else.

Mr. Enright: Information on Tom Enright  Zoom on Tom Enright  We would like the post offices open also.

Mr. A. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  This policy is of major significance in the social and economic life of the provinces. In setting the level of the Revenue Vote this year I have allowed for the costs of the decentralisation programme which will see the transfer of 900 Revenue staff to Limerick, Nenagh and Ennis over the next two or three years. Construction work on the premises in both Nenagh and Ennis is now well under way and work on the Limerick premises should begin during the course of 1991.

Major improvements have taken place in recent years in the area of tax collection and enforcement. In the Programme for Economic and Social Progress the Government undertook to continue this trend and, indeed, an extra [1036] £1 million was made available to the Revenue Commissioners in the budget in connection with special tax collection initiatives. An additional £30 million is expected to be collected from tax defaulters as a result of the various measures under the initiative. I have also provided in the Estimate for the ongoing programme of self-assessment audits — enforcement is the essential factor in ensuring the effectiveness of the self-assessment system and results to date support this approach. A further development in the progress towards full mandatory self-assessment for directly assessed taxes is provided for in the 1991 Finance Act with the extension of self-assessment for capital gains tax.

Expenditure on the smaller Votes is relatively small and non-controversial. Accordingly, I do not propose to do more than advise Deputies of the main changes where they arise.

There is some increase in the President's Establishment Vote to make provision for additional posts and associated expenditure; and to allow for two State visits abroad by the President in 1991. This compares with only one State visit last year, to Japan, in view of President Hillery's commitments during our EC Presidency in the first half of the year, followed by the change in office in the autumn. The Presidential Establishment (Amendment) Act 1991, which was recently passed by both Houses of the Oireachtas, also increased that part of the emoluments and expenses of the President which is spent largely on entertainment from £15,000 to £100,000 a year. This money is, of course, payable from the Central Fund and does not form part of the annual voted Estimates that we are now debating.

The Supplementary Estimate for the Oireachtas is to permit the Broadcasting Unit to operate its facilities on a commercial basis when these are not required for the use of the Houses. The wording of the relevant subhead does not include such activities at present and has been amended to do so.

The Supplementary Estimate also provides for unanticipated expenditure in [1037] connection with the British-Irish Inter-Parliamentary Body, which is funded from the Grant-in-Aid for Cumann Parlaiminteach na hÉireann.

Deputies will also notice a small increase in the State Laboratory's expenditure. This mainly finances additional staff and equipment to facilitate an intensified programme on behalf of the Department of Agriculture to detect and eliminate the use of the illegal growth promoter in cattle, commonly known as “Angel Dust”.

I have allowed for a limited programme of recruitment in the Estimate for the Civil Service Commission. This allows only for the filling of vacancies judged necessary by my Department. To handle the increased workload the Commissioner's staffing costs for 1991, at £1.29 million, show a projected increase of 14 per cent over the corresponding figure for 1990. This increase is required to meet the full year cost of extra staff taken on throughout 1990 by the Civil Service Commission itself. All Departments which now have administrative budgets for three years will have discretion in filling vacancies up to Higher Educational Officer level but will have to meet the costs from within their existing allocations. This will ensure that increases in numbers serving will be kept to a minimum in line with Government policy but there will be a saving of two per cent each year on staff costs. Increased advertising costs and a new programme of computerisation for the Civil Service Commission have also been provided for.

With these comments I commend the Finance Group of Estimates to the House. I look forward to a constructive debate over the next week on the wider issues I have covered earlier in my contribution.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Article 17 of the Constitution states: “As soon as possible after the presentation to Dáil Éireann under Article 28 of this Constitution of the Estimates of receipts and the Estimates of expenditure of the State for any financial year, Dáil Éireann shall consider such [1038] Estimates.” As far as expenditure is concerned that is a very serious responsibility that Dáil Deputies are asked to exercise under the Constitution. It is part of our responsibility to the taxpayer to approve expenditure in such a way as to ensure that the taxpayer gets value for money.

The very fact that these, the Estimates for 1991 presented seven months ago, have not been considered at all by Dáil Éireann before this morning is unconstitutional. Half of the money has already been spent. Would any other organisation charged with the responsibility of authorising the expenditure of other people's money accept the authorisation of expenditure in such a way, after half of it had already been spent? Dáil Éireann is being asked to do just that here today. That the Government today, for the first time in parliamentary history, should ask the Dáil to replace traditional consideration of individual Estimates of individual spending by individual Ministers by what is in effect a meaningless and rambling adjournment debate that is going to last through four days is a gross affront to Dáil Éireann and a gross departure from the responsibility that Members of the Dáil have for the taxpayer's money.

It is now several weeks since I made clear the position of the Fine Gael Party on this matter, warning of the constitutional impropriety — and I have received legal advice on this—of denying Dáil Éireann the opportunity to carry out its duties in scrutinising the Estimates to ensure that taxpayers' money is properly spent. Let us not forget that every penny of the £6,000 million worth of expenditure to which we are being asked to agree in this single debate, in such a cavalier way, has been raised from PAYE and other hard-pressed taxpayers. They elected us to ensure that that money was not wasted, yet we are not being allowed an opportunity for proper examination. We are being asked to have a long and rambling debate with no scrutiny and, at the end of that, to simply rubberstamp, without any amendment, what the Government propose to do with the money.

[1039] The format of this debate — and let me make it clear that it is the format of the debate and not the time allocated to it to which Fine Gael object — denies all opportunity to Deputies to examine whether the taxpayer is actually getting value for money, because, as I said, for the first time Dáil Éireann is being denied any opportunity to scrutinise any individual Estimate for any individual Department. It is the first time in the history of Dáil Éireann that such an en bloc procedure is being used.

I believe that the present Coalition Government do not in any sense regard themselves as being answerable to this Dáil. They consider the Dáil a burdensome duty to be magnanimously offered more time under a grandiose gesture, hoping that such patronisation will satisfy Deputies. We may be offered more time, but we are being denied the opportunity to do our job, and that is why the Fine Gael Party have decided to take a stand on this matter in the debate. We are offered more time — more time for what? Is it more time to examine how the taxpayer's money is being spent? Not at all. Is it more time to examine expenditure line by line? Not at all. It is not even more time to examine individual Departments one by one.

It is a measure of the decay into which parliamentary procedure in the House has sunk that anyone could imagine that the delivery of typed-up speeches by Ministers, many of which will not have been even read by a Minister before he or she goes into the Chamber to deliver them, constitutes anything useful in a parliamentary sense, yet that is the way the next four days will be taken up and that, we are told, is the Dáil considering the Estimates of expenditure. It is not the Dáil considering the Estimates of expenditure. It is not in accordance with Article 17 of the Constitution. It is directly contrary both to the spirit and to the letter of the constitutional responsibility of each and every Deputy in the House in relation to the expenditure of the taxpayer's money. The point at issue between Fine Gael and the other parties [1040] in relation to this debate is not, as I have said, a matter of the time allowed for the debate. The point is that the form of the debate renders the discussion completely meaningless. For the first time all Estimates will be voted together in one block. Does any Deputy on the Government benches, or, indeed, in the Labour Party or The Workers' Party, not understand that even if the House heard months on end of word processed speeches prepared by civil servants we still would not be performing our constitutional responsibility to consider the Estimates because there would be no dialogue, no questioning, no consideration and no examination of the Estimates.

This debate is, to use a phrase from another era, nothing more than an empty formula. Fine Gael do not accept and will not accept, whether in Government or in Opposition, having debates of this kind in respect of the Estimates ever again. I say that solemnly and carefully, knowing what I am saying. As far as I am concerned this type of debate in respect of the Dáil's serious responsibility for approving the expenditure of taxpayers' money will never be allowed to happen again. It is an affront to parliamentary democracy which Fine Gael will never again accept.

Because of the budgetary overruns in 1991 it is now also clear that the Government intend to avail of the early Dáil recess, which this debate is intended to facilitate, to actually alter the very Estimates which the Government want us to approve in this debate. These alterations and cuts will probably destroy many jobs and add further to the dole queues. Yet in this debate there will be absolutely no accountability for any of the decisions that are to be taken. There will be no opportunity to question any individual Minister on the cuts that might or might not be considered in his or her Department. Because Dáil Éireann has agreed to a succession of monologues instead of a proper debate, nobody will be allowed to question anything.

From 1987 to 1989 this House, through the action of Fine Gael, in particular [1041] of my predecessor, kept a rein on the Government as a result of which the Estimates and expenditure and budgetary policy were kept in order. However, since 1989, through its new Coalition arrangement with one other small party, the Government now find themselves off the leash as far as the control of the nation's finances are concerned. We see the results of that directly in the overrun which the Government want to tackle as soon as they pack the Dáil off on holiday.

I say again that this House must have real control over the expenditure it authorises. Fine Gael alone among the parties in this House published detailed proposals for a committee system with terms of reference spelled out as to how accountability could be achieved. Last year we put forward proposals for a comprehensive committee system to deal with the Estimates. That is something we intend to implement and use every parliamentary opportunity to press for. Because of the format of this debate, agreed to yesterday and facilitated not only by Fianna Fáil and the Progressive Democrats but also by the abstention of the Labour Party and The Workers' Party, no opportunity will be afforded for detailed questioning of individual Ministers on any of the cuts that they will make as soon as the Dáil has been sent on holiday. If, on the other hand, we had had, as Fine Gael wanted, a proper Estimate debate on individual Departments with time at the end, which is provided for in Standing Orders, for questioning of Ministers, then it would have been possible——

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  It is not in Standing Orders. The Deputy is wrong.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  ——to follow up where the Government intend to make the cuts once the Dáil has gone on holidays.

I just cannot understand how the Labour Party and The Workers' Party, who are so concerned in various debates about maintaining public services, would wish to hand up, as they did, the opportunity of questioning individual Ministers [1042] about where they intend to make individual cuts. Yet by abstaining and going along with this guillotine for the creation of a totally meaningless Adjournment Debate, the Labour Party voluntarily gave up the opportunity to question individual Ministers in regard to spending.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  That is not correct.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Those two parties on this occasion——

Mr. Dukes: Information on Alan M. Dukes  Zoom on Alan M. Dukes  You want to take the pressure off yourself.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  You are wrong.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  To say the least, those two parties on this occasion suffered what I hope is no more than a temporary lapse of political judgment.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  It was not on offer.

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  The provision for questioning does not exist.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  Deputy Bruton is wrong.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  The issue here is that of the accountability of the Executive to the Parliament. This goes to the roots of parliamentary democracy and of the Irish Constitution. This debate on the approval of the spending of £6.8 billion of taxpayers' money does not meet this basic test of accountability. Fine Gael's minimum has been that each Estimate be debated individually and that there should be a question and answer session for a fixed duration at the end of the debate on each Estimate to allow cross examination and accountability for individual spending proposals before those spending proposals are accepted.

There is not a single parliament in the world, not a single county council in this country, not a single annual meeting of a company in this country, not a single trade union, not a single voluntary organisation that would not insist on the right to have its executive answer questions on individual spending proposals before [1043] those proposals are accepted. Not a single county council would accept it. Not a single parliament anywhere else in the world, not even the most minor urban council, not even a resident's association would give carte blanche in this way to its executive. Yet Dáil Éireann is prepared, it appears, to allow this Fianna Fáil/Progressive Democrats Coalition to spend the people's money without any opportunity to question the way in which that money is being spent.

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  As you did some years ago.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  All that Fine Gael have asked for in this debate is that the Dáil should exercise that minimal democratic right. That was refused. That being the case, we have no option but to take no further part in an empty series of prepared monologues which totally fail to fulfil Dáil Éireann's responsibility in regard to the authorisation of the spending of taxpayers' money. We are therefore withdrawing from this farcical debate, which is a waste of parliamentary time.

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  That is a cop out. You are caught offside.

Fine Gael Deputies withdrew from the Chamber.

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  I am calling Deputy Ruairí Quinn.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  Let them have their moment of drama, please.

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  Close the door on the way out.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  While some of the departing colleagues from the Christian Democratic European People's Party Alliance are still within earshot, let me say that the provision to scrutinise and ask questions to which Deputy Bruton consistently referred simply does not exist, [1044] as the Minister of State in the Department of Finance said in a number of interventions.

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  That is correct.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  Let some people in the Press Gallery or elsewhere think that the Labour Party in some way forfeited an opportunity to take part in a question and answer session to get responses to specific questions, that is not correct, because such a session is not provided for in Standing Orders. Perhaps the Minister of State would confirm that and let the record show that he nodded his head very vigorously.

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  The Deputy is quite right.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  Fianna Fáil and the Progressive Democrats stand exposed. This Government — sometimes described, usually by itself, as the best Government in the history of the State — is now presiding over the biggest budgetary miscalculation since the year they cooked the books. At that stage they were all one big happy family. President Bush once described the economics of his predecessor, Ronald Reagan, as “voodoonomics”. By way of defining this term he gave the analogy of a man taking target practice with a double barrelled shotgun. “What's the target?” the man asked. “Whatever I hit, that's the target” he replied. Using this definition our Government would not even be put in charge of Scud missile practice. After all, Scud missiles are seldom more than 300 miles off target. This is a Government who believe in a free economy.

In the private sector if the financial controller of a large enterprise had to report to his board of directors that despite all the pruning and cost cutting they had agreed to, despite all the sacrifices made by the workforce, he had got his sums so totally wrong that they had to go back to the drawing board again, there is no doubt but that he would be sacked immediately. When someone who has trumpeted his managerial skill and competence from every rooftop in [1045] the land is revealed to be managerially incompetent, there is only one honourable course to take. The least we are entitled to in this debate is an admission that the Minister got it wrong this year. Many on this side of the House believe that what we should be debating here is the Minister's resignation and not Estimates that have been rendered meaningless by the Minister's incompetence and which will be changed as soon as this House adjourns. Instead, the Minister, with the connivance of the two Governments in office, is preparing to cook the books again. All the signs are that the Government will use the £270 million that comes from the sale of Irish Life this year to cover up their mistake and to present a picture at the end of the year that is very far from the truth.

Lest I be accused of inventing this allegation in the last couple of weeks, I said this on the night of January 30 on television after the budget had been introduced. If the proceeds from Irish Life are used in that manner, they will have been squandered in a once-off cover up of our true financial position and will represent one of the greatest financial scandals we have ever seen. That money should be used for new investment in the economy. That is the only basis on which the selling off of assets can even be partially justified. To use the money to cover up financial mismanagement would amount to what the Leader of the Progressive Democrats once called, in a different context, a fraud on the people. It would also be a total waste, because once Irish Life is sold and the money is spent it cannot be used again. It would be as if the financial controller to whom I referred earlier were to recommend to his board that in order to cover up a shortfall in the accounts they should agree to sell off essential plant and equipment and that it does not matter if the factory grinds to a halt as long as the auditors are kept happy.

The essential point here is that this Government cannot say that they were not warned. The budget debate and the debate on Second Stage of the Finance [1046] Bill are a testimony to the various warnings given inside and outside the House. On the day of the budget a number of commentators told the Government that their projections were simplistic and wrong, that their estimate of economic growth was too high and that the allowance made for unemployment was far too small. My colleague, Deputy Michael Higgins, will go into this in some detail.

I hope the Minister of State at the Department of the Taoiseach will accept that this is not something that has happened suddenly. A number of commentators and analysts in January told the Government that they were getting it wrong and that they would live to pay the cost. The Government ignored the warnings and described people who issued warnings as being mischievous and as trying to talk down the economy. They ignored all the danger signs of the last six months when it was obvious that the budget was going seriously astray. They are ignoring the truth even now when it is staring them in the face.

I look forward to the contribution in this debate by the Leader of the Progressive Democrats. I want to hear him explain his role in this affair. I want to hear him explain why he felt it was more judicious to remain silent throughout the local election campaign while the Taoiseach was assuring all and sundry that the budget was on course, that there was no problem, that there would be no need for adjustment. We all know that the Taoiseach only said these things because to tell the truth at that time would have been to run the risk of losing even more seats in the local elections. But the Leader of the Progressive Democrats has made his political reputation on the basis of his concern for integrity and accountability. His silence during the local elections campaign and his continued posturing about tax reform, when all along he knew how far off the rails the budget was, must surely blow that reputation out of the water.

For him, it now appears, the winning of local authority seats was more important than the maintenance of some shred of [1047] Government integrity — just as it was once before, when the experienced Cabinet Minister, Deputy O'Malley, helped to preside over the 1977 election manifesto that continues to be at the root of our fiscal problems. The Progressive Democrat leopard might change its party, but never its spots.

The net effect of all this, of course, is that we are debating a set of Estimates today and next week that are almost entirely meaningless. The Government are preparing to kick our parliamentary democracy in the teeth once again by allowing a charade of a debate for the next week and then announcing the real decisions when the House has risen for the summer, in the hope that nobody will notice. I would remind the Government that August is a very wicked month, that we once got caught in August and the scars are still there for all to see. I would caution the Government against a belief that because people go on holidays nobody will notice severe budgetary decisions.

The cuts that are being planned at the moment will not be debated here, where they should be, because the Government instead will try to do it by stealth. I would warn the Government that if they are not debated here they will be debated elsewhere and everywhere. I warn the Government that it will not matter to us whether or not they secure the support of the social partners for some of the things they have in mind. We will resist in every way open to us any resolution of this budgetary problem which is based on the principle that those who are most vulnerable should be squeezed again or that the numbers of people at work in the public service areas of the economy can be further reduced. And we will not tolerate any postponement of some of the essential commitments already squeezed out of this Government.

There has been a lot of talk about no renegotiation of the PESP. My trade union colleagues, who voted so enthusiastically for the programme and who debated part of its contents in Killarney [1048] during this week at the ICTU Conference, may not generally recognise that the Government would not need to renegotiate the PESP to do some of the things they are no doubt contemplating. Appendix B of the programme, for instance, leaves room for the Government to reintroduce a programme of redundancies. There is nothing to stop the Government from simply reneging on their commitments to recruit 250 extra teachers for primary schools this year and a further 250 teachers at second level.

But I want to assure the Government that we will campaign at every level open to us to ensure that if they implement any policies along these lines, they will be severely punished. The decisions facing the Government now must be informed by two underlying principles, if they are to be just. These principles are that absolute priority must be given to the need to maintain and protect employment. That is the first and most important crisis facing us. We said that in January in our budgetary contribution. More and more economic commentators, most recently the ESRI, have drawn attention to that aspect of the failure of our economy — the failure to provide sustained employment for the vast majority of our citizens seeking work.

The second principle is as follows. There must be a clear understanding of the need to preserve whatever shred of social justice is still left after three years of cutting essential public spending. What this means is that the problem facing us now must not be addressed by further cuts in education, health or social welfare or by postponing much needed improvements which have already been promised. Neither can the problem be addressed by forcing more people out of work, especially people who are carrying out essential functions. If the Government take this road to cover up their incompetence they will be severely punished.

In his Second Stage speech the Minister said — this was not properly heard in the rúile búile — and I quote:

In the event, the recession in the [1049] UK and the US has been deeper than anybody either here or internationally foresaw, investor and consumer confidence worldwide has taken a correspondingly bigger knock, and the fallout of adverse employment trends abroad on the live register here has been greater than could possibly have been foreseen.

Even if someone else wrote his speech, the Minister is responsible for it. It is not true for him to claim in July 1991 that the fallout and the recession in the UK and the US has been deeper than anybody here or internationally could foresee. There is something wrong internally in the Department of Finance if that view is allowed to prevail. I am not saying that this was the unanimous view of people in the Department of Finance — clearly that is not the case — but it is simply not true to say that we are the victims of international market forces which came up and surprised us all.

It has to be said to the citizens who pay taxes in this country that our Civil Service employs very smart people. Fortunately, some of the brightest people who come through our educational system go into the public service. Their integrity is a byword. The Department of Finance have traditionally taken the cream of those people from the Civil Service Commission entrance exams. The private sector market has recognised their skills and brilliance by head hunting them over the years. Therefore, I do not believe that this set of recessionary figures came as a surprise to them. That is the first political charge I want to make. That statement is a slur on the competence of this Republic and on the citizens who have given their time to work in the public service on behalf of all of us. It also belies our ability to manage our affairs more efficiently.

In his budget speech on 30 January this year the Minister for Finance said:

The international slowdown is going to have repercussions on our growth prospects. There is no avoiding that, but I am still confident that we can make progress — economic and social [1050] progress — this year. It is just likely to be at a more modest pace than in the recent past.

This is a correct statement and proves that the Minister knew about the international recession on 30 January this year. He went on to say:

Taking all factors into account, I am projecting output growth this year of around 2.25 per cent, with real GNP up by around the same. That kind of growth should stimulate more gains on the employment front.

At that time commentators said this was an incautious, imprudent and unwise forecast. As the Minister said in his speech today, the prevailing level of optimism in the Department of Finance is usually lower than that of surrounding commentators and forecasters. Therefore, something has happened or is happening in the political decision-making process of the two parties in Government which belies their claims to managerial competence and being fully truthful about the figures.

In his Second Stage speech on the Finance Bill which gave effect to the budget proposals, on 30 April this year, the Minister said:

Though it will be no easy task to attain our Budget Day forecasts for growth, I remain optimistic about the short term prospects for the Irish economy.

We were heading into local government elections at that time and the Minister could not state out loud what every business person has been saying consistently since the end of the Gulf War, when the so-called positive effects which would benefit the western economies did not materialise. The major western economies were heading into a recession and the Gulf War had little or nothing to do with it, except in some areas of tourism and international travel.

The Department of Finance are not incompetent, are not without skills or their array of access to detailed and accurate information; but for political [1051] reasons alone the Minister, with the support of the Leader of the Progressive Democrats and the Taoiseach, found it politically convenient not to tell the public the truth — they believe it would have precipitated more losses for the Fianna Fáil Party in the local government elections and not as many so-called gains for the Progressive Democrats. If that is the kind of political decision-making process adopted by a Government who purport to call themselves the best in the history of the State, then the people and children of this State are in for a very rough ride indeed.

I want to refer to some specific items in relation to the administration of the Department of Finance to which the Minister referred in his speech. I can understand why he did this — it was not clear at the time this speech was being put together what way the Estimates debate would be handled in this House. We have a small, fragile open market economy and are more dependent on international forces than most other European nations. In comparison to other countries, the things over which we have exclusive national control are relatively limited in terms of their economic impact upon our society. Therefore, it is more important in the overall frame of things that we should be as efficient and competent as is humanly possible in those areas over which we have total control domestically, administratively and politically. It is my charge — this will be the challenge of the decade for this country in the areas over which we have total control, and this is not just confined to the Department of Finance — that we are grossly inefficient and incompetent in the way in which we do some of our business. I will give two precise examples.

We were told repeatedly — I am sorry the Minister of State with responsibility for the Office of Public Works is not present to hear this; perhaps his predecessor will reply at an appropriate stage to the comments I make — in respect of the refurbishment, which I supported, of the Government Buildings adjacent to [1052] Leinster House vacated by the College of Engineering that the bulk of the cost of that capital expenditure would be financed from the sale of the houses in Merrion Street. That was an eminently sensible provision, as the Georgian properties, including the house of the Duke of Wellington, were no longer suitable for office accommodation. I did not see anything wrong in selling these houses and using the proceeds to refurbish a building which was being given back to the State by virtue of the College of Engineering moving out to Belfield. However, I have to say that the Department of Finance handled the sale of the buildings in Merrion Street in an outrageous and grossly incompetent way.

The second guessing with regard to the sale of those properties in an effort to do the job which the planning department of Dublin Corporation are supposed to do in preserving the architectural heritage of this city has led, as any property developer would tell one, to a damper being put on the sale of those properties. I have not been able to get information on the receipts raised for the Exchequer from the purported sale of the three lots of property across the street. If the properties had been sold two years ago when property values were high I am told that the proceeds would have been of the order of £13 million or certainly far higher than what we will ultimately get for them. More to the point, had they been sold two years ago they would have been redeveloped but now these semi-derelict buildings across the street from the Department of the Taoiseach, the Department of Finance and Leinster House itself are more a physical indictment of our competence and the way we all do our business, and I use the word “all” because we are involved in that decision-making process. That is one high profile example.

A second example — and you, a Chathaoirligh, will be aware of this since we represent the same constituency — is the vacated premises at Beggar's Bush, the former military barracks which stands [1053] behind Tom Johnson House, the headquarters of the Labour Court, at the junction of Shelbourne Road and Haddington Road, for those who may not be familiar with the geography of the area I am talking about. On gaining independence, when the barracks was taken over from the British authorities, they were assigned to Dublin Corporation to provide married quarters. This was substandard accommodation in old limestone buildings two storeys high consisting of four large rooms with a family in each of them. In time they were detenanted and, as the Cathaoirleach will be aware, the tenants were offered accommodation in other parts of the city at a time when there was a public housebuilding programme.

The intention was, if Dublin Corporation were not in a position to refurbish the properties to provide accommodation for the elderly, to sell them at a premium, being in the centre of Dublin 4, with the proceeds going to the Exchequer to meet capital costs or reduce borrowing or whatever was deemed most appropriate. I think, a Chathaoirligh, I would be right in saying that they have been empty for three or four years?

Acting Chairman (Mr. Doyle): Information on Joseph Doyle  Zoom on Joseph Doyle  Longer, Deputy.

Mr. Quinn: Information on Ruairí Quinn  Zoom on Ruairí Quinn  The reason they remain unsold is that somebody somewhere in the Office of Public Works-Department of Finance cannot draw up a title document which would enable the properties to be put on the market. This is not due to the Gulf War, the international recession, Mrs. Thatcher's disastrous running of the British economy with its consequential impact on emigration and migration trends but rather to the managerial incompetence of those whose salaries are being provided for in these Estimates. If we had the kind of debate on the Estimates which Deputy Bruton sought where specific questions could be put to the Minister or his officials, we might get some reply. There may well be some very good reasons why the properties cannot be sold. A political decision, [1054] which a civil servant has brought to the attention of the relevant Minister, may be required. This may be lost in the file of one official; we simply do not know, but as a result properties which could be used to provide accommodation and gain capital receipts for the State, which could in turn meet some of the cost of running this Republic, are not being refurbished.

This incompetence is not peculiar to the Department of Finance; it can be found in every public sector department, including local authorities. If we do not get our act together and become more efficient with regard to this aspect of our affairs we will not be able to hide behind excuses such as the international recession being the cause of all our ills and woes. There are areas over which we have total control. I have given what I admit are two anecdotal examples, but they are symptomatic of our lack of commitment to efficiency and decisive managerial decision-making. This is something we can no longer afford in the nineties as we head towards completion of the Single Market.

It is a pity therefore that these Estimates do not outline the real amounts of money that will be spent between now and the end of the year. As the Minister has said today and on previous occasions, during the next few weeks he will make a series of adjustments to those Estimates. We will just have to wait and see as one could speculate endlessly. I suspect that the decisions have not been finalised within the Cabinet but, at the end of the day, we are looking at a Government who knew in January and again on 23 April that they were taking an optimistic view, who are now trying to pretend to the world at large and the body politic of this country that it has all come as a great surprise. That is simply not true; it is a political lie that must be nailed, and the only reason it has been maintained as a political lie during the past two months is that there was a need for Fianna Fáil and the Progressive Democrats to put their own parties first with regard to the local elections. That is a long way from the epithet of the best Government this State has ever had or the party who introduced [1055] integrity and high standards to the Irish body politic.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  There is an air of unreality about this debate in the House at present. Fine Gael were quite right to draw attention to the inadequacies and the meaningless nature of the format of the debate starting today on the Estimates. I have no difficulty in agreeing with Fine Gael on that much. If there was any evidence that Fine Gael were offering a different prescription from that offered by the Government on this issue, I would have a great deal more sympathy for them in their withdrawal from the House. The fact of the matter is that Fine Gael are not offering anything different in coping with the challenge facing us. In that sense the confrontation of yesterday and today is hollow and nothing more than play acting.

It is absurd to expect us to spend the best part of a week debating Estimates which are no longer valid and clearly out-of-date, to which the Minister proposes to respond probably by making savage cuts as soon as the House rises; yet, we are expected to engage in an omnibus debate on the Estimates as if there was some reality to the situation. I do not know about the Government, or any Government for that matter, but all Opposition parties would be committed to the kind of format Deputy Bruton sketched before he and his party withdrew from the House. We would all like to have a working committee system which could take the Estimates one by one and go through them with a fine comb because it is very difficult to cope with all the Estimates being lumped together. We are expected, in the context of a general acknowledgement that the Estimates are invalid and out of date, to reply to them. It is not a very meaningful debate.

However, the position Fine Gael have adopted is extraordinary in the context of what I understand to be their position in recent weeks. As I understand it, only two weeks ago Fine Gael were proposing at the Whips' meeting that we would have one Adjournment debate. There is no [1056] difference between one Adjournment debate on the overall economic performance of the Coalition Government and an omnibus debate on the Estimates we are now having. I cannot see the distinction; it is a rose by any other name. I do not know what all the jumping up and down is about. It is regrettable that the House is so impotent to deal with this situation but Fine Gael put that proposal to the Whips and it was agreed. I understand there is a written document in existence detailing that agreement. The macho jumping up and down designed to impress the electorate before the rush to the beaches does not impress me.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  Post election nerves.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  It may well be post election nerves but the prospect of the Labour Party and The Workers' Party being offered the opportunity of going through these Estimates with a fine comb, questioning the responsible Minister and so on was never on offer. It is not permissible under the rules of the House as they stand at the moment. Therefore this is a phoney war which is designed, in my opinion, to do no more than disguise the fact that Deputy Bruton and his party are calling for cutbacks in public expenditure at least as severe as the Government are undoubtedly considering at Cabinet. The very tetchy attitude of various Ministers over the past week is evidence of the fact that this process is well under way, if not concluded, at Cabinet. We had an unusual display by the Minister for Finance at Question Time two days ago when he manifestly lost his cool throughout the period of questioning. During the processing of the Competition Bill the Minister for Industry and Commerce was even more thorny and tetchy than normal and one can only conclude that this is because the dispute at the heart of the Cabinet concerning where the cuts will be made is well under way.

That is the distinction between Deputies on these benches and those in Fine Gael, the Progressive Democrats [1057] and Fianna Fáil. The question confronting the conservative parties is where the axe will fall and what cuts they will make. That is the only question that concerns them and not whether we can protect or boost existing employment. They are not concerned whether we can protect the most vulnerable in our society from the impact of these cuts. That is why I have little sympathy with the playacting of Fine Gael.

As far as I am concerned Deputy Bruton can jump up and down and beat his chest in a macho manner all he likes but the fact remains that both his party and the Government are united in the belief that the response to the budgetary overrun is to impose further cutbacks in essential public services, many of which have already been pared to the bone and are on the verge of collapse. The Government, and Fine Gael, believe that the majority of people, workers and their families, who year after year for more than a decade have been asked to bear the burden of getting the national finances back in order, should be asked once again to submit to the lash.

When the budgetary targets in regard to borrowing go astray, there are two ways of addressing the problem. The Government can seek to increase revenue by imposing additional taxation on those who are not contributing their fair share or they can seek to reduce expenditure by imposing cutbacks. Fine Gael have already very clearly pinned their colours to the mast. This week during questions to the Minister for Finance at Question Time the Fine Gael Party spokes-person on Finance, Deputy Noonan (Limerick East), went to some pains to get the Minister for Finance to commit himself to the fact that he would confront the present challenge of getting his figures wrong on the basis of expenditure cuts only. For the record I will quote one of his supplementary questions. Mr. Noonan asked the Minister:

Will he categorically state that he is ruling out any tax increase by way of a supplementary budget and that he will confine whatever corrective measures [1058] he intends to take to the expenditure side? Will he also give a commitment to the House that capital expenditure will not be cut and if cuts are announced by the Minister on behalf of the Government they will be real cuts with underpinning policy decisions and not estimating cuts of a cosmetic nature.

I do not think any amount of macho display by Fine Gael can disguise that is where they stand on the current crisis. Deputy Noonan would like to see real cuts underpinned by policy decisions and not merely cuts of a cosmetic nature. In other words Fine Gael want real cuts, cuts that will hurt, cuts that will close more hospital wards, cuts that will cost more public service jobs, cuts that will worsen the pupil teacher ratio, will lengthen the housing lists and cuts that will add more people to the dole queues. However, they do not wish to highlight the demand for cuts and this is the reason they have provoked this artificial row about the arrangements for the Estimates debate.

Deputy Bruton has undergone a number of dramatic conversions since being elected Leader of his party. Having callously ignored the plight of the unemployed while he was a senior Minister in Government he has now discovered the unemployed. The Government of which Deputy Bruton was a senior member made extensive use of the parliamentary guillotine and also failed to provide anything approaching satisfactory arrangements for debating Estimates. Now the Fine Gael Leader is suddenly a champion of the rights of Dáil Deputies, including Independents. All the posturing is simply an attempt to hide the fact that on economic policy there are virtually no differences between Fine Gael and the Government. Fianna Fáil and the Progressive Democrats have stolen Fine Gael clothes and Deputy Bruton has to resort to the figleaf of procedural rows in a desperate attempt to preserve his dignity.

Nobody can be happy with the arrangements for the debate on the Estimates and The Workers' Party considers them [1059] anything but ideal. It is an exercise of very limited value to be discussing Estimates for expenditure which are already seriously out of date and in respect of which half the money has been spent anyway. What we should be discussing is the programme of cutbacks which the Government have indicated they plan to introduce. Instead we have to go through the empty ritual of these Estimates debates while the Government will defer announcing cutbacks until the Dáil has gone into recess at the end of next week.

By adopting this strategy they hope that the public and political controversy will be kept to a minimum. It is a fundamentally dishonest approach which reflects no credit on our political system. Already an attempt is being made to convince the public that the only way to respond to the budgetary over-run is by introducing cutbacks. A chorus of conservative politicians, economists and leader writers have joined forces to demand yet more cutbacks. There is, of course, an alternative which is to raise additional revenue through, for instance, the imposition of additional taxation on those who are not already paying their fair share. The Government do not look to raising new taxes. If they simply ensure the collection of taxes legally due and estimated, the estimated overrun of around £300 million would be more than cancelled out.

On 17 April last the Minister for Finance told my colleague, Deputy Sherlock, that there was a total of £352 million in established underpayments of PAYE and VAT due to the Revenue Commissioners. If this money were brought in, it would go a long way towards solving the problem in the current year. In the same reply the Minister disclosed that there was a further £2.1 billion estimated to be due under various tax headings. I accept it may eventually be found that a great part of the estimated sum is not actually due, but if even a quarter of it were to be collected it would wipe out the total Exchequer borrowing requirement set by the Minister in the January budget. While there are sources of additional [1060] review it is simply unacceptable that the Government should be about to embark on yet another round of cutbacks.

I am sure that the Minister for Labour, who has now joined us, will verify that at this week's annual conference of the Irish Congress of Trade Unions in Killarney the leaders of IMPACT drew attention to this proven outstanding amount of revenue due in terms of VAT and PAYE. The leaders of that union drew attention again to the continued ineffectiveness of the collection and enforcement system and to the estimated ratio of staffing necessary to produce this extra revenue. In such a climate it is unacceptable that we should be facing more stringent cuts.

There is no doubt that the Minister is preparing to wield the knife against the traditional victims. Hospitals in a number of areas have already been asked to prepare contingency plans for ward closures. It seems that despite all the damage done over the past few years, health is again to be a prime target. Other high spending areas like education are apparently also being targeted, yet many schools, especially in those areas where parents cannot afford “voluntary” payments, are on the verge of collapse. Environment is apparently also to be targeted, yet local authority housing estates in my constituency, and in virtually every other area of this city and in many places throughout the country, are already paying a terrible price in terms of petty crime, vandalism and social alienation due to the systematic neglect to which they have been subjected in recent years.

Cutbacks on the capital programme are threatened and only constrained by the fact that a great many of these promised capital projects qualify for EC funding of up to 75 per cent. Any serious cuts in the capital programme would mean that we would not be able to avail of this EC funding. Where cuts are made in capital projects there will be inevitably further reductions in employment. In my constituency the Tallaght Regional Hospital has been promised for some ten years. The Fianna Fáil Government told us that work would commence in 1990. [1061] That seems to have been put on the long finger and, judging by the tenor of the Minister's contribution today, it appears that the prospect of the Tallaght Hospital is receding rapidly. That is a tragedy for such a hugely populous area of the city, an area of endemic unemployment. At the construction stage the hospital was to offer 500 or 600 jobs which are desperately needed. It is also a tragedy because such a health facility is so badly needed in Tallaght and the surrounding region.

Job creation scarcely featured in the Minister's speech. His claim that the over-run is due to returning emigrants, depressed car sales and a downturn in the property market is essentially a confession of surrender. The Minister is effectively saying that because of the international recession we can no longer dump our people on other economies, especially the UK and the United States. The Minister pleads helplessness because the traditional safety valve of emigration is no longer available. It is an indictment of our management of this economy that between 1926 and 1989 1,127,000 people left Ireland. Since 1980 240,000 of our people have left.

The Minister's statement is a confession of how emigration has come to be used as an instrument of economic planning by this and other Governments. When the UK and the United State's economies are in recession we claim that the public finances crisis is due to the fact we can no longer dump our people on those economies. It is often said that those people leaving Ireland are at least better educated than those who left in the fifties. That is a confession of surrender. The claim that we have the best educated young workforce in Europe is one of the solecisms with which we comfort ourselves when confronted by crisis in our economy. We have a level of formal academic education for our young people which compares favourably with that in any other country in Europe, but that is not to say that the education system is necessarily geared to the requirements of a modern economy. This has been the subject of a good deal of [1062] comment by some commentators but there has been very little impact on Government planning.

It is interesting to look at the National Development Plan, 1989-93 prepared by the Government. This plan comprises a good deal of very valuable information and analyses. Presumably it is one of those reports prepared for the rigorous scrutiny it will get in Brussels but in the reasonable expectation that busy politicians and journalists will not have time to read it. It records the facts as they are, which is not the kind of thing one hears in a speech written for the Minister in this debate. The plan deals with the suitability of the workforce for a modern economy. The relevance of this point can scarcely be overstressed, especially in a climate where the Government seem to be won over to the theory of competitive advantage which is emerging in the United States. The Minister for Industry and Commerce in particular is becoming a disciple of the new guru of this theory, Mr. Michael Porter. Even if we are going down the road towards that theory of competitive advantage, the suitability of our workforce and our investment in human capital is a major issue.

The National Development Plan 1989-1993, the Government's own plan, put it this way on page 23:

1.2.40 The Irish education system provides a high level of general education. On average, however, students leave secondary school at a relatively young age compared with other EC countries. Relatively few apprenticeships are available to school-leavers by comparison with some other Community countries. In addition, upper secondary education in Ireland is lacking the vocational emphasis evident in the more advanced Member States.

1.2.41 Findings from the recent labour-force surveys point to the serious lack of training and re-training of employed persons in Ireland. This is partly attributable to the small size of business. The Cecchini report [1063] indicated that most small companies lack the necessary resources to acquire the skills and qualifications that will be needed in the Single Market.

I submit to the Minister that those two paragraphs from the Government's own report ought to be taken on board in the construction of any response to the current economic climate. The indictment there of the suitability of very many of the young people who are entering the labour force is, I believe, valid. Obviously, our young people when they leave formal academic schooling go on to the labour force in considerable numbers. This question of investment in educational retraining and the suitability of our education system is a major issue, an issue that Con Power of the Confederation of Irish Industry has devoted a great deal of time to in recent years. The CII are scarcely a body from whom I would normally take my line on economic matters but, on the question of educational investment in the area we are talking about, there is a great deal to be said for the CII policy which seems to be falling on deaf ears. In a recent newsletter of 18 June 1991 the CII return to this theme and comment to the effect that Ireland is out of step with more advanced European economies in having a very high level of unemployment and a lower level of overall participation in education and training for qualifications for young people in their late teens. They say that by increasing the level of participation in education and training it is possible to substantially reduce the number of people who are unemployed. They argue that this could be achieved at little or no additional cost to the State. They go on to make comparisons with countries such as Germany, Denmark and the Netherlands where almost all young people are educated or trained for a qualification for at least three years after compulsory schooling. This includes those who stay in education to the end of second level and subsequently study for certificates, diplomas or degrees and those who participate in training courses within industry. The German system in particular lays [1064] massive emphasis on this question of training, in-service training and their companies generally are broken down as between training and non-training. If one expects to be employed in Germany one must sign on on leaving formal education with one of those training companies. The great cost of this investment in training is borne by industry.

In Ireland by contrast, almost 90 per cent of young people remain at school until they are 16 but this drops off to less than 30 per cent at 19 years of age. To raise the participation rate in education or training for qualifications close to 100 per cent of all young Irish people up to at least 19 years of age would require the provision of about 100,000 full-time education or training places, according to the CII. They conclude that each country must decide on the mix of education and training qualifications in relation to its own needs. Ireland already has a very high participation rate in post-primary education up to the leaving certificate but a very low participation rate in training for job-related qualifications.

I want to put on record that the CII conclude that educating or training 100,000 additional young people for qualifications, thus bringing participation rates at the 16-19 age group close to 100 per cent, would bring about a reduction in the number of people on the unemployment register of at least 40,000 due to less competition for the jobs available. The savings on unemployment payments would be sufficient to pay for any cost incurred by the State. I would like to hear the Minister for Labour comment on that argument because I am satisfied that it is a substantial one. I am satisfied that if we are going to maintain the competitive advantage we have won in Irish industry in recent years because of pay restraint and increased productivity and increased harnessing of modern technology to industrial processes, this dimension of investment in educational training will have to be looked at.

Listening to the Minister's speech I was amazed that, having regard to all the brouhaha that has surrounded this [1065] debate, the Minister should come in here with a script that is the traditional defensive flim-flam of, “Really the figures are not too far out, we are doing quite well since we took over and things look better around the corner, all we have to do is create the right climate and the jobs will come.” My colleague on these benches who is due to speak shortly, Deputy Michael D. Higgins, coined the phrase some years ago that the “school of climatology” was not going to produce the jobs in the fashion being predicted by all orthodox economists. If ever we needed the proof of that contention surely we have it in the climate that has been created since the early days of the Programme for National Recovery. The relevant indicators for 1990 alone make quite startling reading for the orthodox school of economics, I would have thought, with growth rate almost 6 per cent, balance of payments surplus £800 million, surplus of exports over imports £1.922 billion and inflation 3.4 per cent. What more can one do in terms of creating the right climate? The climate has been as near ideal as we are likely to get, yet where are the jobs? The employment situation has continued to deteriorate and, as I have remarked, there is very little point in arguing that this is because our emigrants are returning home. That is a strange attitude to our own people and to our ability to manage our own economy. While we had those successful indicators in 1990 the unemployment figure stood at 225,000. It has rapidly worsened since then and profits outflow for that year was £2.2 billion.

In response to all this the Minister comes into the House today. I notice he refers to officials in his Department now more frequently than when things were rosy in the garden. He tells us that really officials in his Department did not get it all that wrong and he will take the necessary corrective measures, although he refuses to tell us precisely what are those corrective measures.

A great deal of emphasis has been laid on this question of removing the remaining obstacles to this ideal climate. I understand that the new task force, which [1066] the Taoiseach announced, is to concentrate on identifying these remaining obstacles. If we can iron out these remaining obstacles then the jobs will come and the country will once more be flowing with milk and honey. Hopefully by that time the UK and the US will have improved and emigration will have started all over again.

The only obstacle I can identify that has been brought forward by the Government and that is in any way tangible, is the question of the necessity to reduce employers' PRSI. Fine Gael have been to the forefront in arguing this point. It would appear that it strikes a resonant cord with the Progressive Democrats and now more and more the Minister for Finance is beginning to sound like the junior wing of the Coalition Government. Can we accept the argument that employers' PRSI is an obstacle to job creation? I do not accept the argument that it is very high or that it is a tax on jobs. Statistics show that employers' PRSI is very low by international standards. Official figures given by the Minister for Social Welfare show that the standard rate of employers' social insurance in Ireland is the third lowest of 17 OECD countries surveyed. While it is only 12.2 per cent in Ireland, it is 20 per cent in Belgium, 24 per cent in Spain, 26.6 per cent in Austria, 34.07 per cent in France, and 43.25 per cent in Italy. Who do the FIE lobby and their political wing in Fine Gael and the Progressive Democrats think they are fooling? That is the international comparison. These are the people who talk about international competitiveness and playing on a level pitch.

To argue that employers' PRSI is a tax on employment is to look at one side only of the capital-labour equation. On the other side there is the £1.1 billion in tax breaks given to industry, excluding such sections as tourism services and construction which are largely given to capital. In addition, about £300 million to £400 million is given in grants to industrialists each year, the bulk of which is for capital. Thus, industry which employs less than 20 per cent of the workforce receives almost £1.5 billion in subsidies, [1067] largely on capital, while paying only about £180 million to £200 million in employers' PRSI. That is the other side of the capital-labour equation. There is no evidence to suggest that reducing employers' PRSI would create additional jobs.

In October 1989, when the Minister for Social Welfare announced a 12 month exemption for employers taking on new workers over the following four months, his expectation was that 5,000 new jobs would be created. In the event only about 1,000 jobs were filled under the scheme, many of which may have been created in the normal way.

Most companies in Ireland pay very little corporation tax because of the barrage of exemptions, allowances and reliefs as well as our low corporation tax rates. Multinational companies which dominate Irish industry will this year repatriate £1.3 billion in profits, dividends and royalties. Employers' PRSI, together with the pay cheques of those employed by the multinational sector, is the only contribution they are making to the Irish Exchequer. There is no case for decreasing it especially while they are paying so little tax. The case against its reduction is further strengthened by the fact that employers' PRSI is part of the social wage. It is the non-pay element of employees' remuneration. It is used, theoretically anyway, to fund social welfare benefits. The total take from employers' PRSI is about £900 million per year. If this were to be eliminated, or even substantially reduced, the loss to the Exchequer would have to be made up by the imposition of other taxes or by increases in PAYE.

Calls for reducing employers' PRSI — if this is to be the main preoccupation of the new task force — are obviously popular with the FIE and conservative economists. While they will make more profits for the employers they will do little for the unemployed. We need far more decisive action on the part of the Government if there is to be any significant reduction in unemployment levels.

[1068] There was a great measure of agreement that we are in this mess because of the legacy of profligate spending in the seventies and early eighties. The people who suffered in order to get the debt-GNP ratio stabilised — which has been achieved in recent years — are apparently the same people who are being targeted for more cuts by the Government. The Minister's optimistic forecast that in the medium term we will revert to growth and job creation does not seem to be borne out even by economists who would hold the Minister's point of view. The Minister spoke about a return to growth rates of between 1.75 per cent and 2.5 per cent. It is generally accepted now that anything less than a 2.5 per cent or 2.75 per cent growth rate does not actually result in jobs. Even that is a fairly dismal scenario.

In the most recent ESRI Medium Term Review: 1991-1996 forecasts are made over the period 1991 to 1996 and a detailed examination has been made of our economic performance and policies in the eighties. They went on to consider the likely external environment facing Ireland in the nineties and on the basis of an assumed domestic policy stance — which there is a great deal of certainty about — they develop a forecast for the next five years. They conclude with a discussion of possible longer term prospects for the Irish economy to the end of the decade. They take into account a great deal of the factors the Minister has talked about today. They refer to a level of modest steady growth which will sustain a surplus on the balance pf payments of about 2 per cent of GNP due to the export orientation of Irish industry and what they call the maintenance of recent gains in cost competitiveness.

The paragraph of the ESRI Medium Term Review: 1991-1996, I would like to put on the record is as follows:

Total employment will grow by about 50,000 jobs over the five-year period, or by less than 1 per cent per annum. The growth in employment might have been closer to 80,000 were it not for the high interest rates which [1069] have accompanied German unification, and are being used by the Bundesbank to control German inflationary trends. Against a background of a rapid natural growth in the labour force, and lower net emigration, due to a depressed UK labour market, this will result in a rise in the unemployment rate from its 1990 level of 14 per cent of the labour force to a sustained level of 16 per cent. On the basis of present behaviour and policies there is little prospect that it will fall below that level for the next five years.

I and any reasonable person reading that assessment can only conclude that that is a dismal prognostication for the medium term review of five years. When you study the ESRI report you find that that is a rather optimistic forecast because, at the back of the same report, there is an article of major significance by some of its authors based on their assumptions of the dismantling of the CAP. The assessment I have just read — and the early part of this report — make no assumption about the impact of dismantling the CAP. In other words, they base the latter part of this report on an assumption that the leaked MacSharry proposals, which are turning out to be very close to the reality, using the ESRI model they try to apply it to the new situation and it is far more devastating than the prospects I read out here and which were referred to in the media. However, the media do not seem to have taken into account the impact of GATT and of dismantling the CAP.

This projection of 50,000 jobs over a five year period — which, as we know, in the context of the number of people coming into the labour force is a dismal projection in any event — does not take into account developments in the area of agriculture which will have a devastating impact on the rural and urban economies and, in so far as we have one, the industrial economy.

The reference in the ESRI report to the impact of German interest rates is also ominous for this economy. Because, for political reasons in Germany, the pace of unification was hastened, the [1070] consequence in regard to interest rates is now impacting on our economy and will have an even bigger impact over the next five years.

I want to very briefly refer to the economic consequences of CAP reform referred to in this report:

The knock-on effects of the fall in farm prices and the volume of agricultural output will take a number of forms affecting the food-processing sector, consumer prices, farmers' consumption and the Government's finances. The effects of CAP reform operating through these different channels will interact producing a range of secondary effects.

The article goes through the likely secondary effects and in most cases they are negative. It continues:

The fall in the volume of agricultural output will reduce the turnover of the food-processing sector of industry. In addition, some of the benefits of the CAP have, in the past, been captured by the food-processing industry as higher prices and margins. The resulting profits will be adversely affected by the fall in support prices for agricultural produce. The fall in throughput in the food-processing sector will lead to an even bigger fall in employment than would otherwise be the case.

The review of the Department of Agriculture — in November or December last year — which, for some strange reason, is not available in the Library, similarly predicts a decline in employment in the agricultural sector. The report goes on to talk about the fall in farmers' incomes which they say will be substantially reduced and which will lead to a fall in economy-wide consumption which will, in turn, cut the demand for domestically produced goods and services. The report continues:

However, because of the openness of the Irish economy, the negative multiplier effect of this fall in consumption will not be very great. As with all consumption, much of the fall in farmers' [1071] spending will affect the demand for imported goods.

Finally, the decline in domestic economic activity will adversely affect the government's finances ... Thus real interest rates will rise in Ireland. This will be particularly serious for the government finances.

They are the projections, redoing their assessment on the same model taking into account certain assumptions on the impact on agriculture of CAP reform over the five year period 1991-96.

I understand that the minimal Dáil reform in which we have engaged permits tables to be circulated in the Official Report. I do not know if it permits the circulation of graphs — which is a great pity — because I should like to draw the attention of the House to page 85 of the report containing six graphs on which the Taoiseach's task force should be asked to focus. Figure 1 deals with the question of the food industry in output and volume terms, taking 1990 as the base. It is a line directly downwards, a decline inevitably in output and volume because of the impact of CAP reform proposals for the intervention system. Clearly, output and volume will be down.

Figure 2 deals with the total employment significance of that decline in output. Whereas there is a “blip” in the year 1991, the graph is almost directly downwards reaching a nadir in 1996 when the reduction in employment will be very serious indeed. There is some comfort in the prices and wages curb because, presumably, the availability of cheaper food to the consumer will, I hope, lead to less pressure on wage rates and so on. The prices and wages curb offers some solace. However, that is not the case in relation to Figure 4 dealing with gross national product which shows a drastic reduction.

Figure 5, which deals with the debt-GNP ratio, shows that after a period of having stabilised it is likely to rise again to a very significant high in 1996 and [1072] likely to stay there until the end of the decade when the authors of the ESRI survey predict that we will have resumed emigration of 40,000 people per annum.

Earlier I spent some time dealing with the hollow, shadow boxing of Fine Gael and their tactics in this debate. Equally, I deplore any effort by Government Ministers to traipse in here during the remaining days of this debate and trot out pat answers to an economic crisis of the dimensions I have tried to sketch. When you take all the conventional wisdom, the assessments we heard from the Minister and the CAP factor into account, the situation is even worse and highlights the fact that there are major structural competitiveness problems in our economy. If they are not addressed we cannot hope to generate the extra wealth which will get our people back to work.

I do not know whether the Minister for Industry and Commerce, the Leader of the Progressive Democrats, will speak on this debate but it remains for him to tell the House the parameters, scope and remit of the new review group established to tackle industrial policy. We have read in the newspapers that a review group has been established, we have read, the names of the members who will comprise the group but we have not been told in this House what the scope of the review will be, how it will knit in with the other task force announced by the Taoiseach and what will be the parameters of their recommendations.

I have spoken on other occasions about my regret that, despite the worsening financial crisis, and especially spiralling unemployment, we have not managed in the lifetime of this Government to have a debate on industrial strategy. Report after report has highlighted the weakness in industrial strategy and has queried whether we are getting value for money — we are spending a great deal of money on industrial strategy. In all these cases emphasis has been placed on the failure of the native or indigenous sector to make any significant contribution to our employment problems.

The National Development Plan 1989-1993, [1073] submitted by the Government, deals with the weakness of the traditional sector. It is important to repeat that this was a Government document submitted to Brussels at the time of the Structural Funds negotiations: That document states at paragraph 1.2.4:

The performance of the traditional sector of Irish industry has, in general, been extremely poor over many years. Employment in the sector is over 25 per cent lower than in 1980. Investment levels have fallen as has the share of the domestic market accounted for by domestic industry. Less than one firm in four is engaged in overseas sales and, in those that are, there is an undue reliance on one overseas market the UK. Profitability has been poor and in recent years has been running at less than 2½ per cent of sales. While there are significant exceptions, which indicate a real potential for improvement, the sector generally is characterised by major scale diseconomies, poor capability in general management, in marketing expertise, technology and quality control. The sector suffers from a general lack of competitiveness illustrated by the substantial loss of domestic market share suffered since Ireland joined the EC. Some 90 per cent of Irish industrial firms employ less than 50 people and the weaknesses of Irish industry are generally more intense in these small-scale enterprises.

What more damning indictment of the indigenous sector could there be than what comes from the Government's mouth? This is the Government's national development plan. That is a searing and accurate assessment of the performance of the indigenous sector. Yet we have failed during the lifetime of this Government to pursuade the Government or the Minister for Industry and Commerce to have a debate on the weaknesses in industrial policy. Without that I can see no prospect [1074] of us generating the wealth or creating the jobs that will be necessary to tackle this dastardly legacy of debt we have inherited from the spend-thrift policies of the late seventies.

During the local elections it was extraordinary to hear one Government Minister in my constituency, the Minister with responsibility for environmental protection, on “The Pat Kenny Show” warn the electorate about voting for parties of the Left because it would mean a return to the bad old days of waste and overspending in local government. Pat Kenny, normally reasonably alert, did not seek to ask her when were these bad old days when the Left was in control of spending, either in local government or national Government. That situation simply did not arise. The legacy of waste and overspending that now cripples our chances of survival were the product of the conservative parties here and not an inheritance from the Left.

Minister for Labour (Mr. B. Ahern): Information on Bertie Ahern  Zoom on Bertie Ahern  I welcome this opportunity to participate in this debate. As well as reaffirming confidence in the overall strategy of the Government, brought about with the help of the social partners, through the Programme for National Recovery and now the Programme for Economic and Social Progress it enables me, as is done on an annual basis, to put on record an outline of the progress my Department are making in labour market policies over a range of areas. I see the Department as having three main aims: facilitating job creation and maintenance through good industrial relations, training and skill development; making the labour market more effective while helping the disadvantaged to participate on more equal terms, ensuring that basic employment standards are maintained and, where possible, enhanced. I have been very satisfied with the progress we have been able to make on all these fronts over the last number of years.

Over the last four years we have embarked, successfully, on the process of transforming the economic and social situation of the country. With the help of [1075] the social partners we have ushered in an era of development in every area of the economy and society.

I should like to remind the House once again of some of these achievements. Our economic growth last year was about 6 per cent, compared with no growth between 1983 and 1986 — the worst performance in the OECD. Our debt-GNP ratio fell from 131 per cent in 1987 to 111 per cent at the end of last year and Exchequer borrowing fell from a peak of 13 per cent of GNP to 2 per cent last year — the lowest for 40 years. The Government are determined to take the necessary measures to avoid re-entering an upward spiral. Our inflation is now among the lowest in the European Community, despite strong growth which normally carries an inflationary danger. Our balance of payments situation has been transformed from a substantial deficit to an even bigger surplus. Our investment increased at an average of 10 per cent a year in both 1989 and 1990. We have taken major steps towards a fairer taxation system, for instance by reducing both standard and top rate taxes by 6 per cent since 1989, major extension of tax exemption limits for those on low pay, widening the tax base and reforming corporation tax.

The first six months of 1991 have been difficult because of the deeper than expected recessions in the UK and the USA. It was heartening in this context to note the OECD forecast earlier this week that the industrialised countries would return to growth for the second half of 1991, reaching the very satisfactory overall level of 3 per cent growth in 1992.

While the budget returns for the first half-year of 1991 are disappointing, they do support the evidence that the economy is still growing despite the difficult international circumstances. We are still doing more creditably than other countries and, of course, are in a far better position than we would have been if we had not tackled so firmly the dire situation we inherited in 1987.

[1076] The Programme for National Recovery, and firm Government adherence to strict policies, brought this country back from the edge of financial bankruptcy. The Programme for Economic and Social Progress is designed to continue this process. The PNR — and now the PESP — also made a significant improvement in the quality of life of everyone. Both programmes are unique in that they include all the important interest groups in society. They balance macro-economic policy with the realisation that the position of the weaker and more disadvantaged groups in our society needs to be protected. They provide a successful solution to the dangers of conflict between the different sectoral groups. As a small open economy in a very unstable external environment, we cannot afford to indulge in sterile conflict or to fail to co-operate for the general good.

Hand in hand with this economic progress we have made major social gains. Between 1986 and 1991 we increased spending on health in real terms by 5.3 per cent, compared with a fall of 0.5 per cent between 1982 and 1986. In education we increased spending by 13.7 per cent between 1986 and 1990, more than double the increase of 5.7 per cent between 1982 and 1986.

In my labour area we have made major progress towards having an up-to-date relevant body of labour legislation for the nineties and beyond.

Through the Safety, Health and Welfare at Work Act, passed in 1989, and the establishment of the Health and Safety Authority we have in place now a modern system designed to promote and enforce preventative action rather than relying on sanctions after the event. I also brought into force the Safety, Health and Welfare (Offshore Installations) Act, 1987, to give statutory protection to workers offshore.

Equally, the Industrial Relations Act, which was passed by the House this time last year and the consequential establishment of the Labour Relations Commission have set the scene for further emphasis on preventative action on [1077] industrial relations problems. The commission's prowess to develop codes of practice, carry out research and operate an advisory service will help to develop a less confrontational approach in individual industries. In addition, of course, the commission have taken over responsibility for the conciliation, Rights Commissioner, rights and employment equality services, leaving the Labour Court in its rightful place as the court of final resort.

In the training and temporary employment area, the confusion up to 1987 of individuals faced by three manpower agencies offering overlapping services with differing criteria for assessing eligibility was solved by the establishment of FÁS. As a single, comprehensive, local and client-centred organisation, FÁS have been slimmed down, made more efficient and effective and able to give optimum help to their clients.

In the labour area, the three years covered by the Programme for National Recovery was a period of unprecedented industrial relations peace, with the figures for strikes and days lost down dramatically compared with previous years.

I am glad that the figures for strikes and days lost so far this year are again well down on the same period last year. For the first six months we had 29 strikes, compared with 32 last year and 46 in 1987. The number of days lost fell from 176,918 in the same period last year to 45,457 this year. This shows that we have a greatly improved level of industrial harmony, which, of course, is very positive for our economic development.

I particularly welcome the marked decline over recent years in disputes relating to pay issues. This trend can be directly linked to the pay agreements associated with the Programme for National Recovery. I am hopeful that the pay agreements provided for under the Programme for Economic and Social Progress can play a similarly successful role in minimising the level of industrial conflict in relation to pay over the next three years.

The agreements were attractive to both [1078] sides. For employers they meant the ability to plan for increases in pay costs over the medium term. For workers, they represented an improvement in living standards and gave real increases in take-home pay when combined with income tax cuts and the very low rates of increase in inflation which occurred over the period.

As provided for under the Programme for National Recovery, 150,000 workers now benefit from reduced working hours. A framework agreement on hours of work was concluded in 1989, providing for the implementation of a one hour per week reduction in working hours where the normal working week is at or above 40 hours. The process continued right through the past year. It is estimated that by the end of December last, approximately 450 agreements had been recorded, covering over 70,000 workers in the private sector and approximately 80,000 workers in the public sector.

Pay policy is a central feature of our economic development. While the pay increases provided for in the Programme for Economic and Social Progress, approximately 4 per cent per annum, are higher than those in the Programme for National Recovery, I am confident that they are at a level which will enable us to maintain the gains in competitiveness which we achieved over the last three years. Most importantly the pay agreements should help to ensure that the present stable industrial relations environment is maintained. They will also allow employers to plan ahead with a reasonable degree of certainty.

Last year saw the enactment of the new Industrial Relations Act, which provided for the most comprehensive reform of trade dispute and industrial relations law for 50 years. The immediate origins of the Act lay in the Programme for National Recovery. This committed me to holding discussions with the social partners on changes in industrial relations, with the aim of providing an improved framework for collective bargaining and dispute settlement and helping create conditions for employment-generating investment.

The changes in trade union dispute law [1079] tighten and clarify the law in relation to picketing, restrict the granting of injunctions in trade disputes and build on existing good practice in the area of pre-strike ballots by providing that unions must have a rule in their rule books requiring the holding of such ballots.

The Act also provided for the establishment of the Labour Relations Commission with the specific role of promoting good industrial relations. The commission was established earlier this year. An important objective of the commission is to bring about a change in attitudes so that the responsibility for dispute resolution is shifted back to the parties themselves, where it primarily belongs. As I said earlier, through its various services, the commission will encourage and facilitate a more active approach to dispute prevention and resolution. The establishment of the commission should enable the Labour Court to become a court of final resort, as it was originally intended to be.

One of the major new functions which is to be carried out by the commission is the drawing up of codes of practice on various aspects of industrial relations. This is an area of the commission's work which has received a lot of attention in the aftermath of the ESB strike in April of this year. The commission had already begun work on developing codes of practice but priority attention is now being given to drafting a code to cover disputes in essential services. Under the Act the position in regard to codes of practice is that the commission drafts the codes in consultation with employer and trade union organisations and other interested parties. The draft code is then submitted to me and I am empowered to make an order declaring the code to be a code of practice for the purposes of the Act.

Codes of practice are not legally binding and breach of the terms of a code does not leave anybody open to proceedings. However, the codes are, set in a statutory framework, admissible in evidence and can be taken into account by the [1080] courts or the dispute settlement agencies in determining any issue to which they may be relevant.

I am confident that the range of measures provided for in the Industrial Relations Act, together with the activities of the various dispute-settling institutions, will make an important contribution to a stable industrial relations climate which is an essential element in the creation of a strong economic environment.

The experience with the Programme for National Recovery and the Programme for Economic and Social Progress has demonstrated what can be achieved when all the main social partners come together and are involved in the drawing up of a range of agreed targets and objectives. The success of this approach, based on consensus rather than on adversarial attitudes, sets a clear example as to what could be achieved by the adoption of participative arrangements at the level of the individual enterprise. Indeed, there is evidence of a move away from the traditional adversarial style of industrial relations to a more consensus-based approach, centred on the recognition that it is in everyone's interest that the enterprise be developed to achieve its maximum potential.

There is already a wide range of formal participative practices in operation throughout the public sector. This is underpinned by the worker participation legislation, which provides for worker directors in 11 State companies and for sub-board participation in 35 companies. The legislation is very flexible in relation to sub-board participation, allowing each company to develop the type of arrangements best suited to their own needs.

There have been developments, too, in the private sector. The Federation of Irish Employers and the Irish Congress of Trade Unions have had discussions on how best to encourage and develop employee involvement in that sector. Arising from these talks a joint declaration covering employee involvement [1081] in the private sector has just been published. This joint declaration will stimulate activity in this area, and enable employee involvement to be seen as a complementary activity to conventional industrial relations practices.

Developments at Community level too will have an impact on all member states, and these are issues which we will have to face up to over the next few years.

As part of the process leading to the Single Market a whole package of proposals has been drawn up in the social area, which includes the issue of employee involvement. A draft directive on the establishment of a European Works Council in Community-scale undertakings has already been brought forward by the Commission, and a Council recommendation on the question of financial participation is also proposed. My Department will be actively involved in the discussions on these proposed instruments with the intention of ensuring that what finally emerges takes account of our interests and concerns.

Considerable progress continues to be made in the area of trade union rationalisation. The Government have sought to encourage rationalisation of the trade union movement mainly through the Trade Union Act, 1975, by simplifying the legal procedures involved and by making grants available towards the costs incurred by unions. To date grants amounting to almost £1 million have been paid by my Department in respect of 12 mergers.

While the number of trade unions has declined steadily over the years — from 95 in 1970 to 65 at present — there is still scope for further rationalisation. I am very pleased that the pace of rationalisation has accelerated considerably over the past few years. The indications are that the long-term objective of both Government and the trade union movement, of significantly reducing the number of trade unions, is being achieved.

This trend looks like continuing for some time. In 1991 two trade union mergers have taken place — an amalgamation of the Local Government and [1082] Public Services' Union and the Union of Professional and Technical Civil Servants to form the Irish Municipal, Public and Civil Trade Union (IMPACT) and a transfer of engagements from the Telecommunications Officials Union to the Communications Workers Union. With a membership of about 22,000, IMPACT is now the largest public service union and the second largest union overall in the country.

These mergers involving public service unions follow on a number of mergers of private sector unions, including the ITGWU and the FWUI to form SIPTU. This is a particularly welcome development which I hope will continue. Several other mergers are either in progress or under discussion at present and should come to fruition over the next few years.

The change introduced in the Industrial Relations Act, 1990, which allows unions to claim expenses where an attempted merger is unsuccessful, should give further impetus to the present merger trend.

The years between 1987 and 1990 have seen a return to employment growth from the decline between 1982 and 1986. Much of the credit for this is due to the consensus approach adopted by the social partners and the Government under the Programme for National Recovery.

The economic measures contained in that programme led to the creation of over 70,000 jobs. This was excellent in European terms. Indeed, the 3 per cent increase in employment in the 12 months between April 1989 and April 1990, as reported in the latest labour force survey, outstripped the average increase in employment in the European Community over the same period.

I listened carefully to what Deputy Rabbitte had to say. There are difficulties at present. Unemployment continues to rise over the summer months for reasons that have been well debated in the House and outside. To list, as Deputy Rabbitte did, all the benefits and advantages that were to come from the Programme for National Recovery and to say we did not achieve anything in the employment area is not fair to the social partners or the [1083] companies involved. The figures are not mine but independent figures. There was a 3 per cent increase in employment in the 12 months between April 1989 and April 1990; 70,000 jobs were created between 1987 and 1990 and, as the labour force survey stated, this outstrips the average increase in employment in the EC over the same period. It is fair within the political domain to criticise the fact that the figures have been increased recently. There was a 22 month stretch when they declined. The Government issued a statement each time in recent months when they went up and it is fair to debate the reasons for that, but what was achieved during the Programme for National Recovery should be acknowledged. It is misleading to throw out the suggestion that nothing was achieved during that period.

The current employment difficulties have been caused by factors outside our control. These include the recessions in the US and UK, both of which have been aggravated by the Gulf crisis. The UK recession has proved deeper than expected and the labour market there has been badly hit. This, in turn, has led to the return home of thousands of our emigrants and a fall-off in the numbers seeking work abroad.

Far from saying that we are upset to see that, as Deputy Rabbitte tried to imply, I am glad to see our emigrants returning home, but it does create difficulties in increasing the number of jobs, particularly in the light of the difficulties caused by the Gulf crisis almost a year ago. There is no question of running away from the issue. The Minister for Industry and Commerce, who is directly responsible for the employment-creating agencies, the IDA, CTT and others, has spelled out that this is a challenge with which we must contend. The Minister for Finance was merely stating the facts this morning.

Net outward migration has decreased dramatically between 1990 and 1991. In the years 1986-90 the average annual level of emigration was of the order of [1084] 34,000. I was involved in providing information through all FÁS offices to people who were ill-prepared to emigrate or who would be ill-advised to emigrate. We were working actively on that at a time when we were being criticised for letting these people leave the country. On the other hand we had the well-educated who were going of their own volition because there were good jobs there for them.

We know now that people are not going. We have convinced them that it is not right to go because there are very few opportunities for them. The people who were going for the better life and for work experience abroad realise that there are no jobs there. This is the fact but the average annual level of emigration between 1986 and 1990 was of the order of 34,000 and the census figures just published put net emigration at only 1,000 for the year to April, 1991, a drop of over 33,000.

We have to continue to look to every sector of the market, public and private, to try to create sustainable jobs, jobs that are not created through borrowing and over-taxation of people who are already paying enough. This is a challenge for us. The factors I have just spoken about naturally create live register difficulties. The twin factors of the overall improvement in the economy during the last three years and the recent adverse employment situation in Britain and elsewhere have reduced the numbers wishing to emigrate and attracted previous emigrants back home often with new families. This in turn has led to exceptional growth in the labour market giving rise to an increase in unemployment, despite the good rate of job creation. I hope and anticipate that we can improve on this. However, we have to look at the figures I have put forward in this House on numerous occasions.

If the increase in the labour market from second and third-level education this year is in the region of 30,000 and another 30,000 plus return from abroad that means we need something like 60,000 jobs. The programme was drawn up with the advice of the ESRI, the [1085] OECD and Community assessments of the country. With the wisdom of the Irish Congress of Trade Unions, the farming bodies and the Federation of Irish Employers we set out to try to create between 30,000 and 35,000 jobs. One does not have to be a statistician or a mathematician to see how our short term difficulties arise. That is something we have to continue to improve on. It is not, as Deputy Rabbitte is saying, that we are afraid of the facts, that we are running away from them in embarrassment. We have to do all we can to deal with the facts. We have the task force set up under the Central Review Committee and the group working to the Minister for Industry and Commerce on industrial policy. We have Government agencies, Departments and a group of semi-State leaders whom the Taoiseach met last week, all trying to tackle the problem. It is not a question of people dropping their heads and doing nothing about it. It would not be of any benefit if, having listened to some Opposition speakers list out what is being done and what is not being done, I were to give in to the temptation to refer to the summer of 1985, when there were similar difficulties, and to what was not done at that time. I am more concerned about addressing the Estimate for this year and about what we can do in the period immediately ahead.

While there are no facile solutions to unemployment, the Government have responded in a practical manner by the introduction of a package of special measures to offset the immediate effects of the global recession on employment by: the provision of 2,500 new places on the social employment scheme for the long-term unemployed; the training of 1,000 new apprentices in targeted sectors; and the creation of a new marketing initiative to develop tourism.

In addition, the Special Employment Task Force will explore new job-creation possibilities and undertake a review of industrial policy before the end of the year.

Tackling employment remains the number one priority of the Government. A continuation of Government policy aimed at creating a firm basis for the [1086] growth of the economy is the only realistic solution to the problem of unemployment. The ESRI and the OECD have strongly advised that we should actively pursue current policies. On past experience, we must avoid resorting to short-term emergency pump-priming measures which would serve only to lead us up an economic cul-de-sac and jeopardise employment prospects over the medium term. We must have confidence in the underlying very real strength of our economy and the imminent prospect of a return to economic growth in industrialised countries.

Through FÁS training and employment schemes we already devote very substantial resources to helping the unemployed. This year, FÁS alone will provide programme opportunities for some 52,000 people, at an Exchequer cost of £130 million. These include opportunities for around 33,000 trainees. These vary from skills foundation training, aimed at young people, to alternant training, aimed at older long-term unemployed and those wishing to return to the workforce after a voluntary break in their working lives. Opportunities on employment schemes will be provided for a further 19,000. During 1990 FÁS got jobs for 20,500 job seekers in Ireland through its employment services offices. This understates FÁS job successes as, in addition, FÁS training centres also made a significant number of job placements.

I would like to take the opportunity here of commenting on the ESRI report on the youth labour market published earlier this week. The study, of course, refers to the period up to 1988 and does not take account of new developments, such as the introduction of Youthreach. I am glad to say that initial results of the second year of Youthreach appear to be extremely positive. Secondly, the Breen study clearly shows that the prospects of getting a job for young people who receive training are significantly improved. The results given in the main report indicate that young people who have been through a training course are 2.5 times more likely to get a job than those without such training. There may [1087] have been some confusion over this figure when the report was issued but the ESRI subsequently clarified this in a detailed statement yesterday.

The unemployed, particularly the long-term unemployed, continue to be a major concern of the Government. The social employment scheme this year has a target of 12,500 participants by the end of the year. Although the scheme is part-time, I am satisfied that participation is very worthwhile and helps participants to improve their prospects of obtaining employment when opportunities become available. Also, there is the added bonus that the projects on which the participants work are of significant benefit to local communities. The allowances now available represent a great improvement on the allowance structures last year, and I am glad that the scheme is now attracting far more interest among those with dependent families. Currently over 50 per cent of participants have adult and child dependants compared with only 30 per cent at the end of 1989.

As one answer to long-term unemployment, the Programme for Economic and Social Development incorporates a strategy for an area-based response to long-term unemployment. The strategy will have local communities as the primary movers. The approach is being piloted in 12 urban and rural areas and already companies have been established in many of the targeted areas with the remaining companies to be established over the coming weeks. Included in these projects are three projects — Dublin Inner City, Tallaght and Cork North City — for which we secured over £2 million in EC assistance following the resolution on long-term unemployment adopted during the Irish Presidency of the Council of Social Affairs Ministers.

Skills training with recognised qualifications is becoming ever more essential for persons seeking employment. We welcome the steps taken by FÁS towards certification of a greater number of their training courses — especialy the development of joint certification with the City [1088] and Guilds Institute. Trainees will leave courses with qualifications which are internationally recognised and which will assist them in securing employment at home or within the EC. In addition, FÁS are also negotiating for cross-European recognition and comparability of vocational qualifications through CEDE-FOP — the EC training authority. This enhances the portability of certificates awarded by FÁS to programme participants.

Proposals for a new apprenticeship system are set out in the Programme for Economic and Social Progress. The funding of the new system is being discussed by the Central Review Committee.

Primary responsibility for training employees rests inevitably with employers. Nevertheless the State can and does encourage and promote continuing training with the firm. Ongoing or continuing training is particularly important due to changes in skill requirements, especially with developments in technology. In recognition of the considerable impact on skill requirements which will result from the completion of the Internal Market after 1992, FÁS have developed and are implementing an industrial restructuring programme at a cost of over £4 million in 1991. The programme assists small and medium sized enterprises to improve their competitiveness through training in preparation for the Single European Market.

Earlier this year I launched the EC-wide FORCE programme in Ireland. This will assist companies to identify their manpower and skill needs so that they can design the most appropriate continuing training programme to satisfy these needs. FORCE will facilitate the establishment of a Community-wide network of good training practices, while reviewing trends in labour markets and existing and projected needs for training. The central aim of FORCE is to assist individual workers to develop their skills and qualifications so that they can get better jobs or jobs more in keeping with their interests and abilities. Naturally, this will be to the ultimate advantage of all the players in the labour market.

[1089] We have during the course of the year secured a capital allocation for FÁS of over £8 million, which takes account of assistance from the European Regional Development Fund. The allocation reflects the need to address the rapid changes which have been taking place in manufacturing industry over the last two decades, mainly as a result of advancing new technologies and changing markets. We cannot provide a highly skilled, well trained workforce unless we have training centres which are equipped with modern up-to-date equipment. This must reflect the type of equipment which trainees will use when they subsequently obtain sustainable employment.

We have an obligation to provide the Irish workforce with the skills of the nineties. The capital allocation will enable FÁS to continue to replace, update and expand training centre equipment. It will also enable FÁS to continue their programme of modernisation of employment services offices in order to provide a better service to the public.

The FÁS overseas company, ILTS, continues to operate successfully. In 1989, the first full year of operation for which accounts are available, the company created the equivalent of 40 full-time jobs through their commercial operations abroad. During the latter half of last year they had difficulties in the Middle East due to the Gulf War but they are now involved again in the Middle East and in Central and Eastern European countries, working with the World Bank under the Community schemes, and are doing exceptionally well.

For a number of years FÁS have participated in SEDOC, the European placement service. The scope of SEDOC has been widened recently to include bilateral arrangements with placement services in the most popular member states for Irish workers. FÁS are now strengthening and formalising these arrangements in order to provide better opportunities for our emigrants. At their last meeting, the Social Affairs Council further examined how communications and various national services could be developed and integrated. They prepared [1090] a paper under the Luxembourg Presidency which hopefully will lead to a better system. There were some criticisms of how the system operated.

Free movement of workers within the EC is now a reality. Through SEDOC, FÁS assisted approximately 2,000 Irish people to secure permanent and seasonal employment in other EC member states last year. However, many more secure employment through their own efforts. The knowledge and experience gained while working abroad can make a valuable contribution to Irish development when such workers return to Ireland.

The recently published NESC report on emigration provides a very comprehensive analysis of the subject. It sheds further light on the complex range of factors and pressures now influencing the pattern of emigration. I am pleased to say that most of the recommendations contained in the report endorse policy decisions already adopted by the Government. Indeed, FÁS have already started implementing most of the policy initiatives suggested in their area in the NESC report.

They also provide a pre-departure advice and counselling service which, among other things, aims at discouraging from emigrating young vulnerable emigrants who would be better off staying at home. As an alternative, they may be offered a place on the Youthreach programme, or other suitable FÁS schemes. FÁS also alert them to suitable job vacancies.

The range of training programmes provided by CERT is being expanded to reflect the new profile in Irish tourism. While the core of the industry remains the hotel and catering sectors, recent years have seen heavy investment in leisure and activity businesses. The Government have recognised the potential in these new sectors and in the Programme for Economic and Social Progress tourism has been identified as a major area for economic development. The creation of 15,000 jobs in the economy has been targeted as a result of tourism-related activities.

This will be a significant year for CERT [1091] who are responsible for the recruitment and training of personnel at all levels of the hotel, catering and tourism industry. Work has commenced on a new national headquarters and training centre for CERT in Dublin. The building will replace CERT's current headquarters in Lansdowne Road and their Dublin training centres in Clonskeagh and East Wall Road. All office and training facilities will be centralised and purpose built, allowing CERT to broaden the scope of the training facilities available. The new premises will open in the middle of next year.

As a result of increased Exchequer and European Social Fund allocations, CERT were able to increase their training activity in 1990 by 11 per cent over the previous year. This went a long way to meet increased demand for skilled personnel. To accommodate this increase in activity, a permanent training centre was opened in Limerick and additional temporary training centres were set up in a number of seasonal hotels. Over 9,200 persons were trained by CERT in 1990 and a similar number will be trained this year.

Management development also figures prominently in the development plans of the Department of Labour. High performance in management is critical to Ireland's economic performance and employment growth in the future. The most serious problem identified two years ago by the Advisory Committee on Management Training was a widespread lack of commitment to management development among the leaders of all kinds of organisations. For example, the committee found that over one-fifth of the top 1,000 companies spent nothing on management development or did not know how much they spent.

This year my Department launched a programme entitled the, “Year of the Manager,” spearheaded nationally by the Irish Management Institute. It addresses the problem of the low level of commitment to management development. The programme comprises a series of seminars, workshops and conferences which will be held during autumn and [1092] winter. These will be attended in the main by managers of small to medium-sized enterprises. The project is being funded primarily by way of the Structural Funds, with contributions from the Exchequer, participants and the IMI.

The reform of the Structural Funds has had a significant impact on the development of our human resources. It has also had a major impact on the work of my Department, which acts as the national designated authority for all matters relating to the European Social Fund. In the reform of ESF, the broad thrust of the fund remained much the same — to help unemployed persons to secure jobs through vocational training and employment schemes.

The European Commission has tried to integrate the ESF activities with those of the European Regional Development Fund and the FEOGA Guidance Fund to achieve greater effectiveness. Our experience in 1990 with the new fund and the new procedures, on the whole, has been positive. My Department, and the other agencies concerned, have had to cope with new procedures and conditions. I am glad to say they have been very successful in this.

Under the reformed Structural Funds, Ireland received over £230 million from the European Social Fund in 1990, compared to £183 million in 1989. This money was spent on training interventions carried out under eight different operational programmes by 15 agencies. We expect to receive over £240 million in transfers from the European Social Fund in 1991.

The assistance from the ESF is paid on the basis of operational programmes for human resources development which have been drawn up in consultation with the European Commission. Those programmes cover industry and services; rural development, including training for agriculture and fisheries; occupational integration of disabled people; training for tourism; the training of instructors; training in secondary schools, apprenticeships and the social employment scheme; and assistance for the long-term unemployed and young people seeking their first job.

[1093] In order to ensure that the programmes achieve the objectives set for them special monitoring committees have been established. These include representatives of Government Departments and State bodies as well as representatives of the European Commission. This bringing together of the different national bodies responsible for economic development and employment creation and the European Commission has already resulted in a more effective use of national and Community resources. Special evaluations of the programmes are also being carried out in order to assess their effectiveness and value for money.

The additional Structural Funds resources have enabled us to increase the level of activity on training courses and employment schemes. This year FÁS will receive nearly £90 million and CERT approximately £5 million from the European Social Fund.

This greater commitment to training by the European Commission arises from a recognition of the vital role training must play in increasing economic development, especially in the regions of the EC which are relatively underdeveloped. Irish training organisations train to the highest standards, making Irish trainees attractive to employers wishing to compete and expand at home and in European and other international markets.

Training interventions supported by the European Social Fund take place in a European context and some courses include transnational training as an important element of the programme. This aspect is a particular feature of the new Community initiatives which the Commission launched at the beginning of the year. My Department are responsible for three such initiatives, Euroform which concerns new skills, new qualifications and new employment opportunities; Horizon which aims to promote the vocational integration of the disabled and the disadvantaged and NOW which concerns new vocational training opportunities for women.

My Department have reviewed a wide [1094] range of proposals under each of those initiatives. They seek Community funding amounting to several times the amount likely to be available. Accordingly I have taken up this issue with the Commissioner for Social Affairs, Vasso Papandreou and, on the basis of the quality of projects which have been submitted, I hope to achieve an increase in the funding for these Community initiatives.

I am also concerned at certain administrative aspects of the Structural Funds within the European Commission. In particular, delays in making approved payments are causing problems for all agencies which are co-financed by the European Social Fund. Substantial payments are now overdue. Training organisations should not have to incur large interest charges on borrowings due to the late payment of approved European Social Fund funds. I have formally raised this question with responsible Commissioners and the Government are insisting on the more expeditious transfer of payments in the future.

Ireland has always made full use of the European Social Fund to improve the quality and quantity of vocational training available in the country. The growth in the numbers being trained and in training infrastructure developments since we joined the Community in 1973 has been possible because of the assistance received from the Social Fund. Since we joined the Community Ireland has received assistance from the European Social Fund in excess of £1,500 million. The Government intend to continue to make maximum use of the European Social Fund to improve the quality of the workforce through vocational training, by improved technological education and by schemes to train and rehabilitate the long-term unemployed.

A Charter of the Fundamental Social Rights of Workers was adopted by Ireland and ten other member states of the European Community in 1989. The Irish Presidency sought last year to advance a realistic timetable for progress on implementing the charter. The Commission action programme to implement [1095] the charter includes some 20 legally-binding instruments as well as a range of other measures.

During the period under review the Social Affairs Council has been giving consideration to the Commission's proposals relating to non-typical workers, such as part-time, temporary and agency workers, the organisation of working time, the protection at work of pregnant women and women who have recently given birth, and the provision of information to employees about their conditions of employment. Agreement has been reached on the latter proposal and I expect a Directive on “proof of contract” to be adopted at the next Council of Ministers.

Ireland fully recognises the need to develop the social dimension of Community policies. These are a vital counterbalance to the emphasis on the economic dimension. We see social cohesion as an essential basis for the creation of the Single Market and for sustainable economic integration generally. An important aim will be to ensure that specific Community actions in this broad area are satisfactorily adjusted to Ireland's distinctive circumstances and needs, particularly the need to increase numbers in viable employment.

In the current negotiations at the Intergovernmental Conference on Political Union there are various proposals for changes in the decision-making machinery in the social policy area, not merely in relation to the implementation of the European Social Charter but for social policy issues generally in the future. These include different formulae for the extension of qualified majority voting, covering such aspects as scope and methods of application. Because of both the immediate and the longer-term implications, all of these proposals require the most careful consideration.

The overriding concern for us in relation to Community social policy will be to ensure, as best we can, that absolute priority is given to the preservation and development of employment. Indeed, we have been pressing very strongly for this [1096] to be the primary objective in any amended provisions of the social policy chapter of the Treaty. We will also try to ensure that any changes in Treaty social policy provisions allow full regard to be had to the circumstances and concerns of smaller Community member states. This applies to the extension of qualified majority voting and to other Treaty amendments that may be proposed in the social policy area.

My Department continue to be directly involved in the activities of the International Labour Organisation which now represents some 150 member states. Last year Ireland was elected as a deputy member of the governing body of the ILO. The term of office runs from mid-1990 to mid-1993. We have continuously supported the aims of the ILO to advance the promotion of peace by means of social justice since 1923 when we first became a member. The tripartite principles on which the ILO was established have taken on a special significance in the light of the transition which the economies of Eastern Europe are making towards an enterprise-oriented system.

In accordance with the obligations of our membership a tripartite delegation is sent each year to the International Labour Conference held in Geneva. This year's conference, which was held from 5 to 26 June, adopted a new international instrument on working conditions in hotels, restaurants and similar establishments. An initial discussion took place on the protection of workers' claims in the event of the insolvency of their employer and there was also a general discussion on the application of modern agricultural technology.

The ILO has become increasingly involved in organising technical aid for the less developed countries of the world and in co-ordinating new programmes assisting the reform of the economies of the new democratic states in Eastern and Central Europe.

My Department are responsible for the administration and enforcement of a broad range of protective legislation relating to such areas as unfair dismissal, [1097] minimum notice, maternity leave, protection of young persons, holidays, hours of work, overtime and shift work. My Department also provide a comprehensive information service to ensure that employers and employees are aware of their rights and obligations under these laws.

Most of the legislation concerned is of recent origin, but some — the Conditions of Employment Acts, 1936 and 1944, the Night Work [Bakeries] Acts, 1936 and 1981, and the Shops [Conditions of Employment] Acts, 1938 and 1942 — were designed to cope with employment conditions prevailing in a bygone era now outdated to a great extent. A review of these Acts is ongoing. A review of the Unfair Dismissals Act has also been carried out and I will introduce amending legislation in the next session.

The House will be aware that earlier this year the Workers Protection [Regular Part-Time Employees] Act, 1991 came into operation. The provisions of the Act extend to those employees who are normally expected to work not less than eight hours per week for an employer and, where certain other conditions are met, the provisions of Acts in the area of protective legislation. A new Payment of Wages Bill completed its passage through both Houses last night.

My Department enforce a very substantial body of labour legislation including Employment Regulation Orders made under the Industrial Relations Acts. These orders set out minimum pay and conditions in traditionally low-paid or unorganised areas of employment such as clothing, catering, law clerks, hairdressing and agriculture. As a result of inspections carried out by the Labour Inspectorate of my Department approximately £151,000 in arrears of wages was recovered last year. There are at present 14 Employment Regulation Orders in operation and, in order to improve the monitoring and enforcement of these orders, I have recruited an additional four inspectors.

While I am conscious of the necessity to eliminate any undue burdens on [1098] employers which may impede their competitiveness and capacity to provide employment, standards that are legally established to safeguard the interests of workers must be implemented. This is particularly true in the case of workers in certain occupations which are vulnerable to exploitation. I am satisfied that the monitoring and inspection procedures in operation by my Department are necessary to ensure that both workers and employers are aware of their rights and responsibilities in regard to the pay and working conditions which should prevail and that these minimum standards are implemented in practice.

As Minister for Labour one of my tasks is to promote the equal entitlement of men and women to employment. Participation by married women in the labour force has risen from around 5 per cent in 1961 to just over 23 per cent in 1989. This increase can be attributed to a number of factors. These include the general rise in real wages, more favourable social attitudes towards women's participation and the impact of employment equality legislation. The declining average family size has had a significant impact as the number and age of dependent children play an important role in determining whether or not women remain in, or return to, the paid labour force.

However, despite the existence of a legislative framework, the Irish labour market is sex-segregated to a marked extent. For instance: women work in certain sectors and occupations, men in others; women hold subordinate positions, men have positions of authority; women work part-time, men full-time; and the work done by women is frequently monotonous and repetitive and can be learned quickly and many women stay in the same job year after year, while men tend to obtain advancement and more varied work. I intend, therefore, in accordance with a commitment in the Programme for Economic and Social Progress to introduce a Bill to amend the Anti-Discrimination (Pay) Act, 1974, and the Employment Equality Act, 1977, before the end of the year. This new [1099] Bill will increase the effectiveness of our employment equality legislation.

However the traditional approach of legislation is not in itself enough. An effective programme of positive action is also essential. During the past years increasingly emphasis has been placed on positive action at enterprise level. The Employment Equality Agency is also very active in promoting positive action. An example of such an initiative is the system of monitoring which I commenced in State-sponsored bodies. This requires such bodies to devote more attention to equality, to provide to my Department certain baseline data and to indicate their goals and targets for the future. This year the system is being extended to local authorities and health boards.

Another important measure which features in my programme is the active efforts by the manpower agencies to break down traditional barriers between the sexes in the labour market; the best known example is the FÁS positive action programme which aims to encourage increased female participation in growing, future-oriented sectors of the labour market and in sectors traditionally dominated by men. This is particularly important in the light of 1992 and the completion of the internal market. Areas of work with concentrations of low skill, low pay, low technology jobs, the areas where women are most often found, will be particularly vulnerable after 1992. These areas will face greater competition, increased automation because of increased scale, and changing work practices.

At a European level I am pleased that a resolution has been adopted recently on the Third Medium Term Action Programme on Equal Opportunities for Women and Men to cover the years 1991 to 1995. The overall objective of this programme will be to promote women's full participation in, and to revalue their contribution to, economic and social life.

Last year was the first full year of operation of the Safety, Health and Welfare at Work Act, 1989. The Health and Safety Authority which was established under [1100] the Act has been developing its role as the body charged with overall responsibility for the day-to-day administration and enforcement of the new occupational safety and health system. I welcome the Authority's concentration of their efforts on raising the public awareness of the necessity for good safety and health standards in the workplace. It is quite clear that a significant number of accidents are foreseeable and preventable if the necessary precautions are taken and, to this end, most of the Authority's literature aims to educate workers and employers alike in the maintenance of a safe working environment.

The Authority also embarked on a major advertising campaign involving television and newspaper advertisements nationwide. Successful safety campaigns and unannounced inspections of workplaces were held in areas such as Waterford, Cork and Limerick during the past year. In this regard, special attention was given to the construction sector, with a major safety drive taking place in the greater Dublin area. In addition, with the co-operation of the Health and Safety Executive in the UK, a safety campaign was targeted at young Irish emigrants working on construction sites there.

The Authority have adopted a comprehensive three-year programme of work. I am glad to see they have made good progress already on the activities set out in this programme, particularly in regard to sectors which have now come under safety and health legislation for the first time.

In this regard, advisory committees have been set up by the Authority to make proposals on safety and health in the agricultural, forestry and health care sectors.

Complementing the initiatives which have been taken significant progress was made during 1990 at EC level on a number of important occupational safety and health Directives. We are participating fully in the discussion on a wide range of proposals which form part of the social dimension to the establishment of the Single Market in 1992.

I am satisfied that the new occupational [1101] safety and health system which has been put in place together, with the related activities planned by the Authority, will make an important contribution towards the creation by employers, in co-operation with their employees, of a safer and healthier environment in all our workplaces. The picture overall is, therefore, of steady progress in the various areas of my Department's work in industrial relations, safety, training and employment schemes and labour legislation. Employment remains our major challenge and there has been a quick response to the increased unemployment. The Department of Labour are not involved in controlling the employment agencies. We are mainly involved with those who are unemployed and the early school leavers — although we would prefer that they would stay in the education system — and those who wish to get involved in training programmes. The areas I have covered in my speech are where we spend our Exchequer resources and it is right to put on record once a year what is happening to the money and the progress that has been made.

It is clear that our unemployment does not result from any lack of policy response on our part but from events both at home and abroad in the first half of this year, with the slowdown in economic activity because of the recessions in the USA and in the UK. Recession and unemployment are worldwide phenomena at this time.

What is certain is that signs of recovery are already apparent in some economies in the industrialised countries and we hope that recovery will commence in earnest here before the year is out. Our present problems are, therefore, manageable, as the Minister for Finance pointed out this morning. The first half of this year was difficult and the issues have been spelled out inside and outside this House. I agree with some of the things Deputy Rabbitte said. However, when he was listing out the economic achievements in the course of his contribution he omitted to say that we created over 30,000 jobs in the period from April 1989 to April 1990, that there was [1102] a 3 per cent growth in employment during this period and that this was higher than the average in the rest of the Community states. All Government policy, and I am sure all Opposition parties' policies, are designed to getting back to that position as quickly as possible.

The Department of Labour and the agencies we are involved with have a direct impact on economic performance. Through industrial relations we try to avoid conflict and disruption to businesses and, through our training agencies, we ensure that people are skilled and are ready to take up the jobs when they are there, and through CERT we ensure that people are trained to service tourism and we undertake to do the job to the best of our ability.

We have a sound economy and the right policies. In order to encourage investment and create jobs we must continue to keep the economy on a sound footing. That is exactly what we intend to do.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  First, may I comment on the situation in which we find ourselves conducting this debate? For a long time members of my party and other parties and I have spoken about the urgent need for Dáil reform and a more effective method of dealing with our business. The idea that you could reduce the Estimates debate to the level of a procedural tantrum and then walk out of the House and suggest that one had achieved something simply does not impress me at least.

The Labour Party, which was accused this morning of making an error of political tactics want again to place on record, as has been done already by Deputies Quinn and Rabbitte, that they sought at meetings of the Whips to have the best possible discussion within the procedures laid down for a debate in this House. It should be noted for the record that just two weeks ago at the Whips' meeting Fine Gael were pressing for the very procedures that are prevailing now. If one wants to speak about political judgment, let me say as a Member of this House for quite some time and a former Member [1103] of the Seanad that it is not the habit of the Labour Party or The Workers' Party to jump to the tantrums that are provoked by a rush of blood to the head by what might pass for political judgment in the main Opposition party. The electorate will, in the fullness of time, pass adequate comment on the political judgments of the new leadership of the Fine Gael Party. There are those who are more radical than I who believe they have already begun to pass political judgement. The consequences are obvious and what we saw this morning was a rather bad tempered reaction to the most recent expression of the public's opinion on the Fine Gael Party.

Mr. Roche: Information on Dick Roche  Zoom on Dick Roche  Well said.

Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  Since 1981 when speaking on the economy here I have very often been accused of not dealing with real figures or economic reality. Today, as it is some time since I have spoken on this issue, I want to develop some of the arguments I made on previous occasions, because I feel I should do so. I introduced two concepts in debates around the period 1981-82. One is the now quoted concept of a “climatological school of economic thinking” who believe that by getting certain indicators right automatically employment would follow. You could put it more technically if you wanted to confuse people, but I choose not to. One technical view is that fiscal policy can translate automatically into economic policy. I recall on that occasion one speaker after another saying that when the economic environment is put right investment will take place and from investment will follow jobs. Of course, serious economic thinkers always knew that the missing link in that particular equation of fiscal and economic policy was what was assumed about investment.

The people who advance the argument of a climate of investment were the very people who had nothing whatever to say about investment, strategy or, standing behind investment strategy, credit policy. Indeed they were quickly and speedily [1104] divesting themselves of any investment control that they had; for example, they had turned to cuts in public investment; they were leaning on the semi-State bodies and asking for cuts in their investment possibility. They said later that they could not possibly go to the private sector and tell them what to do, while the private sector said that employment creation was not their job. Everybody was divesting themselves of any responsibility for constructing an investment strategy. Yet the theory was rather like, as I described it then, that strawberries would suddenly grow on goosberry bushes, that if you got the inflation rate right, kept interest rates controllable and had a good relationship in relation to the Exchequer borrowing requirement and had good balance of trade and balance of payment figures, automatically like Topsy the jobs would grow. This would be an academic argument if we were somewhere else but we are in the Dáil, the Houses of the Oireachtas. One family after another are suffering the consequences of the fiscal tyranny that prevailed in recent times.

It behoves me if I make such an accusation to be positive in my response. Before I move from the set of assumptions which guided the waffle speeches we have heard, I should say that I have great respect for the Minister for Labour at a personal level but I have on many occasions said that there was a mantraesque quality to his speeches. Last year one went as follows:

In these difficult economic times in which we find ourselves, when at last the public finances have been brought under control....

The Government side all trooped in and read it out. It was the mantra of the year and it is not dead yet. The Minister for Labour today said:

With the help of the social partners we have ushered in an era of development in every area of the economy and society.

Where is he living? Where are the people who wrote the speech living? Perhaps the reason emigrants are coming home is that [1105] they have read somewhere about this land of honey where there is an era of development in every area of the economy and society. We have an unemployment rate which by comparison with European societies and economies is scandalous. We have an appalling level of income distribution disparity which is condemning a number of low income households to a poverty-ridden existence, a low rate of participation in post second-level education, a shrinking level of health services and a declining number of services in relation to specifics like the elderly. This is the era of social and economic development which has begun.

I have no difficulty in addressing the demand to prove my suggestions within formal economics. I asked in 1981 and twice in 1982 that anyone taking the curve of economic growth should run the curve of net employment creation alongside it and show me one with of proof that this climatological school of creating an environment would either create investment or employment. I gave a warning that there was another concept, that of a de-peopled economy. This concept enables Ministers to tell us that we are in an era of economic and social progress and development, while the people do badly. This old tenet of Marxism is curiously a feature of the modern school of economics, we could have an economy doing well but the people doing badly. Everyone knows, the theory goes, that the economy is doing well with manageable interest rates, low inflation and so forth. What is wrong? The truth is that an abstraction has been created, a thing called the economy which has a set of characteristics which include no human characteristics. They are simply left aside. Since 1981-82 there has been a growing body of opinion within such organisations as the ESRI which contended that we would have to look seriously at these matters if we wanted to offer opinions on employment creation and on unemployment. The Government are embarrassed by the publication of more and more evidence of a total failure in regard to job creation.

I emphasise one question which I want [1106] answered by the next senior Government speaker. In this debate, can we take it that the Government regard the returning emigrant as a problem? I have listened to the speeches of the Ministers for Finance and Labour. The Minister for Finance said:

First of all, a very substantial part of the overall drift from budget target can be laid at the door of unanticipated migratory trends, with their repercussions on the live register....

In case this comprehensive insult to the ideology of the returning emigrant was not sufficient, it was rated by the Minister as being equivalent to the collapse in motor vehicles sales. He referred to an “unexpectedly sharp decline in the demand for motor vehicles”. The Minister is saying, “they are coming home and also we are not selling enough cars”. That exposes a certain kind of economic philosophy. It goes on to become more exotic by the introduction of a technical concept which the Minister referred to, the workings of “automatic stabilisers”. This has a resonance for me of self-financing borrowing of the 1977 period which Deputy Roche will remember. We had a Minister for Economic Planning and Development who argued that we could borrow and that those borrowings would be self-financing because of what we could circulate. It was an attack of extreme Keynesianism. I remember not only the Minister responsible but the people who were advising him.

In the face of a serious problem in which an economy has a large number of people unemployed and widespread poverty the Government are putting forward a view of the economy which has very little centrality. The Minister for Finance could say, “Winning four out of five is a good performance any time”. It is the kind of thing that would be fine at the end of a day's racing at the Curragh. It is a pity that the fifth was the people who wanted jobs.

The Minister went on to refer to benefits from the improvement in the public finances and stated:

[1107] On this sound platform we have been able to build a stable exchange rate policy and a low-inflation environment. These in turn facilitated Irish competition on international markets and helped us to maintain and increase employment by over 40,000 over the last three years in a climate of business confidence.

This is the climate of business confidence in which the CII have specifically said that it is not their business to provide jobs. The Minister for Finance has said in this House that it is not his business or that of the Government to create jobs but that it is his business to create the climate. They are saying that with or without the climate it is not their business. That is the capitulation which is obviously central in the speeches we have heard today. Nobody will take responsibility for an investment strategy and a conscious review of the industrial policy or a job creation policy. Instead we are getting these meanderings about “good things that were happening in my Department during the year and which you might like to hear about”.

Before Deputy Bruton withdrew from the Chamber he left me one gem. He said it is an opportunity to question on behalf of the taxpayer whether they are getting value for money. I asked myself whether he thought he was at the Committee of Public Accounts or whether he knew where he was. It reminded me of another image, the kind of person who would go around harrassing children asking, “What did you spend and how did you spend it” without raising the question as to what was the income available to a household. That is the nonsense we are getting from Fine Gael. Their suggestion is that the problem in the Irish economy that leads to a high unemployment rate, one of our scandalous achievements by European comparison, would be solved by putting them in Government and something will happen. That would not be the case because the ideology of the depeopled economy was shared by these people before it affected the Progressive Democrats and before Fianna Fáil lost [1108] any sense of public commitment they might have had. Fine Gael, the Progressive Democrats and Fianna Fáil share this vision but the trouble for them is that people are not getting out of the country fast enough. As they put it, we have an environment in which the British economy is in a certain amount of contraction, so is the US economy. I tell the Minister for Labour that his Minister for Finance grossly underestimated the costs and consequences of German unification. In this House we were given figures for its cost. It is obvious those figures were wildly wrong and that we will pay for that error in calculation, if not over five years, over the next ten years.


Mr. M. Higgins: Information on Michael D. Higgins  Zoom on Michael D. Higgins  Deputy Roche needs education in this regard. We know our interest rates are tied much more than they were to the German rate. We also know that Chancellor Kohl, faced with collapse in what was then his own part of Germany, sped along unifying Germany irrespective of the cost and of the consequences on interest rates.

Maybe I will listen to corrections later from people who have looked at those figures. If I am wrong I will be very glad to be corrected but it is not the nub of my argument. The main point about it is that unemployment had been accepted, swept under the carpet, so to speak, and emigration took attention away from it. Now the problem for the conservative parties is the returning emigrant. We saw something of the ideology of the attitude towards the emigrant in an earlier debate this year in this House when it was suggested by the Minister for the Environment, Deputy Flynn, that there were too many of them as a proportion of the electorate to be allowed to vote. They would not be informed enough to use PR properly. They would not know of the nuances that might decide the last seat. They would abuse their votes. The joke, the harsh black humour of what the Minister for the Environment was saying is that if he is not going to give them a vote in Britain they are coming home. I hope [1109] they will use their opportunity of saying what they think of an economic strategy that regards driving people out of the country or driving them into poverty through unemployment as secondary or soft. In this there has been a comprehensive intellectual capitulation.

I have been teaching in a university on and off since the sixties. I remember when teaching economic theory, and later different aspects of social policy, the antipathy that developed in the seventies and the eighties towards anybody who spoke about the social purposes of economic planning, to anyone who wanted to rescue economics by bunging back political economy, to anyone who did not want to see economics sink to simply a kind of narrow econometrics, to anybody who said that economics has a public policy dimension. On it went; really that was all soft stuff, real hard economics was just about these indicators, about checking on what we were doing and these indicators automatically would create this bogus climate and so on. It has collapsed, and the conservative parties are crawling back to make sense of the unemployment figures.

Let us not go on with this nonsense about an era of social and economic progress. In every household the conversation is about unemployment and rightly so. People know what unemployment means in terms of demoralisation. I am not going to bore this House with all the studies, but take the component of unemployment this is the long-term unemployed. It is calculated by one study that a person among the long term unemployed has one eighth of the chances of other people of getting one of the available jobs. People see the prospect of unemployment implanting itself in their households all around them and they do not appreciate being told: “We want an examination penny by penny” of how the money is being spent or “You are really wrong; you never had it so good. The Government are leading you into a golden age.” What people are asking is whether industrial policy is being examined.

What we want in this debate are [1110] answers to a number of fundamental questions. For example, will an accurate analysis of employment and unemloyment for the next few years be initiated? Will account be taken of the contributory factors to the problems — the existing number of unemployed including the long-term unemployed, youth unemployed and so forth, the numbers leaving school and coming on to the labour force, people being displaced from agriculture and the component of the inestimable migratory trend, the returned emigrants? What will be the effect of that in projecting the need for job creation? We need to look, too, at the Common Agricultural Policy and its implications, as Deputy Rabbitte pointed out. We need to look more carefully at the implications of GATT. We need much more than that. We need to take all the studies we have, and we do need many more in relation to industrial policy and to ask a fundamental question. Given the slow rate of linkages we are achieving between tax-assisted fund locations and the indigenous Irish industrial sector or services, have we not to take an initiative that would involve the exercise by the State of some functions to increase those linkages and, therefore, increase jobs? Also in relation to people who are caught in particular sectors there is a most worrying statement at the back of the latest report from the ESRI on inter-industry transfers. We have not begun to look at that. The Government speeches imply that, when the external environment improves, the heat will be off them. To be fair to the Minister for Finance, he said in his speech that we have a major unemployment problem. The fact that it reflects the UK recession rather than a downturn at home is no consolation either to me or to those without jobs, but the thinking is the same. If there was no recession in either the UK or the US, there would still be problems at home. Despite all these indicators of a splendid investment climate, the investment is not happening. Where is it quantified? Is it in any CII document?

Consider what the Government have responsibility for and look at the forced [1111] redundancies in An Post, RTE and Aer Lingus. Go through the semi-State bodies. Are the Government involved in what they have investment control over, in acts of job destruction which is what many of these voluntary redundancies are?

A broad debate which addresses this one central problem of unemployment is much better in the end than discussing [1112] twopences and pennies and how they might have been spent to make three-pence out of them, as Fine Gael suggested. The people are interested in how our economy is being run and with what social consequences.

Debate adjourned.

The Dáil adjourned at 4 p.m. until 2.30 p.m. on Tuesday, 9 July 1991.

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