Financial Resolutions, 1996. - Financial Resolution No. 7: General (Resumed).

Thursday, 1 February 1996

Dáil Éireann Debate
Vol. 460 No. 8

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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. Aylward: Information on Liam Aylward  Zoom on Liam Aylward  There were great expectations about this budget. The economy was doing so well that substantive cuts for taxpayers were expected but, unfortunately, that did not happen. The general reaction to the budget has been negative. Commentators point to the negligible benefits passed on to the taxpayer. Much of the detail of the budget was leaked in advance and there was a deliberate effort by the three parties to put their respective slants on it. This is no way to treat the most important annual statement from the Minister for Finance who is charged with the management of our finances. We can all recall when the budget was a serious matter and was treated as such by everybody both inside and outside the House.

Last year the Minister for Finance, Deputy Quinn, presented his first Budget Statement which had little to recommend it. I thought we could look [2085] forward to a much improved budget this year, but the most significant change in this year's performance is that no member of Cabinet was forced to resign as a result of it. Apart from that, we received a repeat prescription of the Minister's medicine.

The Minister for Finance, Deputy Quinn, is a member of a Government which came to power at the end of 1994. The rainbow coalition was formed without a mandate from the people, but it was aptly named. I am sure the term “rainbow” was used to convey some new, colourful, bright and shiny image to the people. However, it should be noted that a rainbow is simply a reflection of light. It does not have any substance, it is merely an optical illusion. In layman's terms, it is a trick of the light and those who operate under the banner of the rainbow Government have proved, for a second year in succession, to be trick of the loop men.

The Minister for Finance made much of his concessions to the low paid and unemployed. He trumpeted the increase in child benefit and the introduction of subsidies. In reality, once again he failed large numbers of people. There is little or nothing for those most in need. This is a discredited Government which has failed to live up to its public spending targets. As a result it can afford to give very little to those to whom it promised most. To be able to improve living standards the State must live within its means, but that is not the case with this Government.

The leader of Fianna Fáil, Deputy Bertie Ahern, was Minister for Finance until the end of 1994 and left a healthy surplus to his successor. The current budget deficit had been wiped out for the first time in a quarter of a century, since the days of the late George Colley. Less than 14 months after that historic achievement, the Minister for Finance, Deputy Quinn, aided and abetted by the Taoiseach's Cabinet, has put us firmly back on the road to financial chaos. Most analysts agree that the increase in current public spending for 1996 will be approximately 6.2 per cent, despite all [2086] the efforts to cover that. If we took into account the Minister's creative accounting exercises regarding the hepatitis C payments and the arrangements made by the Minister for Agriculture, Food and Forestry, Deputy Yates, the figure would probably be closer to 7 per cent. This cannot be good news to anyone. Everything must be paid for when the reckoning is called and our national debt now stands at £30 billion. There are many who regard the national debt as something which does not affect them in their everyday lives. This is far from the truth. The interest payments must be made from the Exchequer and this means the Minister has less to spend on people, and especially on people who look to the Exchequer for increases in their allowances. It is small wonder that these people should look forward to increases in the budget. In 1995 pensioners were treated to a miserable 2.5 per cent increase in the Minister's first budget. I spoke on their behalf condemning this miserable increase as paltry. This year it was increased by 0.5 per cent to 3 per cent. That is still not sufficient. We should have increased that figure by at least another 1 per cent.

One anomaly in the social welfare system is the fact that widows and widowers are not entitled to social welfare benefits such as electricity allowances, television licence, free travel, etc. and I have called on consecutive Ministers for Social Welfare to have them included. In the improved economic climate I thought they would have been considered on this occasion. Those on survivor's contributory pensions or invalidity pensions received approximately £2 extra a week. They will benefit by £56 during 1996, which is not very much. How could the Minister possibly give less than £56 to those he insulted so grossly last year, especially when his colleague, the Minister for Agriculture, Food and Forestry, Deputy Yates, needed over £0.5 million to meet advance overtime payments in his Department prior to Christmas? One wonders why the vast sums of money being spent on public relations, advisers [2087] and programme managers in the Departments could not be put to better use and given to those who need it most. The reported average figure paid out by the Minister for Agriculture, Food and Forestry to ease tension in his Department amounted to £500 per head. I am sure those who get their £56 social welfare increases this year will be happy to know that their sacrifice has given peace of mind to one Cabinet Minister.

A rainbow is caused by light passing through water droplets. The water is transparent, but the workings of the rainbow Government would appear to be other than that. I spoke earlier of illusions and tricks of the light. This budget claims to help the low-paid and the long-term unemployed in particular. I can remember a time when there was only one way to describe people who could not find a job and that was as unemployed. We did not categorise them. We just knew that to our shame, too many people were unemployed. Now the spin doctors tell us that we have short-term unemployed. The Minister tells us he has plans to make life easier for them. We seem to have forgotten that the long-term unemployed. when they first signed on the live register, had no idea that they would one day fill the Minister's statistical records in that capacity. All most of them knew was that they needed to get back to work as quickly as possible. They needed jobs and they needed incentives to get to work. They see no hope in the Minister's proposals.

The combined PRSI and PAYE reductions for lower income groups average £88 per annum for a single person and £129 per annum for the married. The average PAYE worker, that includes all those lucky enough to have a job, will contribute an extra £6 a week to Exchequer funding in 1996. This is £300 plus a year. Given the reductions mentioned earlier, it does not take a mathematical wizard to work out that even those who benefit from the reductions will still lose out to the tune of at least £170 this year alone. I am told [2088] that total additional taxes to be paid on average this year will be £14 a week or £720 a year. This certainly does not seem like an incentive to anyone to get back to work.

There is not much comfort either in those figures for people already at work. They are becoming tired of bearing an unfair share of the burden and are making their dissatisfaction known. Last year the Minister announced tax cuts of £111 in his budget and he collected £196 million more than he announced for this year. This year he is setting out again to pull the wool over the eyes of the taxpayer. I have news for him. This great Labour PR machine is grinding to a halt — people will not be fooled any longer. The Minister will have to do more than announce subsidies of £80 for recruitment if he wishes to end unemployment. He will certainly have to back up his announcement with a sum greater than £1 million. If the Minister for Enterprise and Employment, Deputy Richard Bruton, funds 5,000 offers of recruitment among the business community he would need £10.5 million to keep the newly employed on the payroll until Christmas. The Minister has provided less than 10 per cent of this amount, but he talks about transparency. What is really transparent is this Government's pathetic attempt to persuade the people that it is capable of management.

I was interested to note the reaction of SIPTU, one of the strongest trade unions in the country, to the budget. Their opinion of this feeble effort is damning, to say the least. Their national executive, which issued the weekend condemnation, is responsible to a very large membership. The Minister too is accountable to a great number of people and the time has long since arrived to seriously consider his position.

The Government is charged with the overall management of the economy. The main focus at budget time is usually on such items as social welfare payments, income tax and increases in excise duties, and these are of great interest to large numbers of people. [2089] They are also the items which are highlighted most effectively in the presentation of a budget statement. We should not forget that many items in the budget presentation are overlooked at least at first sight. In this budget, for example, we have heard no mention of reductions in mortgage interest and insurance relief, the increases in the cost of electricity and the proposed increase in the cost of a television licence, but they will offset any increase or tax reliefs granted in the budget.

Many problems exist in Ireland which are crying out for attention. There are certain areas where the immediate injection of additional funds is necessary. Crime has the nation in a grip of terror. Citizens are in fear and dread of their lives. They are not safe on the streets and they are not safe in their own houses. Urgent action is needed to restore public confidence in the rule of law, but the figures provided by the Minister to this House show that the provisions of the 1996 White Paper for the Garda Síochána and for the courts have been adjusted downwards, showing reductions of £0.25 million in the case of the Garda Síochána and £0.5 million in the case of the courts, this at a time when additional resources are badly needed in these areas —“miscellaneous minor adjustments” is the term used to explain these figures. At the same time £3 million is set aside as a contribution towards providing security for cash transporters. Like others in this House, I often wonder why the companies that own the large amounts of cash being transported cannot contribute towards the cost of transport, particularly in the light of the profits shown by these companies.

What price does this Government place on the security of our citizens? Precious little, it appears. I welcome the announcement by the Minister for Justice yesterday of her package to combat crime. However, it is high time we put a police presence back into every parish and village in rural Ireland. Any person from a rural constituency would agree with that. I was a member of a county [2090] council in the early 1980s. My Garda division was selected, with the Westport division, for a pilot project involving the introduction of the small green machine on the wall. People were to report crimes to the Garda by speaking into this machine and they could be heard in a central office. Members of the county council from all parties unanimously agreed that this would be a failure. We had meetings with the Garda Commissioner and the chief superintendent responsible and expressed our view to them. They gave us statistical information indicating that this project would be a success. What every councillor said on that occasion 15 years ago has turned out to be true although the Garda thought we knew nothing about crime and law enforcement.

The scheme was extended to the entire country. This resulted in practically all gardaí in rural Garda stations being removed and we have seen the consequences. There is a serious lack of confidence because of the non-presence of gardaí in some areas. There is no continuity of Garda personnel. In my Garda division there has been a change of superintendent almost a couple of times a year. This does not help in the fight against crime and criminals are well aware of this. This issue should be taken on board as there is general agreement in the House on it. There is a cost involved but can anyone put a cost on the present level of crime? In light of recent sad events throughout the country, the announcements of the Minister for Justice will not make people sleep more soundly in their beds.

It was announced in the budget that there would be £800 relief for the purchase of alarm systems by the elderly. This is one of the biggest con jobs I have seen for a long time. I compare it with the relief granted against service charges. There would be general agreement in the House that this will not work. Some 95 per cent of pensioners who live in rural areas will not be able to avail of this relief and I call on the Minister for Finance to change it in the Finance Bill and provide a direct grant. [2091] There are plenty of examples the Minister could consider. In County Kilkenny a scheme has been in operation for many years and this could be used as a pilot project. Health boards should be involved in this because they have knowledge of problems through community welfare officers. I strongly advocate that this be taken on board. It would be a small gesture to people that the Government and the House are concerned about their needs.

In common with most Deputies in daily contact with their constituents, the biggest problem brought to my attention is the poor condition of county roads. The amount allocated by the Minister for the Environment for county roads in my constituency in 1995 was not nearly adequate to carry out repairs or improvements. I see, to my dismay, that revised figures for that Department for 1996 show a decrease of £200,000. This means that allocations to local authorities this year will not meet the amounts required by them.

No provision has been made for flood relief. Every single area of the south-east was devastated by floods this year. The residents of these and many other areas who suffered from the effects of recent flooding will be disappointed with the Minister.

If the Department of Justice and the Department of the Environment have not been well served by this budget, they are not alone. There are other Cinderellas in the ranks of the Departments which regulate the daily lives of many thousands of citizens.

The Estimates for the Department of Agriculture, Food and Forestry have been revised downwards by £250,000. This is explained by a reduction in the grant to An Bord Bia. I would have thought that in a county in which farming plays such a vital role the route to providing new jobs would be to utilise the food processing industry to its full potential. We produce some of the finest food in the world and we should increase its processing to gain added value for ourselves. Surely An Bord Bia [2092] has a central role to play in setting standards and creating markets. I call on the Minister for Agriculture, Food and Forestry to do everything in his power at EU level to restore export refunds to their former levels. I condemn the shortage of money for REPS. The Department seems to be run by public relations rather than strong firm action.

I was disappointed with the first budget of the Minister for Finance last year and I am outraged at this one. I am an Opposition Deputy but I also speak as a tax-paying citizen. Many share my view on this catalogue of waste and lost opportunities. I will illustrate my point with a personal anecdote. Last weekend I attended a function in Kilkenny which was organised to raise funds for two well known charities, one of which was Rehab. The local Rehab organisation received greater per capita benefit from this event than it is likely to get under the budget proposals. It is a sad state of affairs when people who, through no fault of their own, need our help are ignored by the Government which supposedly hails them as equals. Once again it was left to the decency of the ordinary citizen to ensure some measure of fair play.

The Department of Social Welfare spends annually four times the total amount spent on agriculture and business combined. The £23,000 spent by the Minister for Social Welfare on promotional diaries would have been welcomed and well used by many voluntary organisations. The five advisers recently appointed to his Department will each benefit from the budget at a much higher rate than the £56 paid to social welfare recipients. These jobs were advertised only in the Democratic Left's magazine. This begs a question about the transparency of the Government. It also proves that Labour is not the only party involved in nepotism, which is very much alive on the left.

The rainbow is shining brightly at the moment and the colours are not coming apart as can be judged from what is happening here. The fact that the unfortunate people who live under the rainbow [2093] are dejected and bewildered is of no importance to the leprechauns at the end of it. They are far too busy counting their personal pots of gold to see and recognise, or, unfortunately, to care about the state of the nation.

Mr. Mulvihill: Information on John Mulvihill  Zoom on John Mulvihill  I welcome the opportunity to speak in this debate. I congratulate the Minister for Finance on this budget, which underpins the coherent strategy which the Government pursued on an ongoing basis and which has led to the emergence of Ireland as one of the most healthy economies in Europe.

I am not surprised at the criticism which has emanated from the Opposition. Fianna Fáil has distinguished itself in Opposition mainly as a result of its ineptness. Inflation and interest rates are at a historic low. Mortgage rates are at their lowest level for 20 years. If mortgage rates were 12 per cent, as they were in January 1991 when the Fianna Fáil-Progressive Democrats Coalition was in power, the cost of a £50,000 mortgage would be £2,000 per annum or £38 per week more than it is today. This is a real benefit to the taxpayer and outweighs any tax relief which could be contemplated. Inflation was 2.5 per cent in 1995 whereas the EU average for the past five years was 4.1 per cent. The healthy economic state of affairs, almost unimaginable a decade ago, is due mainly to the exemplary management of the nation's finances by the Minister for Finance, Deputy Quinn. When it was announced that he was to become the first Labour Minister for Finance, some people said this was a regressive step which would halt any hope of economic growth. However, the Minister has proved himself to be not only a good Minister for Finance but one of the best, much to the dismay and embarrassment of his original detractors. The Minister's performance has been indicative of the Labour Party's whole performance in Government. It should be noted that the only trail of consistency throughout the emergence of Ireland's economic [2094] buoyancy is the presence of the Labour Party in Government since 1992.

The overall objective of this budget is to tackle the most pressing social issue in Ireland today — long-term unemployment. This problem has affected society for far too long. The Labour Party is committed to ensuring that the problem of long-term unemployment is addressed in a coherent and practical way. That is the approach needed and the one this Government intends to pursue.

A recruitment subsidy of £80 per week, which will be paid to an employer who recruits a person unemployed for at least three years, is not only novel but practical. It will provide a real incentive for employers to take on additional staff. In addition to this subsidy, an extra 1,000 places have been provided on the vocational training opportunities scheme, while spending on community employment has also been increased with the introduction of a pilot wholetime job option scheme with 1,000 places. The Minister also introduced measures to reward people at work. The principal provision in this area is the increase in the PRSI allowance from £50 to £80 per week.

From a cursory examination of this limited number of budgetary provisions it is possible to discern that this Government is motivated by social justice. It does not agree with the policies of the Opposition which would reward only a wealthy few. The Government is committed to ensuring that everybody will benefit from the fruits of economic growth.

It is not acceptable to the Labour Party, however, simply to ensure that the unemployed are content with receiving their weekly social welfare payments. Social welfare is a short-term solution. Unemployment can only be effectively tackled by creating new jobs and the Government is committed to ensuring that those new jobs are created. An illustration of that commitment is the creation of 45,000 new jobs last year.

[2095] My constituency has suffered considerably in recent years because of unemployment, a plight the last Fianna Fáil-Progressive Democrats Coalition did little or nothing to alleviate. That Coalition Government oversaw the sale of Cork Dockyard in June 1990. At the time of the sale, the then Minister for Finance, Deputy Reynolds, predicted that 450 jobs would be created by 1995. To date, those jobs have not materialised. The new owners were unable to create more than a handful of jobs despite Deputy Ned O'Keeffe's declaration at the time that the sale of the dockyard would recreate the economies of towns like Cobh and Midleton — he was slightly wrong in that regard. If that is Fianna Fáil idea of sound economic management, I hope it is a long time before they are in charge of the Department of Finance. As the old saying goes, with friends like that, who needs enemies?

Irish Steel, on the other hand, is an illustration of this Government's real commitment to the people of east Cork. Last week, the new chief executive of Irish Steel predicted the plant would be making a profit by early next year. This is testimony to the efforts of the Tánaiste, Deputy Spring, the Minister for Finance, Deputy Quinn and the Minister for Enterprise and Employment, Deputy Bruton. Their successful intervention ensured the survival of the plant. Their efforts were borne out of genuine concern for the people of east Cork and they should be commended in that regard. Unlike Cork Dockyard, Irish Steel has a future, as do the people still employed there. Without doubt that future was secured in no small way by the workers whose dedication and commitment during the past year will shortly bear fruit. That dedication and commitment would have been in vain had Fianna Fáil been dealing with the problem. It would have been as remiss in dealing with Irish Steel as it was in its dealings with Cork Dockyard, a major State asset which it sold for little or no return.

[2096] Another aspect of the budget I particularly welcome is the provision of £13 million which will facilitate a voluntary early retirement package for members of the Defence Forces. That will have a real impact on the east Cork region in general and my own town of Cobh in particular due to the presence of the naval base at Haulbowline. The early retirement package will enable the Naval Service to recruit young people which will be good not only for the Naval Service but for east Cork. This announcement will allay any fears people may have regarding the closure of Army barracks. It was always the intention of the Government to restructure the Defence Forces.

The Government knows a major State asset when it sees one. As the Minister pointed out in his Budget Statement, the objective of this budget is to reward work, promote enterprise and strengthen social solidarity. Only a Labour Party Minister for Finance would be so bold to attempt such a strategy and succeed.

Mr. Kemmy: Information on Jim Kemmy  Zoom on Jim Kemmy  I was greatly interested in Deputy Aylward's contribution. He did not address the issue of the budget but seemed to have a fixation about rainbows and how they are formed. While it was interesting and indeed amusing to hear his description of a rainbow, a man of his age should have enough common sense to know that “rainbow” is only a word. A Government must be judged on its performance, not whether it is part of a rainbow coalition, and I hope when Deputy Aylward next makes a contribution in the House it will be more substantial. He gave a one-sided view which was very prejudiced and that is not good enough because we owe it to ourselves and to the people who elect us to debate the measures in the budget in an intelligent, analytical way.

I was amused to read recently all the hype about the Ireland-Scotland rugby match. It was only when I saw the performance of the Irish team that I realised I should have had more sense [2097] than to believe anything I read in the papers. That is equally the case in relation to the budget about which there were many leaks to the media, but that is inevitable in the world in which we live. We cannot stop the press speculating on the contents of a budget and in fact the media knew most of the contents of this budget even before it was delivered. There was no element of surprise when the budget was announced, only an atmosphere of anti-climax. Leaks cannot be avoided, particularly when three parties are in Government. Each party will claim to have made a contribution to the worthwhile aspects of the budget and as long as the Minister is not blamed for any of its less favourable aspects, I will be happy.

The reality about this budget is that we must abide by the guidelines laid down by Maastricht. Those guidelines enable us to work within that framework which is a worthwhile one. A budget is a financial statement of the intention of a Government to carry out certain policies and programmes in the course of the coming year. It could be described as the Government's philosophy and this budget was formed by the philosophy of three parties. As far as the Labour Party is concerned, it had the right philosophy.

The budget encourages industrial development and job creation. For too long Members of this House, representatives of the trade union movement, the Church and other bodies paid lip service to the long-term unemployed and lower-paid workers. No positive action was taken to tackle those problems. This is the first serious and realistic attempt to enshrine in a budget a policy deliberately aimed at helping the long-term unemployed and those on low pay. Nobody begrudges the long-term unemployed and low-paid workers their rights in this matter. We have spoken about this problem since the foundation of the State but this is the only serious attempt I have seen to tackle these issues.

I too read SIPTU's reported critical comments on the budget, to which [2098] Deputy Aylward alluded. I am still involved in the trade union movement and I take what the movement says seriously. SIPTU was especially critical of the Government policy to give £80 per week to employers who take on a long-term unemployed person for three years or more. I analysed their criticisms but the reality is that the Government had to discriminate in favour of the long-term unemployed to make a dent in the numbers who have been unemployed for more than three years. If it was left to market forces, young school leavers would get preference over the long-term unemployed. To give the long-term unemployed some chance, action had to be taken in their favour, which I support. If employers want to put up matching finance, well and good but this would take from the attractiveness of the scheme. I hope employers will not be unscrupulous enough to use this scheme only for their own advantage. It will have to be monitored by FAS. I hope the trade union movement will monitor it as well and I think it is more realistic to ensure the scheme is operated properly than to decry it.

Under the budget provisions, 18,000 workers will be taken out of the tax net. This is a first step and I hope the reform of our income tax code will continue. We have a right to be angry about the suffering caused by poverty and Members must use their position to alleviate it.

We cannot think of crime in isolation from society. Part of our present difficulties with crime is that we see it as separate from ourselves, but it is not. It is part of society and we must have a societal based answer to it.

In spite of Government effort, our rate of unemployment is still the second highest in Europe. That is not a happy position, the problem will not solve itself and we need to identify solutions to it. The budget is good in that it is attempting to reduce the number of unemployed and to face reality. It is hard for an unemployed person to get on a FÁS course, in fact public representatives have to telephone and write [2099] on the person's behalf to get him or her on a course, which should be a right. A great deal of effort is needed to get the person who is able and willing to work on a FÁS course, never mind a job. Most people get their jobs through personal contacts and I hope we can move away from that and have jobs awarded on merit. We have tried to achieve that throughout our history but have failed. There are still too many low paid jobs with consequent exploitation of vulnerable people. Everyone who works honestly and fairly is entitled to a living wage. Finally income support supplements the income of low paid workers. A person who works is entitled to be paid for his or her labour and it is a breach of justice that this does not always happen.

The unemployed and those living in marginalised areas have little chance of leading a full, well rounded cultural life. Their lives are impoverished in more ways than just financial poverty and the budget must attempt to tackle this issue. For too long adult education has been the Cinderella of education although it can help to redress much of the cultural and economic inequality in society. Not enough funding is given to adult education but if used properly such education can be a lifeline back to mainstream society for those who are marginalised. It can give people the opportunity to contribute and take part in the wider community. A start has been made on education in this budget and for the first time we have free third level education. This is a tremendous boost for those who are caught in the trap where their income was greater than the qualifying income level for third level grants. That has not been highlighted during Members' contributions on the budget.

A start has also been made on tax reform, which must be continued. Fianna Fáil Deputies concentrated, in particular, on crime as if it had dawned in Ireland today and had not been a problem in the past. The reality is that violent crime has been growing for the [2100] past 26 years or more and is parallel to the violence in Northern Ireland and the availability of guns. The availability of guns worries me and this is an area that the gardaí must target and go after. Drugs and guns must be removed at source because they are far too easily available. The Garda Síochána must identify where they are coming from and stop it at source. It is too late when they are circulating among criminals. We must face up to crime honestly and have a positive policy in tackling it. There are no simple or easy answers and all sections of society must contribute to the solution of the problem. Above all, the Government must give leadership in tackling crime and reassure people that it is determined to stamp out crime. This week the Government has taken the first step to tackle it. For too long we allowed things to drift in the belief that the problem would solve itself. Above all the Government must give leadership and show that it is concerned about the people. We must try as best we can to create a genuine infrastructure whereby people can lead decent lives. That is what party politics is about. Ideology should serve people, not the other way round. For too long in all parties we bowed to ideology but that is the wrong attitude. We have to be flexible to solve problems and build a society in which people can live decent and crime free lives. I hope the budget will be a step in that direction. I look forward to this Government's next budget which should continue to address tax reform of the PAYE sector. They may think they have been forgotten about in this budget but I assure them that all parties, and especially the Minister for Finance, is concerned about tax reform. I am confident that if we are in Government for another 12 months we can deliver a very good tax reform package and I look forward to that day.

Mr. Ellis: Information on John Ellis  Zoom on John Ellis  I wish to share time with Deputy Morley. One might wonder if we are trying to fill time by discussing the budget two weeks after it has been [2101] introduced. However, I see it as an opportunity to give our points of view on the budget as it affects the needs of those we represent.

In assessing the budget we must look at the background to it. The economy was in a healthy position and the Minister for Finance could have brought in a balanced budget. When the figures are assessed at the end of 1996 it will be seen that while he brought in a budget with a deficit of £80 million there will be a surplus of £200,000. The Minister will be able to give that money away in the 1997 budget, in the run up to an election. That may be good political thinking but it is not how the public like the Government to operate.

Those who are deprived and in need of help must be protected by the State irrespective of whatever Government is in power. The job scheme which was introduced is ridiculous and those who take up such employment will be worse off than if they remained in receipt of social welfare. Regrettable though it is, that is a fact.

The Minister for Enterprise and Employment stated yesterday that job starts can apply in respect of both new additional jobs and the filling of vacancies. Employers will let people go in order to avail of the scheme. The number of jobs proposed under the scheme is 1,000. We are talking about one in 250 of the long-term unemployed being offered employment. That is a fact no matter what gloss is put on it. There was much gloss put on the budget before it was introduced in the House. Anyone who read the newspapers in the weeks prior to budget day could have written the Budget Statement and could have read what was contained in the budget on the day preceding its publication.

Mr. Durkan: Information on Bernard Durkan  Zoom on Bernard Durkan  You cannot believe all you read in the newspapers.

Mr. Ellis: Information on John Ellis  Zoom on John Ellis  It used to be impossible to get a ticket for the Public Gallery on budget day. Now everything in the budget is announced days beforehand. I do not blame Ministers for doing that as [2102] they wish to achieve what they can for their Departments. The Minister for Social Welfare proved he could get everything he wanted and extracted a large amount of money from the Minister for Finance for worthless schemes which will not benefit the majority of people. It would have been better had that money been used to reduce taxation. The lower tax band should be reduced to 20 per cent. Those paying 48 per cent are entitled to have the matter examined. It is now more productive for some workers to go sick at certain times of the year and claim social welfare for that period. That matter must be addressed.

The budget does not do anything for those I represent. The Government has neglected rural Ireland. The population is dwindling in these areas. Much could be done to alleviate the plight of old people, particularly in the context of the present crime wave. For example, in assessing means for social welfare pensions, the first £5,000 invested by old people should be exempted.

Mr. Durkan: Information on Bernard Durkan  Zoom on Bernard Durkan  A person can have up to £37,000 in the bank.

Mr. Ellis: Information on John Ellis  Zoom on John Ellis  Yes, but they will be charged 10 per cent tax on it. I constantly make representations on behalf of people whose means assessments have been increased as a result of their having enough money in the bank to pay for their funeral. Perhaps the Minister will introduce such a proposal in the social welfare Bill.

Old people living alone often live in fear. Some Garda stations in rural areas are threatened with closure. The local garda was a source of strength and comfort to them but the fact that gardaí do not live in the areas they police is not in the best interests of these communities. It should be mandatory for gardaí to live within a 30-mile radius of where they are stationed on a permanent basis. When members are promoted they are often stationed outside their home area and if they own a house they may be [2103] reluctant to reside in the new area. Perhaps it would be better for Garda morale if this trend was reversed and local gardaí promoted in their own areas where possible.

Door-to-door salespersons and those who sell goods from the back of vans should be licensed. This would eliminate “spotter” vans identifying those who are vulnerable to attack. The Ministers for Enterprise and Employment and Justice should examine this matter. If such a proposal were mandatory it would help increase the tax take.

The budget does not address social problems but rather throws money into schemes which will not achieve anything. The budget does not address the drugs problem, neither does it help those who are liable to end up as criminals. It does not do anything for education. We need extra remedial teachers and in some cases teaching on a one-to-one basis in order to ensure people are properly educated and do not become social delinquents and criminals, thus causing the State extra expense.

I come from an area which has suffered from 25 years of violence north of the Border. The peace initiative taken by the former Taoiseach, Deputy Reynolds, in conjunction with the Tánaiste and the Labour Party, is going through a rocky period. Nothing has been done in 18 months to rebalance resources in that area. Infrastructure was badly affected as a result of the violence and there is no money of note for its improvement.

As the Minister for the Environment said yesterday, he has allocated £14 million for two water and sewerage schemes in his constituency. A sum of £8 million is provided for one project in the Tánaiste's home town while £14 million is provided for the Taoiseach's constituency. The counties in the west however have received very little — a paltry £150,000 for a minor improvement to a sewerage scheme in Carrick-on-Shannon. Without proper distribution of resources by the Government to all areas, there will be further decline [2104] in the rural population. Smaller towns will decline while larger urban areas will increase, adding to social problems which result from bad planning and organisation. People in rural areas are unable to sustain themselves, even with the help of their neighbours and friends.

Let us consider the position of a person living and working north of the Border vis-á-vis that of a person south of the Border. As Deputy McGahon said, there is a difference of £12 to £15 in the weekly income of persons working in similar jobs north and south of the Border. As regards incentives for industrial development, grant assistance available for investment in Northern Ireland, together with the tax regime, makes it totally unattractive for people to invest on the southern side of the Border. That imbalance will have to be redressed. There must be positive discrimination for Border areas so that communities will survive. Communities north of the Border are much more productive and better able to cope because of the resources available to them. If this matter is not addressed immediately people living just south of the Border will move to Northern Ireland, resulting in a further decline in population.

Money from the Delors package and other incentives are available, but how much use has been made of them? Much money has been given to voluntary groups, and I have no problem with that, but money should have been allocated for infrastructure improvement and to provide facilities to create permanent jobs rather than relying on the Combat Poverty Agency, ADM and others to provide piecemeal jobs. Those organisations are well intentioned, do their best and ensure money is wisely spent, but in the long-term money spent by such agencies will not keep people in jobs.

On the agricultural scene, considering there is no measure in the budget to restore the 50 per cent reduction in export refunds it is important that the Minister for Agriculture, Food and Forestry makes a determined effort to improve the position of farmers. It is [2105] regrettable that sufficient money has not been made available to pay applicants under the REP scheme. The Minister admitted in the House on Tuesday that he is depending on money from the TB scheme and other schemes to pay grants. Last year he suspended the CFP scheme and I suppose he will suspend the REP scheme this year if further money is not available. That would be a retrograde step not in the interests of rural Ireland. The scheme was established to improve the environment as well as farming standards and it was welcomed by everybody. That the first £2,000 is exempt in terms of social welfare is welcome, but the Minister should have gone further in that regard. Only 25 per cent of that money is taken from national resources. I know the Minister of State Deputy Durkan, would not begrudge that money to people who need it. The scheme leads to on-farm investment, which gives a return in terms of tax and PRSI, and it is therefore more or less self-financing.

Wearing my hat as spokesperson for Fianna Fáil on forestry, I appeal to the Minister to introduce a proper scheme of inspection of forest plantations so that people will not find, as happened recently, that four or five years after plantation grant applications are rejected because of improper maintenance. A scheme for yearly inspection should be implemented. That would avoid serious problems, particularly for people who depend on forestry premiums for their livelihood.

Mr. Morley: Information on Patrick J. Morley  Zoom on Patrick J. Morley  I thank my colleague, Deputy Ellis, for sharing his time with me and allowing me to make a short contribution to the budget debate, which is nearing an end. From listening to much of the debate last week and reading reports on it, the word used most often to describe this budget is “disappointing” and that word was used in the context of another opportunity missed by the Government to seriously tackle tax and PRSI reform. The disappointment was greater since it was stated last year that the steps taken at [2106] that time were just a beginning. The people expected more on this occasion but once again there was just a token gesture. The increases in PRSI allowance, the reduction in employers' PRSI and the widening of the tax bands simply tinker with the system and fall far short of reform. The Government totally ignored the universal call for tax and PRSI reform. It has miserably failed to introduce meaningful measures to tackle that issue.

Even if we must be content with piecemeal changes in the tax system I cannot understand why the Government does not, in the short-term at least, take into consideration the position of many small firms, particularly in the clothing and food sectors, who find survival in the marketplace very difficult because of high tax and PRSI and the strength of the punt. One would expect a significant and meaningful gesture towards those companies to give them confidence in the future and hope of alleviation of their difficulties. Some of those industries — many mushroom and clothing industries, are in my constituency — are small producers for whom redundancy is averted only by short time working. There is a constant war in terms of competitiveness and the outcome is uncertain.

The increase in the price of petrol will more than cancel the miserable improvement in PRSI. In response to my parliamentary question tabled to the Minister for Agriculture, Food and Forestry last week asking if he proposed to assist mushroom growers overcome currency difficulties in view of the closure of some mushroom units said, on Tuesday 30 January that “the appropriate response of the currency situation is to improve competitiveness”. Increasing the price of petrol is not helpful in that regard. I am disappointed with the negative tone of the Minister's reply and that neither he nor the Government is prepared to aid that industry or others affected by the present currency situation, although EU regulations provide [2107] that they could do so if they had the will to act.

I, like my party colleague who spoke previously, represent a rural constituency. My main criticism of the budget is that its provisions will not greatly benefit agriculture. There is nothing in it to boost rural development or employment although rural Ireland is a blackspot in terms of employment opportunities. I do not believe that the £80 subsidy to employers for recruitment of the long-term unemployed will have any impact on rural Ireland as it does not have the required industry or potential employers to benefit from that provision. The regulations governing that scheme have yet to be published. I hope it will be successful, but I foresee it giving rise to many difficulties. I hope it will not result in a new employer securing a competitive advantage over an established one, the displacement of established employees by newly recruited ones, the encouragement of certain employers to pay lower wages or employees being unsettled if newly recruited ones get a better deal, such as being allowed retain medical cards for three years after taking up employment. In addition to the fringe benefits conferred by a medical card, such newly recruited staff would probably be paid an equal rate of salary as that paid to their established work colleagues.

My party colleague mentioned the plight of farmers who stand to lose £60 to £70 headage payment per animal as a result of the withdrawal of the beef export subsidy. This position can be allowed continue only for a short time. I am aware the Minister for Agriculture, Food and Forestry is addressing the problem and I hope his efforts will be successful in the near future, but at this stage I urge him to double his efforts in that regard.

Fear of the violent and mobile new age criminal is prevalent in rural Ireland. We have heard and read dreadful stories about old people being battered, robbed and murdered in their homes by brutal thugs who should be [2108] behind bars but are free as a result of not having been detected or because they are out on bail or early release. It is unfair to blame the Minister for Justice for the current position which has developed over a number of years. However, it is reasonable to expect that the Minister and the Government should address this problem immediately and effectively. She has put forward proposals to Government this week but much more is needed. Reform of the bail laws which should be undertaken as a matter of urgency is still outstanding.

I am disappointed with the proposal for new prisons. More prison places are required. The 150 places originally intended to be located in Castlerea Prison should be provided as soon as possible. Failure to do so will send out the wrong message to the criminal and the community. I welcome the changes the Minister made regarding Garda structures and the appointment of extra judges.

The provision of tax relief of £800 for the elderly towards the installation of security devices such as burglar alarms is a joke. One would be inclined to accuse the Minister of cynicism in this regard but for the sad and serious plight of the elderly who are fearful of becoming victims of crime. As cynicism is not a trait in the Minister's make-up, I accept that the provision was an unfortunate lapse. As a measure of the Government's concern for the plight of the elderly, the Minister should substitute that proposal with a substantial grant to enable the elderly install suitable security appliances.

It has been said during the debate that there is nothing in the budget for tourism. I wish to congratulate a county colleague, the Minister for Tourism and Trade, Deputy Kenny, who is doing an excellent job. I remind him that all Government sources and reports indicate that tourism is one of our main hopes for development and employment in the west. However, many people find it impossible to get grants to [2109] provide basic accommodation for tourists in County Mayo while the experts advise we would need to increase our bed night accommodation by 50 per cent to cater for the projected number of tourists who are likely to visit the county by the end of the millennium. The Structural and Cohesion Funds appear to have been directed mainly towards areas already well established in this field. They have assisted in providing those areas with ever more sophisticated tourist products while the more underdeveloped areas of the west are unable to secure assistance to provide basic necessities required for this industry. It is little wonder that a recent report by the Irish Tourist Industry Confederation states that recent research carried out on behalf of the confederation indicated that tourism is growing faster in the eastern region than in the west and, therefore, the benefits of tourism growth are not being spread equitably. The report also states that the Government must decide if sufficient infrastructure is in place to cope with further expansion. That poses the question of how the industry can attract more business into areas with great tourism potential, such as County Mayo and the west, which remain underdeveloped. This cannot be achieved without greater European and Government assistance. Judging from the provisions in the budget, such assistance is not likely to be forthcoming. The increase in the price of petrol will further disadvantage tourism in the west. It will make it more expensive for tourists to travel there and it will also have a negative impact on industries located there.

An IBEC report presented yesterday states that transport expenses are 25 per cent to 30 per cent higher in the west and north-west than in the rest of the country. That is ascribed to road conditions and distance from ports. The Government should heed the findings of that report and take immediate steps to remove the obvious obstacles to a fair sharing by the west and the north-west in the country's growing prosperity. I [2110] appeal particularly to my county colleagues, the Minister for Tourism and Trade, Deputy Kenny, and the Minister of State at the Department of Finance, Deputy Higgins, to ensure that the Government takes note of those findings. I am sure those Ministers could count on support from the Minister present, the Minister of State at the Department of Social Welfare, Deputy Durkan, and the Minister of State, Deputy Rabbitte, who has just left the Chamber. I am sure those Ministers have not forgotten their roots even though that may no longer be their main concern.

Minister of State at the Department of Social Welfare (Mr. Durkan): Information on Bernard Durkan  Zoom on Bernard Durkan  I am pleased to have this opportunity to contribute to the debate on the 1996 budget.

As Minister of State in the Department of Social Welfare, I am acutely conscious of the challenge we face in addressing what can often appear to be conflicting demands. On the one hand, the Government must ensure that public spending is contained and that an environment which will allow for sustained economic growth and increased competitiveness is nurtured and developed. On the other hand, the Government must also ensure that the problems associated with persistent high unemployment, particularly long-term unemployment, changing family structures, poverty and social exclusion are tackled in a meaningful and effective way.

It must continue to improve and maintain the position of the 800,000 people and their 700,000 dependants who depend on social welfare while at the same time ensuring that there are sufficient resources available to support the further growth of industry and employment. In striking the correct balance, it must be borne in mind that every 1 per cent increase in social welfare costs almost £1 million per week, while at the same time a reduction of 1 per cent in basic tax rates could reduce [2111] the amount of money available by almost £80 million pounds per year.

I believe this budget goes a long way towards reconciling the conflicting demands of ensuring the continuing development of both our economy and our social services. It strikes a fair balance in terms of social and economic objectives. It supports the most vulnerable sectors of society while at the same time creating an environment in which real and lasting jobs can continue to be created.

Above all, it is a budget for employment. A package aimed at further reducing the level of PRSI for both employers and employees effectively represents an investment of over £120 million in employment in a full year. Other incentives encourage and support the long-term unemployed to return to work, either directly or through a number of innovative and effective education, work experience and training programmes.

The income of social welfare recipients will be improved and protected through a general increase of 3 per cent across the board, with a minimum of £2 per week on all payments. In addition, special emphasis has once again been placed on the need for greater family support. For example: child benefit has been increased by a further £2 per child. In fact, the child benefit rate has been increased by 45 per cent since this Government took office. The monthly payments will increase to £29 for the first two children and £34 per month for the third and subsequent child. This means that, for example, a family with four children will now receive almost £30 per week in child benefit; a grant for twins — currently £200 at birth — will be increased to £500 and will be repeated when they reach the ages of four and 12; back-to-school clothing and footwear payments increase to £43 for primary school children and £58 for second level; those looking after incapacitated or elderly family members will [2112] get an increase of 8 per cent in their carer's allowance and the family income supplement goes up by £6 per week.

The budget is unique in that it specifically sets out to tackle the issue of long-term unemployment in a cohesive and focused manner. It contains a series of interlinked measures, ranging from employer subsidies to PRSI reforms which will have a real effect on the lives of many of those who are at present effectively excluded from the labour market.

Substantial concessions are being made in relation to PRSI contributions for employees and employers. The employee PRSI allowance is being increased by 60 per cent this year and employees on full rate PRSI will not pay PRSI on the first £80 per week.

There was considerable debate about payroll costs and their effects on competitiveness and job creation. While many commentators were not comparing like with like in relation to the social security structures and costs in other countries, nevertheless there is a clear need to move further to maintain and increase the level of employment here. The welcome news for employers in this budget is that the PRSI rates are being lowered — to 8.5 per cent in the case of the lower rate and to 12 per cent in the higher rate. At the same time, the threshold at which the higher rate falls due will be increased by £1,000 to £13,000 per annum.

The total of these PRSI reforms amounts to almost £121 million in a full year and represents a fundamental strategic shift in the structure of employee PRSI. It demonstrates in the clearest way the Government's commitment to stimulating new employment and rewarding the enterprise of employers and employees who are producing wealth and contributing to State finances.

The income thresholds governing entitlement to family income supplement are being increased by £10 a week at each point, ensuring that most recipients will gain an extra £6 per week. Additional changes to the family [2113] income supplement scheme will render it more accessible and responsive to the ness of those who avail of its provisions. That is particularly important in view of the oft-repeated claim that it was less remunerative to go to work than to remain on the live register. Therefore, this provision is in line with Government policy of focusing specifically on the need to encourage people to return to the workforce and render it remunerative for them to do so.

A crucial change is being effected in the arrangements governing the payment of unemployment assistance which are being simplified with the express purpose of ensuring that people can avail of opportunities to take up part-time or casual employment safe in the knowledge that, in so doing, they will be better off than at present.

Payment of the child dependant allowance, which previously would have been lost when a qualified parent took up employment, will continue to be paid for a period of 13 weeks to people who have been unemployed for 12 months or more.

The extension of the back-to-work allowance will mean that an additional 5,000 unemployed people will be able to retain social welfare payments while returning to work or setting up self-employment projects. This income cushion is vitally important, particularly where they have families to support, during the critical start-up period of any new enterprise. This scheme has already provided employment opportunities for over 10,000 people. This year additional funding is also being provided to assist participants engaging in self-employment ventures with business technical advice and training.

The extension of the VTOS scheme will give a further 1,000 unemployed people the opportunity to return to education and enhance their skills, or acquire new skills needed in the increasingly competitive jobs market of today. Over 8,000 unemployed people will engage in full-time education at second and third level in the coming year.

Under a new pilot scheme, an [2114] additional 1,000 full-time places will be reserved in community employment for people over 35 years of age who have been unemployed for more than three years. Twenty-five per cent of the part-time places on community employment will be reserved for those over 35 years of age who have been unemployed for more than three years.

A new scheme of work trials is being introduced which will aim to place 5,000 job-seekers — who have been unemployed for at least six months — with employers who have prospective vacancies or who are in a position to offer worthwhile work experience.

This is another positive measure, aimed at encouraging people back to the workforce, putting them in a position in which they can train within a work environment to improve their capabilities in the course of that training and thereafter.

A youth progression programme is being introduced which will focus on tackling the problem of long-term unemployment at source by providing a range of services to 18 and 19 years olds in danger of drifting into long-term unemployment, another important provision in that it will focus on a vulnerable group who, at a critical stage in their early working lives, may well be at a crossroads. Therefore, it is most important that their efforts are guided in the proper direction and that they are assisted in every way possible, which is the object of this exercise.

This package of measures is the clearest possible demonstration of the determination and willingness of the Government to provide opportunities for the long-term unemployed to achieve their full potential and participate in society with dignity. It is well known that most job vacancies tend to be filled by people moving from another job or by those who have been out of work for a short time only. Length of time out of work is a major factor for job seekers. Thus, there is need to take supportive action to enable the long-term unemployed to compete on an even footing. The new employers' subsidy will encourage and [2115] support them to recruit people who have not worked for three years or more. It is not true that such schemes are vulnerable to large scale abuse as it is quite easy to ensure that such abuse does not take place.

I am very pleased that this budget contains a number of provisions I have been advocating personally for some time. As in the case of all budgetary preparations, one endeavours to be as comprehensive as possible in addressing the needs all Members will have identified over many years. However, that cannot be done simultaneously, but it involves many steps, which, combined, will eventually have the effect of addressing the identified problems. Suffice it to say that, in any given budget, while one will not see all the provisions one would like — whether in Government or Opposition — it is not an indication that those problems will not be addressed at some future date.

The extension of the free travel companion pass, which will come into effect from July next, to blind and visually impaired children will be of enormous help to those children and their parents and of particular benefit to children attending special schools who must commute daily or weekly. Henceforth, they will be allowed a person of their choice to travel free with them on their journeys. Apart from the financial savings involved, this pass will greatly ease the concern of parents of blind or visually impaired children who will have the comfort of knowing that their children do not have to travel alone.

I also heartily welcome the amendment of the free telephone rental scheme. At present, one of the conditions for receipt of the allowance requires that the pensioner be living alone or with certain excepted persons, including children under 15 years of age. That age limit is now being extended to 18 years of age, an improvement which will bring an additional 3,800 pensioners into the scheme.

[2116] Obviously, a great number of new measures and reforms have been introduced in this budget, and as I have special responsibility for customer services, I am anxious to ensure that members of the public will be in a position to fully understand the social welfare implications of the budget, particularly as it affects their own personal situations.

To this end, a freefone budget inquiry service was made available last week which enabled anyone calling to inquire about budget provisions to be connected, free of charge, to the Departments' information services. This service proved to be exceptionally successful and was widely availed of again this year.

Budget factsheets have also been distributed to the Department's local and branch offices and to the community information services. My Department is increasingly conscious of the need to provide accurate and timely information to the public and to make access to that information as convenient as possible. We now have a strong programme for action in this area which includes: making one-stop-shops a reality, expanding new payment facilities and easier more convenient signing arrangements; a concerted drive to simplify social welfare supports and information about them; improved access to services through upgrading public offices, better signposting and more privacy; better information about entitlements in individual circumstances, and greater involvement and consultation for customers in matter concerning the delivery of services. The commitment to more efficient delivery of information and services is indicative of a welfare system which is increasingly responsive to the changing needs of Irish society.

I have listened with great interest, and some amusement, to the contributions by some colleagues on the Opposition benches to this debate. It is in the nature of Opposition, indeed a duty of Opposition, to criticise the Government of the day and its policies. However, this year, a number of speakers, being singularly unable to find any [2117] substantial flaw or fault with this budget, resorted to the tactic of trying to identify imaginary weakness and divisions in the Government's approach.

Let me put this red herring back where it belongs once and for all. This budget was a team effort by a strong and united Government, with the three parties working in unison to ensure that the social and economic affairs of this country continue to be managed in a responsible, constructive and effective manner.

The 1996 budget consolidates the improvements contained in the first budget brought in by this Government last year and introduces some innovative measures. This Government will continue to work hard to ensure that the economy continues to flourish and that all strands of Irish society share in that success.

Listening to the debate I have been amused, concerned and appalled but I congratulate the Opposition on managing their show in a way which grabbed maximum attention and should surely qualify for an Oscar or, if not, the next best thing. In almost every category, in the fictional section, it has done extremely well from one area to another. Before the Minister delivered his budget speech, Members of the Opposition spoke out. Newspaper headlines stated the Minister for Finance has £200 million to spend on tax cuts; De Rossa has the country ruined with huge payouts and taxpayers are bending under the burden. My colleague, the Minister for Social Welfare, Deputy De Rossa is able to defend himself——

Mr. M. Kitt: Information on Michael P. Kitt  Zoom on Michael P. Kitt  The problem was he spoke before the budget.

Mr. Durkan: Information on Bernard Durkan  Zoom on Bernard Durkan  ——and likewise the Minister for Finance, Deputy Quinn. It is alleged that all these sources had an inside track. If that is the case why were so many wrong? Last year my colleague, the Minister for Social Welfare, Deputy De Rossa, was wrongly criticised by the Opposition for being cold, heartless and uncaring because he had only increased [2118] social welfare payments by 2.5 per cent to 2.8 per cent and inflation would be 3 per cent. The Opposition claimed this was a callous Minister who had no regard for the needs of the poor and was restricting them to a nominal increase.

The budget last year, like the budget this year, was based on sound economic indicators which predicted the likely interest rate and economic growth. Lo and behold by the year's end the Minister had been correct in his projections. I did not hear anybody from the Opposition say they were sorry, that what had been said about the Minister was wrong that they were wrong and were only being alarmist. Last year, according to the Opposition, he did not spend enough.

This year, despite all the flag waving and all the predictions of dire consequences the Minister for Social Welfare sought a requirement in accordance with that which he felt — and I agree — was needed to ensure that the people who were dependent on payments from social welfare received a payment commensurate with their needs and to match inflation. This year we had a 3 per cent increase but we did not hear anything about the problems because the Opposition has changed. It reckons too much money is being spent on social welfare but it has not identified areas where there might be cuts. It is amazing that the Opposition for some unknown reason regards the difference between 2.5 per cent or 2.8 per cent and 3 per cent as huge. Opposition parties are very accurate in their calculations but the amount of money involved in a 1 per cent increase is between £49 million and £50 million. A 1 per cent increase or decrease in social welfare represents a sum of roughtly £1 million per week.

How can the Opposition reconcile its response to last year's budget with its predictions for this year? The debt reckoning of the Opposition, when in Government, exceeded all previous expectations, nonetheless I fail to understand how two percentage points would have involved a huge degree of [2119] soul searching among those on the opposite benches. I am sure it did not.

Oppositions should be constructively critical of Government — this relates to the Oscars to which I referred — but they should also be helpful in their criticism. One must ask how did the Opposition perform in the past 12 months. When the economy is going well it does not make life easy for an Opposition.

My imagination was stretched somewhat over a year ago after a robbery. The Minister for Justice, as in such cases, gave the usual explanation. Despite the fact that this was approximately three to four weeks after the new Government had taken office I was amazed at the alacrity with which Opposition Deputies seized on the opportunity to virtually accuse the Minister of organising the hoist — that is all they were short of doing — when for the previous seven years they had been directly in control of that Department and had not done anything to reorganise the resources in that area and take serious action against criminals. They gave no indication that they had anything to do with the management of the economy over the past seven years but rather made blatant political attacks which had no basis in fact. I am not surprised that the public is cynical about such attacks — it has seen similar ones and knows they are merely trying to deflect attention from themselves. Those Deputies should remember that times have changed.

We should consider the best way forward for an economy which is going well. It is generally recognised that our economy is doing well for a variety of internal and external reasons. It has been suggested that the Government should have introduced massive tax cuts in the budget. Everyone is in favour of paying less tax but it should be remembered that a 1 per cent decrease costs £77 million. Such a decrease is not a massive reduction and it is better to have gradual reductions over a period of time. I am not an economist but I regard myself as a poor man's observer [2120] of various economies and thus far I have failed to identify an economy where a process of massive tax reductions has proven successful. In some jurisdictions, particularly ones close to us, that process has been disastrous and the results are there for everyone to see. If we want to be competitive we must do our utmost to bring about a gradual reduction in taxation over a period of time. We should not exaggerate the extent to which this is likely to happen in a single year. I wish to point out to those who claim there could have been massive reductions in taxation that certain reductions were correctly introduced this year.

The ability of Fianna Fáil to adapt to all situations never ceases to amaze me. At times it is not possible to define accurately the way it does this but it confuses the public and very often ends up confusing its members, who sometimes remind me of a group of armadillos at a cross-roads where some are going in one direction and others are going in a different direction in an effort to cater for every situation as it occurs. They want to ensure that they will have no responsibility for any of the damage their actions or words might cause but at the same time they want to give the impression to the public that they are friendly and helpful at all times.

Mr. M. Kitt: Information on Michael P. Kitt  Zoom on Michael P. Kitt  Is this relevant to the budget?

Mr. Durkan: Information on Bernard Durkan  Zoom on Bernard Durkan  Yes. It is necessary to address the alacrity with which that group of people can present themselves in a fashion which is totally misleading.

Acting Chairman (Mr. Leonard): Information on James Leonard  Zoom on James Leonard  The Minister has some latitude but he seems to have rambled a long way from the budget.

Mr. M. Kitt: Information on Michael P. Kitt  Zoom on Michael P. Kitt  He is jiving at the cross-roads.

Mr. Durkan: Information on Bernard Durkan  Zoom on Bernard Durkan  Yesterday Deputy Willie O'Dea used the word “fraud” at least 15 times in his contribution. I fail [2121] to understand the relationship between the budget and fraud but I think the Deputy was suggesting to the public that the budget was a fraud in some way. Otherwise he was straying from the budget debate. I thought he was referring to illegal activities outside the House and not to a matter being debated in the House.

Acting Chairman:  The Minister should confine his remarks to the budget.

Mr. Durkan: Information on Bernard Durkan  Zoom on Bernard Durkan  I can only conclude that some genius at a meeting of the Fianna Fáil Front Bench suggested that the word “fraud” should be used in a budget speech as the public would read it with great interest and it would keep them entertained for a long time.

He also referred to the “unMidas” touch and a 14-month delay in implementing some Government programmes. It takes a Government a while to find its feet when it comes into office. However, the Opposition do not intend to give this Government any honeymoon period. Deputy O'Dea referred to a 14-month delay but he should remember that his colleagues were in Government for one of those months. It is sad that this type of selfdelusion has taken over the Opposition benches to such an incredible extent. I hope it does not continue and that the Opposition will come to recognise the reality after our period of good government.

In recent years it has been traditional for Deputies of all parties to put forward their ideas on what should be included in the budget. This is a welcome development as people who have a genuine and sincere interest in their job have put forward good ideas. It is also an interesting and reassuring aspect of democracy which should be taken on board at all times. Traditionally Governments have tended not to listen to the points made by Opposition Deputies but when Minister go back to their offices they look at constructive proposals to see to what extent they can [2122] be accommodated. Every Minister has a duty to look at the problems highlighted during genuine budget contributions and I hope this will remain the case.

I congratulate the Minister for Finance and the Minister for Social Welfare. The Opposition must have been very disappointed to realise that there was no row in Government about the budget which is generally regarded as good and which will stand the test of time.

Mr. O'Malley: Information on Desmond J. O'Malley  Zoom on Desmond J. O'Malley  There is a general acceptance that unemployment is the most pressing economic problem facing the country. That acceptance is reinforced by the daily evidence of crime and lawlessness which can be attributed in large part to the social exclusion resulting from mass unemployment. It appears, however, there is much less acceptance of the link between taxation and unemployment. The Minister for Enterprise and Employment seems convinced of the relationship between the two but he has had a hard time in getting this message across to his colleagues.

No degree in economics is needed to know that high levels of personal taxation act as a disincentive to work, which is our major problem. Yet, this budget under a smokescreen of minimalist changes to our dreadful taxation regime, sets out to increase income tax by £260 million. The Government believes it can profitably use the extra revenue to create jobs. It is time we recognised a high spending, high taxation Government is more likely to destroy jobs than to create them. A typical single worker on a relatively modest wage of £250 per week faces a marginal tax rate of 56 per cent, including PRSI and levies while his Northern Ireland counterpart faces a marginal rate of 34 per cent. This is an enormous differential to maintain on a small island housing two open economies.

When differing levels of employers' PRSI and social insurance are taken into account, the cost of employing a [2123] person in the Republic of Ireland is substantially higher than in Northern Ireland or Britain. If we do not move to close this gap, the implications for employment here are ominous, especially at a time when the substained weakness of sterling is putting our exporters under considerable pressure.

We must also recognise the changing political landscape in Britain. Both major British parties are effectively committed to a low tax regime for personal incomes. Indeed, in the run-up to the British general election, there could be further substantial cuts in its income tax rates, making life even more difficult for the trading sector of our economy.

The budget should have addressed this issue head on. Instead, we had a series of penny-pinching changes to personal taxation, none of which is likely to have a significant bearing on the economics of employment. These changes are so small as to be cosmetic. In weekly terms, they are little more than pence and when account is taken of reductions in mortgage interest and VHI reliefs, it is clear that few taxpayers will be better off as a result of the budget, most will be worse off, even if they do not yet realise it.

Not surprisingly, despite the so-called tax cuts, the Minister is budgeting for a further increase in income tax revenues in the order of £260 million; we can do without tax cuts like that. The Minister may argue that these extra taxes will be paid by new workers coming into the tax net. However, with the vast majority of new jobs in our economy being of a part-time nature, this seems highly unlikely.

If the Minister had managed to hold growth in public spending in 1996 in line with forecast inflation, he would have needed to raise £350 million less in tax revenue. That money would have enabled him to make major progress towards reform of our personal taxation system. He could have reduced the basic rate of income tax to 23 per cent, halved the rate of employees' PRSI and cut employers' PRSI by one-third. Instead, [2124] the Minister's high spending colleagues around the Cabinet table made a preemptive strike on the funds that would have been available for tax reform. One commentator said that by the time the Minister got to the cupboard, it was bare.

Our national debt now stands at more than £30 billion or almost £30,000 per householders and we are adding to that total at a rate of £1 billion a year. This is a remarkable achievement when one considers that tax buoyancy has pushed Government revenues to record levels, the current budget was balanced as recently as 13 months ago and huge transfers from the European Union are available to fund capital investment projects by the State.

The debt burden is continuing to grow because this Government has no coherent policy for the management of our public finances. We are currently running a current budget deficit at a time of record economic growth, albeit the pace of that growth is exaggerated by the official statistics, continue to pump hundreds of millions of pounds into State companies, failing to recognise that the international trend is for Governments to withdraw from a direct ownership role in the economy, and refuse to embrace privatisation as a legitimate and valuable policy option and one which would contribute hugely to reducing our debt burden.

The Government is now apparently about to enter into a half-baked arrangement to sell a minority stake in Telecom Éireann to a foreign company. No explanation has been given as to why the company could not be fully privatised by way of stock market flotation, as happens in the rest of the developed world. There is no reason a well managed telecommunications utility should not be capable of surviving on its own in the commercial world. If it needs a strategic link-up with an outside company, that could be achieved by way of commercial rather than equity partnership. Under the arrangement being contemplated, a single buyer will be able to secure a strategic stake in an [2125] overmanned and undervalued company, effectively shutting out all other bidders down the line. This idea serves the interests of Irish taxpayers, the ultimate shareholders in Telecom Éireann, poorly. Even this partial sale of Telecom Éireann will raise significant revenues for the Exchequer. Will some of the proceeds of the transactions be applied to reduce the national debt level or will this too be swallowed up in yet more current spending programmes?

This Government has set a disturbing precedent in its use of a State asset, the local loans fund, to pay for current expenditure. The same must not be allowed to happen in the case of Telecom Éireann. Despite the imminent Telecom Éireann sale, all indications show that the national debt will rise by a further £1 billion this year.

For the last few years, we have been fortunate to enjoy a sustained period of low international interest rates. That period should have seen a significant decrease in the annual cost of servicing our national debt. Instead we have continued to add to our debt mountain. Falling rates mean that the higher indebtedness did not translate into higher interest costs. Out debt service costs are now lower in real terms then ten years ago when the national debt was £10 billion lower than it is now.

In pushing up the national debt at a time of low interest rates, we are storing up great trouble for ourselves in the years ahead. Interest rates will not remain at their current low levels forever. Most respected commentators accept that we are now moving along the bottom of the current interest rate cycle. When that cycle begins to turn, the impact on our public finances will be appreciable. Should international rates rise by three percentage points over the medium term — this is a plausible and benign scenario — the additional costs to the Exchequer of servicing our existing debt burden would rise by almost £1 billion annually. This would put severe pressure on the public finances, especially as rising rates would be likely to slow down economic growth and the [2126] pace of growth in Government tax revenues. It is imperative to adopt a clear and coherent strategy for the management of the public finances. We need to recognise that the national debt must be stabilised, or reduced, if possible, if we are not to run into major problems in a few years' time.

We must also take cognisance that like low interest rates, transfers for the European Union will not last forever. This country currently receives almost £2 billion per year from the EU under various headings. This is an enormous sum of money for an economy of this size. Effectively, EU assistance means that Ireland is one of the world's biggest recipients of development aid on a per capita basis.

All indications show that the volume of funding available to us from 1999 onwards will be sharply reduced by EU enlargement. That might not be such a big problem for this State if we had used our EU windfall wisely. However, we exhausted more energy in arguing how much we would get rather than about how we would spend it. Many of our current spending programmes are heavily dependent on EU funding. We have no guarantee that this funding is renewable and we should treat it as a finite resource. Therefore, it is imprudent in the extreme to continue pushing up the volume of public spending when we are unsure of our ability to fund it in the years to come.

Will we increase taxation to fund spending programmes when EU transfers run out or tail off or will we dispense with entire areas of Government activity currently funded by payments from Brussels?

The huge injection of EU funds provided us with a marvellous once off opportunity to remedy our infrastructural deficits, in terms of roads, ports and airports, but, we seem to have missed it. In the case of the roads programme, for example, most of the major developments scheduled to get under way in 1995 — the Nenagh, Arklow and Kildare bypasses — did not start. There must now be a serious question as to [2127] whether many of the projects listed in the national roads programme will ever be completed.

We are facing into a tight fiscal situation in the medium term. We are vulnerable to an inevitable rise in the interest rates cycle, facing into a major shortfall in EU funding and need to close the gap in personal taxation between ourselves and the United Kingdom if we are to remain competitive as an exporting country. Everything points to the need for tight control of public spending to facilitate a reduction in the burden of personal taxation.

It will be no use tackling this problem in 1999, it needs to be faced up to now. We need to get our act together. Three of four budgets are required to deal with these issues, to set out a planned programme of debt reduction, tax reduction and public spending control. Last week's budget failed to recognise the importance of these issues.

My party recently published a comprehensive five year programme covering taxation and public spending which showed how significant reductions in personal taxation could be accommodated without any cuts in the overall level of public expenditure. We showed how, through a selective programme of State assets sales, sufficient funds could be raised to effect a reduction in the national debt with consequent savings to the Exchequer in debt service costs.

It is interesting that in the course of this debate Labour Party speakers have come into the House day after day to attack the Progressive Democrats document which, incidentally, was produced by a small Opposition party with meagre resources at its disposal. The Minister of State at the Department of Foreign Affairs, Deputy Burton, devoted her entire speech to the document last week. I find it curious that they should concentrate on a five year plan put forward by an Opposition party rather than on a one year non-plan introduced by their party colleague, the Minister for Finance.

One of the recent features of public [2128] administration apart from the obvious lack of transparency, is the lack of accountability for action and inaction. While serious financial matters have come to light in the Department of Agriculture, Food and Forestry, to which I will advert shortly, the most easily understandable and glaring example of the lack of public accountability in a matter far more serious than mere financial losses, lies in what has now come to light about the activities of the Blood Transfusion Service Board. Its negligence in regard to contaminated anti-D immunoglobulin almost defies belief. The ordinary civil negligence is, in effect, admitted by the Government and compensating those severely affected by the actions of the board will cost the taxpayer dearly. A total cost in excess of £200 million is a possible outcome.

The more sinister aspect, however, arises when one considers the question of criminal negligence. The degree of negligence, wilful neglect and failure in this instance is so great it is difficult to see how it can be less than a criminal offence, but what accountability have we had in that sphere? Who is responsible? Not alone are there no prosecutions, but there were golden handshakes for some officials of the board.

I contrast this with the position in France where something similar happened in the blood transfusion line, and several of those involved were held criminally responsible and instead of golden handshakes received jail sentences. Here the official culture is that officials do not make mistakes, do not fail to react to formal warnings of dangers and, if they do, the matter will be covered up.

I am glad the organisation, Positive Action, which represents the 1,000 women injured by the criminal negligence of the State, is endeavouring to enforce accountability. It has my support and I wish it luck, but my experience suggests it will have difficulties.

The matter of accountability in the [2129] beef division in the Department of Agriculture, Food and Forestry over a period of years raises some serious questions. The cost of the beef tribunal to the taxpayer will, reputedly, be about £35 million in legal costs. The additional cost to the taxpayer arising out of some of the facts uncovered will amount to further substantial sums, as yet unquantified. It is worth reminding ourselves that the chairman of the beef tribunal remarked in its course that if certain parliamentary questions had been truthfully and correctly answered the entire procedure might not have been necessary.

In its report the beef tribunal explicitly found that the Department of Agriculture, Food and Forestry failed to fulfil its “duties and obligations” under EU regulations relating to intervention, in particular Article 20/859/89. Arising from this finding a fine of £74.2 million is proposed to be imposed on this country by the European Commission out of a total proposed fine of £109.925 million for various shortcomings and breaches of duty during 1990 and 1991.

The lack of accountability is not just to the Dáil and public, it even extends to the Government. When I inquired in 1989, as Minister for Industry and Commerce, from the Department of Agriculture, Food and Forestry whether intervention beef had been shipped to Iraq it refused to reply. It was aware at the time that intervention beef had been so used. It was a relevant matter as far as the State was concerned in seeking to defend proceedings brought against the Minister, but it refused to inform me. Politically, it was also relevant.

The first that I or my Department heard about it was when the Department of Agriculture, Food and Forestry finally informed the beef tribunal in the latter part of 1992 that it had concealed this relevant and important information for nearly three years. It would not have revealed it, but for the efforts of the beef tribunal. It had concealed it from a member of the Government who was endeavouring to defend an action for a sum well in excess of £100 million and. [2130] possibly, as much as £200 million. There is no reasonable excuse for this concealment. In ordinary terms, it was a coverup. Who benefited from it?

With my letter in the autumn of 1989 I sent to the Department of Agriculture, Food and Forestry a departmental veterinary certificate which had been sent to me by a meat company. It subsequently transpired in 1992 that this certificate was a forgery. The Department had to be aware on receipt of the certificate from me that it was a forgery, but it did not so inform me.

Nobody has ever been held responsible for these concealments of the truth. One senior official in the beef division of the Department altered official correspondence from CBF to excise all reference to the use of intervention beef for Iraq, to substitute other information and thereby deliberately to mislead. He said in evidence that he believed his actions were in accordance with “acceptable departmental policy.” Obviously, they were; he has since been promoted to principal officer.

These concealments could cost the State dearly. The main, but not sole beneficiaries were a number of meat companies. Why were the interests of these companies placed above the interest of the public and taxpayers? Why is there no accountability for so doing?

One of the matters which has come to light consequent on the report of the beef tribunal is the widespread action of a number of beef companies which on boning out carcases for intervention purposes consistently stole meat, the property of the Minister who held it on behalf of the European Union under the terms of the regulations by means of actions that were “not in accordance with the clear and unambiguous terms of the deboning contract”. The stolen meat was put into their own commercial stock and sold on the market for their benefit.

The Department was fully aware of such illegal practices. One official wrote a letter on 11 May 1989 to all meat companies drawing attention to the fact that [2131] the Department was aware of these practices, pointing out that they were illegal and asking for them to stop. Notwithstanding the Department's knowledge it allowed these practices to continue. The companies concerned which were thus facilitated by the Department made illegal gains amounting to countless millions of pounds over a period of years.

Nobody has ever been made accountable for this except for a few relatively junior employees of one private company. No effort has been made outside of one factory to recover the amounts illegally and fraudulently obtained. So far as one can ascertain, no effort has been made to obtain recoupment from the beneficiaries of the practices that led to the proposed fines being imposed on the State. Why should fraudulent beneficiaries be allowed to benefit and retain their ill-gotten gains? At the same time the taxpayer has to pay up because the Department knowingly allowed it to happen. Is this justice?

It appears from page 465 of the tribunal report that one departmental official, over a period of 22 months in 1990-91, forged the name of the appropriate company representative on all the documentation submitted to the Department in respect of payment for all intervention purchases by that company. The tribunal found that during this period a serious and substantial fraud was perpetrated on the Department and the Commission at that factory. The official concerned, a civil servant, who was actively, continuously and deliberately involved in this matter, does not appear to have been made accountable in any way. Why did more senior officials refuse to act? Why did a Minister not act? Is it because they approved of what was happening?

These facts have been publicly documented for nearly 18 months and, apart from a small number of people, what has happened has not caused any great ripples of unease. That a Department [2132] would act in this way is a matter of concern. That scarcely anyone should care is a matter of even greater concern.

I alluded to only some of what is publicly documented. There is much more relating to aspects of the beef industry and its relationship with the Department that is not yet publicly documented but which is no less serious. There will be another day for that, I hope.

Mr. Crawford: Information on Seymour Crawford  Zoom on Seymour Crawford  I wish to share time with Deputy Harte.

Acting Chairman:  Is that agreed? Agreed.

Mr. Crawford: Information on Seymour Crawford  Zoom on Seymour Crawford  I welcome the general thrust of the budget. We inherited the budgetary problems associated with equality payments, the beef sector and hepatitis C and, in the best interests of the general public and the taxpayer in the long-term, we speedily dealt with some of those matters. As Members are aware, nothing was done about the equality payments issue for many years and, consequently, an enormous sum of money had to be paid out. Problems put aside for the time being only add to taxpayers' costs in the long-term.

In the past few days some Members tried to put across that the budget and the efforts of the Government have not benefited middle income PAYE taxpayers. There are many benefits to be gained from a well run economy. The low tax system in the UK was referred to. I am sure none of us would wish private house owners here to go through the recent experience of their counterparts in the UK when high interest rates and rising unemployment levels caused many thousands of people to sell their houses at large discounts. We should not consider the short-term advantage of reducing taxes without ensuring that our economy is soundly based. As a result of a soundly based economy there are 45,000 more people at work. This is important for the unemployed and for parents who want their children to [2133] secure jobs. This is a significant achievement in one year, particularly when one considers the number of jobs created in previous years under different Governments, including ones of which my party was a member.

The mortgage interest rate is another important area. Deputy O'Malley spoke about the doom and gloom, but if we had done what his party wanted there would be much more pressure on interest rates. We have the lowest interest rates in 30 years. A person with a mortgage of £40,000 would have been £130 per month worse off in terms of mortgage interest relief alone when the Progressive Democrats Party was in power with Fianna Fáil. It would be difficult to compensate for that in tax allowances.

Third level education fees were halved last year and will be abolished this year. Parents in the Cavan-Monaghan constituency will now have a choice about where to send their children for third level education. In recent years many of them would not have been able to avail of third level education if they did not have the advantage of being able to go north of the Border for such education. This is a step in the right direction, but the position could be improved further by providing more third level institutions in the Border region, particularly for those wishing to learn a trade.

Enterprise is an important feature of the budget. Corporation tax for small industries was reduced from 40 per cent two years ago to 30 per cent. Small business organisations have been demanding such a reduction for some time. This will mean a significant saving for small industries, particularly for those in my constituency who have not benefited for many years. It will mean a saving of £30 million for that sector.

The first £80 of weekly wages will be disregarded for PRSI purposes for those on low incomes. A total of 18,000 people will benefit from the income tax exemption on £150. The introduction of a special low rate of employers' PRSI of 8.5 per cent on the first £13,000 earned [2134] will mean that a person earning £250 per week will pay the lower rate of PRSI. This will benefit many people in the food industry, in which County Monaghan plays a large part.

In regard to the pig and poultry industries, I was disappointed the Minister reduced the tax on LPG by only 2p per gallon. He should re-examine this matter. Two-thirds of our poultry is produced in County Monaghan by an industry which is under severe pressure. A large proportion of pig production also takes place in the Cavan-Monaghan region. We are all aware of the problems caused by the differential between the punt and sterling. The Minister must re-examine the question of taxation on non-automative LPG which is approximately 8.5p per gallon. This is one way, within EU rules, of alleviating the problems of the poultry and pig meat industries in that region.

The £80 per week recruitment subsidy is an important innovation in terms of employment. In recent weeks we have heard a great deal about crime, which is causing much anxiety for the elderly and others living in rural areas. One of the best means of tackling the crime problem is to ensure that as many people as possible are employed, especially in black spot areas, and the £80 subsidy should help in that regard. Those involved in the mushroom industry and other part-time jobs in Border regions will benefit greatly from the three year rule in respect of medical cards. Housewives and others could not afford to take up jobs picking mushrooms, etc., because the £30, £40, or £50 a week they earned would have resulted in the loss of their medical cards. The measure whereby people can keep their medical cards for three years after taking up a job, is of tremendous benefit and will allow some growers to stay in business and others who have gone out of business to start up again, because without mushroom pickers that sector could not move forward.

I welcome the increase in VAT refunds to farmers. This will mean an extra £9 million in a full year. The PRSI [2135] and tax reduction measures will also affect many small family farms. The measure regarding tax on land leasing is a step forward. In an effort to try to have land transferred to the younger generation we must encourage everybody to make their land available. The fact that a farmer can earn up to £6,000 tax free from leasing his land will encourage him to engage in long-term leasing rather than on an annual basis. There are many benefits to agriculture in the budget and the main benefits are the result of a very active and aggressive Minister solving the many problems relating to farmyard pollution, milk quotas and the pig industry.

There have been cries from the Opposition benches that the Minister is doing nothing about the crisis in the livestock industry. When the Minister took over in December 1994 the pig industry was in crisis. Farmers had been promised in February of that year that something would be done, but nothing was. However, when Minister Yates came into office he immediately met representatives of the pig industry and tried to rectify the situation. The pig industry has done well since, partly because of the Minister's work and partly because of the upturn in product price. It has given farmers confidence that we have a Minister who cares and who has done much to improve payments etc. These are the things that matter to farmers. The measures in the budget may seem small but the overall efforts of the Government, through the Minister and through the back-up he got from the Cabinet, have been beneficial to the farming community.

It was interesting to hear the criticism of the Minister for Social Welfare, Deputy De Rossa, after he introduced his measures. Members on the Opposition benches refused to recognise that he had increased the child allowance by £7, the biggest increase ever, and that he had improved many other areas. They homed in on the 2.5 per cent given to pensioners. This year the Minister defended his efforts to get more money [2136] for social welfare recipients and the long-term unemployed. Again we heard the cry from the Opposition spokesman, Deputy McCreevy, that this was another case of the tail wagging the dog, and cries from another spokesperson, Deputy Joe Walsh, that he had not given enough. There has been much talk on the Opposition benches that this is a three-way coalition, but, from this side of the House, the two speakers on the Opposition benches certainly look like a peculiar coalition. They do not seem to be able to get their act together. Overall there has been an increase of 3 per cent this year. The child allowance has been increased by £2 which is a £9 increase over a two-year period. Pensioners living alone got an increase of £3.30 and the carer's allowance has been increased by £5.90. These are significant improvements.

Another problem that worries many people on social welfare and people in general is crime. I welcome the innovative package put forward by the Minister for Justice, Deputy Owen, in the last few days. It is a scandal that she has been singled out and blamed personally for crime in the past 12 months and particularly in the past few weeks. During the first week of my campaign in the Mayo by-election about two years ago three people were murdered in a small corner of Galway and another not too far away in County Clare. It just did not happen that it was only when Deputy Owen took office that there were brutal murders and unforgivable actions by layabouts who should be behind bars. This Minister has put much effort into her role in the past 12 months and she has now put forward a workable package which will provide jail places for people who should be in jail. Despite all the talk about Castlerea and the money provided for it, the patients are not yet out of that hospital and will not be until next May. It was more than a case of just providing the money for Castlerea. Money had to be provided to pay for hospital beds or homes for those in Castlerea Hospital. The propaganda that a wall around Castlerea will solve [2137] all our problems is far from true. The action the Minister has taken means that prison places will be provided quickly. The appointment of extra judges and the institution of new Garda structures mean that we can look forward to improvements. Anyone who thinks the problem of crime will be solved immediately is living in cloudcuckoo-land, but we must ensure that progress is made.

There have been improvements in roads in recent years, paid for by the money provided from the tax amnesty and the additional money provided last summer. I look forward to an announcement in the next few days of the allocation for the forthcoming year. I appeal to the Minister, however, to give priority to the N2 from Dublin to Derry which goes through Monaghan town. The bombs are no longer going off in the North, the guns are no longer firing, and we have relative peace. This gives people the opportunity to move freely through Northern Ireland. It would be a failure on my part if I did not beg that that road be given priority so that tourism and industry in that region can thrive. The fact that the Minister for Finance has made some gesture towards the cross-Border workers, that the Minister for the Environment has provided £6.5 million for the peace initiative and that INTERREG and the Combat Poverty Agency have offices in Monaghan is a recognition that thought is being given to the Border region, but we need to ensure co-ordinated efforts towards a region that has suffered so much over the 25 years of the troubles.

Mr. Harte: Information on Patrick D. Harte  Zoom on Patrick D. Harte  I do not wish to go into the details of the budget. Like most budgets it has been well debated. If one is in Government one praises it, and if one is in Opposition one criticises it. It has been well documented, well tabulated and well publicised. My contribution will deal with the strategy of the budget. Never was it more important for the economies North and South to be harmonised than at the moment. I am disappointed the budget has not taken [2138] into consideration the effect it will have on cross-Border relationships.

I grew up in the towns of Lifford and Strabane and was puzzled by differences between them. It later became my responsibility as a public representative to do something about this. For years I have been preaching in the confines of my party and in the House that we cannot have political unity in advance of economic unity. Many of us forget this. In budget debates we think of the economy of the Republic without reference to what is happening north of the Border. Yesterday the Taoiseach cleverly and rightly cited Articles 2 and 3 of the Constitution to say why according to them he has a responsibility to all the people of Northern Ireland. I wonder what influence these articles had on the budget; I think they were totally ignored.

From growing up in a Border region I have seen both sides of the coin. For the first ten years of partition there was no economic border between North and South. There was free movement of traffic and people. This changed when Fianna Fáil came into office and fought an economic war with Britain. Economic barriers and customs posts were erected. These began on a small scale and were consolidated until they were dismantled by membership of the EU. This generation now knows the kind of relationship there would have been on this island if these tariffs barriers and customs posts had not existed. People who wished to bring goods across the Border, mostly for their personal convenience, apart from professional smugglers, were stopped from doing so.

What kind of a relationship would there have been between North and South if our economies had been harmonised? Some 200 years ago Henry Grattan preached economic union, free trade, a common currency and political separation. The four points of this political philosophy dealing with the relationship between the British and Irish peoples are as valid today as they were then. I am continually puzzled and [2139] concerned that leaders do not believe in the validity of that position.

There cannot be political unity in advance of economic unity. No party in power, including mine, has ever thought this through. I was expelled from the House for protesting against the biggest blunder it made. I was a lone voice in the wilderness saying it was wrong to break our currency's link with sterling. We made the Irish pound a foreign currency in six counties of this island. No one thought this would happen as a result of making sterling a foreign currency in the Republic. We were only concerned about joining the EMS and obtaining easy money quickly.

No one is as aware as you are, Acting Chairman, of the economic convulsions caused in Border regions by the break with sterling. A party in this House which preaches Irish unity does not have the right to make economic decisions which interfere with natural trading between people living in Border regions. This policy is not in line with the goal of true unity between the people of Ireland.

I hope my words will be listened to because we have an inescapable interwoven relationship with the people of Northern Ireland, not just with Northern Catholics, whom we see as our people, but also with Northern Protestants who are also part of this nation. Of the four million people living on this island, a quarter are Northern Irish Protestants. We have treated them almost with contempt and have not shown concern for them when making economic decisions in this House.

No one was consulted about the break with sterling, not even the people living in Border regions such as Monaghan, whom Deputy Leonard has the privilege of representing. This decision was made by a handful of people in a clamour to join the strong currencies of Europe in the hope that our economy would embarrass the people of the North and force them to join a united Ireland. How many politicians in the [2140] North have said a link with the Deutsche Mark will result in a strong Irish currency, will embarrass them and force them for economic reasons to become part of this State? Economic advantage did not make the Catholics in Northern Ireland unionist and it will not make Protestants there nationalist. The break with sterling was motivated by anti-British feeling, which has been confused with nationalism.

Deputy Crawford spoke about cross-Border workers. People who live in the Republic and work in Northern Ireland must declare their income in the Republic for tax purposes. People in the South may say this is fair enough, that the worker involved should pay the same tax as everybody else. However, the core of this arrangement is that it is saying to people that if they work in Northern Ireland they should live there because if they live in the Republic they will be double taxed. This is blatant partitionism. I am against this and have been since it was first introduced by my party, which was blind to the fact that it would have this effect on people. It puzzles me that people in Northern Ireland have the slightest interest in having anything to do with the South.

The currency problems caused by the break with sterling have caused deep and expensive difficulties for business people in Border areas. Hoteliers, publicans and restaurant owners will take sterling at face value from customers in Northern Ireland because they are glad of the business. However, when they exchange this money at the bank, they pay not only the exchange rate difference but also a banking charge. This is hidden taxation caused by the blindness of politicians in this House.

From the Opposition benches I listened to Fianna Fáil Ministers telling us the benefits which would result from membership of the EMS but which did not occur. We are now in the worst of both worlds. If our currency becomes premium to sterling, we can devalue — we have done so three times — because our trading with Britain would suffer. If [2141] sterling becomes premium to our currency, we can do nothing about it. There have been many advantages from membership of the EU but one of the disadvantages has been that we have been dragged into the currency position of Europe. When we impose taxes on different commodities we do not stop to think how they will affect people living in Border areas. If the price of petrol increases it will not have the effect on people in Cork it will have on those in Monaghan and Donegal. People in Cork and Kerry will pay the additional costs for petrol but people in Monaghan and Donegal will drive across the Border for petrol when the prices increase. They are forced to do that by decisions made by Governments in this House. Nobody ever stopped to think that people living in Border areas would be at such a disadvantage, vis-à-vis counties further away from the Border. I hope future Governments will iron out the economic differences between North and South.

When we talk about equality of the economies North and South of the Border, we are really talking about a common economy with the rest of Great Britain. Instead of always talking about the politics of Britain and Ireland, our leaders should consider how to bring about economic unity between Britain and Ireland because at least one million people — and perhaps half of the Catholic population of Northern Ireland — do not want to forfeit the economic benefits they now enjoy from Britain. If we want to move in this direction we will soon realise we are facing a bigger problem than originally envisaged. The Government should remember that the future of Ireland lies in economic harmony between North and South and, by extension, between Great Britain and Ireland.

Mr. M. Kitt: Information on Michael P. Kitt  Zoom on Michael P. Kitt  I welcome the opportunity to speak on the budget. Some of the measures announced are welcome but PAYE workers have been let down. On the one hand the standard tax bands were widened and PRSI exemptions were increased but, unfortunately, the [2142] PRSI allowance was abolished. The Government then decided to increase the excise on petrol and we can expect an 8 per cent increase in ESB charges in the next three years. These measures have offset the favourable tax changes. PAYE workers will be only marginally better off in regard to their take home pay.

The Government has referred a great deal to creating employment but the increases in the price of petrol, for example will result in increased transport costs, particularly in the west where we are furthest from the markets. In an effort to create jobs in the western region, the Western Development Partnership Board examined the question of population settlement in the west. The board issued its report to the Government at the end of last year and I welcome the framework plan suggested by the Board. I am disappointed the board's report was not mentioned in the budget and I hope the Government will respond shortly to the framework plan outlined by the board.

The board has highlighted the serious problem of depopulation and emigration in the western region. It makes the point that 41 per cent of the population now live in the five eastern counties or, in more stark figures, that only 9 per cent of the population now lives in the north west. When one considers the sparse population in Connemara, for example, it is obvious there is a major challenge facing the board and all public representatives, particularly those representing the western region.

The former Archbishop of Tuam, Dr. Cassidy, recently referred to the fact that 1,000 people left his archdiocese each year. That figure will certainly increase unless some action is taken. The action proposed is to encourage investment in the western region thereby making it more attractive for people to live there, as well as for tourists.

I welcome the announcement today by the intergovernmental committee on the islands that £2 million will soon be provided for the western region. I know [2143] the Taoiseach has taken a personal interest in this matter. However £5 million should be made available each year for the first five years to help the islands. It is obvious from today's announcement two different Departments have responsibility for the islands. Of the funding being provided, £1 million will come from the Taoiseach's Department with the other £1 million from the Leader programme through the Department of Agriculture. Food and Forestry. That is indicative of the way some of these issues have been dealt with in the past. One Department should be responsible for the islands. I hope that will be the case in regard to the Western Development Partnership Board and that funds will be available to it.

An issue that has been highlighted by the rural resettlement organisation is housing. People in cities have expressed great interest in moving to the western region but there is a problem with insufficient housing. That problem should be addressed by the Government which should provide suitable housing so that the work being done by people like Jim Connolly of the rural resettlement programme, in County Clare, can be undertaken in other counties in the western region.

The decentralisation of Government Departments should continue. That has been successful and I am disappointed that the issue has been somewhat neglected. The Government must also accept that some cities along the western region are attracting people to their urban areas and this is causing major problems for smaller towns in rural areas. That question was addressed by the Kiltimagh IRD in County Mayo which adopted a positive approach to the Leader programme when it was announced. It realised it could transform the town by availing of funding from the programme. Minor works such as replacing shop fronts could be funded and in that regard it has been very successful in County Mayo. We now have a Leader programme in East Galway [2144] and we hope the community there will benefit from it and that urgently required jobs will be created.

The peaceful way of life in the western region was always one of its main attractions but, unfortunately, the recent attacks on elderly people and other crimes in recent weeks and months have shocked everybody. I hope the Government will come up with a more imaginative response than that proposed in dealing with this problem. We have been told that 25 prison places will be made available in Castlerea but nobody would accept that as being an adequate response. There has been no answer to the question of a referendum on our bail laws, on a review of the right to silence or the reforming of the murder squad. I hope we will get definite answers to these questions rather than hearing about task forces and committees being set up to examine them for a long time.

If the Minister for Justice is serious about tackling crime, she should ensure the community policing scheme is reviewed and the extra resources that the Garda Síochána require, whether mobile patrols, vans and so on are put in place. If she wants members of the force to live in the town in which they are stationed, she must look at the provision of Garda accommodation. For example, a sergeant was appointed to Moylough, County Galway, 15 months ago but he and his family have not been able to live there because the Garda station has not been refurbished. Having raised this matter, I eventually received a letter last week stating that the Department of Justice had decided on the requirements and I hope the Office of Public Works will do the necessary work. The elderly in this area would have peace of mind if they could see the gardaí living in the community. I hope there will be grants available to the elderly for alarms and mobile phones.

I do not agree with the proposed tax relief for alarms because most elderly people to whom I have spoken do not pay tax. I wonder why we need a task [2145] force when we know what should be made available.

Changes could be made in the social welfare code to help the elderly, for example elderly people under 75 years will lose their secondary benefits such as free electricity and so on if they have an adult relative living with them. The then Minister for Social Welfare. Deputy Woods, reduced the age exemption from 80 to 75 years in the 1994 budget, but it is time to look again at the age exemption so that pensioners can retain the benefits to which they were accustomed and continue to have a relative live with them. Pensioners are between a rock and a hard place in the sense that if they are living alone they will get an extra £1.10 in the budget but if they are under 75 years and have a relative living with them they lose the benefit of free electricity, free telephone rental, free television licence and so on. The task force should look at this hardship for elderly people.

On the question of rural development, there is the issue of decentralisation and the provision of education facilities. There is an excellent university and regional technical college in Galway city but in recent years the Galway regional technical college set up a campus in Castlebar, which is proving very successful. People in counties Mayo, Sligo, Leitrim and Roscommon believe their students should not have to leave their counties to participate in third level education. There are other educational courses that could be provided in the counties and the Castlebar campus has proved how successful this can be.

Due the fall in numbers in primary schools some teachers have to be transferred from their schools to another. I welcome our education spokesperson's suggestion that two teachers should be the minimum number in every primary school. He has pointed out that every country, with the exception of counties Laois and Offaly, have one teacher schools, totalling 163. He suggests that these schools be allocated a second teacher which would cost in the region [2146] of £2 million to implement. Great tribute is due to the sole teacher in one teacher schools whose only modern technology is the telephone. Of the 163 one teacher schools, 42 are under Protestant management and some are Gaeltacht schools. Schools for minorities should get special assistance. A school needs 25 pupils on the roll to retain two teachers. If the Government reduced that number by one, to 24, we would be able to retain those two teacher schools. The Minister should consider this and I hope he will be able to reduce the number by one.

The provision of resource and remedial teachers is most important. I welcome the Minister for Education, Deputy Bhreathnach's provision for additional remedial teachers. Galway, the second largest county, has 48 remedial teachers but only seven resource teachers. That will have to be emphasised in the future. The resource teachers cover six or seven schools, which is a challenge to them. I hope there will be more funding particularly for resource teachers.

With the fall in the primary school population, the school transport system will have to be re-examined. There is a ridiculous rule that there must be ten pupils between the ages of four and ten in a defined area in rural areas before the school transport services is provided. That figure will have to be reduced because of falling numbers. As things stand the Government is getting good value because the same bus and driver will first take pupils to the second level school and then to the primary school. This has been a great success but it should be easier for transport services to be established in rural Ireland. Other Members referred to the welcome change in third level fees but there is an anomaly in that part-time students, many of whom are employed and paying tax and PRSI, will not benefit from this. They say they are subsidising the free third level education scheme. They are being ignored and discriminated against and they are very disappointed [2147] that their case is not being addressed by the Government.

I am disappointed that the Minister ignored the farming sector. Much play was made about improvements in REPs. We were told the first £2,000 received under REPS will not be taken into account in assessing means for social welfare purposes. Will the same exemption be extended to applicants for medical cards, disabled person's allowance and other health allowances? There is much hypocrisy surrounding this scheme as less than half the funding required for REPS is being made available. The scheme will grind to a halt unless the Minister succeeds in securing the necessary funds. At present payments are delayed and departmental red tape is not helping the matter. Farmers are asked for herd numbers and have been told 5 per cent of the plans will be inspected.

This scheme was negotiated by the former Minister for Agriculture, Food and Forestry, Deputy Walsh, and deals with conservation, landscape protection, environmental problems, wildlife habitats, endangered species of flora and fauna and producing food in an environmentally friendly manner.

The food industry was neglected. I appreciate that the strength of the punt against sterling has caused problems but when Fianna Fáil was in office in 1989 it put together a successful package to help the timber industry and the mushroom industry. A similar package is needed now and hopefully the Government will put one in place.

Much publicity has been given to the Minister's animal health policy. He must remember that unless there is a good working relationship between farmers, veterinary surgeons and the Department it will be difficult to implement such a policy. Small farmers who may not be members of a farming organisation will pay more as a result of the changes being introduced by the Minister. I welcome the fact that graduates are setting up new practices. The Minister has privatised this scheme although [2148] I am not sure if the Labour Party or Democratic Left realise this. Veterinary surgeons will not set up a private practice in remote rural areas and it may be necessary to pay a subvention to encourage them to operate there.

I acknowledge that much money has been spent on the health area. During the Christmas period a large number of people were left waiting for beds for a long time in the casualty department of University College Hospital, Galway and the matter was given media publicity. In the past this was attributed to flu epidemics and so on but now it happens during the tourist season when many visitors are in Galway. Galvia Hospital recently postponed operations. The Minister will appreciate the seriousness of the matter. I am confident he will secure funding to implement the interim proposal to provide badly needed beds. The hospital has a huge catchment area. Those living in County Clare use the facilities in Galway.

Many people complain about early discharge from the regional hospital. There is a good hospice movement in Galway and if sufficient funds were provided we could complement the service provided in the regional hospital. The hospice was built at a cost of £1.9 million and many requests for funding were made. I hope the Minister, who will be the first Minister to visit the hospice in Galway, will provide the necessary funding although there is no provision for it in the 1996 Estimates.

Every year 400 people die from cancer in Galway and 25 per cent of them need in-patient hospice care. Some 5,000 people in Galway contribute towards the running of the hospice each year. This shows how seriously the matter is taken by the doctors, particularly Dr. Kenneally, his staff and the directors of the hospice.

The Minister provided funding for the mentally handicapped. I tabled a parliamentary question on this matter. I am disappointed that £262,000 was allocated as it is one-fifth of what we received in 1994. I hope capital funding will make up for that reduction. It is [2149] important that respite care and residential places are available, particularly in east Galway and south Roscommon. At present the mentally handicapped in east Galway must avail of services in Arás Attracta, Swinford, County Mayo or in Galway city. I hope he will consider my suggestion that medical cards be provided to the mentally handicapped and that the successful venture by the Western Health Board, Galway County Association and the Brothers of Charity in providing second level places for the mentally handicapped will be further developed. The vocational education committees worked tirelessly to secure those places.

Regrettably, east Galway is not promoted in the same way as the Connemara area and other areas on the western seaboard. The major assets of the rivers Suck and Shannon should be promoted by Ireland West because angling holidays in particular are becoming very popular. The existence of a marina in Ballinasloe will be a great asset to the town — up to now boats could travel only as far as Shannonbridge.

The Minister of State at the Department of Foreign Affairs is in the House. I welcome in particular the increase in overseas development aid. I am aware that mandatory payments must be made to the United Nations, but the Government should consider voluntary contributions to ensure they are effective and directed at the right areas. Allegations have been made of scandals and ineffectiveness in that regard. I hope the Minister will use the extra money to provide an effective and efficient overseas development programme.

Ms F. Fitzgerald: Information on Frances Fitzgerald  Zoom on Frances Fitzgerald  I wish to share my time with Deputy Boylan.

An Leas-Cheann Comhairle: Information on Joe Jacob  Zoom on Joe Jacob  That is in order.

Ms F. Fitzgerald: Information on Frances Fitzgerald  Zoom on Frances Fitzgerald  I welcome the opportunity to contribute to the budget debate. An attempt was made in the [2150] budget to strike a balance between the need to tackle long-term unemployment, maintain social stability and keep our finances in order to keep interest rates low. Each of those areas is very important and the Government can be proud of its efforts in the budget and through its economic policies to achieve success in each area. I am very pleased there is a balance between keeping finances in order and offering real hope to the many people trapped in long-term unemployment. Unless specific measures are put in place the position of the long-term unemployed will not change. For years people spoke about the need to reform our tax system, to make it easier to move from social welfare to work and to integrate the tax and social welfare systems. It is interesting that when a budget addresses these issues in a real way there is very little praise for it. It is a radical budget and in time that will become more obvious.

There has been much discussion about whether there is sufficient tax reform in the budget. For the tax year ending 5 April 1995 workers paid PRSI on all income up to a limit of approximately £21,000. Commensing on 6 April this year all employees will be exempt from PRSI on the first £80 per week of their earnings, yet we are told there has been no tax reform. For the tax year ending 5 April 1995 employers paid 12.2 per cent PRSI on the wages and salaries to their employees, up to a limit of approximately £26,000. From 6 April this year the 8.5 per cent reduced rate of PRSI will apply to the wage and salary costs of more than 60,000 employees. That is a 30 per cent reduction in tax on labour in two budgets and it is focused on the more labour intensive and traditional sectors of industry. Yet we are told there has been no tax reform.

In the past six days of debate the House has heard much about lost opportunities for tax reform and inadequate tax concessions. We have lost sight of the true nature of the Budget Statement. Tax reform and increases in social welfare allowances are only some [2151] elements of the budget, but let us consider the central purpose of a budget. The Budget Statement, which lays before the House the national economic and financial policies to be followed for the forthcoming year, is the single most important document this House considers each year. It impacts on all Government Departments and services and affects the lives of every citizen. It should, and does, reflect a cohesive set of policies followed over a period of years. A cornerstone of these policies is the maintenance of a low interest, low inflation, stable economy, the benefits of which are enormous to every citizen.

Little interest has been displayed during the debate in the economic policies underlying the budget, yet the real benefits are derived by the ever-reducing Exchequer borrowing requirement, the rates of economic growth and the inflation projections. The benefits of lower mortgage rates, low inflation and increased employment are more substantial than any tax concessions announced on budget day, and changes in these areas would be very evident.

Excellence in economic performance is not an accident; it results from sound economic policies. Proper management of the economy delivers real benefits. It is estimated, for example, that a family on an average manufacturing wage who took out a mortgage in 1992 has a much greater disposable income today than in that year. Such improvements result from sound economic management, leading to lower PRSI, tax, mortgage rates and inflation.

The budget provides for a significant slowdown in public expenditure, a further reduced EBR target and the targeting for the first time of measures aimed at those on long-term unemployment. Irish and European studies have shown that specific measures must be introduced to help people move from long-term unemployment. People in those circumstances lose skills and contacts, thereby reducing their opportunity to get back into the workplace. Incentives such as those provided in the [2152] budget are necessary to help those people — I am referring to the continuation of the child dependency allowance for 13 weeks after a long-term unemployed person finds employment and retention of the medical card which is an important incentive to take up employment where possible. These are the features of the budget that should be highlighted.

The taxation measures announced in the budget merit more attention than has been given them. A number of speakers focused on individual income tax measures but I prefer to focus on the overall impact. Before paying tax at the higher rate, a married couple must earn more than £25,000, excluding mortgage interest relief and child benefit payments, which amount to £58 per month for a family with two children.

An integrated approach has been adopted to business taxation, a matter to which Fine Gael has been committed for a long time. The budget delivers for business, particularly small business, where jobs have been created in the last year and will be created in the future. Entrepreneurs who take risks must be supported, and this budget supports them. The changes in employers' PRSI reduce the cost of labour on business. That encourages job creation and helps to maintain jobs in lower margin industries. That is what is needed to cope with increasing competition. Last year set a record for employment creation. A large number of new jobs were created but that was not an accident, it resulted from sound management.

Large, high technology projects which create a substantial number of jobs are well publicised. However, sustainable new jobs which will make a big difference will be secured through encouragement to small business operated by entrepreneurs willing to put their money at risk to create opportunities for small numbers initially and then gradually expand. For example, the introduction of 30 per cent corporation tax for the first £50,000 of profits will directly benefit smaller business which are in every town, and that provision has been [2153] warmly welcomed by them. It will encourage more reinvestment and job creation.

I also welcome further reduction in taxes that will apply to the transfer of family businesses and farms. Two years ago such transfers attracted the normal rate of capital acquisitions tax. Following two consecutive initiatives by this Government the tax payable has been reduced by 75 per cent. Family businesses and farms are not only critical to the economy, they are also an integral part of the socio-economic infrastructure of rural areas. This provision is supportive of family business and farming families.

The business tax measures announced in the budget are thoughtful, targeted and will undoubtedly stimulate the necessary growth and stability.

The budget serves another function peculiar to Ireland in recent years. It is one of the methods by which the Government honours its side of the social contract, a subject of recent comment. Since the Programme for Competitiveness and Work was agreed the rate of inflation has remained below the level anticipated, job creation has exceeded the targets in the contract and disposable incomes have increased because of tax reductions and lower interest costs. We should not forget that when commenting on the social contract.

I want to address comments that this is a left inspired budget. I, and many of my party colleagues, very much resent the implication that Fine Gael has no interest in tackling the problems of the long-term unemployed, the poor, the marginalised and those dependent on social welfare. The social welfare and pro-employment measures announced on budget day represent the first cohesive plan to tackle this problem. Each party in Government subscribes to them and contributed to their design. The independent economist, Moore McDowell, said that the measures in this radical budget have done more than [2154] any in a generation to tackle the problems of unemployment by a frontal assault on the main causes.

Taking the 1995 and 1996 budgets together, the most extensive and expensive, measures taken have been the increases in child benefit. That is a universal benefit. We are aware from ESRI studies that the poorest families who experiences the greatest difficulty in making ends meet are those with a large number of children. Child benefit reaches families directly. That benefit has been increased by more than 40 per cent in the two budgets delivered by this Government. It goes directly to assist all families. It endures through unemployment and employment and raises the incomes of all families.

For many years budget day was known as the day when taxes were increased. It is now seen as the day when tax cuts are provided, but it is much more than that. The economic policies and targets which this budget encompasses are set to ensure continued economic prosperity, increased job creation and greater income for all our citizens. It is a strong budget that balances the need for social stability with the need for low interest rates and the need to tackle long-term unemployment, which is crucial at a time when there is a major focus on social unrest and concern about crime. It is very important to tackle long-term unemployment, the knock-on effects it creates in society and the hopelessness and despair to which it can give rise. We would have been negligent if we had not included these types of measures in the budget. We would have been neglecting the key problem this country must tackle.

I am extremely proud to be part of a Government that has introduced a budget with these priorities.

Mr. Boylan: Information on Andrew Boylan  Zoom on Andrew Boylan  I thank Deputy Frances Fitzgerald for sharing her time with me. In the short time available I join in supporting the budget and congratulate the Taoiseach and the Government on the presentation of an excellent programme [2155] of work for the next 12 months, which is what a budget should be. For too long budget day was looked on as Christmas Day and people were disgruntled if there was nothing in it for them. Governments, depending on their weakness, were often swayed by the demands of strong lobby groups and did not recognise the effect the meeting of the demands of one of them would have on another.

It is generally accepted by the public that this is a good budget, it will have a steadying effect and does not have any throwaways, but it will benefit all the people, and that is as it should be.

It is easy to criticise those on social welfare and say that they should be made work for whatever salary they might get. From my experience of dealing with people on social welfare, 95 per cent of them would be only too happy to work for the income they receive if there were meaningful jobs for them, but unfortunately there are not. In every society there will always be an element of people who do not want to work, the unemployable. We must bring them along with us and encourage them to return to work.

During the present crime wave people are inclined to single out one section of society as being responsible for all the trouble. That is not true. Many respectful families, who through no fault of theirs are dependent on social welfare, abhor what is happening. In many cases the people involved in crime come from quite well off families, drive fast cars, young people with idle hands who do not wish to work and are out for kicks. That is something I will deal with later if time permits.

I congratulate the Taoiseach on his management of the country during the past 12 months. If there is confidence in the leader, there will be confidence in the country. That confidence is reflected in references to the economy made by independent commentators. There has been a turnabout in the economy during the past 12 months. The indecisions of previous years and the stop-go policies [2156] are no longer part and parcel of this Government. I look forward to the continued work of this Government during the next two years and to it having a further term of five years to enable it to complete its programme of work.

It was reported in the press that the economy will continue to perform very strongly with gross national product expanding by 5 per cent following growth in excess of 7 per cent in 1995. That is an excellent forecast which can be lived up to. Another comment was to the effect that the domestic economy will make a major contribution to overall growth, with personal consumption growing by 4.25 per cent and investment by 8 per cent; another, that exports will continue to do well, increasing by 9.5 per cent — clearly showing that people perceive the opportunities and are availing of them. Another commentator said that, reflecting this well-balanced growth pattern, there will be a substantial increase of approximately 31,000 in total employment in addition to the increase of 45,000 last year, which will give further hope to those seeking jobs. Another pointed to the fall in underlying unemployment, based on a labour force survey of approximately 10,000 people whereas yet another predicted that inflation will remain moderate and consumer prices are expected to increase by a mere 2.25 per cent compared with 2.5 per cent in 1995. In addition, I read today a forecast of another cut in interest rates.

All of these commentaries demonstrate that the requisite parameters are in place, the Government is being taken seriously, is seen to be in control and efficiently managing our economy. That is only to be expected since we have extremely capable Ministers in office and a Taoiseach who has done a marvellous job, unanimously recognised as providing good leadership, a man who can be trusted.

We must always remember that public relations are critical and in this respect the Taoiseach's contacts and communications in regard to Northern [2157] Ireland have been exemplary. His wellfocused, constructive statements are sensible without giving rise to any undue fears in any groups in Northern Ireland in their dealings with him.

Agriculture is the bedrock of our economy, so it is heartening that we have such an outstanding Minister for Agriculture, Food and Forestry. When he assumed office 18 months ago major problems were being encountered in that sector. Pig farming, so important in Cavan-Monaghan, was in dire straits, lobbying groups were protesting and many pig units closing. In response the Minister tackled the problems of feed costs and marketing, to the extent that pig farmers are now doing extremely well, with pig prices at an all time high, among the highest in Europe, and continuing to rise.

The poultry industry also had experienced difficulties. I brought a delegation of poultry producers' representatives, including their well respected chairman from Cavan-Monaghan, to meet the Minister. It took some time, to resolve the problems but they were resolved resulting in poultry producers being reinstated to their former profitability.

Deputy Leonard does not agree that the majority of dairy farmers are doing extremely well but he will admit that small dairy farmers, with insufficient quotas, are experiencing difficulties caused by the continued movement to ever larger units. Nonetheless, the small farm remains an important unit and must be preserved. We must be realistic in advocating the preservation of such small units. Can small farmers survive on a 5,000 gallon milk quota or 10,000 gallons? A quota of 20,000 gallons should be the minimum supplemented by some other source of income. I am talking of the alternative enterprises of the 1990s not the alternatives of the 1930s, 1940s and 1950s when small farmers reared turkeys, produced eggs and so on in addition to their traditional farming in dairying, beef production or whatever. To engage in alternative enterprises such as mushroom and vegetable production in combination with a [2158] 20,000 gallon milk quota can be a viable proposition. In the case of small holdings, the Minister must endeavour to increase 5,000 gallon quotas to 20,000 gallons.

I notice the tendency of larger dairying units to purchase milk quotas, moving into the 100,000, 200,000 250,000-gallon milk quotas, keeping 100 to 200 cattle which, rather than providing much employment merely support one family farm unit. I would prefer to see those additional quotas divided among smaller units. No doubt the Minister will address that problem.

It is somewhat alarming to realise that, after the year 2005, a question may well hang over Structural Fund headage payments, now part and parcel of all small farmers' incomes, particularly those in disadvantaged areas. Now is the time to take a serious radical look at this issue. I understand there is a European Union criterion to the effect that when we reach a certain degree of economic prosperity we will no longer be eligible for such funding. While that may suffice in some parts of the country, in the east and south east, it certainly will not in the west or Border regions where there is a huge difference in the standard of living. Since the withdrawal of such funding would have very serious implications for less advantaged regions, rather than allocate it nationally, it should be allocated on a regional basis. This is a problem about which I have already spoken to the Minister and which I shall continue to stress here.

There is urgent need to implement some controls on afforestation activities. Too many small holdings will be totally shaded by nascent forests not planted by farmers but by business people, corporate bodies and others who purchase land for plantation with the aid of substantial European Union grants, another serious development which must be examined. Planning permission must be a prerequisite to the planting of such forests. It is not good enough that small holdings can be totally shaded by forests planted by investors who pay above the odds for land in the knowledge [2159] that its utilisation will bring them substantial long-term benefit. The Minister will have to urgently address that problem.

I also read with some alarm that many such forests, four years after plantation, when one would expect trees to be well established, do not withstand independent inspection by the Department or Coillte. While there is random planting of trees, their husbandry is not of the requisite standard. It appears that some people simply plant the land they acquire and give all sorts of promises, but farmers who have signed contracts with them lose after that four-year period. It is imperative that farmers with marginal land, who seek the help of Coillte or other agencies in its planting, ensure that the contracts they sign are fully honoured so that, on the expiry of that four-year period, those plantations will qualify for the maximum EU grant.

Regulations should be implemented to ensure that planting forests adjacent to farm land, or any other development does not impinge on farming activities. Just as planning permission is necessary to build a private dwelling or other construction, any such regulation should specify that an adequate tract of land should be left between any privatelyowned property and such plantation.

Debate adjourned.


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