Financial Resolutions, 1992. - Financial Resolution No. 22: General (Resumed).

Wednesday, 5 February 1992

Dáil Éireann Debate
Vol. 415 No. 4

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Debate resumed on the following motion:

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

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  Last evening I had referred to the cut in the promised sum of £12 million under the Programme for Econmomic and Social Progress, which sum has now been reduced to £2 million in 1992, the remaining £10 million being deferred until 1993 and 1994. Obviously this is a total reneging on the promise given the farming organisations in the summer and autumn of last year.

I also made reference to the fact that headage payments subsidies and premia nowadays form the bulk of the basic [1001] income for many farmers, not only small but medium to large farmers and that there is a necessity to have an ordered system of payment where those headage payments, subsidies and premia are concerned. The hit and miss system which has been operating for some time past is not good enough. People are depending on these payments, just like social welfare recipient would depend on his payment at the labour exchange or his cheque in the post. There must be some ordered manner in which this money is paid. For instance, headage which was promised to farmers three or four months ago has not yet been paid. These people have bills to pay and commitments to meet and some of them are virtually destitute. It is not good enough to have a system where payments are withheld to bolster Exchequer funds and the state of the economy. There should be something much more rational.

The beef premium scheme — an EC scheme — has been handled in a disgraceful manner in this country. We should be able to help farmers to get the maximum from that type of scheme. Instead, up to 20 per cent of applicants are being disqualified because of technicalities. It is incredible that people who are depending on this payment for their livelihood should be disqualified on such grounds. As the forms are quite difficult to fill in, assistance should be given to those people rather than have them totally disqualified not just for the current year, but, if the form is filled in incorrectly, from payments for the succeeding year also. It is a crazy system. I ask the Minister for Health, Deputy O'Rourke — whether she is to continue as a Member of the Cabinet or as an ordinary backbencher we do not know yet — to convey to the Minister for Agriculture and Food and the Minister for Finance our disquiet over this very unfair method of administering an EC scheme. I am sure she has come across it in her constituency clinics.

Mrs. O'Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I have.

[1002]Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  Deputies — with the possible exception of Deputies in Dún Laoghaire or Dublin 4 — who deal with farmers are inundated with objections——

Mr. Gilmore: Information on Eamon Gilmore  Zoom on Eamon Gilmore  I deal with a few farmers.

Mr. Deasy: Information on Austin Deasy  Zoom on Austin Deasy  ——to the method in which they are being disqualified. The departmental officials should be there to help people rather than put a pen through their applications and disqualify them.

I want to refer specifically to an item in the budget with which I agree wholeheartedly, that is, the levy of £2 million on the banks to partly pay for the protection services being provided by the Garda and the Army for the movement of money between banks and within banks. I asked a number of questions prior to last Wednesday's budget on this subject and they were answered yesterday. Some of the answers are illuminating. I note that in 1991 the cost of providing Army personnel to safeguard the moneys being transferred between banks was £1.6 million approximately. Unfortunately, the Minister for Justice was unable to give me an exact figure. He said the last time a calculation had been done on the cost to the Garda of providing these escorts was 1986 — six years ago — was £1 million approximately. We do not know whether that is £2 million or £3 million today, but definitely it is considerably greater than the £1 million estimated in 1986.

In one of my questions I asked that all the expense incurred by the Garda and the Army would be paid for by the Associated Banks. That part of the question was deleted because it anticipated the debate on the budget which is currently before the Dáil. That part of the question was ruled out and a letter to that effect was signed by your good self, a Cheann Comhairle, and that is understandable.

In my constituency there has been a spate of robberies recently amounting in losses to the victims of from thousands to millions of pounds. It is a matter of grave concern to me, and I am sure to other [1003] Members, that apparently huge sums of money can be stolen quite easily. It is time for a major review of the security services available in this country where banks and other financial institutions are concerned. The thought of £2.75 million falling into the hands of subversives — as is most likely the case in the recent big bank robbery — is frightening. How many lives are likely to be lost when those who got their hands on that money start using it? Will it be dozens or hundreds? How many tonnes of semtex, how many submachine guns, rifles and revolvers could that money buy?

This robbery happened because of inadequate security arrangements. I do not think anybody was even faintly aware of the insecure nature of the building in Lisduggan, Waterford, from which the £2.75 million was stolen. We should bear in mind that sometimes that building holds as much as £10 million and a local building contractor said that access to the building could have been gained by merely using a hammer and chisel. Three individuals were seen on the roof of the building two days prior to the robbery; it was not guarded 24 hours a day, although it could contain up to £10 million. Access was obviously relatively easy and the alarm system must have been inferior or obsolete as it did not provide a deterrent. The whole thing is frightening. Is it any wonder that people make the glib remark that banks in Ireland might be called cash and carries rather than banks? The simplicity with which the money was removed is unacceptable. This item in the budget is very much in order and I feel the banks should pay the full amount involved.

I want to express my disgust at the banks' statement following the budget that they would pass this £2 million on to their customers in the form of charges. I think they have a confounded cheek and should be told so. These banks make huge profits every year, though some have actually made investments particularly in the United States and in Britain where they have incurred huge losses, but overall they make huge profits. If [1004] the four associated banks cannot pay £2 million annually to assist in the security of those establishments, then they should be ashamed of themselves.

I was a member of a Government at the time of the collapse of the Insurance Corporation of Ireland whose liabilities could have been into billions of pounds. The Government were forced to underwrite the AIB and the Insurance Corporation of Ireland to the extent of £400 million or £500 million to prevent a run on the bank and a possible collapse of our banking system. We had to intervene and underwrite the losses to the extent of £400 million to £500 million. Those involved are the same individuals who lecture us, whether we be in Government or in Opposition but in particular when we are in Government about fiscal rectitude. Those people put the whole banking system of this State in jeopardy by their own incompetence.

As I said before in this House, the board of AIB were lucky they did not go to prison. We are too soft when it comes to dealing with people who have made major mistakes and put the security of the country, in particular the well-being of financial institutions, at stake. Nobody was penalised as a result. The only person who stood to be penalised was the Irish taxpayer. The Government were berated at the time because they had to provide £400 million to £500 million to stop a possible collapse of the banking system although it was totally outside their control.

The day has come when the present “softly softly” attitude in regard to security in banks will have to change. The banks should be asked to provide their own security within the banks. If it has to be armed security so be it, but the day should be over when people can walk in with a sawn-off shot gun, a revolver or an imitation gun to steal thousands or tens of thousands of pounds. The day should be over when well organised criminals, be they subversives or the hard core of the criminal element, can go to holding centres to steal millions of pounds. The day should be gone when these people can walk up to unarmed [1005] gardaí, put a gun to their heads and threaten their lives. People must fight back.

I am not advocating that the gardaí should be armed but the day has come when the special task forces which existed some years ago should be resurrected or reformed. We should let hardened criminals know they are likely to meet armed gardaí inside or outside banks or other financial institutions when they go to rob them. They should not be left go unchallenged and the sooner we face up to reality the better.

Minister for Health (Mrs. O'Rourke): Information on Mary O'Rourke  Zoom on Mary O'Rourke  I am very glad to have this opportunity today to speak on the budget and, in particular, about my own Department, the Department of Health.

The 1992 provision for the health services, as reflected in the Abridged Estimates, is clear evidence of the Government's level of commitment to the health services. The net 1992 Estimate is over £1,500 million pounds. This figure represents an increase of £180.3 million or 13.4 per cent over the original net Estimate for 1991. This represents over one-fifth of all Government expenditure on supply services for 1992. The allocation of such a significant sum for the provision of health services in a time of fiscal restraint cannot but emphasise the position which the health services occupy within this Government's overall priorities. This provision will make it possible to maintain services at approved 1991 levels and also provides for a number of important developments in acute hospitals; services for people with AIDS; services for the mentally handicapped, including the development of a medical genetics service; the continuation of a number of capital projects, including those at Ardkeen, Sligo and the Rotunda, and the commencement of a number of new projects.

The budget presented to the House last Wednesday contains further evidence of the commitment towards the development of the health services in a manner consistent with the objectives agreed between the social partners and given [1006] expression in the terms of the Programme for Economic and Social Progress. Under the terms of the Programme for Economic and Social Progress, the social partners agreed upon a comprehensive and fundamental plan of action for the development of the health services, with the overall strategic objective of providing a comprehensive, equitable and efficient health care system, with a strong commitment to a patient-centred service. The Programme for Economic and Social Progress places particular emphasis on the development of community based primary care services. I am happy to be able to report to the House that this budget builds on the start made last year in the implementation of the Goverment's commitment to the development of community services.

When I became Minister for Health three months ago I was very concerned at the waiting list for services in mental handicap and I made the immediate improvement of these services one of my main priorities. The Government are determined to improve services for people with mental handicap and I have repeatedly stressed this point. In particular I provided outline details of my intentions in my statement to the Dáil on 11 December and in the statement I issued following the announcement of the Estimates.

With the additional allocation of £3 million announced in the budget, and the additional funding which I have provided from within the Estimates, there will be an additional injection of £10 million in services for persons with a mental handicap this year. This will enable significant improvements in services to be put in place this year. Much of the ground work has already been done in planning and the additional services will be coming on stream very quickly.

I should like to outline how we propose to use this extra allocation this year. Additional residential and day places will be provided. The total number of places involved will be about 400 and they will be allocated according to need and in accordance with the plans for the development of services for persons with [1007] a mental handicap which have been prepared by the health boards in co-operation with the co-ordinating committees. Further respite facilities will also be developed. This will mean that about 550 additional families will be able to have a break of one month in the year. This is a significant provision and was recommended to me by the various deputations I met in regard to the provision of resources for mental handicap services. I am only too well aware of the value families and carers put on this type of service. The additional places will be spread over the entire country in accordance with the plans submitted to me and the Department.

At present many families suffer considerable hardship and make an enormous sacrifice in caring at home for a son or daughter with a mental handicap who may be advancing in years. I am initiating a home care or outreach programme to meet the needs of those families. The concept envisages the provision of varying degrees of help and support to the person with mental handicap and to their family. It is my intention that the scheme will work in a very flexible way and could, for example, involve a more adaptable and out of hours use of day care facilities. The scheme in turn should provide a service for between 600 to 700 families.

Crisis intervention and services for disturbed persons will also be developed while services for children will be expanded by the provision of extra early intervention teams and centres for child education and development.

While it is of course necessary to address the needs of those who have a handicap we must also improve our efforts in the preventive area. It is important to reduce the prevalence of genetic disorders by means of the provision of a specialist genetic counselling service to people for whom there is a risk of handicap which is genetically determined in themselves or their families. I am pleased to be in a position to initiate this service at Our Lady's Hospital, Crumlin.

The allocation for 1992 have already [1008] been issued to the health boards and the voluntary hospitals and I will be issuing them to the mental handicap agencies next week. I am glad that these allocations will be adequate to meet their ongoing needs. When account is taken of the 1992 allocations to the health boards and agencies who provide services for the mentally handicapped and the additional £10 million being provided this year for services development the estimated 1992 expenditure on a range of services to people with mental handicap will be close to £200 million.

The additional funds allocated this year represent the single largest annual investment ever in mental handicap services and I am glad I have been able to do this. Services will now be maintained at these increased levels of provision and improved on. I am fully aware that more needs to be done but we feel we have made a good start. This substantial increase shows that we have a real commitment to that area. In the debate on the Opposition's Private Members' motion on mental handicap services, on the Estimates and on the budget, in answers to Dáil Questions and when I met various groups, I stressed my commitment to improving such services which was evident in the Government talks on the allocation of resources in the budget and the Estimates. I am glad to record that a firm commitment was given to provide those moneys.

I should also like to pay tribute to all who work in the area of mental handicap. Since Christmas I have met nearly 20 groups from around the country who deal in one way or another with services for mentally handicapped people; the groups comprise voluntary and statutory agencies. I am heartened by the way they approach their task in such a caring, dedicated way, the very obvious care and commitment to the people in their care and their zeal in making submissions and putting forward their case. For me it was an endorsement of what I have always felt about this area and I am pledging anew my commitment to it.

The Child Care Act, 1991, represents [1009] the most comprehensive reform of the law in relation to the care and protection of children since the foundation of the State. It is among the most enlightened social legislation ever to have been enacted by the Oireachtas and, indeed, received a great measure of cross-party support in the various deliberations by committees in relation to the Bill. It is one of the finest examples of what can be done when there is a strong commitment to certain legislation.

It provides a secure legal framework for the future development of our child care services. It envisages a fundamental change in orientation from a system rooted in charity and crisis management to one in which the emphasis is on prevention, participation and welfare rights. The principles embodied in the new legislation will shape public policy in this area into the next century.

The Act contains a wealth of new and improved provisions designed to promote the welfare of children. These range from granting health boards new powers to provide child care and family support services, the introduction of new legal procedures to enable the health boards and the Garda to intervene where children are being neglected or abused to new legal controls on pre-school services and children's residential centres. Among the many other detailed provisions are legal representation for children involved in care proceedings; new powers to enable the courts to appoint guardians ad litem; a new approach to the question of parental access to children in care; controls on the sale of solvents to children and a requirement on health boards to provide support and assistance to children leaving care.

Given the scale and complexity of the new legislative provisions, it has always been recognised by all sides of the House and by the various interest groups that the Act would have to be implemented on a phased basis over a number of years. It is clear that the implementation of the Act will require a sustained programme of investment to provide additional staff in the community, to develop new and improved residential and community [1010] facilities and to evolve locally based responses. The Government are committed to providing the additional resources needed to bring the Act fully into operation as soon as possible. As a first step, a sum of £1 million was set aside in last year's budget to fund essential developments preparatory to the implementation of the legislation.

Among the important new developments approved during 1991 were: 30 additional social workers; a new therapeutic unit for difficult adolescents to be operated by the Eastern Health Board; a new emergency hostel for homeless girls in Dublin; new hostels for homeless youth in Galway, Sligo and Athlone; new residential services for adolescent boys in Dublin, Cork and Limerick; new child psychiatric services in the North-Eastern, South-Eastern and Mid-Western Health, Board areas. The full year cost of the developments approved during 1991 is estimated at almost £3 million and full provision for this expenditure has been included in the 1992 Health Estimate and in the allocations notified to health boards.

I am anxious to build on the considerable progress made during 1991 so that we can bring substantial elements of the Child Care Act into operation during the current year. As the House will be aware, the Minister for Finance announced in the budget that a special allocation of £2 million will be made available for this purpose in 1992. This is in addition to the £3 million already in the system and brings our investment in the Act this year to almost £5 million. The additional moneys will be used to give effect to a number of important provisions of the Act.

It is my intention to bring most of Part II of the Act into operation during the first half of this year. The provisions involved include: section 3 which imposes a statutory duty on health boards to promote the welfare of children who are not receiving adequate care and protection and empowers them to provide a comprehensive range of child care and family support services; section 5 which imposes [1011] a statutory duty on health boards to provide accommodation for homeless children; section 6 which requires health boards to provide or ensure the provision of an adoption service in their area; section 7 which requires each health board to establish a child care advisory committee to advise and assist them in the performance of their functions under the new legislation and sections 9 and 10 which will enable health boards to make arrangements with voluntary bodies to provide services on their behalf and to grant-aid them for that purpose.

I should like to pay tribute to the Minister of State at the Department of Health, Deputy Flood, who is with me this morning. The implementation and monitoring of the child care Act is under his aegis and he has made an enormous input to our deliberations on the matter. He works constantly with the people who operate in the middle of all the work which needs to be done. He has an extraordinarily sensitive feeling for the area and by working with him and building on what he has already done we can achieve much through the Act. We are both fully committed to it and the Department of Health are lucky to have the expertise of the Minister of State.

I met representatives of IMPACT about three weeks ago and again yesterday — the union represents people working in the child care area — and we had a very thorough discussion. Very fine ideas were advanced as to how we would move as a result of the implementation of these sections of the Act.

The additional moneys will enable health boards, in association with the voluntary sector to begin to develop a comprehensive range of child care and family support services, to recruit additional social workers, child care workers, child psychologists and child psychiatrists and to develop family resources centres and other special initiatives for families facing particular difficulties.

This morning Deputy Sherlock asked about services for the elderly and I am sure his colleague will relate what I intend to say.

[1012]Mr. Gilmore: Information on Eamon Gilmore  Zoom on Eamon Gilmore  I will tell him every word.

Mrs. O'Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  Because of technology, the Deputy may not have to. I am very pleased to be able to initiate very necessary improvements in services for the elderly from the additional funds made available in the budget and in the Estimates. I have been able to convey approval to both the Mater and Meath hospitals in Dublin to the setting up in each location of a specialist unit for the elderly comprising assessment and rehabilitation facilities. This will entail the employment of a consultant geriatrician on each site plus the recruitment of complementary nursing and paramedical staff. Also, I have authorised the Eastern Health Board to provide as a matter of urgency 26 additional extended care places. I will be announcing the provision of additional long stay places later in the context of the implementation of the Health (Nursing Homes) Act, 1990. I intend to bring this Act into force later in the year and I am confident it will contribute in a major way to the care of the elderly in our community. The regulations to give effect to the Act are being prepared at present.

Time does not allow me to go into detail on the improvements which are being made in many other areas of the health services. These include improved services for AIDS sufferers, the opening of additional new hospital facilities at Dublin, Waterford and Wexford. I have concentrated here today specifically on service improvements related to the budget given that it is the budget we are debating and that we had an opportunity the week before Christmas to debate the Health Estimates.

While I am glad of the improvements I have been able to put in place I am also conscious that more needs to be done in certain areas, such as mental handicap. However, I would like to emphasise that the improvements which have been put in place will be maintained in future years and provide an excellent basis on which to build.

This Government have set themselves [1013] the task of putting the nation's finances on a sound footing and I am happy to say that in this they are being most successful. At the same time, the Government have set themselves the task of reforming the taxation system and of ensuring that the social needs of our society are given a high priority. It will also be very clear from what I have said about the improvements in the health services as a result of this budget that the Government have a sympathetic and responsive approach to social issues.

I should like to pay tribute to all those who work in the health service. Since Christmas I have set myself a schedule for visiting hospitals, community groups, institutions and organisations, and, in cases where it is not possible for me to visit these institutions, for their representatives to visit me. This has been an extraordinary learning process for me. As I said earlier in regard to people who work with the mentally handicapped, all the people who work in the health service take their jobs very seriously and are very committed to them. I want to put it on the record that this gives the lie to those who constantly complain about our health services. Of course, we could all do with more money; indeed every service-providing Government Department could say the same thing. However, for commentators to constantly bemoan what is happening in our health services does a disservice to those in our health services who work so diligently. I want to pay tribute to the men and women of extraordinary calibre who work in our health service, and who are devoted to their jobs. I am very appreciative of the work being done by the people in our health services. I commend the budget to the House.

Mr. Gilmore: Information on Eamon Gilmore  Zoom on Eamon Gilmore  The kindest thing that can be said about the budget is that it is a major non-event which fails to take any significant steps to tackle the major social and economic problems facing the country. It will have about as much lasting impact as its author's bungled bid for the Fianna Fáil leadership — no matter how he tries the numbers will not add up. [1014] Since the budget debate gives us an opportunity of championing the case of the underdog, I want to take this opportunity to wish the Minister for Health every success in her efforts in this regard.

If one believes that unemployment at a level approaching 300,000 is satisfactory, that our tax system is fair and just and that people on social welfare are well enough off, then this could clearly be regarded as a good budget. However, if like The Workers' Party one believes that our unemployment level is a national scandal, that our tax system is grossly unfair to the PAYE sector, who continue to bear a disproportionate share of the burden, and that social welfare rates must be substantially increased, then this

The Conference of the Major Religious Superiors of Ireland have accurately described this as a budget of omissions. It would be hard to improve on the summary of their response to the budget where they point out that there was no redistribution to ensure that everyone has sufficient income for a minimally adequate standard of living; a complete failure to close the gap between the poor and the better off — in fact, the gap has been widened; little attempt to tackle widespread rural poverty; a totally inadequate programme to tackle unemployment; no significant action to tackle child poverty; no significant changes which would make it easier for unemployed people to work when jobs do not exist, that is, working towards developing themselves, their communities or the wider society; no serious attempts to tackle poverty traps; no evidence that the emerging housing crisis is to be tackled; no evidence to suggest that the Government recognise the need for a comprehensive integrated approach to tackle poverty and social division; and no indication that the Government recognise that social welfare alone will not eliminate the serious deprivation being endured by large numbers of Irish people. This is not the verdict of an Opposition political party with an axe to grind or a group of academics with no experience of the real world but the considered response of a group of [1015] people who on a daily basis deal with the social problems created by successive Governments and successive budgets of this kind.

The Minister made much in his speech of the fact that the level of social welfare increases, at 4 per cent, was expected to be slightly above the rate of inflation. We do not, of course, know what the actual inflation rate will be and many commentators have suggested that it may increase because of the increase in the standard rate of VAT. However, even if the increases are in line with inflation, they are not good enough. The practice of increasing social welfare rates in line with inflation would only be acceptable if the basic rates were satisfactory. This is clearly not the case. Most rates are still way below the levels, increased for inflation, recommended in 1985 by the Commission on Social Welfare. Even with the extra increase for those on the lowest level, many people will still be expected to exist on just £53 per week. How many people in this House could exist on just £53 per week? It is a derisory sum. Many of the stockbrokers and Right wing economists who regularly lecture the public about the need to reduce Government expenditure would spend as much on a bottle of champagne in a Leeson Street night club.

People on incomes as high as the Taoiseach's and people on equivalent incomes in the private sector will get as much benefit from this year's budget alone as a result of the reductions in the tax rates — which may be of the order of £2,500 — as the entire annual income of somebody on social welfare.

In addition, while the social welfare rates will not be increased until late July, VAT increases will come into operation on 1 March. Therefore, people will face an increase in the cost of adult clothing and footwear within a matter of weeks but will have to wait for almost six months before they get their extra few bob in social welfare. Why is it possible for Governments to always implement measures which bring them in extra money within a matter of weeks, but [1016] defer for months measures which might put some badly needed extra money into the pockets and purses of those on social welfare? Up to the early eighties social welfare increases were paid at the beginning of April. Since then they have been gradually pushed back and back. The Government should now revert to paying them in April.

One of the matters of most concern must be the systematic reduction in the proportion of gross national product spent on social welfare, despite the huge increase in unemployment and the irrefutable evidence of growing poverty. In 1986 expenditure on all social services, such as education, health care, social welfare, housing and subsidies, amounted to 29.2 per cent of GNP. This year it is likely to be less than 27 per cent. In 1986 expenditure on social welfare represented 14.9 per cent of GNP. This year it is likely to be around 13.8 per cent. This does not reflect the actions of a Government with any sense of social responsibility. How can the Minister justify the systematic reduction in the share of national wealth which they allocate to those on social welfare when poverty and unemployment are increasing?

One of the most disappointing aspects of the budget is its total failure to increase child benefit. There is a very substantial body of research which shows that people who are at greatest risk of poverty are children, especially when they have been born into large, low income families. Again all the relevant research has pointed to the importance of child benefit as the most direct way of reducing the risk. Yet the Government have for several years frozen the level of child benefit. If we are to make any progress in this area, child benefit must be increased substantially. Ideally there should be a graduated rate which would take account of the fact that it costs a lot more to feed and clothe a teenager than a two year old child.

In regard to taxation, what the budget shows is that the Progressive Democrats have won the argument in the Cabinet hands down. Not only do they dictate who can be in the Cabinet, and even who [1017] can be leader of Fianna Fáil, but they also dictate Government policy on taxation. The changes in the budget reflect the total preoccupation of the Progressive Democrats with reducing tax rates to the virtual exclusion of other aspects of taxation. Lowering the tax rates is not the most progressive way to reform the tax system. Widening the tax bands and raising the tax threshold would have been more progressive and would help much more those who are in real need but, of course, the Progressive Democrats are not interested in helping those in real need. Their priority is to reduce the tax burden on the well off, and they have had their way. Look at the impact of the tax changes in the budget: a married couple with two children on a gross income of £10,000 per annum will benefit to the extent of about £95 per year, or less than £2 per week; a couple with two children and a gross income of £30,000 per year will gain an additional £743, and a couple with two children and on £75,000 per year will end up with an extra £2,500, in other words, the same amount as the annual income of a person on the basic rate of social welfare.

Up to 1975 the highest rate of tax was 80 per cent and now the highest rate will be 48 per cent. While the reduction in the rate will help many people on low incomes, it is a present to those who do not need and do not deserve it. We make no bones about this; we would like whatever tax relief is available to go to the low and middle income groups. Many more people must be taken out of the tax net. The increase in the general exemption limit of £100 for a single person and £200 for a couple is totally inadequate. It may take a few thousand people out of the tax net temporarily, but as soon as they get the increases due under the Programme for Economic and Social Progress they will be back in the tax net again.

It is unacceptable that people who are officially considered by, say, the Combat Poverty Agency to be living below the poverty line are paying tax. It is ludicrous that between 11 per cent and 18 per cent of those living in poverty are paying tax [1018] and that in more than half these cases they pay £20 per week or more. People on low incomes must be taken out of the tax net, and this can be done by substantially increasing the income limit. The level at which people begin to pay income tax should be raised to at least £100 a week for a single person and £200 per week for a couple.

While the Minister did move to close off some areas of tax avoidance and evasion, these tended to be the small beer, but the real rip-offs where the big money is made, remain relatively unscathed. No doubt the highly paid tax advisers and experts are already devising new schemes and new strokes to enable their clients to continue to avoid their financial obligations to society.

Nowhere is the budget more disappointing than in its failure to come up with any significant measure to deal with our appalling unemployment problem. The Government may approvingly quote impressive trade figures and higher than average growth rates, but the most appropriate way to gauge the success or failure of an economy is surely by the number of people in gainful, productive work. This is the only meaningful measure. It measures the success or failure of our economy, not in terms of figures on a balance sheet, but in human terms. Judged by this criterion our economy is a total disaster. There are almost 270,000 on the live register — 20 per cent of the labour force, more than twice the average rate of the EC. When those on pre-retirement schemes are taken into account the figure is around 283,000 and when those on training schemes are added the figure is well in excess of 300,000.

Against this background one would have expected that unemployment would have dominated the Minister's speech. Instead it got four and a half pages out of a speech which ran to more than 60 pages. Most of the four and a half pages were devoted to simply announcing further details of the new employment and training scheme which had already been announced on a number of occasions. The Minister had nothing new to say, [1019] no hope to offer the unemployed, no comfort for mothers and fathers of school going children who despair of them ever getting a job, irrespective of their qualifications.

Government's insist that they cannot make jobs, but of course the decisions Minister's take in preparing the budget can have a crucial impact on the whole job creation area. The public capital programme has a central role to play in job creation. Not only does it create jobs directly, but employment is also created indirectly through sub-contractors, suppliers and so on. The public capital programme this year is just £1,879 million — almost exactly the same as it was ten years ago, in 1982, when the figure was £1,858 million. If the 1982 figure has been simply increased in line with inflation, it would now be around £3,250 million. In other words, the public capital programme for 1992 represents a reduction in real terms of almost a half in the past decade. Is it any wonder that we have such a huge number of unemployed?

That was brought home to me very forcibly recently by an architectural technician who had qualified in the last couple of years, lost his job shortly before Christmas and wrote to 156 architects' offices looking for a job — he picked the offices from the Yellow Pages that were known to him. Not surprisingly, many of these people wrote back telling him there was no job available, and not surprisingly many of them did not reply at all, but what was surprising was the number of applications returned to him with the imprint “Return to Sender” marked on the envelope because the architects' firms had gone out of business due to the lack of work, particularly in the area of public works.

What about the £3 billion in EC Structural Funds which we were told would make such a difference to this country in 1989-93? Where are the major infrastructural programmes which were promised? We are now virtually at the end of the programme but unemployment is still on the increase. The safety valve of emigration has been closed off for the [1020] moment. We continue to spend huge sums of taxpayers' and EC money sub-sidising industry and agriculture, but we are not getting value for money. We need proper reporting and accountability. Subsidies and tax breaks which are not producing jobs must be withdrawn and the money diverted to a more effective job creation strategy.

A series of reports has been produced of which the report of the review group on industrial strategy is the latest, and probably the most important. The time for the production of reports is past. The country, and especially those without jobs, are demanding action, but unfortunately there was very little sign of action in last weeks's budget.

Another particular disappointment is the total failure of the budget to address the housing crisis. There is no recognition in the budget of the crisis which exists particularly in the area of public housing. There are now almost 30,000 applicants nationwide on local authority housing lists. Effectively there has been no local authority house building since the Fianna Fáil Government took office in 1987, other than the completion of the works already in hand at that stage, and a token amount of building since. It is interesting to note that more local authority houses were built in 1986 alone than have been built since Fianna Fáil were returned to office at the beginning of 1987. The provision in the budget to increase the allocation to local authority and social housing programmes by £1.3 million to £80.3 million is derisory and fails to take account of the extent of the problem.

About 12 months ago the then Minister for the Environment, who may soon be restored to a prominent position in public life, announced with a great fanfare an action plan for social housing, but that action plan was never implemented. A housing Bill was to be introduced in conjunction with that plan, but despite prodding requests and questions on the Order of Business and at Question Time, 12 months later that Bill has not even been circulated, much less debated or enacted by the Oireachtas. In the meantime, the schemes in the plan for social housing [1021] are not being implemented. Not a single house has been purchased under the so-called shared ownership scheme. Not one site has been provided for families wishing to set up house on their own. At the same time the number on housing waiting lists continues to grow. In the part of County Dublin I represent not one person has been housed from the housing waiting list in the past 12 months except people who have been declared officially to be homeless. The number of people on the housing waiting list in south County Dublin is now about 700. There are 500 people on the housing waiting list of Dún Laoghaire Corporation, the adjacent authority, yet the number of approvals from the Department of the Environment for house building in the area amounts to no more than 50. That will not address the problems facing young families who are trying to set up home but cannot afford to buy a house. They are now faced with the prospect of having to wait for years before they will be housed, the prospect that faced families in the fifties and sixties.

A similar situation exists with regard to the refurbishment of houses. Deputy Deasy in an earlier comment stated incorrectly that there were no farmers in the Dún Laoghaire area. Many farmers reside in the Rathmichael and Kilternan areas. Indeed that sizeable agricultural belt is under strain from the developers who would like to build houses on it. There are almost 600 local authority houses in my constituency which have no bathrooms. That is a disgrace. In the course of the past couple of days I met a couple who have two young children aged five and three. One child is incontinent and the family have to wash the bedlinen in the only sink in the house which is served by a cold water tap. They have no bathroom or other washing facilities. These are Dickensian conditions as we approach the end of the 20th century. Yet last year the allocation from the Department of the Environment provided for the installation of only 40 bathrooms in an area where 600 houses are without them. While the specific allocations to the various local authorities for [1022] this year have not been made, it would appear that the amount of money allocated in this year's Estimates is the same in money terms as it was in 1991. When inflation is taken into account, this means that the allocation is actually less than last year's.

This means we will continue to have many young families on local authority housing waiting lists, and living in accommodation that is now unsuitable for their needs and from which they should be transferred. Substantial numbers live in sub-standard accommodation which belongs more to the last century than to the end of the 20th century.

Mr. Leonard: Information on James Leonard  Zoom on James Leonard  I congratulate the Minister on his first budget which sets out to deal with the inequities in the tax system and closes the loopholes on tax dodgers. It has removed many anomalies in the system and, generally speaking, it was well received. Measures were taken to prepare us for the Single Market in January 1993. Despite the criticism of the 1991 budget, the then Minister for Finance, Deputy Albert Reynolds, was vindicated by the outturn.

My constituency, which consists of two Border counties, featured a great deal in the budget of the past decade for the wrong reasons. In the years 1983-87 the price of petrol was increased and as a result trade in Border counties suffered. I welcome the reduction of 9p in the price of a gallon of petrol from 1 May. Many petrol filling stations on this side of the Border had to close down while on a concession road between counties Monaghan and Cavan, four large supermarkets and filling stations were built on this Golden Mile to avail of trade from the Twenty-six Counties. We made repeated requests to Ministers that measures be put in place to level the playing field but our requests were ignored. However, the former Minister, Commissioner MacSharry set about dealing with this problem in 1987 and it has been dealt with consistently since then. Indeed, the towns along the Border now have a belief in themselves and are enjoying a new lease of life. The shop fronts [1023] were lit up at Christmas and the filling stations have re-opened now that they can compete with their counterparts across the Border. The supermarkets that were built to cater for trade from the Twenty-six Counties have lost custom because it is no longer attractive to shop there for electrical goods and spirits which were much cheaper in the North. This has now changed and we welcome the transformation.

The main emphasis in the budget is on jobs. The Minister has provided £70 million pounds for training and employment, £60 million of which will come from the EC. It is hoped to provide £25,000 additional training places. There will be substantial transfers from the EC, including an additional £100 million from the Structural Funds. While I am certainly grateful for this money, I am concerned that we may become over dependent on this type of transfer. It may kill local initiative. I attended a dairy conference in Cootehill on 5 December and the main speakers were the chief executive of a dairy in the north west and a member of the New Zealand Dairy Board. I noted some of their comments on the dairy industry. The chief executive, when discussing the need for further rationalisation in the Irish dairy industry, said:

In Ireland the industry is carrying too many costs in the form of administration costs, milk assembly costs, duplication of processing and inefficiency in milk pool utilisation. Producers are paying for these inefficiencies. It is time action was taken with the producers playing a major role in making it happen.

When talking about the marketing of Irish dairy products he pointed out that only 20 per cent of our milk is marketed at home, that the balance is exported but that only about 40 per cent of exports are sold as branded products, the remainder going in commodity form, in bulk and largely unprocessed. He went on to say that too high a proportion, 70 per cent, [1024] of our milk is still going towards the production of butter, that the seasonal nature of our milk supply is a problem, that we need to shift a higher proportion of our sales to EC countries, that despite our great disadvantage we need to compete effectively in price and that our milk prices, therefore, must be kept in line with market prices in Europe. He said that we need to maintain stable prices to our customers for periods of between six and 12 months and that we must be able to give a guarantee of continuity of supply. Those comments have come a long time after our entry to the EC, after we received much support by way of grants for processing, storage facilities and intervention. They are a sad reflection on Ireland's dairy industry in 1992, as we approach the Single Market.

Robertson stated that New Zealand had been shocked by the entry of the UK to the EC in 1973 and by the world oil crisis which began in that year. He said that the New Zealand Government continued a policy of protectionism and of agricultural subsidies, with the result that taxation increased, inflation stood at 15 per cent and the Government debt grew. Robertson went on to say, and this would be very relevant to this country, that in forgetting the realities of the market-place New Zealand entered fairyland, lived off borrowed money which went to support and push the economy into something it could never be. He proceeded to talk about the developments that had taken place there with the change of Government in 1984 and said that the present National Government, elected in 1990, would continue the fiscal and economic policy of the previous Labour Government. He said that inflation rates had reduced considerably, that the maximum personal tax rate had reduced from 66 per cent to 33 per cent, that the total tax take had increased and that the debt position had been controlled. He stated that the New Zealand dairy industry received little help from the Government and focused on the customer all the time, that the industry had rationalised plant, brought in new technology and developed new products and [1025] it had a worldwide network in more than 100 different countries.

That illustration demonstrates a marked comparison between the way in which the position was handled by two different countries — to live off subsidies or to go out independently and use initiative. I think Ireland should focus on a point somewhere between those two stands.

Much of our beef is going into intervention stocks and our cold storage facilities are full. The Minister stated in the House that there was demand for our beef while early in the year the newspapers reported that although the German food fairs had showed up a market for Irish beef the market could not compete with intervention prices paid here for beef, with the result that our exports to Germany which amounted to 40,000 tonnes per annum in the eighties had dropped to 12,500 tonnes by 1990. We must utilise our products to better advantage and go out to the market-place and sell them. Further processing of our produce would secure much-needed downstream jobs.

Development agencies such as the IDA must re-examine their policy in many respects. I mentioned before that the IDA must re-examine their policy of grant aid to the poultry industry, for instance. It came to my notice recently that at present the IDA will not grant aid any enterprise set up for processing timber. My own region has substantial acreages of timber that has reached maturity and is now being felled. All of that timber, in long form, is moved out of the area and into the Six Counties to be processed there. The IDA must change their policy of providing no grant aid for small sawmills or mills involved in debarking timber, drying it and so on. In the fifties substantial funding was made available to plant those forests and we all anticipated the provision of a substantial number of jobs in the region but that has not been the case. We must make the greatest use possible of all our resources. Down the years all that our region has had from the forests has been pot-holed roads, resulting from six and seven large [1026] truckloads of felled timber being taken out from those areas each day.

I visited a small industry in the region that is processing the forest waste — branches and tops of the trees, etc. left behind when the logs are taken out. That industry is purchasing the forest waste from Coillte and is debarking the timber for use as fence posts and sawing a proportion of the timber to produce light timber for garden sheds and fences. They have drying equipment and equipment which with a pressurising facility can inject a preservative into the timber. It is just not right to think that a small industry of that kind has no grant aid available to it.

Mention was made in the budget of the removal of the tax exemption from co-ops. In all probability the Minister's thinking was that removal of the exemption was justified on the grounds that several of the large co-ops are now plcs and are rated as industries. However, there are also many small co-ops — several of them not processing at all now but being used only as collection depots — which provide very good service for farmers in respect of supplies and so on. I ask the Minister to seriously reconsider the withdrawal of that exemption from small co-ops and to provide for it under the Finance Bill. It is to be hoped that under programmes such as Leader those co-ops would divert funds into rural development in disadvantaged areas, as they have done in the past. I hope they will continue to give the good service that has been given in the past. Before I came into the Dáil I spent all my working life in a co-op and I know of the services they provide. I would be very concerned if these services would be impinged upon in any way by the withdrawal of that exemption.

As I said earlier, we receive a good deal by way of funding. There is the International Fund for Ireland, the Leader Programme and Intereg. When Ray MacSharry was leaving to go to the EC he gave a commitment here in the House that he would do his best to secure more money for rural areas and for more integrated rural development. He has [1027] now made the money available. There are committees and working parties involved in all of this. There is the Intereg Committee, which has representatives from seven Government Departments and there are county development teams and so on. However, I am not satisfied that there is the right input on those committees. Do we have the proper knowhow and the necessary expertise in so far as these various bodies are concerned? I hope that the Minister for Finance will consider the restructuring of the county development teams, the management of which is now made up of the county manager, the chief executive officer of Teagasc, the chief executive officer of the vocational education committee and the IDA. It is time to bring in others. It is time, for instance, that we brought in successful businessmen from those regions. Many of these enterpreneurs would be willing to contribute their know-how and knowledge. Until we do that we will not make the best possible use of those funds. Funding is substantial and much research has been done into suitable projects. The potential is there and a Leader programme for my constituency has been approved. If this programme is funded and implemented it will provide 780 jobs. We should not be impeded by administrative procedures with regard to those projects. We were told that the ideas would come from the bottom, but it is also important to have someone involved who can keep his hand on the tiller and know what is happening.

People in the VHI and labouring under substantial mortgages must have given a sigh of relief when they heard that those reliefs were not to be reduced, because the general belief was that those reliefs could be interfered with. I am glad that there has not been any increase in VAT relative to the construction industry and tourism. The Minister has also given concessions to the motor and road haulage industies.

For my four county health board regions we got a health budget of £102 million. In 1988 we got £88 million. The most effective way to answer the critics [1028] of the health services is to point to the increase from £88 million in 1988 to £102 million this year. The health board was set up in 1970 and in 1972 the budget was a mere £7 million. With regard to services for the mentally handicapped particularly, Ministers for Health over the last number of years deserve credit for the compassion they showed in the money which they provided in that area. Throughout the years health boards have heard announcements about moneys from the national lottery and from the social fund, for the elderly, the disabled and the mentally handicapped. No other EC country is honouring its commitments in that area more than we are. Additional moneys have also been provided for residential and respite care for children.

The Minister has also provided for an increase in back-to-school payments and has enabled adoptive mothers to have ten weeks' leave, equivalent to maternity leave. That is to be welcomed. There has been a further increase in the family income supplement.

Many representations have been made with regard to the latest medical equipment for hospitals. Over the last number of years, I am pleased to note the amount of money raised from private and voluntary sources for up-to-date medical equipment. I am glad that the medical equipment will now be vat-free.

Mrs. T. Ahearn: Information on Theresa Ahearn  Zoom on Theresa Ahearn  The 1992 budget indicates gross irresponsibility and indifference towards the 269,000 people who are unemployed. It also shows neglect of those living in poverty and isolation, an uncaring attitude towards the homeless and the destitute, and a total lack of interest in the agricultural and rural community. The irresponsibility displayed in the 1991 budget has been continued and expanded in this year's effort. This is not good enough and it must not be allowed to continue. At the recent CCI annual dinner the Minister for Finance said:

The outstanding objective for the future must be to maximise the number of sustainable jobs in Ireland. All of us must give top priority at all times to [1029] the business of generating more viable work.

On budget day the Minister, Deputy Ahern said:

Unemployment is the single greatest social problem we have to contend with. The Government are keenly aware of the needs posed by the continuing growth in the labour force.

Is it not amazing and unbelievable that in spite of all this rhetoric about unemployment, the Minister on budget day did nothing about it? Nothing was done to promote employment, to create an environment conducive to job creation, to encourage people back to work, to entice employers to provide jobs or reward those who already do so. The budget is nothing short of disastrous for the thousands of people out of work who perhaps depended on the Minister for Finance to do something for them.

The Minister for Finance made a miserable attempt to reduce the numbers on the employment register by announcing two new FÁS schemes. This attempt could be classed as laughable if the situation were not so serious. The employment subsidy scheme is merely a substitute for the employment incentive scheme already in operation, and the in-company training scheme is merely a replacement for the training courses already run by FÁS. The difference is that the cost will be borne by the company rather than by the State. I would remind the Minister that changing titles will not fool those without jobs. Their needs are so great and urgent that they will not be codded by these tricks.

Action was not proposed to combat the enormous unemployment problem facing us in 1992. I suppose people have to be realistic and, in the absence of a worthwhile effort to solve unemployment, be satisfied with even those two unsatisfactory attempts. The employment subsidy scheme has two welcome changes: an employee must now be on the unemployment register for only two months, and the scheme is open to a broader range of employers. Nevertheless certain [1030] questions must be asked. Who will benefit from the scheme? Will it be those on long term unemployment who are our greatest concern? Will this scheme result in the creation of suitable jobs? Can we expect that when the subsidy ends employees will once more find themselves in the labour queue? Such schemes do not have a good record here but I hope that, despite my pessimism, the scheme will live up to the Minister's prediction of 15,000 additional jobs.

I must admit that I am very sceptical. The major blunder in this scheme is the exclusion of married women working in the home. It is totally unacceptable that they, not being on the unemployment register, will be excluded from being beneficiaries of the scheme. It is totally unjust and unfair and I will be asking the Minister to make immediate provisions to eliminate this injustice in the interests of fairness and equity.

The in-company job training scheme envisages that up to 10,000 people will be provided with training, at no cost to the Exchequer. The fact that it will not be a burden on the Exchequer is its only asset. We are reassured that these schemes will have a big public launch, full of fanfare, but unfortunately the substance will remain the same. Several questions must be asked about this scheme. Who will monitor it? Who will ensure that the scheme consists in training people rather than work? Will the training be certified? Where are the companies who will be prepared to employ people to provide training? Do we believe that the subsidy is sufficient to entice companies into this type of scheme? I pose serious questions about the future of the scheme and question whether it will do anything to reduce numbers on the unemployment register.

The sum total of the Minister's concern and strategy to deal with unemployment consists of those two schemes. As a result of the budget, the future of the unemployed is still a future without hopes and dreams. For how long more can we expect the patience of the 269,000 people who are workless to last? How long can [1031] they cope with the utter despair and desperation that unemployment brings? How much longer will they control their anger and frustration at the continuous neglect and ignoring of their plight? How long more will this Government remain convinced of the inevitability of unemployment? Their inaction to date verifies this tendency. Surely they cannot allow themselves to believe that the unemployment problem, so severe and protracted, can be seen as a national phenomenon. We cannot believe that unemployment is something that will sort itself out if other things can be achieved first.

The budget should have addressed the unemployment problem ruthlessly, but sadly it ignored it ruthlessly. The verdict on this budget can only be given when the unemployment figures are examined in the months ahead. The most appropriate measure of our economic success is the number of people gainfully employed.

As we enter 1992, severe and widespread poverty remains an urgent challenge to us all. Yes, poverty should have been a priority in the budget, but was it?

The aspirations of the Programme for Economic and Social Progress were towards fundamental structural reforms and a commitment to develop greater social rights with our health, education, social welfare and housing services. Were all these aspirations set aside in the chilling Estimates and budget targets for the coming year? We all realise that the Minister for Finance faced very difficult choices in framing the budget. However, there is still no justification in failing to take any significant steps towards tackling the underlying causes of poverty.

Poverty is a denial of basic social and human rights and no delay in measures to tackle it can be justified. We cannot afford to wait for a rising economic tide before we start the process of reform. The harsh reality is known, yet this Government continue to ignore the alarming housing crisis, the deplorable living conditions of so many. The budget did [1032] not even mention the importance of housing.

The children of the poor were ignored yet again, with no proposals to increase the children's allowance or to turn the balance in favour of the less well off with children. That any Minister for Finance could ignore such screaming and urgent needs is unbelieveable and unacceptable.

Paltry increases in social welfare payments will never liberate those trapped in the poverty net, nor will loans for those in need substitute for the lack of a basic income to provide for the family. The poor among us are still left to depend on charity for survival. Is this fair? Does the Minister realise that while unemployment continues, the battle against poverty can never be won?

While the basic provisions in relation to housing, health and education are inadequate, the battle against poverty can never be won. Some effort must be made. The budget is guilty of downright neglect in its lack of care and concern for those in need.

The budget failed dismally to tackle the enormous problem of capital acquisition tax. In fact, to the dismay and astonishment of the farming community, the capital acquisition tax did not even merit a mention in the 1992 budget. This surely and sadly demonstrates the ignorance, and worse still, the lack of interest of this Government in the survival of family farms, threatened so often by the dreaded penalty. The concern and frustration among farmers over the implications of capital taxation cannot be overstated. Despite repeated calls for major reforms in the taxation system as it applies to farmers, the Fianna Fáil-PD Government gave the deaf ear to all who attempted to make a reasonable case.

The inequities of capital acquisition tax and stamp duty, which discriminate against family farming, are a major disincentive to young farmers embarking on a farming career. In fact, they are causing severe financial hardship to a vast number of farmers, often resulting in the sale of the family farm to meet a tax bill.

In spite of all this, the budget has dismissed this problem as unimportant. The [1033] crisis with the capital acquisitions tax is the unrealistic valuation of land for capital taxation purposes. A major change is called for urgently. Land for capital acquisitions tax should be taxed on its earning capacity rather than at present. Land is currently valued based on recent land sales. This too often results in a very inflated valuation, in particular where small parcels of land reach a very high and unrealistic figure at auction.

How can any taxation be judged as fair and equitable, when it is governed by an unreliable and unrealistic monitor — market prices? This is a taxation that is not based on capacity to pay. It is scandalous that the Minister for Finance chose, yet again, to ignore this problem. It is unfair and unwise that no changes were proposed in this budget to ease the financial hardship which the capital acquisition tax imposes on many families, many of whom are forced to borrow heavily in order to retain their farms on inheritance.

The Minister received a pre-budget submission on behalf of farmers seeking relief on stamp duty to encourage lifetime transfers to qualified farmers; this submission also sought adjustment of thresholds to take account of inflation in the period 1975-90. However, as this budget has proved, the Minister and Government decided to ignore such requests from a sector of our economy faced with daunting challenges in the months ahead.

While referring to farming I might add that I too am very concerned at the lack of finance made available to Teagasc, our agricultural advisory body. For example, £1 million have been allocated to them whereas they need an extra £3.5 million even to continue what I might now describe as a decimated service, one which is no longer realistic and cannot cope with farmers' needs or render the quality of service eminently desirable. For example, in my constituency, the Teagasc office in Tipperary town has been pinpointed for closure, this in the wake of a Teagasc office already having been closed in Cahir. This latest proposal must be totally opposed particularly since Tipperary is a rural town located in the [1034] heart of the agricultural hinterland. The Teagasc office there is located adjacent to the livestock and veterinary offices. The agricultural community of the surrounding areas not only deserve but need such agricultural advisory services. If they are not continued, I fear for farmers' futures in the area and for the development and prosperity of agriculture generally in my constituency. Unfortunately these budgetary provisions did not bring us any hope. We realise that sufficient resources have not been made available to Teagasc to enable them provide an adequate service, resulting in offices such as the one in Tipperary town now being faced with closure.

The hands of the Progressive Democrats are very much in evidence in this budget. Their claim to honour is the introduction of two income tax bands. I welcome, as I am sure do most Members, the reduction in the income tax rates. Any measure which puts more money in workers' pockets is to be welcomed. However, on closer examination, it will be ascertained that this measure is socially misdirected since henceforth millionaires will find themselves in the same income tax bracket as the average industrial worker. The emphasis should have been on widening the tax bands which would have relieved many workers from paying tax at a higher rate. It may give the Progressive Democrats more satisfaction to put more money in the pockets of high earners than to relieve lower paid workers of their income tax burden. Resulting from their philosophy 30 per cent of the population will remain in the top tax bracket. Surely it is regressive and repressive to demand lower paid workers to pay the cost of relief for the better-off? I contend it would have been more equitable and just to have relieved the average wage earner from paying income tax at the higher rate, leaving those who can and are well able to pay income tax to shoulder the heaviest burden.

Of course the architects of this budget would like to convince us that such income tax measures are a means of encouraging job creation. They want us [1035] to believe the gospel: tax cuts create jobs, whereas all the evidence would lead one to the opposite conclusion. In spite of consistent reductions in the income tax rates over the past three years there has been a massive surge in unemployment figures. While voicing my support of and desire to see lower tax rates I believe in individuals having greater choice in the disposal of their incomes. In the face of the real facts I cannot accept the theory of tax cuts leading to job creation. The reality is that there is simply no evidence that the type of tax changes announced in this budget will lead to increased employment.

This budget puts many problems in abeyance to the year 1993 — the new escape route for this Government — put off the problem until tomorrow in the hope that it may even disappear. The problems being stored up for 1993 are serious. For example, the public sector pay bill will increase by 8 per cent in 1993, thanks to the rescheduling of the Programme for Economic and Social Progress; our VAT levels vis-à-vis those obtaining in the United Kingdom remain above the comfortable level necessary to prevent substantial erosion in 1993 when cross-Border constraints will be eliminated, with no action taken with regard to the deposit interest retention tax despite the abolition of exchange controls in 1993 and their effect on revenue. I contend that all the pre-budget warnings of 1992 must be repeated in 1993 since severe, deep cuts in public spending will be required again to meet the enormous burden now being transferred to next year's budget.

As one might expect, the Minister in his Budget Statement, paid lip service to the creation of employment whereas the budgetary provisions encourage the exact opposite. I recognise the Minister, in finalising his budgetary provisions, had his attention diverted to the creation of jobs in some areas detracting his attention from what should have been his obvious priority, overall job creation.

Unfortunately this budget achieves nothing. For example, it fails dismally to [1036] address the most serious problems of the nineties, that is, unemployment and poverty. It is my fear that these budgetary provisions will send the country into terminal decline and our people into eternal depression. It is a failed budget in that it gives no hope at all of improving the living standards of so many of our people. There will remain thousands queuing for social welfare weekly. Children will leave home each morning leaving parents with no work to go to, or having any useful purpose in life. We will continue to see the sick and elderly wait, hopefully living, until hospital beds become vacant for them.

What a pity that once again the opportunity to do something positive about job creation has been missed. In this budget, as in all of the Government's actions, unemployment continues to be the forgotten priority.

Minister for Defence (Mr. V. Brady): Information on Vincent Brady  Zoom on Vincent Brady  I listened with considerable interest to the Opposition reaction to this budget. For instance, Deputy Therese Ahearn has just indulged in a litany of sorrow and feigned concern, useless, mournful commentary, without one constructive suggestion or proposal.

Mrs. T. Ahearn: Information on Theresa Ahearn  Zoom on Theresa Ahearn  That is the job of the Minister and the Government.

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  For example, she has not told the House from where the additional millions of pounds expenditure she advocates will emanate. In her 20 minutes contribution she purported to spend something in the region of £50 million to £60 million without having informed the House from where that will come. Does she propose the introduction of higher income tax, additional indirect taxation or some new forms of tax of which we are not aware? One should be constructive rather than destructive in commenting on budgetary proposals. The Deputy's comments were destructive, as was the case generally on the part of Fine Gael since the Budget was introduced — destructive suggestions advocating the expenditure of millions of [1037] pounds, advanced irresponsibly, without one single suggestion as to where such money should emanate from.

It could all be summed up in one sentence. The Minister did not have a magic wand. Such criticism might be justified were it not for one problem. When one moves from the never-never land of Opposition to the real world of Government — from which the Opposition are a long way off — and difficult decisions must be taken by reference to the facts, there are no magic wands.

Mrs. T. Ahearn: Information on Theresa Ahearn  Zoom on Theresa Ahearn  Why did the Minister not practice what he preached when in Opposition?

Mr. V. Brady: Information on Vincent Brady  Zoom on Vincent Brady  The Deputy's colleagues have discovered that fact already.

Indeed the Fine Gael-Labour Coalition Government in their 1985 budget introduced new tax rates, when the low rate was 35 per cent, the medium rate was 48 per cent and the high rate 60 per cent. With regard to the income tax bands, the then 35 per cent band obtained on income ranging from £4,500 and £9,000 whereas today the 27 per cent band is applicable to incomes ranging from £7,475 and £14,950 — and these figures speak for themselves.

In attempting to assess the performance of any Minister for Finance when drafting his budget, regard must be had to the immovable constraints on him. For example, it must be appreciated that, in an open economy, such constraints derive as much from the outside world as from the domestic economy.

Last year, 1991, was a difficult year for the international economy. The world in which this country must sell two-thirds of its output is in one of the longest periods of economic recession for many decades. While the collapse of communism is a welcome step forward bringing freedom and the hope of a better tommorow for countless millions, it is a hard fact that in the short term, it is a factor in creating uncertainty in the international economy.

Within the domestic economy, all Government decision-making is still [1038] overshadowed by the massive carryover of debt from the mid-eighties. Although the situation has been improving since 1987, with the ratio of debt to GNP on a reducing track to our eventual target of 100 per cent by 1993, £2.4 billion — one quarter of the Government's total revenue — is pre-empted by the legacy of the time when the present Opposition were in a position to practice what they preach today. Without this burden, current revenue receipts would comfortably exceed current expenditure. In other words, the Minister for Finance must not only find the resources to pay for the day to day spending of Government during 1992, he must also fund a heavy repayment schedule on the national mortgage.

For the coming year, the international situation remains less than satisfactory, with the consensus view among commentators that the recovery in 1992 is likely to be sluggish and uneven. It is against this background that the Minister for Finance has had to frame a budget. In doing so he has had to reconcile many conflicting demands and it is against this background that his remarkable achievement in reconciling the many conflicting pressures upon him must be judged.

The total cost of supply services, that is the range of indispenable services provided by Government on which all citizens depend to some extent, will approach £7 billion in 1992. When all Government expenditure, including debt repayments, are added up, the Minister for Finance has to find more than £9.6 billion. The search for efficiency is being pursued throughout the public service, including the Defence Forces, my area of responsibility. However, the scope for reducing the level of public spending in the short term through efficiency measures is very limited when compared with the overall scale of Government spending. Accordingly, any attempt to criticise the budget as if the Minister has total freedom of action and the ability to dispose of large amounts of money as he pleases is based on a completely erroneous assumption.

In the area of taxation, it has long been recognised that there is a need to reform. [1039] First, it is essential that the tax burden must be spread evenly across all sectors based on the principle of ability to pay. Second, the rates at which income tax is levied must be structured to avoid causing a disincentive to those at work. To achieve these two aims, it is necessary to reform the administration of the tax collection system and to change the rates of tax. We started that procedure in 1987 with former Deputy MacSharry's budget in which he indicated that we were commencing a reform of the tax system which would be continued on a yearly basis. That has been happening since.

As the PAYE sector has long borne the lion's share of the burden of income tax, there is a particular need to ensure that the scope for tax avoidance in other sectors is eliminated. Anti-evasion measures have been substantially improved in recent years. As part of the 1992 Finance Bill, the Minister for Finance will be introducing measures which will close a range of loopholes in legislation which either permit individuals and companies to avoid tax by using legal technicalities of facilitate the illegal practice of tax evasion.

As regards the rates of tax, five years ago, the idea of a 25 per cent standard rate would have seemed impossible. The changes announced in the budget — a standard rate of 27 per cent and a higher rate of 48 per cent — represent a major step towards the Government's goal of a 25 per cent standard rate with a single higher rate.

Reducing unemployment is accepted by the Government as the number one priority on their agenda. With continuing growth in the workforce, it is not enough to preserve the present level of employment in the Irish economy. In fact, over recent years the numbers of people at work in the Irish economy have remained fairly stable. The Irish economy has actually performed fairly well by international standards in preserving the overall number of people at work. However, with a growing workforce, this achievement is not enough. A substantial increase in the levels of people at work [1040] is required and the budget represents significant progress towards this goal.

The most important consideration in encouraging job formation is the maintenance of a stable economic environment which in turn will encourage investment. The economic policies pursued by the Government and continued by the 1992 budget have seen a steady rise in the level of industrial exports, a balance of trade surplus, low inflation and levels of economic growth which compare well with our trading partners in the EC and OECD. While the burden of debt carried by the Exchequer remains crippling by international standards, the corner has been turned and the public finances are firmly on the path to good health. All in all, we have succeeded in creating and maintaining as favourable a climate for investment as possible in the present international environment.

However, unemployment will not be solved by macro-economic initiatives alone. Specific measures are required and the budget includes a number of important practical initiatives in this vital area. Among the measures are a new employment subsidy scheme, a new in-company training scheme and area partnerships to combat long term unemployment.

Jobs cannot be created overnight out of fresh air. In particular, Governments cannot create jobs by decree. However, there are many specific measures which can lead to the formation of jobs in the economy and the Government will leave no stone unturned in the search for ways to reduce the number out of work.

One of the most difficult conflicts between objectives to be reconciled in the budgetary arithmetic is the competition between the need to balance the needs of the less well off who depend on the payments and services provided by Government against the overriding need to contain spending. This conflict is made all the more difficult as the consequences of Government overspending in the recent past have been shown to bear most heavily on the weakest sections of our community.

However, Fianna Fáil in Government have always regarded the protection of [1041] the less well off as a prime responsibility. Long-term initiatives to combat unemployment will take time to have effect. Accordingly, the Minister for Finance has made specific provision for a number of increases in the levels of social welfare payments which will cost £85 million in the current year. The costs of social welfare have placed a considerable burden on the Exchequer. However this is a burden which has to be met and it remains a commitment of this Government to defend and increase the value of social welfare payments.

Amid the welter of debate about the budget and economic policy generally, it is important to retain a realistic perspective about our recent economic performance. While this requires an honest appraisal of the difficulties which we face, it should not blind us to the solid achievements of the past five years. Since 1987, the economy has grown at an annual average of 4.5 per cent. The ratio of debt to GNP has been reduced from 127 per cent to 107 per cent. In particular, Irish exports have grown at an unprecedented rate. In many areas, our economic performance has been well above that of the average for our trading partners.

These solid achievements are no grounds for complacency. They represent sufficient evidence to rebut the extremes of pessimism emanating from some quarters. Having addressed many of our economic problems successfully, we should have the confidence to address our remaining difficulties in a positive way.

Within my area of responsibility, the drive for administrative reform has been underway for some time. While the major focus of all such reforms is to improve efficiency, organisational reviews also provide an opportunity to reconsider other policy issues. In my area, I have directed that the role of women in the Defence Forces be included as part of the review process to ensure that the principle of equal opportunity is adhered to as far as possible.

I have asked the military authorities to reconsider the range of appointments which are presently reserved for men [1042] with a view to increasing the number of women in uniform. As a first step, I have decided that women may in future serve as pilots in the Air Corps. It is my intention that other restrictions on the role of women will be critically examined in the coming year.

No budget contains all the answers to our economic and social problems. It is unreasonable to expect that it should. The budget is an element of a broader programme of Government action. The package of measures announced by the Minister for Finance on budget day will ensure that the public finances will remain under firm control; that the standard of living of social welfare dependents will be protected; that the taxation burden will be more equitably spread and that the economy will be ready to participate in the international recovery which should begin in the coming year. This budget will help to build a more prosperous and secure future for all.

Mr. Deenihan: Information on Jimmy Deenihan  Zoom on Jimmy Deenihan  One could say that the budget was an anticlimax. As far back as last September various Government commentators had been warning the country that tough decisions would have to be taken. Indeed, the Taoiseach himself warned us that the budget would be the toughest in living memory. Between September and Christmas the media, no doubt through well-informed leaks, published various articles about the drastic spending cuts that Ministers and Departments would be forced to make. Hopes for a cut in tax rates were dampended on several occasions and almost ruled out by the then Minister for Finance, Deputy Albert Reynolds, in a number of public statements. However, the budget when it was eventually announced was rather neutral. It contained no radical proposals and gave no indication that there would be a clear shift in policy. It could not be described as a reforming or tough budget; rather it was geared towards maintaining the popularity of the present Coalition Government and postponing the inevitable until 1993.

In not facing up to some of the crucial [1043] issues the Minister has stored up a considerable number of problems for 1993 when it is likely that public sector pay will increase by over 8 per cent. The Minister has also failed to take into consideration some of the inevitable tax revenue losses which will follow the introduction of the single market from January next. The standard VAT rate will have to be reduced. Indeed, VAT on imports will have to be abolished while DIRT will at least have to be reduced. The Minister has taken no account of any of these factors. On my calculations, the Government could be faced with an opening 1993 Exchequer borrowing requirement of over £800 million. The Government, whoever they may be, will face major problems in framing a budget for next year because the problems have not been faced up to in this budget.

While I welcome the reduction in the top tax band to 48p and the lower band to 27p — this is a move in the right direction and one which we in this House have all been seeking — we must look at the way in which the changes will be funded. On the one hand, people will gain but, on the other, they will suffer. Indeed the people who will gain most from the concessions granted in the budget are those on salaries of £20,000 and upwards, not the low paid worker about whom we are all concerned. Essentially, the income tax reductions will be financed by way of VAT and excise duty increases. While the standard rate tax band has been extended, personal allowances remain unchanged. Hence, single taxpayers will continue to hit high marginal rates at below average income levels. As I have mentioned, those in the lower and middle income groups will be hit hardest by this proposal and the amount gained will be minimal when the costs imposed by way of increases in indirect taxation are taken into account.

I would like to refer specifically to a number of issues. The first is the 20 per cent increase in road tax to which I referred in the debate on the Financial Resolution on the evening of the budget. This is a cruel imposition especially on [1044] motorists living in rural Ireland to whom we refer so often in this House. This might be acceptable if this money was to be used to improve the roads in rural Ireland but these unfortunate motorists will have to pay extra tax on their cars while having to travel on roads which have deteriorated to the extent that they are increasingly becoming impassable. This is most unfair.

It is rather ironic that this cruel burden is being imposed by the very Government who wiped out motor tax in 1977 but now they see nothing wrong with introducing a major hike in motor tax. When one considers the increase in motor tax, in the context of the cost of motoring in general, this budget is definitely anti-motorist. This increase in road tax together with the increase in VAT on car maintenance from 12.5 per cent to 16 per cent, will mean that the cost of motoring will be a major factor especially for young people who would have to travel a distance to work, when they come to decide on whether to take up a low paid job. For example, due to labour costs the charge for servicing a car has gone up by nearly 50 per cent during the past two years. Indeed it is now almost impossible to have a car serviced or repaired more than twice a year. When the full implications of this budget are realised by motorists I am afraid they will not be very happy.

The increase in VAT, from 12.5 per cent to 16 per cent, on services such as AI and on footwear and clothing will result in an increase in the expenses incurred by rural communities, in particular by farmers. They will be very dissatisfied with it. In a sense they are being given a handout in that I understand £2 million is to be made available to increase headage grant payments. However we were told last year than £12 million would be made available under the Programme for Economic and Social Progress to increase those payments. I cannot see another £10 million being provided in next year's budget. There is very little therefore in this budget that either motorists in rural Ireland, who have to travel on some of the worst roads in [1045] Europe, or the farming community in general, can enthuse about.

Another cruel imposition in the budget is the taxation of disability and unemployment benefit. In effect, we are putting a tax on the sick and on the unemployed. This is being done without due consideration being given to the trauma felt by those people. The previous speaker, the Minister for Defence, Deputy Brady, said that because Fianna Fáil have a social conscience they have increased benefits in the budget. However, the 4 per cent general increase across the board will hardly keep recipients ahead of inflation this year. Given the increase in VAT rates, prices will increase and these will hit the unemployed and the sick. In imposing these taxes on the sick and on the unemployed they conveniently forgot about their social conscience which they proudly speak of and which they no doubt had in the past.

Instead of being negative about it I should like to welcome the special allocation of £250,000 for the Irish Olympic Council. However, it was allocated a year too late, it should have been allocated last year because the previous year is always the vital year in preparing athletes. Nevertheless, I am sure it is warmly welcomed by the Irish Olympic Council. Nonetheless it shows the lack of knowledge and understanding of the preparation which athletes must undertake because most of the preparation has already been done by them for the Olympics. Most of the hard work by way of preparation by athletes or by team managers was done in 1991. Although the Irish Olympic Council pleaded for an allocation last year they were ignored. When we have international victories members of the Government and politicians like to be on the platform when the athletes return home but they are very slow in allocating money. No doubt it was the intense pressure put on the Government by people like Pat Hickey and others from the Irish Olympic Council which forced the Government to allocate money, even though, unfortunately, it is a year too late in many instances.

[1046] I should like to refer specifically to unemployment. As we know, Ireland has the highest youth unemployment rate in Europe, running at about 28 per cent. Only Spain has a higher level of unemployment. Despite the improvements in our economy and the very positive trends regarding foreign borrowing, our Exchequer borrowing and so on, it is not impacting clearly on our unemployment problem.

The two provisions in the budget, the employment subsidy scheme and the in-company training scheme are welcome. I hope they will have the desired effect to help the unemployed but I expect they will have a very marginal impact. I can see the unemployment subsidy scheme being abused by employers because they will use it to take on workers for a short period and probably postpone taking on workers on a permanent basis. I have not seen details of this scheme but it seems it is not conditional on an employer who takes on temporary workers giving them a full-time job later. They also have to recruit workers from the live register which will militate against those who are not on it. The scheme is funded mostly by Europe and employers, I hope it will work but it is fraught with risks and was not thought out. It was a knee-jerk reaction to union pressure, it was to keep them happy and to keep the Programme for Economic and Social Progress together.

I welcome the in-company training scheme. It is about time we emphasised the importance of training and retraining. Too many of our workers who lose jobs are not being prepared to take up other jobs because their skills base is so narrow. I am totally in agreement with the concept of in-company training schemes, not just for the workers but for the management in factories. There should be a continuing process and emphasis on company training from the factory floor up to senior management. If we are to compete in a new Europe without any commercial boundaries we will have to continuously update our training methods and increase and improve our skills base.

[1047] There are not any real radical proposals in the budget which will meet the problem of the highest unemployment rate we have ever had, which is now over 270,000 people. Last year, in the corresponding debate, I proposed setting up a jobs forum and this concept was later taken up by the trade unions and — I was glad to notice — by my Leader. I said the unions, all the political parties and the Conference of Major Religious Superiors should be called in to analyse the problems in relation to unemployment and to propose solutions. We have had one year to think about solutions but all the Government have come up with are an employment subsidy scheme and in-company training. There is nothing in the budget which will remove the obstacles to the creation of jobs or bring our unemployment figures close to 250,000 this year. Indeed, by the end of the year, I forecast — I do not want to exaggerate — that the figure will be close to 300,000. The Government will say that the macro-economy is fine and that the indicators are good, but that unemployment is inevitable. It is a sorry admission by the Government that they can do nothing about the problem.

I hope that by next year all parties and interested groups will have come together and put forward a positive response and solutions to our unemployment problem; otherwise we will be faced with an even worse problem.

Mr. Hyland: Information on Liam Hyland  Zoom on Liam Hyland  I welcome the opportunity of making a contribution in relation to the budget debate. Indeed I compliment the Minister on introducing what has been described by many people, inside and outside the House, as an imaginative budget.

Since the budget was introduced a week ago much has been said and written about it. It has been analysed by economists, journalists and ordinary men and women. Outside the House the reaction, by and large, has been favourable. There was, of course, predictable opposition [1048] within the House; even the most favourable and reforming aspects were criticised. However, such criticism is justified only when those who indulge in it can put forward a more acceptable alternative. This morning Opposition Members referred to the need to increase the overall programme for expenditure without any reference to where the funding would come from.

This reminded me of the position which obtained a few short years ago when those parties were in Government and how they allowed the national debt to double. This was a major contributory factor to the problems the previous Fianna Fáil minority Government and the present Coalition Government had to resolve.

We should have reached the stage where people who have been elected to public office are prepared to face up to their responsibilities and behave in a rational manner. I do not think Members who come into the House demanding higher expenditure for various Government programmes, without identifying where the money will come from, are fooling anyone. As I said, such performances may have been justified in the old days but given the number of intelligent people in the community who are capable of analysing the position for themselves, such performances are no longer credible. Such performances may be acceptable to some extent from backbenchers who, like me, make the odd political comment but it is totally inexcusable for the spokespersons of the political groupings, particularly the Finance spokespersons, to try for negative reasons to make political gains from a very serious problem.

The contributions of some Opposition speakers — Deputy Deenihan endeavoured to be constructive and fair — raised doubts in my mind about their sincerity and their capacity not only to form constructive opposition but to form an alternative government. Over the past few months, the Opposition parties almost daily referred to scandals or alleged scandals for the purpose of creating political [1049] instability, undermining public confidence in the institutions of this State and, sadly, short term political gain. That kind of negative political opposition is of no help to the country; rather it does considerable damage to the image of our country abroad.

I am not saying for one minute — indeed I would not condone this for one second — that these irregularities should not have been exposed and debated in his House. However, I am concerned that even though procedures to deal with these issues have been put in place, certain people have continued to pursue them for political gain. As a member of the Council of Europe, I know, from my colleagues, that these issues have not done justice to the image of Ireland abroad. The Government have given an assurance that these matters will be fully dealt with and appropriate action taken in each case. In what I hope is a climate of political change I appeal to Members to ensure that this House returns to normality so that we can address the more important problems facing us, for example, unemployment etc.

Is it any wonder that the public perception of politicians and political institutions is at an all time low? I was saddened to read recently in the newspapers the findings of a public opinion poll which showed that in excess of 70 per cent of people do not have confidence in politicians or the political institutions of the State. From my knowledge of public represenatives on all sides of this House, I have to say that politicians are dedicated and committed to furthering the interests of the country and their constituents. Nevertheless, this is an issue which we will have to address. If there is a need for reform of our structures or our performance in the House, then it is important that we face up to these tasks in the national interest.

Despite its shortcomings, this is a reforming budget. It tackles for the very first time the question of tax reform and lays the foundation for a continuation of this process. The Minister has replaced in a practical way the lip service which has been given to this important issue [1050] over a number of years. I believe this budget was motivated by a desire to achieve fairness and equity and to restore public confidence in the Government's commitment to the introduction of reform in areas which were perceived to be of advantage to some sections of the community. I am referring in particular to our levels of taxation. In fairness to him, the Minister has addressed this issue in a very courageous way.

All of us must be concerned about the high level of personal taxation and corporate tax. These act as a disincentive to the generation of wealth on which job creation depends. For this reason, the initiative taken by the Minister in the budget to reduce the level of taxation must be continued in future budgets and taken into account in the future planning of our economy. Our high rates of taxation have stifled progress and entrepreneurial commitment, which lead to overall economic development. The tax reform plan announced by the Minister will not be the final answer to this problem, but it is a positive start. We must give due recognition to the Minister for the efforts he has made in the budget to resolve this problem.

The budget protects the incomes of those who depend on the State for support. I would not have any difficulty subscribing to the view expressed by the Society of St. Vincent de Paul and many other voluntary charitable organisations, including the Combat Poverty Agency, that there should be a more generous increase for these people.

I fully agree with that point of view but I also believe that, despite all our economic difficulties, the Minister in this budget made a genuine attempt to at least protect against inflation the incomes of those who are most dependent on the State for support. It is right that the Minister for Finance should take such a course of action. Indeed, many of us wish he were in a position to be more generous. We are a charitable nation and in many instances voluntary contributions exceed the Government's statutory commitment. That fact has [1051] been borne out by the generosity of the Irish people's response to the many appeals which have been made over the years.

Without doubt unemployment remains the most serious challenge facing the Government. Sometimes I am a little concerned that people are beginning to accept unemployment, particularly youth unemployment, as inevitable. I reiterate the commitment of the present Government to generate the economic climate in which jobs can be created. Anybody who accuses the Government of not being so committed should identify in a positive way what the Government should be doing in this very important area. The present level of unemployment is totally unacceptable. It is no consolation that part of the problem results from the recession in Great Britain or elsewhere. We have a duty to our people and as far as we can we must continue with policies which will generate the economic climate in which jobs can be created.

I acknowledge the efforts of the Government to maximise the benefits to be derived from the EC in terms of various social programmes, particularly in relation to unemployment. We should welcome the Minister's positive statement about the possibility of removing 25,000 people from the live register in 1992 as a direct result of EC grant aid. That money will be spent creating retraining and social programmes for the unemployed, particularly the young unemployed. It is not the final solution to the problem but at least it is an attempt on the part of the Government to maximise the benefits of our EC membership for the purpose of creating jobs and, more importantly, for the purpose of preserving the work ethic for our young people who could very easily become disillusioned at their continuing failure to find suitable and rewarding employment. We have put in place a very comprehensive educational and training scheme, for which all sides of this House are entitled to claim credit, which has [1052] resulted in highly trained, highly qualified school leavers who should be in a position to take up rewarding employment at home or in the country of their choice.

One could argue, and I am sure many people will make the point, that we are not investing enough money in education, that we are not doing enough in terms of training in the various skills which would enable people to get employment, and that we are not doing enough in the area of remedial teaching and in terms of the pupil-teacher ratio. However, while the present position is not as satisfactory as we would wish, nontheless progress is being made. Those who are critical of the lack of progress should state how best the Government could provide the additional funding necessary to put alternative programmes in place.

In a budget debate we talk about budgetary matters, about the provision, redistribution and reallocation of funds, and perhaps about the priority of one spending programme over another. To be constructive in Opposition one should clearly identify where additional funding can be found or where changes can be made in terms of reallocating finance from one programme to another. Progress is being made, albeit not as fast as we would desire, but at least it is steady and it will continue.

I would like to refer in passing to the problem of poverty in Ireland. We have the second highest level of defined poverty in the European Community — at 20 per cent it is an unacceptably high level. It is no consolation that our nearest neighbour, Great Britain, has a poverty rate of 18 per cent. We have to address the problem as we find it. I would like to pay tribute as I have already done, to the generosity of the Irish people in the first instance and to the many charitable organisations who make such a valuable contribution in terms of caring for those who are not in a position to earn a living because they cannot get employment at home. As a member of the Council of Europe we have commissioned a new report in terms of European poverty. The [1053] fact that there are five million people in the European Community on the poverty line indicates the extent of the problem facing Europe as a whole, and most importantly, individual Governments within the European Community. We have a duty to address this problem and to ensure that within the limited resources available to us we do not lose sight of our social obigation to provide care for these people.

Mr. O'Shea: Information on Brian O'Shea  Zoom on Brian O'Shea  This budget has been heralded from the Government side as the tax reforming budget. I intend dealing with that matter in more detail later in my contribution, but suffice it to say that since 1988 it is the highest earning 20 per cent of taxpayers who have benefited. The lowest earners have not benefited and I will produce figures to substantiate that fact.

I would first like to address the social area, particularly education, the area for which I hold a brief. The capitation grant is frozen at £28. Despite primary education being a constitutional right, we can now expect further increases in voluntary contributions and/or crises in funding for heating and fuel in schools.

I would like to say a few words about the prevalence of voluntary contributions in schools. Naturally these are at their highest in affluent areas, they do not exist to any great degree in less well off areas. The primary curriculum review body report recommended that a European language should not be introduced in national schools. The Minister for Education indicated in the House that he agreed with that recommendation. As we become more involved in the EC, I believe the job opportunities for our young people will be enhanced if they are fluent in a European language. A number of schools in affluent areas offer tuition in a European language as an extra-curricular activity. Because of the low capitation and the policy the Government say they will implement, young disadvantaged people are being discriminated against in terms of their long term job prospects.

For the fifth year in six, child benefit [1054] has not been increased. We should look at child benefit in a particular context because that for many women is the only independent income they have. If child benefit were to be kept in line with the 1986 figures there would be an increase of £2 to £3 per child in this budget. Both women and children have been short changed. The Department of Finance view is that child benefits should not be increased; the Progressive Democrats also hold this view. When the old system of children's allowances was replaced by the child benefit scheme, this represented progress on a long cherished objective of the Labour Party.

Against the storm of right wing rhetoric and the anti-welfare lobby which gave birth to the Progressive Democrats and the demands of the “Smurfits” of this world to cut public expenditure by £2 billion and social welfare by at least £200 million, the Labour Party held the line. The Taoiseach, who is departing in order to secure the continuation of the Progressive Democrats in office, confessed to making an intellectual leap when explaining to his Fianna Fáil colleagues what was happening when they decided to go into coalition with the Progressive Democrats. If one decodes “intellectual leap” what it means is playing politics.

As a party with a social commitment, Fianna Fáil have gone a long way in a short time to espouse the new right, the view of the Progressive Democrats. To paraphrase the late Mr. Seán Lemass, Fianna Fáil is a slightly social party. However, when their commitment is tested by the Progressive Democrats, they struggle with their conscience but, unlike the Labour Party, their conscience never wins.

I have alluded already to child benefit from which 1.2 million children benefit. Had child benefit payments kept in line with the 1986 figures, the mothers of Ireland would be getting an extra £27 million. There is another area of social care which all sides admit is very badly catered for; the much heralded carer's allowance introduced last year has proved to be of little value. In fact, it raised expectations but because of the [1055] very rigorous means test 60,000 voluntary carers who save the Government over £500 million per year have been ignored.

I now come to this so-called tax reforming budget. Since 1988 the top 20 per cent of taxpayers have benefited from successive budgets. Looking at the benefits that accrue from this year's budget, the first thing that strikes you is that the PAYE and personal allowances have been frozen. It would cost a further £125 million to maintain these reliefs at 1986 values. In the context of tax reform this area which would be of particular benefit to low paid taxpayers was frozen. A single person on an income of £60,000 will gain £2,123 whereas a married couple with an income of £60,000 will gain £1,934, but a married couple on £8,000 will gain only £54 a year and a married couple on £10,000 will gain £95 a year. So much for tax reform. We can see who really benefits.

If we consider the increase in VAT rates which will affect telephone charges, clothing and personal services, such as hairdressing, and other services which are availed of by all sections of the community, we see that a higher percentage of the income of low earners will go in this area. The gain of £54 in the case of a married couple on £8,000 per year will be quickly obliterated by the increased VAT charges. In essence, the much vaunted tax reform is an illusion for those on low pay.

Other Government measures, which are not part of the budget per se impact on the low paid. The Labour Party were particularly concerned about third level grants. A family with an income of £10,000 will gain £95 from the budget whereas a family on £20,000 will gain £489, but the income limit for eligibility for third level grants lie between these two figures. In the early part of last month the Minister issued a statement on third level grants where he said he was setting up a review committee to develop more equitable income assessment criteria. This committee will comprise of representatives of concerned Departments, [1056] including the Departments of Agriculture and Food, Education, the Environment, Finance, Health and Social Welfare and the Office of the Revenue Commissioners. That is the old ploy once again, set up a review committee on a sensitive issue that requires urgent attention so that the issue is sidelined for a considerable period. It should be noted that the Minister's statement set down no time limit for the deliberations of the review committee or for the date for the publishing of their report and recommendations.

I shall not be completely negative. Paragraph 69(m) of the Programme for Economic and Social Progress in relation to education states:

The Higher Education Grants Scheme will be re-examined in the context particularly of (i) increasing the income eligibility limits for families with more than one child attending third-level; (ii) assessing income eligibility of mature students who are not dependent on their parents, on the basis of their own and, if married, that of their spouses' incomes; (iii) regarding mature students who secure a place in a third-level institution as satisfying the academic requirements and (iv) the development of more equitable income assessment criteria for all applicants.

The fourth is the most vital and it has been kicked to touch into the distant future.

The Minister has indicated that he will introduce amendments to the Local Authorities (Higher Education Grants) Act, 1968, to give effect to changes to the first three points to which I have referred — increase eligibility for families with more than one child attending third level education; the assessing of mature students on the basis of their own and, if married, their spouse's incomes and regarding mature students who secure a place in a third level college as having satisfied the academic requirements. The move is welcome, but the real issue and the fundamental inequity in terms of access to education relates to income limits [1057] across the board. The Government have not done anything in that regard and, worse, the Minister has decided that, commencing in September 1992, ESF grants for new students will be means-tested. That, again, will be detrimental to educational access for the children of parents in the PAYE sector.

The income limits will be at the present completely unacceptable level of the higher education grants. It is universally acknowledged that the present system militates greatly in equity terms against those who have parents in the PAYE sector. Everyone accepts that the PAYE worker is a prisoner of his or her P60, whereas local authorities receive mind-boggling returns of income related to activities in the self-employed sector. The system is so loose that, for instance, if an account is presented showing the item “drawings”— and the drawings against a business can be quite substantial — the local authority dealing with the grants do not have the wherewithal or the permission to query that item. As will be noted from that example, there are transparent ways of diverting funds away from income for the self-employed sector. The present system has gone on for too long and there are too many students unable to avail of third level education because their parents, who are on modest incomes, do not qualify. To make matters worse, the same inadequate income levels are now being applied to ESF grants.

As a first step, and before the review committee sit, the income limits should be changed and should apply to net rather than gross income. Ireland is an overtaxed country and nobody disputes that. However, with my party I dispute the contention that this is a tax reforming budget. The point I stress again is that those on the margins in terms of eligibility for third level grants will get very little out of the budget. I ask the Government, and the Minister for Education in particular, that under consideration of the Finance Bill — or whatever mechanism is open to him — as a very first step he should make the basic change that the income limit for third level education [1058] grants be based on net rather than gross income. The Labour Party also call on the Minister to rescind as a matter of urgency the decision that ESF grants now be means-tested.

The Minister has not responded to a very important query about ESF grants which concerns post-leaving cert courses at second level colleges. Those courses provide second-chance education for many people, including the unemployed. The Government must address this quickly and effectively. The budget should have been a jobs budget. Unemployment is the major problem facing this country. There are 275,000 people on the live register but the real figure is much in excess of that. In my constituency on 31 December last, the most recent day for which we have official figures, the unemployment figure for Waterford city and county stood at 8,172. That figure does not include the workforce of Waterford Crystal, who are on continuous short-time work. They were on holidays that week and, therefore, they were not signing.

A problem that all public representatives face every day is housing. For local authority housing and the social housing programme the budget provides £80.3 million. Last year approximately 1,300 houses were built, which compares very unfavourably with the number built at the time of the Coalition Government of which the Labour Party were a member. During the term of that Coalition Government the Environment ministry lay for most of the time with the Labour Party. In 1984 7,002 houses were built. The problem is dreadful. We are all aware of people with a real housing need and are now housed in accommodation that is utterly unacceptable in this day and age. It will be three, four or five years at the present rate of progress before they will be housed.

The budget lacks generosity and that point comes across strongly in relation to development aid.

Debate adjourned.

[1059]Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.

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