Appropriation Act, 1987: Motion (Resumed).

Thursday, 21 January 1988

Seanad Eireann Debate
Vol. 118 No. 5

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Debate resumed on the following motion:

That Seanad Éireann notes the supply services and purposes to which sums have been appropriated in the Appropriation Act, 1987.

Mr. McDonald: Information on Charles B. McDonald  Zoom on Charles B. McDonald  I want to deal with one or two other Votes. Vote No. 23 which provides for the salaries and expenses of the Office of the Minister for Justice is a vehicle under which one could have a nice debate on the question just raised. Nevertheless, I anticipate that we will have a debate on that. Vote No. 29 provides for the salaries and expenses of the [719] Office of the Minister for the Environment, including grants in lieu of rates, etc., to local authorities. I have been a member of a local authority for some 30 years and I find it is no longer an occupation, a post or an elected office which is enjoyable for a number of reasons. For example, services have had to be cut back and they have been cut back drastically in my county. Of course, this is something I have raised at local level and I am not going to deal with it for very long here, except to point out to the Minister for Finance the seriousness of the evolving situation at local authority level.

There are three operational areas in the county I represent. The road services section in my area deals with about one third of the 500 miles of county roads. Those roads are used by many other people in addition to the local people because we are in the heart of the country and many roads cross back and forth through the county. Yet, we have nine road workers only working every week on 400 to 500 miles of roads. A sum of £20,000 is provided for the maintenance of county roads for the entire county. That is about £12 per mile. It would not be possible, even for £12 per mile, to have somebody to wash the signposts at any of the crossroads never mind to have potholes repaired. The Government have an obligation to examine that situation as soon as possible so that our road structure will not deteriorate still further.

It is unfortunate and very sad for those of us who took pride in the high standard of local authority services that councils developed, nurtured, nursed and provided for the people during the past number of years to see them abandoned before our very eyes. Of course, it is not fair to blame the Government for that. Some years ago service charges were introduced. The problem originally arose in 1977 when the Fianna Fáil Government got a huge majority in the general election because of their promise to do away with rates and some taxes. That kind of manifesto or platform would be popular in an election any year but there [720] was nothing to replace the finance and that is when the problem arose. When the subsequent Coalition Government tried to introduce the imposition of levies and charges, some Fianna Fáil councillors publicly advocated non-payment. It is very hard to get back from that.

Terrible injury and damage has been done to local authorities and local administrations by the thoughtless acts of a very small number of people. It is unfortunate that we now find ourselves in a disastrous situation where there are not sufficient funds to pay the staff to carry out the services. In my county the public refused to pay £15 per year for a scavenging service where modern trucks called at houses in every village in the county every week. They gave an excellent, comprehensive service but because the council did not have enough money they had to abandon that service. Now some people who would not pay £15 for the service do not mind paying £100 to the private sector to do it. We are such daft people that we can be led by the nose by people who advocate an easy way out. People do not think of the future. That is sad because not only are the public going to pay for a more expensive service but it will not be as comprehensive as the public service it is replacing. This will mean we are going to have more pollution and more indiscriminate dumping of domestic refuse on by-ways and in various parts of the country. While people like to keep their own place tidy, they do not mind in the least rushing out and dumping their rubbish on somebody else's property.

The policy changes introduced by the Minister for Education in the educational services system will mean a great reduction in second level education service at county level. That is only gaining momentum at present and many of the staff in the smaller schools that have served the counties very well over the years do not know whether their jobs are secure and this leaves a lot of uncertainty. We are in a difficult phase at present because people are not happy in their work. They are under pressure because of the uncertainty of their jobs and they [721] cannot see any hope for the future. In addition, there is the problem — which, of course, is not new — of providing jobs for our young people.

We need to awaken a national spirit, designed to encourage people to throw in their lot with the country. The people who are working with or without encouragement from the Exchequer and the Central Funds will try perhaps to set up their own private services which will be attractive to the public and fill whatever voids are there. However, the mentality to do that is not there at present. The incentive must come from the Minister for Finance. I hope that in his budget next week he will be very mindful of trying to encourage people to continue working and that taxation will be pegged at a level that will encourage people to continue to give of their best, not only in their own interest or that of their families but in their national interest also. I hope the Government will endeavour to reduce the burden of taxation on the people who are continuing to work in this country.

I am glad of the opportunity to make those points on the Appropriation Act, 1987, and I look forward to seeing how the Government and the Minister for Finance are going to react to the points that were made so very forcibly in the House before the recess. Senators from all sides of the House have pointed out very clearly the difficulties — and not just the political difficulties — that the present fiscal legislation is having on some sectors of the people in this country. I hope he will have as much of the wisdom of Solomon as can be expected next Wednesday. Above all, I hope the Government will endeavour to reintroduce hope and give fair play to the section of the population who are on the lower rungs of the ladder.

Mr. Cullimore: Information on Séamus Cullimore  Zoom on Séamus Cullimore  I welcome the Minister to this House once again and I would like to compliment him on the excellent work he is doing as Minister of State at the Department of the Marine.

The Appropriation Act gives us an opportunity to review events of the past 12 months as well as giving the Minister [722] the appropriations necessary to deal with matters in the coming year. The Government have taken tough, difficult and sometimes unpopular decisions but these will not only ensure our future but the future of generations to come. The Government's achievements speak for themselves: reductions in interest rates by 5½ per cent; stabilisation of our national debt; inflation down from 3.9 per cent to 3 per cent; Government budget targets achieved; borrowing reduced by £300 million; and exports at record levels. Above all, confidence has been restored to the Irish people. However, there is much more to be done.

Taxation is still at an unacceptably high level. I welcome the Minister's decision in the Programme for National Recovery to grant £70 million in tax relief to the hard-pressed PAYE sector and I hope that this is the first step on the road to tax equity and reform for this hard-pressed sector. I fully appreciate the Minister's determined effort to secure the payment of outstanding taxes from the self-employed. However, as previous Governments have failed in their duty to collect these taxes, this fact, together with high interest rates, is resulting in grave cashflow problems for small businesses and the self-employed. The Minister has introduced the 10 per cent penalty for those who are late in submitting their accounts. In view of this it seems unjust that interest rates charged are in excess of the commercial bank rate. While bank interest rates are at 11 per cent approximately, interest charged by the Revenue Commissioners is 1.25 per cent per month which is the equivalent of 15 per cent per annum.

Small businesses and the self-employed are an important and growing source of employment in this economy. This is the area which gives most hope for expansion in employment for those who find themselves victims of redundancy or unemployment. I welcome the Government's decision to provide an increase of 3 per cent from mid-July for social welfare recipients. I would like to compliment the Minister for Social Welfare, Deputy Woods, on extending the free fuel [723] scheme to cover 30,000 long term unemployed and the extension of optical and dental benefits for the wives of insured workers.

However, increases in social welfare are no substitute for meaningful employment. Every source must be made available to combat our grave unemployment problem. Bodies such as the IDA and Bord Fáilte must be examined with a view to making a greater contribution, directly or indirectly, to the creation of jobs. It is a national scandal that the IDA have a land bank of almost 6,000 acres — two million square feet of empty factory space. In conclusion, I wish the Minister and the Government every success in their stringent efforts to put this economy back on a sound footing.

Mr. Harte: Information on John Jack Harte  Zoom on John Jack Harte  I had not intended opening my contribution on the basis on which I am now going to do it. This arises because of some observations made by Senator Haughey here yesterday. As we are talking about large sums of money under different headings, it is appropriate that, in the first instance, I deal with the question of sums of money paid to private enterprises, to publicly owned enterprises and the value that is gained from both of them.

In this context, Senator Haughey seems to suggest that the call for privatisation was trying to strike the right balance. Senator Haughey said that he believed in the mixed economy and that the balance needed to be weighted towards private enterprise. He may be sincere about that, but the people who have been “hollering” for private enterprise certainly were not sincere and were not as well intentioned as Senator Haughey in striking a balance between private enterprise and publicly owned enterprises. If we are not very careful about privatisation, we will have what they had in England which was a programme of denationalisation which has nothing to do with a mixed economy. This would be unfortunate.

It is important to put a few things on [724] the record about privatisation and publicly owned companies and the role they play in the economy having regard to the fact that more money is being appropriated both for private enterprise and for publicly owned companies. In relation to publicly owned companies last year the public enterprise sector did not cost the taxpayer any money because overall they showed trading profits of £447 million The most profitable areas are open to privatisation. We cannot have that, because ultimately somebody will sell off shares, the profitable operations, and the company lays off workers, all in the name of private profit. Then there is no public benefit. The economic development enjoyed as a result of the public enterprise, the job creation and the wealth produced are hindered and the State control over whether we encourage modernisation or expand new project policies and investment etc. is lost. We must remember that private companies will not be looking for unprofitable State enterprises but will be looking for the profitable ones.

Despite the incentives, inducements, grants, subsidised services and so on given to the private sector, it has not expanded over the past 15 years. Grabbing what is already there is not a substitute for industrial expansion. This is what the private sector have been doing. The fact that public enterprise employs only 2 per cent of the total number of employed in manufaturing industry is very revealing. It certainly knocks the argument about privatisation on the head with regard to selling off the profitable aspects of the public sector. The public sector is one of our few economic successes. At present there are 78,000 people employed throughout the country providing very essential services to the public. To put these services into the hands of private enterprise threatens the security of jobs.

Since the trade unions and the Government have entered into a national agreement into which is written a guarantee on job creation, there has been too much crowing about private enterprise taking on the profitable parts of the public [725] sector. This must be tackled seriously to make sure that we do not end up with a denationalisation programme rather than a programme for a genuine mixed economy. There is nothing ideological in what I am saying. I believe in the mixed economy but I am very much afraid of the people who can put their hands on very substantial sums of private money and invest it and, when the time is right, can sell off the investment to anybody, and control is lost. The quick buck mentality is at work. We have seen a great deal of evidence of that in recent times. For example, in Britain when they decided to start privatisation in the public sector some of the companies were sold at give away prices and ultimately when an assessment was made of what was lost on these transactions, it showed an immediate loss to the tax payer of £4.5 billion in the selling off process, not to speak of the damage that was done when companies were taken over.

There are many deficiencies which have to be tackled in the public sector. However, when you look at the number of private company closures every week, the number of redundancies and so on, the deficiencies in the public sector are nothing compared to the failures in the private sector which have led to massive job losses. Privatisation would not make enterprise much more commercially successful. In fact, it would have the opposite effect.

The demand for privatisation is not based on the needs of the national economy. It is a response to the cries of international capital. For example, Mr. McPearson, an American banker and legal adviser, said last year that the US would link its aid giving programme to privatisation efforts and the head of livestock developments at the World Bank called for steps to be taken immediately to privatise CIE, Aer Lingus, ESB, NET, Bord na Móna and the airports. These are very substantial public enterprises that have served this country very well. The track record of the Irish private sector shows that their objective is short term [726] gains. Short term gains certainly take precedence over long term benefits. The evidence is there. They failed on numerous occasions to heed the warnings on industrial organisation, both in the sixties and in the seventies. The result of that was catastrophic job losses; so why are we all so terribly excited about what the private entrprise people will do for us? When we have regard to all the inducements, incentives, grants, subsidised services and so on which they receive, it makes us sceptical about whether private enterprise can deliver on the question of job creation.

I have regard to this in particular because of the national agreement that is being entered into. I am afraid that the promises may not be delivered on, if we look at a mixed economy on the basis of denationalisation rather than just dealing with the question of efficiency within the private sector. I showed earlier the amount of profit the private sector have made overall. When the private sector can develop they will be supported, and more capital will be provided for them to develop more jobs. The employees of one State company in one year paid more PAYE than the whole of the farming communities that year. That is also something which we should regard seriously.

Let us not get carried away with the powers of privatisation; they do not exist. I am sceptical of the powers of private enterprise as I was born and reared in the inner city of Dublin. I know the population growth has been very substantial since I was a child in the twenties. From the time when I could realise what full employment and unemployment meant, I have never seen full employment. I will not see it before I die either. There are many young people in this House who are probably 30 years younger than I who certainly will not see it either. I am always astonished at the belief in the private sector. The evidence is that there are no grounds for it, but we never face up to it.

I am not opposed to private enterprise. I would be behind it if I thought it was doing the job it is supposed to do and that it was not a selfish scrambling system. [727] I am antagonised by private enterprise because it is a selfish scrambling system which does not measure up against what the public sector have done over the years. I pay tribute to Seán Lemass here on the development of the public sector and the development of the whole concept of a mixed economy. We must recognise that private enterprise cannot match the performance of public enterprise overall, taking into account the benefits that go to both sides.

Senators will recall that earlier I referred to a State company in which the employees paid more in tax in 1984 than the entire farming community. The company was An Bord Telecom. I am not suggesting that farmers are not prepared to pay their fair share of tax. Most of the farmers I have spoken to are prepared to pay their fair share of tax and are very forthcoming on it when you get into discussion with them. But the people who lead them are not that keen on the idea and farmers are led away from the concept of measuring up to what they should pay in tax etc. I do not blame the individual farmers. It is a collective problem which can be remedied. The PRSI proposal is a small beginning, but it is a beginning.

People in public sector employment have good steady jobs and there is not the same temptation in a steady and permanent job to dodge tax as there is in private enterprise. The use of the black economy is not open to public servants in the same way as it is to some private enterprise workers and they are not exposed to the possibility to abuse Government training schemes. I do not want this to be taken out of context, but many of the employment schemes and enterprise allowance schemes are an abuse. They are a means of suggesting that there are fewer people unemployed than there actually are. In the public sector, people are not entitled to take up these schemes so they do not cost the Exchequer any money.

Another interesting thing about the public sector is that it creates a lot of profits for the private sector. For [728] example, in 1983-84 Aer Lingus paid £49.5 million to the oil companies for fuel, and over half the State's subvention to CIE is paid out to the private sector for goods and services. Many private enterprises depend almost totally on public enterprise for an outlet for their product or service. Dozens of provincial garages would have to lay of hundreds of workers if An Post and An Bord Telecom cancelled their contracts for the maintenance of a large part of their fleet, over 4,000 vehicles. In 1985, An Post alone purchased 340 new vehicles. If the sugar company closed tomorrow, about 50,000 farmers would be without a market for their produce. That is one side of the argument about the moneys provided for both private and public enterprise. There is clear evidence that the money put into public enterprise, having regard to the overall public sector, is a much better investment with one reservation, that is, that inefficiencies should be tackled. We should all support that. It is not a question of ideological hang-ups. I am a little bit worried about somebody saying that we have to give a lift to private enterprise so as to get the balance right. The balance is the other way around. The public sector are doing their duty. The private enterprise system has not come to terms with the country's long term needs.

The cuts in public expenditure outlined in the 1988 Estimates for the Public Services and the public capital programme were not negotiated as part of the Programme for National Recovery. It is important that I say that in this House as an ex-trade union official nominated for the Irish Congress of Trade Unions. There is a belief that the cuts were actually negotiated by the trade unions with the Government. It may sound funny, but if you go into a lot of pubs you find that is the belief. The trade union movement certainly did not negotiate the cuts. They went into discussions on a pragmatic basis to serve the interests of their members. Based on the fact that there is only one fixed principle operating in the trade unions, they went in to get the best conditions and wages they could for their members in all of the circumstances. It is [729] necessary that the trade union movement be seen to be reserving their right to oppose the implementation of cuts. Where these cuts would result in a reduction in essential services to the public, or where they would bear heaviest on the lower paid social welfare recipients and the working class areas, certainly the trade union's voice will be heard again.

The main problem with the tax system, as shown by the recent Exchequer returns, is that some sections of the community are not paying their fair share of tax. The tax base is too narrow and some features of the system are highly repressive. As a result, the PAYE workers bear the brunt of the bad application of the tax system. They are certainly paying much more than some sections of the community. Therefore a key element of the budget must be to reduce the disproportionate burden on the PAYE sector and provide real tax relief for workers. I mention real tax relief because again we are talking about appropriating money to do certain things. I will mention one or two examples later on of how we have not got real tax relief at this time. There is some tax relief and credit for that must go to the parties to the national agreement.

The tax system badly needs to be reformed so that the other sectors of the community, including the self-employed, companies, the owners of capital and wealth pay more. I do not want to be regarded a farmer basher — I am certainly not that. I have a great regard for the farming community, but they will have to be included in the overall situation.

There is a commitment by the Government to reduce income tax. This is to the accumulative value of £225 million. Out of that, as I understand it, the PAYE allowance under the national agreement will cost only £70 million. This is obviously the minimum. I am not making the argument that more could have been provided at this time. It should be understood, also, that what is happening to working class people is that they are not getting a great lift at all. For the whole of 1988, between more job losses and so [730] on, the morale of workers will be further reduced. When they open their wage packets and discover the reality of the tax relief, their morale will be even further reduced.

I may have made a mistake in my figures in one or two of the examples I have given. I will give two examples and I think that I have them right. I left school a long, long time ago and I certainly could be inaccurate. For example, if you take somebody who has £7,800 annually, or £150 a week in wages, he is getting a tax benefit of £17.50 for 1988. Another increase in the allowance would yield him £26.50 in 1989 and another £35 in 1990, which would add up to a total of £79 over a three year period. I hope I have that right, but this is how I see it. The matter needs to be clarified or I must be contradicted. That comes down to people receiving an allowance spread over the three years of, on an average, 56p tax relief over and above what they have at the moment. I hope I have that wrong because when people start opening their wage packets and realise they are only about 50p better off as a result of the £70 million tax spread, the situation will not be very satisfactory. On the other hand, for somebody earning £13,000 and getting the same relief over the same period, the likelihood is that he or she will get £725 over the three year period. The result of that will be a little over £5 a week extra in tax relief. We are talking about two very different amounts of money. I know it is not possible to go through all the cases and I do not intend to do so. I thought I would give those two examples and perhaps somebody can correct me if I am wrong.

The reason I am making the point is that nothing has come out of this national agreement except that, for pragmatic reasons, the trade unions needed to get in there, not only to play their role in the national recovery but to protect their own members' interests. It is not a bad situation overall, having regard to the circumstances, but putting the wages and tax relief together over the three year period will create disappointment among the working classes. There will be some [731] resentment because they misunderstood what the tax benefits would yield. Also, coupled with the other job losses, etc., it will add to aggravation amongst the working classes in 1988. All that can be said at this time is that it is a beginning to letting the PAYE workers see there is some hope that the disproportionate amount they are paying in tax will be tackled over a period of time. It is a long, long haul. I do not think we should fool anybody about that.

The favourable outcome of the Exchequer finances in 1987, lower inflation and the fall of the dollar mean that some increased resources are now available for job creation. Increases in social welfare payments and readjusting of the Estimates for 1988 could take place, also. The opportunity is there. These selective increases in expenditure could be financed by reorganisation of grants and subsidies to industry and farmers. Unless action is now taken, the country will continue to face a growing crisis over the serious lack of jobs. Recent forecasts from the ESRI and OECD indicate that unemployment and emigration will increase in 1988. This will add to the misery of the working class sector.

Not enough emphasis in the debate has been put on the whole question of what the key objective in the 1988 budget should be. The key objective must be to create jobs and to halt the growth of unemployment and emigration. I know that each person will crow in his own bailiwick. Many people will be concerned about charges and so on. If the jobs and tax situation were put right, many of the complaints over charges and so on may not have the same degree of severity or produce the same antagonism that is now manifested.

The worrying thing is that the Estimates for the public services show that Government action today has been concentrated mainly on stabilising the national debt and the GNP ratio. There are other areas in the Programme for National Recovery— and we must not be too critical in that respect — where action must be taken. There must not be just [732] an agreement. For example, the 1988 budget must include specific measures to stimulate economic growth in 1988 and to implement the commitments to the programme of job creation, tax reform and increases in social welfare payments. It is easy enough to put it down on paper; the job of putting it into action must now be done.

On the question of education and health, again, in the Estimates published last October the burden of adjustments was not shared equitably across all sections of society. The poor and lower paid were hit hardest by the cuts in public spending. Also, in framing the Estimates, the Government did not take sufficient account of the need for increased growth in the economy as a means of stabilising the national debt and the GNP ratio. Again, that brings us into the public sector area where there is an opportunity for the Government to act.

We know that essential services to the public always cater for the lowest paid, social welfare recipients and the working class and these categories suffer most in the cuts in education, health and the local authority services, which were very severe and, I think it can be said, unjust. Whether they will damage the basic structures of these services I do not know; I think they will. The structures have taken decades to establish. When the Government were imposing cuts across the board, I do not think there was very much account taken of social equity and if they did take account of social equity, they missed out somewhere.

The proposed increase in the teacher-pupil ratio certainly would reduce the educational opportunities of working class children. Again, we have to guard against a two-nation development — the rich and the poor. The changes in the health service — some of them actually by stealth — can lead to a two-tier health service. While I do not suggest for one moment that the Minister for Health deliberately set out to achieve that purpose, the signs are that developments will head in that direction unless we can see more opportunities given to the credit [733] unions who have announced some initiatives in recent times to assist people to get health insurance.

It has been said to me, and I am inclined to agree, that some of the public expenditure schemes and tax breaks are transferred to the rich who always seem to remain untouched when we are dealing with the Estimates or when we are doling out money. If that is the case, the budget must readjust the 1988 Estimates to make sure that the public services get their proper whack. Much damage has been done there to schools, education, health and so forth.

I spoke earlier about the farmers and said a little about the self-employed. The fact of the matter is that the farmers and the other self-employed are not paying their proper share of direct tax. This is not referring to the individual farmer. The large farmer leadership, in my view, can be a contributory factor to that. When you get big organisations like this, not only among the farmers but in the private sector also, there are opportunities for evasion and avoidance. For example, if people are not paying their direct share of tax, there is great opportunity for evasion and avoidance. For example, generous business allowances, expenses, etc. can be allowed for tax purposes. The recent OECD report shows that an average per capita income tax paid in 1986 by group was — employees £2,768, self-employed £2,005 and farmers £629. Although 70,000 farmers earn more than the average industrial worker, only 17,500 of them are paying income tax. In order to provide real tax relief for the PAYE worker, as set out in the National Programme for Recovery, the Government must raise more in taxation from farmers and other self-employed if they are going to be able to live up to the letter of the agreement they have made.

I do not want to look across the House when I say this next little bit, but persons such as doctors, accountants and solicitors should be paying more in taxation. Immediate action should be taken by the Revenue Commissioners to ensure that most of these people pay more tax than [734] they are paying at the moment. There must be evidence of it. I will not go too far down that line. You never know when you might need a doctor.

Mr. Connor: Information on John Connor  Zoom on John Connor  They are privileged people.

Mr. Harte: Information on John Jack Harte  Zoom on John Jack Harte  Capital allowances and business expenses should be restricted and expenses deductable only when they are wholly, exclusively and necessarily for the purpose of a trade or profession. We all know the opportunities for evasion and avoidance. The present refund scheme for unregistered farmers should be abolished. All farmers should be required, as other taxable persons are, to register and maintain business records. Self-assessment should be introduced for farmers and the self-employed under certain conditions.

With the introduction of self-assessment, the present system within the Revenue Commissioners for the examination of the accounts of the self-employed and of companies must be improved considerably and include the random selection for audit of a representative proportion of accounts by size of business and by occupation. Penalties for noncompliance must be increased substantially and the tax collection powers of the Revenue Commissioners, including disclosure of information by the financial institutions, improved. Before receiving any State grants, farmers and other self-employed persons should be obliged to supply a tax clearance certificate to show that they have paid all taxes and levies due from them.

In the Programme for National Recovery, the Government are committed to income tax reductions to the tune of £225 million but it is not going to mean a great deal for the worker. If some of those things I have just mentioned were put into operation, the PAYE workers would see that there was a definite and consuming desire on the part of the Government really to tackle the problem of taxation. I do not wish to point the finger at the present Government over the tax situation, certainly not. Quite frankly, [735] the previous Government — and I was a member of one of the parties in Government — were to blame there, also. There were plenty of opportunities, but they had not the bottle to tackle the rich in an effective way and we lost an opportunity there.

For example, we could have gone a little further on the wealth tax. Admittedly, the first yield from it was not great and, subsequently, Fianna Fáil did away with it. In fact the first yield from any scheme is never great but this time the yield would have been much greater. The people concerned got off the hook by making the argument that the tax would have the effect of money being taken out of the country. Profit has no loyalty to anyone, it is a citizen of the world, so to speak. Most of those people interested in making profit on their money are prepared to put it in banks in Switzerland if that is where profits are highest. They might have a conscience in respect to some of the money made in this way but if their own profits are not as healthy as they think they should be, according to their criterion, they will not lose a lot of sleep about the overall position of the country.

There have been good reports about the Exchequer finances and the Government's approach to the problem has been good to date. They are now in a position to tackle the question of giving additional tax relief in the not too distant future. As I have already said I do not think this will come about too quickly. I suggest that if there is any extra money available, real tax relief should be thought about very seriously in the context of the budget. At the end of the day if the people I criticised a few moments ago who move their money around in order to get a better return could see themselves getting a better return for their money here they would leave their money here. It is a bad way to buy money but that is a fact of life.

Increasing tax relief would provide an incentive for the PAYE worker to increase productivity. What also adds to costs to the State is the overlapping and [736] duplication of trade union activity. If proper attacks were made on the whole question of tax, if people were made to pay their way and if the disproportionate burden was taken off the PAYE worker, there would be a favourable climate in which to talk about a reduction in the number of trade unions and in which to introduce further measures with regard to the transfer of engagements, etc. The trade union movement would accept that it would be better served by having fewer unions operating more efficiently and in a more direct way.

It is a pity that the moneys available for tax relief in the budget cannot be confined to the PAYE sector. It is unfortunate that the indexation of the PAYE allowance cannot be increased significantly and that we cannot widen significantly the indexation of the standard rate tax band. It is also unfortunate that we cannot ease further the burden on the low income taxpayers by widening the exemption in regard to payment of the young employment levy and that we cannot convert the tax allowance to tax credits as this would be much fairer for low income taxpayers. Having regard to the Programme for National Recovery the Government should seriously consider these issues.

The Programme for National Recovery commits the Government to maintaining the overall value of social welfare benefits and to considering special provision for greater increases for those receiving the lowest payments. This is why we believe the very minimum should be provided. We believe that Congress should be advocating that old age pensioners, the unemployed and others on social welfare should not be asked to bear any part of the sacrifices that may be necessary at present. We believe that to ensure greater social equity and the maintenance of the living standards of social welfare recipients that social welfare payments should be increased at least in line with the cost of living. Someone may say that that is a debatable point but frankly I do not believe that is so. As the year goes on we will all come to realise that.

Child income support should be [737] improved and the child dependant allowance should be standardised. Incidentally, I read recently that we have over 100 different child benefit payments. We talk about the need for rationalisation and the need for people to be more productive and efficient, yet there is a lot of waste within our Government services. If the figure I have quoted for the number of child benefit payments is correct someone has got to look at that scheme. I may not be accurate on the figure but I recall a man by the name of Barrington giving a lecture on local government reorganisation and when giving examples of inefficiency this was one of the things he mentioned.

The Combat Poverty Agency recommended that the income maintenance needs of unemployed young people between the ages of 16 and 18 should be reviewed expecially in regard to the supplementary welfare allowance. There is an argument as to at what rate farmers and the self-employed should pay PRSI at in 1988. The National Pensions Board recommended that they should pay at the rate of 6.6 per cent. It is acknowledged in the Programme for National Recovery that the yield from corporation tax is low due to the extraordinary number of relief and allowances which are available to companies. The programme provides for a review of the corporation tax code and that is to be welcomed.

A recent OECD report shows that taxes and corporate profits now amount to 3 per cent of total tax revenue compared with 9 per cent in 1965, with 13 per cent in the United Kingdom, 7 per cent in the United States and 21 per cent in Japan. The budget must provide for increased taxation from manufacturing companies. When we compare the gap between the 3 per cent of total tax revenue with the figure of 9 per cent in 1965 and with the figures I have mentioned for the UK, the United States and Japan we can see that we are not doing that well in that area. There must be some reform of the corporation tax code.

I do not know whether the question in regard to a tax on property is covered in the Programme for National Recovery[738] but certainly taxes on capital and property have been reduced substantially over the years. They are lower than those in Britain, the United States and Japan and they are also lower than the EC average. That is another area which needs to be tackled.

Given the increase in the repatriation of profits, a levy should be imposed on the portion of the profits of manufacturing companies that are not reinvested in productive assets in Ireland. A portion of the levy could in fact be refunded to companies that increase employment levels or incur research and development costs in Ireland. Allowances and reliefs in respect of capital assets could be restricted a little bit more and another look needs to be given to this area. Further restrictions should be introduced on tax lending and leasing, including section 84 loans. What I am opposed to is any extension of the tax relief available under the business expansion scheme or increasing further the income tax allowance available to private investors because, as I understand it, these schemes cost over £3.4 million in 1987 and have had very little effect on job creation. As I have already said, if the Government are serious about creating jobs which they can control, which will be steady and sure and which will not lead people towards the black economy or other malpractices, then the public sector is the best bet. We interpret too liberally — maybe the Revenue Commissioners are at fault here — what is a qualifying trade and therefore abuses creep in.

The thresholds for capital gains tax and capital acquisition tax should be reduced. In particular, the exemption threshold for capital acquisition tax of £150,000 in the case of children should be reduced substantially. The income thresholds and the level of relief for children under the residential property tax should be reduced to increase the yield from that tax. Furthermore, stamp duty should be levied on inheritances.

The budget can be seen as part of the process of implementing the four year [739]Programme for National Recovery negotiated between the Government and the Irish Congress of Trade Unions. This programme provides for the simultaneous implementation of integrated policies in four main areas: job creation, tax reform, stabilisation of the national debt-GNP ratio and the removal of social inequities in our society. The Programme for National Recovery provides for the creation in manufacturing industry of 20,000 extra jobs on average per year over the next ten years. That is a very difficult task and I wish them well in their intention. Some people believe that private enterprise can do it all but it certainly cannot.

The programme also provides for the creation of additional jobs in natural resources in a number of projects to be developed by State companies. I would like to see that encouraged and it would relieve my concern whether sufficient emphasis is being given to job creation in the public sector. For example, State companies could expand into the tourist industry and into international financial services. Have Aer Lingus not branched out successfully into various areas?

There should be a reallocation of the funds for industrial development to existing public enterprise for investment in job creation projects in information technology, forestry, high processed food projects, chemicals and pharmaceuticals and the 48 other projects outlined in the Programme for National Recovery. Funds should be allocated to Airmotive, the Sugar Company, the ESB and Bord na Móna for the establishment on a joint venture basis of a substantial manufacturing project in the mechanical engineering industry. There has been much abuse over the years with regard to the tax allowance relief for companies in respect of building, plant and machinery. As everyone else is suffering cutbacks that is an area that should be looked at as well.

On the question on job creation we have to talk about recruitment to the public service, particularly in the revenue collection sections. The Programme for National Recovery provides that [740] additional resources would be made available to the Revenue Commissioners in order to achieve improved results. I hope this becomes a reality. I am a little bit sceptical about whether the will exists to win it but it can be achieved if we make up our minds about it and if the letter of the Programme for National Recovery is adhered to. One way or the other, if it is not adhered to what will happen is that there will be industrial strife. If the terms of the agreement are not lived up to the unions will have to take another look at the position and pull out of the agreement. I do not see that happening but it should be borne in mind that the unions are not fastened into it.

It should be clearly understood that the trade unions do not initiate wage claims; claims are initiated by the members and if their members who make an agreement see that that agreement is not being implemented or that there is no real desire on the part of one party to the agreement to live up to it then in the very same way as pressure mounts up for a wage increase, pressure will mount up for a withdrawal from this Programme for National Recovery. That will be a sad day. It is very important that we give our attention to tax reform, evasion, collection and enforcement as this will assist in the creation of jobs to which there is commitment in the programme.

What we have to bear in mind is that we are in a great deal of trouble. The difficulty we are undergoing at present was self imposed. Nobody from the outside imposed it on us, we imposed it on ourselves down through the years. Nobody came in from outside and did it to us; we did it to ourselves down the years. It was done not only by one Government but by successive Governments. There is no use wearing a crown of thorns about the fact that we are in a bad way, because we imposed the sorrow on ourselves.

The Irish economy has deteriorated further into crisis since the last budget. Unemployment continues at its highest level ever and, according to recent forecasts, will increase further in 1987. Emigration has recommenced. The tax [741] system has not been reformed and real interest rates are at near record levels.

The imbalance in the public finances remains and, as the Commission on Social Welfare showed, many social welfare recipients are living below the poverty line. This deterioration, caused by a lack of planning and the insistence of successive Governments that developments be left to the free play of the market forces, reinforces the need for a new approach.

The main problem facing the Irish economy is the lack of growth. The next budget needs, therefore, to address two issues: first, how to improve the prospects for growth and jobs in 1987 and, secondly, how to begin to tackle the longerterm problem of rebuilding the Irish economy. To get the economy growing again, specific measures should be introduced in the 1988 budget to improve the prospects for higher growth, the creation of wealth and lower unemployment than in 1987.

In particular, the budget should provide for selective increases in job creation expenditure, to be financed by a reorganisation of subsidies to industry and farmers, real tax relief for PAYE workers to be financed by reforming the tax system, a move towards stabilising the national debt-GNP ratio by, in particular, increasing the rate of growth in GNP and increases in social welfare payments in line with the recommendations of the report of the Commission on Social Welfare. Following the budget, a medium term national plan for growth and economic recovery should be introduced. The current crisis facing the Irish economy will not be solved overnight. It requires a medium term strategy.

It should be clear to all by now that moves to tackle the jobs crisis, tax reform, the national debt and the inequities in Irish society are feasible only in the context of a medium term plan for economic and social development in which specific priorities are laid down for a number of years ahead and an integrated approach is adopted to tackle [742] these problems. The trade union movement is willing to play its part in the formulation of such a national plan.

The urgent need for planning which would enable the Government to control development in the economy is highlighted by the inability of the Government in recent times to deal with building societies, ensure that price reductions are passed on to the consumer and to stop the growth in the “black hole”.

Overall, I have covered the proposals in the Programme for National Recovery and the situation at the moment. The steps I have suggested need to be taken if we are to win the support of the working classes who, ultimately, constitute the majority. They may not vote for the Labour Party but overall they constitute the majority of the nation and at the moment they are carrying a very disproportionate burden.

Dr. O'Connell: Information on John F. O'Connell  Zoom on John F. O'Connell  I listened with great interest to what Senator Harte had to say and I must confess that one would find it very difficult to disagree with a lot of it. He is a man of good sound logic and his arguments were very good. I agree with him that the twin problems facing the country are inordinately high taxation and massive unemployment which is souldestroying. It is almost like a volcano with the social welfare payments merely keeping a lid on what is a very explosive situation. The end of year Exchequer returns do give us some cause for optimism and hope. They are an indication that Government policy is making some attempt to get the public finances under control. I believe it will be many years yet and that it will be a painful process that will not be without very serious repercussions on the whole economy. The public sacrifices have been enormous, particularly in the health services.

I would like to say something on the health services. They, more than any other service, have suffered more in the nine months that the Government have been endeavouring to implement their new policy. Admittedly, the health services up to last April were absorbing a disproportionate amount of the gross [743] national product. Indeed, they were inefficient and wasteful. By comparison with the British national health service they were an extortion on the public because we were not getting value for money and the relative cost, vis-a-vis the national health service, was deplorable. In Britain — I have studied the figures and made comparisons with the populations in both countries — they get value for money with 100 per cent of the population covered. We have to say that only 35 to 37 per cent of our population avail of a proper free health service. Having said that, and knowing that the measures were necessary to bring some form of control into the health services, I would say without equivocation that the measures were too drastic in too short a time. Economies were necessary to achieve fiscal control but the measures to bring them about and have them implemented in such a short time brought about chaos.

To put the position in regard to the health services in proper perspective, it must be said that in the sixties and seventies we had created the impression among the public that there could be no limit on the amount we would spend on them. Indeed, it began in the fifties with the great Minister for Health, Donogh O'Malley, who decided to abolish once and for all the poor law system that operated with the dispensary service. He initiated that and he was a wonderful person. However, that in its own way created public pressure for more and more improvements in the service. The Adminstration that took over in 1973 thought they should go one step further and provide taxis to bring medical card patients to dispensaries and hospital outpatient departments. We had fleets of taxis flying around Dublin city on that business. That was done to prove that we had a caring Administration. Indeed, patients of mine were getting taxis. Many of them may have been elderly people but they were not incapacitated. The taxis would call for them at 8.30 a.m. and, of course, the patients would sleep on. The taxi man did not care if he did not get a reply, he just sat in his taxi running up [744] the bill. The patient might wake at 10 a.m. or 10.30 a.m. and say he or she would not bother travelling that morning. Many of them also thought that as well as taking the trip in the taxi to the outpatient department they could get the taxi to take them to Moore Street to do a bit of shopping also. There was gross abuse of that scheme and that escalated costs in the health services.

Added to that there were major break throughs in the health services. I am only trying to point out how this all developed. In the sixties we provided kidney dialysis machines to hospitals and we went one step further and provided them in the homes of the patients. Many patients, young mothers and fathers, were able with the aid of dialysis machines to continue to work and lead a normal life. They might go into hospital and stay there overnight and then go to work the following day. They were not exactly cheap but we provided them on an enormous scale and many, many lives were saved. Later, we went one step further with heart transplants — very costly procedures — and coronary by-pass surgery, now a normal procedure costing between £12,000 and £20,000 with all the other ancillary services that are provided. We now have, perhaps, 1,000 people per year being restored to normal life with the aid of coronary by-pass surgery. Then we said there must be bone marrow transplantations so that we could bring about remission for the many hundreds of children who have leukaemia.

The break throughs were continuing at a phenomenal pace. The public, seeing the television and other media coverage of the events and break throughs abroad, were making demands for those services and doctors responded to those demands by making their own demands on the health services and called for the setting up of special units. We had hip replacement operations which restored many severely crippled people to normal mobility and a normal working life. [745] Thousands of such operations were carried out and we were not able to cope with the demand. We had more geriatric patients and people living longer, each in their own way making more demands on the services. We had the in vitro fertilisation technique, now a normal procedure but a very, very costly one. We had new equipment such as CAT scans, costing £1 million. We were to have one for the country, but we now have them in nearly every major hospital. It has got to be that way because the demand has increased at a phenomenal pace. Doctors are of the opinion that they must provide the best for their patients and patients have become more and more enlightened with the media highlighting all the new techniques.

If we were to continue at that pace the cost of the health services would outstrip the gross national product, it would absorb more and more money. That is a frightening thought. We do not have a country that is creating more and more wealth and that is the big problem and the Government were confronted with when they took office last April. The Government decided they had to do something positive and very definite; radical surgery had to be performed to bring about economies and bring the cost of the health services under control. The only problem with that is that we cannot do that in a short time without creating havoc, chaos, a total breakdown and a major disruption of the whole service. The repercusions are enormous. It is a very traumatic thing and we cannot just displace personnel in hospitals or close down hospitals without frightening effects on a community. We cannot do this. What we have to do is look at the problems, look at what has to be done and say, “We will get the health services under control within five years by planning a number of economies and then in five years time we will have the matter totally under control.” Only by such a procedure can we have proper health services but we cannot just close the doors, turn the key and say it is all over. We cannot do that and we may have done [746] immeasurable harm to our health services by that — if I may say —“elephant in the china shop” attitude.

I hope wiser counsel will prevail and that we will see control of the health services over a phased period. The answer is to decide the target for curtailment of the services and over a period of three to five years bring it under control.

We know that hospitals are very costly places, that they are very inefficient and very wasteful. There was a notion in our society that if a patient wanted a medical investigation he or she had to go into hospital. Hospitals can cost as much as £1,000 a week for a bed. Doctors, perhaps, agreed with this notion. Patients felt they needed the medical investigation and doctors agreed that it should be done in hospital. We never thought that we should get general practitioners or family doctors, to carry out many of these tests. For years I have been preaching this and have asked why patients had to go into hospital for tests. I suggested that such patients should stay in hostels beside the hospital. We had to look at those areas because hospitals are inefficient, wasteful and very costly. We had to bring them under control in some way. However, we cannot close them down.

Many patients in psychiatric hospitals have been institutionalised for years and we cannot close the door on them, move them out into the community and say “you will be all right”. These people are ending up in prison or in hostels. They are being neglected and isolated and are a serious problem for our community. We cannot do this and — if I may say so — we have been callous and totally without care and consideration for these people. We have to set timetables and targets and say we will achieve them over a period. At the same time, we have to bring the public with us on this. They are the problems that have arisen and I say we should look again and should not continue with this approach because it will do untold harm.

We must also look at the serious economic and ethical problems that arise from the major breakthroughs. The question [747] we have got to ask now is: can we afford these costly procedures? Are we willing to permit funds to be diverted from other areas in the health services, such as the geriatric and psychiatric areas, to fund those sophisticated operations? Should we deprive the old people of the medical care they require so that a young person can have a liver or heart transplant? They are very serious ethical problems and no one has touched on them as yet. Indeed, if Margaret Thatcher in Britain who is now confronted with a serious crisis in the health services was to initiate a public debate on this the public might appreciate her a lot more.

One of us may find that we need a technical procedure that may cost £20,000 or £30,000 but will the public be prepared to pay for this? Will the public be prepared to pay more for the health services? Who is going to make the decision? This is very important. Will it be the doctor, the surgeon, the cardiac surgeon, the geriatrician or will it be left to an independent committee? Are we going to neglect the old so that a young person can have a coronary by-pass operation? These problems will arise more and more because the amount for the health services is circumscribed and more people are going for cardiac operations — 300 a year in Our Lady's Hospital in Crumlin. Such operations are absorbing more and more of the health services finance, leaving less and less for our old and psychiatrically disturbed patients. They are the problems we face and we have got to answer them.

The financial constraints in the health services may force us to deprive patients of their entitlement to these new lifesaving operations. Are we saying that means and not need will be the determining factor? Have we the right to deny senior citizens their right to basic medical care in the interests of new technological breakthroughs that will bring life and hope to younger people? I hope those operations do not become the exclusive preserve of private health care. I know the questions are varied and complex but we should not ignore them. We have an [748] obligation to face up to the challenge posed by them. The Department of Health have been singularly silent on this. There is a need for a public debate on the issues involved in this and the Minister for Health must initiate that debate. I hope he rises to this challenge.

We have at the moment a serious situation with more and more private medical institutions being set up. It is worrying that the person of normal means may find himself or herself at the end of a very long queue while the person with the appropriate means can have attention very quickly. This poses a very serious problem about the kind of society we are living in. I do not know the answer. I have had problems with it, wondering what is the best answer for our country. The rapid rise of these private institutions poses a problem for us and, with more and more of them coming into being, we may find that the services of our skilled medical personnel are absorbed in private care to the exclusion of public care. That is a serious problem. We cannot allow such to happen. I hope the medical profession will see the matter in this light and take steps to curtail the escalation of all these private medical institutions that are vying with each other in providing luxury care at very high cost.

Senator Harte spoke about doctors and what they are earning. That is a good question to raise. The general practitioners in the medical card sector — the GMS — have a 35 per cent retention tax on their fees but this is posing very serious financial problems for them. The fee they charge a patient covers the service and the expenses for practice. It has been agreed, even by the Department, that half the fee goes by way of expenses — car expenses, clerical expenses and administrative costs, so taking 35 per cent of the whole fee has produced serious financial problems for the general practitioners. I cannot agree with Senator Harte that they are benefiting to any great extent. As a matter of fact they are a hardship case at the moment. I could not say the same for their consultant colleagues.

I hope that some kind of agreement [749] can be reached whereby the public perception of the medical profession paying their tax will be achieved. Nothing gives rise to more public annoyance and cynicism than when there are certain groups who appear to be not paying their tax. The medical profession have been a little remiss on this in not explaining that the consultants have a contract that they give 33 hours per week and are paid for that by the State but that the tax is deducted at source. This is not explained to the public who, understandably when not aware of this, start saying these people are making fortunes and will not pay tax. It should be explained and the organisation themselves should perhaps take more time and trouble in enlightening the public on this.

I do not want to delay the time of this House on unnecessary things. Areas of the health service should be looked at so that we can know where we stand. The service is absorbing more and more of the gross national product so there is a problem. I do not envy the Minister his task in this coming year. He has incurred the wrath of so many and it is difficult to please so many vested interests. I often think that some of the people who are, as it were, dislocated as a result of the measures taken, are more concerned with their own jobs than with the care of the patients. The health service is now a burgeoning industry employing 66,000 people. Of course dislocation of a service like that causes massive unemployment and, understandably, the Government would be concerned about it, but the Minister having to face the wrath of these people is something you would not wish on anyone. He has had a very traumatic time in trying as a doctor to show the concern — and he above all is caring and has a sense of concern for patients — knowing the radical measures he had to take were contrary to his own principles as a doctor. The Government might look again at the situation and perhaps try to phase in the economies we want to bring about in the health service. It would be in the better interest of the public and the public would be more tolerant and [750] understanding if they knew it was that way.

Mr. Connor: Information on John Connor  Zoom on John Connor  I was elected on the Agricultural Panel and speak on agriculture for my party in the House here. I will generally confine what I have to say to agriculture, to its performance in the past year and to the way the Government relates to agriculture in this role. We might also try to project into the future.

I will start by quoting from the Official Report of 18 December 1987, column 355. On that evening the debate on the Appropriation Act, 1987, took place. The Minister was here in the House. He said in relation to the agri-industry, and I quote:

Agriculture is also likely to show a real improvement in 1987. After two difficult years, we expect to see a strong recovery in farm incomes due to a number of factors. Output prices are likely to be much better than in 1986. The volume of farm inputs has fallen because of better weather. Input prices have also fallen. The recovery in farm incomes this year should be substantial.

There is an overall tone of optimism in what the Minister had to say but I do not know on what he bases that optimism because we know from official figures from the institute that the output in agriculture — that is overall commodities — was down by 1 per cent in 1987. It will fall by 2 per cent — twice that amount — in 1988. That is what we had in the past and that is what is projected and I am sure it will be accurate because this is a scientific examination taking account of all the factors involved. The finding for the year gone is based purely on facts. Yes, there were increases in cereal production and in sugar beet production, but they were weather related. The Minister did not say to us on 18 December when he addressed this House that cattle numbers were down by 5 per cent in 1987. He did not tell us that milk production went down by 1½ per cent in 1987. He had nothing to say about the fact that pig numbers went down by a further 1 per [751] cent in 1987 and that the rate of decline in breeding and dairy cow numbers in 1987 was between 3 and 4 per cent, possibly closer to 4 per cent than 3 per cent.

Yes, sheep numbers went up by 8 per cent but that was related to a favourable market for sheepmeat. The upward curve in the sheepmeat area arises largely from the farsighted policy of the Coalition Government of putting in place policies to encourage this sector to expand and to take advantage of the growing sheepmeat market in Europe. This growing consumer demand is against a background of falling sheep numbers Community wide. These and these alone are the reasons for the relative prosperity of this sector and it has absolutely nothing to do with anything the Government might or might not have done in terms of agricultural policy in 1987.

What have the Government, or more appropriately the Minister for Agriculture, done in the last year to arrest the decline in the national cattle herd? The national cattle herd is the greatest single sector left to us. That is absolutely pivotal and all-important. If we take 1986 as a base year, at present trends in the cattle sector, cattle numbers will have fallen by 15 per cent in 1989. Beef breeding cow numbers will be reduced by a staggering 180,000 animals by 1991. That is all part of that combined decline of 3 per cent or possibly 4 per cent in total cow numbers last year. I do not think anybody has worked out the percentage decline for 1988, but obviously we are set for a major decline. Think about what this overall staggering figure is doing to the national cattle herd.

There was some kind of feeble attempt by the Minister to establish a new breeding cow expansion scheme in the autumn. It involved some kind of alliance of the banks, the farmers through their organisations, the co-operatives and the meat industry. Lastly and it would seem least of all, the Minister and the Department were involved. From the word “go” this scheme floundered around like a drunken sailor and the various bodies involved could not agree as to how to proceed or [752] who was going to do the financing, and nobody, least of all the Minister, was willing to give any direction. The whole setup is moribund and going nowhere. This was in 1987 the response of the Government to this most critical question with all its consequences for the farmers' income and the income and the employment of the people who are in the food related to agriculture industry. Remember we have a higher proportion of our total workforce engaged in that industry than any of our partners.

We are not alone talking about those two interests, we are also talking about the much greater interest of the wider economy because all of that is inextricably bound up here. My opinion, and that of most observers is that the Minister and the Government get not just zero but minus marks for their performance in this area of the beef herd expansion. I have elaborated on and one could repeat how central and pivotal the beef herd is to the whole agricultural industry and to the whole national economy because it has to become the largest single sector within agriculture.

We might turn to the dairy industry in 1987 and look forward to 1988 and beyond. During last year dairy farmers' incomes taken globally within the boundaries of the State increased but this was purely and simply because we had a normal summer in 1987. Then there was the fall in the value of the dollar which meant cheaper imports like fertilisers and which brought down peat costs. The cost of things like maize and soya beans went down by 20 per cent because they are dollar-related commodities. The disastrous summers of 1985 and 1986 were two of the worst ever recorded and in these years milk production, because of the weather, fell dramatically. The increase we are talking about for last year, 1987, is in comparison with those years. This is why the dairy sector income rose significantly in 1987. It is a significant increase by comparison with two of the worst years on record, and it is quite dishonest to link it to anything the Government did last year.

However the crisis in dairying looms [753] larger than ever in 1988 because of the continuing quota restrictions. I do not know if most people recognise that at this moment, a few weeks into a new quota year, we are about 1½ per cent over quota. If you project it to the production surge that always happens between February and April we could find ourselves in excess of quota by 12 per cent in what one would call a surge production period. Leaving that aside, there is now little doubt among those who have studied the market, the people who are well informed among the farming community or within the industry itself, that nationally we will exceed our quota by 5 per cent in the calendar year 1988. This is quite unprecedented and has no parallel with any past experience. What have the Government or the Minister done to cushion the impact of this major blow in the future on the incomes of the dairy farmers and especially small dairy farmers? The answer, I regret to say, comes in a single work, “nothing”.

On bovine TB eradication, what has happened in the last year? Nothing, except that the Minister increased the disease levies on farmers and now the farmers pay by these levies two thirds of the total cost of the national disease eradication programme. I have said that before, and it is important that one repeats it often because there is a widespread perception among the people that our disease eradication programme is purely and simply borne by the taxpayers. It is not. Two thirds of it is borne by the farmers and one third by the taxpayers. That is not to make any argument that we should not be careful and mindful and see that financial resource as precious and spend it wisely. It is important that the facts about it are clearly set out.

The disease levies on farmers at the various take-up points amount to £20 million approximately and the total expenditure is £30 million. That is two tens and one ten. The spending of £30 million notwithstanding, we will find when the figures are published that in 1987 we went backwards and not forward in eradicating tuberculosis in the national bovine herd. Much is made, rightly so, of [754] the £1,000 million which has been spent since the inception of the scheme. I agree that most of it has been taxpayers' money because we are talking about the past and the idea of levies is relatively new. There is still no sign that we have come anywhere close to complete eradication or reaching an acceptable level of completeness in this area, because you never get complete eradication of the disease despite all this expenditure. Most people rightly see it as costly and many as somewhat scandalous.

What of the future in terms of disease eradication? My party earlier this year produced a policy document on clearing the national herd of bovine TB. It proposed a radical approach. It was practical and had and has wide support among farmers. We sent a copy of our policy to the Minister and invited him to adopt it and add to it if he so wished, and if he wished to make certain adjustments by taking from it we would not have minded either as long as he adopted a new approach. Did the Minister react? No, he did not. He hardly bothered to acknowledge receipt of the document and, of course, he proposed no new policies or departures, being content it seems to let the present scheme run its wasteful merry way. Let the Minister and the Government be warned that the farmers who pay two thirds of the cost and the general taxpayers who pay one third of the cost will not continue to tolerate this ducking of a clear responsibility to do something about what has become something of a public scandal.

As I mentioned earlier, the pig industry went through a rough time in 1987. It declined in output by at least 1 per cent and is set fair to continue that decline in 1988 and beyond if something is not done about it. What has the Minister done to stem that decline during his first year in office? Alas and again, nothing. He has made all kinds of grandiose wool gathering announcements about new processing plants all over the country. We have heard about new market drives and new drives into expanded process lines. When the huffing, the puffing, the bluffing and the bluster was all over, there [755] was no action and the industry continues its downward spiral. Research, development and education in agriculture in 1987 was, and in 1988 will be, if I may borrow half a line from Dickens, “the worst of times”. Charges for ACOT services were set up earlier in the summer but the worst sabotage came with the announcement on the amalgamation of ACOT and the Agricultural Institute of a 43 per cent cut in the combined budget of these organisations. The practical effect of this proposal was to make 1,000 people redundant. This constitutes 50 per cent of the total staff of ACOT and of An Foras Talúntais. There are approximately 1,100 people working in An Foras Talúntais and about 1,000 people in ACOT. If the Minister is to achieve his targets, as set out in the Book of Estimates for 1988, he would need to make 50 per cent of that total workforce redundant in the coming year. That is more than any other Government agency had to take on board — this was mentioned on a debate on this point before. There has hardly been any decrease at all in the staff numbers in Agriculture House. I do not wish to be critical of them. I have my own criticisms of the Civil Service. I am a former civil servant and I have a good inside knowledge on how it operates and so on, but it is unacceptable that the arm of the Department of Agriculture that is most relevant, most germane and most helpful to farmers and to the industry is the arm that has to take the greatest cut of all. The administrative side — which I know has its own role as back-up to agriculture but which is certainly not as meaningful and germane — has taken a staff drop of 2 per cent or less which is almost meaningless and which ordinary natural wastage would have taken care of in any event.

Taking 1,000 people out of the research, development and educational services to agriculture constitutes a madness of Gothic proportions. Ireland, excepting Greece, has the highest dependence on agriculture for wealth creation in the EC and we have twice the number of people employed in farming compared [756] with the EC average. Agriculture contributes 46 per cent. of net exports when raw material inputs are taken into account. I could go on quoting statistics, figures and facts which back up the argument of the pivotal role of agriculture and agri-related industries in the Irish economy. No country in the Community should be spending more on research and education than we should because of the facts I have mentioned and because of our pivotal need to be abreast of technical, scientific, market and financial changes in agriculture. We must keep our performance and product quality on a par with our competitors. In recent years we have spent much less on research and education per person employed on the land and per farm unit than most of our Community competitors but in this singular piece of madness the Government propose to almost have again the inadequate amount we spend. Any observer looking in from the outside would think that the Minister for Agriculture has taken leave of his senses in this attempt to destroy the most vital support service to our most important wealth creating industry.

I would like to refer to the disgraceful performance of the Government in relation to extensions of the severely handicapped areas under the EC Directive 268/75. We call it the reclassification question. I am delighted that the Minister of State is with us because his constituency of east Galway is very much affected by this.

In the months prior to leaving office Deputy Austin Deasy, the Coalition Minister for Agriculture, lodged with the Commission an application for an extensive extension of this scheme. We knew at the time of application that the areas applied for met all the criteria in terms of relative economic disadvantage and that, so far as the Commission was concerned, granting the extension was only a matter of form as long as we paid the national share of grants amounting to 50 per cent.

The Fianna Fáil response to this initiative by Deputy Deasy was to go around the country during the general election [757] campaign of last January and February saying that Fianna Fáil, if returned to office, would fully implement a policy of extended areas. This chorus was led by the Fianna Fáil spokesperson on agriculture, Deputy Michael Noonan, who is now Minister for Defence. In my constituency of Roscommon they even went one better. Both candidates went around shouting that not alone would the 40 per cent of farmers in our county who were excluded from the scheme — and who are still excluded from the scheme — would be included but that on top of that there would be a further 100 per cent increase in the value of cattle headage grant paid to all farmers in the constituency should the better way triumph. The better way won but it did not win triumphantly and what did we get? The incoming Government welshed on the promises of expanded reclassification in 1987. What was worse, the Government failed to take up the negotiations for expansion in 1988 and, even much worse still, we now find in the Book of Estimates, under the Estimates for agriculture, a proposed reduction of 8 per cent in expenditure for farmers in disadvantaged areas. I am sorry the Minister for Finance or the Minister for Agriculture are not here, but I hope the Minister of State who is acting for them will let us know what is involved in this reduction. Is this betrayal of the promise to disadvantaged areas to be further compounded by a reduction in the level of assistance given to farmers who are lucky enough to be classified? That is an important question and, if possible, I want it answered here and now.

My party see the agri-food industry as having a central and pervasive role in the national economy. We see it as pivotal to our ability to generate sufficient wealth to provide an acceptable standard of living for the whole population. Agriculture is to us what oil is to Venezuela and what copper is to Zambia. It is central to our economic survival. Agriculture has a major social role in Ireland, aside from the role of enhancing the gross national product, and this must be preserved also. The Taoiseach said that the [758] agri-food industry will and must play the leading role in his Government's policy document — the Programme for National Recovery. He could have fooled me and many more like me when we see the stand-up policy he and his Ministers adopted in relation to every problem that arose in the industry in 1987 and the stand-up policy they appear to have in relation to every problem that will face the industry next year, the year after and the year after.

We go into 1988 with great trepidation. We feel, farmers feel and the agricultural spokespersons for this party feel that the best we can hope for is favourable weather. All the other omens are unfavourable. There will be a 2 per cent drop in the value of all commodities generated in the agricultural field in Ireland in 1988. At EC level, on which we have an absolutely crucial dependence for our prosperity and for our markets, etc., there are all kinds of changes taking place which will be adverse to us. People who are pure economists would say there is a madness about producing products for which there is no longer a market and I would have to go along with some of that. We are a member of the EC and, on entry, it was part of our bargain to allow freedom of trade to release or open our markets to our partners in order that they could sell here. We suffered a major loss because of this. The industrial base which we had in the early seventies was almost wrecked because of this freedom of trade and because our history of protectionism went back to the foundation of the State.

As of right, we expect in return that we will be protected in any major adjustment in the Common Agricultural Policy in 1989 and beyond. At present, the Commission is proposing removing thousands and thousands of acres of agricultural land from production. That is going to have very major ramifications for this country. Every farmer and everybody whose livelihood is in any way related to agriculture — and there are few people who do not have some indirect relationship for their livelihood to the agricultural industry — must ask how that policy will be applied here. Will we apply [759] a policy of making mendicants out of the thousands of medium and small sized farmers? We fear that the Government do not fully understand or comprehend everything that is involved in these major changes. We have gone along with the cosy opinion that nothing has changed and that the halcyon days of the late sixties and most of the seventies are still with us. They are not. The political climate and the political opinion in Europe has changed utterly and that has major consequences for this country.

We should warn the Minister that his performance must buck up, if I may use that phrase. What we have seen in 1987 is not good enough. In a sense it was a neutral year in terms of what is externally pertinent to agriculture. That means that not a lot happened in terms of EC policy changes to affect us adversely but major changes are coming. The political climate is changing every day and it is changing adversely in terms of where our interest lies. I say to the Minister and to the Government that they must be more vigilant and more aware of this vital national interest.

Mr. Fitzsimons: Information on Jack Fitzsimons  Zoom on Jack Fitzsimons  Traditionally the debate on the Appropriation Act in the Seanad is a wide-ranging one for the reason that, unlike the other House, we do not have a debate after the budget and, therefore, advantage is taken of this facility to cover different areas of concern. To a large extent, it is a facility which benefits the Opposition more than it does the party in Government because the party in Government have an opportunity of bringing up problems and matters of concern at parliamentary party meetings and having those problems dealt with in that way. As has been exemplified by the contribution made by Senator Connor, the Opposition have this opportunity to deal specifically with areas of concern.

In my contributions I have tried to be fair and objective and I do not want to start off in any other way now. In relation to the Coalition Government, we had a period of great stringency at the end of [760] their period in office and they doubled the national debt from £12.5 billion to £25 billion. I could spend a long time going into details on that matter alone.

That enormous debt was inherited by this Government. Looking back on their year in office, every member of the Government should feel proud of the marvellous achievements they have made in all areas. First, the financial targets were achieved and this has given great confidence to everybody. I have discussed the Government's performance with people on social welfare, with employers and those who are financially secure and while there has been criticism everyone, without exception, paid tribute to the Government and to their achievements because undoubtedly they are on the right track.

During the past year the media has to a large extent concentrated on the cutbacks, on financial rectitude and balancing the books but other areas have been neglected to a considerable extent. The positive areas where the Government have achieved much, for example, in horticulture where they have established a new ministry in the food area, mariculture and the science and technology areas, are all significant and they should not be forgotten. I could go into all these factors in detail and spend considerable time on them but, as I have said, I do not think this would be appropriate and that is not what the debate is intended for.

The Government are rightly concerned about the vulnerable people who depend on social services, the aged and the infirm. However, I have one grouse in relation to the free fuel scheme. This is a good and necessary scheme. I am sure all of us who are in public life have been approached by individuals who have been disappointed in one way or another. My immediate concern is in relation to people who did not apply in time because, unfortunately, they miss out. My understanding is that this is the first time application forms were not sent directly to people who qualified. On all previous occasions, those who qualified or were expected to qualify received application [761] forms for completion. Apparently, on this occasion a notice was simply published in the newspapers. On previous occasions the notice was published additionally.

Many people in this area cannot afford to buy papers and possibly because of age, poor eyesight or other reasons, may not be able to read the papers. They were not aware that it was necessary to make application, to get the form and have it completed. They missed out. They will only be paid from the time they made application. Quite a few people are affected. It seems rather harsh that people who would qualify are debarred simply because they did not apply in time. If somebody qualifies for this scheme, even if he applied after a particular period, he should get this payment. I hope that in future schemes this will be looked into because it is unfair to penalise people, particularly when it is not their fault.

I am concerned about the roads. In this area there is much to be done. I am pleased to note that considerable development will take place in road work in the immediate future. In County Meath there is cause for concern. At one stage, the roads in County Meath were the best in Ireland. The situation today is far from that. On many occasions in this House I have mentioned the main road from Clonee to Dublin. It is over three miles of a very narrow road and most of it does not even have a grass margin. This morning when I was coming up from Clonee to Blanchardstown I was in a traffic hold up because of a very slow tractor with a very wide trailer. This is quite common here. It is extraordinary that the main road from the northern part of Donegal right through Cavan into Meath, Kells and Navan is a first class main road, and then when we come to the entrance to our capital city we have a narrow inferior road. If planning were properly carried out, that should have been the first road to have been developed. I understood that development was to take place last year. Hopefully, it will take place this year. I raise [762] this once again in the hope that something will be done very soon.

On a more general point, our roads are most important from the point of view of development. Transport costs are higher here than they are in any other country in Europe due to delays and to several other factors caused by our roads. It is strange that over the past number of years the value and importance of a proper network of main roads were not taken into consideration. There is a necessity to develop our county roads but not to the same extent as our main roads. I recall a recent occasion when Senator Kiely referred to county roads in Kerry where he hoped that development would not damage the environment any further. That was a very important point. While main roads may be intended primarily for speed and heavy traffic — indeed the standards of our main roads are determined by the speed aspect — this is not as important on county roads. To make them safe for travelling rather than speeding is more important.

Tourism also is very important. The roads play a big part with regard to tourism. I was very pleased to read recently that the Taoiseach promised that anyone who had a worthwhile suggestion would be welcomed and that every suggestion would be taken on board and considered. This is important in a country that depends so much on tourism. In the debate on the Fisheries (Amendment) (No. 2) Bill I mentioned this aspect and that further development with regard to fisheries would pay handsome dividends. In every part of this country we have streams and lakes, large and small, whose potential has not been developed to the extent possible.

I also mentioned on other occasions that it was easy for me in Kells to determine during the summer whether or not we had a successful tourist season simply by going out in the mornings and taking note of the number of cars passing by with boats and fishing equipment on the roof. In north Meath and throughout Cavan there are small lakes which are noted for their fishing potential. It is [763] important to understand the value of coarse fishing. I made the case on other occasions with regard to coarse fishing that, whereas one pound of salmon may be bought for perhaps £2 or £3, a pike might be worth £1,000 to the nation through tourism. Tourists interested in fishing come here. The weather is not all that important. Of course, they like to come in good weather, but primarily they come to enjoy the fishing. We have the lakes and rivers which could be stocked properly. I know there is a problem. Growing up in a rural area, I noted that there were problems with regard to poaching in our rivers and small lakes. Some individuals felt that the fish in those rivers were there for them alone, and by poaching the rivers they deprived people of many hours, days and weeks of enjoyment. Great tribute is due to our fishery inspectors, but there is a limit to what they can do. It is necessary to educate the people to bring home to them the value of fishing. If people realise the importance of fishing, the poacher will be ostracised. This is the only way we will overcome that problem.

There are many other areas where tourism could be helped. It is unfortunate, for example, that there are no grants for guest houses and hotels. Possibly this will come later. They, and indeed Bord Fáilte, have played a very big part in tourism. I compliment Bord Fáilte and all the officers there for the great work they have done. There are many aspects of tourism which can be expanded and improved.

Previous speakers referred to agriculture. I too am concerned about farmers. I noted on other occasions, that the Government had determined their policy with regard to the payment of tax by farmers. I have no doubt that the Government decision was the proper one, because people should pay tax in relation to their income. Nevertheless, a very good case could be made for the farm tax — the £10 per adjusted acre. For a start, the farmer did not have to employ an accountant. The amount was reasonable. The adjustment procedure [764] seemed to me to be fair. I am sure some provision could have been made with regard to farmers who were sick or had problems of that kind. In relation to payment of £10, anybody who could not afford to pay that much per adjusted acre, should not be in farming. When this matter was discussed initially, I was one of a number of representatives — and I think that every representative was contacted by the farming organisation — who was lobbied to go against the tax. It has more or less transpired since, that it was the large farmer who was opposed to this tax. Unfortunately, the small farmer at that time did not make his voice heard.

It is important to remember that not everybody who owns land is a farmer. Simply being the proprietor of a large tract of land, does not convert one to being a farmer. Land, in some cases, is intended as collateral or for prestigious purposes or whatever. The large farmer can now employ an accountant to reduce his profits so that he does not have to pay very heavy taxes. I just mention in passing, that the farmers at a particular time got an opportunity; they did not grasp it and now a decision has been made and I agree with the decision. I am simply expressing my feelings with regard to that proposal.

In the area of housing, unfortunately things are not as good as we hoped. New house grants of £2,000 are still payable. There is a problem in relation to people who build their own homes. It is unfortunate that this is not sorted out to the advantage of families where, for example, there are one or two tradesmen. One of the conditions of the new house grant is that the house must be built by a contractor registered for VAT. Where the house is built on the applicant's own site under a contract to build, which is termed self-build, or building by direct labour, the VAT-registered work undertaken by the registered contractors must not be less than £15,000. More than one registered contractor can contribute to make up that £15,000; nevertheless, it is an inhibiting factor in many cases. It is unfortunate that we do not have some kind of system for collection of VAT [765] where people are able and prepared to build their own houses. I appreciate that it is precisely in relation to the problem of payment of VAT that this condition has been imposed. It is unfortunate that some simpler system could not be devised. I am sure the Minister can come up with some system which will help in this area.

People living in secondhand houses needing repairs do not get a reconstruction grant. If this continues over a long period the housing stock will deteriorate. Perhaps we can expect a change in this regard in the not-too-distant future.

I am glad that disabled persons' grants have been retained. They are very important, and more so now, because the reconstruction grant for new applicants has been abolished. The disabled person's grant is available up to a maximum of £5,000 or two-thirds of the estimated cost. This is of considerable benefit. There has not been a reduction in the funding for this grant and I pay tribute to the Minister for that. There are a few problems with regard to this grant which should be looked at. One relates to planning permission. I brought it up on other occasions. In rural areas where an extension includes a septic tank, it is necessary to apply for planning permission. Planning permission for an elderly individual who is not familiar with the regulations, can be rather difficult and to some extent, costly. I appeal to the Minister to make provision so that payment to a professional person with regard to obtaining planning permission would be allowed in the £5,000 grant. In other words, I ask the Minister to consider that in calculating the amount of grant payable to any individual allowance would be made for the cost of obtaining planning permission, or else have the situation, as I understand it applies in County Dublin, where the local authority provide the plans. Possibly this would be the better solution. In general, it would not cost the local authority very much. The biggest cost for any individual with that problem would be obtaining a 25 inch ordnance survey sheet which costs around £33 and [766] the local authority would have all the 25 inch sheets of the county. Even if it were a problem to provide money for this area, if a local authority made provision to supply the appropriate section of the 25 inch ordnance survey sheet that, in itself, would be a help to applicants.

Small businesses have their problems. We have discussed this subject and the joint committee have considered many aspects of small businesses. Every help that can be given should be given to small businesses because the general feeling nowadays is that the small business can be the foundation for success. Whereas in the past large profits were associated with big business and big concerns and a large number of employees, it is generally agreed now that small business can have quite reasonable profits. The overheads are reduced and there is so much to commend the small business.

Forestry is another area that many people are concerned about. More can be done in this way. We have plenty of suitable land. At present, the EC is considering making payments to farmers not to cultivate or use their land in the normal way. It is a rather extraordinary situation and I suppose it will bring about some considerable change in land policy in the immediate future. All that could be taken into consideration with regard to our forestry development. I think we are doing reasonably well. I note the State attempted to sell off some of its forests recently but apparently the amount of money on offer was not sufficient to induce the State to sell. There are problems in that area, particularly with regard to fire hazards. A forest which takes so long to develop can be destroyed in a very short space of time. Perhaps that is why some concerns are not too anxious to invest so much money in forestry. By taking reasonable precautions, such as divisions between areas of forestry, this would take care of that problem to some extent.

It has been proved that the timber produced in this country can compare favourably with the timber from any other country, and is, if it gets what people would regard as a fair chance. In [767] the past, the problem with our native timber was that in many instances it was cut down one day and used in the roof of a house or in some other way a few days afterwards. Of course, that is not the proper way to deal with timber. It must be harvested properly, like in any other item.

Coming from County Meath, I feel I must make a plea with regard to the Gaeltacht and the Irish language. Baile Gib is close to Kells in County Meath and we also have Ráth Cairn where Irish is the spoken language of the people, a living language. Unfortunately, I feel that the Irish language is doomed as a spoken language. We made many mistakes in the past. I have always felt that originally there was not enough money provided to encourage people in the Gaeltacht areas to remain there and to have a decent way of life there. Many of them were ripped out of that culture and that environment. To that extent, the Irish language and the Irish culture suffered.

At this late stage some great effort should be made so that we would have a situation where most of the people would be bilingual. That is most we can hope for at this stage. Coming from a county that is proud of Baile Gib and of Ráth Cairn, I make that plea with regard to the Irish language. In passing, I want to pay tribute to the urban renewal programme and hope we will have further developments in this regard.

I have noticed recently that our exports in particular areas have expanded and I was particularly concerned about one of these, that was stone that was dressed and transported abroad for use on buildings. We have a tradition here which could very well be extended and enlarged. We have other areas of craft and craftsmanship, in timber and in many other areas, that could be expanded. Perhaps it would be worthwhile looking at them.

It would be wrong if I did not refer to the unemployment problem and hope that we would see improvement in this regard. We are all familiar with the exodus from this country. In Kells nearly [768] every second family has someone who has emigrated. There are quite a few who have sons and daughters staying illegally in America and they are very concerned. I hope that some progress will be made in this regard.

A previous speaker referred to the Ombudsman. I would also like to pay tribute to him and hope he will be able to continue to do the important work that has been done over the years. On one occasion I had reason to contact the Ombudsman about a particular individual who was aggrieved. I must say that I was very impressed by the way in which the matter was dealt and that in the end full justice was done, due to the efforts of the Ombudsman. I would like to pay tribute to the work he had done. I am sure that very many people have reason to be grateful to the Ombudsman.

I do believe that this debate is more suited to members of the Opposition parties. It affords them an opportunity to make criticisms of Government policy and they have availed of that here today. I simply want to say again that the past year is one of which the Government may very well and very justifiably be proud. I look forward to a more successful year ahead.

Mr. Kelleher: Information on Peter Kelleher  Zoom on Peter Kelleher  I also welcome the opportunity to speak on this Appropriation Act, 1987. It gives us the opportunity to look back at the year that has gone and at where we are going in the year ahead. I acknowledge what Senator Fitzsimons has said, that it gives us in Opposition the opportunity of being critical of Government policy more so maybe than, what he would like to say himself. But we are not being critical for the sake of being critical. If there are areas of Government policy that we are not happy with, it is our duty as spokespeople in Opposition to address that problem.

I would like to make an opening remark about the Minister for Finance's opening address on Second Stage of the Bill. He outlined the progress that was being made in the country, with inflation at its lowest for two decades, the balance of payments deficit down below 2 per [769] cent of GNP, interest rates falling substantially, etc. He was attributing all this to Fianna Fáil Government policy but he failed to mention that the previous Coalition Government's policies over four and half years were the real reason that we have this favourable situation today. I would also like to remind him that when the Coalition Government took office five years ago inflation was heading to the mid-twenties, interest rates were out of control and it was against that background that the Coalition governed for four and a half years, bringing the country around to the present low inflation and low interest rates.

The Minister also mentioned the progress that was made in alleviating the unemployment situation. He said:

In the 12 months to be end of April last, the live register rose by 18,400, but in the 12 months to the end of November the increase was only 3,800. A further improvement in this trend is expected by the end of the year.

Well, as we know, he did not get this improvement and the unemployment figures now stand at over 250,000. This figure would, of course, be much greater but for the high level of emigration which is taking place. All during the year I come through Molesworth Street on my way to Leinster House and I saw the huge queues of people waiting to get their passports. All of this under a Government which made an election issue out of unemployment and had large billboards in the major towns all over the country showing the passport and telling the people, There is a Better Way. There was a better way but the people did not take it and are now once again finding that out to their cost.

Take, for example, the construction industry. This has been decimated under the present Government. Fianna Fáil had, prior to the election, stated that the industry would make a significant contribution to economic growth and employment. The industry currently depends on the public capital programme for 70 per cent of its finance. The cut of [770] 3 per cent represented a drop in funding of approximately £50 million in 1987. This reduction, in addition to the abolition of the £2,250 house purchase grant, the home improvement grant scheme, the £5,000 grant for local authority tenants and the reduction in the level of mortgage interest relief to 90 per cent led to a further sharp decline in activity and employment throughout the industry.

In relation to housing grants, Fianna Fáil stated that prior to the election the Government's policy document on the industry had suggested that all grants be revised with the aim of improving their impact and benefit to the industry. The abolition of the £2,250 and the £5,000 grants without a full compensating reduction in VAT was wholly unjustified and had a further negative impact on this sector in 1987. It was also contrary to the clear implications of the manifesto. In relation to the £5,000 grant for local authority tenants, this incentive had been very useful in stimulating local authorities to buy houses in the private sector and also in relieving demand for local authority housing. It had become an important source of demand for new housing and for the home improvement grant scheme. This scheme provided a considerable amount of work for contractors and subcontractors and was supplemented by the additional contribution from the householder. It was also valuable as it was confined to registered firms within the industry. That, of course, was to deprive the black economy. In addition, it provided badly needed employment, with a consequent saving in unemployment benefit and tax revenue. While it was obvious that in view of the State finances there would have to be cuts in various sectors, the measures referred to are ill-advised, negative and, in effect, will increase unemployment in the industry, currently standing at 47,000 people.

As somebody who is involved in the construction industry and as a member of the CIF, I know that building in this country is dead at present and that there is no future here for the construction industry. It had always been said in the past that under Coalition Governments [771] the construction industry suffered. That myth has now been well and truly exploded. It is clear to be seen that the construction industry advanced significantly under the last Government but has now been stymied by the present Fianna Fáil administration. I would like to quote a brief pre-budget submission from the Irish Housebuilders' Association. It will give a background to the present situation of housing in the country. It states:

Housing activity has declined dramatically since the start of the current decade. The number of public and private sector housing completions is estimated to be approximately 17,000 units this year which represents a decline of 38 per cent since 1981.

Private sector housing completions could be under 15,000 for 1987 which represents a 44 per cent decline in the level of completions since 1981.

An appropriate measure of future private housing sector activity is represented by the registrations by the National House Building Guarantee Company. At its peak, the Company registered 10,830 units in 1983. The forecast for 1987 indicates that at best the Company will register 7,000 units which is a 36 per cent fall in housing starts as measured by the Company in three years!

A further indication of trends in the private housing sector has been the decline in the proportion of mortgage advances directed at new housing. In 1981, 50 per cent of loan approvals by various financial institutions and the State sector were in respect of new housing. In 1986 this had fallen to 35 per cent and this trend has been continued in the first six months of 1987. New house loan approvals are approximately 10,000 per annum at present, compared to approximately 15,000 four years ago. A further decline of 23 per cent in the public capital programme for 1988 will result in 12,000 job losses directly, with a further 4,000 to 6,000 job losses in the professional, [772] manufacturing and building provider sector.

I would like to turn my attention to the tax situation. I would start off by saying that tax reform is vital and possibly was one of the disappointing aspects of the last Finance Bill as a minimum of £300 million extra was taken from the PAYE sector. When people talk about tax reform, they talk about reduction in tax. We must have a system which will lead to a reduction in tax if we are to maintain incentives to work and if we are to keep highly educated and skilled workers at home.

The only way of reducing taxation is by cutting public expenditure. The more a Government spend the more tax people will have to pay. The present high levels of tax are a direct result of the gross over-expenditure of the late seventies. We must reform the income tax system and widen the tax bands so that the vast majority of people pay tax at standard rate. An immediate move towards self assessment together with reform of company taxation and a spread of the tax base will give leeway over the next few years for reductions in income tax and a broadening of the existing tax base.

The decision of Fianna Fáil to abolish the land tax is to be deplored. This land tax was perceived to be fair by the majority of farmers and by the PAYE sector.

Senator Lanigan in his address to the Seanad on the Bill made reference to the strictness of the Revenue Commissioners. His opinion was that they were too strict and had too much power. I agree with the Senator on that. I agree also that the rates of interest they charge on outstanding accounts at 1.25 per cent a month is too punitive. If it is the case that the Revenue Commissioners are carrying out strictly the letter of the law, perhaps we have a duty to have another look at the legislation. I have found the Revenue Commissioners in my dealing with them to be totally inflexible and not to allow any room whatever for negotiation. I am not saying that I am in favour under any circumstances of tax evasion [773] but I do believe that when problems arise in small companies — as they invariably do — there should be some degree of leeway for negotiation with the Revenue Commissioners. This has proved not to be the case.

I am sure that many of us here today saw the recent “Today Tonight” programme on television in relation to sheriffs and tax collectors. The counties concentrated on were Meath and Westmeath and we saw the tragic circumstances which followed the exercise. We saw the way in which these officials went about their business. I could not concur with the way in which they acted on behalf of the State in collecting taxes. It was a very bad programme from their point of view.

I would like to turn very briefly to the subject of education. There is panic and confusion running through the Fianna Fáil Government in relation to education. There have been comprehensive U-turns on nearly every statement made during the four years of bitter opposition in the Dáil, four years of promises and undertakings to teachers, students and parents. On 8 April 1987, the Minister, Deputy O'Rourke, said that within the overall allocation of resources she proposed to give a particular priority to primary education. I ask is the worsening of the pupil-teacher ratio a particular priority? We now see a cut of £42 million in the allocation to the primary sector. Parents, teachers and managers all need to know how much damage is going to be done, how much real money is going to be saved and how many more children are going to be stuffed into our classrooms.

Another major cut which demands an explanation is the £6.5 million cut in school transport. This implies not only further increases on a massive scale in charges but also far-reaching changes in eligibility. In plain language the parents and youngsters need to know if they will have a bus next year and, if so, how far will they have to walk to get to it and how much it will cost them. There is great concern among parents and pupils alike that when the small print is finally read many pupils now going to school by bus [774] will be walking there instead. It is my belief that education has taken a sudden and massive blow under this Government. This is all the more despicable because of the guarantees given to the education world by the Taoiseach two days before the general election. He described Fine Gael's minor cuts as devastating and said that it would be completely counter-productive to implement them. On budget day, 31 March, Fianna Fáil's failure to understand the education sector was exposed when £11 million over and above the minor cuts we had proposed was taken out of the system. We are talking of taking approximately £86 million out of the system in 1988. I do not have to press the point any further as the facts speak for themselves.

I will now make a brief comment in relation to the Department of Justice. The overall net Estimate for the Garda Síochána in 1988 is £273 million. There will be cutbacks in overtime and there is disillusionment within the force, yet the Minister says that he is satisfied that the Estimates provided for the Garda Síochána for 1988 will enable all essential policing services to be fully met. I have my doubts that this is going to be the case. The Association of Garda Inspectors and Sergeants also have their doubts. I would like to quote from an article in the November 1987 edition of Garda News in relation to the situation they found themselves in because of the kidnapping and the cutbacks and how they affected their management. I would also like to make a few recommendations on their behalf to the Minister. The article reads:

The debate which honed in on the defects in the management of An Garda Síochána was nothing new to AGSI members or to the many people who had been concerned about the development, or lack of it, in the Force for the past 50 years or more. In fact, no less than 17 years ago in its concluding comments the Conroy Commission had this to say:

“We would be failing in our duty to the Minister if we did not strongly urge that an examination be carried out by [775] appropriately qualified people into the role, organisation and personnel policy of the Force and, in particular, its relationship with the Department of Justice. For example, (a) there was evidence of an unclear defintion of roles as between the Department of Justice and the Garda Síochána. Specifically, there was a vagueness causing uncertainty and ineffectiveness about the relationship between the Department and the Commissioner. There seemed to us to be a lack of delegation from the Department to the Force. This lack of delegation permeated the Force. Authority — particularly in relation to financial resources — was not commensurate with responsibility, causing an unhealthy “them and us” attitude.

(b) There was no comprehensive planning based on research. No one was specifically charged with this function. The result was reaction to circumstances and ad hoc decision-making.

(c) There was no clear personnel policy. We found it disturbing that, in a Force of this size, there was no one with specific responsibility for developing an on-going personnel policy, including training and retraining.”

It is a tragic fact that those comments are as relevant today as the day they were written and it is supremely tragic that it took an incident such as the O'Grady kidnap to bring them to the forefront of public attention — such basic recommendations for the good of the Force should have been seized on and acted upon at once. If they had been implemented perhaps there might have been a vastly different outcome to the earlier kidnap hunt incidents.

What the kidnap incidents highlighted so cruelly was the utter lack of delegation of authority within the Force — a lack which was pinpointed clearly by the Conroy Commission but one which has now been exacerbated [776] by the shortsighted manner in which the financial cutbacks have been implemented, leaving local officers floundering about in the dark without a clue as to the resources they can deploy in an emergency situation and unable to mount the type of operations which are necessary in such instances.

During the hunt local Garda management was left not knowing how far to go in conducting searches, mounting armed checkpoints and detailing manpower to take part in the investigations and chases with the end result that the Force as a whole was made to look inefficient and lacking in co-ordi-nation.

In his Christmas message to the Garda Síochána published in the December 1987-January 1988 edition of Garda News the Minister said:

I commend and congratulate the Garda Síochána for the excellent work in effecting the release of Mr. O'Grady.

Of course, that is as it should be but those were not his comments half way through the search. I suggest that he work in close co-operation with the Garda associations and iron out the many problems facing the force today.

I would now like to turn, very briefly, to Roinn na Gaeltachta. Senator Fitzsimons is associated with a Gaeltacht area in Ráth Cairn. I also come from a Gaeltacht area, the Múscraí Gaeltacht in Ballyvourney. I would like to place on record my congratulations to Údarás na Gaeltachta for the good work they have been doing in the Gaeltachtaí with very limited resources. We have heard of many cases in the past where Údarás have been criticised and, in my opinion, very unfairly. We also hear of the failures of factories and projects that never got off the ground in those areas but we never hear of their successes. It should be said loud and clear that from the very beginning Údarás were working at a disadvantage in that there is no comparison with trying to attract an industry to the SFADCo area of Limerick or, indeed, [777] to Cork or Dublin and trying to get an industry to survive in Glencolmkille in Donegal or, indeed, in any part of Connemara or south Kerry. From the very beginning Údarás were working on projects which I would regard as being second best projects because the best projects deal with the IDA and with SFADCo.

An Cathaoirleach: Information on Tras Honan  Zoom on Tras Honan  SFADCo is based in Clare.

Mr. Kelleher: Information on Peter Kelleher  Zoom on Peter Kelleher  I apologise; that was an awful mistake to make, especially in the Cathaoirleach's presence. It has a good record attached to it and it is very suitably situated. It makes a big difference to be situated close to a part or close to an airport as distinct from the picture I am trying to paint. We should give more encouragement and finance to Údarás because they work in areas where we need to have industry and to prevent emigration.

My own area would be considered as one of the second best Gaeltachtaí, location wise, being situated on the Cork-Killarney road. It would come second to Ráth Cairn which is close to Dublin airport and Dublin port and has all the facilities available to it. It would be fair to say that in my area we are as close as we can get to full employment, thanks to the many industries brought in by personnel from Údarás na Gaeltachta. However, at the moment we have one factory which is in difficulty and I know that the Minister for the Gaeltacht, who happens to be the Taoiseach, is aware of that. He has taken an interest in that industry. I hope the jobs will be safe, are kept in the Gaeltacht and not relocated elsewhere but the job should be cost effective with a good return for the funds of the taxpayer.

Senator Fitzsimons said that in his opinion the Irish language is doomed. That was an overstatement of the present position of the Irish language because even in Dublin city a number of Gaelscoileanna are being established to revitalise the Irish language. The same applies to Cork city and outskirts. In the [778] city centre a number of scoileanna lán-Ghaelacha have been set up.

There is an Oireachtas Joint Committee on the Irish language and members of it are trying to get Members of this House to speak Irish in the precints of the House. A survey was carried out by the committee of each Member of the Oireachtas and out of a total of 226 Members only 80 replies were received. It is up to us as Oireachtas Members to give example to the people by making an effort to speak the Irish language, particularly in the precincts of the House.

I welcome the appointment of a Minister of State to deal with forestry. It is a move in the right direction by the Government. I welcome the decision to set up a new State-sponsored body. It may be an avenue to help us get away from the huge surpluses of milk, grain and so on. It will be a big job trying to educate the ordinary farmer that there is a profit margin to be obtained from forestry and that forestry is an alternative to the huge surpluses we have in the EC.

Minister of State at the Department of Finance (Mr. N. Treacy): Information on Noel Treacy  Zoom on Noel Treacy  Is aoibhinn liom bheith ar ais arís agus ba mhaith liom mo bhuíochas a ghabháil leis na Seanadóirí go léir a ghlac páirt san díospóireacht thábhachtach seo. Nochtadh a lán tuairimí i rith na díospóireachtá agus tá an-spéis agam féin agus ag an Aire Airgeadais sna tuairimí sin.

I should like to thank Members for their co-operation in getting the Appropriation Bill through in the month of December. I must also thank Senators for their contributions to this resumed debate yesterday and today. They have in most cases, at least by implication, shown their approval of the appropriation accounts for 1987 and, therefore, of the Government's discharge of the obligation laid on them by the Oireachtas.

During the debate a large number of specific comments were made about individual items and individual programmes of expenditure. I do not propose to deal with all of them in detail; many of them would be more properly dealt with by [779] other Ministers more directly concerned. However, I would like to take up some of the many excellent points made during the course of the debate.

Senator Bulbulia, the first speaker from the Opposition side, urged that money be made available to refurbish the National Gallery, particularly its air conditioning system. It has been apparent for some time that the environmental conditions in the National Gallery are unsatisfactory. My Department, that is, the Office of Public Works, have prepared a major refurbishment scheme for the premises incorporating the installation of a modern air conditioning system. It is envisaged that the scheme will be implemented in phases over a number of years.

Planning for the first phase of the work, which will deal with the most serious problems at a cost of in the region of £5.5 million, is at a very advanced stage. The placing of a contract to carry out these works will depend on the availability of resources within the Office of Public Works' building programme. It is not possible at this stage to state when this will be, but I would be hopeful that something may be done over the next year and thus ensure the continued preservation of our valuable paintings and art treasures. I want to assure the House that the Government are very concerned to maintain and preserve those valuable art treasures and paintings.

A lot of comment has been made of late about the state of the National Gallery. I wonder why this information was not made available to the relevant Minister, or Department, much earlier to ensure that work could be carried out on this? However, the Government, and I, will leave no stone unturned to see that action is taken as quickly as possible, given the financial constraints placed on the State at this time.

Senator Bulbulia also criticised the reduction in official development assistance and contrasted it with the allocation for the Department of Foreign Affairs. The Government regret very much that Ireland's economic circumstances should [780] have forced such a reduction on us. We have been successful in building up a modest but worth-while programme of aid to developing countries in recent years. I can assure the House that the Government remain committed to the maintenance and expansion of official development aid as soon as economic circumstances permit. Meanwhile, in 1988 the funds available will be sufficient to maintain a basic programme of assistance from Ireland to developing countries. All commitments to existing projects will be honoured but it will not be possible to enter into new commitments.

As regards the Department of Foreign Affairs, the 1988 allocation is based on a contraction in our overseas representation. Further economies will be effected in the administration of the Department by curtailing travel, reducing expenditure on official entertainment and our information services and limiting the allowances paid to Irish diplomats abroad. The total number of staff will also be reduced following the general policy on Civil Service numbers thereby helping to reduce the State's public service pay bill which is absolutely enormous taking into account our population base, our financial base and the level of public service that our people enjoy.

Senator Bulbulia urged that State funds be provided to develop an archaeological find in Waterford. The Senator referred to a paying of £10,000 by the Office of Public Works to Waterford Corporation in respect of archaeological excavations. I was pleased to have sanctioned this during the last year. The payment was made to allow work on archaeological investigations, which up to then had been funded by Waterford Corporation, to continue in that year. I understand the excavations are continuing this year under funding from the Corporation's own budget. I further understand that an application for assistance of the order of the figure mentioned by the Senator, which was close to £250,000, has been made to the Department of the Environment and is under active consideration.

[781] The urban renewal programme is part of the Government's strategy in revitalising urban areas in our inner cities and larger towns. It is an excellent scheme. It helps to bring life back into these huge urban areas which are often filled with old buildings and much dereliction. It is also part of the Government's efforts to create investment opportunities and job opportunities both in the construction industry during the programme of work in the various projects and thereafter in the new development on a permanent basis.

Senator Seán Haughey highlighted the need to stamp out social welfare abuse engaged in by a minority and to provide a more efficient delivery of services to the genuinely needy. I can assure the Senator that these two objectives have been high on the Government's list of priorities since we came into office last year. Some remarkable progress has been made on both fronts.

In the 1987 budget the extension of the Jobsearch programme nationwide was announced. The main purpose was to help the long term unemployed. Many of these have now been put through Jobsearch courses to improve their job seeking skills and to give them new motivation to resume active job seeking after years on the dole and being unemployed. In some instances it was even possible to direct the long term unemployed towards jobs in the private sector or to let them participate in schemes such as the social employment scheme.

The detection of those on the live register who might not be genuinely unemployed was expected to be a useful bonus from the programme. However the extent to which those interviewed or even just called for interview have chosen to sign off the live register has been rather surprising. It would be fair to sum up the programme by saying that the bulk of those on the live register are genuinely unemployed but in some instances they had become discouraged and needed some outside agency to encourage and motivate them to resume active job seeking. Unfortunately, the programme has also confirmed a long standing suspicion [782] that there was a hard core of abusers on the live register.

The Jobsearch programme has not been the only notable success achieved in the past year. The published allocation for disability benefit in 1987 was £232 million. The outturn was less than £220 million. This was due to a variety of factors such as a lower intake of claims, the transfer of some recipients to invalidity pensions etc., but a significant contribution towards this saving was also made by the introduction of controls for the detection of cases of working and claiming disability benefits.

Senators will be aware that it is now the policy of the Department of Social Welfare to prosecute such offenders and this has helped to reduce the incidence of such abuse. Other improved controls are also beginning to accrue from the extensive computerisation in the Department of Social Welfare in recent years.

On the question of improved services to which Senator Haughey referred, I can point to the introduction of one stop shops in several locations around the country where applicants can have all their welfare queries attended to under one roof. Many local centres have been connected to visual display units via the Department of Social Welfare's information system which can give them on the spot replies to claimants' questions about their welfare entitlements and payments. Where possible, decision making is being devolved in the routine cases down to local employment exchange level. This leads to being able to put claims into payment at an earlier stage and reducing, or even eliminating, the need for interim reliance on the supplementary welfare scheme. I feel that some commentators outside the Department of Social Welfare have sought to look at all welfare initiatives from an antiabuse or fraud control perspective. While this is a consideration in some instances, we are primarily concerned with giving those who rely on welfare a much quicker service, and where resources permit, in better surroundings. The programme of upgrading facilities in public offices and employment exchanges is evidence of our [783] commitment in this regard. Again in 1988 the allocation of extra resources to the Department of Social Welfare Vote is tantamount acknowledgement of the Government's commitment to looking after those less well off in the public sector.

Senator McDonald referred to a refusal by the Department of Forestry to sell timber to many small family firms. This is simply not so. The Senator may be referring to a requirement introduced by Forestry some months ago that all persons or firms tendering for timber should produce tax clearance certificates. This ensured that persons or firms who did not pay their taxes would not have an advantage in bidding over those who did pay their taxes and discharged their liabilities and responsibilities to the State and to the Exchequer. This move has proved successful and has been welcomed by the industry in general.

Senator Brendan Ryan criticised the reduced allocation for the Ombudsman's Office. The Office of the Ombudsman was set up in 1984 with a staff of 14 people which had increased to 41 people by the end of 1986. Even taking into account the importance of the Ombudsman's functions, this was a most exceptional development at a time when almost every other area in the Civil Service was being reduced in size. In view of the ongoing need for severe financial restraints it was no longer possible to continue to exempt this office from the drive to contain the cost of the public service to the taxpayer and the relevant allocation was reduced accordingly.

Senator Ryan also asked why Irish banks do not lend to the Government at lower rates given that the loans are entirely secure. Banks hold relatively large amounts of Government paper. This constitutes the bulk of their lending to the State. A high proportion of this Government paper is traded in the Stock Exchange and therefore the yield on it is determined by market forces. The remainder is issued by way of tender and the yield on this is also determined by market forces. In general, interest rates [784] in Ireland are influenced by international interest rates and the supply of and demand for money in this country. The fact that Government paper is entirely secure is, of course, taken into account by the market in determining, the appropriate yield on Government securities. The Government actively manage their debt so as to minimise the cost of servicing it, but we must always remember that in a small open economy like ours international trading and money markets have a major influence on the interest rates being charged here taking into account the reaction of our own domestic markets and the supply and demand situation prevailing here at home.

Senator Harte suggested that any money available because of the savings in 1987 should be used to relieve the burden on PAYE taxpayers. The favourable 1987 outturn for the Exchequer finances and the effect of reducing the borrowing requirement did not increase the resources held by the Exchequer or allow for additional expenditure or tax reliefs in 1988. Senator Harte also criticised the level of farmer taxation. We in Government have ensured equitable treatment and assessment for all taxpayers right across the board. Farmers, like the self employed, are being taxed on their incomes and assessed accordingly. While comparisons are often very odious and may often give an imbalanced impression, it must be remembered that farmers by the very livelihood which they pursue are the biggest payers of indirect taxes in the country.

Senator Connor in a wide-ranging address, particularly specialising in agriculture, referred to the major cuts in staffing in ACOT and An Foras Talúntais at a time when agricultural research is very relevant. Legislation providing for the amalgamation of AFT and ACOT was recently introduced and will be treated as a priority in the next session. The amalgamation was decided upon because the public finances could not continue to provide funding of £35 million to the two bodies. It was considered that [785] through amalgamating the bodies, certain administrative savings would be achieved. I am sure that many people in this House believed when both bodies were set up and, in particular, when ACOT was created, that it would have been much better to revamp the existing structure rather than create the new structure. In addition, further savings could be gained by concentrating valuable resources on the priority needs of agriculture. It is much simpler and cost effective to operate the essential research advisory and educational services to agriculture from a single effective organisation than from two separate bodies. It is understood to date about 400 employees of the two organisations have decided to opt for the voluntary redundancy package. The question of how best to achieve the level of savings implicit in the 1988 allocation of £20 million is under examination. An efficiency audit of both organisations, as well as of the Department of Agriculture and Food, is under way and should be completed over the next two months or so.

Senator Connor also referred to the reduced allocation in 1988 for headage payments to farmers in the disadvantaged areas. There are a number of factors involved in the reduced allocation for headage payments in 1988 as compared with 1987. The 1987 allocation contained provision for special payments as a result of the hurricane in August 1986, some of which were not made until 1987. These amounted to close on £4 million. Another factor is the reduction in the off-farm income limit from £6,400 to £5,200 which accounts for a reduction of £1 million. Senator Connor berated the Minister for Agriculture and Food on his performance. I have to say that we are fortunate at this time to have a man of the calibre of the Minister for Agriculture and Food in office. He has held various ministries and also been European Commissioner and I do not think anybody with his experience has ever held this position before. His ability as an international negotiator, particularly in the forum of the European Commission and on the Council of Ministers has been [786] proven decisively and conclusively to be to the advantage of Irish farmers during the past year.

Senator Connor said — and it is a pity he is not in the House at this time — that cattle numbers were down and the breeding stock population had been reduced and he blamed the Government and, in particular, the Minister for Agriculture and Food for this. The position is clear. We came into Government in March last. We inherited serious difficulties in the economy right across the board. We found agriculture in serious difficulties: farmers' incomes had been reduced, and in many cases eroded, and many farmers were in a serious financial position. The Minister for Agriculture and Food has tried to redress that situation. The reason the cattle population is down and the breeding numbers are down is that in many cases financial pressure was placed on farmers during the reign of the Coalition Government, during the previous five years, and they had no option but to dispose of their breeding stock in order to meet their financial commitments. It now falls to this Government and to the Minister for Agriculture and Food to create an environment and give incentives to farmers so that they can again expand, develop and invest in further breeding stock and make their contribution to increasing the cattle herd and the breeding population. We must ensure that the State sector, the private sector and the farmers themselves make their fair contribution to creating that environment. Negotiations are presently being pursued vigorously by the Minister for Agriculture and Food to create the conditions which will enable the cattle population to be restored to a satisfactory level.

If one was to summarise what Senator Connor had to say one could say that he wanted production but he was not worried about processing. He criticised the Minister for having lent his support to various processing outlets throughout the country and for the State support that had been given to them. For far too long much of our best beef and cattle have left this country on the hoof and have not [787] been processed. As a result, many valuable jobs have been lost and there has been a great loss to the economy also. We must ensure that there are ample processing facilities available so that we can get the last shilling out of our own natural resources. The hallmark of the Government's policy has been to create the incentives for the private sector to go into processing and production and to ensure that jobs can be created for our young people. The Minister for Agriculture and Food and the Government must be complimented on the tremendous work that has been done in this area. The vast sums of money which have been negotiated by the Minister for Agriculture and Food from the FEOGA fund in Europe is proof positive of his skilled ability as a negotiator and his full understanding of the problems Irish farmers face at this time.

Senator Connor made great play of the severely handicapped areas scheme. He mentioned the last general election and the commitments my colleagues in Roscommon gave during that time. He told the House this afternoon that during the months prior to the general election the then Minister for Agriculture, Deputy Austin Deasy, had lodged an application with the European Commission for an extension of the severely handicapped scheme right across the country. My constituency colleague, Deputy Paul Connaughton the former Minister of State for Agriculture, would not like to hear that because he claimed that he lodged that application. The facts are that on 4 February 1987, 12 days before the general election, the then Minister for Agriculture lodged a hurried application in the European Commission. That was considered by the Commission right throughout the summer and was rejected by them in the autumn on the basis that it did not meet nine of the 12 conditions laid down.

It was then up to this Government to put another application together and a detailed, positive, logical and practical application has now been lodged in Brussels by the Government, through the [788] Minister for Agriculture and Food, and negotiations are proceeding. As soon as the European Commission and the Council of Ministers agree to that application the Government will accept it, implement it and honour it in a positive, professional manner as any good Government would. These are the facts and they will stand up. The record in the Department of Agriculture and Food will show that. That cannot be contradicted and there is no point in people clamouring that they did this or that when we all know it was done in the heat of a general election to try to save seats and win votes. In my constituency, the then Minister of State not alone publicly issued the statement that he had made the application but the week before the election he wrote to every farmer in the constituency in a very detailed manner, quoting the farmer's herd number, telling him the number of stock that he had and the amount of money he was going to get in 1987 as a result of this application. The facts are that these were political decisions; they were not made in the best interests of the country but in the haste of the day. Consequently we must now take up where the Coalition Government failed and restore Irish agriculture, through European support, to where it was when we were last in Government in the early part of this decade.

Senator Kelleher in his contribution referred to the construction industry and said that once and for all the myth had been buried that Coalition Governments had let down the construction industry, implying that Fianna Fáil always looked after it but that now we were neglecting it. It was very easy for a Coalition Government to look after the construction industry, by sanctioning £330 million of home improvement grants and only providing £100 million. It was left to us, as the new Government, to provide the balance of £230 million.

In the weeks prior to the general election of 1987, £30 million was sanctioned for school buildings but no money was provided in the Book of Estimates or in the Budget. We had to provide that £30 million. We have always looked after the [789] construction industry. We have created a climate for investment now. We have reduced interest rates to their lowest levels in decades and we have given the opportunity for people, through the decentralisation programme, through the urban renewal programme and through the public capital programme, to invest their resources to create the opportunity for themselves, in a reduced interest rate and financial environment, to make their contribution to the development of the economy under State leadership and State motivation. That is the principle on which this Government will proceed. We are stimulating the economy by creating the opportunity for private enterprise and the Construction Industry Federation to respond to the leadership given and to the climate that has been created.

Mr. Kelleher: Information on Peter Kelleher  Zoom on Peter Kelleher  The vast majority of the builders are emigrating to the UK. They will not be around to get involved.

Mr. N. Treacy: Information on Noel Treacy  Zoom on Noel Treacy  There are many of them left, and many are returning both from the United States and from England. In my own Department, I have had the pleasure of interviewing some of them for the various programmes that the Government have created.

Senator Kelleher also talked about education. We must remember that the Fianna Fáil Government did a lot for education by creating equality of opportunity in the sixties, something which until then was sadly lacking. Education was the privilege of the few. Now equality of opportunity prevails. As a result, we have a tremendous young intelligent work force. Today we have almost one million young people at school. We have a national debt of £25 billion. We have a quarter of a million people unemployed, and we have only 800,000 people working day after day, week after week making a regular tax contribution to the Exchequer. Taking everything into account, £6.3 billion has been passed in the Book of Estimates by the Dáil, by the biggest majority in its history, and by this House also. Out of the Book of Estimates we have allocated one-fifth of [790] the State's resources for 1988 to education. Nobody can claim that this Government are neglecting education. Our children have a fundamental right to education. They will get it from this Government. We will ensure that the necessary resources are made available, taking into account the constraints placed on the economy and our resources at this time.

Mr. Kelleher: Information on Peter Kelleher  Zoom on Peter Kelleher  What about 20/87?

Mr. N. Treacy: Information on Noel Treacy  Zoom on Noel Treacy  We are now at 24/87 and we are moving into 1/88 so it is irrelevant at this stage; it is obsolete. This Government are moving so quickly and decisively that those things do not matter.

Senator Kelleher also referred to Údarás na Gaeltachta agus ba mhaith liom freisin comhghairdeas a dhéanamh le Údarás na Gaeltachta. Táimid anbhrodúil as ucht an sár-obair atá déanta ag Údarás na Gaeltachta i rith na mblianta atá caite agus ón lá a bunaíodh é.

Senator Kelleher also referred to SFADCo. I was delighted that the Cathaoirleach mentioned the fact that SFADCo was located in the adjoining county to Galway, County Clare, the Cathaoirleach's own county.

An Cathaoirleach: Information on Tras Honan  Zoom on Tras Honan  I get a bit confused at times. Senator Kelleher accepted it the way I meant it.

Mr. N. Treacy: Information on Noel Treacy  Zoom on Noel Treacy  We try to dispel any confusion. The aim of this Government is to have everything on the table and no confusion about anything. I would remind Senator Kelleher that the Coalition Government proposed to remove SFADCo off the Statute Books completely. In an effort to ensure the maximum utilisation of the State's resources by any semi-State sector, the Government decided to revamp the role of SFADCo. SFADCo who had an industrial brief, and were responsible for tourist traffic through Shannon Airport up until 1987 have now a full industrial transport brief through Shannon, they are responsible for the Shannon Free Airport area, and for tourism and they have a full [791] industrial and financial brief for the whole mid-west area. They are co-ordinating the roles previously taken by themselves, the IDA, the County Development Teams, Bord Fáilte, the tourist boards and the various other statutory bodies which means that there is proper utilisation of State resources to ensure that the maximum number of jobs are created and that the maximum economic activity is generated in the mid-west region. This is the type of policy the Government have been pursuing right across the board in every area. It is the type of policy we intend to pursue in all areas in the years ahead.

Senator Kelleher also talked about the Department of Justice and the Garda and blamed the Minister for the present situation. We all salute and acknowledge the great work being done by the Garda and the Department of Justice. We were all delighted with their success in bringing the terrible kidnap ordeal to its conclusion. The resources needed to preserve the security of the State and to ensure the freedom of movement by individuals and by any people coming to this country will be made available on a continuous basis by this Government despite the economic constraints we have inherited and despite the difficulties we have.

There has been criticism in this House of the Government's policies. Some allege that these policies necessarily involve cutting back in growth and employment. This view is very shortsighted and dangerously simplistic. Our gross indebtedness rose throughout this decade. It did not buy permanently higher growth in employment. This is a point I would like to stress. There is no trade off, except in the very short term between fiscal expansion and growth. In the medium term borrowing which was used to fund further growth begins to act as a drag on the economy through the interest payments which are required to service that debt. In the eighties, unlike the seventies, real interest rates have become negative. In plain English, that means that the real interest burden is [792] rising over time, and so we must find even more resources for debt servicing. This is a serious difficulty that the present Government have to handle.

Cutting back on Government borrowing and expenditure has had some adverse effects on growth in the short term. I do not deny that. We must remember that these policies are essential for the health of the economy in the medium term. However, there are positive spin-offs in the short term, too. The main benefits so far have been lower interest rates. There were no fewer than six separate interest rate reductions since the Government came into office and since Dáil and Seanad Éireann passed the budget last March. There has also been a real improvement in confidence. This is not just something intangible; it can influence how people make their investment decisions which is also important for the long term growth of the economy.

It is quite incorrect to say that the policies we are following now have not worked anywhere else. Let me turn the statement around. No successful and prosperous economy anywhere in the world allows its indebtedness to the rest of the world to rise unchecked or allows Government spending to rise inexorably.

There is, unfortunately, no shortage of countries in the world which ran into problems through allowing unrestrained public service expansion funded by external debt. The end of that road is not prosperity but chronic indebtedness which puts an enormous constraint on the freedom of action of economic policy. All the indications point to the fact that this Government have finally started to bring the public finance problem under control. It was starkly clear when we came into office that as long as public expenditure and, in consequence, taxation and borrowings remained at their present levels, productive activity would simply be stifled and the economy would not recover. Pious platitudes about the need to reduce expenditure are no longer enough. What we now need is action and that is precisely what this Government [793] are providing, swift, decisive and determined action.

Finally, what this Government are providing is swift, decisive and determined action. They have resolutely taken action to tackle the fundamental problems, aiming for a medium term solution which will allow growth to resume at a sustainable rate. Sound foundations are being laid and the benefits will be reaped in the years to come.

One of the main foundations for recovery which we have put in place has been the Programme for National Recovery and the public service pay agreement. The programme represents a consensus-based approach to the resolution of the difficulties facing this country. It has been endorsed by the principal economic and social interests and has received the support of the public generally, including the trade unions and the farmers alike. I would like today to pay my tribute to the positive attitude adopted by the trade unions and the farmers in acknowledging the serious difficulties that this country has and acknowledging their role in helping to resolve, along with the Government, these difficulties. I am confident that the leadership they are giving will ensure that this economy can respond to the very important measures being taken by the Government to stimulate economic activity.

It is only through such consensus that our problems on the economic and social fronts can be overcome. The programme is based on the realities facing us and the strategy and principles outlined are consistent with the views expressed in the NESC Report: A Strategy for Development, 1986-1990. This report sets down the requirement to be met to avert an economic crisis and to establish a solid basis for increasing output and employment over the long term. In line with the NESC recommendations, the Programme for National Recovery has adopted a consistent and coherent macro-economic strategy in borrowing, in particular fiscal policies which will stabilise the national debt in relation to gross national product. When we take into account the level of services we have [794] in the areas of health, education, environment and right across the board, in comparison with other countries in Europe — and we are part of the European Community — and in comparison with our GNP, it shows clearly that the levels of services are much greater in proportion to our financial debt and our population structure than in other countries throughout the Community. The amount of GNP we are putting into our public services and into servicing our national debt is serious. This is why people must acknowledge the difficulties that various Ministers have now to grapple with to ensure that these difficulties can be resolved by consensus and by proper support right across the board.

In addition, the programme has also put forward a development strategy, focused on the international trading sectors of the economy. We have had in the past year the highest level of exports ever in our history, which shows the committed, flexible and productivity performance of our people. It shows the ability of our industrialists and our factories and the people involved in high technology to be able to produce and compete with any other country throughout the world. We can be all proud of that tremendous effort and we must also salute our unions and our workers, for 1987 was an industrial strike-free year and that led enormously to the tremendous success we have had in our exports and in our export growth. We are hoping that 1988 will even surpass the performance of 1987. Already, the Minister for Industry and Commerce and the Minister with responsibility for Trade and Marketing are ensuring that no stone will be left unturned to ensure that the private sector and private sector leadership will be available to complement the State incentives and the State resources so that we can equal or even surpass the great export performance of 1987.

An integral part of the overall programme is the public service pay agreement. This provides for yearly increases in pay, averaging about 2½ per cent over the three year period of the programme. The agreement is the outcome of very [795] many long hours of difficult negotiation and, in my view, it represents a satisfactory compromise between what the Government can afford to pay and the expectations of the trade unions and their members. Some people seem to suggest that it was unnecessary for the Government to have given an average increase over the next three years in their negotiations with the social partners. This I could not accept; indeed nobody with any practical positive financial sense would accept it. If the Government are to meet the public service pay bill, if they are to meet the servicing of the national debt, if they are to stimulate the economy and if they are to ensure that we can reschedule and renegotiate our serious national debt, then they must know over a number of years, and particularly over a three year period, exactly what money they have to spend on the public service pay bill and in servicing our national and international debt. In that situation, when we know exactly where we are going, when we know what we have to spend, it is much easier to negotiate and to arrive at a positive conclusion as to what can be done over three years to reduce the national debt and to bring it within manageable proportions.

A very important element of the agreement is the weighting of the basic pay increases in favour of the lower paid, which should enable them to secure a real improvement in relative wage incomes over the period of the programme. The value of achieving consensus with the Irish Congress of Trade Unions and with the other representatives of Irish industry in a national programme to tackle our economic and social problems cannot be overstated. It was crucially important to the success of the programme that agreement be reached with Congress on the development of pay over the period involved. Any national programme which did not contain such consensus on pay policy would have been seriously flawed from the outset. Apart from the certainty that it provided for Government planning, as I already have alluded to, an approach based on consensus will [796] minimise pointless confrontation and the hardship arising from industrial disputes.

A very significant element of the agreement in this regard is the undertaking on the part of the unions not to engage in industrial actions in pursuit of claims in excess of the pay terms. This will naturally contribute greatly to industrial peace in the public sector for the three year period of the programme and leave the Government free to concentrate on solving the serious problems facing the economy without the distraction of what can often be very damaging disputes. Moreover, it allows for proper planning and strategy management of our finances by the Government. The Government are determined that the Programme for National Recovery will succeed and are relying on the parties to that programme to help in that aim. In this area we all, as public representatives and as community leaders, have a very fundamental role to give active, positive support and leadership to the consensus arrived at, in trying to resolve the enormous financial difficulties that confront this country.

The Government policies are the right ones for the country at this time and, as I said earlier this week, are entirely in keeping with the recommendations of independent analyses and of organisations both at home and abroad. I know of no reputable economic body or institute which do not support the broad thrust of the Government policies. Various economic analyses have been done and various comments have been made and they are all positively supporting the attitude and the policies at present being pursued by this Government in the interests of all the people on this island.

The debate we have had, ranging over the performance of the economy generally, should be an occasion for us to look at the shape of what is emerging, to identify the strengths that we have seen in 1987 and to conclude that we should build on those during 1988 and future years. This will be one of the central concerns of Government economic policy during the course of this year and in future years.

Mar fhocal scoir, ba mhaith liom mo [797] bhuíochas a ghabháil le gach Comhalta a ghlac páirt agus a thug tacaíocht don díospóireacht tábhachtach seo.

Question put and agreed to.

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