asked the Minister for Economic Planning and Development if the terms of the proposed national pay agreement will be made liable to any "clawback" whatsoever.

9.

asked the Minister for Economic Planning and Development if he will make a statement on his talks with the ICTU and the FUE relating to the proposed national pay agreement.

10.

asked the Minister for Economic Planning and Development if the national pay agreement is in keeping with the Government's policies.

With the permission of the Ceann Comhairle, I propose to take Questions Nos. 8, 9 and 10 together. Discussions with the ICTU and the employers' representatives were held on 9 February at the invitation of the Government. The purpose of these discussions was to ensure that the parties to the wage negotiations would be aware of the Government's views on the role which an appropriate wage agreement could play in their overall economic policy. The opportunity was availed of to outline once again the Government's overall economic strategy, with particular attention to employment plans, and to emphasise the crucial role which wage developments had to play in the success of this strategy. No proposals were put to either party as to the terms of an agreement which would be acceptable to the Government. They were informed, however, that the policies introduced in this year's budget could not remain unchanged if an excessive settlement which threatened our competitiveness and our job-creation programmes were made, and that corrective action would be taken.

In the event, the terms negotiated for the proposed national pay agreement will result in an increase in basic wage rates of 7 per cent in 1978, and the Government have decided that this figure is sufficiently close to their original requirement of 5 per cent to render acceptable the terms of the new agreement. Accordingly, the Government do not intend to take corrective action where the terms of the new agreement are strictly adhered to. It must, however, be stated that these terms make targets for future jobs, prices and investment somewhat more difficult to attain. The Government will therefore be especially vigilant to ensure that these terms are not exceeded in any individual cases and that action will be taken against any parties who should engage in excessive settlements.

You will appreciate, a Cheann Comhairle, that there are three questions there and I have a number of supplementaries. First in relation to the possibility of a clawback on increases, I wonder if the Minister will assure the House that, in order to facilitate the passage of the national pay agreement, there will be an adjustment in tax-free allowances for the national pay increases plus the two increases announced by the Minister for Health and Social Welfare in social welfare insurance contributions?

I am not quite clear as to what the Deputy's question is. Is he asking that the changes in income tax allowance as announced in the budget should go through? They are going through.

I ask the Minister to assure the House that the increases agreed in the national pay agreement will not be reduced by taxation or by the increases in social insurance just announced.

I do not understand that. Is the Deputy saying we should now revoke the proposed increases in social insurance contributions?

The Minister probably does not realise that the ordinary working people get £68 tax-free allowance, including allowance for social welfare contributions which have now gone up by two increases in the last week. I am asking, in order to facilitate the passage of the national pay agreement, that such tax-free allowance will be increased. I am also asking that there be no clawback on the terms of the national pay agreement.

I have already indicated that there will be no clawback on the terms of the national pay agreement.

Will you assure the House that there will be an increase in tax-free allowances to meet the increase?

My understanding is that the allowance in question is normally adjusted. If the Deputy tables a specific question about the system of operation of tax-free allowances I will undertake to give a precise answer.

You will know that the social welfare contribution has gone up and the health——

The Deputy will please address the Chair. This custom of addressing the Minister across the floor is not in keeping with the best order.

Will the Minister assure the House that the social welfare tax-free allowance will be increased in order to meet the recent increases?

My understanding is that whatever the normal arrangements are in that area will operate. I do not have details of the concise way in which all the income tax allowances are adjusted. I know that the basic increases in tax-free allowances, which are far and away the most important changes, are going through, and that there is no question of any clawback being applied either to those or to the increased pay amounts suggested under the proposed national wage agreement.

I am calling the next question.