Seanad Éireann - Volume 121 - 16 December, 1988
Appropriation Bill, 1988 [ Certified Money Bill ]: Second and Subsequent Stages.
 Question proposed: “That the Bill be now read a Second Time.”
Minister of State at the Department of Finance (Mr. N. Treacy) Noel Treacy
Minister of State at the Department of Finance (Mr. N. Treacy): At the outset, I would like to extend to the House the Minister for Finance's apologies at being unable to attend himself this afternoon. You can appreciate, of course, that the Minister is at present fully engaged in familiarising himself with his new responsibilities and preparing the groundwork for his first budget.
The Appropriation Bill is an important annual piece of financial legislation the purpose of which is to give statutory effect to the Departmental Estimates for the supply services, both non-capital and capital, including all Supplementary Estimates that were voted and approved by the Dáil since the enactment of the 1987 Appropriation Act. This year's Bill appropriates to the various services set out in the Schedule to the Bill, the sum of £6,454 million comprising the Estimates totalling almost £6,372 million as set out in the revised post-Budget Book of Estimates, Supplementary Estimates of just over £67 million and some £15 million in respect of a 1986 excess on the Environment Vote.
As usual the Bill also authorises the use of certain departmental receipts amounting to almost £668 million as appropriations-in-aid.
The 1986 excess on the Environment Vote arose because of a deficiency in appropriations-in-aid as a result of the ESB's refusal to pay its full contribution in lieu of rates for that year as required under section 7 of the Electricity (Supply) (Amendment) Act, 1982. Following intervention by the Government in 1987, the ESB agreed to pay the balance of the 1986 contribution and this was brought to account in 1987. The shortfall on the 1986 accounts must, however, be made good, hence the need for the excess Vote. The excess Vote was cleared by the Committee of Public Accounts and has been  approved by the Minister for Finance. As the Central Fund (Permanent Provisions) Act, 1965 does not authorise the issue of moneys for an excess vote, a special section is required in this year's Appropriation Bill for this purpose.
The Appropriation Bill also provides the statutory basis for calculation of the “four-fifths” issues which the Minister for Finance is authorised, under the Central Fund (Permanent Provisions) Act, 1965, to make from the Exchequer towards meeting the cost of next year's services during the period before the Dáil has an opportunity to consider and pass the various individual Estimates.
I want now to look at recent economic developments. Many of the main economic indicators have shown considerable improvement over the past two years. Growth last year was over 5 per cent, the highest growth rate of the eighties so far. This was mainly due to the strength of exports. Last year we saw the trade surplus improve further, while the balance of payments moved from deficit into surplus for the first time in 20 years. Inflation fell to a very low level — just over 3 per cent — and was in line with the European average, rather than double it, as was the case in earlier years.
I am glad to report that these favourable trends are being maintained this year. While GNP growth probably will not reach the exceptional heights of 1987 which resulted from a very strong export performance, it will probably be in the 1 per cent to 2 per cent range, higher than anyone had believed possible at the time of the budget. Inflation has continued to fall this year, averaging 2.1 per cent — the lowest inflation rate for a quarter of a century. It is now actually lower than the EC average and, of course, very much lower than in the UK, our single largest trading partner.
The trade surplus is continuing to improve this year. In the first ten months of the year, the surplus was £1,731 million, up from £1,205 million in the first ten months of last year. For the year as a whole, we will probably see a trade surplus of about £2 billion, which is equivalent to about 11 per cent of GNP.  The main source of the improvement in our trading position continues to be the strength of exports. In the first three-quarters of the year, the volume of exports was 9½ per cent higher than in the same period last year. It is very heartening to see that this export growth has been more widely spread among all sectors. Growth is no longer coming from the high technology sectors alone.
Mainly as a consequence of the strength of exports, the balance of payments surplus is expected to grow. Last year we had a balance of payments surplus for the first time in 20 years. This year it is expected that the surplus will increase, probably to about 4 per cent of GNP compared with about 1½ per cent last year.
There will be a surplus this year even though imports of capital goods have increased by over 6 per cent year-on-year in the first nine months of the year and imports of consumer goods by over 8 per cent. Moreover, the surplus cannot be attributed to a temporary boom in exports. The recent strong export growth reflects increased industrial capacity in the economy and a stronger competitive position which Government policies have fostered. The surplus can be maintained because the world economy, especially the EC, is now in a phase of rapid industrial growth. There is every reason to believe that the balance of payments position will remain sound over the medium term.
Interest rates in 1988 continued the remarkably favourable trend that has been evident since the Government assumed office. The present level of rates is a full 6 percentage points below the level in early 1987. Interest rates are now at their lowest level for over a decade. Incidentally our Associated Bank's prime rate is also a full 6 percentage points below the corresponding UK rate.
The benefits of lower rates to the business and personal sectors are self-evident. Investment is encouraged by the reduced cost of capital and personal interest rate burdens are lessened. In general, increased confidence generated by lower interest costs are assisting growth  in activity and hence in employment in the economy.
Encouraged by lower interest and inflation rates, consumer spending is showing a modest expansion. Private consumption is likely to grow by about 1½ per cent this year compared with no change in 1987. Retail sales have arisen by about 11 per cent for the year to August; new car registrations are over 12 per cent up for the year to date. Also, investment in plant and equipment is picking up.
Although there have been major successes over the past 18 months, unemployment and emigration remain at unacceptably high levels. Reducing unemployment by expanding employment continues to be a major priority for the Government. It is heartening to see that unemployment has begun to fall. This year to date, there has been an average decline of nearly 6,000 in the live register compared with the same period last year. The live register for end-November showed a drop of 2,100 in the de-seasonalised total. This was the fourth successive month in which such a fall took place. The fall in November was the largest so far this year and the seasonally adjusted figure was the lowest for over two years.
This decline has come about for a number of reasons. It certainly has not been due to emigration and the Jobsearch programme alone, as some critics claim. The labour force survey for mid-April this year disproves that. The survey showed that total employment rose in the year to mid-April by 6,000, having remained virtually static for the previous three years. Within this overall increase, services employment increased by some 10,000 and, given the fall in numbers employed in the public service in this period, this points to a considerable increase in private services employment. This is a very welcome sign and shows that non-agricultural employment has definitely turned the corner and is starting to grow again. The private sector is clearly responding to the improved economic climate brought about by the  Government's policies. Our main objective is to accelerate this rate of growth in employment and to bring down the rate of unemployment.
The recovery in the public finances continued through 1988. The target set for the Exchequer borrowing requirement in the budget last January was 8.2 per cent of GNP. The outturn for the year will be well below this figure. There are, undoubtedly, some exceptional factors at work, notably the tax amnesty, the success of which has exceeded all our expectations, and the encouraging response to the introduction of self-assessment for the self-employed which has resulted in significantly higher income tax receipts than had been expected.
Even without the exceptional and largely once-off nature of the improvements brought about by the tax amnesty and the introduction of self-assessment, the budgetary performance in 1988 has been satisfactory. Discounting these one-off improvements, the underlying Exchequer borrowing requirement for this year is still likely to come in under 7 per cent of GNP. This reflects the general improvement in the economic climate and the beneficial effects of a sound budgetary policy. The recovery in car sales in 1988 which I referred to earlier has significantly boosted indirect taxes.
The decline in the live register has meant that the annual average live register of 253,000 underpinning the budget can be revised downwards to an expected average level for the year of the order of 241,500. The savings resulting from this allied to tight expenditure control generally have also contributed to the improvement which took place during the year. Although the Government are in a position to report good progress the fact remains, however, that our borrowing and debt are still too high and responsible, strict management of the public finances must continue.
The funding programme this year has proved to be highly successful and leaves us in a very strong financing position facing into 1989. I will mention just two of the highlights. First, investment in Irish  pound denominated Government securities by foreigners reached an all time high this year with about £800 million being invested in the first three-quarters of the year. This represents a vote of confidence on the part of foreign investors in the policies we have been pursuing since taking up office. The second point I want to mention is that we have been able to pay off significant amounts of our foreign currency denominated debt this year — by end-September we had paid off £230 million. The end-year position is likely to be even better. It is clear at this stage, despite the many uncertainties which must still surround the figures, that we are well on target towards achieving the goal of stabilising the national debt-GNP ratio which was set out in the Programme for National Recovery.
In addition to the progress in the correction of budgetary imbalances, the Government have been able to implement a number of important tax reform measures in 1988. This year's budget went a long way towards meeting the Government's objective of putting two-thirds of taxpayers on the standard rate. In fact, as a result of the concessions this year, nearly 63 per cent of taxpayers will be paying tax at the standard rate in the 1988-89 tax year. What is often forgotten is the ongoing cost of such concessions—those in this year's budget will cost some £150 million in a full year, on an ongoing basis. This has to be provided for before any further easement can be given.
New ground has been broken, too, on company taxation. The phased reduction in the standard rate of corporation tax brings us into line with the trend in other countries. At the same time, the reduction in capital allowances will help restore the balance in favour of badly-needed jobs as against investment in fixed assets. These changes are playing a part in the better employment prospects that are now emerging, as confirmed by recent statistics.
The most radical changes have, however, occurred in the area of tax administration. The success of the tax  amnesty has already been well documented. The move to self-assessment, too, is little short of a revolution in the approach to tax assessment and collection for the self-employed in this country. It will place the responsibility squarely on individual taxpayers to meet their tax obligations in a timely manner. The charade of high levels of estimated tax and of appeals as the normal course of events will be ended. The aim is to eliminate the red tape that has for so long been clogging up the system — both in individual businesses and in the office of the Revenue Commissioners. Efficiency will be improved and everybody concerned will have more time to get on with their real business. The indications to date suggest that self-assessment is working very well with its benefits being conferred on both the taxpayer and the Revenue Commissioners.
The Programme for National Recovery has been operating now for just over one year. I am pleased to say that the spirit of co-operation and realism which characterised the discussions leading up to the negotiation of the programme has continued to be evident during this period. All participants have contributed significantly to the work of the Central Review Committee set up to monitor progress in implementing the programme and in achieving its targets and objectives. I would like to express on behalf of the Government, their sincere appreciation of their efforts.
I have already referred to the substantial further progress made this year towards achieving the programmes's central objective of bringing about a stabilisation in the national debt-GNP ratio. The benefits which have accrued from this in terms of reduced interest rates, and an improved environment for growth and investment, are there for all to see. The considerable stepping up in the rate of job creation over the past year both confirms the correctness of the programme's strategy and underlines the Government's commitment to the pursuit of their employment goals. The recent report of the Central Review Committee on progress in job creation at  the sectoral level during 1988 is welcome and reassuring. The creation of almost 15,000 new jobs in manufacturing and international services in the first three-quarters of the year is itself good news, but the fact that the industrial promotion agencies estimate that 20,000 jobs will be created over each of the next two years is even more encouraging. The report also brings out the significant contribution, in terms of extra jobs created, from the tourism, construction and natural resources areas. These developments show that the positive actions taken by the Government are bearing fruit. They indicate also the widespread nature of the economic recovery now taking place.
In concluding I would like to say that the Government can look back on 1988 with a good deal of satisfaction. For the second year running the Government set themselves very ambitious budgetary targets and will more than achieve them. We have made very significant strides on tax reform and have radically overhauled tax administration. There is no doubt that these measures are going to lead to a much more efficient and effective tax assessment and collection system for the future that will be welcomed by everyone except the tax defaulter.
The Government and all of us are grateful to the outgoing Minister for Finance, Deputy Ray MacSharry, for his great leadership and co-ordination and the great work he did in the area of tax reform and in the area of tax collection in co-operation with the Revenue Commissioners. I am sure Senators will be pleased to know that this morning he has been confirmed as Commissioner for Agriculture and Rural Development in the European Community.
The first part of the Government's 1989 budgetary strategy has already been put into place with the publication of the Abridged Estimates Volume and Summary Public Capital Programme last October. The reductions underpinning these Estimates represent the third substantial phase of fiscal adjustment since the Government took office and clearly demonstrate to the public and the financial markets that the Government are  resolute in their commitment to firm management of the public finances. In settling the 1989 expenditure allocations the Government adopted the same comprehensive searching expenditure review approach that had been used so successfully in deciding on the 1988 Estimates. All programme areas were again closely examined to see where savings could be secured.
In deciding on the 1989 allocations the Government were guided by the principles that programmes essential to the wellbeing of the less fortunate should not be cut back, that waste and over-provision should be eliminated, that fraud, abuse and unwarranted recourse to State services should be controlled and that those who can afford to contribute to the cost of certain State programmes should be asked to do so through the introduction of or increases in charges. With this approach the Government have managed to maintain the downward pressure on public expenditure without restricting the access to public services of those groups in society who must turn to the State for support and without reducing the effectiveness of our development policies.
The budgetary strategy will, of course, be completed early next year when the new Minister for Finance, Deputy Albert Reynolds, introduces his 1989 budget. We wish him every success in his new position. We are confident that he will do an excellent job.
The Government's faith in their ability to put together a well thought out strategy for recovery and more important to see this strategy through is now being rewarded. Things are coming right—the evidence is there for all to see.
I commend the Appropriation Bill to the Seanad.
Mrs. Bulbulia Mrs. Bulbulia
Mrs. Bulbulia: I welcome the Minister here this morning. I understand why the Minister for Finance could not be here. We look forward to having him with us on a future occasion. I should like to take the opportunity to extend good wishes to the outgoing Minister for Finance,  Deputy Ray MacSharry, on having obtained such an important and valuable portfolio in Europe. I am sure he will deal with it effectively and in the best interests of the Irish community.
It is customary in the Seanad to take the Appropriation Bill before Christmas. It is something of an annual event at the end of an Oireachtas session. It also gives us an opportunity to look back on the year and comment on the finances in general. It gives Senators an opportunity to look forward, to look to the future and to give indications to the Minister as to what way they see the future shaping up. We do not have an adjournment debate as such in the Seanad, but the Appropriation Bill serves as a sort of adjournment debate. The Cathaoirleach, with her customary latitude, has generally permitted Senators to range widely and freely on all aspects of the economy so that the Appropriation Bill is synonymous with an adjournment debate.
The purpose of this year's Appropriation Bill, as the Minister has said, is as in each year, to give statutory effect to the departmental Estimates for the supply services, both capital and non-capital, including Supplementary Estimates that became necessary throughout the year. This year's Bill follows the usual format.
The progress made by the Government in the last two budgets in reducing the EBR and in moving towards stabilising the national debt-GNP ratio was achieved principally by cuts in public expenditure. The Government, as a party in Opposition, decried the whole notion of public expenditure cuts. They suddenly found out that, in their view, health cuts, for example, did not hurt the old, the sick and disabled. The Government proceeded without any coherent policy to effect swinging cuts in every conceivable programme of Government activity. Backbenchers, part activists and Fianna Fáil members the length and breadth of the country had to be systematically debriefed and led towards a realisation that cuts in public expenditure suddenly had to become palatable and to be the  flavour of the month. This crude, ill-thought out and unrefined exercise proceeded.
I was fascinated to listen to the Minister deliver what is a substantial speech in many ways. It just does not reflect the reality on the ground. There was no reference to the word “poverty” in this speech. There was no reference to the actual net effect of these Government policies as they are affecting the lives of so many Irish citizens. That is not merely my view. I quote from a submission to the Dáil and the Seanad made by the Justice Commission of the Conference of Major Religious Superiors. In a comment on Government policy to date, they have this to say:
When the Government and most politicians talk about the issue of poverty, they argue that other issues must be given priority. They claim that we must first get our financial house in order. By this they mean that we must stabalise the debt-GNP ratio, reduce inflation and increase real output. This strategy, we are assured, will produce jobs for everyone who wishes to have one, an end to involuntary emigration and a better standard of living for all.
The Conference of Major Religious Superiors goes on to say that this strategy has failed both on its own terms and from the perspective of Christian values. It says there has been no increase in the number of jobs available; the number of unemployed has stayed close to a quarter of a million, involuntary emigration continues at its highest level for decades. The standard of living of the better-off continues to rise at the same time as poverty grows in our society. On its own terms, the strategy has failed. It is creating a more deeply divided society.
The Minister dealt with stabilising the debt-GNP ratio, reducing inflation and increasing real output but nowhere did he give recognition to the facts which obtain on the ground, facts which I am sure he must be aware of — that divisions are opening up in our society, that there is real poverty out there and that the actual knock-on effect of Government  policies is not benefiting vast numbers in our community. I hope to develop that in the course of my speech. While I accept that the thrust of Government policy, which of course has been adopted and adapted from Fine Gael, is correct, nevertheless because it does not appear to be part of an overall coherent framework it is not quickly inpacting on the lives of so many ordinary men and women in this country who are struggling to survive and who do not understand why they — the poorer section — should be so drastically affected by Government cuts.
If progress is to be made in the 1989 budget, one must ask the question: how is this to be done? It can be done in two ways. It can be done by further cuts in public expenditure or by increasing the amount of revenue collected by the Exchequer from taxes, levies and miscellaneous charges, or indeed by a combination of these two methods. If this does not happen, the EBR will remain too high in 1989 and the prospect of stabilising the debt-GNP ratio will be diminished. The 1989 Estimates are surprising: much-heralded and greatly-leaked, when they were finally published they were something of a damp squib. We will suspend judgment on that because the other side of the equation will become available to us with the publication of the budget in January. Then we will have a far better idea of where the Government are heading and whether people can expect to feel that the Government actually are concerned with and aware of the plight of so many in our community.
Many concerned and thinking people — and not merely politicians who are in Opposition — are coming forward and expressing very grave reservations about the actual effects on the ground of Government policies in the fiscal area. I am thinking of television programmes like “Today Tonight” that did a masterful exposé of poverty. It dwelt on Waterford city — which obviously interested me greatly — and other areas in the community and spelt out in clear, unambiguous and unequivocal tones, the actual hardship being endured by so many people. Last night, I also caught  a glimpse of another programme which instanced the effects of Government fiscal policy on the ordinary lives of Irish citizens.
Over one million people live in serious poverty in Ireland today while on the other hand there is an unprecedented — for this country — number of people who are very well-off indeed. There is nothing wrong with being very well-off. It is a very nice state of affairs if you can manage to achieve it but the problem is that the gap between the one million who are living in poverty and those who find themselves quite well off is widening all the time. I do not see that Government policy is doing very much to redress that frightening imbalance.
Apart from the hardship and the very real injustice of this situation, it is potentially explosive and it bodes no good in the years ahead if it continues unchecked. Government policies should reflect reality and they should be dedicated to equity in addition to righting deficits and balancing books which was largely the thrust of what the Minister had to say this morning. The progress began when Fianna Fáil adopted the Fine Gael 1987 budget and continued it through to the 1988 budget and it has been praiseworthy to an extent. However, the average citizen on the ground does not feel more secure or more hopeful. Unemployment figures are alarming and emigration, which is a sort of social or fiscal safety valve, continues to soar.
The 1987-88 figures of 32,000 people is just quite simply frightening and unacceptable. It is horrifying to consider that since 1981, over 150,000 of our fellow-citizens have left. That is bad for Irish society. It breaks up family structures. It weakens the fabric of villages, towns, cities and countryside and where it is involuntary it is a tragedy. We must make a distinction between well-equipped highly qualified people who choose to leave to get more experience — very often in the hope that they can come back and contribute to Irish society — and those weaker, struggling people who go  involuntarily and for whom it is a catastrophe.
I do not see any real policy thrust on the part of Government to address this issue. I see a lot of hope and a lot of aspiration but I am not sure that I see the kind of policy that would help to redress this and swing it around. The Minister in the course of his speech pooh-poohed the notion that in some way emigration was not part of the whole scenario. He talks about decline and says it has certainly not been due to emigration and the Jobsearch programme alone as the job critics claim, but he might have said that emigration was very much a feature of it rather than dismissing it in that rather cavalier fashion.
Mr. N. Treacy Mr. N. Treacy
Mr. N. Treacy: I was recognising the effects.
Mrs. Bulbulia Mrs. Bulbulia
Mrs. Bulbulia: I would now like to look at some of the various appropriations and aspects of the Bill as it is before us and I would like to make a reference to health care policy or indeed the absence of any coherent, structured or planned approach. I find this very worrying. Yesterday, the Minister announced yet more cuts in the allocations to certain hospitals, and I gather institutions dealing with the mentally handicapped are due to hear of reductions in their allocations next week. I think that is a pretty painful way to proceed. I think if you are going to announce bad news, better announce it all together and get it over with instead of stringing people along and telling them that announcements will come at a later stage. I really think the spirit of Christmas might have entered into it and it might have been possible to deliver the whole package, however unpalatable and unacceptable, in one fell swoop rather than leaving people in a horrible state of suspense.
The lack of any coherent, structured or planned approach is extremely worrying. The effects of this are being felt the length and breadth of the country. It is one area where the full brunt of the expenditure cuts are being felt by those least able to cope with them — the poor, the ill and  the disabled. Anybody with means can bypass waiting lists. I gather that the number on waiting lists at the moment is some 50,000 throughout the country.
People who are privately insured and have a health care facility can, of course, bypass this type of logjam and receive almost immediate attention. A very basic principle of health care is being broken in all of this. The right to health care is based on need and not on economic power, but that basic principle is being broken in this country every day. This is unacceptable and it cannot be allowed to continue. I have not heard the Minister for Health expound on that. Instead he has embarked on this programme of unplanned, ill thought-out cuts leaving near chaos in his wake. I support the recommendation from the Justice Commission of the Conference of Major Religious Superiors who called for an ongoing independent evaluation of what is really happening in our health care system as a result of Government cutbacks.
The health boards allocations have been frozen at the 1988 figure of £640 million. Health boards are, in the main, already operating on overdrafts. They have carry-over deficits into 1989. This will make their task even more difficult. There appears to be no thought or no idea of restructuring the number of health boards. Instead of that, we still persist in having a cumbersome, administrative layer to look after the health care needs of some 31£2 million people. That whole corpus of administration just sucks up scarce Government resources. It is a downright shame that something is not done to consider the rationalising of the delivery of health care services.
It is also a matter of concern that there does not appear to have been any provision made for certain new services which have devolved on the health boards. I refer, of course, to adoption and child care services, legislation about which we debated in both Houses during the course of this year. All of those people who are waiting for elective medical or surgical procedures are stuck on  the waiting lists of 50,000 and their conditions are deteriorating. When they finally are seen, whatever about their actual health, if you really want to look upon it as a fiscal measure it is going to be more expensive to deal with a more complicated situation than it is to deal with a straightforward one where they are seen quickly and the first symptoms of whatever illness they have become apparent.
I would like to make reference to the local authorities. I believe that local authorities are becoming more and more irrelevant and more and more of a poor relation in our system of administration and Government. This is all due to the fact that they are being starved of funding. It is an old refrain; we have been singing it for years and years. Lip service and platitudes are the lot of those involved in the local authority structures. The real thinking of the Government is revealed in the swingeing cuts that these local authorities have to sustain. Of course there, is all that horrible ambivalence about service charges, and complete inequality in the country, when you have Dublin city and county not involved in that tax collection exercise and the rest of the country being forced to pay up for local services.
I am extremely concerned about the fact that the Government do not seem to think that the provision of housing should be a priority. There has been no house building in 1988 and from what I can gather there will most likely be no house building in 1989. In my own local authority area housing lists are building up; social pressures are mounting and the Government are really just building up problems ahead. The 1988 sales scheme is a good scheme and one which I welcome. It is probably one of the better sales schemes ever launched. It is very interesting to note that there is quite a poor take-up of the option to purchase under what is a very attractive scheme.
In Waterford city we had a meeting about it the other evening, and we expressed our disappointment at the slow response and the poor-enough take-up. It is a reflection of the economic realities on the ground; unemployed people,  while they might wish to own their own house, just cannot afford to leave the differential system which serves them well and purchase their own houses. It must be a source of acute and keen disappointment that they are unable to avail of such a good scheme. What is happening at the end of the day is that the scheme is assisting the advantaged rather than the disadvantaged. While there is a certain economic reality about that, nevertheless there is a very worrying social consequence which is part and parcel of it.
Tax reform is, obviously, something that the Government will look at in relation to the Finance Bill and the budget in 1989. We, in Fine Gael would like to see a consensus approach to tax reform. There is a certain consensus approach in the area of the curtailment of Government expenditure. That is working reasonably well, even allowing for what I said earlier in the course of my contribution here today. Tax reform involves very painful choices, very painful political choices. I believe that the only way in which we will get a breakthrough of any value, merit or significance is if we can manage to do it on a consensus basis.
We have extended an invitation to the Government to sit down with us on this, not for party political advantage but for the benefit of the Irish citizens and the country as a whole. That invitation has to date been spurned. I issue it again here today to the Minister of State at the Department of Finance and ask him to recognise the political reality that it is going to be extremely difficult to make any meaningful or significant progress in the area of tax reform unless we approach it on at least a bipartisan basis.
I would also like to refer to the tax amnesty. It has been a success. Of course it has revealed the underside of financial and economic activity in this country. I know everybody was surprised at the amount that was finally forthcoming. It was interesting to see a headline in this morning's papers that some £7 million  worth of cheques bounced. That is probably some indication of the sort of characters that were being dealt with under the tax amnesty. It is a small enough proportion of the whole sum that came in. But questions must be asked about the tax amnesty. Will it lead to increased revenue buoyancy in 1989 by bringing extra taxpayers into the net? Or, will it reduce buoyancy because it has brought forward into 1988 payments of arrears which would be made in any event in 1989? I will be interested to hear what the Minister has to say about that.
We are all aware of the long term strategy of the Government. Certainly we in Fine Gael are aware of it because it was pinched from us in 1987 quite unashamedly.
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: Then it must be right.
Mr. J. O'Toole Mr. J. O'Toole
Mr. J. O'Toole: I cannot understand why, if the Senator agrees with it, she is arguing.
Mrs. Bulbulia Mrs. Bulbulia
Mrs. Bulbulia: What I really want to know is what is the medium term strategy. As I have already said, over one million people are suffering from the downside of all this. We, in Fine Gael, recognise this. We are a party of the Just Society. We have a commitment to the poor and the underprivileged. We feel for those who are suffering and who are being targeted by these cuts. The Minister in his fine speech here this morning did not choose to develop the negative aspects of Government policy. He owes it to the one million to give them recognition, to talk about their plight and to state whether or not he accepts that this is the reality for over one million people in Irish society. If he accepts that as a reality, I feel that he should state what Government policy is going to do about it and whether the thrust of policy in 1989 is going to give practical recognition to the very real plight of these people.
It would appear that there is spare cash around. There has been the quite unaccepted bonanza of the tax amnesty. I want to know if the Government will  direct some of that funding towards the poor and those in need. Will it beef up the meagre incomes of so many families who are struggling and who are just subsisting?
The current budget deficit is most likely going to be eliminated. Can the Minister state whether or not there is a time scale on all of this? Is he talking in terms of three years, five years or six years? What is the actual rate of elimination? I also want to know what he has to say about tax reform, emigration and poverty.
Just looking at some of the programmes in the Appropriation Bill I recognise that many of those who follow me from my party will speak on the various programmes. I would like to make reference to programme 47, the payment of lump sum and related payments resulting from early retirement in the public service. This year the Government introduced a voluntary retirement scheme for public servants. This led to public service pay bill savings by reducing the overall number of public servants. It had two cost elements. One was immediate — the provisions of lump sum gratuities to those who availed of the scheme. The second is progressive — the cost of ongoing pensions. The Central Bank provided the money to fund the lump sums. This was not done by means of a loan or grant but by straightforward advance of £80 million accrued profits by the Central Bank——
Mr. J. O'Toole Mr. J. O'Toole
Mr. J. O'Toole: Illegally.
Mrs. Bulbulia Mrs. Bulbulia
Mrs. Bulbulia: —— to the Exchequer for this purpose and I would be very interested in hearing the Minister comment on this mechanism. The early retirement scheme will continue next year at a reduced level of activity. I would like to know if the Minister sees that while there is cost-saving because of the rationalisation, very many highly-experienced, highly-trained people are opting out into the private sector and the public sector is, as a consequence, becoming impoverished. I have met some of these people who have opted, as they are able to do, for the private sector and I regret the loss which their going means to the  public service. I do not know if any thinking, analysis or any evaluation has gone on in relation to the effect that is having on the quality, standard and calibre of the administration of the public service.
I notice that programme 41 refers to contributors to international organisations and for certain official development assistance including certain grants-in-aid. I must protest at the Government's meanness in relation to this whole area and to state that I do not believe it reflects the thinking of the Irish people. While we have immense problems, such as poverty and deprivation, our position cannot be compared with the grinding subsistence level which people in the Third World countries are forced to endure. The reduction in our Official Development Aid is quite disgraceful. We should not have done it and we should never do it again. We should begin to move in a progressive fashion in this whole area. The Government had no mandate from the Irish people to make cuts in a very sensitive area.
I am also concerned about the fact that decisions made were to reduce our diplomatic representation in so many countries. Recently, I was in southern Africa. We do not have a presence there. The Government ought to look very carefully at the whole aspect of diplomatic representation of Ireland in Third World and in other countries and to ensure that there is some coherence and thought, other than that of cost containment, behind this area of activity.
I also want to make a brief reference to item 22, expenses in connection with prisons including centres of detention for juveniles. I expect other Senators will comment more extensively on this. We need to spend much more money in this area. I am deeply unhappy and concerned about the level of care and rehabilitation which is offered to those who are in Irish prisons. It is a cause of grave concern to read about the number of suicides which are occurring in prisons. The Government must ask what they can do to avert such catastrophies.
I see item No. 5 is for a grant-in-aid to An Comhairle Ealaín, the Arts Council.  Perhaps by the time the Minister gets round to replying to this debate some time in January the new Arts Council will have been announced. I do hope it will contain a body of people who know about the arts and who wish to make a contribution and that it will not be in any way padded out with people who are of a particular political orientation and who have very little to contribute in that area.
I also note item No. 6 for the salaries and expenses of the National Gallery, including certain grants-in-aid. I want to see more money spent in that area. The treasures of this country — some of the finest paintings collected over a long period of time — are deteriorating. We have debated this quite extensively in this House. It is not good enough to allow that kind of deterioration. I hope the Minister in his reply can tell us a little more about item No. 12, the Secret Service. Who are they? What are they doing?
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: The Senator will have an opportunity of pursuing that matter early in the New Year. As your time has expired I would be grateful, Senator, if you would conclude.
Mrs. Bulbulia Mrs. Bulbulia
Mrs. Bulbulia: I conclude by thanking the Minister for coming here this morning. I know he likes to engage in debate. I hope he takes on board what I have said and we look forward to what he will have to say when he replies to this debate.
Mr. Fallon Mr. Fallon
Mr. Fallon: This debate gives us a chance to review progress or non-progress in the past year. I am happy to say that the year which has passed was a year of progress for the Irish economy. We have with us Deputy Noel Treacy, Minister of State, who has been with us on many occasions and, as a previous Senator said, he is always anxious to engage in debate with us. Unfortunately, the Minister for Finance, Deputy Reynolds, from my own constituency cannot be with us. I would love to have him with us this morning especially as it would have been his first visit as Minister  for Finance. However, it goes without saying that we welcome Deputy Noel Treacy, the Minister of State, and we wish Deputy Reynolds every success in the Department of Finance.
I also take the opportunity to pay tribute to the previous Minister for Finance, Deputy Ray MacSharry, who has proved himself to be one of the finest Ministers for Finance of our times. We congratulate him on his recent appointment, having received the very important portfolio of agriculture in the European Commission. We wish him well.
This is a time to review. It is a time to talk about many matters of importance in our way of life. What strikes me about this way of life of ours at the moment is that there is much evidence to suggest — and it continues to emerge — that the Government's economic strategy is having very beneficial effects on the Irish economy. We all know that the latest figures, both on inflation and on the visible trade fronts, confirm the very healthy developments in the economy, which has resulted in a steady growth over the past 12 months. These developments will maintain the confidence for continued growth in the years ahead.
There are a number of important positive factors to examine and to consider. First, our rate of inflation is on course to record an average for the year of as little as over 2 per cent. This will make Ireland's rate of inflation about three-quarters that of the European average and close to one-third that of Britain. There is no question but that the gains in terms of our element of competition will ensure that the conditions are right for the continued growth in output over the next 12 months.
Irish interest rates have fallen. They have fallen by something over 5 per cent in the past 18 months and they have remained remarkable steady despite the tendency of international interest rates to rise in recent times. For the first time Irish interest rates have been decoupled from those of sterling and, while the latter have risen sharply in recent months, Irish rates have not been under  pressure. I believe this is because there is confidence in what the Government are implementing, that they are implementing the correct policies to bring down Exchequer borrowing.
Lower interest rates benefit the productive sectors of the economy. They make investment in Ireland more attractive. They reduce the cost of personal borrowing and mortgages, leaving more disposable income with consumers. In the process they reduce the burden on the Exchequer of servicing a massive domestic public debt. I spoke to a man the other night who made it quite clear that interest rates were very important for him on his mortgage. He equated his monthly mortgage reduction as better than a pay rise. We can also say with certainty that there is not just a domestic confidence; the confidence on the part of foreign investors is real also. This, too, has been helpful. The trade figures are showing clearly that in volume terms exports for the year to date have recorded a massive increase. Of course, this is another important factor for the boost for our economy.
There is no doubt that we are making steady and quite satisfactory progress. I believe that there is substantial ground still to be recovered. Final success in this battle for recovery depends on our continuing to exercise discipline and responsibility for some time to come. We cannot allow ourselves to be changed or to be diverted in any way from the main objective of giving our people a growing economy firmly based on sound finances.
There is no doubt that a return to growth and employment is coming clearly into view. Our financial problems over the years have been brought under control, but not resolved. We are still spending and borrowing too much in relation to what we produced and our capacity to pay. We must continue with the difficult and detailed work of controlling every aspect of Government spending until they are brought into line with the resources available. In this process there is absolutely no joy for any member of the Government or for any of us. Unfortunately, it is an exercise that has to be  continued and I think there is general consensus that it should continue.
As I said earlier, the vital element in our present situation is confidence. The nation is recovering. It is recovering its confidence in its future and in itself. Throughout the economy confidence is returning. There is optimism. People have expressed opinions to me that there is an optimistic view around. People everywhere are thinking of investing, undertaking new projects, expanding existing projects. During the past two years the amount of money that has been invested in unit-linked insurance launches has been astronomical. People living outside our shores — non-residents — are returning hundreds of millions of pounds in Government securities, investing in Government securities. International investors as well as home investors have confidence and this can only be good. The Irish people understand perfectly well at this stage that there is no simple formula that would make all our economic problems disappear.
We must examine practical examples of what is happening. There is no question that the construction industry has been going through a very difficult period for some years but there is evidence now of recovery in the private sector as the economy returns to growth, based on sound public finances. We know that the Customs House Dock centre has started. Naturally, the development there will create many jobs. The interest there is growing and hopefully it will continue to grow. We have many urban renewal schemes throughout the country. There was a reintroduction of the section 23 initiative in the budget of last year. I think that will also lead to activity in the whole area of the rented apartment sector and in the private house sector. The Government's decentralisation programme is well under way in ten provincial centres. All of this indicates a practical confirmation that things are improving.
It has long been recognised that our arterial roads system is an impediment to our economy in comparison to those of  our competitors. It has been estimated that our economy on annual cost penalty of some £300 million by reason of our inadequate arterial road system. As we all know, in recent months the Government established a National Roads Authority to give a central administrative and technical impetus to creating a modern arterial roads system which will be capable of carrying efficiently not only our existing road traffic but the substantial growth which will occur as the economy expands in the future. Only last week in my own town of Athlone we received sanction for the building of a new bridge across the River Shannon to be built in about 15 months at a cost of approximately £5 million. While that is a fact of life, we cannot ignore the fact that we still have the potholes. The Government have been generous in this area. Obviously, I would love more money for the famous, or the infamous, potholes; but it is a fact that in the last year of the Coalition Government our county roads received a mere £4.5 million or £4.6 million. The present Government have been much more generous in their spending in this regard. They allocated a sum of £15 million last year and, hopefully, they can give more.
It is no harm to examine the role of the various State companies, at least some of them. They have all had very successful results for the past year. There has not been sufficient recognition of the major success which Aer Rianta achieved in winning the contract for the duty-free shop in Moscow, which arguably opens up new developments with that country. Aer Lingus have had excellent results. We are told that they are expanding their fleet. Telecom Éireann have had a good year and have reduced their prices and, indeed, so also have the ESB. We have had legislation in this House dealing with the setting up of a new forestry board, a commercial semi-State body to manage our forests. Sustained improvement in the financial performance of the semi-State sector should give some added return to the Exchequer. This is essential in an economy such as ours.
 The Government, as was mentioned earlier, are attaching much importance to the tourist industry. They see it as an area of growth and an area for the creation of many jobs. Indeed, in the joint Government-ICTU statement it was estimated that about 7,500 additional job equivalents could be created by the increase in tourism we are hoping for. While the Minister, Deputy John Wilson, said last night that, while the numbers coming to Ireland increased by something over 13 per cent, somehow or other they were not the big spenders we would have liked them to have been and as a result there was a downfall in spending which has not been helpful.
We must continue to consider new attitudes to tourism and every avenue must be explored. I have often thought of the outstanding successes of our sports stars over the years and how that can focus attention on Ireland, with the obviously beneficial result of travellers coming to Ireland. Indeed, the recent American football match, Boston v. Westpoint here in Dublin attracted some 10,000 Americans here for a fortnight. They had a good time, enjoying the fun and enjoying the football. Hopefully, that type of activity can be repeated next year, perhaps twice a year, because it was certainly beneficial to Dublin.
It can also be said that our farming people have had a good year. Last year the figures were quite good and no doubt this year the incomes for farmers will prove worthwhile and indicate that they should have another good year in 1989. The Government have placed a lot of new concentration on food production and we all know that a major programme of improvement in meat factories with State support is under way.
While much has been happening in many different sectors, our problems have not been overcome. Hopefully, the sustained effort for expansion which has started will continue in a positive way; and it must do so if we are to achieve a decisive reduction in the rate of unemployment and emigration. The decrease in unemployment figures is encouraging. Under the Programme for National  Recovery the committee set up to monitor progress on the programme recently reported progress in job creation in all sectors that were targeted within the programme. That is beneficial and it is clear from that report that the ambitious objectives that were set out for job creation will be achieved.
While there are real signs that we are on the right road to recovery, I would not wish to infer that all our problems have been overcome. As the previous speaker said, there are health cuts. Only yesterday I attended a health board meeting in Tullamore where we found that our budget is short by some £2 million and that we will have to prune our budget to meet this. We may have to sell some of our farm land to do this, but I would like to believe that nevertheless a good service will be maintained for people who have to go to our hospitals or our clinics. It is interesting that in the past year some 1.5 million people were admitted to public hospitals and a half a million people attended clinics, that is, out of a population of 3.5 million. How many others attended private hospitals or went to their family doctors? While there are health cuts — and I accept that there are — nonetheless people are still in hospitals, attending clinics and going to their doctors and hopefully we can continue to give a good health service to all our people.
We also have education cuts — I cannot deny that; it is a fact of life — and this year it appears that people in third level education will have to take the brunt in that regard.
Social welfare has also been referred to. With regard to greater social equity, the Government have rigidly adhered to the key clause of the Programme for National Recovery. The Government will maintain the overall value of social welfare benefits and within the resources available will continue to make special provision for greater increases for those receiving lowest payments. These commitments were met. There was a general 3 per cent increase in social welfare payments in the budget, significantly in excess of both general inflation and the  wage increases under the programme. There was a 6 per cent increase in child dependant allowance and an 11 per cent increase in payments to the long-term unemployed. This is in keeping with my party's caring social philosophy. In fact, in the three years from 1980 to 1982, when resources were available, the Fianna Fáil Government increased social welfare benefits by between 20 and 25 per cent which considerably improved the lot of pensioners. That has to be contrasted with what was given when the Labour Party were in a Coalition Government and we had a Labour Minister in the area of social welfare.
I believe the philosophy behind the Commission on Social Welfare report is good and sound, but it is a basic fact of life that only national economic recovery can provide us with the means to deal with poverty in the effective and lasting way we would like. Of course, the reverse is also true. In times of falling growth and rising inflation it is the poorer and the weaker sections of the community who unfortunately carry the heaviest burden.
In the area of local government it is a well known fact all over the country that the rates support grant has been reduced. This is causing headaches for many of our county managers, for staff and for elected members of local authorities. Many of the local authorities are living with the situation. I know this is not easy. If you like, the ball is at their feet and they can impose charges but all of us would like to see the day when we would have the local authorities permanently established with their own financial framework so that they could in that way bring forward the improvements they would like for their own authority.
Regrettably, these reductions in all Government Departments are necessary as part of the overall strategy of the Government. A sustained effort for expansion is needed on many fronts if we are to achieve a decisive reduction in unemployment and emigration. I already mentioned, there are signs that these things are beginning to improve, and I wish to stress that. In so far as unemployment is concerned, I have mentioned  the committee. A point worth mentioning here is that it is long recognised that there is always a considerable lag between a resumption of growth in the economy and an increase in employment. There is evidence of this in England in recent years. Our aim must be to sustain what we are doing. In order to press ahead for a good result we should create a wider and improved level of prosperity and security.
At all times we must maintain the lot of the poor and the disadvantaged. We have a responsibility to improve the circumstances of the poorer sections of our community. This has been the Fianna Fáil philosophy over the years, a caring philosophy which must never and will never be abandoned. I believe we can have an improved level of prosperity, an improved level of security and a wide range of opportunities at home for our young people who will be coming out of schools, and colleges over the next few years. I have listened to our Taoiseach and our Ministers over the past few years. I have seen them at work and I have talked with them. I am confident that they are going about their business in the most practical way possible. They are doing their very best for this nation and I, for one, am confident for the 1990s.
Mr. J. O'Toole Mr. J. O'Toole
Mr. J. O'Toole: The Appropriation Bill debate is always an impossible debate to get stuck into, because it is so wide-ranging. First, I would like to deal with the method by which the Government have funded the payment of the lump sums from the Central Bank, which Senator Bulbulia raised. Unfortunately, I do not have the proper references with me, but I have taken some interest in that over the past year. The previous Minister for Finance in his budget speech last year made it clear that, under section 6 of the Currency Act, 1926, he had the authority to purloin £100 million from the Central Bank in order to fund the famous redundancy scheme. I have looked very closely at that section and I have also looked at the debates which took place at the time when it was passed. It is the only enabling  section the Government could find in order to get this money, but it is my view that, were the matter to be challenged in law, what the Government did last year would not be sustained legally for the simple reason that any reading of that section of the Currency Act, 1926, will clearly indicate that it gave power to the court of the Central Bank to forward the surplus of income that would be available for that particular year and no further. It clearly refers to the surplus of income in any particular year.
What the Government effectively did last year, however, was to get £100 million over five years. That is not possible and there is no enabling legislation allowing that to happen. Decisions were made over a period of five years, when, for instance, the whole management structure or court of the bank could have changed — all sorts of things could have changed in the meantime. I would say quite clearly and definitely that any examination of the legislation does not allow the type of operation to take place which took place. It is being presented as £100 million in one year. In fact, it has been necessary to change the advances over five years in order to make it work, and there was no enabling legislation to do that. I would just say that to the Minister and look forward to his response. This time I would like a detailed response and not merely a reference to the section. The reason I have fleshed it out a bit is to make it quite clear that I am aware of the section and the legislation that has been referred to. As far as I recall it is section 6 of the Currency Act, 1926, but it does not give the authority which has been referred to.
Reviewing the position in which we find ourselves for the past year, there are a number of ways of looking at developments and the way in which money was spent or might have been spent. It is fashionable for the Government party to refer to it as the year in which we became an exporting nation again, as the year in which we brought inflation down to one of the lowest levels in Europe, as the year in which we maintained one of the lowest interest rates in Europe. This is true.  These are the economic indicators which we were told would lead to the good times, which have not come. It is also the year in which we have brought emigration to record levels, levels which were never known before in the history of the State, even in the bad times. It is the year when we gave a tax amnesty to people who owed us money and, at the same time, we put in jail a woman who could not pay all her television licence. It was the year when we once again rewarded the rich and punished the poor. It was the year in which we saw unprecedented health and education cuts.
The reason I want to put those issues on the record is that it leads us into the discussion which is taking place at the moment on a divided society and needs of poverty. There have been two issues which I find most interesting. This time last year those of us on the left of Irish politics were making two very strong points, which neither party made before this — the previous Government or the present Government. The two points were these: First, that we were not an over-taxed people and, secondly, that poverty was the major issue that needed to be addressed. The fact that poverty needs to be addressed is now generally accepted over the last number of months. There is a view emerging that we are not an over-taxed people for the simple reason that a comparison with other European countries proves that quite simply.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: I think that taxation is one of the few things that does not arise on the Appropriation Bill.
Mr. J. O'Toole Mr. J. O'Toole
Mr. J. O'Toole: That might well be the case. Far be it for me to be in any sense negative about the Minister's speech, but he did take some time to discuss the tax amnesty.
Mr. J. O'Toole Mr. J. O'Toole
Mr. J. O'Toole: However, I take your point. I will not develop the matter. I supported the idea of the tax amnesty for the simple reason that it brought people  into the net. People should also recognise that we lost money at that time. As a revenue earner, in the long term it brings more people into the tax net and it gets them into the system. It was an effective way of doing so and I do not say that in begrudging way. What worries me, however, is why we got so much more than we expected? In other words, why did we expect so little? Somebody somewhere should be made answerable for that. It may be unfair to make that comment but I think the political head of the Department has to take responsibility for it.
Senator Bulbulia referred to the public service and the lack of morale and cutbacks in the public service. One of the things that is happening in the Department of Finance particularly is that people are developing techniques and expertise at the nation's expense and are then moving into the private sector finance houses and finance operations with larger salaries, etc. We lose the best people and the investment we made in them. The public service needs to have the best possible people. There is no point in the Minister coming in here if he does not have access to the very best advice. There is no point in presenting a budget prognosis if we do not have the best people available to piece it together.
There is a drain of talent from the public service into the private sector. The basic difference in our thinking is that I do not believe that investment in the private sector and the creation of wealth through the system of the private sector at present necessarily has a net beneficial effect for everybody in the country. The difference between the public sector and private sector is one of people before profit. In terms of control, we need to have the very best people in the public service.
Sometimes people look suspiciously at many State enterprises. Unfortunately, many of them were set up on very bad advice. Take NET for example. Anybody who knew anything about that industry could have seen that they would have produced the total Irish needs in three  months and that for the other three-quarters of the year they would have to export their products. They could not possibly be competitive. There were no figures to indicate that they could but it still went ahead. Things like that happened down through the years.
We have also set up boards. I noted the Minister's response when a previous speaker referred to the Arts Council and the habit Governments have of putting party supporters on boards, etc. The Minister said that was not the style of the present Government. Time will tell. The two main parties can sort that out for themselves. I smiled wryly when I heard it. That is one of the most dangerous developments that can take place. That was the reason for many of our problems. Instead of putting in the best possible people with the best expertise, very often party affiliation was considered to be more important. I just throw that in for what it is worth.
In terms of looking at various aspects of life and spending, the single most difficult riddle for me is that I keep hearing that 66 per cent of the people are in favour of cutbacks in the public service, a curb on public spending, etc. and at the same time I hear people everywhere saying they are opposed to the cuts in education, in health care, etc. People have been told they must cutback on the public service and on public expenditure and that is good. It is almost like saying, let us do away with income tax. People would also say that was good. That would be the immediate response of people who do not think it through. There should be a Government warning issued with all future announcements of cuts in health, education or otherwise, namely, that people will suffer from this.
It has given me extreme pleasure on a number of occasions to talk to groups who clearly support the Government or to members of the Government party who give out about various aspects of cuts in public spending and I ask them why they voted for it if that is how they felt about it.
Mrs. Bulbulia Mrs. Bulbulia
 Mrs. Bulbulia: They knew they were going to get it, that is the whole point. That answers the Senator's conundrum.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: Senator O'Toole does not need any assistance.
Mr. J. O'Toole Mr. J. O'Toole
Mr. J. O'Toole: I do not mind, I always welcome help, advice and assistance. I welcome the intervention from Senator Bulbulia who was no doubt referring to the extraordinary poster campaign that took place prior to the last general election about there being a better way. I did not believe it so, therefore, I do not refer to it much. There was no better way shown to us by the Government than was in operation by the previous Government. There certainly is a better way but we have not seen it. People should understand that supporting cuts in the public service and in public spending means supporting cuts in education and health. It is a simple message. That is what we have failed to get across.
I want to refer to one other area. Looking down through the aspects covered by the Bill, I have no doubt they will be teased out fairly well by other speakers in January. I want to explain to the Minister what cuts in education mean. What happens in primary education is that the Minister decides each year on a figure, at the moment it is approximately £30, the figure is not that important, which it is estimated is the cost per pupil to run a primary school and every school gets £30 per pupil from the State. The Minister for Education can say we have a system here which is a model of equity because all schools are run on precisely the same amount of funding and, therefore, pupils from all backgrounds who go to primary schools — that is 96 to 98 per cent of the population — are exposed to the same quality of education. It is a beautiful equation. Successive Ministers for Education have stated that. In reality the grant from the State to run schools is barely enough to heat the school, and in many occasions is not even enough to heat the school. This is the money that is supposed to be available to heat, clean, decorate, maintain, repair, renovate and  run the school. It is supposed to provide the amenities for classroom teaching, the various audio-visual aids, etc. The £30 per pupil is not enough and it has to be added to. If there is money in the community it is taxed. We produce a new local education tax. We call it “sponsored walks”, “sales of work”, “sponsored spells”, but, in fact, it is a local education tax referred to kindly as the “local school fund raising event and everybody will be willing to give a few bob to the school”. It is a tax. We are not allowed to talk about tax so I am glad it is called something different for the purposes of this particular exercise.
The difficulty about this arrangement is that in areas of very high unemployment with very high levels of poverty money is not available. You cannot get blood from a turnip. You will know the school in the less well off area. It will be a drab, dull, dreary school, not painted since it was built with broken windows repaired with bits of cardboard, wood or various other things, leaking toilets, broken doors, broken windows, and all the rest that you see in a socio-economically deprived area. That is only one aspect of it.
The next aspect of free primary education is the fact that, for instance, books are not covered anywhere in the appropriation grant. The level of support for buying books is minimal. It is not worth discussing in terms of spreading it about. What happens then in the socio-economically deprived area is this: the teacher sets out to do the book list for the year and makes a list of the books that will be necessary to run the class for the year. The teacher then works out the cost and realises that in such an area the kids could not afford it. Immediately there are cutbacks. There are fewer books available to the pupil in the socio-economically deprived area. They are at a further disadvantage. Through the year in the well-off area they will say that it would be a nice experience for our pupils if they were to visit the museum, Paris, London or wherever. It is a very good experience for people to travel and to see the archaeological sites of this country, which is a very popular tour for schools. In a place  where there is no money they do not go and they lose out on that experience. There is no grant available to them for this.
I have heard it said that all kids should be able to swim, that all kids should participate in sport. There are swimming classes for primary schools in areas where the parents can afford to send their kids and in the others there are not. I could go on. In the funding of education, not only are we not closing the gap between rich and poor — I do not say that in an ideological way but in a very positive way because we are not managing to bridge that gap at all — but we are actually reinforcing inequity and are consolidating the differences between the rich and the poor.
I could develop that for an hour without any problem and I could then go on to the post-primary area and point out that success here is very often dependent on having a good academic record at primary level. So the child coming into post-primary education is at a loss if he comes from a socio-economically deprived background. Similarly, coming to third level depends on how successful they are at post-primary. Every survey that has been done has proven time and again that the more qualified and educated you are, the more likely you are to get a job. We have just seen that the whole system of funding in education is biased against the less well off in our community. As a result of the way we fund our educational system we maintain inequity and poverty in society. We should aspire as a nation to what was in the Proclamation of the Republic, which Éamonn de Valera made certain never got into the Constitution, that is, the famous line most Fianna Fáil people think is in the Constitution: we should cherish all the children of the nation equally.
It is unfortunate that it is not in the Constitution because if it were, what I have just talked about would never happen; it would be unconstitutional. We should aspire, however, to that objective. Very simply, the kind of State we should aim to develop is one where there would be equal access to education, health,  housing. We have failed to do that. The Government are not addressing themselves to that and we are not one step nearer to achieving it than we were this time last year. We have watched our best people leave the country in the meantime.
At present I am doing a study on the feasibility of having a short wave radio service which would encompass the areas of tourism, job creation, bringing in funds from abroad, advising, helping and supporting emigrants abroad, etc. This should be taken on board by the Department of Finance. We could talk directly to our emigrants in Sydney, New York or wherever they happen to be and ask people to come home. Rather than have the “Write and Invite Scheme”, we should ask them, now, today to think about a holiday in Ireland. We would have the ability and facility to reach the world.
All in all, I regret that after one year, since our last debate on this matter and looking at what is intended for next year, unlike Senator Fallon, I do not see any hope for the poor, for the deprived and for the underprivileged in the coming year.
Minister of State at the Department of Finance (Mr. N. Treacy) Noel Treacy
Minister of State at the Department of Finance (Mr. N. Treacy): I thank the House for its co-operation in faciliating the Government by putting this important financial legislation through before the Christmas recess. I also thank those who have contributed to the debate for the many varied, interested and thought-provoking points they raised. I do not propose to reply at this time to the many points raised here this afternoon. It would, perhaps, be more appropriate for me to do so when we resume the debate after Christmas.
We have made tremendous progress over the past two years on the economic and budgetary fronts. As I said in my opening address, things are coming right and the evidence is there for all to see. It would be nice to tell this House that our budgetary difficulties are a thing of the past. Unfortunately, this is not so. We  still have to borrow substantial amounts of money for day to day purposes. The servicing of our national debt, still over one and a quarter times our gross national product, absorbs and will go on absorbing a very substantial amount of our resources.
In this context, therefore, it is appropriate for me to sound a note of caution on behalf of the Minister for Finance regarding 1989. The assumption that there is scope for taking off the brakes in relation to the 1989 budget would be extremely rash. It is all to evident from what has been said by various commentators that many people believe that this year's exceptional results mean that all our budgetary problems are over and that all sorts of concessions can now be funded. The truth, unfortunately, is otherwise.
Although good progress has been made by this Government, there is still a long way to go. Responsible management of the public finances must and will continue. The budgetary situation facing the Government next year is not easy. There are various reasons for this and I would like to mention some of them which appear to be overlooked by some commentators. Some people are assuming that a large element of receipts collected under the amnesty will carry on into next year. There is no reason why this should be so. This year's tax amnesty receipts are substantially of a once-off nature and will not be repeated next year. In fact, far from expanding the tax base next year, the tax amnesty will result in a sizeable reduction in it. This is due to the fact that arrears which would have been collected in 1989 in the normal course have been collected already this year under the amnesty and related measures.
Observers frequently overlook the heavy carry-over costs resulting from the 1988 budget concessions. On income tax alone these will cost the Exchequer £150 million in 1989 while on social welfare the full year cost is £101 million. Lower interest rates, while welcome on a broad economic basis, mean a loss to the Exchequer revenues in areas such as the deposit interest retention tax. Such  factors contribute to upper pressure on the opening buoyant position next year. In the circumstances it is difficult to see any justification for the over-optimistic predictions about the level of next year's Exchequer borrowing requirement and about the likely level of next year's tax cuts which are currently emanating from various sources in the financial world. The reality is that we are facing a difficult budgetary situation and undue expectations of give-aways are totally misplaced.
Finally, on behalf of the Government and on my own behalf I would like to wish all Members of the House, the staff and the press, a very happy and peaceful Christmas and a very prosperous New Year. Both myself and the Minister for Finance look forward to being back with you again in the New Year. Go raibh míle maith agaibh.
Question put and agreed to
Agreed to take remaining Stages today.
Bill put through Committee, reported without recommendations, received for final consideration and ordered to be returned to the Dáil.
Seanad Éireann 121 Appropriation Bill, 1988 [ Certified Money Bill ]: Second and Subsequent Stages.