asked the Minister for Economic Planning and Development if he has under consideration any meetings with the social partners to devise a wages policy in 1979 after the expiry of the national wage agreement.

5.

asked the Minister for Economic Planning and Development if any arrangements are under consideration to replace the present national wage agreement on its expiry in view of his recent speeches on the general theme of moderation in wage increases.

With the permission of the Ceann Comhairle, I propose to take Questions Nos. 4 and 5 together.

No discussions have taken place so far on a new wages policy to follow on the expiry of the present national wage agreement. The House will be aware, however, of the Government's wish, as expressed by the Taoiseach in a recent address, that a broad understanding between Government, the trade union movement and other interests should be achieved. This would embrace employment targets and other policies, as well as pay. The Government are encouraged by the positive attitude towards such a possible understanding adopted by the Irish Congress of Trade Unions in their statement issued today.

Does the Minister see any basis for further talks with the social partners, particularly the trade unions, on possible wage targets for 1979? Does he see a basis for such discussions arising out of any similarity between the document which has been circulated to affiliated unions and the document sent out by him?

As I have indicated, the Government are encouraged by the positive attitude towards such a possible understanding, that is, towards the specific issues that would need to be dealt with in the context of any broadly-based understanding. The trade union document appears to expand these various issues. It deals with questions of policy for employment creation, with relevant policies in the taxation area as well as the nature of the guidelines for pay developments that would appear to be appropriate in these circumstances. However, my understanding is that at this juncture it is a discussion document and it is a matter for the trade union delegates to decide on some course of action in response to that set of proposals before it would be appropriate for formal meetings to take place.

Is it the Minister's intention to comment on the aspect of the document which refers to a probable inflation rate in 1979 making it necessary to go for wage claims of approximately 16½ per cent? If the inflation rate is as high as 10 per cent, is it the Minister's intention to comment on that aspect of the document?

My understanding is that the trade union document does not contain any figures and, to that extent, I think it appropriate that it should avoid seeking to identify specific numbers as being the relevant issue at this juncture. In my view it is far more important to seek to identify the basis on which prices and incomes might move during the current year and the nature of the arrangements that would be appropriate to ensure not only that the living standards of workers are protected but also that they share fairly in any improvement in living standards that would be possible as a result of increased national production. I think that is the position of the trade unions. I should like to add I would not endorse the various reports that have appeared today in newspapers and other media that make references to fairly large numbers. I do not regard them as an accurate representation of the situation because even without any new pay increases this year the incomes of most, if not all, workers will rise anyway as a result of increases under the final phases of the 1978 agreement and also as a result of the carry-over effect of last year's figures.

I agree that it would be in the interests of all that there would not be any premature references to figures at this point in the hope of getting some settlement for wage and salary increases during the coming year in line with other income increases. However, does the Minister agree that it would be helpful in this connection, if trade union thinking is tending to believe in an inflation rate that seemingly is in excess of the rate forecast by Government sources, if Government Ministers would come in on this one and give the facts which would suggest a lower rate of inflation?

As I have indicated already, I do not think it appropriate to go into numbers in any great detail at this juncture. I would be surprised if there were any misunderstanding in this area because in the course of the meetings that I had with representatives of ICTU when we were discussing the various White Paper targets and so on, one of the issues on which clarification was sought was the nature of the inflation target the Government had in mind and its interpretation and, therefore, the likely trend of price rises which might occur this year. Since those meetings took place prior to the budget, obviously it was not possible for union representatives to form a final judgment as to the overall rate of price increases that would arise because, of course, indirect tax changes would affect the overall increase in the consumer price index this year but I think there was sufficient awareness of the likely trends in prices throughout the various quarters of the current year.

Does the Minister accept the principle that pay rises be index-linked both to the consumer price index and increases in GNP?

While I recognise and support the underlying principle behind indexation, namely, the desire to protect the living standards of workers, I have to point out there would be circumstances in which it would not be appropriate automatically to seek to guarantee indexation. The obvious example is in the case where there could be a price rise because of a severe import price increase—oil is a classic example. If there was a severe increase in oil prices there is no way in which everybody could be compensated for such an increase because the effect of such a rise would be to make the nation as a whole poorer. Clearly there would need to be some understanding of the arrangements that would be appropriate in such circumstances. It might be possible to compensate some groups in such circumstances—let us assume the lower income groups. If that were so, quite clearly it follows that other groups would not be compensated. The second area where I do not think there would be an automatic presumption in favour of indexation would be where indirect tax increases occurred. Very often the purpose of such increases is to raise additional revenue to finance improvements in social welfare benefits or other desirable developments in the social area. Clearly it would defeat the purpose of such an attempt if those tax increases were to become the cause of a general wave of income increases.

Will the Minister state——

We cannot continue with this question all the afternoon. We have spent a long time on it. I am calling the next question.

Will the Minister state if he excludes the possibility of a national deal that takes into account taxation, social insurance and so on?

I do not exclude such an understanding. On the contrary, I thought I made clear in my initial reply that I was encouraged by the positive approach of the trade union movement on these issues. I am saying that I cannot just jump to an automatic acceptance of any particular formula. While particular proposals, whether for indexation of pay increases or a guarantee of living standards of groups, may be relevant and might be the subject of some form of understanding, they need to be placed in a wider context. They need to be part of a more comprehensive understanding and this was what the Taoiseach called for in his original address about a month ago.

Will the Minister state to what extent he is prepared to go to achieve a new national pay deal? What would be the Government's attitude to a free-for-all? What action will the Government take, arising from the attitude of the Minister for Finance in his budget speech, if the free-for-all is envisaged?

I do not think it useful at this juncture to speculate on hypothetical situations. The appropriate approach at the moment is to await discussion of the ICTU document by trade union delegates, then see the nature of the position which the trade union movement will adopt, because until such time as there is some approved trade union position, I do not see how the executives of the trade union movement could be in a position to negotiate any form of agreement—they would not have the authority to do so. Therefore, it is appropriate to await the determination of the trade union position.

I accept the correctness of what the Minister has said about awaiting the outcome of the unions discussions on the document, but would he not agree it would be helpful if someone on behalf of the Government were authoritatively to state their view on the facts known to them after the budget and what their estimate is of inflation for 1979? This would have a close bearing on wage expectations. Can the Minister tell the House now what he expects the 1979 inflation rate to be?

That is a separate question.

It is a very important one.

I have dealt with that matter. I said I did not regard it as being relevant at this juncture. I pointed out in my earlier reply that the trade union document by itself does not go into numbers. Numbers are not a relevant issue at this juncture and it would not be helpful to seek to introduce them into the discussion at this stage. It is far more important to seek to clarify the nature of the issues on which some form of decision is required and some sort of policy formulated.

That is not what the Minister said on television.

On television I was specifically denying the Deputy's misleading and confusing and inaccurate interpretation of the situation, and I felt it was necessary to do so because to have allowed an erroneous interpretation such as the Deputy's to receive any public credibility could have been damaging to our national interests.

The Minister gave a figure on television, though in this House he is telling us it is not useful to give it. He said 8½ per cent plus, but he said he did not know how much plus.

I said it would be "more than".

Surely it is unrealistic to expect realistic wage negotiations to be started this year without these figures.

I want to clear up this confusing and misinterpreted situation. I said in my earlier reply that I was satisfied from discussions I have had with trade union representatives that there is a sufficient understanding or appreciation on their side of the likely pattern of price movements quarter by quarter this year.