The issue we are addressing here today is one of confidence. We are asked to affirm confidence in the Government and in their management of the economy. The revised Programme for Government issued in the past few hours is an innovative and creative document agreed in a spirit of partnership by the two parties.
It sets out the economic and budgetary strategy for the next three years. I advise Deputy Noonan to get a copy and to buy a pair of glasses and perhaps he will then appreciate the parameters of the economic and budgetary strategy in the document.

I did not interrupt [1064] anybody. When I set out on this road in 1989 I said in my budget speech that the level of income tax is a major disincentive to initiative and hampered the drive to increase employment. I pointed out then that in the interests of employment and equity the tax burden had to be reduced.
Those guiding principles have been applied in each of my subsequent budgets in 1990 and this year. That is what we were doing then and that is what we are doing now. It is my contention that the record of this Government speaks for itself. Unfortunately for the people sitting on the benches opposite their record, too, speaks for itself and the people of this country know all about their record. They remember that the very people who today have had the effrontery to put forward a motion of no confidence were the very same individuals who, over five years of pathetic indecision and mismanagement, brought the country to the brink of bankruptcy.
The facts and the dismal record of their period in government make it clear that their pretensions - or their aspirations to office have no credibility. I have to point out that Deputy Bruton has achieved some unenviable distinctions in his mercifully brief periods as Minister for Finance. One of those distinctions - worthy perhaps of the Guinness Book of Records - is that he never got an annual budget through the Dil.
The other was that in 1986 he presided over the biggest budget deficit ever recorded in this country. It amounted to a staggering 2,145 million - and even that figure represented an overrun of 144 million on the intended target. Deputy Bruton, Deputy Spring and their colleagues in that very poor administration are hardly qualified to lecture us on economic management.
The Leader of Fine Gael is given to expressing concern about the national debt. He points out - quite rightly - that the national debt is a huge burden not only on this generation but on our children. I agree with him. What a pity [1065] then, that the Fine Gael-Labour Coalition, of which Deputy Bruton was a leading member, virtually doubled the national debt in their time in Government - and added some 1,000 million a year to the burden on the PAYE worker as a result. Credibility indeed.
Another prominent member of that administration was Deputy Noonan who is the Fine Gael spokesman on Finance. I have to say that Deputy Noonan displays some kind of consistency - the wrong kind. He consistently maintains the lack of responsibility on economic matters which was the hallmark of that Government. I visited Germany last week for discussions with the German Finance Minister and with German parliamentarians with my colleague, the Minister for Foreign Affairs, to seek amendments to proposed tax legislation which might as originally drafted damage the prospects of the International Financial Services Centre. The centre is a success story of which Fianna Fil and indeed the whole country have a right to be proud. Despite the cynicism of the critics when it was established it has already attracted 180 projects including many of the biggest names in the international financial world.

You would expect that my mission to Germany would have the full support of all political parties here at home. That is the normal practice in most countries when an important national interest and valuable job opportunities are involved. That I am sorry to say was not the line taken by Deputy Noonan. Instead he issued a totally misleading statement calculated to pull the rug from under me. There can be no excuse for his blatant act of national sabotage and his blatant lack of responsibility towards our economic interests or [1066] towards the jobs and future job prospects at the centre. This is reckless behaviour from a man who is spokesman on Finance for the leading Opposition party.
That example of "top of the head" opportunism heedless of the consequences is, unfortunately, typical of his performance and that of his party; the "top of the head" response to any situation - regular calls for more and more spending and in the same breath a lecture on the need for tight fiscal control. This type of double-speak is not lost on ordinary people. They are far more intelligent and perceptive than Deputy Noonan thinks. They are wise to his double-speak.
Now let us coolly and calmly look at the facts on our management of the economy. The economy grew strongly for several years, most particularly last year. Our rate of inflation was reduced to one of the lowest in Europe. Our exchange rate is rock steady in the EMS. The trade balance has shown a healthy surplus for some years, mainly on foot of a strong performance in exports. Our strong trade balance has given us a substantial surplus in our balance of payments - one of the strongest in the EC.
What were the factors which led to the strong growth over 1987-90, which by any definition amounted to a boom period for the Irish economy? A favourable international environment clearly helped. However, the real transformation stemmed from our own better handling of our affairs in a number of crucial economic and financial areas. That transformation started the day Fianna Fil returned to office.
First, we greatly improved our competitiveness. If there is one lesson which the past four years has taught us it is the importance of competitiveness to our economic performance. The pay agreement in the PNR gave us the kind of competitiveness gains that our employment needs require. At the same time, workers' real take home pay increased [1067] substantially aided by continuing tax reductions.
The importance of improved competitiveness cannot be overstated. We depend for jobs primarily on exports, on what we can sell abroad. By adhering to these moderate pay agreements, the Irish workforce has contributed and is still contributing greatly to progress. That moderation is especially important in the present difficult trading conditions.
This Government and their predecessor played a major part in the economic turnaround. We devised the overall strategy and persuaded the social partners to join in implementing it. We encouraged wage moderation by reducing income tax rates and improving the tax structure. We also maintained a firm stance of the exchange rate.
Since 1987, consistent policies have been implemented by this Government and their predecessor with the aim of creating more jobs. In the three years to April 1990 total employment rose by 40,000. That contrasts with a fall of 23,000 in the preceding three years under the Fine Gael-Labour Coalition. This increase in jobs between 1987 and 1990 took place despite the need to reduce the size of the public sector. Between 1987 and 1990, the number at work in the private non-agricultural sector rose by almost 70,000.
There was, of course, another important ingredient behind those achievements and this brings us back to the central theme of this debate. This special ingredient, this "Factor X" of recent Irish economic progress, was and is confidence - confidence among our own people at home and among investors from abroad.
The confidence of foreign investors in the strength of our economy was evident, and still is evident, in the 4 billion worth of Irish securities that they continue to hold, and also in the steadiness of the exchange rate. It was also evident in the narrowing of the differential in interest rates at home and abroad. The gap [1068] between Irish and German interest rates is now less than 1 per cent; a year ago it was 2 per cent and four years ago, when Fianna Fil initiated our strategy for recovery, it stood at a massive 9 percentage points.
From the further narrowing in interest differentials this year, one can only conclude that the financial markets are not as worried as some of our domestic commentators profess to be. The judgment of international investors is thus in direct contrast with the nonsense that is being spewed out by the Opposition.
This year the startling pace of recent economic growth has faltered. It has faltered among our main trading partners as well, but despite the recession in some or our main trading partners, the fact is that our economic performance is holding up very well. Our inflation remains one of the lowest in the EC. This year we expect to see a balance of payments surplus equivalent to 3 per cent of GNP.
Manufacture output was 2.5 per cent higher in the first seven months of this year compared to the same period last year. The volume of exports increased by an estimated 4 per cent in the first seven months of this year with industrial exports performing even more strongly. The trade surplus exceeded 1 billion in this period. Excluding garage sales, the volume of retail sales has increased by almost 2.5 per cent in the year to June, a quite creditable performance.
I am particularly heartened by the recently published estimates of employment in manufacturing which showed an underlying increase in the second quarter of the year. The latest official figures published last Friday show that industrial employment went on growing even in the very difficult conditions of the first half of this year. In the first six months of this year, industrial employment was up by almost 1,500 or 0.7 per cent on the first half of 1990. Employment in manufacturing industry was up by 2,000 or 1 per cent.
[1069] Unemployment remains a most serious problem. We are acutely aware of the hardship and frustration for those directly involved and for their families. That is why the drive to grow our economy and thus generate lasting and viable jobs is and will continue to be our first priority. Naturally, unemployment also has serious effects on the public finances through higher spending on social welfare.
In contrast to the pattern over the first half of the eighties the rise in unemployment this year is not due to job losses. It has been due to a cessation, if not indeed a reversal of net emigration. It is not the result of a fall in employment. All the available indicators bear this out. The total at work will on average be higher in 1991 than in 1990. Indeed, some of the more dramatic increases in the live register this summer have been due to students temporarily signing on the live register because they could not get summer jobs abroad.
The Government have been attacked in this debate because of the increase in unemployment. I have not heard anyone across the floor make even one sensible suggestion as to how we might avoid this increase in unemployment, much less reverse it. We have set up the Task Force on Employment to draw on the knowledge, experience and ideas of all the social partners to produce new ways of reducing unemployment.
Our achievement in dealing with the public finances stands in stark contrast with the situation before we took office in 1987. In that context I am expecially concerned that several Deputies have referred specifically to the budgetary performance this year and implied that the budget was presented in the knowledge that the targets were unrealistic. Deputies Bruton and Noonan and many of their Fine Gael colleagues have, with their customary recklessness, suggested that we introduced a false and fraudulent budget. That is a contemptible allegation which casts an unacceptable and entirely [1070] unwarranted slur on the integrity of the Government and of the Department of Finance officials who prepared the forecasts.
I have explained on several occasions, beginning with my Budget Statement - that the budget was framed against a background of exceptional international uncertainty. Last January I noted that the favourable international environment was changing for the worse and that the international slowdown would have repercussions on our growth prospects in 1991. Domestic growth was, therefore, more than halved in the budget projections, to 2.25 per cent as compared to the recent economic growth rate which had run at 5.6 per cent in 1989 and 6 per cent in 1990. That was, at the time, a realistic and prudent expectation.
The simple fact is that underlying international economic trends have been weaker than anticipated by my Department, of by the international agencies including the EC and the OECD or indeed by most of the leading stockbrokers. Even at this late stage, there are still conflicting assessments of the eventual growth outturn.

Deputies do not want to hear the facts. The truth always hurts. Germany, France and Italy have also been obliged to introduce corrective packages this year to restrict budgetary overruns. During this week, the half-year Exchequer returns in the UK indicate that rising unemployment and lower than expected tax receipts will result in very significant budget overruns. Some commentators estimate that the British outturn deficit could overshoot target by 2 [1071] billion or more. Do the Opposition spokesmen believe that the German, French, Italian and UK budgets are fraudulent?
The factors which have led to the emerging overrun on the 1991 budget target for the EBR are at this stage well known. The slippage has arisen under a very few heads and for reasons that are readily identifiable. For the most part, the drift can be put down to the fact that the international downturn has been even worse than could have been foreseen in the very uncertain climate at the start of the year.
There is no question of any loosening of the strict control of spending. We reduced the annual Exchequer deficit from 2,145 million in 1986 to 462 million last year, that is from 12.8 per cent of GNP to 2 per cent. The overruns this year will result in a budgetary EBR of close to 2.5 per cent, less than half the German rate. That is still a very far cry from the budgetary track record which we inherited in 1987. In addition, this dramatic turnaround in the national finances was achieved while, at the same time, we managed substantial reductions in income tax and VAT. In fact, of course, the actual EBR will be more than one percentage point below that level when the proceeds of flotation of Irish Life, an extremely successful flotation, are taken into account. Thus the actual situation is that Exchequer borrowing is set to decline in 1991 for the fifth consecutive year.
The trend in the debt-GNP ratio, which had increased rapidly over the early to mid-eighties to reach 131 per cent in 1987, has since been dramatically reduced. By the end of last year the ratio was under 110 per cent, and it will fall again this year. What we are witnessing this year is a disruption in the underlying budgetary trend. This disruption reflects the slow-down of domestic growth and the different external environment. This is not to minimise the difficulties I have [1072] to overcome in framing next year's budget. It is only to set 1991 in its proper context.
Discussions are taking place at official level with the social partners under the Programme for Economic and Social Progress consultative mechanism on a range of issues which have a bearing on next year's budgetary problems. I hope that from this process, proposals towards a satisfactory solution to our budgetary problems will emerge to which all interests represented will subscribe.
At the heart of the policies followed by this Government and their predecessors has been a concern to ease the overall burden of taxation and at the same time to bring about real tax reform in the interests of economic growth, job creation and social equity.
A central thrust of our policy has been to maintain sustained downward pressure on public expenditure as to enable us to do that. We did not, as had been the case in the past, and more especially from the opposite benches, look to the option, a misguided option of increased taxation to correct the budgetary position.
A large part of that increase in the tax burden through the early and mid-eighties came from income tax. The proportion of taxpayers paying at more than the standard rate increased from 11.5 per cent in 1980-81 to 44.1 per cent in 1987-88.
The key to our success lies in the firm management of expenditure that we introduced. Consider the record. Current Government spending increased from 41 per cent of GNP in 1980 to over 48 per cent in 1986. That trend was reversed from 1987. Current spending has been reduced from that 48 per cent peak to less than 40 per cent last year.
The message is clear. Tax reduction and reform requires prudent control of expenditure. That is the only sustainable policy, and that is the policy that has been followed by this Government and that has allowed reform to be achieved simultaneously with the reduction in the [1073] level of Exchequer deficits that prevailed over the early years of this decade. That is how we propose to proceed, so that we can continue to move steadily toward a more equitable, simpler and more economically efficient tax system through a widening of the tax base and lower rates of tax.
Since 1987, both the standard and top income tax rates have been cut by six per centage points, the top VAT rate has been cut by four points. Income tax allowances and rate bands have been increased and tax reliefs for low paid families have been dramatically improved. Over the same period our restrained approach to excise duties has brought our rates much closer to UK rates and the requirements of the single market.
Reform in the corporation tax code over the past four years has more than doubled the yield from that source. Revenue from capital taxes also has been more than doubled.
Far reaching reforms and improvements have been made also in the tax administration system. These include self-assessment, current year assessment for the self-employed, power of attachment on tax defaulters and a radically improved system of tax enforcement. Under the reviewed programme announced today a comprehensive series of measures will be promoted to effectively tackle unemployment and ensure greater equity and social justice.
The reviewed programme stresses resolute adherence to the Government's medium-term budget targets. There will be no deviation from the budget discipline which has been central to the economic achievements of recent years. To this end the EBR will not exceed 1.5 per cent of GNP in 1993. In successive budgets we delivered extra cash increases, significantly ahead of indexation to families on lower welfare rates in the interest of social equity. Deputies will also be aware that despite the budgetary difficulties this year, arrangements [1074] are being made to pay a Christmas bonus to all long term social welfare beneficiaries at a cost of 28 million.

The Deputy has just wasted three minutes of my time.
We have recorded notable successes in the discussion so far on economic and monetary union, in particular in blocking what would, in effect, have resulted in a two speed union. Quite recently the current presidency proposed a procedure for the passage to the final stage of the European monetary union under which those member states who met certain criteria would proceed by themselves to European monetary union while other member states would be kept outside until they fulfilled these conditions. On behalf of the Government I vehemently opposed this proposal for a two speed Community, and, with the support of like-minded colleagues, succeeded in having it quashed. The procedure now under discussion in the conference is one which is much more in keeping with the spirit which has informed the development of the Community up to now.
Moreover, I was a prime mover in ensuring that the crucial subject of economic and social cohesion was put on the agenda of both intergovernmental conferences. In January last, I presented a well argued position paper together with proposed Treaty amendments to both Conferences. My initiative is clearly reflected in the draft Treaty texts which are under discussion.
[1076] Our economy had not gone into reverse this year, as some contributors to this debate have suggested. Indeed what has happened here is no more than what has been happening to our trading partners. Indeed our results this year will be more in line with the average of what is happening across the EC. That is real evidence I suggest of the potential and good foundation for growth when the international recovery commences. The international experts in the OECD and the European Community forecast that the recovery should begin during the second half of this year and strengthen in 1992. We are engaging in bilateral discussions with the social partners with a view to keeping our house in order and to make sure that we can take full advantage of the opportunities that will arise when the recovery gets under way. On this side of the Chamber, we live in the real world. On the other side of the House they live in cloud cuckoo land.
Deputy Bruton, for example, says he will not be part of a Coalition with Fianna Fil unless his party are in the majority and he will become the Taoiseach. When is that going to happen? I suggest, never.

Who is he kidding anyway? Himself obviously. I regret to have to suggest that he will remain on the Opposition benches or as he suggests himself, on the shelf, continuing to gather dust.

In cloud cuckoo land, one does not have to address real issues, provide real leadership or come [1077] up with real alternatives, all one has to do there is to posture and point the finger. I have no fears whatsoever on that score. As far as I am concerned I go along with my colleagues in Government. I wish to put it on record that at all times I carried out my duties in a totally impartial manner in every Department in which I served.
At the heart of the allegations now under investigation there is the question of trust. Trust, and the integrity and sense of public duty of individuals is the only basis I suggest on which our system of Government can work. That same sense of trust is essential in every business. That is why the serious breaches of trust, which appear to have occurred, must be rigorously investigated. I know and share the anger and dismay of the man and woman in the street following these events.
I expressed my strong feelings, shared by every member of the Government, on these matters early in September. I repeated that view subsequently many times in the public arena. I said there would be a thorough investigation and that the facts would be fully disclosed, that nothing would be swept under the carpet and if heads had to roll so be it.
The Government have acted promptly in initiating the most searching inquiries and examinations into these allegations but we are also concerned to ensure that the things which have been alleged cannot happen again. The Secretary of my Department has just completed, at the request of the Government, a report on the principles governing the relationship between Departments of State and State bodies under their aegis together with subsidiary and associated companies of the bodies in question. This examination was designed to ensure that (1) the traditional standards of integrity and conduct which are appropriate to the public service are maintained, and (2) the interests of the community and the State, as owners of these bodies, are taken fully into account in their operation.
[1078] Among the questions examined were tendering for contracts; the monitoring of acquisitions, reporting and accountability. Together with my Cabinet colleagues I will be examining the findings of this report very closely with a view to preparing and implementing updated guidelines for State-sponsored bodies.
There is a responsibility on parliamentarians at a crisis time not to be cheaply opportunistic. No matter what side of the House one is on, one has to hold on to certain prime values. People are innocent until proven guilty. That does not change, just because there is the chance of a quick bit of publicity. Let me make it absolutely clear that those who may be guilty should face the consequences but only after their guilt is established. Nobody is above the law. What we have been witnessing, over the past few weeks, is more than a witch-hunt. It is a feeding frenzy. These allegations tarnish our country's image. Prospects for investment and for jobs will have been damaged.
The Opposition too have serious responsibilities in these matters. They should stop acting like unsupervised children around a halloween bonfire; never mind who or what gets burned or who gets hurt - build it higher, make it hotter, listen to the crackling, feel the heat on your face. But, let me make it clear, right now.

I do not accept most of what I have been hearing over the past few days from the Opposition as a fearless hunger after truth and justice. Most of it has been brazen, political opportunism and self-promotion. The reckless behaviour of the Opposition is in sharp contrast to the restrained and responsible attitude taken by Fianna Fil [1079] when we were in Opposition at a time when the Fine Gael-Labour Coalition presided helplessly over a series of disasters. The mysterious evaporation of Irish Shipping--

Listen to them. There was the Insurance Corporation of Ireland disaster; the collapse of Dublin Gas; the PMPA - an endless string of disasters all associated with those people.

We could have hounded out of office the Ministers responsible in those areas, and perhaps [1080] deservedly so. We did not choose to travel that road. Instead--

This is a new start, a new beginning. It has been a tough week in Irish politics. Let us put it all behind us and start afresh in the interests of the ordinary people of this country.

