Seanad Éireann

25/Mar/1999

Prelude

Business of Seanad.

Order of Business.

Joint Committee on Finance and the Public Service: Motion.

Bretton Woods Agreements (Amendment) Bill, 1998: Second Stage.

Social Welfare Bill, 1999: Second Stage.

Adjournment Matters. - Mental Handicap Services.

Adjournment Matters. - Disadvantaged Areas Scheme.

[1125] Chuaigh an Cathaoirleach i gceannas ar 10.30 a.m.

An Cathaoirleach:  I have notice from Senator Cosgrave that, on the motion for the Adjournment of the House today, he proposes to raise the following matter:

The need for the Minister for Health and Children to examine thoroughly and give consideration to the need for funding to assist people with learning difficulties in the south east Dublin and east Wicklow regions.

I have also received notice from Senator Leonard of the following matter:

The need for the Minister for Agriculture and Food to re-examine the areas not included in the severely handicapped scheme in County Monaghan which was announced in recent weeks.

I regard the matters raised by the Senators as suitable for discussion on the Adjournment and they will be taken at the conclusion of business.

Mr. Cassidy:  Today's Order of Business is items 1, 2 and 3. Item 1 is to be taken without debate. Item 2, Second Stage, will be taken today with the contributions of spokespersons not to exceed 15 minutes and those of other Senators not to exceed ten minutes. Senators may share time. Item 3, Second Stage, will also be taken today with the contributions of spokespersons not to exceed 20 minutes and those of other Senators not to exceed ten minutes. Senators may share time.

It is proposed that item 3 commence at the conclusion of item 2.

Mr. Manning:  Will there be a sos today?

Mr. Cassidy:  If it is requested. It is not envisaged at present.

[1126]Mr. Manning:  Yesterday on the Order of Business Senator Lanigan and Senator Ryan condemned the invasion of Kosovo while Senator Coghlan supported the NATO action. The Leader of the House, in his reply, supported both points of view. Is that the Leader being the Leader or is it an accurate reflection of Government policy? It appears to be the latter but could a debate be held today or tomorrow – preferably tomorrow – on the current situation and the Irish Government's attitude to it?

I understand it is proposed to take item 7, the Qualifications (Education and Training) Bill, 1999, next week. A number of educational organisations are still studying the Bill and wish to put forward their views. Committee Stage of that Bill will not conclude next week anyway so I would be grateful it the Leader could postpone that debate until the first week of the new session. The Government will get every co-operation on this matter from this side of the House.

It is an important Bill and everybody is anxious to ensure it is the best possible legislation. It was initiated in the Seanad and the Leader has been extremely understanding in this regard up to now. However, I am seeking a further deferment.

Mr. O'Toole:  I support the call for postponing Committee Stage of the Qualifications (Education and Training) Bill. The Teachers Union of Ireland and the Irish Congress of Trade Unions have set up groups to examine the legislation. They have salient views to offer and they represent the people who are most closely involved in this area. If extra time were given, it could facilitate useful consultation.

The first European war this century began in the Balkans and it appears the century will also conclude with a Balkan war. Ireland has come through this century not knowing its position on, for example, Hitler's extermination of the Jews and various other horrendous events. The Irish Government and its people must have a well discussed position on these issues. We need to find a position between not interfering in the internal affairs of a nation while not washing our hands when we witness genocide. That position must be discussed. On at least four occasions in the past two years I have sought a debate on this matter. Admittedly, a debate is not helpful at times such as this but it must take place and I ask the Leader to make time available for it.

I wish to put on record our appreciation of the wise decision by the House of Lords in the UK that Mr. Pinochet should address the problems of his past life properly.

Mr. Costello:  I support the calls of the two previous speakers for more time on the Qualifications (Education and Training) Bill to facilitate proper consultation with the broad range of educational interests involved.

Senator O'Toole commented on the good judgment of the House of Lords with regard to General Pinochet, the former dictator of Chile. I [1127] was less than happy with the statement by Lord Dubs in the House of Lords yesterday regarding the proposed inquiry into the death of Rosemary Nelson. He said the RUC is the best qualified body to conduct the inquiry. Given that the report by the independent commission showed that the inquiry conducted by the RUC into death threats to Rosemary Nelson was a sham, the force is the worst qualified to conduct the inquiry. The Minister for Foreign Affairs should impress upon the British authorities the need to have the inquiry carried out by an independent body. There is no reason the FBI could not conduct the inquiry, having first received the forensic material from the RUC.

Regarding NATO's air strikes on Yugoslavia and Kosovo, I am disappointed the Minister for Foreign Affairs has been seen to be evasive and not to have an opinion, good, bad or indifferent, about what this country's position should be. It behoves us to know where we stand as a people. It is not good enough to say we do not have a view because we do not know the position under international law. We have enough experts to find that out so that we can state our position. President Milosevic is a dictator who has engaged in extreme violence and ethnic cleansing. This country must know where it stands on the NATO strikes. The Minister should address the House and allow us to help him make up his mind, and that should happen at the earliest opportunity.

Mr. Dardis:  I support the view that it is a matter of considerable urgency that the House should debate the issues associated with the air strikes on Yugoslavia and Kosovo and form a coherent view. Senator O'Toole is right to say there are two conflicting views. One is that this is an internal matter which is outside the remit of the rules regulating international intervention. The other is that this is a dictator who has brought considerable misery and suffering to the area, that several attempts have been made to reach a settlement but on each occasion President Milosevic has engaged in brinkmanship and withdrawn from making an agreement, and that in the circumstances there was no option but to intervene. We need to tease out those matters in some detail and it is important that the Minister should be here for the debate. I join previous speakers in asking that we devote considerable time to it tomorrow.

An Cathaoirleach:  The leaders of the various groups have supported the holding of a debate on Kosovo. I will not allow that debate to be pre-empted on the Order of Business by other speakers. I have allowed considerable latitude to the Leaders and will now call other Members on the Order of Business.

Mrs. Ridge:  I again ask the Leader for a date for a debate on the proposed revision of the censorship laws, as promised in the Fianna Fáil elec[1128] tion manifesto. I hope the Leader will not renege on his promise and assure him there will be speakers from this side of the House. Apropos of that, will he inquire of the Minister for Justice, Equality and Law Reform why a purveyor of pornography in Galway had his sentence doubled, yet the same material is freely available and advertised in Dublin? There appears to be an anomaly in the law. I congratulate the Garda sergeant who seized the pornography and brought the case to court but why are we unable to deal with this problem in Dublin?

Mr. R. Kiely:  The Minister for Agriculture and Food is to be congratulated for his remarkable success for Ireland in the agricultural talks on CAP reform. When the Commission's proposals were published some time ago, the loss to Irish agriculture was estimated at £226 million per year. After the changes made to these proposals, achieved by the Minister, that loss has been wiped out.

Mr. Connor:  That is so.

Mr. R. Kiely:  I ask for a debate on the Commission proposals in the near future. I also condemn the overcharging by Tesco and the deceitful manner in which it was done – there was often a large difference between the price on the goods and the price charged at the checkout. This borders on the criminal. I also support the calls for a debate on Kosovo.

Mrs. Jackman:  As rapporteur to the Oireachtas Joint Committee on Health and Children, I was responsible for its report on attention deficit disorder in Ireland. The report will be adopted this morning and will be presented to the Dáil and Seanad. It is a serious issue and I hope the House can debate it as soon as possible. It is a growing problem which has not been addressed. It straddles three Departments, the Department of Health and Children, the Department of Education and Science, and the Department of Justice, Equality and Law Reform, but it is mostly within the remit of the Department of Health and Children so I hope the Minister, Deputy Cowen, can attend the House when we discuss this report.

Mr. Lanigan:  I accept your ruling on Kosovo, a Chathaoirligh, but I would not like to let the opportunity pass without complimenting the Minister for Foreign Affairs on his stance, although he was condemned earlier.

An Cathaoirleach:  You will have an opportunity to do that in the debate.

Mr. Lanigan:  In the past ten minutes, he and other Ministers have arranged for Kosovo to be discussed at the Berlin summit. He has been very involved and has not been neutral.

Mr. Ryan:  Since concerns about minorities are widespread in the EU and NATO, I ask the [1129] Leader to ask the Minister for Foreign Affairs to undertake a visit to the Kurdish territory in Turkey to investigate the abuses of human rights, genocide, murders and bombings carried out against those people by Turkey for the past 50 years at least. Turkey, incidentally, is a member of NATO and may well be involved in bombing Kosovo. I also ask the Leader to ask the Taoiseach whether he is happy to have an Attorney General who apparently does not have an opinion about international law.

Mr. Coghlan:  Will the Leader confirm whether the Minister for Justice, Equality and Law Reform has brought to Government a satisfactory recommendation on pub licensing laws? Will it be in place by the summer and will he outline the timetable?

I too accept your ruling on Kosovo, a Chathaoirligh. It was akin to a pre-emptive strike. We need hard, fast, specific strikes to bring the bully boy dictator back to the negotiating table.

On Objective One status, I am concerned that the Taoiseach may have folded his tent prematurely in his hour long meeting with the German Chancellor, Mr. Schröder. I read this morning that papers have been drafted which may allow Portugal an extra two years of Objective One funding. Our master of negotiation may have been premature in conceding that most of Ireland should have the status of Objective One in transition. Perhaps the Leader will comment on that.

Mr. Cassidy:  Senators Manning, Costello, O'Toole, Dardis, Kiely, Coghlan and Lanigan expressed views on Kosovo. I join Senator Lanigan in congratulating the Minister for Foreign Affairs on his stance, and on his involvement in arranging a discussion of the issue at the summit. I accede to the requests of Senators and will arrange for statements at 2 p.m. tomorrow.

Senator Ridge called for a debate on the censorship laws. I will allocate time early in the next session for such a debate. Senator Rory Kiely congratulated the Minister for Agriculture and Food on his success with the new Commission proposals and called for a debate on them. I will see if I can arrange to have statements on this issue for two hours next week and if the Minister will be available to address the House.

Senator Jackman called for a debate on attention deficit disorder and I support her request. I will arrange for a debate on this issue.

Senator Coghlan called for a debate on the licensing laws.

Mr. Coghlan:  I want information on the licensing laws.

Mr. Cassidy:  I will allocate time for this debate and I will come back to the Senator with information. I read in the newspapers this morning that the licensing laws will extend opening time by one hour. Many people have different views [1130] on this issue. I will inform the Senator of the up-to-date position tomorrow morning.

Mr. Manning:  I asked the Leader about the Qualifications (Education and Training) Bill, 1999.

Mr. Cassidy:  I will discuss that with the leaders of the parties after the Order of Business.

Order of Business agreed to.

Mr. Cassidy:  I move:

That the Joint Committee on Finance and the Public Service is hereby authorised by Seanad Éireann for the purposes of the Freedom of Information Act, 1997 to be the joint committee referred to in section 32(2) of that Act and to discharge the functions of such committee.

Question put and agreed to.

Question proposed: “That the Bill be now read a Second Time.”

Minister of State at the Department of the Marine and Natural Resources (Mr. Byrne):  I am pleased to make the Second Stage introductory speech on behalf of the Minister for Finance whom everyone in the House will be aware is in Berlin on business that is of the utmost importance to Ireland's economic, structural and social development.

The primary purpose of this Bill is to enable the Minister for Finance to take or to authorise the Central Bank on his behalf to take the necessary actions to make the payments authorised by the Government under the debt relief package announced by the Minister for Finance and the Minister for Foreign Affairs on 16 September 1998. The package will amount to £31.5 million over 12 years of which £17 million will be disbursed in 1999. It consists of three elements – debt relief of £11 million to the World Bank's HIPC debt initiative trust fund; £4 million to the IMF's, ESAF, HIPC trust; and £7 million to the IMF to provide interest subsidies under the enhanced structural adjustment facility trust.

The Bill also deals with Ireland's acceptance of a special one time allocation of SDRs by the IMF and Irish participation in the Bank for International Settlements Facility in favour of Brazil. The Bill was subjected to intensive scrutiny in the Dáil and its accountability and control provisions have been greatly strengthened as a result of amendments put forward by Government and Opposition Deputies. I do not propose in my address to cover the same ground in the Seanad [1131] as was covered in the Dáil. The debate there was intensive, if a little lopsided, and many issues were raised by Deputies to which the Minister replied during the various Stages.

Unsustainable debts have increasingly been recognised as a constraint on the ability of poor countries to pursue sustainable development and reduce poverty. In response, just over two years ago, the World Bank and the IMF launched the heavily indebted poor countries debt initiative, HIPC. It was endorsed by 180 Governments represented at the World Bank and the IMF as a sound and effective instrument to provide poor countries a way out of the debt trap. The HIPC initiative is designed through a combination of substantial debt relief and important policy reforms to help poor countries reduce their external debt to sustainable levels so they can focus on long-term poverty reduction and economic growth. HIPC debt relief is used specifically in cases where traditional debt relief mechanisms will not be enough to help countries exit from the rescheduling process.

The HIPC initiative comprehensively attacks the debt problem in some of the poorest countries. If an external debt is unsustainable and a country has established a good record of implementing structural and social reforms, the HIPC initiative provides for additional debt relief. With HIPC debt relief, Governments will have additional resources available to strengthen their social programmes, especially in primary education and primary health. A second special aspect of the initiative is the new dimension of multilateral debt relief. Before this initiative, multilateral debt relief was taboo. For the first time, multilateral institutions, such as the World Bank and the IMF, are providing debt relief together with other bilateral and commercial creditors.

There are 40 HIPCs worldwide that owe in 1996 US$170 billion in external public debt. While this amount is but a small fraction of the total debt of developing countries of more than US$2 trillion, the debts of HIPCs are, on average, more than four times their annual export earnings and well exceed their annual GNPs. These are approximately twice the levels considered to be sustainable. Some 33 African countries are HIPCs and many of these have debt that is unsustainable.

Over the past two years seven debt relief packages have been approved for Bolivia, Burkina Faso, Cote d'Ivoire, Guyana, Mali, Mozambique and Uganda, yielding debt service relief in excess of US$5 billion. In the cases of Uganda and Bolivia, the countries have already successfully completed the HIPC programme and are receiving debt relief amounting to more than US$1.4 billion in debt service reductions. HIPC and traditional debt relief will help these countries to return to a sustainable debt position. For these seven countries, total external debt, expressed in present value terms, will fall from US$31 billion in 1996 [1132] to US$19 billion in 2000. There has also been preliminary discussion on debt relief packages for Guinea-Bissau and Ethiopia.

The HIPC initiative has been catalytic in mobilising governments around the world, international institutions, NGOs and religious organisations to stay focused on the need to deal urgently with the debt problem faced by the poorest countries. At the same time we should be aware that debt relief alone will not solve the development problems of these countries, especially that of poverty. Debt relief should be seen as an integral part of the broader development agenda and integrated into an overall strategy of poverty alleviation. The key element of all strategies to reduce poverty must be a well specified plan of reform which has broad political support in the countries concerned.

From a financial point of view debt relief must also be seen as part of an overall support package that includes grants and highly concessional credits. In this context it is often forgotten that most HIPCs are already receiving substantial net inflows from creditors and donors. HIPCs receive on average twice as much by way of external assistance, involving grants and concessional loans, than they pay by way of debt service, and in some HIPCs such as Mozambique, Tanzania and Uganda this ratio is much higher.

Many Governments, institutions and civil society groups have strong feelings about debt relief and there has been an intensive debate about the HIPC initiative. The Irish Government has been to the fore in calling for significant improvements in the package on offer. The debate is attracting increasing support for more extensive debt relief. I expect an initiative to accelerate and deepen the HIPC initiative at the G7 summit planned for Cologne in June of this year.

I would draw the attention of the House to the principles concerning Third World debt which the Government announced in September last. This was one aspect of the Bill which received universal approval in the Dáil. These principles are: debt relief should become an integral part of Ireland's overall overseas development aid strategy, reinforcing the existing emphasis on the fundamental goal of poverty alleviation as well as environmental sustainability and gender equality; Ireland will continue to emphasise the need for definitions of debt sustainability to take human as well as economic development into account; we will press for increased flexibility in the implementation of the HIPC initiative in particular with a view to its speedier implementation and its application to as wide a range of the heavily indebted countries as possible; we will continue to encourage the IMF to take full account of the social impact of its policies at the design and implementation phases of its macroeconomic and structural adjustment programmes; we will strongly encourage the international community, including bilateral creditors, to take a generous and flexible approach to the heavily indebted [1133] poor countries. Ireland will continue to press for deeper debt relief so as to ease the debt burden that is imposing enormous constraints on many developing countries; we will continue to advocate a greater degree of consultation and involvement for civil society in the developing countries in the planning, design and implementation phases of IMF-World Bank programmes; we will continue to call on the IMF to maximise the use of its own resources by, for instance, the sale of its gold reserves, to fund a deeper and wider response to the debt problems of Third World countries – in recent discussions on funding HIPC and ESAF Ireland took a strong position in favour of the sale of gold; the Minister for Finance will press for greater transparency in the workings of the Bretton Woods institutions; both the Ministers for Foreign Affairs and Finance will emphasise the importance of continued consultation with the NGO community on issues of concern in relation to debt and development. These are the principles upon which all of our future aid and debt relief strategy will be based.

The Government has listened very carefully to the comments in the Lower House on the debt relief package and in particular to the stringent criticism levelled against the IMF's enhanced structural adjustment facility. However, Deputies and Senators should note that the Government means what it says when it calls for the deepest possible level of debt relief. This is not empty rhetoric.

The initiative calls upon creditors and debtors alike to work towards a way out of the debt trap and to focus scarce resources on sustainable development and reducing poverty. The HIPC initiative has made good progress in the past two years but much more needs to be done. The review of the initiative currently under way provides an opportunity for all interested parties to make their comments available. Ireland has now submitted its own proposals for reform of the initiative to the World Bank and the IMF. These comments build on the principles concerning Third World debt which I have already mentioned. In addition, we have encouraged the NGOs to make submissions and been in contact with both the IMF and the World Bank to make sure these are heard.

I would like to draw attention to some of the more significant points in the submission in the context of the debate on this Bill. The submission acknowledges that the HIPC initiative is a valuable framework for dealing with the debt issue. It is based on many sound principles and the calls for review and reform should not be allowed to obscure its solid base. Having said this, it is quite clear that many elements of the initiative could and should be improved. Many of these improvements inevitably raise the question of finance and resources.

Debt relief is an important element in the overall efforts to bring about conditions of growth and development in the HIPC countries and also to assist them in their efforts to become integrated [1134] in the world economic, financial and trading systems. Poverty eradication is the ultimate goal towards which the interim goals of growth, development and debt relief are critical underpinnings. Debt relief in itself is not therefore the end game.

We very much welcome the pledges made by many bilateral creditors to cancel their bilateral and commercial debts. In Ireland's case our overseas aid has been in the form of grant rather than loan assistance. We are aware of current calls for blanket debt cancellation of multilateral debts or the cancellation of unpayable multilateral debts. We feel there is a need for the full implication of these proposals to be fully teased out. We have drawn particular attention to the need to assess the impact of multilateral debt cancellation on the operations of the multilateral financial institutions, the flow of funds – grants and lending – to the middle income countries, and the ability of HIPC countries thus assisted to attract further external private sector flows and inward investment in particular.

We would be concerned that middle income or lower middle income countries should not bear the cost of the additional relief required to deepen, broaden and widen the HIPC initiative. The most obvious source of finance for improving the HIPC initiative would be increased aid budgets, supplemented by further contributions from the multilaterals themselves where this is possible. In the case of the IMF, for example, the sale of gold would produce additional finance. Ireland has been, and will continue to be, a strong advocate of the sale of IMF gold.

The primary prescription made in the submission is to shorten the period of track record and to extend the period within which the developed countries and the multilaterals would commit themselves to working with the HIPC countries. We support social considerations and human development indicators as an integral part of structural adjustment and not an afterthought or add-on. This is important in terms of ownership and effectiveness of programmes and of the efficient and effective use of donor resources, including those of the multilaterals.

The present scheme needs to be broadened, deepened and accelerated as well as being developed to take into account both dynamic and human factors. While the existing framework is important as a first step and as an innovative approach to deal with the complex problem of Third World debt, we favour an easing of the eligibility criteria. It is clear that the developed countries will have to be far more generous if the initiative is to provide a real exit strategy to the least developed countries. That is one of the reasons the Minister has provided for the possibility in the Bill of making further payments to assist further multilateral debt relief efforts.

The case has been made for ring-fencing social expenditure, particularly in the areas of health and education, in the context of an economic and social reform programme, worked out with the [1135] IFIs before the fiscal thresholds are brought to bear. We see merit in this approach and believe it ought to be pursued further. Otherwise the claim that foreign debt service is at the expense of social provision will gain increasing currency.

Our submission takes the view that the maximum number of HIPCs should be clear on their eligibility under the initiative by the year 2000. The key issue here is that accelerated relief should be included in a realistic and achievable national development plan which would have the backing and active participation of the main donor countries and the international financial institutions. The active participation and collaboration of the international financial institutions will also be critical. The type of collaboration and co-operation suggested by the President of the World Bank under the rubric of the Comprehensive Development Framework has much to commend it, both in terms of monitoring developments and ensuring an integrated approach to the development of HIPC countries.

Broad based growth and development can be achieved only through self-directed growth, and only the countries themselves can ultimately ensure this. For the economic and social reasons already mentioned, this implies any measures applied are implementable over the medium and long term, which requires that they are perceived as relevant and subject to influence and control by the countries concerned. There must be both ownership and empowerment on as wide a basis as possible, involving governments, parliaments, social partners and civil society.

The Bill goes beyond the question of Third World debt. It includes provisions in section 9 to deal with Ireland's participation in the IMF arranged financial package for Brazil. It also deals, at sections 2 and 3, with the acceptance by Ireland of the one-time equity allocation of special drawing rights to members of the IMF.

The Bill will enable the Minister for Finance to take the necessary action to guarantee the Central Bank against any losses it might incur under the Bank for International Settlements' Facility in favour of Banco Central do Brazil. Ireland's participation in the facility will cover the capital element of US$50 million – £34.3 million – and associated interest. It will provide for the adoption by Ireland of the proposed fourth amendment of the Articles of Agreement of the IMF. This will enable the Central Bank to accept the one-time allocation of special drawing rights agreed by the IMF at the annual meetings of the fund and the World Bank in Hong Kong in 1997.

A new section 10 was added to the Bill in the Dáil to provide for an annual report to the Houses of the Oireachtas in respect of Ireland's participation in the IMF and the World Bank. This is a welcome addition.

The entire debt relief package is designed to make an initial Irish contribution to the alleviation of the burden on HIPC countries. The package offers a pragmatic way forward to alleviate [1136] the crippling debt overhang which has acted as a constraint on the development of the HIPC countries. It is also appropriate that Ireland should show its solidarity with Brazil in the financial difficulties it is experiencing at present. We hope the international support they are getting will enable them to undertake the reforms necessary to underpin their future economic development.

The amendment of the IMF Articles of Agreement to enable the selective allocation of SDRs is also worthy of support. I commend the Bill to the House.

Mrs. Taylor-Quinn:  I welcome the opportunity to speak on this Bill. Some sections of the Bill are very welcome but others are questionable.

Ireland has a good record in this area, in that the people in general have a conscience and an awareness about poverty in Third World countries, and have always responded generously on a voluntary basis to the various crises that have arisen, particularly in Africa. However, at times our performance at Government level leaves a lot to be desired. We have aspired to increase our contributions, and this has been done, but there were then debates on whether we should continue to make contributions in line with the booming economy. This issue will always be a source of discussion, and rightly so, because just as we have an obligation nationally to the less well off and the socially excluded in our community, as citizens of Europe, we should strive to achieve equality across the board at all levels. A lot of equality legislation is being introduced at European level. As the world becomes a smaller place, our obligations at international level will continue. We have a moral obligation to apply our approach at European and national level to the global community. The general principles of parts of the Bill are extremely welcome, but others must be questioned.

Our obligation to the under-developed countries in the Third World must be put into focus. We have an obligation, because of our international commitments over the years and the continued discussions between the Department of Finance and the Department of Foreign Affairs at international level, to ensure international agreements are complied with. Unfortunately, there is a serious question mark over the way the IMF has operated. There is a real problem in relation to debts in Third World countries and the way in which the IMF moved in to try to get the debts repaid. We must recognise that the IMF is a bureaucratic institution with one specific purpose, to ensure deficits are reduced. In many instances, the plight of the people on the ground in these under-developed countries has not been reflected in the policies being pursued. This is a serious matter, particularly as the debt required to be recovered by the IMF is not that fundamental in the global order of things at an economic level. The stringent approach adopted up to now must be reviewed. It is not good or sound policy when the general good of the community and the [1137] people of these under-developed countries becomes secondary to the repayment of the debt. Increasingly, the programmes that have been put in place have aggravated the situation rather than improved it. This is unacceptable.

Providing assistance to people is important, but enabling them to provide for themselves and to become self-sufficient is more important. In many countries, particularly in Africa, debt repayments have crippled governments and the many fragile democracies in the region. They have led to tensions, unrest and uprisings in communities. This is dangerous and the role of the IMF and the ESAF programmes which have been put in place in that scenario must be questioned. The abundance of information available, particularly from the Debt Coalition in Ireland, in that regard must be acknowledged.

The Debt Coalition is the only group, other than the Departments of Foreign Affairs and Finance, with informal information on this area. The group has identified clear and serious problems on the ground and there is an obligation on us to heed its message. The group is extremely concerned about the operation of the ESAF programmes. For example, in Ethiopia, 100,000 children die each year from diseases which could be easily treated and cured if funding was available. However, four times the amount of money spent on the health budget goes towards debt repayments. If that was reversed, the children would not die. We must raise questions in that regard.

In Tanzania, six times more money is spent on debt repayments than on health services. This is unacceptable. Few people in that country expect to live beyond 35 years of age. As a western democracy, we must ask if that is morally justifiable. How can Ireland support an organisation at international level which demands and gets money from these countries in debt repayments when the life expectancy in one is only 35 years and children are dying in another? Extensive education is not provided in Zambia because five times the amount of money spent on it goes towards debt relief. This is an unacceptable scenario and Ireland, as a Western democracy with a booming economy, cannot justify support for a programme which pursues countries in that manner. Ireland has an obligation to ensure that its voice is heard at international level in opposing this approach.

Many of the Minister of State's comments are commendable and I agree with his points about the principles in relation to Third World debt and the Government's aspirations, such as the HIPC initiative and greater transparency in the working of the Bretton Woods institutions. These moves are welcome, but ultimately Ireland as a Western democracy which did not support the ESAF programme was in a much stronger position before the Government's change in policy in relation to contributing to and supporting it. The Minister and the Department should consider its change of policy. Just because other countries are doing it is not a good reason for Ireland to participate.

[1138] Ireland should be a voice for deprived people and countries which are attempting to set up fragile democracies. Ireland is a recent democracy and we should appreciate the difficulties and vociferously articulate them on behalf of the countries involved. Ireland's voice has been substantially weakened and the next time the Minister goes to Washington, he will not have the moral authority he had previously when Ireland refused to support the ESAF. I hope the Government will reconsider its position on this matter. It is easy to fall in with the crowd; it is difficult to be a lone voice, standing apart from the rest and articulating a view which may be unacceptable to the powers that be.

It is unfortunate that our close ties with America and Washington may have conditioned us to falling in and taking this approach. The support we are receiving in other areas from Washington for domestic problems should not be used as a lever in diplomatic negotiations to put us into a position where we feel obliged to change fundamental policy. The Government should review its position on this matter.

There are real problems in many countries and many administrations are far from perfect. In many instances democracies are highly questionable and the expenditure on armaments is totally unacceptable. Some African countries spend vast amounts on arms and it must be possible to make other arrangements to ensure they are advised in a co-operative sense, discouraged from that line of activity and encouraged to spend more money on areas of social policy. It is most important that such a move is considered at international level.

The leaders of some countries have huge egos which they like to boost by spending exorbitant amounts on projects which may not necessarily benefit the people of their communities. There must be other ways to make them realise that this expenditure is unacceptable to the international community. We should take a line in that direction rather than implementing the measures in the Bill.

A number of reports on the ESAF have been carried out, including internal and external reviews of the working of the programmes. The internal review focused mainly on the progress of countries towards achieving macro-economic targets. The figures in relation to the IMF were extremely disappointing and the overall change in inflation levels and economic growth rates were lower than for developing countries. The IMF did not achieve its basic economic lines; it failed at that level.

The external review highlighted two areas of grave concern regarding the social impact of the programmes and the sense of ownership and democracy surrounding them. In Zambia the reform process was undertaken wrongly and the resulting credit squeeze caused the destruction of maize producers in remote areas. Their livelihoods were destroyed.

The external review recommended that the International Monetary Fund should work with [1139] the World Bank to identify in advance which groups may lose out through the ESF programmes. It stated that this would provide a basis for monitoring the impact of ESF and for putting safety nets in place. That recommendation should be pursued.

The Minister has weakened his hand for his next trip to Washington by putting in place a change of policy in relation to ESF proposals. It is unfortunate that the Government has decided to take this line of action and I ask it to reconsider.

Mr. Byrne:  Do not underestimate us.

Mrs. Taylor-Quinn:  I would not dare but this matter is very serious. We should heed what is said by Irish people who spend time on the ground in the Third World and know exactly what the scenario is. This change in policy is ill advised.

Ms Cox:  I welcome the Minister to the House. Senator Taylor-Quinn will understand that any tension is a result of the Minister's efforts to have Wexford included as a HIPC. He is somewhat upset about the situation.

Mr. Byrne:  We are almost there.

Ms Cox:  It would be useful to be able to see Ministers' speeches before they come into the House. Often we can see from those speeches how much has been taken on board from the debates in the lower House. This speech indicates that there was a great debate in the Dáil and that points were made which were taken on board by the Minister and his officials. The issue of accountability and reporting was very much taken on board. That amendment was put forward and the Bill has been strengthened by it.

Senator Taylor-Quinn said that our hand had been weakened by joining the rest. It is my belief that our hand has been strengthened because we are now involved. It is only by becoming a partner in the process that we will be able to demand the reviews which are important and look at the implementation of programmes and see how they affect people on the ground.

We are no longer talking, we are now putting our money where our mouth is. We have a voice with moral authority. The Irish voice has never been a lone voice, it has always been part of the group leading the way. Throughout the Famine we saw the problems of economic policies which ignored the human element and millions died as a result. That culture and heritage will never be forgotten, no matter what Government is in power. We will never be the lone voice. Progress may be slow and the people on the ground may become frustrated with the slow pace of the establishment but, if I have learnt one thing in public life, it is very difficult to move the establishment and you need a lot of patience.

[1140] When the Department of Finance publishes a document, it is full of jargon. It is useful to look beyond what is written to see what it means. This document states that we will strongly encourage the international community, including bilateral creditors, to take a generous and flexible approach to the heavily indebted poor countries. Ireland will continue to press for deeper debt relief to ease the debt burden that is imposing enormous constraints on many developing countries. Members of the Opposition who believe this Bill is not doing what is intended should look at the words “deeper debt relief”. It is in black and white in the Minister's speech and in the minds of the Government officials who are working on our behalf. We are trying to help people on the ground and deeper debt relief is part of that.

The Minister made the point that we will continue to advocate a greater degree of consultation and involvement for civil society in the developing countries in the planning, design and implementation phases of the IMF-World Bank programme. We will also be involved in the review. Therein will be our strength. Because we are now involved we can have an input and make a difference. We will continue to call on the IMF to maximise the use of its resources by selling some of its gold reserve. Senior officials of the IMF would tell us to take a hike if we were not putting in money. We are not in a position to push for better use of IMF resources if we do not contribute.

The Minister for Finance will press for greater transparency in the workings of the Bretton Woods institutions. That is vital. This is couched in diplomatic language but it means that we will be pushing for the maximum benefit in each programme. The Minister for Foreign Affairs and Finance will emphasis the need for continued consultation with the NGOs on issues of concern in relation to debt and development. Our commitment exists at all stages, particularly for the NGOs which we recognise as having a huge contribution to make. Without their contribution many more would have died in the Third World.

It is sad that the people who are speaking against the Bill cannot see past the propaganda from many organisations and cannot understand the intention behind the Bill. We must help countries, we must look at the consequences of debt. We know the IMF is not a developmental agency but that is not what it exists for. There are many developmental agencies with which it works.

The package amounts to £31.5 million. This year £17 million will be disbursed, including debt relief of £11 million. Anyone who thinks we are not committed to debt relief is fooling themselves. A total of £11 million is being provided for the World Bank HIPC debt initiative trust fund and £4 million is going to the IMF HIPC trust. We should be proud that £7 million is being given to the IMF to provide interest subsidies under the enhanced structural adjustment facility.

We need to recognise that we have failed to respond adequately to Third World and [1141] developing countries. We may have been too focused on trying to get our economy to a stage which would allow us to make that contribution and we have achieved that objective. However, I am saddened that we no longer have collections in schools such as pennies for the black babies. Perhaps it is because television brings events closer to us, but when I was in school one felt one was making a contribution by giving money to the black babies. We may need to look at this issue. It is one thing to give away billions of pounds but there is nothing wrong with local communities donating small amounts of money.

The Department and the Minister are aware of the human face of the suffering. One Deputy recalled a visit to a small village on the Namibian-Angolan border where $5 Namibian, worth 80p, obtained medical treatment for a very sick child. One sees posters on billboards stating that £1.20 can save a child or provide them with necessary medical treatment. There are huge problems which, as a Government and as individuals, we can help address.

There is a clear recognition that debt is the key burden in developing countries. Let us forget about such countries for a moment. If we spend our entire household income servicing our debts we do not have money to pay for food, clothes and medical bills or to provide education for the future. The Government recognises this fact and that is why it is committed to introducing this Bill and putting in place this substantial investment in the world's future. On Ireland's behalf we are providing for investment in the development of the world. We are playing our part as global partners and helping those less well off.

The less well off are those spoken about by Senator Taylor-Quinn, the 40 per cent of the population of Tanzania who die before the age of 35 or the people of Zambia where the servicing of the external debt costs five times the expenditure on education. We could say that these are reasons for not doing what we are doing because it will not work. However, these are the reasons we should take these measures because it is by making this commitment that we can address these issues.

Debt is very onerous on many poor countries and it is important to ensure that, in the words of a speaker in the Dáil, the medicine is not too strong for the patient. This is one of the key challenges we face. We must ensure that whatever policies are implemented do not leave people worse off than if they received no money. This is a good analogy of which the officials are aware. However, if the medicine is too strong the patient will die.

It is important to recognise the role of the NGOs, religious agencies and Irish people working in the Third World. I am a great believer in giving money to the religious missionaries. There is no one better than missionaries for spending money wisely. I have seen nuns who have returned from Africa travelling from community to community collecting £50 and £100 which is [1142] spent wisely when they return to their missions. As well as addressing this problem at a macro level we also have to work with agencies, particularly missionary orders, who do not run advertising campaigns or maintain large administrative offices. They operate on a voluntary basis and some of our money should be directed to such organisations.

This has been a tremendous debate. I read the entire Dáil debate on this Bill. I have spoken to the officials and I recognise from where they are coming. We are now putting our money where our mouth is. We could stay on the outside and criticise until the cows come home. We are providing £31.5 million over 12 years which is an incredible amount of money of which we should be proud. The points about which we need to be concerned have been raised by speakers on both sides and have been taken on board by the Minister and his officials. I commend the Bill and compliment all involved in its drafting.

Dr. Henry:  I welcome the Minister of State and most of the Bill. There was an excellent debate in the Dáil on this Bill. However, like Deputies, I am puzzled by the change in Fianna Fáil's policy from its pre-election commitment to continue to withhold funds from the enhanced structural adjustment facility until there was reform of the IMF. I have no reason to believe that the IMF is a malign group in Washington. I have been to the IMF and the World Bank and a considerable number of Irish people work for those organisations.

The IMF works at a macro economic level. No matter what one may claim about us forcing it to have greater transparency and to take into account the social implications of its policies, I would prefer to see Fianna Fáil stick to its pre-election commitment and stay outside the organisation until some attempt is made at reform.

I am grateful to the Debt & Development Coalition for its briefing documents. I have been involved and interested in this area for many years and I will quote from the work of Michel Chossudovsky, professor of economics in Ottawa University who has an Irish connection – his father lives in Howth. He has studied the impact of IMF and World Bank reforms and what they have attempted to do in developing countries. He has written a book on the globalisation of poverty which addresses many of the issues we are discussing today.

I do not think the Department has any malign intent, however, I do not understand the position. The foregoing of debts is to assist the developed world, not the Third World. Underdeveloped countries are unable to pay their debts so we are establishing structures through the IMF which give them the money to pay us what they owe without doing anything to help them.

I agree with what Senator Fox said about the more personalised campaigns regarding overseas development and helping people in Third World countries. Last summer I visited a friend, who is [1143] a nun, in Lagos. With the help of small amounts of money sent by Irish people she has done much work in a home for mentally handicapped people. I saw the photographs before and after she went there. She is running organisations for people who have been sent to jail without trial. When they are on remand there is nobody to bring them out and she has devised a structure where people undertake to mind them if they are released on bail.

We have done incredible things from this country with very poor resources. Now that we are more flush with money, I am concerned about what we are allocating for overseas development. It appears to be well intentioned, but I do not believe it will help the countries involved. It will be of great help to the major banks who have lent the money to these Third World countries. Russia is becoming like an underdeveloped country due to the necessity to repay debts. It is only by the grace of God that the eastern European countries have escaped the same fate.

Debt repayment has achieved an enormous significance, but it is because it is so important to the banks and financial institutions in the developed world that we are giving it such consideration. It is doing nothing for those in the undeveloped world.

The IMF claims it is inflicting short-term pain for long-term gain, yet by its own admission there has been no long-term gain. When replying to the debate will the Minister identify a couple of countries, besides Uganda, which is always referred to, where there has been long-term gain?

These policies have been ongoing since the 1980s. In his book entitled The Globalisation of Poverty, Michel Chossudovsky refers to the tacit acknowledgement of failure by the IMF and the World Bank and quotes from an IMF staff paper by Mohisn Khan entitled The Macroeconomic Effects of Fund Supported Adjustment Programs, which states:

Although there have been a number of studies on the subject over the past decade, one cannot with certainty say whether programmes have “worked” or not . . . On the basis of existing studies, one certainly cannot say whether the adoption of programmes supported by the Fund led to an improvement in inflation and growth performance. In fact it is often found that programs are associated with a rise in inflation and a fall in the growth rate.

I do not know any country where there has not been a rise in inflation and a fall in the growth rate and, in numerous instances, the destruction of the local currency. Given that the legislation commits us to the IMF approach, I presume the Minster will produce contradictory evidence and identify the countries in which the policies of the Fund are working. Thus far in the debate this has not been mentioned.

Traditional debt relief has not worked because these countries are in such an appalling state that [1144] they cannot pay. The IMF is changing its policies to ensure the developed world is paid. The enhanced structural adjustment facilities have had terrible social effects. I have taken a considerable interest in the health effects and I doubt if there is an underdeveloped country in which the general standard of health has not fallen in the past ten years. In his book, Michel Chossudovsky, referring to the resurgence of communicable diseases in sub-Saharan Africa, states:

In sub-Saharan Africa there has been a resurgence of a number of communicable diseases which were believed to be under control. These include cholera, yellow fever and malaria. Similarly, in Latin America the prevalence of malaria and dengue has worsened dramatically since the mid-1980s in terms of parasite incidence. Control and prevention activities (directly associated with the contraction of public expenditure under the structural adjustment programme) have declined dramatically.

Under the IMF programmes these countries must curtail spending on these domestic issues so that money can be given to debt repayment. This is what we are encouraging. Mr. Chossudovsky goes on to state that the outbreak of bubonic and pneumonic plague in India in 1994 has been recognised as – here he quotes from the Madrid Declaration of Alternative Forum, The Other Voices of the Planet,“the direct consequence of a worsening urban sanitation and public health infrastructure which accompanied the compression of national and municipal budgets under the 1991 IMF/World Bank-sponsered structural adjustment programmes. . . ”. The Minister is aware that the Indian budget is effectively drawn up in Washington by the IMF. The Indian Department of Finance has no control over its spending on health. That is decided in Washington. I do not suggest that those in Washington are malign in their intent, nevertheless, IMF forms specify what must be included. Furthermore, IMF officials visit these countries for three or four days, attend meetings of their finance departments and tell them what is to be done. Yet, they have very little knowledge of the social consequences of their suggestions.

Michel Chossudovsky goes on to state:

The social consequences of structural adjustment are fully acknowledged by the IFIs. The IMF-World Bank methodology considers, however, the “social sectors” and the “social dimensions of adjustment” as something “separate”,. . .

I do not believe the Irish people considers the social consequences of these monetary changes have to be considered as something separate. He continues:

. . . according to the dominant economic dogma, these “undesired side effects” are not part of the workings of an economic model. [1145] They belong to a separate “sector”: the social sector.

This identifies the problem with this legislation.

The education area has been severely hit and the education of women has been more severely hit than the education of men at the primary level. Unfortunately, as we have discovered, the importance of primary education for women is that, more than anything, it encourages improvement in the health status of a country. Clean water and primary education for women are the most important things to be done if the health status of any country is to be improved. The UN has figures on this. The Minister does not need persuading.

However, nothing in the Bill will promote this. Given that these countries will have to accept the economic models devised by the IMF to relieve the debt, which is the money owed to us and which we say must be repaid as a first priority, they will not have funds for education.

This can have a serious effect on democracy. One can recall the way the IMF went into Peru with a big stick. There is merit in the view that the security forces, the police and the army, must be paid. This is important to ensure the prevention of a Mafia situation similar to that in Russia. However, it means that when the economic pain kicks in, there can be resistance by the population. This can arise for various reasons, for example, because of an overnight increase by 100 per cent in the price of bread or, in the case of the Côte d'Ivoire, a collapse in coffee prices because we have decided we will not pay as much for coffee.

When there is social unrest the leaders of a country bring in a strong army to subdue the general population. This has caused dangerous terrorist organisations to arise, as happened with Shining Path in Peru at the start of this decade. It was almost certainly the economic reforms introduced at the behest of the International Monetary Fund which led to the rising support for Shining Path. There are numerous countries where this will happen. Civil society is seriously affected when dramatic reforms are introduced. It has been suggested that the IMF sell gold, as it has been told to do for a long time. I do not know whether it has sold any yet. Perhaps the Minister's officials could tell me.

I am sorry Fianna Fáil did not keep to its pre-election commitment to stay out until there were changes in the IMF. Those changes are not being made. As Senator Cox said, we have frequently made a huge contribution on a bilateral basis, particularly in Africa where we had good relationships because a great number of Irish missionaries worked there over the years. All of us who have attended international meetings on this subject know how our contribution is valued, because we have been so independent in this area. Unfortunately, we are giving away a great deal of our independence. If I knew Fianna Fáil had changed its policy for a good reason, I would [1146] not mind. However, it has not been explained to me yet.

Mr. Connor:  I am delighted this legislation is before the House; it may have its inadequacies but it is an important step. I am one of the many Members in both Houses who over the past decade have drawn attention to the debt problem in developing countries. The levels of unsustainable debt in 40 of the poorest countries in the world has continued to grow. The Bretton Woods institutions, the World Bank and the International Monetary Fund have discussed this issue for years. It is at least ten years since John Major, the then UK Chancellor of the Exchequer, proposed the famous Trinidad terms which were concessional terms for the relief of world debt in some of the world's most debt distressed countries.

Ten years ago the debate was the same. The impact of debt on the economy and social structure of these countries was such an overriding problem that the term debt distress, a very good way to describe it, came into vogue. Some of the countries have been mentioned already, for example Ethiopia and Tanzania. Niger has replaced Mozambique as the poorest country in the world. The basis of its poverty and economic decline is its debt. Its debt to GDP ratio is so adverse that it is totally unsustainable.

I remember meeting the new president of the World Bank in Washington in 1995 at a meeting which he addressed. I raised these issues with him and he was obviously a man with an open mind. The HIPC initiative, which is now two years old, was very much his work. It is interesting that in the early 1980s the response was to change the situation in Africa, where there was new democratisation following the ending of apartheid in South Africa and the release of Nelson Mandela. That had a major impact in sub-Saharan Africa. Namibia became independent and there were what seemed to be positive changes occurring in Angola, which were never realised. There were changes in Mozambique and a stable Government was elected nearly four years ago. The same was true in Zambia, where the effect of a one party ruler, Dr. Kenneth Kaunda, seemed to be brought to an end, but I am not satisfied that the Government of Mr. Chiluba is anything like a democratic Government. Nor am I satisfied that the Government led by Mr. Mugabe in Zimbabwe is anything like a democratic Government.

There have been dramatic changes in the political map of Africa in the past ten years, when there were dictator led regimes, non-participation by the population and the huge level of corruption attendant on that. There are now more democratic Governments in sub-Saharan and Francophone Africa, north of the Sahara, than there were ten years ago. However, the World Bank and the Bretton Woods institutions responded to the debt question by insisting that countries implement structural adjustment programmes, or SAPs as they became known. The [1147] structural adjustment programmes, to which Senator Henry and others referred, entailed the implementation by countries of all the characteristics of a working market economy before they could be considered for debt relief.

Free milk schemes for primary school children in Zambia had to be abandoned. Vaccination programmes in the Ivory Coast had to be abandoned because it accepted the structural adjustment programme. The World Bank told them they had to cut back on essential social spending on health and education and they must put greater emphasis on building the economic basis of their economies, rather than as previously under dictatorships when socialism was the economic basis, which we all know did not work. This response was inappropriate and the World Bank misunderstood the problem by insisting on these extraordinarily harsh structural adjustment programmes. This is the same as what is being told to Eastern European countries trying to make the transition from the old communist economies to what we consider the western market economy.

This has not worked in so many countries and has been difficult and painful, as well as stressful on the political order. Attendant on the structural adjustment programmes and changing their economies to western style market economies, we have insisted on standards of democracy, political participation by the population and standards of openness and accountability which we take as given in this part of the world. However, the problem is that when one stresses the economy, especially taking milk from schoolchildren, closing schools and ending inoculation and immunisation programmes, one puts pressure on democracy in countries where it was fragile to start with. The structural adjustment programmes attenuated nascent democracies and better standards of governance which were coming on stream in those countries, as I have said in the other House on many occasions. The Minister said that with the HIPC debt relief, Governments will have additional resources available to strengthen their social programmes, especially in primary education and health. I welcome that as a great change of heart.

I have criticisms of some countries. Ethiopia is one of the world's most indebted countries and it must be condemned for conducting a war with its neighbouring country, Eritrea. It has 400,000 armed men engaged in that war. Eritrea and Ethiopia are two of the poorest countries in the world, yet they are fighting for a useless piece of turf between them. They will not submit their dispute over a few square miles of land to international arbitration, or, if they do, they do not seem prepared to accept the outcome of that arbitration. They have now pitted two mighty armies against each other in a situation which is reported in the newspapers as being very much like the Flanders front in World War I. The two armies have dug in against each other and are killing each other in [1148] tens of thousands. That creates a huge economic drain on those two poor countries.

Just over ten years ago we all had the greatest sympathy with the famine that broke out in Ethiopia in the Mengistu years, and there was a tremendous public response in Ireland to that problem. After Mengistu left, Eritrea was given its independence, as it had always been an area of tension and civil war. Ethiopia and Eritrea signed an agreement to live peacefully as neighbours and to co-operate economically and otherwise for the betterment of both their peoples. We now find that there is a war between them.

Ireland has an excellent moral record. We do not have a great record of donation because of our lack of resources, but our moral voice is heard. When travelling abroad I have found that the Irish voice is always listened to because people understand that we are on the right side of this argument and that we do not have any baggage from the past. Our voice should be listened to on the Ethiopian situation.

I welcome the World Bank's initiative, but the Government should ask that organisation to attach an anti-corruption programme to the HIPC initiative. This is extraordinarily important. The Minister of State's speech referred to debt relief and getting foreign investment into these countries, as they cannot grow without that investment. There must be an anti-corruption programme written into the World Bank initiative, and that body will have to insist that Governments clean up their act. A recent survey showed that 70 per cent of foreign investors who invest in Third World indebted countries such as those we are discussing today see their greatest problem and disincentive as Government corruption. They felt they had to pay for legislation, and that has to be tackled. Interestingly, 80 per cent of investors who deal with those eastern European countries in transition from the communist era see corruption as a problem, which means the problem is 10 per cent greater there. This matter should be taken into account by the Minister.

Mr. Lanigan:  I welcome this Bill, which addresses some vital areas. As chairman of the Sub-Committee on Overseas Development Co-operation, numerous NGOs have suggested to me that we should not support ESAF and that we should have an independent review of how best to deal with world debt. Debt is growing in poorer countries because although interest rates around the world have gone down, when put in place for Third World countries they were much higher, and there is no way that debt can be alleviated for these countries.

Debt relief should be looked at, but we should really look at the alleviation of poverty. Debt relief will not and has not alleviated poverty in the HIPC nations. In many cases, countries are improving macroeconomically, but their people are getting poorer. If debts are repaid or the IMF or World Bank devise a package, education, health and basic human rights suffer. That is a [1149] fact for all these poor countries. Unsustainable debts have been recognised as a constraint on the ability of poor countries to pursue sustainable development and reduce poverty.

The EU creates much world poverty because it sends subsidised beef to the poorest countries in the world. When that happens, the farmers in those countries do not have a cash crop and cannot sell their own cattle because of the subsidised meat coming in from well-off western European states. It is good for European farmers, but it is detrimental to the cash economies of the poorest countries in the world.

Ethiopia has been mentioned. Unfortunately, when famines occur in these countries, the first thing that happens is that there is a massive influx of grain or food. In many instances the foods supplied have been grown in the country, and when the crops grow again they cannot be sold because the country already has food from outside the country. The alleviation of poverty in a fire brigade manner ensures that the poorest of peasant farmers in these countries have no cash crop, and this leads them into a poverty trap from which they have no hope of escaping.

I have visited many of the poorest countries of the world, and there is no doubt that in many of them corruption is a part of life. However, the corruption often comes from outside because many of these countries have natural resources which are capitalised upon by western entrepreneurs such as oil, gold and diamond companies. If one goes to Amsterdam or the oil markets of the world one finds that diamonds and oil are being traded, but not for the good of the people of the countries those goods come from. The goods are being traded by the corrupters; westerners who buy resources illegally in these countries by paying backhanders to people who in turn sustain western economies by buying arms.

The two biggest arms supplying nations in the world are attacking eastern Europe from the air like cowards. Mr. Robin Cook is the biggest arms salesman in the world. He attacks the arms sales sector of the British economy, but unfortunately, every time a Labour Government is in power in England, the arms industry gets bigger and bigger. This is unfortunate for Angola, for example, which could be one of the richest countries in the world. There is a civil war there and nobody seems to give two hoots about it. Some 70 per cent of the oil that goes into petroleum products that go to America or offshore comes from Angola. It is paid for in dollars, traded through London and the money goes into the coffers of dos Santos and the oil companies – not one dollar reaches the people of Angola. No one seems to care and the war continues. Without the collusion of the western oil companies and the diamond merchants in Amsterdam, that war would cease. Western nations, including those in Europe, should take note of the damage they are doing to the power structures in and morality of Third World countries. The European Union is not addressing that problem.

[1150] The external debt of the world's poorest countries is increasing and is not being alleviated by HIPC or ESAF because debts that were incurred when interest rates were extremely high are being repaid at current values. HIPC is supposed to be used, in many instances, for the alleviation of debt but it is the interest charged on interest payments which is growing. We must completely rid these countries of their debts. A once-off payment to get rid of debts would be much better than chipping away at the interest charged on those debts.

Ireland has played a good role in this area and the Government is doing an excellent job of trying to alleviate some of the world's problems. Anyone who believes Ireland will be able to reduce Third World debt is foolish in the extreme; Ireland can only provide limited help. The NGOs are close to being correct in stating that Ireland should not become involved in multilateral or multi-national schemes. A number of NGOs are too large and are responsible for creating problems in Third World countries. I visited Sierra Leone a number of years ago, where a war is currently taking place, and I saw many four wheel drive jeeps and vehicles, on the sides of which were displayed the names of innumerable UN organisations, World Vision and other major NGOs. These organisations created a sub-structure of society in Sierra Leone which did not benefit the people of that country.

The aid industry is probably as large as any other industry in the Third World and there is a need to provide a definition of what is a good NGO and what is a bad one. Irish NGOs are good, in the main, because they are small and concentrate on specific projects; they are not trying to save the world, they are trying to provide people with assistance in the form of fishing rods or ploughs.

The Minister of State said we will continue to press for “deeper debt relief”. Will he provide an explanation of that term? Does it mean we will provide increased funding or that we will concentrate on specific areas? The Minister of State also informed us that “we will continue to call on the IMF to maximise the use of its own resources by, for instance, the sale of its gold reserves”. There is no doubt that the headquarters of the IMF and the World Bank in Washington, with the swimming pools, gyms and other perks available to the personnel of those organisations, could be sold to help alleviate the debts of Third World countries.

The Minister of State indicated that the “initiative calls upon creditors and debtors alike to work towards a way out of the debt trap”. If the people of the Third World are to escape that debt trap by means of a poverty alleviation programme, we will be obliged to eliminate to a large degree the involvement of Governments, to a large degree, from our initiatives. We must go directly to those who need money and not give it to Governments or regimes which can or already have been corrupted. If we provide funding to the governing regimes or the individual in charge in [1151] the most heavily indebted countries, there is no doubt this funding will disappear. Ninety per cent of the money to which I refer will return to the west in the form of payments for armaments and it will not be given to poor people to ensure their survival.

The west gains on each occasion money is invested in the programmes to which I refer. I ask the Minister of State to engage in careful consideration before providing money to countries with corrupt regimes and to ensure that, if it is provided, such money should be given to the people to ensure the survival of their children.

Mr. Gallagher:  I move amendment No. 1:

To delete all words after “That” and substitute the following:

Seanad Éireann declines to give the Bill a second reading on the ground that, while urgent measures need to be taken to address debt relief, the Enhanced Structural Adjustment Facility (ESAF) cannot be supported in its present form and on the ground that the Bill's proposal to fund ESAF is a direct contradiction of Fianna Fáil's pre-election commitment to continue to withhold funds from ESAF pending reform of the International Monetary Fund.

Mr. Ryan:  I formally second the amendment.

Mr. Gallagher:  I wish to share time with Senator Costello.

It is with great sadness that I speak on the Bill. Its underlying principle, namely, to support debt relief, is supported by everyone. However, that principle is being used in a perverse fashion to reintroduce a proposal which the Department of Finance has been trying to place on the agenda for many years, which it succeeded in having brought to Cabinet by way of memorandum to Government in 1994 and which was returned by the previous Minister for Finance, Deputy Quinn, following his dialogue with the Joint Committee on Foreign Affairs. The Department is using the Bill as a Trojan horse to reintroduce that proposal, the need for which I cannot understand.

In a year when this country is, in real terms, reducing its overseas development commitments, particularly in the context of its bilateral aid programme, it is perverse that we are seeking to contribute to a facility operated by the International Monetary Fund which is doing nothing to address the problem it purports to address and which it is only making worse. We are intent on spending £7 million on ESAF and £4 million on what is disguised as an IMF contribution to HIPC, another version of ESAF – a total of £11 million – and I am sure the Irish public would support the provision of an additional £11 million for overseas development. However, the money should not be put to the use intended; it should be spent on [1152] small local credit schemes which have already been put in place by many of our bilateral aid partners or on the International Development Association which is less objectionable than ESAF.

It is perverse that, when we are cutting back in real terms on our commitment to our bilateral aid partners, mainly those in Africa, we are paying into a structural adjustment facility which will only reinforce the problems in health, education and other areas that our bilateral aid programme is attempting to address in the first instance. It is appalling that the Government intends to proceed with this proposal, which is inconsistent with the two main planks of Ireland's overseas development aid policy, namely, our commitment to human rights and to poverty reduction. The proposal is also a direct contraction of the commitment given by Fianna Fáil before the last election that it would not contribute to the fund. It is disappointing that the Minister for Finance and his officials have failed to listen to the members of Fianna Fáil with concerns on this score.

I preceded Senator Lanigan as chairperson of the overseas development sub-committee of the Joint Committee on Foreign Affairs. The sub-committee, with the involvement of Senators Lanigan, Taylor-Quinn and Connor, paid a great deal of attention to this problem in the period 1993 to 1996. We made progress in discussing this issue with the Government. The first report we produced in April 1994 stated that the international financial institutions were anxious to take urgent measures under the Brady plan to relieve the debt problem of middle income countries because they owed the most money. However, they were dragging their heels on relieving the debt of the poorest countries and they are still doing so. The IMF and World Bank have demonstrated an inability to confront the issues and to respond to them in a timely and effective fashion. They should not be entrusted with a further pretence of tackling the problem through the enhanced structural adjustment facilities.

Debtor countries working with the IMF and the World Bank have been subjected to what can only be termed a form of modern colonialism. Democracy, accountability and political responsibility go out the window. Instead, these countries must subject themselves to plans which are handed down from Washington and have no basis in social partnership in the recipient countries. Having benefited so much from social partnership, Ireland should push that concept internationally instead of undermining it.

The result is situations such as those I witnessed in Uganda, a fragile democracy after years of war. On budget day in parliament the Minister for Finance sat in the ante room while an official from the Irish Department of Finance, working under the aegis of the IMF, was upstairs writing his speech. That is not political accountability or democracy. These people, living in fragile democracies, are being forced to implement pro[1153] grammes which are socially and politically unpopular and lead to social unrest. How can those countries put down democratic roots and nurture the plant of democracy if they are forced to implement programmes which cut spending on education, health and other social areas?

Nobody need tell me that the IMF and the World Bank are concerned about the social aspects of these programmes. They are not. They talk about it in response to pressure from this part of the world. One only had to watch the BBC “Newsnight” programme on Tuesday night to see the effects of structural adjustment in Tanzania. I was in Tanzania three years ago when that country was in the process of signing up for the IMF package because it was believed it had no other option.

Tanzania's primary school system, although imperfect, was much better than Uganda's. Now, it is worse. Tuesday night's programme showed a primary school teacher whose salary was being deducted by the amount of fees he did not collect from his primary school students. Families of those students, already living in dire poverty, were being hauled before the courts because they were unable to pay the primary school fees. Do not tell me that is progress. It is perverse that Ireland is helping schools in Tanzania under a bilateral programme and, at the same time, undermining them through our contribution to structural adjustment.

There is no widespread political support for this measure. Government backbenchers expressed grave disquiet about it but they were dragooned into voting for it by a Minister who will not listen.

Senator Cox correctly referred to the role of NGOs and religious missionaries in development assistance. If the Government listened to these bodies it would not proceed with this proposal to contribute to ESAF. It has been widely opposed by voluntary groups and NGOs throughout the country. Interestingly, there was no mention of ESAF in the Minister of State's speech. It was disguised. There was a snide reference to the fact that the debate in the Dáil was intensive, “if a little lopsided”. If the Deputies do not agree with the Department's wishes, the message must be that the Department, not the Deputies, is lopsided.

The Minister of State made another niggling comment when he said: “Otherwise the claim that foreign debt service is at the expense of social provision will gain increasing currency”. That is not a claim but a reality.

Mr. Costello:  I thank Senator Gallagher for sharing his time with me. I support the amendment. We cannot tolerate this legislation because while we support its principle, we fundamentally disagree with the proposed manner of implementation.

This is a serious matter. Every Irish non-governmental organisation and voluntary body involved in assistance to Third World countries [1154] in terms of debt, human rights, education and sustainable development has opposed the provision of funding to ESAF and the IMF and the manner in which the World Bank conducts business with regard to the Third World. We should take note of that opposition and think hard before making this funding available and, in a sense, giving our imprimatur to a multilateral approach with which we fundamentally disagree. This approach is contrary to the position adopted by the main Government party, Fianna Fáil, in its election manifesto. Why is it doing a U-turn and adopting a position with which, apparently, it disagreed a few years ago?

Ireland has a proud record of seeking an approach that is linked to human rights, sustainable development, democratic institutions and cutting poverty when dealing with bilateral initiatives to tackle poverty and development in the Third World. That is the principle we should always seek to enshrine. I do not agree with jumping in and seeking to change this policy from within. It is too big. It is better for Ireland as a small country to say: “This is the proper and internationally recognised approach by those countries which are deeply involved in Third World development and this is the approach we should maintain”. We should stick to our guns in that respect – if that is not the wrong metaphor – and insist on those criteria. There is no reason for doing otherwise.

Our commitment to overseas aid has, unfortunately, been reduced under this Government. When the Labour Party and Fianna Fáil formed a Government in 1992, expenditure was increased from 0.2 per cent of GDP to 0.31 per cent with a target of 0.45 per cent. By next year, however, the contribution will be back to 0.2 per cent. It is time the Government examined its record in this area.

We know where we stand on this issue. The participants involved in this area and the Government know what is the correct approach but this legislation follows what the IMF has always stood for – an international economic orthodoxy in world affairs. This orthodoxy is too pervasive; it is almost evil in its pervasiveness and operation. It puts accountancy and statistics before people. It promotes the political ideology of the United States and is discriminatory with regard to the countries in which it operates. That must be taken on board in recognising the difficulties we have with this legislation.

The Government should accept that our approach is best. Let us not get involved in this unsatisfactory approach to dealing with Third World debt. While the principle of providing funding is correct, the implementation mechanisms and the thinking behind them are incorrect. This legislation should be rejected.

Mr. Bonner:  Those of us who have not travelled as extensively as Senators Gallagher or Lanigan might not appreciate the urgent need for this Bill. I have little knowledge of the reasons for it. On hearing its title, one might think it is [1155] within the remit of the Minister of State, Deputy Byrne, who is responsible for forestry in the Department of the Marine and Natural Resources, or in the remit of the Minister of State currently in the Chamber, Deputy Jacob, who may have had to deal with the eco-warriors in his constituency. However, the thrust of the Bill's contents are welcome, because it provides for debt relief and reduction for many Third World countries. Poverty is rampant among their billions of inhabitants, the infrastructure is poor, there are neither social amenities nor educational structure, and apparently no development structures are in place to give hope to future generations. If these issues are not addressed, these countries will never develop properly to enable them to deal with their debt problems. We need only think of our history, or the hullabaloo about Objective One status in recent months, to appreciate how fortunate we are to have progressed.

Our missionaries have a proud record in assisting the poor in the Third World. Every parish sent nuns and priests as missionaries. A local contemporary of mine, Sister Mary Dolores Sweeney, is doing great work in Sierra Leone, a country mentioned by Senator Lanigan. All her funding comes from collections and subscriptions from our small rural area. Many of us can recall the visits home of these missionaries, when they told stories of what happened where they were stationed, but unfortunately things have deteriorated. We can also remember missionaries visiting schools to request pennies for black babies. We still occasionally receive letters requesting minuscule amounts to help educate people in the Third World, and only a small amount of money is needed to feed children for a year.

We are aware of the great work done in recent years by development agencies such as Goal, Concern and Trócaire. They have provided food and medical aid. We have been horrified by television pictures of events unfolding in many under-developed nations and by the obvious poverty. We also remember the initiative taken by the former President, Mrs. Robinson, to highlight the difficult social environment in these countries.

Our Government has always provided funding to the overseas development aid programme. Now, for the first time, we have tried to address the major problem facing these countries in acting to alleviate their crushing burden of debt. In the past we have called for action to relieve debt. We are now providing hard cash as a contribution to redress matters.

The main element of the Bill is a package of debt relief measures in favour of the heavily indebted poor countries. It will make a payment authorised by the Minister for Finance and Minister for Foreign Affairs, which was agreed last September. The total package of £31.5 million covers 12 years, of which £17 million will be disbursed in the current year.

[1156] The main features include £15 million for multilateral debt relief, £11 million to the World Bank and £4 million to the IMF; a further £9.5 million has been committed to Mozambique and Tanzania in bilateral debt relief. The balance of the funding, £7 million, will be provided to ESAF, which attracted much opposition in the Lower House. Many would prefer to see the funding made directly available to the various Irish agencies who are working at the coalface in these countries.

The Bill also provides for the adoption by Ireland of the proposed fourth amendment to the articles of agreement of the International Monetary Fund. This will enable the Central Bank to accept the allocation of the SDRS. The Bill will also guarantee the Central Bank against any losses it may incur through an international settlement facility in favour of the Brazilian central bank, for which we are guaranteeing capital and interest elements of £34.3 million, which has already been pledged.

However, the debt package is the primary reason for the introduction of the Bill. The servicing of, and repayments towards, a heavy external debt burden diverts valuable resources from the provision of social services and hinders the economic and social development of many of these countries. The debt owed to multinational financial institution accounts for the largest portion of the total indebtedness. Far-reaching and co-ordinated action is needed to tackle the debt problem, whether bilateral or multilateral.

We must question how these debts arose. In the past, money was given freely to these countries, and in many instances it was used corruptly or went towards arms purchases. The funds were not properly utilised to develop the social and economic fabric of these nations. Many say the IMF was responsible for these mistakes and is now more interested in the repayment of these loans than in the welfare of the poor. The IMF should maximise the use of its own resources – for example, through the sale of gold reserves – to fund development and give a wider response to these debt problems.

The part of the Bill that deals with provisions to the enhanced structural adjustment facility has caused the greatest opposition. The past operation of these structures has not been successful, and nothing has happened to remove the poverty and distress of these people or to build proper economic and state structures to enable them to resolve their own problems. African countries spend four times more on loan repayments than on health care. For every £1 million given in aid by rich countries, poor countries spend nearly £4 million in debt repayments. It is estimated that 500,000 children die each year because of cutbacks in health services in these countries. The burden of debt repayment has channelled resources away from domestic services such as education, health care, agriculture, food and water supply. The structural adjustments force the poorest people in these countries to suffer [1157] and die. A new approach is needed to help them. The IMF's ESAF has, to date, not been the proper approach.

This Bill proposes to authorise the Government to contribute £7 million to the ESAF. Is the Minister satisfied this contribution will be used for the benefit of the poorest people in the countries which will receive these funds? Has he considered whether the money would be more beneficially used by the agencies working at the coalface with the people in direst need?

While the Bill appears acceptable in most respects it has sparked controversy in this area. However, it represents the first occasion where the Government will participate with its multilateral partners in the provision of debt relief to deserving Third World countries whose development has been constrained by their heavy debt burdens. Both Houses are broadly supportive of the main thrust of the Bill, concerning the Irish Third World debt policy. Most people believe this should be part of our overseas development aid strategy, with the ultimate aim of poverty elimination. The difficulties appear to relate to the preferred economic model of the IMF as to the performance of the main players in the highly indebted poor countries implementation strategy.

Many Members of both Houses referred to the focus on the volume of our ODA budget and passionately support the stance taken by the Minister of State, Deputy O'Donnell, on this matter. We should note that the World Bank has indicated that debt relief should be seen as an integral part of the broader development agency and the integrated and overall strategy of poverty alleviation. A key element of all strategies to reduce poverty must be a well specified plan for the reform of countries, which has broad political support.

I hope the IMF will take human development indicators into account when designing its programmes. The Minister for Finance will impress on it the importance of this approach. The IMF must be more caring and productive in the preparation and implementation of its programmes. It must become more aware of the social needs of developing countries and work more effectively with civil society. It must care about the social impact of its policies.

Social sector expenditure, which is taken into account by the World Bank in the design of its programmes, has been endorsed by many who have genuine concerns about the alleviation of debt in the Third World. I accept that good economic policies must be complemented by an appropriate social safety net and policies with social inclusion aims. However, this must also be backed up with sound macroeconomics and appropriate structural, industrial and inward investment policies which take local cultures, conditions and the present state of development into consideration.

I have faith in the approach of the Minister for Finance and I know he will keep a close eye on the situation and adjust our strategy if necessary. [1158] I welcome the first substantial contribution this country is making to resolving this problem.

Mr. Ryan:  Last Tuesday the President of Tanzania said on television that he had 20,000 trained teachers ready to go into primary schools in Tanzania but the IMF would not let him send them. It will be at least three years before they are operational. This is the new humanly sensitive IMF which has learned its lesson from all its mistakes in the past. The evidence is the IMF cannot learn because it is tied up by its commitment to US foreign policy and to an ideological view of the world which is based not on reality but on what it believes reality should be.

The IMF has a prescription which it believes should apply to every country. A former economist with the IMF said on American radio that there is only one set of laws of economics to which everyone must apply. His belief in that is the same as my belief in the law of gravity. However the law of gravity exists whereas there is not a law of economics. It is a great mistake leading to appalling abuse that the IMF believes there is one model to suit everyone. The extraordinary “coincidence” is that the prescription the IMF has for every country is based on reduced public expenditure and international free trade.

The only country which threatened the dominance of the United States in the world economy was Japan when it took on the United States in the 1960s and 1970s in the areas of automobiles, electronic goods, etc. Japan developed by ignoring IMF rules and developing its economy behind trade barriers. When it developed things which it believed were capable of being sold on the world market, it sold them to other countries, particularly the United States. That model, which was developed by a country devastated by two nuclear bombs and a world war, worked and will work again in spite of the current crisis in Japan. It defied the rules of the IMF and it was also a threat to the United States.

The one thing the IMF will not allow to happen, and has consistently prevented from happening, is the development of another economy like that of Japan. It has devastated the Russian economy which, given the huge skills base of the workforce as the Soviet education system was extremely good, could have developed its own huge internal market from which it could export to Europe and the United States. However, it has not been allowed to do so because that would be fair competition.

The modern understanding of international free trade, as well articulated by Professor Paul Krugman of the Massachusetts Institute of Technology who is one of the United States' most eminent economists, is that it does not balance up. It preserves the advantage of those who are ahead. The IMF is arguing for a world economic order in trade which will preserve the advantage of those who are ahead and inhibit others from catching up. It will ensure that those of us, domi[1159] nated by the United States, who are well off will stay ahead. The old fashioned 19th century theory of free trade is defunct, but the IMF cannot accept it because that would mean its ideological domination would cease.

The IMF is extraordinarily politically selective in that it will help out as long as the government is not left-wing. Neither Cuba nor the Government of Nicaragua during the period of the Sandanistas got not a penny. One may have views about both these countries but countries with a million times worse record in human rights and corruption have been generously assisted by the IMF. As long as they practised the basic rules of cutting public expenditure and accepting free trade, they could cream off as much international aid as they wished to enrich such people as the former President of Zaire. The IMF blinked because these were friends of the country whose interests the IMF defends in all cases.

The IMF is ideologically driven by an economic model which does not work but which suits those who most fund it. It has displayed an extraordinary indifference to the poverty and misery it leaves in its wake. The IMF does not expect across the board cutbacks in public expenditure. It is happy to ignore continuing obscene expenditure on armaments by many of the countries from whom it demands structural adjustment. Why? The biggest seller of arms in the world is the United States. The next biggest is Germany now that Russia has collapsed. One of Europe's more unpleasant ambitions is to catch up with the United States. The IMF blinks when arms are sold to these countries. Expenditure on instruments of internal repression in some of these countries is not questioned.

Education and health are ignored by the IMF but it is not alone in this. Until recently, the Department of Finance classified education as social expenditure. It is now classified as partly social and partly economic. I wrote to the Secretary General of the Department to ascertain which parts of education were only social but he could not tell me. There is no more fundamental instrument of economic development than education. It is a contradiction of any attempt to develop a country to create an economic order which undermines its education system. The ideological model the IMF uses, the United States, has one of the worst public education systems and the highest infant mortality rate in the developed world. Health and education do not matter to the IMF.

We are giving this body more money to play its power games with people who have already suffered too much. This debt is not their fault. The reason these countries are in debt is that we in the western world had a problem 25 years ago after the oil crisis. Oil producing countries needed somewhere to put their money so they put it into western banks. We told all these countries to borrow the money and develop and this led to a [1160] crisis. Then we pushed up interest rates because inflation became the dominant concern. These countries were forced to pay those interest rates even though we had a recession which reduced their capacity to sell primary products. What happened next? Every one of those countries have paid more than a multiple of the capital they borrowed. It is not the capital they owe but the accumulated interest of 25 years of exorbitant interests imposed on them by the western financial system. It is not their fault. Therefore, the linkage of debt elimination to so-called economic reform – which is a code for misery – is one of the many nonsensical measures foisted on the world by the IMF.

At present, one of this State's problems is that we have the most ideologically fixated Minister for Finance that we have ever had in my period of almost 20 years in the Houses of the Oireachtas. Without much protest he has frozen overseas development aid. Why did he do that? It is not that we could not afford it. We would hardly notice the amount of money he refused to give in comparison with the total amount of public expenditure. He refused to give it because he does not believe in it. It was not difficult to persuade him, and people in his Department were happy to persuade him not to give more to overseas development aid. We had the money a million times over. It would not have caused inflation in Ireland, which is the Department of Finance's greatest argument about public expenditure at home. It might have caused inflation in Tanzania, and perhaps the Department has extended its supervisory role to all the countries of the world at this stage. The reason we froze overseas development aid is not that we cannot afford it or there was no public support for it but the ideology of the Minister for Finance constantly states that he does not believe public expenditure is a solution to any problem.

I heard the Department of Finance say at the same committee that reductions in taxation are always a good thing, but they did not qualify that. Therefore, the view of the Department of Finance is that even if it means closing down the health services, reduced taxation is always a good thing.

In that context it is obvious what is happening. The Government, the Minister for Finance and his officials want to join and become full members of the IMF club. To do that we have to sign up with our £7 million, and that is why I am a member of the Fine Gael Party. I am tired of Members on the Government side of the House telling me that the Minister for Finance is too rigid on various issues. They have a choice that I do not have. They can talk to him privately and tell him what they think of his nonsensical ideology, his hostility to the poor, health care and welfare, which he demonstrated in the Department of Social Welfare. They can also tell him what they think of his hostility to overseas development aid and his involvement in one of the institutions which, in the name of alleviating poverty [1161] has created more misery in this world than any other single institution could claim credit for. I oppose this Bill because to give more money to that institution in its unreformed and unreformable state is a direct contradiction of the wish of most Irish people.

Minister of State at the Department of Health and Children (Dr. Moffatt):  I thank Senators for the interesting and thought provoking interventions they have made on this important legislation. This Bill marks a new departure for the Government. It represents the first occasion when the Government of Ireland will participate with its multilateral partners in the provision of debt relief to those deserving countries in the Third World whose development is being constrained by the crippling burden of debt.

I propose to take the points raised under themes touched on by Senators and will respond to them accordingly. The question has rightly been asked on what progress has been made since the publication of the international and external evaluations of ESAF. I propose to set out the progress made. Senators should be aware of the programmes associated with ESAF and IMF and that countries have to follow these programmes if they are to benefit from the HIPC initiative or get debt relief from, for example, the Paris Club. The programmes also serve as IMF endorsement and are also required by many bilateral donors before they will release aid to the countries concerned. From our point of view the objective is to influence the whole IMF approach to programmes for these countries to take full account of human development, democratisation, involvement of civil society and good governance, in other words, the elimination of corruption.

Progress is being made under a number of headings specifically identified by Senators as areas of concern. On programme ownership IMF staff, in individual programme cases, give greater consideration to alternative policy measures which could attain the desired economic objectives. The development of a range of such policy options is intended to help foster ownership by increasing the flexibility for programmes designed to address more fully the particular Government's political constraints and objectives.

IMF staff are also continuing and intensifying their efforts, where requested by the national authorities, to help build a consensus for reform. Thus, in addition to broadening the policy dialogue on structural or sectoral policies to include all relevant ministries, staff will embrace more frequent contacts with civil society to engender wider understanding of the Government's reform programme.

With regard to collaboration with the World Bank, work is under way in six pilot cases. They are Cameroon, Ethiopia, Nicaragua, Tajikistan, Vietnam and Zimbabwe. In these cases the staff of the World Bank and the IMF are experimenting with new models of collaboration. The aim is to demonstrate the potential of closer col[1162] laboration to deliver better integrated programmes, drawing to the fullest extent possible on the combined expertise of these two institutions. At the same time the experience gained from these pilot cases is to be reviewed to enable collaboration to be strengthened across the board.

The World Bank itself is elaborating a code of best social practice and the IMF is moving to incorporate the bank's social expertise in the design and implementation of programmes. The declared aim of the IMF as expressed recently by its managing director is for high quality growth which it sees as capable of being sustained over time without causing domestic or external imbalances; is accompanied by adequate investment, particularly human investment through education and health, to take full advantage of the tremendous leverage of human capital for future growth; to be sustainable, based on a continuous effort for more equity, poverty alleviation and empowerment of poor people; and to promote protection of the environment and respect for national cultural values.

On the social impact of adjustment, work is now under way to develop social assessments of specific adjustment policies and integrate the findings into programme design, including the design of well targeted social safety nets. Initially, the focus on this work is on the six pilot cases on which staff of the IMF and the World Bank are collaborating closely. Thereafter, the lessons gained could be used to extend the coverage of this work in the design of all adjustment programmes supported by ESAF.

IMF willingness to review is a new strength. It is now demonstrating that it is willing to listen and to examine its own actions and policies. I would refer to its response to the evaluation of ESAF programmes, its own review of its policies in relation to the Asian crisis and its support for the review of the HIPC initiative.

Chancellor Schröder's debt initiative is virtually the same as that which we are proposing. I draw to Senators' attention the fact that it calls for adequate funding for both ESAF and HIPC initiatives, particularly in relation to bilateral contributions. I am also glad that the G7 has called for improvements in the HIPC initiative, in particular reviewing the duration and criteria for eligibility. There is also a coded reference to the use of IMF's own resources, namely, the sale of gold.

I would remind Senators that we are instituting, through this Bill, accountability, openness and transparency provisions relating to Ireland's participation in the Bretton Woods institutions. I hope that we can pull together to improve the position of the poorest most heavily indebted countries. It is time we moved on and accepted our responsibilities to the people of the Third World and shared some of the increased economic prosperity which our country is now enjoying.

[1163] Senators should appreciate that change is taking place and that the IMF is going in the right direction. I share the concerns expressed by this House that the rate of progress needs to be accelerated greatly. This is why the Government now believes that it is time to vigorously pursue these objectives in the context of shouldering the appropriate burden of the costs of international debt relief efforts and also having made a modest contribution to ESAF.

Some Senators asked what is the rationale for reversing the previous decision not to contribute to ESAF. This is not a reversal. The original Government commitment to contribute to ESAF dates from 1994. In response to concerns about the severity of ESAF-supported IMF programmes, the then Minister for Finance decided to defer Ireland's contribution pending a satisfactory operational implementation of the debt initiative. This initiative is now under way and following two evaluations of ESAF, a significant number of criticisms of this facility are being addressed. These include the social impact of adjustment; improved IMF collaboration with the World Bank; promoting ownership of the programmes; increasing the level of consultation and participation of civil society and advancing reform across all sectors. Action in these and other areas is intended to refocus ESAF to provide more effective support for economic reform in all low income countries.

We do not believe we can stand back permanently from a commitment we made and then deferred subject to conditions. Moves have been made in the direction of the conditions we specified and we will continue to press for progress in these areas.

Senators asked if there are any success stories from ESAF programmes. There are currently 36 countries on IMF programmes availing of ESAF. Most of these are in Africa. As one might expect, the picture emerging from such a wide number of countries is varied and due to a large number of factors. The political situation in many countries is unstable. Some are experiencing war, and even in countries where the environment is more stable, programmes when adopted may not be followed through consistently. It is very difficult, therefore, to point to any one country and attribute success to an IMF programme under ESAF. That having been said, when IMF-supported policies have been effectively implemented, the result has been higher social spending and sustained economic growth.

A recent study of 32 low income countries implementing adjustment programmes supported by the IMF during the period 1985-96 showed that real per capita spending on health and education increased, on average by an impressive 2.8 per cent annually during the programme period, helping to underpin discernible improvements in key social indicators. Moreover, of the 22 African countries in the study, as many as seven enjoyed real per capita growth that exceeded the average [1164] of all developing countries over the ten years ending 1995.

Ireland's commitment to multilateral co-operation is well founded and widely respected. The Oireachtas has over the years been supportive of increasing Ireland's involvement in international financial institutions. In addition to approving Ireland's membership of the original Bretton Woods institutions, it subsequently approved Ireland's membership of the International Finance Corporation and the Multilateral Investment Guarantee Agency, and more recently endorsed Ireland's membership of the European Bank for Reconstruction and Development. The Oireachtas has also on numerous occasions overwhelmingly approved various replenishments of the International Develpment Association, the soft-loan arm of the World Bank. The Minister for Finance will introduce legislation in the coming session to confirm Ireland's proposed contribution of £20 million to the 12th Replenishment of the Association.

It is generally recognised that debt cancellation is only one of the many problems facing these countries. The IMF, with justification, points out that unconditional debt relief is not the right tool for promoting the ultimate goal of sustainable development and poverty reduction. These goals are best attained by providing debt relief in a process such as that provided by the debt initiative, which encourages the adopting of appropriate policies by the recipient country designed to stimulate private sector-led growth and focuses on an improvement in social expenditures.

The members of the IMF and the World Bank see conditionality as an integral part of this process. The goal is to ensure that the debt relief provided is used effectively, particularly through promoting health and education expenditure. The IMF fears that unconditional debt cancellation risks debt relief being used for purposes not related to growth and development.

The Government is open to pursuing a rational debate on this important issue. Ireland will be in a stronger position to pursue the debt cancellation issue more rigorously once we have established our credibility by bearing our fair proportion of the costs of the ESAF and HIPCs initiatives.

Some Senators spoke on the myriad of causes that have led to the present difficulties. The 1998 Human Development report indicated that the main causes of poverty in Africa, affecting approximately 45 per cent of the population in sub-Saharan Africa, are economic stagnation, slow employment growth, increasing income disparities, the lack of socially balanced economic growth, marginalisation from global trade and financial flows, high fertility, the spread of HIV and AIDS, degradation of natural resources and the consequences of violent conflict, including displacement of people and violation of human rights.

Senators referred to gross economic mismanagement and corruption, the excesses of dictators, “white elephant” infrastructure projects and a [1165] lack of well developed democratic structures as being the root cause of the debt crisis. It is clear it would be unfair, and a misrepresentation of the problem in relation to ESAF, to saddle them with the entire woes of Africa. Clearly a multiplicity of factors must severally shoulder the blame.

The Secretary General to the United Nations in his report to the Security Council on the causes of conflict and the promotion of durable peace and sustainable development in Africa in April 1998 indicated that Africa had begun to make significant economic and political progress in recent years, but in many parts of the Continent progress remains threatened or impeded by conflict. The Secretary General's analysis of the historical legacy shows that the colonial history in Africa, the establishment of frequently artificial states drawn from disparate communities, economic production to meet requirements of colonial powers and interference in Africa for ideological reasons have all contributed to the underdevelopment of the Continent. Clearly we need to engage with Africa on a wide variety of dimensions. We must adopt a multifaceted approach in partnership with the regions concerned to address the most significant challenges ahead. The best model we can point to with credibility in this respect is the proposed successor to the Lomé IV Convention.

Other general themes picked up by Senators include the issue of transparency on the part of the International Monetary Fund and the role of civil society, particularly its participation in the development, design and implementation of IMF and World Bank programmes. Substantial progress has been made by the president of the World Bank under the strategic compact to implement such principles in so far as the World Bank is concerned. However, the same cannot be said of the International Monetary Fund. It is time the fund adopted more consultative, participative and co-operative approaches with regard to programmes it supports, including the ESAF, and the wider community of interests it serves. Free market liberalism without adequate controls and social safety nets for the most vulnerable people in society is no longer a viable option.

I thank Senators for their in-depth contributions to this important debate. The Bill represents a carefully balanced package of assistance for debt alleviation in the Third World. Senators Ryan and Bonner raised Ireland's overseas development assistance. ODA will increase from £137 million in 1998 to £158 million this year.

Mr. Ryan:  It is still a reduction in real terms.

Mr. Gallagher:  The Minister of State should not mess with statistics.

Dr. Moffatt:  Inflation must be very high.

Mr. Ryan:  Of all Departments, the Department of Finance should not play games with figures.

[1166]Acting Chairman (Mr. R. Kiely):  The Minister, without interruption.

Dr. Moffatt:  On the basis of the best estimates available, ODA will increase in 2000 to £173 million and in 2001 to £196 million. In this three year period, ODA will increase by £59 million, or 43 per cent. This is not a bad increase.

Mr. Gallagher:  It is a reduction in real terms. It is scandalous that the link with GNP has been broken.

Mr. Ryan:  I agree. The Government ducked out of it.

Acting Chairman:  The Minister, without interruption.

Mr. Gallagher:  Ireland is now too rich to meet its obligations.

Dr. Moffatt:  An increase of 43 per cent is not bad.

Mr. Ryan:  As Keynes said, “In the long run we are all dead.”

Dr. Moffatt:  Regarding the bilateral aid programme, the Minister for Finance and the Minister of State at the Department of Foreign Affairs have reached agreement on a multiannual basis for funding the programme for the years 1999-2001. The 1999 budget will amount to more than £104 million and the sum will increase to £136.4 million in 2000 and £159.2 million in 2001. The scale of the increases is best appreciated by pointing out that the relevant subheads in 1992, only seven years ago, amounted to £23 million.

Mr. Gallagher:  The Labour Party increased them but the Government is decreasing them in real terms and breaking the link with GNP. It is a scandalous change of policy.

Acting Chairman:  The Minister, without interruption.

Dr. Moffatt:  There were not such increases when the Senator's party was in power.

Mr. Gallagher:  The Minister of State should consider the 1987-92 period.

Acting Chairman:  There are other Stages on which the Senator can make his points.

Dr. Moffatt:  It is important that Ireland plays its role and shoulders its proportionate part of the financial cost of the international co-operation efforts being made to alleviate debt. These are part of a wider framework of development efforts to secure the economic and social development of heavily indebted poorer countries, particularly those in sub-Saharan Africa.

[1167] Senators were strongly of the view that, given our new found economic standing, Ireland should use its voice assertively in the international arena on behalf of the developing and less well off countries of the world. I could not agree more. [1168] Such a responsibility can no longer be considered an option. It has become a moral imperative.

Question put: “That the words proposed to be deleted stand part of the main question.”

Bohan, Eddie.
Bonner, Enda.
Callanan, Peter.
Cassidy, Donie.
Chambers, Frank.
Cox, Margaret.
Cregan, John.
Dardis, John.
Finneran, Michael.
Fitzgerald, Liam.
Fitzpatrick, Dermot.
Gibbons, Jim.
Glynn, Camillus.
Keogh, Helen.
Kett, Tony.
Kiely, Daniel.
Kiely, Rory.
Lanigan, Mick.
Leonard, Ann.
Mooney, Paschal.
Moylan, Pat.
O'Donovan, Denis.
Ó Murchú, Labhrás.
Ormonde, Ann.
Quill, Máirín.
Walsh, Jim.

Níl

Burke, Paddy.
Caffrey, Ernie.
Connor, John.
Coogan, Fintan.
Cosgrave, Liam T.
Costello, Joe.
Gallagher, Pat.
Henry, Mary.
Jackman, Mary.
Manning, Maurice.
O'Dowd, Fergus.
O'Meara, Kathleen.
Ridge, Thérèse.
Ross, Shane.
Ryan, Brendan.
Taylor-Quinn, Madeleine.

Tellers: Tá, Senators Keogh and R. Kiely; Níl, Senators Gallagher and B. Ryan.

Question declared carried.

An Cathaoirleach:  I declare the Bill read a Second Time.

Committee Stage ordered for Friday, 26 March 1999.

Question proposed: “That the Bill be now read a Second Time.”

Minister for Social, Community and Family Affairs (Mr. D. Ahern):  I am pleased to be here to present my second Social Welfare Bill to this House. This is a significant Bill which provides for substantial improvements in the rates of social welfare payments announced in the budget. In addition, it also contains a significant package of improvements for carers, new schemes for low income farmers and fishermen and a new bereavement grant.

A number of these measures were already announced in the budget. Since budget day, however, I have secured Government approval for a number of further improvements, which are included in the Bill, costing over £15 million in 1999 and more in successive years. These include the provision of an additional £5 million in 1999 to bring forward the commencement of the farm assist scheme to the beginning of April; the introduction of measures to improve the position of low income fishermen, costing £1 million in a full year; very significantly, the introduction of a bereavement grant scheme, costing £10 million in a full year to replace the existing death grant scheme which incorporates a five-fold increase in the grant to £500, with easier qualifying conditions; additional enhancements to the pension improvements for self-employed persons aged over 56 in April 1988, costing £1 million in a full year, on top of my previous announcement; the significant extension of the back to work allowance to carers and changes in the provisions to allow certain lone parents retain their entitlement to deserted wife's benefit and allowance and prisoner's wife's allowance.

In overall terms, the resources provided by the Government for social welfare improvements in the Bill amount to more than £317 million in a full year. This is a 33 per cent increase on last year and a 49 per cent increase on the last budget of the previous Government in 1994.

The Bill addresses commitments set out in the Government's An Action Programme for the Millennium aimed at building an inclusive society and fulfilling key commitments in Partnership 2000. This Government is committed to a strategic approach to poverty and social inclusion. Immediately on taking office, we established a Cabinet Subcommittee on Social Inclusion and Drugs to co-ordinate policy across Departments. We have also made great progress in meeting the [1169] targets set out in the national anti-poverty strategy, NAPS. In the near future I will publish an assessment of how we are doing on the specific targets set out in NAPS on the basis of ESRI and other research. I would like to think we could update the key targets in NAPS in light of the rapidly changing circumstances as part of the Government's social inclusion strategy.

With regard to income adequacy, for example, a key commitment in this area was the achievement of the Commission on Social Welfare's minimum recommended rates by the end of 1999. This target is being achieved in the Bill. With regard to progress on unemployment, the rate of unemployment is 6.8 per cent for February 1999. This means the target for the end of 2000 set out in the employment action plan has been achieved. We are near to achieving the unemployment targets set out in NAPS. The live register has fallen by 53,500 since we took up office. Long-term unemployment has dropped by 40,000 in the past two years.

As part of the budget package I was pleased to announce new and enhanced employment support measures to help long-term unemployed people back to work. The number of places on the back to work allowance scheme is being increased by 2,000 to 29,000 from January 1999 and, from next July 1,000 places will be reserved for a special pilot scheme for the long-term unemployed – those unemployed for five years or more.

The Government is committed to adopting a families first approach by putting the family at the centre of all its policies as enunciated in the programme for Government and our pre-election policy documents. Through this Bill we are investing more than £40 million in the family this year through major increases in child benefit of £3 per month for the first two children to £34.50, and £4 for subsequent children to £46.

In line with this pro-family approach as set out in our programme and in response to the recommendations of the Commission on the Family we established a family affairs unit in the Department. More than £2 million is being provided by the Government to support marriage counselling, child counselling in relation to parental separation, marriage preparation programmes and bereavement counselling and support. The enhancement of the family and community centre programme is another important objective. By the end of this year, 50 centres will be funded under the programme.

The nationwide expansion of the family mediation service, a key objective in our action programme, is rapidly moving ahead. In addition to the Dublin and Limerick services, the family mediation service is now providing services from regional centres in Cork, Tralee, Wexford, Athlone and Dundalk. Next Monday I will officially open the Galway family mediation service providing services for people in Galway and Mayo. I also plan to expand the service to the western region of Dublin and the north-west of [1170] the country by the end of this year. This will fulfil our election promises.

In recent months, I was very pleased to have the opportunity to meet many of the voluntary groups who work with families at a local level. Many Senators will have received invitations to the family services information fora being held throughout the country. Thus far, fora have been held in Wexford, Dundalk, Athlone and Limerick and will continue throughout the country in the coming months. On Monday, the Galway forum will take place to coincide with the launch of the family mediation service. The fora provide an opportunity for local voluntary organisations and community groups who work with families to discuss with me and my officials the issues they encounter in their work in supporting families. Their views on the priorities for supporting families in today's changing social and economic environment are critically important for the future development of family services and policies.

The Bill contains a number of measures designed to improve the position of older people. In our action programme we committed ourselves to increasing the rate of contributory old-age pension to £100 over a five-year period. The Government provided a special increase of £5 per week in last year's budget in the maximum rates of payment. This year we are going a step further by providing an increase of £6 per week in such payments. This means the contributory old age pension will now amount to £89 per week, an increase of £11 or 14 per cent on the rate when the Government took office and one third more than the Rainbow Coalition provided in three budgets.

The Government is also committed to substantial increases in other social welfare payments. The personal rates of social welfare payments other than those for older people are being increased by at least £3 per week. A special increase of £3.60 per week is being provided in the short-term rate of unemployment assistance and supplementary welfare allowance. This ensures these two rates now exceed the minimum rate set by the commission, thus fulfilling the commitment in Partnership 2000.

I will outline some of the key provisions in the Bill. Part III, sections 10 to 14, provides for the implementation of the package of improvements for carer's allowance. I want this Government to be known as the Government that put an end to taking carers for granted. We took a hard look at the situation by carrying out an interdepartmental review of the carer's allowance. That review resulted in a number of proposals for improvements. I have accepted and acted on those proposals. Last year some Members of both Houses said we did not go far enough concerning carers. At that time I gave a commitment that because of the on-going nature of the review we would look at the proposals once the review was completed. The review was published in the middle of 1998 and we have more than acted upon its recommendations. I have acted on those pro[1171] posals to the benefit of 11,500 carers. I have also ensured that almost 3,500 new people will qualify for the first time for the carer's allowance.

From now on those who care for children in receipt of a domiciliary care allowance will be eligible for the carer's allowance. This is the most significant move in this area even though it has not received the most publicity and will cost about £9 million. Eligibility is being extended to the carer of anyone between 16 and 65 who requires full-time care and attention. We are relaxing the residency conditions for receipt of the allowance and the full-time care and attention rules. This issue was raised by Senators and Deputies. Carers' social insurance records will be preserved and we are giving income disregards to carers in their own right.

One of the main problems facing carers can be isolation. We are addressing this in a number of ways. For example, we are extending the free telephone rental scheme to all people receiving carer's allowance and the free travel scheme to carers of people receiving constant attendance allowance and prescribed relative's allowance. One of the most important changes for many carers will be the annual payment of £200 as a contribution towards respite care to all qualifying carers – about 15,000 people. All of these moves add up to a 40 per cent increase on last year's expenditure which Members on all sides will accept is a major increase. It amounts to an extra £18 million for this year alone on top of £45 million spent last year, a total of £63 million. The carer's allowance started in 1990 with an estimate of £100,000. In the intervening nine years it has increased to £63 million.

A key recommendation of the review was the introduction of the system of needs assessment. This will take account of the needs both of the carer and the person being cared for. The Government has decided that such a system should be introduced and a working group chaired by the Minster of State at the Department of Health and Children, Deputy Moffatt, has been established. The review proposed the introduction of PRSI carer's benefit to facilitate carers in employment to temporarily leave work to care. This would be financed through the PRSI system. The proposal would require a small increase in each of the current employee and employer PRSI rates depending on the level of Exchequer contribution. The proposal deserves fuller examination and I would be interested in the views of the social partners in this regard.

Carers all around the country look after people in their homes and communities. They make a huge contribution to keeping our society humane and decent. I am committed to improving their situation, but it is not just the commitment of one Department. The Minister for Finance, the Minister for Health and Children and the Minister for the Environment and Local Government have recently introduced a range of measures to help carers because the Government sees it as an [1172] essential multi-faceted approach. The Minister for Finance extended the tax allowance of £8,500 available to the spouse being cared for to the extended family. While it diverges from the proposals in our general election manifesto and the programme for Government, it was considered after examination to be a more equitable beneficial change. The Minister for Health and Children has introduced other initiatives on respite care and the Minister for the Environment and Local Government has introduced changes to the disabled person's grant which were announced in the budget, where the Government decided to introduce a co-ordinated response to the issue of carers.

Part IV provides the legislative basis for the new farm assist scheme announced in the budget. The scheme represents an important new development in the provision of income support for farmers. While the impetus for its introduction stems from the current difficulties facing farmers, it must be recognised that the scheme is not a temporary one related to the current situation but will be an ongoing feature of the social welfare system.

Section 15 provides that the new allowance will be paid to farmers who are aged between 18 and 66 years and who satisfy a means test. The maximum weekly rate will be the equivalent of the long-term rate of unemployment assistance payable from next June, £73.50. Increases for qualified adults and child dependants will also be provided on a similar basis as for other social welfare payments. Income from capital will be assessed on the same basis as long-term social assistance payments.

Section 16 provides for the assessment of means for entitlement to the new payment. Under this section the farmer's net income from self-employment, including farming, will be assessed at the rate of 80 per cent instead of on a pound for pound basis, as currently applies under the smallholder's unemployment assistance scheme. In addition, in the case of the family farm, the amount of £100 per annum for each of the first two children and £200 for each subsequent child will be disregarded when assessing the net income from the farm.

The budget provides a full-year allocation of £15 million to cover the cost of the scheme. The House will be pleased to note that the Government has decided to provide for entitlement to payment under the farm assist scheme from the first week of April 1999. We made this decision subsequent to the budget. We provided £5 million in the budget which would have allowed the scheme to start some time in June. We have now provided an extra £5 million to bring payments back to 1 April. To allow for the necessary means testing and other preparatory work, the first payments, including arrears, will be made in the first week of June and earlier where possible. These will be back-dated to the beginning of April.

Given that the farm assist scheme is being introduced shortly, I have already made arrange[1173] ments for the suspension of the signing-on arrangements for smallholder's assistance for those who now apply to seek a review of their existing claim. Any person thereby qualifying for the assistance will be transferred automatically to the new farm assist scheme from June and will have their additional entitlements under the scheme backdated to the first week of April.

In addition, an application for smallholder's assistance will be taken as an application for the new scheme for those who fail to qualify for smallholder's assistance but who will be entitled to some payment under the farm assist scheme. Application forms will be available almost immediately the Bill passes.

Section 19 provides for the introduction of a bereavement grant to replace the existing death grant scheme. I have secured an additional £10 million from the Government since the budget to improve the scheme, introduced in 1970, to alleviate the cost of funeral expenses. Some 10,000 grants are payable each year at a cost of £1 million to the social insurance fund. The maximum grant payable was £100 and a reduced grant of £95 is payable where the contribution conditions are partially satisfied.

Section 19 provides for three significant improvements in the scheme. First, it provides for a substantial increase, from £100 to £500, in the level of the grant. The last increase was made in April 1982. That represents a worthwhile contribution towards funeral expenses incurred by families. Section 4 also provides that the amount of the grant payable under occupational injuries will also be increased to £500.

Second, I am extending the scope of the scheme to include other insured persons, such as self-employed and people covered by the modified rate of social insurance, for example, all public servants. At present the scheme is largely confined to employees who pay the full rate of PRSI contribution. It makes no sense that people in such categories cannot qualify for a death grant but may qualify for a widow's or widower's contributory pension.

Third, I am proposing a substantial easing of the contribution conditions so that as many people as possible will qualify under the scheme. The present conditions require the insured person to have a minimum of 26 contributions paid since starting work or since 1 October 1970 and to have either 48 contributions paid or credited in a recent income tax year or an average of 48 contributions per year since October 1970 or since starting work if later.

I believe the grant should be payable to insured persons with the minimum level of contributions. In view of this, I propose that the grant be paid automatically on the death of a person receiving a contributory pension or deserted wife's benefit, his or her spouse or qualified dependants; a person receiving orphan's contributory allowance or his or her guardian. Since the announcement of the scheme the Government has decided that it will apply to bereavements which have occurred [1174] since 2 February, the date the decision was made at Cabinet, at an additional cost of £1.7 million, given that a number of people would have missed out on it in the intervening period. It was originally intended to bring it into force in April.

Section 21 provides for the payment of the special rate of old age pension to certain self-employed persons who were aged 56 years or over on 6 April 1988 when social insurance was extended to this group. This issue was raised in both Houses last year. I am delighted that the Government has delivered on its commitment in the programme for Government and the general election manifestos by introducing a special rate of contributory pension for those with at least five years' paid contributions since that date.

Entitlement to the new pension will begin in the first week of April but payments will not be made until October for logistical reasons. This allows for my Department to examine all the relevant claims and to ensure that refunds of contributions made already to 3,000 contributors in this group are recouped. Any arrears of payment due will be issued in October.

The new rate will be 50 per cent of the maximum personal rate plus 50 per cent of the appropriate increases for qualified adults and child dependants where appropriate. Up to 10,000 people – 8,000 pensioners and 2,000 qualified adults – should benefit from the scheme at an estimated cost of £18 million. Anybody who qualifies will also qualify for the free schemes as appropriate.

A comprehensive review of the qualifying conditions for entitlement to old age and retirement pensions is being undertaken by my Department this year. Particular attention will be given to the yearly average test. It will also deal with the treatment of pre-1953 contributions and the commitment given in the programme for Government to allow women who take time out for family reasons to continue contributions for pensions purposes.

Section 22 deals with the issue of low income fishermen. We are introducing for them a similar scheme to the farm assist scheme. It represents a substantial response from the Government to the difficulties experienced during prolonged bouts of bad weather by fishermen who operate out of small boats in our coastal communities.

I now turn to the provisions that deal with the powers of social welfare inspectors. Section 26 strengthens the powers of inspectors to allow them to remove, or secure for later inspection, documents or records from employers' premises and to require employers to provide reasonable explanations of their contents. These additional powers will facilitate inspectors in making sure employers meet their PRSI obligations and that their employees are not concurrently working and claiming social welfare benefits.

Section 26 also makes specific provision for an inspector to be accompanied by a garda when exercising his or her statutory powers, when [1175] accompanied by a garda in uniform, to stop any which he or she reasonably suspects is used for the purpose of employment or self-employment, and make inquiries of any persons in the vehicle or require them to produce any record in their possession in connection with their employment or business.

Over the past year, at the invitation of the gardaí, my Department, the Department of Enterprise, Trade and Employment, the Department of the Environment and Local Government and the Revenue Commissioners have participated at 19 checkpoints in Counties Dublin, Kildare, Wicklow, Monaghan, Cavan, Louth and Meath. These checkpoints have largely focused on commercial vehicles or those used in the course of employment or self-employment. From my Department's perspective, it is primarily aimed at people who may be concurrently working and claiming social welfare payments. To date, as a result of follow up by social welfare officers, a total of 118 social welfare claims have been disallowed, giving savings of £350,000. In addition, gardaí and Customs have detected a number of road traffic, road transport and customs offences.

This approach has been very effective in detecting serious levels of fraud and abuse. For example, one checkpoint in February last year detected abuse in no less than 10 per cent of the 100 vehicles checked. A number of cases involving people from Northern Ireland are being followed up through the normal liaison arrangements with the social security agency there. To date, social welfare inspectors have operated under general powers contained in existing legislation. I was advised when preparing this Bill that it would be more appropriate to replace these existing general powers with more specific provisions.

Concern has been expressed about the exercise of such powers. I assure Senators that these powers will continue to be used responsibly. This programme is not aimed at ordinary citizens going about their business. It is the ordinary citizen who is being ripped off by all defrauders, including social welfare defrauders. It is those in most need who are losing out by this – OAPs, carers, widows, widowers, lone parents and the unemployed. I make no apology for doing all I can to stamp out fraud. Every £1 taken in fraud is £1 less for the needy in our society.

Those who find fault with multi-agency efforts to find out fraud surely are not asking us to turn a blind eye to what we all know is going on. If so, they are being extremely hypocritical. Fraud is fraud. Those most vocal on this cannot have it both ways. These powers will work only if they are used in a sensible and responsible manner. That is how they have operated in the past and that is how they will operate in the future.

Section 27, at the request of the Department of Health and Children, extends the scope of the legislative provisions I introduced last year for an [1176] integrated social services card, to include the General Medical Services Payments Board and voluntary hospitals operating in the health services area. The Department of Health and Children has plans for the voluntary hospitals to use the number for patient records and screening programmes. The GMS board will use it for the creation of a national patient index in the consolidated drug subsidisation scheme. Any data sharing will obviously be governed by the existing legislative provisions.

Section 32 provides for an increase in the health contribution from 1.25 per cent to 2 per cent and for an increase in the weekly exemption threshold from £207 to £217 from 6 April next. Section 33 repeals the relevant provisions underpinning the 1 per cent employment and training levy which, as announced in the budget, is being abolished from 6 April next.

I have been concerned for some time about the issue of integration, the process whereby occupational pensions effectively top up the social welfare pension to provide a total pension specified in the rules of the occupational pension scheme. I have referred to the issue on a number of occasions, most recently in my budget speech in December last. Integration is normally carried out on a once-off basis at the point of retirement, but I am aware that in a small number of pension schemes, the process is continued on an ongoing basis after retirement under a total pension scheme approach, which is provided for in the rules of these schemes.

In considering any reforms in this area I have to bear in mind that occupational pension schemes are voluntary arrangements. Nevertheless, I consider certain reforms in this area are warranted, and as a first step I am providing in the Bill that any reduction in occupational pensions in payment, as a result of increases in the social welfare pension, will be prohibited.

While there is little, if any, evidence that any pension scheme rules allow for such a reduction, the prohibition will obviously outlaw such a practice if it does exist and will also prevent employers considering such a rule in the future. Such a prohibition was recommended by the Pensions Board in its report on the national pensions policy initiative. In relation to the general issue of post-retirement integration, I have decided that it should be examined in the overall context of a review of the indexation of occupational pensions generally and I have requested the Pensions Board to prepare a report on this. I will consider the board's report and revisit this issue in the pensions Bill which I hope to publish towards the end of this year.

In the last election in June 1997, we promised to do three things – to cut taxes, to cut crime and to cut dole queues. We have succeeded dramatically in all three. A major reform of the tax system was announced in this year's budget by standard rating the basic single and married personal allowances and the PAYE allowance. The full year value of the main personal reliefs [1177] amount to £581 million, on top of £517 million last year. Crime has been cut by some 16 per cent and the live register has dropped by 53,500 since this Government took office. The Social Welfare Bill demonstrates the Government's commitment to building an inclusive society. I commend the Bill to the Seanad.

Mrs. Ridge:  I thank the Minister and note his focus on the family and the “in” word everywhere, inclusiveness. I will start my contribution on that theme by reminding the House of Charles Dickens' novel A Tale of Two Cities which opens with the line “It was the best of times, it was the worst of times.” It would be unfair of me not to agree that for many people it is the best of times. However, I represent many people to which the latter category applies. That statement is as true today as it was in France 200 years ago, although in a different context.

Before applying that thesis to Ireland today, I acknowledge the positive contributions to the social welfare system contained in the Bill. I have not had time to absorb his contribution today, but I read his Second Stage speech in the Dáil. Who could possibly oppose the proposed increases in the Bill, although one would always wish for more in certain areas? I congratulate the Minister on the increase in the bereavement grant which is a positive step. I do not know who advised him on this, but it is one of the most welcome features for many families at their time of bereavement. I take issue with the lowest rate of carer's allowance. However, the Minister will also be pleased to hear that I have no intention of going down through the list, criticising each allowance and telling the him how he could have done better.

I am a realist and I accept what the Minister said in concluding his speech about the three main areas where he feels his party's manifesto has been successful. However, I do not agree with him on crime. In urban and rural disadvantaged areas, and more specifically in marginalised large towns and cities, particularly Dublin, crime is more cruel and vicious and is certainly not declining. I am not going to criticise the Minister's provisions, but I regret that some Government Deputies have already issued press releases to the effect that Fine Gael voted against the poor and elderly by voting against this Bill on Second Stage. We have every reason to vote against something we feel we could do better, though the Minister would obviously disagree. I regret the context in which those press releases were issued, but that is politics. I feel we have the right to reject something that is inadequate in the Bill.

This brings me back to my “Tale of Two Cities” thesis. The Government has budgeted for a 1999 surplus of £2,300 million, and all the signs are that this will be exceeded. However, the extra money allocated to the Social Welfare Estimate amounts to £77.9 million, not a huge proportion of that surplus, a point with which the Minister might agree. The Minister is being presented with the opportunity of a lifetime in these affluent [1178] times to set up support systems through his Department to make a significant difference in the lives of the disadvantaged, the have nots and the deprived.

On a lighter note, the Minister will be delighted to know that I have no intention of speaking on farming or fishing issues. There is no farmland and one canal in my area.

Mr. D. Ahern:  Like myself.

Mrs. Ridge:  I will confine my remarks to the issue of disadvantage, as an area with which, unfortunately, I am all too familiar. I doubt that disadvantaged areas will benefit very tangibly from this Bill. Individuals may have slightly increased incomes, but I am worried by the overall picture. There is a two-Ireland system at present, and it is clear that the meek shall not inherit the earth – that is becoming more obvious every day.

The Minister referred to the support groups he has met in the family fora and to their view that the priorities for supporting families in today's changing social and economic environment are critically important for the future development of family services and policies. I am happy to note this and do not doubt the Minister's commitment. I have often wondered how any brief could include the breadth of areas this portfolio covers. However, it is not my fault the Minister was given the job of being Minister responsible for people from the cradle to the grave, or the womb to the tomb. All human life is there.

We have a unique funding situation this year, and I will address broadly how we can work to help society and for greater inclusiveness. Our first class citizens have wealth, educational advantage, private health care and enjoy inclusion; theirs is a place in the sun, and if it is raining they will not be out in the cold. Many of those I represent live in poverty and are on waiting lists for hospitals, houses and in queues for buses. There are also unacceptably high unemployment levels in these areas. However, the most notable feature of these areas is that the people there do not feel included. They do not feel they are part of society but feel marginalised. I could go on with the litany of social woes: the huge increase in homelessness among young people, the never-ending problem of drugs and the degradation of the human spirit that comes with addiction and children who are out of control, which is a huge social problem in the area I represent and which I feel nobody can cope with. There is also child abuse and school absenteeism. It reflects badly on the Government that we still do not have school attendance officers in the heavily populated areas of urban deprivation; we still rely on the gardaí to be school attendance officers in high crime areas. That is ludicrous, but I appreciate that that is not directly within the Minister's brief.

The issue I worry about most is the isolation of the aged. It is probably nobody's fault; with the growth of the city and families becoming smaller, [1179] it takes longer to visit people. However, it is a problem that will not go away. I refer to these matters not to criticise but to show that the Bill could have been more inclusive in taking on board some of these issues, though the Minister would have to be Solomon to cater for them all.

However, there is still an opportunity here. The Minister has funds at his disposal to heal gaping wounds in society, which is now divided in a way I have never seen before. I am a native Dubliner who is not in the first flush of youth, and I have seen the city increase and multiply. However, it is also dividing in a worse way than when class divided it. It is hard to explain, but there is an example in this week's newspapers with the £1 million houses in Malahide. One will be a millennium person if one buys one of these houses, while a huge proportion of the population is still receiving supplementary rent allowance. The cost of that scheme has never been higher. I am not blaming the Minister or his Department, but these social ills are so grievous that they should be addressed, and the Minister's brief includes some of them. This is also an Ireland where refugees are paid not to work while there are vacant jobs to fill. This is crazy. None of us foresaw this Ireland, but it is threatening to overwhelm us if action is not taken. I know that sounds like a Doomsday statement, but I feel some sections of society cannot cope any longer.

Regarding the Bill, one can start at only one level, and one cannot address all these problems. That start should be made with the most important person: the child. I say that as a tutor in early childhood education, a former chairperson of the Irish Pre-school Playgroups Association, an adult educator, a former teacher of teenagers and as a mother.

Is the Minister aware that in disadvantaged areas it is almost impossible to secure a place for a child in a State assisted pre-school facility? Such facilities are often full and, in some cases, they are not being attended by the children for whom they were established. This leaves the young single parents about whom I am most concerned – they are mainly young women – with no opportunity to re-enter society through the workplace because they cannot gain entry to crèches for their children due to the shortage of places. Many of these people, most of whom live in the same areas, lead a kind of twilight existence. The Fine Gael proposal of an increase in child benefit would help in situations of this sort.

In my opinion an increase of £20 per week would be a better proposition than £3 per month, particularly in terms of trying to provide people with an income geared towards their specific child care needs. The demand for child care is growing at an alarming rate. The benefits of a good pre-school care system are obvious and should be addressed for a number of important reasons. Such a system will address the social exclusion of single parents, provide a stimulating and secure experience for children and allow for the return [1180] to employment many who cannot do so under the current system.

The Minister is aware that the studies carried out under the home start and head start programmes will show that children with secure pre-school backgrounds develop into non-threatening teenagers. If we are intent on discussing family focus, inclusion and trying to address the situation of the aged and the disadvantaged, this serious matter must be taken on board. I genuinely believe that the brief is so broad that if we began with the current generation of children, we might have something to look forward to in the not too distant future.

The famous French sociologist, Emil Durkheim, tried to address the problem of “anomie”, alienation in society, over 100 years ago but he did not succeed. We now have a means at our disposal to do so. I do not know whether it would be 100 per cent effective but it is surely worth trying. I was amused to discover that the dictionary defines “welfare” as a lack of calamity and a presence of health and well being. I am not suggestion that we have reached the calamitous stage but the health and well being of a certain sector in society are at risk unless these problems are addressed.

I refer the Minister to the Combat Poverty Agency's report on “Strengthening Partnership and Practice”, published in February, which contains measures that could be successful in tackling the self-evident social ills in marginalised areas. Part of this year's Exchequer surplus should be allocated for those specific purposes. This is an area where State and voluntary groups could work together because these problems can, in the main, only be dealt with by means of a two pronged approach.

I commend the report on secondary benefits commissioned by the Department, which I read with great interest. This report shows why people in certain areas will remain unemployed, particularly when secondary benefits are added to their welfare allowances thereby providing them with a disincentive to return to the workplace. I say this purely from the point of view of commenting on social exclusion because I cannot believe that anyone who is willing and able would be better off on unemployment benefit or assistance.

The Minister will be glad that I have no further comments to make and that I have no intention of calling a vote because it would be spurious to do so. I hope he will take on board my suggestion about increasing child care allowances.

The Minister stated that section 26 strengthens the powers of inspectors to allow them to remove or secure for later inspection, documents or records from employers' premises and to require employers to provide reasonable explanations of their contents. I do not believe employers retain documents in respect of many of these people. Therefore, I do not know how the provision will be applied and I will be interested in his response. The people to whom I refer are usually not registered by their employers and they are paid in [1181] cash; they are only registered with the Department of Social, Community and Family Affairs. I thank the Minister for his attention and I look forward to his response.

Ms Leonard:  I welcome the Minister and congratulate him on the introduction of his second Social Welfare Bill.

I was interested by Senator Ridge's reference to the best and worst of times. Everyone knows that there will never be a level playing field in a society where people require social assistance. It would be unrealistic to believe that those in receipt of such assistance will make the same amount of money as their counterparts in employment. I suggest that the sign of a good Minister and a good Government is their ability to plan ahead. As sure as night follows day, as sure as the calm follows the storm, there could be a rainy day waiting around the corner. The sign of a good Government is its ability to prepare for such a day. In that context, there are a large number of provisions in the Bill which will improve the situation of less fortunate individuals in our society. I propose to discuss some of those provisions in detail because it is important to point out the positive aspects of the Bill.

The difficulty with a successful economy is that certain people can be left behind. It is often the people who have contributed most to society who receive the least. The Programme for Government states that the older people in our society would benefit most. For that reason I welcome this year's £6 per week increase to pensioners which, when added to last year's £5 increase, means that pensions have risen to £89 per week. Therefore, we are well on the way to seeing pensions reach £100 per week in the lifetime of the Government.

Eaten bread is soon forgotten and in the current climate it is easy to forget that times were not always so good and money was not always so readily available. Members of the older generation are responsible for the country's current success, a success which is expected and enjoyed by those of my generation. I welcome the increases for old age pensioners because we must recognise and reward their contribution to society.

Though not directly relevant to the Department of Social, Community and Family Affairs but extremely relevant to older people is the change in medical card guidelines relating to those over 70 years of age. I hope this will be extended to all old age pensioners in the future.

We must remember that all other benefits have been increased but I propose to concentrate on one or two of the main provisions which are particularly relevant. Senator Ridge referred to the increase in child benefit. I welcome the increases for the first two children and subsequent children. If I was totally unrealistic, I would support the Senator's call for an increase of £20 per week instead of £3 per month. The broader issue we are discussing is child care. [1182] Child benefit is only one aspect of this issue. It is usually paid directly to the mother and can be an important source of income for her, if not her only source of income.

The child care debate, which has been ongoing for some time, deals not only with income but with the lack of suitable, affordable child care facilities. This brings the debate to a different level because no matter what increase is made in child benefit, the issue is the type of care given to children. The national child care strategy does not recommend increasing child benefit because it is an expensive option and is not specifically targeted at child care.

It is difficult to anticipate where this debate will end. People who are working full time require child care facilities but the parent who remains in the home cannot be forgotten. I am still a firm believer that the parent is the best person to care for their children. An increase in child benefit is not the only provision which could be made to deal with this issue. However, the debate on what should be done will be wide ranging. I welcome the discussions of the interdepartmental group and I hope the best possible resolution will be achieved. It is a difficult and complex issue and rash decisions, used as sticking plaster or emergency measures, would be ill considered and ineffective. However, there is no doubt that some action is required to tackle the child care issue.

One of the best features of this Bill is the provision for carers. This was discussed at length in the Seanad when last year's Social Welfare Act came before the House. I wholeheartedly welcome these provisions. I said earlier that the forgotten people in society are the elderly. Carers, however, are the heroes of society. One often hears nursing described as a vocation and people regularly praise the dedication of nurses. The fact is that the nurse works to get paid at the end of the week or month, not because it is a vocation, and I speak as a member of the nursing profession. We are paid for our work.

Carers provide care 24 hours each day, seven days a week, 52 weeks of the year. Until recent years they were neglected and I wholeheartedly welcome the efforts of the Minister, Deputy Ahern, to provide some form of recognition for them. Carers take pressure off the State because, when an individual is being cared for in the home, it is often a case of out of sight, out of mind as far as the social services are concerned. They also take pressure off their own family members. In my experience, their work is often not appreciated by their siblings and other relatives. There is seldom a thought of the physical work involved or that financial assistance for the carer sibling might be appropriate.

Carers are generally anxious to maintain the family member in the home. They do not wish to see them taken into institutional care. However, the constraints on time and energy over a long period can sometimes damage the health of the carer so I particularly welcome the provision of [1183] £200 each year for respite care. My Opposition colleagues will claim that this amount will not pay for a week's respite care but it is an important first step. As well as improving the position of the carer, respite care is usually good for the person who is being cared for. It is good for them to get a break from the family because a person who is limited in mobility and outlets can often become more incapacitated than they were at first.

The carer's allowance is extremely important for people in rural areas. In many cases, the carers are the sons and daughters of parents who might not live at home but next door. Until now these carers received no recognition because they did not actually live with their elderly parents. I welcome the new provision in this regard. I also welcome the fact that this scheme will cover carers of children who are in receipt of the domiciliary care allowance, paid by the health board. Indeed, it covers carers of all people aged between 16 and 65 years who are receiving full time care. It is, of course, means tested.

That brings me to the one problem I have with the carer's allowance. It would be unrealistic to expect the means test for the allowance to be abolished. However, I hope some form of proportional payment will eventually be paid to individuals who are carers but are just above the means test thresholds.

I welcome the discussion on needs assessment. That is probably the major anomaly in this area. The levels of needs of individuals who are being cared for can vary enormously. Somebody might satisfy the means test who is slightly immobile but mentally competent and physically able to carry out a good deal of their own care. There should not be the same level of payment for the carer of that individual as for the carer of somebody who is possibly just above the threshold and who is caring for one or two elderly parents who are incapacitated, incontinent and totally dependent on them for all activities in daily living. I look forward to the review of the assessments. Hopefully, over time there will also be proportional payments for people who are just above the guidelines.

Society has changed a great deal. The nuclear family unit is now the norm. A couple of generations ago the elderly parents could be sure they would be cared for in their homes by their daughters or grandchildren. Times have changed, however, but the improved regulations for carers will help an individual to retain their independence while being assured of care when it is necessary.

Senator Ridge did not discuss sections 15 to 18. She felt she did not know enough about them as they were not relevant to her constituency.

Mrs. Ridge:  I freely admit I know nothing about them.

Ms Leonard:  These sections deal with the farm assist scheme. I represent a constituency com[1184] posed mainly of small farmers so I wholeheartedly congratulate the Minister on his swift action in bringing this measure forward.

The regulations will come into effect from 7 April. The scheme will benefit approximately 13,400 farm families, which include the 6,000 smallholders who are already in receipt of assistance in addition to more than 6,000 low income farmers. It has been a difficult year for farming. Many urban dwellers feel farmers are constantly holding out the begging bowl but that is the IFA's job – the large farming organisations must paint the worst possible picture in putting forward their case. However, those organisations do not reflect the needs of smaller farmers. Many such farmers do not join those bodies or are unable to join them because their farms are not big enough. These people are left behind and are most in need but never look for anything from the State.

In my area there are many farmers who looked after elderly parents and never married, and whose only training is in farming – it is the only livelihood and life they know. Unfortunately, because of the way agriculture is developing, these people are facing extinction. When small farmers fill out official forms, they suspect that mention of acres or cattle works against them. I wholeheartedly welcome these provisions, especially the one which provides that farmers will not have to sign on every week. In congratulating the Minister, I also congratulate the Minister for Agriculture and Food, with whom he has worked in partnership to tackle the crisis for the farming community over the last few months.

A measure which will benefit not only farmers but also the self-employed is the recognition given to people who paid social insurance contributions since April 1998 but had not paid for ten years by the time they reached pension age. This welcome provision does not affect many people but it is a significant improvement for those it does benefit, people who were discriminated against through no fault of their own. This affects a number of farmers in my area and I am delighted the anomaly has been resolved.

The Minister is well aware of my views on multi-agency vehicle checkpoints. This provision received a lot of attention even before the Bill was discussed in either House but I have no reservations about this policy. I have come across a number of these checkpoints, which do not include social welfare inspectors at present. This measure is already in social welfare regulations, the Bill merely incorporates it into the law, so I do not know what the fuss was about. It has been said the gardaí would be better employed looking for real criminals and carrying out their work in a different way. These checkpoints are already in existence, it is just a matter of social welfare inspectors joining Customs officers and gardaí. It is good sense that social welfare inspectors should take this opportunity. This issue is raised by people who find the Bill satisfactory but need something to complain about.

[1185] As a result of my proximity to the Border I am aware of the number of people who cross from the North to the South and defraud the State by not paying any contributions. We can stand on the high moral ground and talk about white collar crime but fraud is fraud no matter who does it. If we are to be realistic we must stamp it out, and we must be seen to deal with it so that people realise they must pay their way in society. The basic principle is to root out all fraudsters, and though it may not be popular, I am fully behind this provision.

I approve the Department's greater focus on the family, particularly the extra funding for family mediation, counselling and bereavement services. The way society is developing there appear to be greater problems in families. I am glad the Minister continues to increase funding for these services, because everything that eases a child's transition from a two parent family to a one parent family is welcome. It is a difficult time.

I congratulate this Minister. This has been described as an innovative and radical Bill but it is really a continuation of the innovative and radical measure he embarked upon this time last year. I was pleased to hear Senator Ridge ask who could oppose such increases and in that light I look forward to the speedy progress of the Bill without opposition from our colleagues.

Mr. Connor:  I begin with a plaudit for the Minister, which may be surprising coming from the Opposition benches. When discussing last year's Social Welfare Act I made a case for old age contributory pensioners who had not claimed their pension on the date it fell due, that is, their 65th or 66th birthday, and discovered years later that they were entitled to draw their pension while working. I argued that all such arrears should be paid to pensioners and it was the only issue on which we called a vote on last year's legislation. Since then, the Minister has gone some of the way to meet the fears I expressed and I thank him for that.

However, there is some way to go; we will not have given full justice and equity to pensioners until we pay full arrears to everyone who did not claim their pension after making a lifetime of contributions. I was the only Senator to raise this last year, and I doubt it was much raised in the other House. In the spirit of generosity the Minister has shown, I ask him to re-examine this matter because there are a number of cases outstanding and some money is due to many pensioners who feel a sense of injustice. Perhaps he will have further good news in next year's Bill.

The Bill is welcome and contains a number of improvements, many of which are justified by the times in which we live and the performance of the economy. People who are working are doing well and the Government is receiving a huge bonus in Exchequer funds which would have been undreamed of even three years ago. The improvements are, therefore, only right and proper.

[1186] This is enlightened legislation. The Minister and the Government have shown an enlightened approach towards spending a substantial part of the additional resources generated in the State on people who cannot look after themselves and on those who are vulnerable because of poverty, old age or unemployment.

While I welcome the improvements in the carer's allowance, including the means test which is the most liberal of all the rules for any social welfare payment, the Minister must look at the disregard of income for carer's allowance. A young woman with two children came to see me some weeks ago. She spends 80 per cent of her time looking after her mother who has Alzheimer's disease. Because half of her husband's average industrial wage is attributed to her, she is above the maximum threshold to qualify for the carer's allowance. It is unfair that such cases still exist.

I know it will cost money to change this scheme but it is better for a sibling or relative to look after someone who is disabled in their home than placing them in an institution where it would cost the State approximately £500 per week. It is more expensive to look after people with Alzheimer's disease in a hospital or nursing home. I ask the Minister to examine this. Institutions which care for our elderly citizens are bursting at the seams. We should do everything possible to encourage siblings or relatives to look after these people at home. It is a pity someone on the average industrial wage is outside the scope of this scheme.

I welcome the new farm assist scheme which, with EU supports, will help small farmers to supplement their income as many of them cannot generate a sufficient income from their farming activities to keep body and soul together. The Minister said that farmers on low incomes will qualify for this scheme. However, departmental officials and appeals officers, who are independent, may interpret the regulations differently.

I remember having an argument with an appeals officer a few months ago about treating a small farmer in the same way as if he was dealing with a tax inspector and ensuring that everything which affects his income was taken into account. Small farmers should be given the right under the social welfare code to take into account the depreciation of their assets, which are usually low in value. A piece of machinery, for example, is worth a certain amount on 1 January in a given year but it is worth less on 31 December. The same is true of all assets. The social welfare code does not recognise that when assessing a farmer's income, although it is a drain on it, but the Revenue Commissioners do. This could mean an extra £5 a week to a small farmer on a low income. I appeal to the Minister to take that into account when writing the regulations.

I am a farmer in my spare time. When I make a declaration of my farm returns before a tax inspector, I detail any capital investment in my farm and the capital assets which have depreciated. I can then write them off against my income rather than adding them to it, which is [1187] what seems to happen in the Department of Social, Community and Family Affairs.

I ask the Minister to abolish the idea of notional income. If a farmer tells his social welfare officer he will produce proof that he sold six animals last year and that they made less money than in 1996 or 1997, the social welfare officer will make a notional assessment of the income. They will say that because he sold six animals last year his average every year must be eight. They will not accept what is written on the receipt from the mart or abattoir. They do not seem to understand that the price of livestock has fallen by 50 per cent in many cases. Small farmers own many of the animals which have suffered the greatest reduction in prices.

I welcome the fact that people who were 56 years of age in 1988 when the new self-employed contributions were introduced will now qualify for a pro rata pension. I also welcome the reduction this year to five contributions. However, many pensioners have an average of five contributions over a working life of 25 years. I know one self-employed man who had an average of six contributions but they were disregarded. He will qualify for nothing because he must have an average of ten contributions as he entered insurable employment before 1988. I ask the Minister to examine this anomaly where one category of pensioners will qualify for a pro rata pension if they have an average of five contributions over their working life but another category will not qualify even if they have five contributions.

Mr. Glynn:  It gives me great pleasure to speak on this Bill which is one of the best I remember. The Minister and the Government must be commended for giving people an early Christmas. I also commend the Opposition's fair comments.

This Bill tackles a number of issues that have been around for a long number of years. I will start with the old aged, our senior citizens and the people who have built up this country. They are responsible for the institutions of this State. They rose early and worked long hours to ensure that the machinery of the state, whether local authority or the Houses of the Oireachtas, ran smoothly. I am delighted that the promises made by this Government are being delivered. It is fair that we would look after those who looked after us and who have built up the institutions of this State.

Since we came to power the old age contributory pension has been increased by £11 and now stands at £89. This compares with the increases given by previous Government of £7. The Minister has done in one year what the previous Administration took three years to do. That is a major tribute to the Minister and his Cabinet colleagues who supported him in bringing forward those measures.

[1188] Everyone in public life whether at county council level, town commission level, Seanad or Dáil, has always referred to the income level for medical cards, especially as it pertain to old people. This Government are committed to tackling this problem and have provided a 33.33 per cent increase in medical card guidelines for those over 70 years of age. As everyone knows, when people get on in years they need more medical attention.

There is also a commitment to children in this Bill. They are the future leaders of society. Children's allowances have been increased by £3 for the first two children and £4 for subsequent children. This measure will cost £41 million for the full year, compared to £25 million in the last year of the previous Administration. That is another feather in the Minister's cap.

I come from the rural constituency of Westmeath and the northern part of the county has seen a population decline in the past few years. As everyone knows, the inclement weather of the past couple of months has made it necessary for this Government to step into the breach and bring forward proposals to help the small farmers in their hour of need. For the first time the Minister stepped into the breach by providing the new farm assist scheme. This will bring major benefits especially at a time when there is a flight from the land. As every Member will be aware, many of the young people who have become owners of land are now asking themselves if it is worthwhile being in farming and who will help them when they get into difficulty. The Minister has provided help.

Senator Tom Fitzgerald has been articulating the needs of low income fishermen here ad nauseam. Thankfully, the Minister has also addressed this problem as well.

Birth and death are two very important times and bereavement is a time of trauma for everyone. The Minister has addressed this by increasing the bereavement grant by 500 per cent. That is a real commitment to people in their hour of need. To lose a loved one is a particularly traumatic experience.

Another bone of contention that has been around for a very long time is pensions for the self-employed. Again the Minister has taken up a long-standing issue and provided pensions for the self-employed who are over 56 and have five years paid contributions. They will receive 50 per cent of the full rate pension and this measure will cost £80 million in a full year. That is a major step forward for anyone who wants to start their own business. They know they can provide for themselves in the future.

My pet aversion is social welfare fraud. The Minister made the point that the saving to the Exchequer in this area was about £300,000. Imagine what £300,000 can do for the poor and the needy? The Minister has been criticised for taking certain measures but I commend him for [1189] it because when you are dealing with scarce resources it is very important that they are dispersed to benefit those who need them most. People cannot have it both ways. If the public purse is to be used to the optimum benefit of those who need it most then action must be taken against those who are drawing on its resources illegally.

This Bill is a further indication of the achievements of this Government in office. It delivered on many of the commitments set out in Partnership 2000, in our action programme and in our election manifestos. Last year we created a record level of 95,000 new jobs. Unemployment has been slashed and people are moving into jobs at a rate never seen before. Unemployment is down by over 40,000 since this Government took office. That is what this Government is all about, creating the opportunity and the incentives for people to share in the benefits of economic and social growth. This Bill and the recent budget provided for a record £317 million in social welfare improvements.

Unlike the previous Administration we take our commitments very seriously. The so-called Rainbow Government set out a wish list of what they were going to do in office but they quickly developed convenient amnesia. Unlike the Opposition we remember our commitments and we deliver on them. We promised pensioners a contributory pension of £100 per annum by the year 2002 and we are well ahead of target because this Bill will increase pensions to £89. It also provides for a total increase of 14 per cent in the level of pension since we took up office 18 months ago, which is more than was delivered over the entire period of the previous Administration.

I welcome the move to ensure that this increase is passed on to the occupational pensioners and that is it not offset by a reduction in the level of occupation pension. Occupational pension funds are doing very well out of the present record pension increases. These benefits should go to the pensioners, not to the funds. We promised to improve the situation for pensioners who narrowly lost out on qualifying for pension. This Bill provides for a new pro rata pension for the self-employed at a cost of £80 million in a full year; up to 10,000 people will benefit. Even the Opposition who did nothing when they were in Government had to welcome it and I commend them for that.

We promised to bring all social welfare payments up to the level recommended by the Commission on Social Welfare. With just two budgets this Government has moved to bring the rates up to the recommended level, unlike the Opposition who allowed the level of payments slip back in 1995. Most payments are well over these limits.

[1190] We also promised to improve the situation for carers. They are a very important. This Bill takes cognisance of the massive input carers make to society, particularly what they do for those who are unable to care for themselves. The Minister has taken measures in this Bill which brings a new level of concern for the cares. It must be borne in mind that if conditions are not right for carers then they might need care. Unfortunately, as I have said on many occasions here, when you are the fourth or fifth speaker many of the things you wanted to say have already been mentioned.

The Minister has done a marvellous job and I commend the Bill to the House. Lean ar aghaidh leis an obair.

Minister for Social, Community and Family Affairs (Mr. D. Ahern):  I thank Senators for their kind remarks. I could make political points about the size of the package but I fully accept that at budget time a Minister has to work with the package that is available. Since becoming Minister, my experience has been that a lot of negotiations go down to the wire. We would all like to deal with issues for old age pensioners, children, carers, the disabled, the unemployed and disadvantaged areas, because all these issues must be given priority. Obviously, in determining the budget available to him, the Minister for Social, Community and Family Affairs must weigh up all these factors.

The Government decided early on – indeed prior to coming into office – that it would look after those in our society who have reached the retirement age of 65 or 66. I believe most Members of the Oireachtas would accept that in the last two decades old age pensioners have lost out in that they have not been able to lobby as a group as articulately as others. This is the reason the Government has concentrated on assisting old age pensioners. We did so with regard to the State pension, which is not a large payment. However, there is a commitment to increase the contributory old age pension to £100 per week by 2002. By increasing the pension in our first two budgets by £5 and £6 on the maximum rates, we have gone further than what is required of us over the period of Government. We aim to continue along that road, not only in respect of social welfare payments, but also in relation to the medical card. On 5 April 15,000 old age pensioners will be taken out of the tax net as a result of the changes in the budget. This is by far the largest number of any cohort of taxpayers taken out of the tax net as a result of the budget changes.

Reference was made in the other House to the budget surplus and a figure of £2.3 billion was mentioned. This does not take into account the factual position which is that the net Exchequer [1191] surplus is in the region of £900 million. This is a substantial amount of money, but obviously every Minister and Opposition spokesperson will make suggestions as to how it should be spent. On Report Stage in the Dáil yesterday the Opposition suggested that times are now very different and that there is plenty of money available. The Government has one important commitment which is the cornerstone of An Action Programme for the Millennium – to curtail spending to 4 per cent. To date this has been adhered to, and will continue to be adhered to.

One of the reasons the country got into financial difficulty in the late 1970s and early 1980s was that current spending far outstripped what was available to the Exchequer. The commitments made by the Government in its election manifesto and An Action Programme for the Millennium were predicated on curtailing spending to 4 per cent on average over the lifetime of the Government. This has been adhered to and is one of the reasons we cannot spend the budget surplus willy-nilly.

In her contribution, Senator Leonard adverted to the fact that as sure as night follows day, the rainy day, as it were, will come. Indeed, it is not very long since we had rainy days. We are often accused of spending large amounts of money on consultants' reports and so on. I indicated on Report Stage in the Dáil that my party had an “away day” in the Slieve Russell Hotel. A panel of experts and economists attended and the topic of the day was how we in Government, and as a political party, could devolve policies which would allow us to manage the booming economy, given that the problems of a number of years ago no longer exist and that there are new problems, such as house prices and traffic congestion, etc. One economist said that the boom would continue for the foreseeable future – for five or ten years. A wise person from my parliamentary party said that while economists say that the boom will continue for the next ten years and that there are good times ahead, five years ago they did not predict the economic boom we have today.

At the end of the day, Government must make decisions based on its experience, knowledge and on advice, not only from outside consultants, but from the Civil Service. The Government cannot spend its budget surplus willy-nilly. Nothing illustrates this better than the fact that at present there are 400,000 old age pensioners and in a relatively short time – approximately 50 years – there will be one million old age pensioners. The ratio of worker to dependent person, that is, a child or an old age pensioner, will improve in the next decade to approximately 5:1. However, early in the new millennium the ratio will decrease [1192] dramatically whereby in 50 years' time the ratio will be 2:1. We must make provision for that now.

Every politician would like to spend more money but we must look at the broader picture. The reason we cannot spend the budget surplus is that we must consider issues such as care for the elderly and the rainy day, which will undoubtedly come sooner or later. I appreciate the constructive criticism of the Bill and, indeed, the compliments about the Bill in this House. Perhaps the debate was more political in the other House. However, I accept the Opposition must do its job, but people should not make outlandish requests and their tongue in cheek statements.

Senator Ridge referred to social welfare inspectors and their powers to remove documents. A District Court judge said recently that he had never come across an employer being prosecuted for social welfare fraud. However, there have been a number of such prosecutions. The staff in the Department are more against social welfare fraud by employers than by employees. It is all the same, but employers are pursued as much as employees.

One of the problems encountered by inspectors in employers' premises is the constant level of non co-operation. The Bill gives the same powers to social welfare inspectors as those enjoyed by the Revenue Commissioners' inspectors. This will allow social welfare inspectors to enter an employer's premises and seek documents under the legislation. It will avoid cases where inspectors are told to come back in a week and when they do so they are given the excuse that the documents were destroyed.

I appreciate Senators' comments about the multi-agency checkpoints. Some of the points were ill-informed, but the Department and I have good anecdotal evidence to suggest that the publicity about the checkpoints has already had the effect of driving people who were engaging in fraud out of the system. The live register figures for the weeks during which there was much publicity about this issue show an unusually large decrease.

I thank Senator Connor for his comments. Depreciation is usually assessed as a percentage of the gross output from the farming operation, depending on whether it is dairy or sheep farming, etc. It ranges from between 3.6 per cent and 4.8 per cent. These figures and the issue of depreciation are being considered with Teagasc in the light of the new farm assist scheme. The current position is that the scheme will be based on the existing assessment arrangements under the social welfare system. Once the Bill is passed, an explanatory note will be produced on the application form, which will be available almost immediately.

[1193] Senator Connor also raised the notional value of assets. The Department insists on prices based on current known trends being taken into account. All the officers in the Department of Social, Community and Family Affairs are aware of the difficulties which exist in the farming community.

My view is that child benefit or a similar system is probably the best method of dealing with the child care issue. The Government recently published the report of the expert working group, which was set up under Partnership 2000 to consider the issue of child care. The Government decided on the basis of that report and similar reports from the Commission on the Family and the Department of Education and Science that an interdepartmental working group should be established. This will include assistant secretaries from Departments and will report to the Government as quickly as possible to allow action to be taken in this area.

We cannot wave a magic wand to solve all the difficulties immediately. Most people appreciate that the expert working group had as its primary aim the issue of equality of access to the workplace by the female population. It did not consider primarily the issue of women in the home. Members of my parliamentary party expressed the view that both issues need to be considered together. The Commission on the Family considered the overall issue and made proposals which were plagiarised by the leader of the Fine Gael Party, Deputy John Bruton, in his ard-fheis speech when he referred to the need to assist children up to the age of five.

This exact suggestion was contained in the commission's report which stated that particular assistance should be available for children up to the age of three and that other assistance should be available for children aged between three and five. However, the commission's report did not suggest the exact measures which should be taken. One option is to pay a supplement in child benefit for children aged up to five. Deputy Bruton made a similar suggestion and it is a good idea. However, if there were three children aged two, three and four years and the family received a payment of an extra £20 a week or a month, what would happen to the overall family income when each child reached the age of five? The family would be bereft of this additional payment once the child reached five years of age. There would be an outcry because the family would be used to and need the extra money, but it would be withdrawn suddenly.

It is not simply a case of paying an extra £20 for each child up to the age of five. Other issues need to be taken into account and questions will arise as to whether the payment should be tapered and at what age it should be reduced, for [1194] example, between the ages of 12 and five years. It will be pointed out that extra costs arise after a child goes to school for clothing and books. This is why the Government decided to take a much broader look at this issue and to consider the three reports and the commitments in the programme for Government. The Government gave a firm commitment to make a start on addressing the child care issue this year with a view to taking action in the next budget.

I thank Senators for their forbearance and their kind remarks. I am proud to be part of a Government which introduced this good Bill. It addresses some of the needs in society with regard to social inclusion. One hears and reads much in the media about poverty. The best solution to poverty is the provision of employment and the figures speak for themselves. Since the Government came into office 20 months ago, the live register has fallen by 53,500 up to this month and 96,000 jobs have been created. This is one of the best ways to deal with the issue of poverty but I do not suggest that we should forget the people who, through no fault of their own, are unable to get a job. This is one of the reasons the Government is targeting resources at this area.

Senator Ridge referred to disadvantaged areas. She and many others would be surprised if they were aware of the programmes in my Department, which are separate from the schemes operated by other Departments and local authorities. In my Department there is a programme for community development projects and, at the moment, my Department substantially funds 90 such projects in areas of extreme poverty and we have a commitment to increase that number by a further 30 over a certain period. That is one aspect of the assistance which we give to local community projects.

I thank the Senators for their contributions and look forward to constructive criticism on Committee and Report Stages.

Question put and agreed to.

Committee Stage ordered for Tuesday, 30 March 1999.

An Cathaoirleach:  When is it proposed to sit again?

Ms Leonard:  Tomorrow at 10.30 a.m.

Mr. Cosgrave:  I welcome the Minister and hope he will pass on my concerns to his colleague, the Minister for Health and Children.

I wish to raise the crisis which has arisen in [1195] services for the mentally handicapped and people with learning difficulties in the south-east Dublin and east Wicklow regions in particular.

There was an important debate on this subject in the Lower House some months ago. We are all aware of the problems in the heath service but any debate on this issue should be constructive and not on a party political basis; it is too serious for any one party to make political capital from it. That may be in order for other matters but not this. I ask the Minister to take my points on board and to pass them on to the Minister, Deputy Cowen.

There are unacceptably long waiting lists in this area at the moment, a problem which must be addressed. At present there are 97 people on waiting lists for residential places, 180 people waiting for respite care and many more waiting for day care assistance.

There must be an immediate injection of funds to meet the capital costs, which are in the region of £7 million, £2.5 million of which is made up of current costs. That is a large amount of money on top of that spent already. It is easy for us, as the Opposition, to say “come up with the money”. However, in a time when we can spend money on pet projects and put aside millions of pounds for Army deafness claims, the Minister and his colleagues could go further to pursue funding for the mentally handicapped.

I attended a meeting about this matter a few days ago. On the night in question there were 20 parents present but probably no two parents were from one home for the simple reason that one parent had to stay home to look after their handicapped child. There is much anguish about parents growing old. They wonder what will happen to their children as they grow up. Parents were nearly saying that they would prefer their child to die before them because they are not sure what the future holds for them.

Although it is not just a case of flippantly throwing money at the problem, more is needed. The Minister will know these people in his constituency and need help. In these days of economic success it is disheartening to see families waiting for basic inexpensive items.

We must look at the broader picture. At a time when Croke Park is given £20 million – and I do not begrudge that – we must examine our priorities. We must do more for the mentally handicapped because their lobby is not as vocal as others. It was put to me at the meeting that there are not many votes in helping people with a mental handicap. However, this is an issue which affects Members of all parties; we all know someone who is in this position.

The Minister or his officials should meet some of the people in Dunmore House or St. John of God to discuss their problems. I am not asking that the world be turned upside down, but some money should be found. If this cannot be done immediately, there should be a commitment in principle that some of the problems will be [1196] addressed as soon as possible and that a long-term way of dealing with this will be found.

Further problems for service planning are also caused by the changing age structure among those with moderate, profound and severe disabilities.

I am aware that this does not come within the remit of the Minister for Social, Community and Family Affairs, but he is next door to the Department of Health and Children and will be aware of many of these problems.

Minister for Social, Community and Family Affairs (Mr. D. Ahern):  I thank the Senator for raising this important matter and wish to reply on behalf of the Minister for Health and Children, Deputy Cowen. In Opposition and as Minister, Deputy Cowen has been and is very committed to the issue of mental handicap. In devising our policy on this issue, Deputy Cowen was adamant that we should be positive in this area. Since his appointment as Minister for Health and Children, and despite the many competing demands which are made on the resources available to his Department, the Minister has consistently identified as one of his priorities, the provision of the additional residential, respite and day services outlined in the document Services to Persons with a Mental Handicap – An Assessment of Need 1997 – 2001 .This assessment of need is based on information from the national intellectual disability database and provides details of the current and future needs of persons with a mental handicap. It has also identified the amount of funding required to meet these needs over the period 1997-2001 as £63.5 million. This year the Minister was pleased to be in a position to provide an additional £12 million, with a full year cost of £18 million in 2000, for the further development of new services in line with the needs identified in the assessment of need. This £12 million is in addition to the £6 million already allocated to the services in 1999 to meet identified needs in existing services. This brings the total additional funding provided in 1999 for the services to £18 million, with a full year cost of £24 million in 2000.

Additional capital funding of at least £10 million is also being made available to support this year's developments. This funding is part of the £30 million national capital programme for services to persons with a mental handicap which the Minister put in place towards the end of 1997. Of the additional revenue funding, £3.635 million has been allocated to the Eastern Health Board, with a full year cost of £4.61 million in 2000. Details of the precise services to be put in place in the eastern region from this additional funding, including services in south-east Dublin and east Wicklow, and the individuals who will benefit from these services, are agreed by the Central Mental Handicap Planning Committee. This committee is representative of the Eastern Health Board, the voluntary mental handicap service [1197] providers and parents and families of persons with a mental handicap.

As a result of the committee's deliberative process, services in south Dublin and Wicklow are to receive additional funding of £585,000 in respect of 21 new residential-respite places and an initial allocation of £310,000 in respect of 31 day places. Further discussions are taking place to finalise the overall position regarding day services in 1999. The agencies benefiting from this funding include St. John of God services, Cheeverstown House, Stewart's Hospital, Peamount Hospital and Sunbeam House.

In addition to the funding mentioned above, £1 million has been set aside by the Eastern Health Board for the management of emergency cases which will arise during the year. This will give the board flexibility in dealing with crisis situations as the need arises. Officials from the Department of Health and Children have had an initial meeting with the various voluntary mental handicap agencies in the eastern region, including some of the agencies providing services in south-east Dublin and east Wicklow, to identify priority issues within existing services which are of concern to them. These discussions are taking place in the context of the transfer of responsibility for the direct funding of certain voluntary mental handicap agencies from the Department of Health and Children to the new Eastern Regional Health Authority in 2000.

I acknowledge the work which families and carers of persons with a mental handicap undertake in caring for their relatives. I understand the frustration of families whose relatives are on waiting lists for services and the toll which the caring and waiting can take on their health. I assure the House that the Government wishes to be of assistance to those families in working with them and the service providers to meet the needs which have now been identified.

While the additional services which have been put in place to date have made a significant difference, their impact on the waiting lists has been reduced because of the number of emergency admissions which had to be made, particularly to the residential services. These admissions affect both the planned management of the waiting lists and the availability of respite care. Given the age profile of clients and carers and the general unavailability of planned respite breaks, the expansion of the residential services must be tackled on three fronts – provision for the management of emergency cases; provision for new residential places for those who have been assessed as requiring this service and provision for an increase in the level of respite care.

This process began last year and has been further enhanced this year. The Minister intends to further develop it as additional resources come on stream. The funding provided in 1999 will bring the total additional revenue and capital funding allocated by the Minister to these services to £53 million in 1999 and £59 million with effect from January 2000. It also underlines the [1198] Government's commitment to meeting the needs outlined in the assessment of need for 1997-2001 within the specified timeframe.

The Government looks forward to working in partnership with health boards, voluntary mental handicap services providers and carers, including those in the south-east Dublin and east Wicklow regions, for the further development of services for persons with a mental handicap. Senator Cosgrave's comments will be brought to the Minister's attention.

Ms Leonard:  I thank the Minister for taking this Adjournment matter. I ask the Minister for Agriculture and Food to re-examine the areas in County Monaghan which have not be included under the severely handicapped scheme. In recent weeks the EU approved the application made in 1997 for severely handicapped areas. Unfortunately, 15 per cent of County Monaghan is outside this region. We are grateful that 11 per cent of the county was included, approximately 15,000 hectares, and I am aware that 79 per cent of the disadvantaged area is considered severely handicapped. We are fortunate that 85 per cent of the disadvantaged areas in County Monaghan are considered severely handicapped. However, an anomaly remains for those areas excluded.

It appears that the data used to compile the submission to Brussels was based on a survey carried out in 1989 in conjunction with the Small Farmers' Association and the IFA. These organisations agreed with the results of that survey. As a result of the data compiled the areas were decided upon in 1995. At that time 38,000 hectares were to be included in the application. However, we underestimated the severely handicapped areas in County Monaghan. When the data was revisited it appeared that the application could be re-submitted to include 53,000 hectares. This application was made in 1997 and the results were announced a few weeks ago.

However, 15 per cent of the land in County Monaghan remains excluded. Farmers in these areas find it difficult to accept that their neighbours have better land. These people are being excluded based on data compiled in 1989. The area involved is a small strip of land in the middle of Monaghan and is the only area in Ulster or Connacht to be excluded. It is difficult to justify the exclusion of this 15 per cent of the land. Everybody knows about the drumlin hills and soil in the area. It is wet, hilly land with poor drainage. Parts of the south of the county, closer to the Minister's locality, are of different quality. Indeed, there are amazing variations in the quality of land across the country.

It is difficult to understand how this part of the county has been excluded. In response to inquiries I have made with the Department I have been told that a possible reason this section of County Monaghan has been excluded is that while it is recognised there is bad land, the county has good [1199] farmers but that does not put extra money into people's pockets.

This submission was made in 1997 but it has taken two years to decide which areas need to be reclassified. It is hard to understand why it has taken so long. It is for the Government to decide, following Agenda 2000, what areas, if any, are to be reclassified.

While I appreciate it is probably not feasible to undertake a further study, there is a need to engage in further tests on the 15 per cent of the land that has been excluded. One would not have to be qualified in agriculture to know that, in many cases, the land is of very poor quality.

Will the Minister explain why 15 per cent of the land of Connacht and Ulster has been excluded? Given the amount of the land involved, is there a possibility of further re-examination? A review could mean up to £1,000 annually for each farmer in the area concerned, a very significant amount given the present state of agriculture. I ask the Minister to relay the concerns of the farmers in my area to the Minister for Agriculture and Food. We seek an explanation for our exclusion.

Mr. D. Ahern:  On behalf of the Minister for Agriculture and Food I wish to respond to the points raised by the Senator. When the disadvantaged areas appeals panel commenced its examination of areas for reclassification in 1992 it was decided, following agreement with farm organisations, that it would base its recommendations on data gathered in the 1989 survey. This data has been used in the previous fourth review to select areas for reclassification, based on an income criterion of less than 40 per cent of the national average income and the presence of at least 40 per cent of the working population being engaged in agriculture.

It was agreed that if the income limit was raised to 60 per cent and the working population limit was disregarded, then the data would allow the [1200] selection of a significant number of additional areas. A further condition was that the land must be rated at 4 or lower on the quality scale of 0 to 9, and also that selected areas must adjoin existing more severely handicapped areas. Using these criteria the appeals panel selected an additional 30 per cent of County Monaghan for reclassification as more severely handicapped and this was approved by the EU Commission in November 1995, bringing the total more severely handicapped area of the county to 73 per cent of the total land.

Following representations from farmers, farming organisations and public representatives, such as the Senator, regarding areas not included, it was decided to carry out a complete recheck of the less severely handicapped areas of County Monaghan, including those reclassified in 1995. This recheck highlighted a number of areas which the appeals panel has inadvertently omitted from its original recommendation. A supplementary proposal to the EU Commission was prepared and submitted in April 1997 to include these additional areas.

Due to pressure of other work, the Commission did not examine this proposal until November 1998 and it was finally approved by the STAR Committee in February 1999, bringing the total more severely handicapped area in County Monaghan to 85 per cent. I am satisfied that, based on the data at the disposal of my officials, all areas of County Monaghan which could be shown to satisfy the criteria of more severely handicapped status have now been reclassified.

I acknowledge the Senator's remarks given my knowledge of the quality of the farming personnel in County Monaghan, especially those contiguous with my county. I will pass on her comments to the Minister for Agriculture and Food and I suggest that she subsequently take up this issue with him.

The Seanad adjourned at 4 p.m. until 10.30 a.m. on Friday, 26 March 1999.