SPEECH BY THE TAOISEACH, Dr. garrett Fitzgerald,  to galway chamber of commerce at their annual dinner in university college, galway on saturday, 30^th^ January, 1982 at 8.30 p.m.  Last Wednesday's budget proposals represented the completion of the first stage of the Government's action programme to deal with the threat to our national solvency.  I am not going to go back and describe how the present situation arose or who was responsible for it. There is no  point in raking over the past or reiterating the realistic analysis by Senator Whitaker a week ago to the US Chamber of Commerce. Our need now is for national unity under this Government to face the future with greater confidence in our capacity to manage our own economy.  What this Budget is designed to achieve is the protection of our economic independence This means, essentially, the right to decide our own economic and social priorities and to determine our own policies to achieve those priorities. The tough measures of July and January are part of the price we must pay for that independence. That independence is of immense value to us. I give only a few of our chosen priorities.  It is because this independence exists that we have been able to increase all social welfare payments by 25%.  This independence allows us to decide to make the income tax system fairer by introducing the Family Income Supplement which eases the burden on married people in the lowest income groups by as much as 25%  Our independence has also enabled us to ease the burden of  rates on farmers by halving the remaining rates payable and to provide the finance for a package of aid to help farmers bowed down by debt.  None of these measures of economic and social benefit helping hard-pressed sectors of our society* might have been permissible, or even within our power, if we had allowed our finances to get so out of control as to force us to seek outside guarantees for our solvency and credit worthiness. Such outside guarantees are not secured without paying a price and that price would be a certain loss in freedom to manage our own affairs.  This election, although unsought by us, presents the Irish people with an opportunity to endorse what are admittedly tough proposals, with a severe impact on many sections of the community, This endorsement, of which I am confident, will show the world outside that we can manage our affairs and are prepared to do so.  Of course more still needs to be done. But the back of the job is now broken.. The two budgets of this Government would have reduced sharply the prospective current deficit for 1982. As a result of these actions it would amount to £715 million this year - a reduction by almost half of what it would otherwise have been.  The deficit in 1981 even after the July budget was 7.9% of GNP. But for the action taken in July and proposed in the recent Budget, :he deficit would have attained a figure of about 11^% of GNP this year our Budget cut it back from this threatened figure to 5.9% This represents firm and significant progress towards phasing the deficit out over 4 years. The further stages in this process can, if expenditure growth is controlled be less dramatic and painfull although they will have to be taken with the same firmness and conviction in due course  As regards borrowing in the Budget, last year's figure of 16.9% of GNP - which would have risen to about 20% this year if no action had been taken - was reduced to 13.8%, that is by almost one-third below what it would have been' This is still too high/ but it makes considerable progress towards getting our excessive borrowing under control.  We have had to take painful measures to cut expenditures. These include cuts in the provision for local authorities to be met by additional revenue raised by these bodies and higher charges by hospitals to private and semi-private patients in public wards and reductions in the rate of subventions payable to. Health Boards in the cases of persons who opt for treatment in private hospitals involving increases this year in VHI contributions as a result. Moreover» action is being taken in the present year to secure reductions in the cost of drugs!  And the cost of food subsidies was halved - with compensation for the less-well-off.  In the pay proposals negotiated with the public sector unions we cut back the cost of special public pay claims under these proposals to £l6m. this year. Even allowing for carry-over of special claims from the period of the former National Understanding this will reduce the cost of special claims payable this year to less than half the average of recent years. In addition, the public sector pay proposals negotiated will limit the year-on-year impact of the general increase to 8.5 % over what was already committed. This is by any standards a moderate increase against the background of present inflation rates ~ notwithstanding suggestions to the contrary which have gained wide currency. If in the private sector increases as close as these are to those recommended by the Committee on Costs and Competitiveness are negotiated/ (subject to any adjustments that may be appropriate to the different wage structures there), the outcome would represent a significant .Step in relation to our competitiveness.  All these measures have helped to cut or to hold down expenditure. Issues of effective control of this expenditure and of increasing productivity in the public sector are now being tackled, but we took no financial credit in the budget for hoped-for improvements which have yet to be achieved.  What we have done is to demonstrate that the first serious attempt 'to curb the growth in public expenditure is at last under way.  At the same time, we have proposed painful tax increases, mitigated, however, for the less well-off in this Budget by introducing major elements of tax reform which protect those on lower income; and ensure that the burden is borne .by those best able to pay. The result is that after allowing fully for the impact of the Budget on the cost of living for low-paid workers, the Budget would increase the purchasing power of a person on unemployment assistance by 20% and that of a low paid worker by as much as 19% Such people will, therefore, be better off even in this difficult year.  No one can suggest that this Government has evaded the problem or shirked its responsibility r- Nor could anyone with a sense of- reality fairly say that we have over-reacted or over-corrected in the face of our deteriorating public and national finances.  In all we have done, we have been concerned to achieve equity, and to create confidence that the tax system is going to be much fairer as between different groups and their capacity to bear tax. This concern is clearly shown in our tax reform measures, which even in their modified form have/ as I have explained, significant redistributive effects.  We are, for example, remedying PAYE payers' grievances about being differentiated from other taxpayers by having to pay tax on the current year's income as we are providing that the other income tax payers will also have to do likewise and, thereby, in an inflationary period, pay more tax. Business entertainment allowances are being cut out completely, interest relief is ending for new borrowings save in respect of mortgages on the principal private residence;' and the rate of capital gains tax is being significantly raised -while an even higher special capital gains tax will be payable by those selling land for development; they will pay a higher rate of 45% on the development value and be disallowed indexation – the cumulative effect o£ these two provisions being very considerable. There is also a new initial and current tax on present and future discretionary trusts. Moreover, the aggregation of all gifts and inheritances received by beneficiaries will reduce avoidance of Capital Acquisitions Tax and will increase the yield of this tax. The Finance Bill will contain other measures curbing severely evasion and avoidance.  These and other similar measures will deal with much of the sense of justified grievance of PAYE taxpayers who do not avoid or evade tax They will make the whole system more equitable and be seen to be more equitable  But in our taxation measures we have been careful not to take measures that would damage industry or enterprise.  This Budget directly reflects our concern to deal with fundamental social deficiencies and inequalities in our society. Of these, the lack of employment is paramount, since so much of social inequality lies in the difference between having and not having a jot. The Government have decided, at a time when the need to reduce our level of borrowing is paramount to maintain the total volume of the Public Capital Programme. Within that total, we have taken some important strategic decisions to give a better return on our investments in terms of employment!. I should underline here our determination through the improvement of project appraisal and  assessment to avoid the emergence of a new herd of white elephants trampling pitilessly on our public finances!  Expenditure on energy investments this year will be 40% higher than in 1981. This massive increase will not only generate increased employment but will lay the basis for more economic and secure energy supplies for the expansion of our economy, We are making provision for the IDA which will ensure that some 10,000 new IDA grant-aided jobs will be provided in 1982 in spite of the unfavourable international climate for industrial investment. A major new initiative which we will be funding is the provision by the IDA of advance office buildings and related facilities for service industries on a regional basis. This will supplement the advance factory construction which has now reached the stage where a large quantity of factory space is on hands throughout the country.  We have increased by 22% the provision for sanitary services, as we see the shortage of these services as a major factor inflating the price of building land and housing.  We have provided a record total of £344 million for housing -an increase of 26% over 1981 and of 42% over the January 1981 Budget provision. This is a clear signal of our determination to deal with the chronic problem of poor and inadequate housing which is at the root of so much social deprivation and inequality.  We are fully committed to a roads improvement programme which will make our economy more efficient (and our roads more safe. We have therefore increased the provision for road improvements by 17%.  Our provision of £238.5m. for telecommunications reflects our commitment to the planned development of our telecommunications and to ensuring that telephone connections this year will be well in excess of the 80,000 target for 1981i. This programme directly and indirectly is a major stimulus to employment.  I have outlined some of the major employment-creating investments we have proposed in the Budget in order to show that it is a Budget which is concerned to ensure the fullest possible impact of Government investment on employment.  Schemes under the Youth Employment Agency are being funded to the extent of £40m. this year , and this will become £63m. in a full year 4 With the addition of European Social Fund contributions, it is expected that in a full year, total expenditure will be almost £l00m - many times greater than hitherto. We intend, through this Agency, to give an additional 20,000 young persons training, work experience]or job opportunities.  We have also been concerned in the Budget to ensure adequate provision for education, social welfare benefits and health services. The total cost of these services as provided in the Estimates amounted to 50% of the total non-pay provision in 1982. This was increased very substantially by the budgetary provisions announced by the Minister for Finance.  In the agricultural sector we are providing stamp duty relief which will apply for a limited period of two years only to encourage transfer of farms to a new and younger generation. Side by side with this and with the same object in mind we are adjusting upwards the agricultural Capital Acquisition threshold to compensate for the increase over 1975 of agricultural use value and price. To encourage the building up of the great asset of the national herd we are putting up the provision of stock relief from 100% to 110%.  For other sectors we propose an important new incentive scheme to encourage employers to take on the employment of additional workers. Moreover we have made provision for establishing the National Development Corporation at once so as to improve the structure for managing our public investment and increasing its return,, and as well to ensure that no opportunity is missed for building up Irish enterprise and securing the growth of the Irish economy- In the Budget we gave extra marketing aid to C.T.T. to assist them in a drive for increased exports. I.C.C. was given additional working capital and the Sectoral Development Committee extra money :o study specific areas of industry where growth potential exists. It also provided a subsidy to the horticultural industry. It substantially reduced VAT payable on the sale of some products of an Irish industry that is exceedingly exposed and vulnerable: the producers of furniture, carpets and soft furnishings.  And it took the first steps t" which no Government has hitherto been willing to face up to remove disincentives to work by treating as income for tax purposes payments in respect of pay-related benefit.  The adoption of profit sharing schemes by enterprises helping thereby to increase efficiency and productivity was also to be encouraged by tax reliefs.  The legislation "is nearly ready for the setting up of a statutory Agency to Combat Poverty^ for which initial provision has been made in the Estimates and the membership of the Board of which will shortly be announced. This Agency which will have wide-ranging functions will I believe, act as a primary focus for examination of and recommendations on the many social policy choices with which this community is now faced.  Despite the elimination of the subsidy on milk, the new School Milk Scheme will provide, through combined Exchequer and EEC action, a subsidy of over 11 pence per pint of milk supplied to school children.  This is an important social provision, one in which we are breaking new ground in the field of social policy. It is also proposed that Dail Eireann vote £6m. by way of subsidy for decontrolled tenants.  An additional £250,000 has been provided to youth and sports organisations because of the Government's concern that increased facilities for youth services be made possible at this time of such difficulty for young people. The Office of Ombudsman is to be established with a view to improve the quality of public service. Our commitment to improving the position of women in society was demonstrated clearly by the enhanced provisions for the Council for the Status of Women and for the Employment Equality Agency. There are a number of provisions in the Budget which will interest those who properly value the preservation of our natural heritage and I would draw particular attention to the decision to commission a special report on areas and sites of archaeological significance.  Finally I refer to a matter of the greatest material importance. We have decided to provide money in this year's budget to assist organisations involved in the constructive work of fostering better understanding between people North and South of our country and of reconciling the two traditions in this island and improving Anglo-Irish relations by the establishment of the "Encounter" organisation envisaged in the recent London Summit Communique.  increase the output of Irish goods,' protect or create jobs at home and reduce the unsustainable level reached last year of .our balance of payments deficit.  Where people have ideas and skills they can help by starting new enterprises, however small., This is the time, when the economy is at bottom, to give every impetus to our productive capacity so that we will be well placed to benefit from the prospective recovery of world economic demand later this year and in 1983. .  Those in the tourist trade can help by giving visitors value o with courtesy. There have been indications that we have recently not been as good at offering these as we used to be.  Farmers can help by re-stocking their farms, under the more favourable conditions now prevailing.  Employers can help by entering into genuine dialogue with workers, which means listening to them. From experience of consultancyd and especially of the consultations with industry and trade unions in the mid-1960s as part of the work of the Second Programme for Economic Expansion, I have personal knowledge of the contribution that workers can make by their insights and their special experience, The shop-floor view can be a very effective complement of management's bird's eye.  The rationale of the Budget proposals has been financial osolvency, combined with equity ind with incentives for increased output and employment. Against this background we must now look to the future. The question has often been asked recently - what can people do to help at this crucial time?  Already people have helped. By the understanding they have shown of our national problems, they have assisted the Government to tackle their., This task would have been much mort-difficult if the public mood had been resentful or unco-operative.  For the future, people whose purchasing power is reduced by budgetary measures - as will unfortunately happen in many cases can help by accepting this, and by not seeking to compensate for the reduction through drawing on savings, which are needed to promote investment. In particular, increased domestic lending to Government is essential to reduce foreign borrowing upon which last year we had to depend for almost three-quarters of Exchequer borrowing.  By consciously giving preference to Irish goods seeking them out and putting pressure on shops to stock them; we can view; remember, birds have limited vision. Works Councils and similar consultation procedures should be used to the full to enlist co-operation and to talk frankly to workers. Everything possible should be done to avoid waiting until the firm is in terminal trouble, as so often happens.  Workers can help by co-operating when the firm that provides their livelihood is threatened, and by not taking a short-sighted view and opting for redundance or seeking more from their firm than the firm can afford if it is to survive^ of which there have been tragic recent examples.  More generally, workers can help by settling for moderate increases. Some increases sought from - and in certain instances apparently agreed by - a number of private employers have been clearly higher than the economy can affords and well over the 8 % year-on-year increase proposed for the public sector.  Community organisations can start thinking out ways in which young people trained and paid through the Youth Employment Agency can be given constructive work in their own area doing things that need to be done, whether in the amenity or social fields.  Finally, the quality of our society can be enhanced if more and more people start to think in terms of what they can do to help Others- rather than considering only their own interests.' Some of our experiences during the snow emergency were frightening in terms of what they implied about low public morale and personal selfishness amongst admittedly a small section of our people,' This was a warning that we should heed, And that means creating a society from which people will not be so alienated as to act in an anti-social way but will be good neighbours.  In all that I have been saying concerning what people can themselves do to help in the present situation, the  preoccupation that lies behind my approach can be seen to be -unemployment. Having protected by the Budget our power as a Government to control our own policies, we must thereafter -not just we the Government, but we, all of us, the Irish people give absolute priority to the problem of unemployment.  I know that other countries face similar, even in some cases perhaps, worse problems in relation to unemployment. In Britain, for example, unemployment has more than doubled in the past two years against an increase of just over 60 per cent here. But this is cold, and irrelevant comfort, especially as the percentage of insured workers unemployed here is somewhat higher than in Britain.  Much more needs to be done here to tackle this problem. The blunt fact is that there will not be jobs for those now unemployed nor for a large proportion of the 67,000 young people completing their education each year, unless we become far more competitive and efficient, getting rid of restrictive practice (which only destroy jobs in the medium or long-run instead of protecting them, as no doubt is intended* and tackling intolerable levels of absenteeism which are undermining many industries.  Even more may be needed. The most optimistic hypotheses about economic growth in the markets we sell to, do not suggest that we can provide the necessary number of new jobs unless there is radical change', a quantum leap, in competitiveness and willingness by those now employed to share their good fortune with those out of work or seeking work for the first time. It would be wrong to express false optimism about this - to suggest - as politicians are often tempted and even encouraged to suggest - that this problem will solve itself within present structures and with present attitudes,. We need a radical reform of structures and a revolution in attitudes,, or there could in time be another and less pleasant kind of revolution.  The foundations for recovery have now been laid, painfully and at a cost to many in this society and recent events must not be allowed to undermine them. Having first ensured this we then have to build on these foundations - not just 1'a.ive them there with the grass growing over them The Government given endorsement by the people for its tough but fair policies will provide leadership to grapple with these problems and to take  advantage of these opportunities. It will seek to encourage a united approach as soon as it secures the necessary endorsement for its policies.