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Economic Situation.

Thursday, 27 January 1966

Dáil Éireann Debate
Vol. 220 No. 3

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Debate resumed on the following motion:

That Dáil Éireann agrees generally with the views and recommendations contained in the Report of the [358] National Industrial Economic Council on the Economic Situation, 1965, which was laid before Dáil Éireann on the 24th November, 1965.

—(Minister for Finance.)

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): Last evening I was attempting to review our economic progress over the past few years and to show that the present economic difficulties were not something of recent occurence. I dealt at length with our balance of payments figures, our capital inflow, our unit production costs, our external assets and import ratio, and our bank liquidity. In dealing with these as signposts of our economic progress. I showed, I believe, that the Government should have seen the writing on the wall long before the announcement was made on July 13th. I believe they should have so informed the people and should have taken earlier action. One may ask why they did not do so. The answer is equally simple; it was not politically expedient to do it and only when the election was safely over and they were again in the saddle was it deemed politically safe to come before the House and wash their dirty linen in public.

Dealing with the question of bank liquidity, may I direct the attention of the House to page 54 of the booklet sent to us by the NIEC? At the bottom of that page you will find this very pertinent part of paragraph 78 which says:

The Central Bank will, no doubt, consider it appropriate to take action to prevent an exceptionally high but temporary increase in the net capital inflow from leading to an excessive expansion of credit and will continue to use the mechanism of changes in recommended ratios to keep the rate of credit expansion in line with the requirements of economic growth.

These steps were not taken and the progressive change in ratios which was there for any Minister for Finance or Government to see was produced and I am sure drawn to their attention quite regularly and was clear evidence of the undesirable inflationary trend in our economy.

[359] I had just begun to deal with the question of Government borrowing and borrowing generally. Everybody had been admonished, as we are all being admonished now, to cut down expenditure. The Central Bank had given instructions to the commercial banks covering the last nine months of 1965, and now extended to cover a full year, to curtail bank lending except for productive purposes. In general, the policy of restraint has been adopted and those in the community who have had occasion to go to the bank trying to borrow money are painfully aware that there is a very rigid credit squeeze in operation.

But when one looks at the Government position one finds in spite of all admonitions they have continued to borrow. It may be difficult for them suddenly to change the pattern; they may not have too much room for manoeuvre but I think it proper to draw attention to the latest figures which may be obtained from Iris Oifigiúil. These show that from 1st April, 1954, State borrowing from all sources was £211 million and there was £184 million in Exchequer Bills during that period. Despite all the admonitions we have had, between 1st April, 1965, and 1st December, 1965, State borrowing jumped to £368 million with an Exchequer component in that of £253 million. Surely this is increased money in circulation. Is this not inflation? Is this not revenue overdraft mounting rapidly?

Similarly, we find that on 20th October, 1964, commercial bank advances to the Government were £25 million and on 19th October, 1965, those advances were £39 million. This shows the highest percentage increase in any section of the community and this is the Government who are asking us to exercise restraint.

Apropos of that, may I direct attention to this paragraph in the introduction to this booklet? I shall quote paragraph 24:

Finally, action is necessary in the field of credit policy. The role of credit policy in the first instance is to ensure that the volume and composition of credit will be in line [360] with the planned growth of consumption and investment expenditures. The lesson to be drawn from 1964 is that there is a danger that an abnormally high inflow of capital may be used to allow a rate of credit expansion which cannot be maintained when the inflow returns to a normal level. This also applies to increases in bank liquidity resulting from abnormally large issues of Exchequer Bills which can have the same effect as a large capital inflow in increasing the liquidity of the banks and thereby permitting an expansion of domestic credit. The Central Bank will, no doubt, consider it appropriate to take action, should the above circumstances recur, to keep the rate of credit expansion in line with the requirements of economic growth.

This is the booklet which the Government are asking the House to endorse and the concluding paragraph of that booklet is, so far as a production of any State Department can be so, condemnatory of the Government.

Deputy T.F. O'Higgins and, I think, Deputy Michael O'Higgins, adverted to the former attitude of the Taoiseach in regard to bank credit control. Deputy Michael O'Higgins stated that at Castlebar on 29th March last the Taoiseach said that if Fine Gael proceeded to exercise credit control over the banks as enunciated in their Party policy statement, there would be a flight of capital out of the country. Yet we have it stated in this book, and, indeed, we all know it, that the Central Bank would, in effect, exercise restraint and issue restraint instructions to the commercial banks beginning on the 1st April and going on to the end of last year and subsequently extended to cover the entire financial year. Here was the Taoiseach giving one view on the 29th March and the Central Bank with which one would expect him to be in consultation, apparently acting in the opposite direction at the same time. Has there been proper consultation or any consultation between our Taoiseach and our Central Bank on such an important issue?

One fundamental defect in this document [361] as I see it is the inadequate reference to the agricultural section of the economy. Not alone are farming interests not represented on the NIEC but this publication is in line with that approach in so far as very little reference is made to the agricultural section of the economy.

I put down a Parliamentary question to the Taoiseach on Tuesday of this week asking, in general, for particulars as to the Government aid given to the agricultural section of the economy and to the industrial section of the economy. The figures I got were that the estimated aid to agriculture for 1965-66 would be £51.9 million and to industry £57.5 million. Much of the aid given to industry, of course, applies to building.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Tourism and fertilisers.

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): Yes, but the big item would be building.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Bord na Móna.

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): I asked, because it is an important part of our judgement of the economy, the import content of our exports. The figures given to me for agricultural exports for 1965-66 was £96.4 million and for industrial exports £82.7 million but I was informed that no information was available regarding the import content of these exports. I, therefore, turn to Table 33 of the last Central Bank Report and to comparable figures given on Table 11 (a) of the National Industrial Economic Council Report. For 1964, according to these figures, our agricultural exports amounted to £123.8 million; other products, £93.6 million. For 1964, imports of materials for agriculture amounted to £16.5 million; materials for industry, £195.4 million; consumption goods, £71 million; producers' capital goods ready for use, £52 million; unclassified, £11 million.

The point I am trying to bring out— and I have no further information than the statistical tables provided here —is that there is a very small import content required to produce a substantial [362] agricultural export. If these figures are correct and if I am interpreting them correctly, for an agricultural export of £123 million the corresponding figure for materials imported is £16.5 million; whereas, for £93 million exports on the industrial side there is an import content of £195 million.

Over the years our agricultural exports have been consistently greater than our industrial exports and the imported materials necessary to service these exports have been running at about one-tenth or one-eleventh of the imported materials necessary to provide our industrial exports. In this booklet, in Table 11, similar figures are quoted.

It is claimed by the NFA that the agricultural community, about one-third of the population, produce two-thirds of our exports and enjoy little more than one-fifth of the national income. I think it is generally accepted that the income of farmers, agricultural labourers and forestry workers has not kept pace for many years with the income of the other members of the community, despite falling numbers engaged in farming occupations and despite the fact that production has in general tended to increase.

Therefore, I find it hard to accept that we can approach this question of incomes policy, which is the theme running through this booklet, without taking into consideration in a more realistic fashion than we have done the question of agricultural income and farmers' income in general.

I suppose you could say that the agricultural community, which represents only one-third of the nation and feeds the entire nation—because the amount of food imported is not really very great—and provides, maybe, two-thirds of our exports, with very little import content, receives it would seem something a little more than one-fifth of the national income while the remaining two-thirds of the nation provides a proportion of the goods and services and to do that imports materials for industry to the tune of £195 million per year; capital goods to the tune of £52 million, making a [363] total of £249 million, and £71 million worth of consumption goods. These figures should bring home to everyone the fundamental importance of our agricultural industry in the field of exports and I am at a loss to understand why more consideration was not given to that aspect in this Report. Our agricultural labourers, deemed to be unskilled workers by some, are amongst the lowest paid in our society. Forestry workers are paid £7 15s. per week; bonus incentive can, I believe, bring that figure to about £9 per week. They complain about their conditions. They have no huts. They have to work under canvas in bad weather. With regard to the average agricultural income of the farming community, different figures have been given at different times by various economists and in Government reports.

Speaking yesterday, the Taoiseach was not very encouraging, to say the least of it; as far as I understood him, the economic curbs will continue until 1967. I would have hoped there would be reasonable improvement in our economic position towards the end of this year. Improved cattle exports, which we surely must have by the end of this year, remembering that we had a record cattle population last July, should help to put right again the imbalance in our economic position at the moment. The highest exports of store cattle were in the record year 1957. The record exports for that year were very welcome to the incoming Fianna Fáil Government. Cattle exports came to their rescue. Probably history will repeat itself now, but it is ironical that in two periods the cattle trade, in relation to which a gentleman on the opposite side once said: “We will destroy in one year what it took 100 years to build up”, should now be the means of saving the Fianna Fáil Government. If it is. then this traditional industry will have saved Fianna Fáil on two occasions.

It is rather extraordinary that our economy always seems to boom before an election and to slump after it. That, of course, is not fortuitous. That is something carefully organised with a complete disregard for the [364] national welfare. Many simple people may think this “Stop-Go” in our economy is a cyclical thing, largely occasioned by influences outside our control. I admit there are influences outside our control which have intermittent effects upon our economy, but the position quite clearly is that our economy is being subjected, whenever that seems necessary, to the pressures of political expediency. The Government were very unpopular when they introduced the turnover tax and to redeem their unpopularity they introduced an unprecedented wage increase in the form of the 12 per cent ninth round.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch The Government did not introduce that. That was freely negotiated between the employers and workers.

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): The Taoiseach intervened and got the Federated Union of Employers to sit down a third time with the Congress of Irish Trade Unions. The negotiations broke down twice. I do not see the Taoiseach, the Minister for Finance, or his colleague, the Minister for Industry and Commerce, intervening now to get the Federated Union to sit down once more with the Congress of Irish Trade Unions. Indeed, the attitude of the Taoiseach, the Minister for Finance and the Minister for Industry and Commerce is: “The negotiating machinery is there, if they want to use it; we, like Pontius Pilate, wash our hands of it.” There is no necessity now for the Taoiseach or any of his Ministers to rush around desperately in an effort to negotiate an agreement.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Did the Minister not see both sides?

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): The position now is the reverse. There is no election pending.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Will the Deputy agree the Minister saw both sides? He cannot shut his eyes to that.

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): The Taoiseach went on television when the by-election was on in Cork [365] and he told the people: “You will be getting an increased pay packet next Saturday night. What is wrong with that? There will be more money passing over the counters. What is wrong with that?” He smiled benevolently then and the people smiled benevolently back when it came to casting their votes. The trick paid off. Now the effort seems to be to pretend that that was a negotiated agreement in which the Government played no part at all.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Nothing else was claimed for it.

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): It was an agreement in which the Taoiseach interested himself.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Having advised that seven or eight per cent would be sufficient.

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): And he agreed to 12 per cent. A general election is worth 12 per cent. A Presidential election is worth three per cent and, if there were a by-election, I suppose it would be one per cent.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch I hope the Deputy is not right about a by-election. I do not know any one of our colleagues who has passed away.

Mr. P. Hogan: Information on Patrick Hogan Zoom on Patrick Hogan (South Tipperary): There is no by-election, but I wonder would there be another PR Referendum. I am sure the economy could stand a 20 per cent wage increase if there were a PR Referendum tomorrow morning. Is it too much to appeal to the Minister for Finance, who, I believe, is a reasonable and honest man, of less tough fibre and less ruthless than his immediate chief, to try to arrange our economy more independently of politics? The Government are now in the position of having a fairly assured majority. There is no necessity for this recurring panic which bedevilled their activities in the previous Government. There is an opportunity now for calm planning. There is an opportunity for them to take decisions without looking over their shoulder and thinking of when the next election will be coming off. I [366] would ask them to make these decisions in the interest of the national welfare, a departure which may be new to them, and not, as heretofore, entirely in the interest of Fianna Fáil.

Mr. Cosgrave: Information on Liam Cosgrave Zoom on Liam Cosgrave This debate, I believe, has been conducted in a responsible way in an effort to analyse the problems, economic and social, which affect us. The debate was brought about by the decision of the Fine Gael Party to table a motion last November endorsing and supporting the NIEC Report and recommendations. The gravity of the deteriorating situation moved the Government, with unexpected and unusual alacrity, to table a similar motion last week. The fact that it has been possible to get a discussion on the recommendations included in the Report and the general agreement that has been shown during the debate on the causes of the present situation indicate and underline the importance of securing, wherever possible, the right measures to deal with the situation.

The NIEC Report, in its analysis of the problems which affect the country attributed them to four main causes: the excessive expansion of monetary demand, of which a major cause was the rapid rise in investment over the period, which, in the Council's words, was largely determined by Government policies; secondly, a deterioration in the relative competitiveness of Irish production; thirdly, excessive credit creation, much of it for unproductive purposes, which in the Council's Report was regarded as facilitating the excessive increase in demand; and, fourthly, the creation by these developments of an environment in which price increases could be easily passed on.

A close examination of this Report and the recommendations made in it reflects at many points strong criticism of the failure of the Government to take the necessary action and the fact that the Government did not adhere to the various figures laid down in the Second Programme for Economic Expansion. There has been a remarkable growth in the Government's capital programme, and the fact that the available resources are no longer adequate to finance that Programme [367] is to a very considerable extent due to the failure of the Government to examine periodically and in a critical manner the terms of that Programme and the availability of adequate capital to meet it.

During the course of the last election when Fianna Fáil were criticising various aspects of the Fine Gael policy and in particular, criticising the proposals made in respect of banking credit, an attempt was made to generate fears among the community and to cause concern by attacking the proposals made on the ground that this was an attempt to interfere with or in some way control by Government appointees credit policy and that the normal reaction of individuals, farmers and business people, is to resent any Government control or interference.

That was done because at that particular time the Government had created the illusion that it was possible to spend freely, that adequate resources were available and that there was no reason for limiting the capital available either for productive development purposes or for building and construction. Although the evidence was there in the report submitted to the banks that the situation was deteriorating and that 1964 had shown quite a significant change—in fact there is, I believe, evidence to show that at least one bank sought guidance in December, 1964, on what action might be taken—the Central Bank failed to move in that direction. It is not quite certain when the Central Bank first took action on the matter but there is some evidence that at the end of April or early in May, action was taken for the first time.

It is of importance to advert to the comments that have been made by those who have a purely economic interest as distinct from those who might have a political interest as well. The quarterly Irish Banking Review had this to say in December last:

The deterioration of the balance of payments has led to many warnings. The question may fairly be asked if some of these warning should have been pronounced some time ago and some of the remedies applied earlier. [368] Delay in facing up to difficulties may make their correction more severe and prolonged.

The proposals which we made were, I believe, reasonable. We suggested that the Central Bank should take action, as has been recommended in the NIEC Report, in respect of credit creation.

We think it is significant that the action, taken in a quiet way, unannounced until later, came within weeks of the published recommendations we put forward. One important aspect of this question is that the 33 per cent formula which was pointed out to be a reasonable ratio in respect of bank lending was departed from, though the margin referred to in the Second Programme allowed a ratio of anything from 27 per cent or 28 per cent to 33 per cent and nothing was put in its place. There is now some evidence to suggest that it has dropped to as low as 22 per cent.

The NIEC Report refers to the difficulties of foresight in the field of credit policy and in the whole field of economic management:

We believe that primary emphasis must be laid on policies of the type we recommend for ensuring that the growth of money incomes is kept in line with the growth of real output and that expenditures are planned so as not to exceed the real resources available.

A big, if not the biggest, single user of capital is the building industry and the position in so far as building is concerned has now deteriorated to quite a marked degree. Deputy T. F. O'Higgins adverted to the December figures and to the fact that there was a notable decline in employment and that these figures pointed a very serious warning. I should like to advert to this in the context of a reference to it in the document Public Capital Expenditure, laid before the Oireachtas last October. It is stated at paragraph 23:

It is hoped that it will be possible to maintain the public building programme next year close to this year's level of £31.6 million, which is the highest ever achieved. As regards the possibility of raising it [369] above this level, in line with the projections in the Second Programme, it is necessary to point out that the Second Programme projections were made in the light of forecasts of financial resources which having regard to present conditions, must be regarded as optimistic.

What were the National Building Advisory Council doing? We have been told now it is proposed to reconstitute that body. I want to suggest, without intending any disrespect to the members, that the members of that council are hand-picked and it does not require a great deal of imagination to find the reason. They were not appointed to represent this industry. They could not communicate with all the interests concerned on matters before the Council and do not represent the building industry—there are no specifically appointed persons on the Council who represent any section of the building industry and they are entirely out of touch with the building industry.

In the light of that situation, with the acute shortage that has developed in respect of capital, this serious situation has resulted. Government Departments have delayed the placing of contracts for public construction, there is a big hold up, there is confusion and a drop in the volume of work and employment. Those of us who are familiar with Government Departments realise they never move quickly even with the green light, but with the red showing they have not only stopped but have gone into reverse. The position is that because there was not available an accurate estimate of the total construction projects in each Department, there is no properly indexed schedule of the building projects and it is not possible to decide quickly which projects should go ahead and which projects should be stopped. The result is that there is now a hold-up in virtually every Government Department and, because there was no order of priorities in the past, there is not any possibility now of getting a quick decision as to what projects should be proceeded with.

[370] In the private building sector there will also be a drop this year. It may be true to say that the same amount of money will be made available but that is not sufficient. With the SDA loan procedure, even allowing for increased grants, it is obvious that because of the rise in building costs—it is true to say they have risen not less than 10 per cent and some people say by more— and the facilities from building societies drying up, it is obvious there will be a serious drop. I can speak with most experience of County Dublin in this respect—the area served by Dublin County Council and Dún Laoghaire Borough Corporation—and I can say the number of houses will drop considerably. The situation in County Dublin is quite remarkable and has alarmed those who have examined it. It is obvious, therefore, that the Building Advisory Council should be reconstituted rapidly on a realistic basis so that those appointed on it will have not merely authority to represent the interests concerned but the right to have discusions with those interests.

In the Second Programme for Economic Expansion, reference was made in Table IV at page 270 to the public capital building programme during the years 1964-65 to 1969-70. For the year 1966-67 the total estimated expenditure is £34.37 million and it is made clear on the previous page that it is expected total public capital expenditure during the six years inclusive in terms of present prices would amount to £569 million, or an average of £94.9 million a year. With the deterioration in money values and the rise in building costs, it will be necessary this year to spend £38 million in order to provide for the same amount of building work as was originally planned in that Programme and which the Government have departed from without giving reasons or explaining the circumstances of why the targets enshrined in the Second Programme, which have been discussed at length in the House, will not be realised.

They hope, this year, to get £31.6 million which, on the figure I have [371] given, is a drop of one-fifth. This, as I said, is due to a variety of factors. Due to the delay in placing contracts and due to the fact that available supplies of capital are not adequate, they are unlikely to attain their own targets. Even more serious than this is the fact that the figure which was laid down in the Second Programme of a growth rate of 4¼ per cent was not attained last year and on the estimates made for the coming year it will not be attained this year either. It is, therefore, obvious that if that situation continues—and there is no evidence to suggest that there will be any likely remarkable expansion in the years ahead—then the targets will not be realised or there will have to be a very substantial increase in growth in the latter years of the target.

I believe that the Government have a responsibility and a duty to review and re-examine the Second Programme. If it is not realisable or attainable in certain respects they should say so and get public support even for a less ambitious programme. There is no advantage in publishing a whole set of figures that are incapable of realisation in practice. One of the facts that has been adverted to in the NIEC Report is the difficulty of securing adequate capital. In this connection, I want to try to get some information from the Government other than that supplied in the course of a reply by the Minister for Finance in relation to the proposed US loan. I notice a new expression has now crept in to describe the situation. It is said that because of congestion in the finance market, the loan has to be postponed. In effect, what that means is that the total number of applicants exceeds the supply available. It is important that we should be informed adequately in advance. That is the problem that is affecting, and that will affect, the building industry today. They are not able to get sufficient information in advance. There has to be planning, arrangements have to be made, tenders have to be secured and the programme of work has to be ordered in a way that will enable the resources of the industry to be utilised to the best advantage.

[372] One of the very strong comments made in the course of the NIEC Report was that there was no order of priorities. I adverted to this on previous occasions in the course of debates here and it is adverted to at page 50, paragraph 71, of the Report, which says:

In particular, in the case of capital expenditure, a ranking of projects in order of national importance is necessary to ensure that the resources available for public and private investment, which are now scarce in relation to the demands being made upon them, are used to maximum advantage. Up to recently, such careful scrutiny of the relative return from different investment projects may not have seemed so vital because the problem was a shortage of productive projects and not a shortage of investment funds. However, the reverse is now the case: it is now resources and not projects which are relatively scarce. If the new opportunities for growth are to be exploited to the full while at the same time maintaining stability, a stricter examination of the relative benefits from the various possible projects is required. The investment projects must be ranked in order of priority based on a considered judgment of their benefits to the national economy, and an assessment must be made of the share of the total resources available for investment to be devoted to each project in order to maximise the total benefits.

That is a criticism of what has been happening up to the present. It is also a recommendation with regard to the necessary action in respect of the capital construction programme.

I want to advert to a point I made earlier and examine the Government policies in relation to the need to attract and the measures taken to attract capital to this country. It is quite noticeable that last year, completely independent of any action that we proposed, and at a time when the Government were operating their own policy, two measures, one in 1963 by the Minister's predecessor and another in the last Finance Act operated to deter capital from coming to this [373] country. This may very well, according to estimates that are given by those who are conversant with the banking system, mean that there will be a definite outflow of capital. There is no doubt that the proviso in the 1963 Finance Act, which obliged banks and banking institutions to disclose deposits in individual cases, has meant an outflow of capital. The theory behind that decision may have been reasonable enough but there does not seem to have been anything more than a theory behind it. The idea was that people had for a long time collected and placed on deposit sums of money which, if disclosed, would make available money hitherto not available for taxation purposes. That seems all right in theory, but, in fact, you have now to take account of the nature of those deposits. Many of them had lain there for a considerable period and, even if they were there, once a person took out a deposit and put it to any use which made it liable to tax, eventually the Revenue Commissioners would be entitled to find out where this money came from and secure tax from it.

I believe that what was equally serious was the proposal passed in face of our criticism in the last Finance Act, which aggregated insurance policies with other assets for death duties. That is bound to have a deterrent effect on capital inflow, not merely from a securement point of view but from the business point of view, from the farming point of view and, as I said earlier, from the point of view of attracting outside investment. Those are factors which have been adverted to by accountants and economists. The experience of anybody running a farm or a business at the present time is one of increasing need, because of rising costs, for more capital to ensure that a business may be continued without the necessity to mortgage portion of it, to sell portion of it or to enter into unduly onerous financial arrangements to maintain the existing rate of expansion. The proposal enshrined in the last Finance Act will mean for the first time that farmers and business people who took out, or who take out, insurance policies to provide against a heavy incidence [374] of death duties will find that it applies in many respects inequitably and unfairly. Although there is quick succession relief, nevertheless in most cases where death duties apply, it is not an easy problem to alleviate the consequences for the business or the firm. In those circumstances, it is important that any action that has been taken should be reversed and repealed in the coming Finance Bill.

I believe that those two proposals, the one introduced last year which has not yet had time to have an effect, and the other, are indicative of a wrong attitude and a wrong approach to the attraction of capital to this country. In recent years the Government have secured a much larger share of the increased capital which was available. In 1964, bank lendings to the public sector, which showed little change over previous years, increased by 27 per cent, compared with an increase of 12 per cent to the private sector. This is quite significant. In the December bulletin of the Irish Banking Review this was adverted to. It stated:

The capital programme of the Government is the section of total domestic demand which has shown by far the most rapid rate of acceleration.

It went on:

On the investment side, a ranking of projects in order of national importance is required because, at the present time, financial resources are the scarce factor rather than the number of sound investment opportunities available.

There was also this significant comment:

In the course of 1964, bank credit by way of bills, loans and advances increased at a significantly faster pace than the total of deposit and current accounts, the respective rates of growth being 13.9 per cent as against 8.8 per cent.

That re-emphasises the situation which is adverted to, and pinpoints the criticism which was expressed in this NIEC Report, that the action which is now being taken should have been taken earlier.

[375] The recent statement by the Irish Congress of Trade Unions was, I believe, made in a constructive attempt to adopt a reasonable approach to the problem of wages and salaries. I say this without offering any view on the figure suggested. Some figure had to be mentioned, of course, and certain types of employment, and certain categories of workers, might be entitled to more than others, depending on the type of work and the trading position of the business or industry concerned, and so on. It is vital in any arrangement or agreement that the special position of the lower-paid workers should be taken into consideration. There appears to be a generally accepted view that the country at present, in the light of a rise in unit costs, and a deterioration in our competitive position, with a shortage of capital and a general weakening of the economy, cannot afford more than about three per cent in total increase.

I believe that the recommendation which was endorsed by the unions represented by the Irish Congress of Trade Unions is, at any rate, an indication of an awareness of the problem and a constructive approach to the difficulties involved in it. It is unnecessary to emphasise the desirability of agreement being reached and the dangers consequent on a free-for-all. Negotiations between the Irish Congress of Trade Unions and the Federated Union of Employers, conducted by both sides in the realisation that failure to reach agreement must react to the detriment of the nation will surely provide the necessary incentives for the reasonable, practicable and constructive approach which is necessary in conducting these negotiations.

In the face of mounting problems such as a rise in the numbers unemployed, a slowing down in industrial output, a drop in building and construction, a weakening of our export competitiveness, brinkmanship in industrial relations is good neither for the individual nor for the community. What is needed now is an indication of what Government policy on wages is, and if wages are increased, whether employers and businesses be allowed [376] to increase prices to pay for those increased wages. I say this because I think some indication must be given in advance of what the consequence of wage and salary adjustments will be, and whether any such changes in cases where they are warranted—and not in cases where they are not warranted— will be entitled to be included in price changes.

The Minister also indicated that certain measures would be taken to meet the breach of the three per cent. I believe it is important that any such measures should be announced in advance if they are to be effective. Some positive indication should be given other than the phrases used in the Minister's speech. In that connection I want to say a word on profits. This, of course, was adverted to in the NIEC Report and reference was made to the fact that an incomes policy should be so designed as to avoid any disincentive effects and so inhibit the desirable growth of profits. It went on to refer to certain forms of taxation in the event of excessive profits or unreasonable profits being made.

I believe it is important to differentiate between reasonable profits and excessive or unreasonable profits. In any economy—and this is not confined to free democracies such as ours—there is a realisation nowadays that the profit motive is the only incentive which will secure adequate returns. I believe the Government have an inescapable responsibility to ensure that excessive profits are not earned, and that if unreasonable profits are earned, a strict examination is made to ensure that they are ploughed back or put to productive or other advantageous uses in the industry or project concerned. If the profits made are unreasonable, that naturally causes disquiet, and causes comparisons to be made between either wages and salaries on the one hand, or profits earned in industry, on the other.

These are two aspects of the matter which were adverted to in the NIEC Report and to which reference was made in a recommendation similar to the recommendation Fine Gael made in their policy document, that it was not the purpose of an incomes policy to [377] prevent profits from growing or to prevent wages or salaries from rising but to ensure that the control of profits is not desirable where they are earned competitively, and it refers to tax and other measures to ensure the rate of increase in aggregate post-tax purchasing power derived from investment is not higher than the rate of increase in aggregate post-tax wages, salaries and other incomes. This clearly contemplated a similar tax mechanism and tax arrangements to those laid down in our policy document and which have been restated in somewhat similar phraseology in the NIEC Report.

One very definite criticism that is being made in connection with the NIEC Report, and which I want to reemphasise, is the fact that this Council does not include representatives of agriculture. The excuse given in the past was that because they could not get agreement from the various agricultural organisations, it was decided not to put them on. In any event, there was some reference made by the Taoiseach that it was dealing only with industrial matters. That excuse can no longer hold. In fact on page 7 of the Report, this significant phrase is used:

An incomes policy that does not embrace all categories of money incomes, namely, wages and salaries, farmers' incomes, professional earnings, rents, profits and realised capital gains, is repudiated as inadequate and inequitable.

That is the recommendation of the NIEC on which there are Government representatives, representatives of the trade unions and of the employers and other business interests. The time has arrived when a fresh approach should be made to the agricultural organisations and in default of agreement, the Government should select representative nominees from these organisations and put them on the NIEC.

In that connection I want to advert to one other reference and to relate it to the argument which was made yesterday. It says on page 9, in paragraph 19 that:

Decisions about the current level [378] of support for agricultural incomes should be taken at the same time as—and recognised as an integral part of—decisions concerning non-agricultural incomes.

This week a series of questions was put down to the Minister for Agriculture about the revised prices which would operate for agricultural products in the coming year and the Minister declined to give an answer. Last night at some unspecified Fianna Fáil agricultural committee an announcement was made. I believe that shows scant regard for the Dáil and for the responsibilities of public representatives. I can accept and understand if the Dáil is not meeting where if a Minister is going to some established public function, that anything is better than a repetition of platitudes and if he is able to make an announcement then, there is something to be said for it, but where specific questions are put down by elected representatives and a Minister declines to answer, and then goes later that night to some Fianna Fáil gathering and announces decisions that affect the nation, it shows scant regard for and an undesirable attitude to the responsibilities of elected representatives and to the functions and duties which Deputies have.

This debate has been conducted in a most responsible and constructive fashion but the attitude adopted by the Minister for Agriculture in announcing that decision shows no regard for the function of the Dáil and no respect for the duties and responsibilities which Deputies are elected to discharge.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon Hear, hear.

Mr. Cosgrave: Information on Liam Cosgrave Zoom on Liam Cosgrave I believe that one of the factors in the present situation is that there has not been, up to the present, a sufficient sense of urgency in the remedies applied and the speed essential to deal with the various problems that affect the country. Nowhere is that more evident than in the Government. Ministers give the impression of having a lack of confidence and they appear to be overawed [379] by their incapacity to solve the problems of our time. The Government have not provided leadership and have not provided the direction. I am satisfied that the economy is essentially sound, that it has within it the resiliency necessary to surmount the present difficulties but there must be a clear indication of the targets that are realisable, definite decisions and decisions taken in time and then pursued with the resolution and vigour essential in order to see that they are implemented.

The present situation has largely arisen because of undue optimism and the creation of an attitude and the development of a mentality by Government speeches and general propaganda that we were on the high road to prosperity and there was no need to plan adequately, plan carefully, plan in the light of realisable attainments and defined targets, and on the basis of the availability of adequate financial resources for the work to be done and the various projects to be carried into effect. If this country gets effective, efficient government and fair leadership, we can surmount the difficulties but the responsibility cannot be transferred either to the Congress of Trade Unions or the Federated Union of Employers. The prime responsibility for leadership, for decisions, for action, lies on the Government.

Deputies: Hear, hear.

Mr. Cosgrave: Information on Liam Cosgrave Zoom on Liam Cosgrave This debate has shown that there is immense goodwill. In fact, I believe it is true to say that in no place in Europe or outside has there been such a constructive and co-operative national approach as this Party and Parliament have shown in dealing with the problems which affect the country. We expect some measure of co-operation, some leadership and some action from the Government in dealing with these problems.

Deputies: Hear, hear.

Mr. P.J. Lenihan: Information on Patrick J. Lenihan Zoom on Patrick J. Lenihan We have here a first-class Report. It is a cold, objective, [380] hard look at the economy. A lot of Deputies have shied away——

Mr. Coogan: Information on Fintan Coogan Zoom on Fintan Coogan Very cold.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon You can say that again, brother.

Mr. P.J. Lenihan: Information on Patrick J. Lenihan Zoom on Patrick J. Lenihan They have been very vocal about 1922, 1932 and 1942 and they blame the Government largely for their failure to appreciate that a crisis exists. I should like Deputies to take a hard look at this objective Report, at paragraph 10 on page 15 and also at paragraphs 14, 15, 16, 17 and 18. Paragraph 10 says:

In the first quarter of 1965, there were indications that the volume of fixed capital formation may have been about 10 per cent greater than in the first quarter, 1964——

Ten per cent greater——

and that the volume of building and construction work done may have been more than 10 per cent higher.

The same held for the second quarter of 1965. Does that show a lack of growth in the economy? I need not quote the other paragraphs to which I have referred. They demonstrate the external factors which affected our economy and the crisis came about for the reasons given in that Report. They set out three principles for dealing with this situation, set out on page 15.

First, there is an incomes policy. What does an incomes policy mean? It is very easy to speak about it but a lot of hard work has to be done before we can properly arrive at it. We must first have a speedier and better collection of statistics and a better appreciation of their significance. We must have an adult and sophisticated approach to the whole problem. We must sit around the table like rational men with one thing in mind: that the objective of any incomes policy is to maintain a healthy national economy. The increased national cake can then be divided when a clear-eyed assessment has been made of the growth in the cake. Better still, if prices hold, if the national cake increases and the cost of living is held, you can have a real share-out of the [381] cake, which will mean an increase in real incomes. That is the heart of the matter.

As this Report points out, other problems remain. There is this question of the differentials between professional and vocational classes and labour. The working out of an incomes policy should not be confined purely to thinking of wages and workers. The Labour Party dwelt completely on that. It is likely, even if you have a growth in the national economy, that some industries will earn more than the national average and will pay more wages. On the other hand, less efficient industries will probably be able to pay only less. That is a natural thing. It will result in an effective and efficient economy here.

Deputy Tully put up some cockshots of his own making. No one wants to prevent collective bargaining or strikes, but we should seek to avoid them by creating devices and procedures to prevent their happening. Above all, a prerequisite of an incomes policy is good industrial relations. This does not meant you abolish the right of free collective bargaining, but it does mean you must take, in addition, a patriotic approach, knowing we are all in the same boat in this country. A lot has been done in this way by many industries. You have consultations on the shop floor between foreman and shop steward and consultation in the works council between management and workers. That consultation is not all one way. Ideas come down from management to workers and go from workers to management. All this is only creating the climate in which an incomes policy can succeed.

There is no use telling us Fine Gael thought of an incomes policy or the Labour Party thought of it. It is inherent in the 1916 Proclamation and in the social policy of the Republic of 1919. It is inherent in ourselves. It is part of our Christian and democratic tradition. This is not to minimise the difficulties. The principles are set out here for effective action to prevent aggregate demand from rising excessively. This is the exercise the Government [382] are at present engaged in. It is a very necessary exercise and they are doing it.

The third principle, concerning banking policy, is set out in paragraph 7 on page 14:

If the Central Bank's advice to the commercial banks regarding the growth of total bank lending had been strictly complied with and had taken immediate effect, loans and advances to the private sector and/or lending to the Government would have been reduced.

You have the heart of the matter there. It says “if the Central Bank's advice had been taken,” but I would prefer to substitute the word “direction” for “advice”. If you have good planning priority, you then have direction and not advice which can be ignored. That is the hub of the increase in the demand.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon Who did the borrowing?

Mr. P.J. Lenihan: Information on Patrick J. Lenihan Zoom on Patrick J. Lenihan The Government themselves borrowed for their capital programme. If they did not, there would be some other remarks.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon Did the Central Bank direct the Government?

Mr. P.J. Lenihan: Information on Patrick J. Lenihan Zoom on Patrick J. Lenihan I think the Central Bank got their directives from the Government.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon We are round and round the mulberry bush so.

Mr. P.J. Lenihan: Information on Patrick J. Lenihan Zoom on Patrick J. Lenihan During the debate on the Free Trade Area Agreement, the Deputy, in his inimitable way, envisaged Castlereagh coming through this House. The other day I decried Napper Tandy coming through this House. He shook hand with Deputy L'Estrange, said it was a most distressful country and took his seat in the Fine Gael back benches. I wholly commend what Deputy Cosgrave has said. We are working together. Let us hear less criticism of what happened in 1922 and 1932 and more about what is going to happen in 1966.

Mr. Barrett: As Deputy Cosgrave indicated in his remarks, the Minister [383] can be assured he will receive in this House the greatest assistance from the Opposition Parties in the present dilemma in which he and the country find themselves. That does not absolve members of the Opposition from the duty of examining the root causes of the difficulties we are now in, with a view to ensuring they will not occur again. Any examination of these root causes leads to the inevitable indictment of the Government for their failure to face the facts of a situation which developed long before the general election in April last.

During the last general election, the people were actively encouraged by the Minister, by his colleagues in the Cabinet and by the Leader of the Government, to believe they were living affluently and that they were beholden to the Government for that affluent life. We know now, as we knew then—and as the Minister knew then— that the people were not living affluently but were living dangerously beyond their means. Far from being cautioned, as they are now being cautioned by the Minister and those who sit with him, that this was a dangerous thing to do, they were encouraged to do so. They were encouraged to believe that this state of affairs would continue if the country opted for Fianna Fáil as the Government in the general election.

Now we find the Minister coming in here and saying something we on this side of the House have been saying for a long time. I have been in this House 12 years and certainly at least twice a year, I have said in relation to expenditure on main roads and such things that we should realise we cannot get what is desirable but what is possible. The Minister used that phrase on Tuesday. In my memory it is the first time I have heard that expression used in regard to the national economy by a member of the Government Front Bench. It gives me hope that what we are going through at the moment will teach the Government the lessons necessary for the institution of government by the Fianna Fáil Party.

The Minister tells us the Government will cover consumption expenditure by encouraging savings. I [384] rejoice to hear that. Up to the last general election the only encouragement savings got were an advertisement on the back of the Telephone Directory, a few advertisements in the newspapers and maybe a flash on the television screen. There was never a word of caution to the voters, to the mothers and fathers of families, to anybody who had hold of domestic or industrial purse strings. I am glad to hear that the Minister now suggests that savings will actively be encouraged by the Government.

The Minister also tells us that they will influence consumption expenditure by favouring a credit policy which will give priority to productive proposals. We welcome that, I should like to know what the Minister means by “productive proposals”. One of the big tragedies of the present troubles is that the Government refuse consistently to regard housing as a productive proposal. I know of no more productive proposal. All the materials which go into a house are produced in Ireland; all the labour which goes into the building of a house is produced in Ireland. I know of no greater wealth that the country could possess than happy, clean, hygienic homes where children can be brought up in a proper Christian attitude.

As the Minister is talking about credit policies, I may say I regret very much the situation in which our credit policies vacillate from year to year. You can go, in April, and get credit for a second car or for a month in Majorca, if you are in that particular social bracket, or you can get credit for a fortnight in the Isle of Man or for going to the club three times a week or to the pub for a hooley three times a week, depending on your social outlook. But, in March, May and June, after an election, you cannot get credit for important things like building a house or any of these matters, no matter what the security. I suggest to the Minister quite sincerely that when all this is over, when this crisis has passed, as I hope it will pass, we should not go back to the old system of that sort of unrestricted credit, whether by way of bank advance or hire purchase. If a man goes [385] to buy a second car by hire purchase, there should be something to make him prove it is a necessity and not a luxury because if people want to invest in luxuries, they should invest in them from savings and not from credit.

The Minister also indicates that he intends to control public expenditure. We are back again then to what the Minister said in his speech, that we must decide what is possible rather than what is desirable. When I was coming up through my constituency, and the counties between Cork and Dublin, on almost every few miles of the road I saw what I looked upon as unnecessary expenditure on main roads. I do not know what has been spent over the years on these roads: they are unnecessary; they are desirable but they are not by any means necessary. Therefore, they are in the bracket of being desirable and in these circumstances I think this expenditure should, in so far as is possible, be arrested even at this stage.

As Deputy Cosgrave indicated in his speech, we are most anxious to accord every assistance to the Government. We do not want to rock the boat at a time when it has a perilous list such as it now has. Irrespective of Party or class, when we realise we must assist the Government of the day, provided the Government show the proper dispositions, I believe we can overcome this crisis. Somebody referred to this particular position in which we find ourselves at the moment as an “emergency” and somebody else referred to it as a “near crisis”. The country generally refers to it and thinks of it in terms of a crisis. I think it is important that the Government should realise that to investigate the present situation as a purely Government problem is to localise a dilemma which is national. It may be solved only by each individual playing his or her part in the national life over the coming months. The Government should not blame the trade unions, the employers, the Opposition or anybody else. In the first place, they should squarely admit that the Government themselves allowed this situation to develop, at least to some degree, by their failure, by their fear in fact, to [386] arrest the trends they actively encouraged up to 7th April of last year.

This prompts a suggestion at which I think Deputy Cosgrave hinted. I think he said that the composition of the Government was such that they were unable to deal with the problems which now beset them. The thought is not that of Deputy Cosgrave alone. There is a feeling throughout the country that the constitution of the present Government is such that it is not able to serve the people as it should. The Taoiseach told us during the last general election campaign that he was not as young as he used to be and that probably he would never lead another Government; in other words, that he was getting old. The feeling down the country is that a man in such a position needs the very best advice and assistance he can get and that the people who would give that advice should have the best qualities available.

I say this in an absolutely impersonal way, irrespective of how dedicated or how hardworking the Ministers whom the Taoiseach has gathered around him may be. I should like to pay tribute to the heartbreaking work which many of them have tried to accomplish over the past few months. The Taoiseach should stand back and take a square look at his Cabinet and decide whether it is one by which he can best be served or whether he should look elsewhere for assistance when he goes into a Cabinet meeting. Having done that, he should put his mind and conscience to what is required in the present difficult situation.

It is said, time and time again, that no man is an island, that no man can isolate himself and feel he is quite independent of his fellow men. I have advocated, time and again, on the Estimate for the Department of Education, that young people in our schools should be taught exactly that. I think the dilemma in which we find ourselves at the moment springs, certainly in some degree, from a lack of education in matters such as the inevitable nature of the laws of economics and our appreciation of Christian social principles. Every child [387] should be taught that if he or she, whether worker or employer, tries to take all the cake for himself or herself, the country cannot exist. I think that, had previous generations been so educated, much of the difficulty the Government must now be experiencing would have been avoided.

I do not know if there is anything that can be done to make up for the lack of that education in respect of present generations. It might be possible, by way of advertisement, television, radio or something of that nature, for the Government to get across to the country the need for an unselfish approach to this problem. I am not suggesting that it should go out by way of Government propaganda but possibly some statement, agreed by the Leaders of the three Parties, could be turned into advertisement form and used to bring home to the people the necessity for an unselfish approach to the present problem.

It is all very well for us to talk here in this House. If, in the unique event of our talking commonsense every time we stood up here in the Dáil, even then, by the time the words had been taken down, sub-edited and put into a newspaper they would naturally be truncated and, truncated as they are, the fact is that the majority of the people do not read the reports of proceedings in Dáil Éireann. If some approach could be made to the people to induce them on an occasion like this to deal with their fellowmen in the most unselfish way possible, if it were pointed out to the worker that maybe he cannot have his extra slice of cake, and to the employer that maybe he cannot have his extra portion of roast duckling at the moment, possibly something might come of it.

I share the views expressed by Deputy Cosgrave that, essentially, we have a sound economy. Maybe it would be better to say we have the remains of a sound economy but Marshall Foch one time said that battles are won by remainders. If we could hold on to the remains we have, if each man and woman in this country did his or her part, we could [388] overcome our difficulties. On the other hand, if sectional interests only are looked after by each section, the remains we have will be interred indecently and greedily, first because of the inefficiency of the Government in their approach to the situation before the last general election but, above all, because each man and each woman in this country—by his or her sectional approach to this problem— failed to assist the country in coming to a realisation that we could rescue the remains of our economy.

Mr. Andrews: Information on David Andrews Zoom on David Andrews It is not my intention to look back and criticise what has or has not been done. I think the House will generally agree that the progress envisaged in the Second Programme for Economic Expansion, at this time, has been considerably curtailed by what may be described as an international credit crisis, together with the introduction of the British levy. This levy, in my view, was a tremendous blow to our continued economic development and this fact, I think, is accepted by all.

I come to what I consider to be the kernel of my brief contribution, and developing what I have already said as self-evident truth. In this NIEC Report there is a great emphasis placed on the Buy Irish campaign. I would suggest, as an addendum to the Buy Irish campaign, we should introduce the slogan—Sell Irish. We have a duty to sell abroad as well as on the home market, and I refer particularly to Table 1 of the Report in this context. I would suggest that, to rectify in some small way our present economic difficulties, a complete examination of the work of Córas Tráchtála Teo. would be a worth-while exercise. Are they really fulfilling the required functions in relation to selling Irish abroad? If we examine the figures published in Table 1 from 1960 to 1965 and compare imports with our exports, it has been stated that we are maintaining our export capacity. I do not altogether agree with this proposition. I compare the value of money in 1960 with that in 1965 and relate the import figure. which is practically double, to that of the export figure, which is still three-quarters [389] short of doubling itself. I wonder how Table 1 would look if it were assessed on a tonnage basis rather than on sterling?

Córas Tráchtála being a semi-State project and, keeping in mind that the Report states:

We should programme our capital projects in a better planned manner to obtain the most up-to-date and most essential use of our various projects.

I pose the following questions:

(1) Is Córas Tráchtála and its functions as a selling organisation really working at full capacity?

(2) Does it not, in fact, gain its main contacts from our Embassies abroad?

(3) Has not Aer Lingus shown itself worthy in the extension of its services to be helping to promote tourism?

(4) Could we in some way correlate the progressive sales abroad of Aer Lingus with those of Córas Tráchtála in an effort to promote greater trade contacts?

To develop question (4) a little further—businessmen, as we know, use Aer Lingus extensively, both national and international businessmen—could we not during these flights, amongst other things, give them some sort of indoctrination as to the merits of investing in Ireland and, indeed, the methods of buying Irish. These are personal views, as set out in these questions. At some later date, I hope to make some small contribution on how our Embassies, Bord Fáilte, Córas Tráchtála and Aer Lingus could, in some way, co-ordinate for the greater development of our export sales drive. Is it, for example, a fact that we can afford separate offices for Córas Tráchtála, Aer Lingus, Bord Fáilte and our Embassies in the United States and other countries? However, these are random thoughts which I hope to develop at a later date.

It was astonishing to note the figures published dealing with savings. It is evident that withdrawls had to be made to meet the increasing prices. I know the corrective measures of the Minister for Industry and Commerce for a standstill in prices will have the [390] desired effect. I believe if the younger people in employment took the time to look at Table 14 and see the cost per unit of output, it would urge them to take a keener interest in their various jobs and make more effort to increase output, and, consequently, productivity.

I think management could be more flexible in its approach to employees. The young people today are more independent and, in a lot of ways, clearer in their minds on the various issues which come before them from time to time. I believe if employers came to their employees and said—“Well, here is the audited statement of our accounts; we are doing all we can to promote exports; this is our deficiency for this year; we must come together and rectify this position in the coming year”—a proper answer would not be long forthcoming. I believe if we had more trust in one another, both management and employees, it would accomplish a lot. This is a time, as has already been expressed by other people in this House, for co-operation. One side blaming the other and one side criticising the other achieves nothing. As someone stated recently in relation to the co-operative movement, co-operation is not merely business, it is a social policy. I believe this concept should be extended to deal with the present situation on the industrial relations front.

The Taoiseach put it very well yesterday—if I may presume to give an opinion on it—when he said that it was not impossible to visualise the Government, trade unions and employers sitting around a table to work out what it is feasible to attempt in the matter of wage increases this year. He went on to say that this matter should be capable of being decided in a reasonable—I emphasise “reasonable”; this is a great time for reason— and objective way by reasonable men by reference to known factors and sensible expectations. This excellent suggestion should be seriously considered by all the political Parties and accepted and, of course, implemented. I had intended calling for an all-Party committee on the problem but [391] the Taoiseach's idea—again, if I may be presumptuous—is a first-class one and I defer to it.

In reference to an incomes policy, the Report states that the start should be directed to the self-employed or professional people. Records of all transactions should be inspected. Let me say on this aspect of the Report that the seventh report of the Commission on Income Tax should be adopted as a matter of urgency. Also, if I may modestly say so, I am a professional man and I am prepared, and always have been, to subordinate my own welfare to that of my country and I attach great importance to the concept of a more efficient and greater Ireland. The present situation requires prompt action. I believe this action can only be achieved by co-operation. Co-operation is the key. There are injustices on all sides. Could we not come to recognise these wrongs in a rational way and solve them together in the spirit of patriotism rather than in a spirit of regionalism or in a spirit of sectionalism?

Mr. Ryan: Information on Richie Ryan Zoom on Richie Ryan We have been properly reminded in the course of this debate of the number of criticisms uttered by the Taoiseach and his minions during the general election campaign last year in which they condemned Fine Gael for proposing a prices and incomes policy and asked the people to support Fianna Fáil because they would not introduce such a policy, nor would they engage in any credit policies such as Fine Gael were suggesting. In the course of that campaign we were also told something else which it is correct to recall on this occasion. We were promised by the Taoiseach that he would retire before the next general election and it seems to me that if he has any regard for truth or for the views which he expressed in February and March of last year, now is the time for him to retire. The policies on which he sought support and got it have now been found by him and his colleagues and the nation to be unsuited to our needs. The policies which he condemned, the policies at which he jeered and which he said he did not [392] understand, are now the policies which the NIEC and the Government Party are accepting. These are the policies which we in Fine Gael brought to the electorate at the last general election. Therefore I would expect that at a time such as this when there is a complete reversal of economic and financial policies on the part of the Government as presented for the most socially and economically-minded election we ever had, the Taoiseach would take this opportunity of retiring and indicating that the policies in which he believed had failed and leave it to somebody else to replace them.

The words he used—I am speaking of the present Taoiseach—in relation to an incomes and prices policy were that it was “a vague idea”, “a slick phrase” and “an impractical idea”. This is what Deputy Seán Lemass, who spoke here yesterday as our Taoiseach, said to the people earlier this year. I cannot understand how he can feel comfortable in remaining in office except of course that he is following the best traditions of the leadership of Fianna Fáil, that is, to satisfy his own personal vanity first and the nation's needs afterwards. At the time of that election campaign, we had the most vulgar example of personal vanity ever uttered by a public man when the Taoiseach said that his own personal wish above all others would be to be Taoiseach of a Fianna Fáil Government on the occasion of the celebration of the Golden Jubilee of 1916. It strikes me that that is the only reason he is remaining in office because at heart he must be an extremely sick man and his mind must be very much disturbed, seeing that all he propounded for the past seven or eight years and all that he went to the country on early last year has been rejected and has been found by everybody to have failed. I therefore call upon the Taoiseach, if he is a man at all and if he wishes to be remembered with real respect by the Irish people, to quit office now and make way for a leader whom the Irish people can trust.

There are certain qualities essential to leadership of this country if the [393] difficulties we are now going through are to be overcome. The first of these qualities is truthfulness and coupled with truthfulness, a capacity to understand the needs of our time, not when compelled to do so when an emergency makes one sit up but long in advance of the emergency, so as to prevent it. It is quite clear that the present Leader of the Government cannot have both these qualities. He either failed to understand the difficulties of the country over the past few years or, understanding them, was not truthful with the nation about them. It is quite clear from the NIEC Report and from what we in Fine Gael have been saying, year in year out, to the point of boredom for ourselves and the nation, that these difficulties have grown like a malignant growth. They could have been cut down, and prevented from spreading but instead the Government were not truthful with the people and were not determined to prevent the growth of this cancer. The result is that if we are not bankrupt, our creditors are considerably worried about our capacity to pay and that is the step before bankruptcy. It is not foolish talk to say that; it is stating the facts of economic life.

It also strikes me that we need in the leadership of this country an indifference to personal popularity. Quite clearly a man whose principal preoccupation is an ambition to satisfy his personal desire to be in office during the Golden Jubilee of 1916, to stand on platforms and be the guest of honour on all occasions in the celebration of that Golden Jubilee, is a person not indifferent to personal popularity. Clearly then, the present Taoiseach is unfitted to lead this country at present. As I said earlier, a capacity to understand the problems that face us, to anticipate difficulties and avoid them by that anticipation is essential to leadership in the crises which we are going through now and which will become worse during this year. Clearly, all the indications are that the Taoiseach and the Government he leads have not got that capacity. It is clear also that we need a man of courage. How can we say that the Taoiseach or his minions have [394] courage when they have avoided for many years the necessarily unpopular steps which had to be taken to keep the economy right or to get it on to the right tracks again?

In the course of my few brief remarks, I will indicate where the Taoiseach and his Government were lacking in courage and, above all, in leadership. At a time like this we need a man who can be trusted. How, in heaven's name, can this nation or anybody with whom we do business trust a man who for years has argued that you cannot have price control, who for years has said that it is impossible to visualise a prices and incomes policy, who for years has asserted that it is impossible to have proper credit policies, and who in time of grave crisis says that all these things are acceptable and are the solutions to our difficulties?

I think that one needs a man with qualities of truthfulness and determination, indifference to personal popularity, capacity to appreciate difficulties and thus avoid them. We need a man with courage, a person who can be trusted. The Taoiseach has promised us that he will retire before the next election. It seems to me, as I said earlier, that now is the time for him to do it, but even if he does not do it now, he is going to do it before the next election. Quite clearly, there is nobody in his Party who can in one person combine all these qualities but on this side of the House we have a man by the name of Cosgrave whose name is synonymous with all these qualities, who in times more difficult than these, financially, politically, socially——

An Ceann Comhairle: Information on Patrick Hogan Zoom on Patrick Hogan I do not want to interrupt the Deputy but he seems to me to be endeavouring to assess the various qualities of personalities instead of dealing with the motion before the House.

Mr. Ryan: Information on Richie Ryan Zoom on Richie Ryan The relationship between the arguments. I am advancing and the motion before the House is that the Government's actions in relation to the economic, social and fiscal welfare of this nation have been [395] governed by the lack of qualities in the Taoiseach but I am coming to the end of this line.

An Ceann Comhairle: Information on Patrick Hogan Zoom on Patrick Hogan I hope so, because my patience is coming to an end also.

Mr. Ryan: Information on Richie Ryan Zoom on Richie Ryan I do not blame you, Sir. The whole nation is grossly impatient with the irresponsible Government we have.

An Ceann Comhairle: Information on Patrick Hogan Zoom on Patrick Hogan I am impatient of the Deputy's failure to speak to the motion before the House.

Mr. Ryan: Information on Richie Ryan Zoom on Richie Ryan A leader who has always believed in and who has asserted these policies long before the wiseacres thought is wise to propound them and who has the qualities of which I speak is a man like Cosgrave and the sooner the Taoiseach makes way for him the better.

A considerable part of the debate today and throughout the past year has been devoted to the question of credit policies and, in the best MacEntee style, in the course of the last general election campaign, the Taoiseach in particular, and to a lesser extent Deputy MacEntee and other members of the Fiannn Fáil Party, attacked the Fine Gael policy for a just society by saying that the ideas which Fine Gael had would restrict credit and would create hardship. The facts are, as indicated in the NIEC Report and as asserted by Fine Gael, that wise credit policies prevent a situation developing such as we now have, in which essential national priorities have to be postponed because of our inability to meet ordinary current commitments. We in Fine Gael asserted, before the publication of the NIEC Report, that there should be a determination of the priorities to be given to various forms of investment and various social policies.

The NIEC Report, on page 9, says that there should be a ranking of projects in order of national importance. We endorse that. We are sorry that the Government opposed us when we put this to the nation earlier this year.

[396] One would hope that in future we will have a proper assessment of national priorities and that we will ensure that our credit policies are such that these national priorities get first attention.

I would direct your attention, Sir, and that of the House to page 75 of the NIEC Report where, on Table 16 (b), we have figures for the gross domestic physical capital formation at 1958 prices between 1958 and 1964. I am sorry that the figures do not go back just to 1956 but we will get those figures in the near future based on the 1958 prices. This Table is most interesting in this regard, that while prices of dwellings have more than doubled between 1958 and 1963, the gross domestic capital formation has not doubled or anything like it. There is a rise of from £10.4 million to £17 million. That is not sufficient even to maintain the deplorably low quantity of private dwellings which were being built in 1958, which was a particularly bad year for the building of private dwellings, so that, in real prices, over the period we invested less in the provision of necessary housing for our people.

At the same time as we did that we increased the spending of money on other building and construction, that is, on the construction of edifices other than private dwellings, from £28.3 million to £48 million. We are able to spend an additional £20 million on the building of offices and factories, some of which have not yet paid or are incapable of paying the capital cost and we have spent it on the building of hotels and various forms of luxury erections. It seems to me that this indicates a failure to assess national priorities and, having assessed them, to see to it that the credit policies of the country were so used as to ensure that money would be available for what should be our national priority, that is, the provision of dwellings.

I was sorry to see that one of our national journals in a directive which it gave early this week to Members of this House as to the topics upon which they should discourse during this debate, said that we should not discuss the question of house building. I find [397] that unacceptable and I will continue to find it unacceptable as long as there are, as there are in this case, 100,000 families in unfit dwellings.

If there were financial difficulties in 1956, one of the principal reasons for them was the fact that the then Government were investing one-third of the gross national annual investment in the provision of housing for our people but we accepted that burden, whatever the consequences might be. We accepted that as a national priority deserving attention before all other forms of building. Now we are in serious financial difficulties for a multitude of reasons, one of which is not the provision of housing for our people. If we are to have a proper assessment in the future of our credit policies, we must first of all have priority given to the provision of houses for our people. We in Fine Gael will say this even if it bores people and even if certain people in the national press tell us that we ought to shut up about it.

Figures published annually in relation to house building and so forth are grossly inadequate to enable any reasonable assessment to be made of the capital required for house building. They are also inadequate in that no indication is given as to how the capital is provided for houses in the private sector which, taking one period with another, probably represent half or more, of the houses being built.

In the replies to a series of questions which I addressed to the Taoiseach, the Minister for Finance and the Minister for Local Government earlier this week, we found that there are no figures available to indicate the amount of money made available by our commercial banks for the building of houses. We also found that there are no figures available to indicate the capital made available by building societies for the provision of dwellings, as distinct from other mortgages and loans. We also found there are no figures available to indicate the amount of money supplied by insurance companies for the building of private houses. There is a clear need here to have a detailed investigation so that [398] we shall not continue to have this abominable sequence of slumps and booms in building. This ought to be given some serious attention by the Government and by the various money agencies so that, once and for all, we will have a proper assessment made of the various agencies which can supply money for building; knowing what these agencies are and knowing what they have done in the past, steps can then be taken to ensure a steady flow in accordance with our national needs instead of having the present unknown, unascertained and unsatisfactory situation.

A great deal of our trouble has been caused by the reckless optimism of the Government and of the various people, including the banks, who were misled by the Government. In recent years, from a purely book-keeping point of view, our accounts were kept somewhat in balance by some unusual and non-recurring forms of foreign capital investment. As a result of these unusual and non-repeating capital flows, our banking system, encouraged by the Government, made many widely scattered, foolish and irresponsible loans. For a long time it was not a question of whether or not you wanted a loan; it was simply a question of being given encouragement by the bank manager to take on loan commitments, loan commitments which the individual might never have had in mind at all. Many bank customers, not seeking loans, were invited to take loans and were encouraged in every conceivable way to expand their liabilities. This was done, not on the basis of a better economy but on the basis of a few unusual and, as I say, non-repeating forms of substantial capital investment.

Now that these foreign flows are no longer repeating, we have the crudest and most irresponsible credit sqeeze ever inflicted upon our people and particularly upon our business community. There has been an utterly stupid and irresponsible clamp-down on credit. This has had very serious consequences for business. I believe we are only beginning to feel the pain. I believe that the pain will intensify and grow very much worse. The evidence of this will be found at page 57 [399] of the NIEC Report which shows that, as between the end of 1964 and 1965, bank deposits increased substantially. In 1964 there was £6,147,000 on deposit and private account with the commercial banks. At the end of 1965 that sum had increased to £7,851,000. There was an increase of £1,700,000 in the banks. Yet people were in dire need of credit in order to meet current commitments and in order to pay for stock ordered by them in the days of unlimited loans.

Having been encouraged to expand business, increase stock and make purchases, they were unable to get the money from the banks to pay for these and the consequences so far have been that many stores and shops, wholesalers and retailers, have been obliged to sell stock purchased by them in the days of unlimited credit at substantially below cost and they are now unable to maintain the staffs they took on in order to sell the increased goods they were encouraged to handle. The consequences of this are to be found in our unemployment figures, which show an increase of 8,000 in a few months, and the indications are that the figures will worsen. If it were otherwise, I am sure we would have received a specific assurance from the Taoiseach and the Minister for Finance in the course of the debate that the credit squeeze was going to be relaxed.

It is clear there are a number of forms of borrowing which should not be encouraged. On the other hand, there are forms of investment for productive purposes and desirable national purposes which should be encouraged. For the purpose of providing incentives or disincentives for the varying kinds of credit, serious consideration ought to be given to the provision of money at varied interest rates. Again, money ought to be made available at varying interest rates in accordance with the location of investment. One appreciates this would require a very sophisticated and, perhaps, difficult to administer system, but, if good will come of it, as we believe it will, it is something certainly worth striving for.

[400] Previous experience has shown that, where you have a credit squeeze, you may get your books right, but the squeeze will inevitably lead to a decline in production because production will respond to the lesser demand. This has been a consequence of the present Government credit squeeze. There has been a fall in productivity and this is likely to worsen unless the credit squeeze is relaxed. In the first quarter of 1965, there was a reduction in the volume of food produced by the industrial sector. In the second half of the year, there was a reduction in textiles, clothing and footwear. These figures bring us to the June quarter only of last year, but, from the figures available to us in other journals, it appears that this trend has been worsening pro rata with the worsening of the credit squeeze. Even the Taoiseach was obliged to accept that the position was worsening when he spoke of the significant rise in unemployment. I believe that he spoke of this more to frighten the workers than as an admission of his own failure. But there is a significant rise and that is likely to continue so long as the unselective credit squeeze continues to apply.

The building industry is tottering on the brink of disaster. Yet we are assured here and, through us, the people as a whole, by the Minister for Local Government that he is not aware of this parlous situation. He has not been aware for the last year that there were any difficulties in the provision of credit for private houses and, now when the building industry has in public sounded its concern, and the building industry has directly to the Minister and his Department expressed its concern, the Minister says he is not aware there is any difficulty at all and figures can be produced to show how right he is and how wrong the builders are, how wrong the unemployed builders' labourers are, to show that if they think they are not working, he knows to the contrary, that they really are, that if they think they have no money in their pockets at the end of the week, no weekly wage packet, they are wrong because he can produce figures to show otherwise and that if [401] builders have debtors summonses served upon them and if building firms have gone or are about to go into liquidation, as one would believe the position to be from looking at Iris Oifigiúil and other such documents, all the people are wrong and the Minister for Local Government knows otherwise.

It is quite possible that the Government are convinced otherwise. It is quite possible that they have the same source of information as they have had for the past six or seven years, but the position is that the people in business, the people in building, know to the contrary, and these are the people who have as much right to complain as anybody else. The person who eats the meal or goes without it knows as much about the consequences of what goes on in the kitchen as does the chef or the scullery maid.

We find on page 60 of the NIEC Report, Table VI, another most disheartening development, a development again which the Government have been denying in this House, that in a short period of two years, between 1963 and 1965, emigration has doubled, and from the trends of the past two or three months, all the indications are that it has quadrupled the figure for 1963. We shall probably have to wait for the various figures produced before the Budget to realise the serious nature of the growth in unemployment and in emigration.

The failure of the Government to control prices over the past eight or nine years is reflected in the high costs of production. The fact is that workers here—by “workers”, I mean every person who earns a living—and their families have a lower standard of living than is available on the other side of the Irish Sea. Notwithstanding the fact that our wage rates here, according to the NIEC Report, are higher, nominally speaking, than in Britain—I think it is necessary to emphasise that these figures for wage rates speak only of the nominal wages given at the end of any week—the real value of wages here is considerably less, because they will not purchase the same quantity of goods. Bread [402] and butter, the staple diet of our people—or what is alleged to be the staple diet of our people, because for many of our people it is bread and margarine—are dearer here than they are in Britain, and we subsidise butter in order to make it cheaper for the British people. The principal diet of working families—these commodities represent some 80 or 90 per cent of their diet—are dearer here. There are many other commodities which are cheaper on the other side of the Irish Sea but, in addition, there are other factors which we must take into account.

Parents here must pay for secondary education. On the other side of the Irish Sea it is free. The majority of our people, certainly in Dublin city and county, whatever about some better-provided-for areas in the West, must pay for medical services. In England milk is provided free for children. Here it has to be paid for. The principal commodities in the diet of families here, bread, butter and milk, are dearer, and these and other commodities must be taken into account before any attack is made on people who are seeking an increase in wages. The fact is that wages here, while nominally higher, are purchasing very much less than wages across the water.

On page 71 of this Report, we are given indices of output and earnings per hour, and of unit wage costs in manufacturing industry, and one finds that the cost per unit of output since 1963, and perhaps earlier for all we know—the figures are not given—are higher here than they are in Britain, but this is not and should not be taken to be a reflection on workers. It should not be and must not be taken to be a criticism of people here for seeking to be paid too much. What it must be taken as representing is clear proof of the Government's abysmal failure to control prices and profits.

The sole attacks to date, and one suspects in the future, by the Fianna Fáil Party are apparently against wage earners and salary earners. The element of profit in prices, the element of income in profits, has been ignored [403] to date except by Fine Gael, by the NIEC Report and by the Labour Party, who have been emphasising these fundamental facts of economic and financial life. Rather than this abuse of working people for seeking an improvement in wages, we should have an appreciation by the Government of their responsibility to provide a decent standard of living. If the Government fail to control prices and enable a decent standard of living to be achieved with a lower wage rate, then workers are justified in seeking higher wages and salaries. One appreciates that the consequences of that to the economy are not damaging but the primary responsibility goes back to the Government. Their duty must be to control prices and such things first.

There has been, as the NIEC Report points out, a substantial falling off in the net capital inflow to this country. Apart from the fact, which I emphasised earlier, that a substantial part of foreign capital investment in this country was of a non-recurring nature, we must also attribute the falling off in the net capital inflow to the disastrous folly of the Fianna Fáil Finance Act which sent millions of pounds which lay on deposit here out of the country.

In taxation, two factors must be balanced against each other. One is the desirability of having the tax borne according to the capacity of people to pay. The second factor we must bear in mind is the consequences if, in enforcing the first one, we damage the economy by sending money out of the country or by discouraging people from investing in the country. That happened as a result of the 1963 Act, and the 1965 Act adjusted the figures in accordance with changes in money values.

This is the type of stupidity we have had in the Control of Manufactures Acts which prevented this country from having the benefits of an inflow of money from abroad for almost 30 years. It is no use our being cloistered here, working out beautiful theories, if we fail to put these theories into practice and to apply them. That is what has got us into the difficult position we now face. When one makes a [404] detailed examination of our imports, one finds several commodities the import of which has increased out of all proportion to the benefits flowing therefrom to the community. It strikes me as undesirable that a Government should hesitate to control imports of a luxury nature; yet that is what has been happening. Rather than wait for crises to develop, the Government, in anticipation of the consequences of a particular trend, should step in well in advance of crises.

Recently I argued the position in relation to glass imports. We have quadrupled our imports of glassware over a short period and from investigations which I pressed for in the House by way of question, we found that the Department of Industry and Commerce were relying entirely on a monoply in this country in the manufacture of glassware for information they sought as to what their policy should be in this matter. When they were told by the hardware trade and when they were again informed in the House that the failure of the Irish monopoly to produce glass obliged people to import it, the Minister for Industry and Commerce would not accept what the hardware trade had to say. I find it extremely difficult to understand the Minister's attitude and that of his colleagues who apparently will take information only from a particular source, especially when it happens to be a monopoly.

What has happened in relation to glass has happened in relation to several other commodities. If we are to have a thorough examination of imports and of the need for them, it is necessary that the Minister for Industry and Commerce and other members of the Government throw their nets of inquiry further afield in order to get unbiased and objective information. It is quite clear that, where a particular industry, working under protection, claims to be supplying home needs, if the Minister accepts their information, you will have an increase in imports if people unable to get the products they require from the monopoly are obliged to import. It may be that the Government did not care on this occasion if imports increased so long as they could [405] get the customs duties flowing from the goods and one can find grounds for such a suspicion in various publications. The Government have the idea that as long as they can get a buoyant revenue, all will be well even if the revenue comes from imports.

We in Fine Gael can find so much to agree with in the NIEC Report that we simply encourage people to read it, but we feel that in reading it, they will also be reading the Fine Gael policy on a just society. Indeed we know for a fact that the secretariat of the NIEC had before them that Fine Gael programme when they were compiling the Report on the economic situation in 1965 and when drafting the various recommendations issued to the country. We know also from the Report what the NIEC consider to be the principal reasons for the unfortunate developments which now have us in this mess. They are not, may I point out, the reasons advanced here today by Deputy Andrews who said the cause of our difficulties is to be found in the international shortage of credit.

That is not the reason, but we are likely to have more difficulties in the near future because of the inability of the Government to obtain in the international money market a paltry loan of £7 million. We already know the consequences to the various targets in the Second Programme of the appalling credit squeeze which the Government are directing at the moment but we have not been told during the debate the consequences of the Government's failure to get £7 million in any part of the world. We will be told that only when the misery is upon us. What a low position our credit must be in when this country is unable to get £7 million from one end of the world to the other. If the Taoiseach does not like the word “bankruptcy” to describe that situation I can only say it is the step immediately before bankruptcy when nobody will lend us a bob.

Notice taken that 20 Members were not present; House counted, and 20 Members being present,

Dr. O'Connell: Information on John F. O'Connell Zoom on John F. O'Connell We agree with the [406] NIEC Report. We realise that this country is going through a period of economic difficulty, with contraction of employment, a credit squeeze and balance of payments difficulties. We think the Government are in no small measure to blame because, with their long years of experience, they should not have permitted us to reach this situation.

There is divided opinion among trade unionists abroad as to what an incomes policy is and how it should work. Germany is bitterly opposed to an incomes policy and Britain is obsessed with the idea. Trade unionists in Britain are divided on the issue, though, I think, mainly on the application of an incomes policy more than anything else. We in the Labour Party favour very much an incomes policy and we would support an incomes policy if it were introduced into this country, making clear, of course, our views on what an incomes policy is. Everything that has been said here would lead us to suspect that an incomes policy is a euphemism for a wages policy or a wage control policy. This is where we would be very cautious.

The Irish Congress of Trade Unions at its annual conference in July last adopted a motion which was passed unanimously on this question of an incomes policy. I think it should be quoted in full as it represents the official viewpoint of the trade union movement. The motion was:

Congress declares its opposition to any attempt by Governments to control free collective bargaining between trade unions and employers and re-affirms its rejection of any form of incomes policy that does not deal effectively with prices and profits.

Congress considers that an acceptable incomes policy must not only adjust the total volume of increased demand to the total volume of increased national output but must have as its primary objective a just distribution of income. To this end Congress calls for an examination of long-term policy concerning the distribution of incomes, which [407] materially affects the form and character of our society. For the immediate future, Congress declares that a national policy on incomes should be directed towards the following objectives:

(1) A substantial increase in the income of lower-paid wage and salary earners, pensioners and persons dependent on welfare benefits, and

(2) Increases in the incomes of wage and salary earners generally which would be sufficient to offset price increases and which would enable them to enjoy a steadily rising standard of living.

To achieve these ends, Congress considers that it is essential to resist any limitation on increases in wages or salaries which is not equally applicable to other incomes and which does not take into account the level of such incomes.

An Leas-Cheann Comhairle: Information on Cormac Breslin Zoom on Cormac Breslin Would the Deputy give the reference, please?

Dr. O'Connell: Information on John F. O'Connell Zoom on John F. O'Connell It was a motion passed by the Irish Congress of Trade Unions in July.

Mr. Carty: Information on Michael Carty Zoom on Michael Carty It was a very long motion.

Dr. O'Connell: Information on John F. O'Connell Zoom on John F. O'Connell It is very relevant, if I may say so. The NIEC in its Report is equally emphatic in rejecting any incomes policy which does not concern itself with the behaviour of all money incomes so we can say that the Irish Congress of Trade Unions and the NIEC are in accord about this, that it must be all-embracing. The NIEC Report says that the wage and salary incomes of farmers and self-employed persons, professional earnings, land profits and realised capital gains should be taken into account. To quote the NIEC:

We repudiate as inadequate and inequitable any incomes policy which does not embrace all categories of money incomes.

We are faced now with the NIEC [408] wanting a proper incomes policy. The Irish Congress of Trade Unions have affirmed their views of what an incomes policy should be and nothing less will be accepted.

The Taoiseach has implied and many Government speakers, I am sorry to say, have implied that an incomes policy should be a wages policy. That, I think, is wrong. It can be harmful and it will be repudiated by the workers of this country. You cannot apply a policy to just the wage earners and leave the professional men and the business directors alone. The NIEC and the Irish Congress of Trade Unions were in accord about the desirability of bringing standards to a level which is in keeping with the present day increases in prices. This should be one of the aims of an incomes policy.

An incomes policy has a social purpose, too. It should be designed to ensure that the value of the real increased money income should not be upset or should not be eroded by price increases. We know workers over the past 12 years have bitter experience of wage increases being practically wiped out by price increases which followed. The onus is on the Government to spell out in no uncertain terms a proper incomes policy. Vague terms and references are not sufficient. Britain, at the moment, are bogged down and cannot come out with any proper concept. They cannot put into working shape their idea of what an incomes policy should be. It has never been successfully done in any country in Western Europe. I cannot see how we can have one in this country. A proper incomes policy, as outlined in the NIEC Report, has failed so far in other countries.

Much of the NIEC Report is revolutionary in its outlook and in its implications and I think the full significance of it has not been understood by many people who welcomed it. It should be widely read and studied. It should be subjected to critical analysis. We should not put it away. It should be widely discussed in different circles in the country after it has been read so that a proper understanding of what is [409] implied in it is obtained. We of the Labour Party are very much opposed to this matter of three per cent increase for the workers. The Taoiseach said that no more than a three per cent increase could be considered without increasing prices. There is no doubt that over the past two years the profits of companies have increased tremendously. Having regard to the expenditure incurred by workers through increased social welfare contributions, a three per cent increase in wages would not compensate them for the increases which have taken place. I think the workers of this country would reject any attempt to enforce an increase of just three per cent in their wages.

The question of industrial relations is relevant to the situation. Scarcely a day goes by without headlines in the papers about worsening industrial relations, and it has been implied that the workers themselves are at fault. I certainly am new to this—I was not aware of this before April—but I have seen quite a considerable lot of indifference on the part of the employers to negotiations. It was evident in the bus strike when the manager of CIE refused to discuss the position. He was away. He was out on the golf course. That is true. He was not anxious even to consider proposals, and he preferred CIE to incur a tremendous debt over that long time rather than be available to discuss any proposals which might have helped to resolve the situation.

How can the workers be blamed when the employers adopt this indifferent attitude? The same goes for the printing strike. Members of the Irish Printers' Federation did not want the strike to be settled. They wanted to go on vacation and that was their attitude. They did not want to resolve the strike. They preferred it to drag out. So long as the employers adopt this attitude we will have continuing bad industrial relations. The time is now ripe for workers and management to come more closely together. So long as this gap exists between them they will never understand each other. [410] The workers have tried on many occasions to make contact but without success. Unless we can have a situation which is entirely different from the situation which exists today—where no effort is made to bring workers and management together, and where CIE management reject the idea that the workers should have any say or voice in management—we will have worsening industrial relations.

The Minister for Transport and Power gave an order to the effect that whatever decisions were made by the negotiating bodies in CIE, the company were not to honour them. That is a very serious state of affairs, and it should receive a lot more publicity than it has received. With an attitude like that, we cannot hope for proper industrial relations. Without proper industrial relations we cannot have an expanding economy, because the country will suffer so long as the situation continues as it is at the present time.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore I see in the discussion of this Report of the NIEC a great opportunity to mark the opening of a new era in the prosperity of the country, if we take cognisance of the facts put before us regarding the economy in general, and the crying need for an improvement in industrial relations. The greatest need facing our society today is for some kind of sanity between capital and labour so that we can go on, irrespective of what Government are in power, to build up the economy and offer full employment to all our people.

There is no need to stress how serious the industrial scene is at the moment. I deplore the attempt made in this House to distort some of the facts and to suggest that the Government in their attitude to an incomes policy are interested merely in having a wages policy. I have heard speakers opposite say that they had an incomes policy at the time of the last general election campaign. This is something new. I came across an article I wrote two years ago for a workers' paper in which I quoted a world authority on the need for an incomes policy. The last speaker said it had not worked [411] anywhere in Western Europe. I agree with him that it is a very difficult thing to organise or introduce an incomes policy which will be fair to all sections and achieve the purpose it is intended to achieve.

In Sweden they have such a policy. I am not an expert on this policy in Sweden, but I can point to Sweden as being probably the most prosperous country in Western Europe. It took courage on the part of members of the board to produce this Report. It says things which we have all been saying for a long time, but if one suggested an incomes policy three years ago one might be called a traitor to whichever side one was on.

I think a plea should go out from this House to employers and workers to try to stop this thing of having two camps in such a small society. In England the Government are striving to introduce an incomes policy and to wipe out for ever the “them versus us” battle. They have a richer economy than we have. In all seriousness I say that unless we can introduce a policy which will give us some peace and continuity in industry we will face grave dangers—much graver dangers than I could emphasise this evening.

The Report states that the first principle on which an incomes policy must be based is that increases in total money incomes must be related to increases in national production. Up to a short time ago we had speakers here who disagreed with that and said they would not have income measured by production. You need not be an economist to realise that this is essential if we are to make any progress and have any peace. It is stated in the Report that:

If the continuity of economic development is to be assured, three things are necessary: first, a policy for the planned development of incomes; second, effective action to prevent aggregate demand from rising at an excessive rate; third, a policy pertaining to credit.

There are very few people in this House who would stand over any attempt to introduce an incomes policy [412] which dealt merely with wages. As a matter of fact, it would be so unwise that the thing would kill itself. Any incomes policy must take into account the top salaried man, plus his dividends, right down to the wage earner who has only his wages to depend on.

I mentioned some of the distortion of matters contained in the Report by some speakers and on page 75, in Table 16 (b) there is reference to the gross domestic physical capital formation at 1958 prices, for 1958 to 1964. One speaker referred to what was spent on housing and said that the amount mentioned had not all been spent on housing, but on hotels and factories. He actually condemned the building of factories. I note in regard to “Other building and construction, including land rehabilitation etc”, that in 1958 the figure was £28.3 million and in 1963 it was £48 million. That figure, of course, included hospitals, clinics and public libraries. It is not a great point which he made but I am mentioning it in order to point out to members that if we are going to benefit the country by any discussion we have to accept this Report, which is not a Governmental report but one prepared by representatives of the Government, the trade unions, the FUE and several other people. Indeed these people are to be complimented on the courage they showed in putting forward this Report. I am sure there were matters in the Report about which the trade unions had some misgivings but the fact that they showed the need for this Report demonstrated their earnestness in trying to give us a means which we could adopt to benefit the country generally.

At the moment we have a shortage of credit but we had that before. I believe this shortage would have occurred no matter what Government were in power. We know that the USA, probably the greatest country in the world, also has its problems, as have France and Britain and they have had to restrict credit. While credit restriction is not to be welcomed, if we arrange our priorities in the right order the least harm will be done to the weakest sections of the people.

[413] The lowest-paid workers were also mentioned in the Report. They have been mentioned by most Parties in various economic debates. Everyone is interested in the lowest-paid worker. If you take the semi-skilled labourer in the city who earns about £11 a week, probably has five or six children and is living in the suburbs—which means increased bus fares— you often wonder how that man can keep going with the expenses he has, as against the tradesman who is drawing £4 or £5 at least more than he is. When we come to the question of helping the lower-paid workers, we can see that it is a very difficult problem. Human nature being what it is, if the Government were to give the semi-skilled worker an extra £1 a week, we know that the craftsmen would seek to maintain the differential and they would have to get the £1 extra also. That spiral keeps going on and you find that the lowest-paid workers are still the lowest-paid workers.

Even in regard to the social welfare contribution, the lowest-paid worker will pay the same amount as the higher paid one. You may say that he obtains the same benefits but I think that perhaps there is a case here and the Department might consider whether we are being fair to the lowest-paid worker. He is paying 7/- a week and one wonders if we could not give him some reduction. It would show our earnestness in trying to help this man who is such an essential part of the community. In the city we are naturally worried because of the great housing problem. Housing is affected by the present credit restrictions but so far there has been no hold-up and it is our earnest desire that whatever priorities will be affected housing will not be one of them.

One final point which I should like to make is in regard to the Dublin dock strike. Might I say to both sides, despite their differences and the deadlock that exists, that this strike must be settled sooner or later? Can we not appeal to both sides, in the interests of the community, to come together once more and settle today what must be settled tomorrow or next week? [414] If that is done today, it will save the workers of the city and the country a lot of unnecessary suffering.

Mr. Lyons: Information on Michael D. Lyons Zoom on Michael D. Lyons “Do not rock the boat” appears to be a popular slogan in this House and around the country, particularly from Government supporters. What does “Do not rock the boat” mean today? Does it mean that the boat is not seaworthy, that it has not been kept in a proper condition or does it mean that the captain and crew are unable to get the boat safely to whatever harbour they were destined to go? In any democracy it is necessary that an Opposition should criticise the Government. If we are to arrive at the stage where we start patting everybody on the back we will arrive some day at what is called national government, or dictatorship. The democratic system which we have is the best possible system today but it is necessary that criticism should be directed against the Government whose members are the captain and crew of the boat at this particular time.

The NIEC Report has been read, criticised, interpreted and misinterpreted here for the past couple of days but it has been accepted as some kind of new bible, the foundation on which this country will go forward in the future. The fact that this is accepted is an admission by the Government that the bible they had been using up to this was not the proper one and that the methods they had been using were not properly directed or at any rate were not achieving what the Government intended to do. It is a good thing that the policies of expediency which were pursued by the Government in the past for their own political interests should now be dropped. Everybody should realise, particularly the Government, that it needs the co-operation and good will of every section of the community if the nation is to survive at all. It was pointed out that emigration has increased and that unemployment is rising. There is no doubt about this. but can we place any of the blame on the shoulders of the Government for this? It was made abundantly clear that it was the hasty action of the Government, for purely political [415] motives, in granting the 12 per cent increases which started off this spiral which has led the Government to where they are today. I do not know if the acceptance of the fact that the economy can face a three per cent rise will be of any benefit to the thousands of small farmers whose incomes are under £4 a week. I do not know what three per cent will mean to them.

This debate, based on a document surveying the whole economy, has today deteriorated to the point that nothing is being discussed but employer-labour relations. I know those relations are important and that they are at flashpoint today. Somebody is at fault. However, the wider aspect of where this country is going needs to be discussed. With the background of restricted credit, both at home and abroad—seeing that we were unable to get accommodation in the wonderful country of the United States for a measly pittance that would probably keep Mayo County Council in operation for a couple of years— I do not know if anybody can be very complacent about where we will land in the foreseeable future, even with the co-operation of every section of the community.

A lot has been said about a prices and incomes policy. No doubt it is necessary. Its structure is the important factor. How you are going to achieve it without complete co-operation from business, professional, industrial and worker interests, I do not know. It is necessary that the workers realise as well as everybody else that wildcat strikes which hold the public up to ransom will have to cease or eventually the workers and the trade unions will force themselves into the position that public opinion will force the Government to take legislative action to control them. That would be the worst thing that could happen. But it has to come and will come unless there is a more realistic attitude on the part of workers and employers.

Everybody says the worker is entitled to a certain wage. But do workers [416] not realise that in a situation in which industrialists and employers have to risk their own capital, seek their own markets, have to stand all the losses caused by transport troubles and other strikes and who may be forced into a position where they have to curtail their work and exports, workers cannot expect to get more of the cake than is available? To have a structure in which there will be acceptance of that fact by both employers and workers is what faces trade unions, employers and the Government today. It will have to come or else we will be on the rocks in spite of everything.

The aggressiveness of trade unions was necessary in the past. Without aggression, they would never have made the trade union movement what it is today. Without aggression, we would never have achieved our freedom. But surely the day has come when commonsense must take the place of aggression on the part of everybody? The structure I envisage will take a long time to build up. If we have the goodwill of everybody, it can be done.

It has been said that some of our problems have been caused by world restriction of credit. That may be so. But it was stated from the Fianna Fáil benches that the British 15 per cent levy caused almost the total collapse of our economy. If that is so, our economy must be on a damn shaky foundation. However, I do not think it is so. I think the Government must have failed in their long-term view of what was to come. They must be taken to task for that. On the other hand, having regard to the point of view which tells us not to rock the boat, basically the economy is sound. If you have the people of the country willing to work and co-operate, the economy is always basically sound. Even though we have to blame Fianna Fáil for the situation in which we find ourselves, it would not be the proper thing to deny the Government the support they will need in order to get the country out of the mess.

I do not know what the NIEC Report will mean for the small farmers of Ireland. At a function last night the [417] Minister for Agriculture decided to make a statement about increased prices for wheat. As was pointed out here today, that showed great disrespect for the Dáil. The Minister was asked a question on this subject this week in the House. He decided not to answer it here, where I think all matters of policy should be told to the people, particularly Government policy, rather than at dinners down the country. The Minister is giving an increased price for wheat. That will mean nothing to the small farmers in the West, where I come from. It will mean they will have to pay more for the unmillable wheat they feed their stock, which will make production costs higher. Instead of an increase of three per cent, they will get possibly a decrease of five per cent. Nobody in this House or anywhere else appears to have any solution to the problem. Regardless of whether trade unions and employers iron out their difficulties, if the bleeding of the West goes on any longer, this country will go down. You cannot have Dublin city with the hinterland behind it a desert with unproductive people.

The debate serves a useful purpose in showing the people we have, if not a crisis, at least near enough to it to cause concern to everybody. I hope the debate will bring a sense of reality to our people so that with more co-operation, even though the Government are not the best we could have, the country will go on to greater prosperity.

Mr. Larkin: Information on Denis Larkin Zoom on Denis Larkin The motion before the House is:

That Dáil Éireann agrees generally with the views and recommendations contained in the Report of the National Industrial Economic Council on the Economic Situation, 1965, which was laid before Dáil Éireann on the 24th November, 1965.

That motion was moved by the Minister for Finance on behalf of the Government. We take it that generally the Minister agrees with a number of the principles laid down in the NIEC [418] Report. He possibly has noted other matters dealt with, apart from principles. For instance, in paragraph 43 on page 36, the following appears:

An example of the dissatisfaction with existing differences is the attitude of manual workers towards the relationship between their earnings and the earnings of various clerical or other office workers. There also appears to be dissatisfaction among wage earners generally with the differences in conditions attaching to their employment as compared with salaried employment: in very many cases there are, for example, differences in security, pension rights, holidays, sick pay and hours of work.

I am interested in the Government's position in regard to their responsibility to their own lower-paid staff— and not only in respect of wages, which compare unfavourably with the wage rates paid to employees in private employment. What has been the Government's attitude through the body they set up, the Agricultural Wages Board, to wage rates and conditions of employment of the bulk of the ordinary wage earners in this country? Certainly, when we get this Report before us for discussion at this particular stage, it is appropriate to examine the record of the Government. It is appropriate to ask what the Government have been doing during the years to improve the wage rates of lower paid working staff. It is appropriate to ask what they have been doing in relation to sick pay provisions for unestablished staff, temporary staff, which would compare at least reasonably with those provided for a large number of workers in quite good private employment and even, as my colleague Deputy James Tully says to me, for permanent staff. It could be recorded that the Government have been masterly in their inactivity. For instance, many attempts have been made to endeavour to bring the working hours of certain employees of Government Departments into line with accepted working hours.

Debate adjourned.


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