asked the Taoiseach if, in view of the fact that the employment and budgetary targets in Building on Reality, 1985-87 have become unrealistic and unattainable, he will now withdraw the document; and if he will now state the Government's present projections for 1986 and 1987 in respect of unemployment and the current budget deficit.

5.

asked the Taoiseach if, in the light of the just published OECD Report on Innovation, the labour force and employment creation targets in Building on Reality, 1985-87 need to be revised.

6.

asked the Taoiseach if he will make a statement on the operation to date of the plan Building on Reality, 1985-87 indicating the extent to which the objectives of the plan are on target and the extent to which the conditions forecast in the plan have been met.

I will take Questions Nos. 3, 4, 5 and 6 together.

The Government have made considerable progress in achieving the objectives set out in the national plan —Building on Reality. No serious arguments have come from any quarter for economic policies different from those which underlie the plan. We are, inevitably, closer to achieving some targets than others.

Marked progress has been made in curbing the rate of inflation. Compared with a rate of over 20 per cent in 1981, inflation has been reduced to 5½ per cent. Interest rates have also come down, falling by over four percentage points since the start of the year. Mortgage rates have now fallen to 9¾ per cent per annum, the lowest level since 1977 including a fall of over 3 per cent since March last. Irish mortgage rates are now 3 per cent below those in the UK.

Substantial progress has also been made on the balance of payments front. Compared with a deficit of almost 15 per cent of national output in 1981, the deficit this year should be down to less than 4 per cent of output in line with the plan.

Employment performance has not been as strong as had been hoped for. Despite the welcome improvement in the unemployment figures for September there has been a strong upward movement in unemployment this year.

There have been a number of contributory factors to this disappointing outturn, including the higher than expected level of interest rates that prevailed earlier in the year, the slower than expected startup of the social employment scheme and the greater tendency of school leavers to register as unemployed while seeking their first jobs or before going on to further education.

With regard to the OECD innovation report to which Deputy Haughey referred in one of his questions, I should point out that the time frame of the national plan Building on Reality is 1985 to 1987 whereas the time frame of the OECD report is from 1985 to the year 2000. This obviously invalidates any comparison of projections underlying these separate documents. The Minister for Industry, Trade, Commerce and Tourism will be making a definitive statement shortly on the action to be taken arising from the OECD innovation report.

In considering what measures should be brought forward now in response to the disappointing experience with unemployment, the Government have to have regard to the position of the public finances which we inherited from our predecessors. There is no realistic or responsible alternative but to continue to work within the framework established in the plan for an improvement in the state of the public finances.

It would be grossly irresponsible for the Government to abandon the thrust of the plan's financial policies. The fiscal objectives set out in the plan were described by the EC in their Annual Economic Report 1985-1986, published recently, as the minimum amount of progress which is compatible with ensuring a halt to the situation where growing debt interest payments have pre-empted the real growth in national resources.

The Government have firmly committed themselves not to finance increased spending by any increases in the burden of taxation as a proportion of national output. This is why there is so little room for manoeuvre in relation to public service pay. Equally new measures to expand employment cannot have a significant net impact on Government expenditure.

The Government have reviewed progress on the national plan and consider it appropriate to introduce additional measures to boost employment creation and to improve the process of tax collection and enforcement with a view to bringing the employment and public finances position closer into line with the plan expectations. I will be dealing with these measures in my statement after the Order of Business.

I will be arranging to send copies of that statement this afternoon to members of the National Economic and Social Council and I will be asking them to discuss the proposals in it with me at a meeting which I have requested for Friday, 1 November.

As I indicated at meetings with representatives of the Irish Congress of Trade Unions and employer and farming organisations last July, I would intend that the meetings in NESC could be followed by meetings with the social partners separately. I am, of course, together with my colleagues in Government, prepared to meet with the Irish Congress of Trade Unions at any mutually agreed time to discuss matters of common interest to the Government and to Congress.