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Committee on Finance. - Resolution No. 3: Tax in Respect of Certain Goods (Resumed).

Wednesday, 29 June 1966

Dáil Éireann Debate
Vol. 223 No. 10

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[1549] Debate resumed on the following motion:


(a) with effect as on and from the 1st day of October, 1966, a tax, to be paid by such persons and in such circumstances as may be specified in the Act giving effect to this Resolution, shall, subject to the provisions of that Act, be charged at the rate of five per cent in respect of goods sold within the State and goods imported into the State;

(b) the said tax shall not apply in respect of food, drink, tobacco, medicines, clothing, fuel or hydrocarbon oils, or such other goods as may be excluded by or under the Act giving effect to this Resolution.

—(Minister for Finance)

Mr. Kyne: Information on Thomas Anthony Kyne Zoom on Thomas Anthony Kyne When progress was reported last Thursday afternoon, I was speaking of the responsibility of the Government in respect of this extra taxation. I accused them of letting the position drift from a time prior to the last election so that they now find themselves in this morass of difficulty. I accuse the Government of doing that through ignorance or with intent. If it was done through ignorance, then the Government and the Minister responsible are to be blamed for it; if it was done with intent, then it was fraudulent. I do not intend to repeat all the arguments I made last Thursday but I want to go over some of the points I made because, since then, I have gained additional knowledge to support my statements.

I said that, as a result of the drift and the consequent shortage of money, my own local authority, and, as far as I can read in the national newspapers, every local authority, is experiencing a shortage of money for housing, water and sewerage. Last Monday, Waterford County Council met. What I have said was confirmed by a circular from the Minister for Local Government [1550] to the effect that planning for housing and for water and sewerage schemes should continue. We already have a formidable list but, while these schemes are held up at the moment, we must not stop sending more up for sanction. We are now told that while no money is available immediately, we should continue to forward our schemes to the Custom House and that each of them will be dealt with in the order in which the Minister's officials decide. There is no discouragement to the sending up of schemes but when they reach the Custom House there then ensue queries, investigations and inspections rather than an honest admission that the Government have not the money and that, until they get it, they are not in a position to carry out all they would like to do.

I presume the Government would like to see the country prosper, as would all Parties here. No doubt they would like to see housing schemes, water schemes and sewerage schemes. If, through some action or some mismanagement by the Government, there is a halt in that work, then the Government should admit it, claim the indulgence of the House and plead for time. They should say they may not be able to carry out the work this year or next year but that, in time, the economy will recover to the point at which they can resume where they left off prior to the last general election.

I mentioned that I did not believe the statement by Government speakers that the new taxes—particularly the five per cent, which I can only regard as a purchase tax—will not interfere with the cost of living. I cannot accept that view. Although it will not affect foodstuffs and the absolute essentials of life, it will affect the cost of items such as furniture and goods of all sorts outside the essentials of life. It will affect the necessaries of life such as a bed to sleep on, a carpet, curtains, stair-rods, a chair to sit on in the kitchen, or a cooker of any sort, or any type of television set. These things cannot now be classed as luxuries; at least I do not class them as luxuries. Ordinary people of any class or creed are entitled to these things as essentials, [1551] the things which make life easier. The five per cent tax is bound to affect them. If it does, what are the people who produce expected to do? Are they to go short because the Government failed to make provision beforehand to ensure that certain things did not happen? Later I will try to suggest why those things happened but at the moment I am dealing with the fact that they did happen. Does anyone think that the ordinary worker, working from 8 o'clock to 6 o'clock for five days a week, is just going to tighten his belt and go without, or is he, through his trade union, going to say: “We are going to seek compensation in some form or other, either by an increase in wages or overtime or in shorter working hours”? In some way or other he is going to seek redress.

All taxation, unless there is some adjustment by the Government in power to hold prices and the cost of living, is bound to be reflected not in advance of increases in prices but following an increase in prices, by a demand from the working people whether they are organised in trade unions, farmers seeking a living from the land, or anyone who works for another person, for a wages adjustment. I suggested last Thursday that much of the high spending which led us into this position was due to an ideal, or call it what you will, in regard to prestige. We had to be a big nation and we had to send troops to the Congo and to Cyprus. We had to send observers to the Lebanon. There are other little countries. There is a small country, Switzerland, which has a record for hundreds of years of having one object in life, promoting peace and promoting activities that would take away from the horrors and hardships of war. I would rather see our country devoting its money and thought to that kind of ideal than seeking to attain the position of America, Great Britain, France or some of the huge industrial countries with empires.

I had the advantage of travelling around the world in my youth and I have been in practically every maritime country in the world and in most of them I found the greatest difficulty [1552] trying to explain that I was not a member of the British Empire and that I was not an Englishman. It is true that I spoke English but even if I spoke Irish, it would not have made the slightest difference because they— even our favourite cousin, America— lump us with Great Britain and look upon us as part of a group. Surely we should try to carve out something in proportion to our size and to our wealth? I would prefer to see us devoting our energies to building up prestige on similar lines to other small countries, not necessarily Switzerland, which I mention because I have knowledge of it, but countries whose aims are peaceful. I know that our troops went abroad with the intention of keeping peace and I have nothing but praise for them. However, the Minister for External Affairs said yesterday in answer to a Parliamentary Question that he had been missing for three months solving the problems of the big nations of the world in connection, perhaps, with either the atomic bomb or something else, but surely he would be much better off at home endeavouring to use his good offices to solve some of the problems we have at home?

With all due respect to the Minister for External Affairs, I agree that he was moved by the best motives but this must involve cost and there must be for him a feeling of being important. You are going to solve the difficulties between China and America and that is bound to get headlines. You are doing something for prestige motives. I suggest these prestige motives cost money not only in keeping the Minister abroad for three months but also in keeping a staff with him. I thought the Minister was sick during that period but now I know he was away in foreign parts, probably in New York at UNO, or somewhere else, deciding how Ireland could help to solve the problems of Russia, America, China or France, or some of the other big countries.

That is not the function of Ireland in the world. That is why we are in the morass in which we are. That is why housing is short of money, why [1553] water and sewerage schemes are short of money and that is why this extra taxation is being imposed on us, to make up for the expenses and losses caused by following these prestige ideas. I could go on to give other examples and in my concluding remarks I will point out why we are following a mirage in thinking that we are a nation which is bigger and better and more important than most of the small nations. In point of fact, we are a very small nation; even when we are combined with our Northern Ireland brethren, we have only four million people.

If one thinks of London or of Greater London, one finds that there are 12 million people there, and if one thinks of the New York Police Force, one finds that in 1953, when I was there, there were 25,000 men in it. Yet in our Army, at its maximum strength, there are only 5,000 men. This gives one some comparison. The police force in one of the principal cities of America is five times greater than our Army. This gives some idea of the place we should be seeking in world affairs. We are a wonderful nation. We have sent out missionaries and educationists and we have done more than our share in colonising many countries, but as a free nation we should understand that it is more important for us to work for the people who live here. They should be our first concern.

I also spoke in a limited and general way on Thursday afternoon last about CIE losses. In particular, I referred to a proposal to close down the railway line between Mallow and Waterford city via Fermoy and Dungarvan. I am informed that this proposal is made because this particular stretch of line is at the bottom of the scale as regards profit-making. When I reported progress, I had reached the stage of pointting out that I thought this was not a forward looking policy because of improvements made on that line in recent years. I instanced the raising of the line within two miles of my own town by five or six feet in order that trains may run unimpeded by flooding. A new signal box was erected at Dungarvan and a new beet loading station was put [1554] up at considerable expense. CIE should have been aware that, if they were going to close down the line, this was a waste of money.

If CIE intend to close the line between Mallow and Waterford via Fermoy and Dungarvan, they should remember that this line is of vital importance to these two towns and also to the towns and stops between them. How does this action of CIE relate to the new industrial centre which it is proposed by the Government to establish in Waterford? Waterford Corporation have already acquired valuable land and have earmarked it for industrial expansion. They expect, and I hope their expectations will be realised, that industry will be directed to that area. A school of technology is to be set up in Waterford for the purpose of training people to work in that industrial centre. That has been done by Waterford Corporation and other educational bodies at considerable expense.

Where will the products of this industrial estate, if established, flow? Waterford Corporation have a project for a £2 million extension, of which Waterford County Council have agreed to underwrite £100,000. The Corporation of Waterford have agreed to underwrite a further sum. South Tipperary and south Kilkenny are considering it and certain shipping lines have intimated that they will give grants up to £100,000 to develop this industrial estate and they have agreed to supply a container traffic system from London and the south of England to the port of Waterford in order to distribute the goods to Munster and Leinster.

How are these goods to be distributed west of Waterford it this vital railway link is cut? It cannot be done except by putting the traffic on to the roads. I have additional information since I spoke here on Thursday last and I have learned from a communication from CIE itself that they propose to put on two extra buses over a certain period to deal with passenger traffic and up to five extra buses at peak tourist periods. That will have a strong bearing on the economy of west Waterford, portion of south [1555] Tipperary and a good deal of east Cork. There was also a suggestion that seven lorries and three trailers could deal with all the traffic on that particular line. That is an average figure; there would be less in slack times and more in peak periods.

What proposals are being made by CIE to deal with increased traffic either by road or rail which will result from the development of the Waterford industrial estate? There are none. The matter is not even being looked at. It is not even being said that should the industrial estate prove successful, they will increase the carrying facilities. This is a matter that should be looked into by the Government. It has been suggested to me that there are many railway lines which are losing less than the Mallow-Waterford branch line. That has been stated by an association which looks into such matters. I would like that to be contradicted if it is untrue and admitted if it is true. Then we would be in a position to point out what the loss is.

Since last Thursday I have got some further information. Those of us who are interested asked our county engineer in Waterford the cost of the abandonment of the railway line and the re-alignment and maintenance of roads in substitution for that railway line, taking into consideration the flow of traffic likely to be diverted from the rail to the road. Re-alignment in the case of one portion will cost, in the opinion of the county engineer, £500,000. That is a tidy sum. Maintenance will cost something in the region of £8,000 per year, to say nothing of the approach subsidiary roads leading to this main direct route to Mallow and other places. The cost of maintenance of the road to Youghal will be in the neighbourhood of £12,000 to £14,000 extra per year.

Most of the traffic will be main road traffic and Waterford County Council will have to get therefore a 60 per cent grant. If you take 60 per cent of £14,000 or £15,000, plus a capital grant of £500,000, which is a 100 per cent [1556] grant for main road re-alignment, underpinning bridges, and so on, for the next 20, 30 or 40 years, the loss on the line between Mallow and Waterford via Fermoy and Dungarvan would not be in any way equal to the expenditure with which the Government will be faced within the next five to ten years if they go ahead with their present proposal. Coupled with that, the community will suffer at least a 50 per cent loss of service, to say nothing of a possible added danger to life.

The Minister for Local Government goes around screaming about road safety and appealing to local authorities to hold meetings, bring out propaganda, and do all sorts of things to save life. With the railway, the only danger is possible accident, but the Minister intends now to divert all the traffic normally carried by the railway to the road. The roads will be unable to bear this traffic and their maintenance will in time amount to far more than would a subsidy on the railway line. That may be slightly away from the main matter at issue, but we are dealing here with State money. These are the things which are causing increasing taxation. When the Bill comes before the House, I shall deal with this aspect at greater length; I understand the Minister is in such a hurry for his Bill that he cannot even wait until we finish this very crowded session.

I referred to the need for investigation of matters like this by a Committee of Dáil Éireann. In Great Britain, there is a Special Committee appointed by the Government to scrutinise all details of expenditure in the case of semi-State or other bodies to which the Government give a subsidy. It does not matter whether it is the purchase of a hammer or a railway engine, a steamboat or a chisel, all expenditure must be accounted for. Some of us have had the privilege of serving on the Committee of Public Accounts and we know the advantage that Committee is. If the information sought is not available at the meeting, the accounting officer has subsequently to make it available. The Chairman of that Committee is normally a member of the Opposition. [1557] Immediate results have shown themselves following on the examination and investigation carried out into Departmental accounting. I sometimes think it is a pity the newspapers have not enough space, and perhaps not enough time, for reporting in full what happens at meetings of the Committee of Public Accounts, the queries raised, the answers given, the investigations carried out.

In his own interests, the Minister for Finance should seriously consider setting up a Committee on the lines of committees in other countries to investigate these State and semi-State bodies. The mere fact that such committees are in existence would be a deterrent to unnecessary and useless spending. The Minister is responsible for these public bodies, such as CIE, Bord na Móna and Irish Shipping. In reply to queries here in connection with the everyday working of these bodies, or indeed expenses incurred by these bodies, the Minister answers with the simple statement: “I have no function.” Either he is right or he is wrong. Perhaps he is quite right. Perhaps legislation is so arranged that he has no function and he has not the power to intervene. If that is so, then I suggest it should be altered. If the Minister denies he has a function and he has, the Minister is guilty, but if he has no function, there is no use in Deputies in the Opposition blaming the Minister for something for which he has no responsibility. I suggest to the Minister for Finance that that is a matter that requires attention.

In regard to the taxes on petrol and on cigarettes, the Labour Party offered, through me as a Deputy, a long time ago—so long now that I find it difficult to trace the year, but I am sure I could get it from newspaper records—to support an increase on cigarettes, on drink and on petrol, provided all the money derived from those taxes went to improve the situation of what is known as the social welfare group. We stated that and have stated it repeatedly since.

I was impressed by a newspaper report of a statement by the Taoiseach which I understand was sent mainly to Fianna Fáil Deputies and Senators, in which he said, following the Presidential [1558] election and the very near defeat of the new President by Deputy O'Higgins, that a new look was going to be taken at social welfare benefits. My interpretation of his statement—I do not know whether I am right or wrong—was that a standard of living would be given to the social welfare group, to the aged, the widow, the orphan, the unemployed and the disabled, not as a percentage of what the economy had produced but as a necessity, as a minimum, and that the ways and means of finding the money to produce that standard would be accepted by the Government and introduced by the Government.

I thought quite honestly that the mini-Budget would provide that through increased taxation perhaps on cigarettes, petrol, drink or other non-essentials or through what I could call luxury taxes, a dancehall tax, for instance. Such taxation would have received the support of the Labour Party, provided the proceeds were earmarked and earmarked in full for the people in that group. Unfortunately we know that is not the case. I am not permitted to deal with the Social Welfare Bill, and I do not intend to do so, but may I say that while we welcome the provisions of that Bill, which has been introduced, as an improvement, it is only a little step forward, and it does not deal with the situation in the comprehensive way that we members of the Labour Party would desire and would fully support.

I have mentioned the causes of strikes. None of us in the House can but regret that the economy of the country has been so disrupted by strikes, whether here or in the neighbouring country, Britain, over the past six or seven months. It is a matter of regret for any intelligent member of any Party that the need for strikes should arise and that there are no good offices or no means, apparently anyhow, successful in preventing them. I have been actively connected with the labour movement for a long period, right from 1942, actively as secretary, and prior to that as a member of a trade union for a further 20 years. Therefore, I can claim first-hand knowledge of trade union matters, of their [1559] grievances and of their difficulties over a period of 40 years.

What has happened over the past 12 months? I think I know. The new boy coming into productive employment, the new fitter, the new millworker, the new machinist, the new road worker, has arrived in an educated state. He has had, thanks to an improvement in the economy, a better chance of education, of going further than sixth standard in the national school. He has got a year or two additional, and television, radio and lending library services have all contributed to bringing his standard of education higher than that of his father or mother.

These workers realise that manpower in industry is much more important than machinery or administration, that the factory hand who takes the cow skin in the tannery and, with the help of his fellow workers, turns it out at the other end in the form of leather to be exported to Great Britain and elsewhere, is doing more for the economy than a fellow who writes down on a sheet of paper a record of how that was processed through the factory. Productive workers, due to their education, have now decided that they are no longer going to take the small portion of the cake but are going to demand, and strike, if necessary, and for as long as they possibly can, in support of their demands, until the difference between the wages and conditions of the administrative staff and their own wages and conditions are so adjusted as to recognise their claim to be as important as, if not much more important than, that of the administrative staff.

As far as the labour movement is concerned and, in particular, as far as I am concerned in the labour movement, they do that with my blessing, with my help and with my encouragement. Even if they have to wreck the country, it would be much better to see the country wrecked and then rise like a phoenix from its ashes recognising equality and the sharing of profits for workers, rather than have the present system whereby those who produce more are paid least and those [1560] who administer get the full profits of industry.

Employers and Government must realise that this is a pressing problem and must be dealt with on that basis. That is why the Labour Party took the action they did in regard to the ESB dispute. We did not want to have the dispute continue, have the country deprived of electricity and have all the workers suffer; but we knew that for every battle there must be a price, that in every fight, there must be casualties. Whatever casualties there are will be worthwhile, provided in the end we secure the desired victory. That is why we will oppose any repressive legislation and fight tooth and nail any effort to compel workers to do things they know are against their own interests.

I can warn the Government it is waste of time endeavouring to legislate for people against their wishes. I know the Government have a responsibility to legislate for the good of the majority. You can legislate. We will not violate the law. We simply say that nobody can make us work if we do not wish to. Even if we have to starve to establish that principle, I can assure the House there are in the country now educated working people who understand their power. They do not want to break any law. You can pass any law you like here, but you cannot force them to work, unless you do a Fascist act like Franco in Spain. But even if you put them to jail, they will not be available for work.

There is one sensible way of dealing with this matter. In times of peace, employers and workers should get together. I was a trade union official in my area for 20 years and during that time we had only one strike. That was in 1944. We never had one since. I convinced the employer that he should not meet his workers only when there was a dispute but should meet them at all times. They should have socials and mutual aid societies. The managing director and the manager have a responsibility to get to know their workers. They should give the workers' children at very little cost a Christmas party where the parents would meet the employers. All employers are not [1561] bad. There are good and bad employers. It is the distrust, uncertainty and—the new phrase—lack of communication that cause the trouble.

Now the workers are educated to a point where they will not accept compulsion from anybody because they know they can defeat it. That is the reason why the labour movement fought the Electricity Bill and will fight any legislation impacting on the workers unless there is consultation with them. I understand from the Minister there is to be consultation in this case.

I should like to say more on this motion but it would be unfair of me to deprive other Deputies of the opportunity of putting their views. I should like to conclude by expressing surprise at the failure of the Government to give a lead on the question of economy. Over the past two months, we have seen extraordinary lavishing of money on pageants, guards of honour and ceremonies of all kinds— people in tall hats and tailcoats. It is all far away from the bainín talked about when Mr. Cosgrave established the State. Whether people wear tall hats, tails, dinner jackets, white ties, black ties or bainín is a matter of indifference to me. But if the Government want to bring home to the people of this country, particularly the workers, that they must tighten their belts and economise because the country is in a critical state, then they should be more careful about the type of pageant they are promoting. I would recommend to the Minister for Finance an examination of his conscience and the conscience of the Government in regard to their future conduct.

Mr. Andrews: Information on David Andrews Zoom on David Andrews I appreciate the Deputy's curtailment of his contribution to let some of us in on this debate. Recent Government borrowing has been criticised at some length by various members of the Opposition. It may be necessary to remind these critics that this is in line with Government policy as set out some years ago in the Second Programme for Economic Expansion. It was pointed out that such [1562] help from abroad might become necessary unless a lower level of investment was to be accepted or lower targets set for the growth in national production. This view was accepted by a commentator in the OECD survey which was carried out here in 1964. He also dealt with the possibility of using foreign capital to finance the Second Programme and said:

This would seem to be an appropriate objective, given the need for higher investment and the fact that agricultural production abroad is hampering Ireland's most important export.

Of course, when the author was writing this particular article, he did not foresee the introduction of the 15 per cent British levy. As far as borrowing goes, we have certain precedents from the Coalition Government when they borrowed £40 million in dollars under the Marshall Plan. The idea of foreign borrowing is nothing new. The economists tell us it is a good thing in certain situations to bring in outside capital to continue the progress of the economy.

There is one point I should like to make in relation to the United States. We went to the United States and failed to get a loan from this very wealthy country. I was particularly disappointed we did not receive any assistance from them. We know they have their troubles at the moment in Vietnam and so on and possibly they want all the money they can get. But we hear a lot in the Press and otherwise about what America has done or has not done for us. We went there to look for this small sum and did not get it. That is all I want to say on that particular topic.

Deputies received a copy of the annual report of the National Savings Committee for the year ended 31st March, 1966. I should like to record my appreciation of the work this Committee has been doing. It is the first time it has come to my notice as a public representative. Having studied the pamphlet, I should like to congratulate them on the presentation and content. On page 7 of this pamphlet, under the heading, [1563] Saving Groups, it is stated:

The drive for the formation of new groups—that is, the new groups campaign, continued during the year and is now almost completed. During the past two years the Committee's organisers have canvassed 4,077 firms. It has found that 457 of these had savings schemes already. New schemes form a total of 248. The managements of 1,150 firms were unwilling or unable to introduce savings schemes. While in over 665 firms the response from the employees was not good enough to justify a scheme, in many other cases the firms concerned were too small to operate a scheme.

Apart from the benefit of savings to the economy and the use these savings can be put to, the National Savings Committee should be encouraged. That 1,150 firms were unable or, particularly, unwilling, to co-operate with this national organisation is a pretty bad state of affairs. I would call on all firms in the country, as a matter of economic patriotism, to assist in this national savings drive. I was very disappointed to read that this number of firms—over 1,000—are either unable or unwilling to co-operate.

Of course, the usual long list of failures has been presented to the House by the Opposition Parties. I should like to refer them to the Shannon Industrial Estate. Can anybody in this House say that this scheme has not been a success? I take the following figures from Irish Statistical Bulletin. Four firms were set up during 1965, with one or two more during 1966. The total employment rose from 2,669 to 3,162 at the end of December last. These are the latest available figures. The report continues:

At the end of 1965, the population of the new town at Shannon was 1,425, compared with 1,100 a year earlier. Further, there was a 20 per cent increase in the number of terminal passengers to no less than 286,000 during 1965; freight traffic at Shannon also continues to expand with a rise last year of 20 per cent.

These figures speak for themselves.

[1564] Then, of course, in the constituency which I represent, on Thursday last, the Taoiseach opened an industrial estate at Kill-o'-the-Grange just above Dún Laoghaire. This is a type of development we hear very little about. Here are businessmen in Dún Laoghaire and outside Dún Laoghaire who are prepared to come in and erect an industrial estate so as to encourage industries to come into the industrial complex and we are told, of course, that the situation is so bad that the country is almost bankrupt or, in the words of the inimitable Deputy Dillon, “bust”.

We read in the papers the other day of the recent crude oil terminal, on which £10 million is being spent, at Whiddy Island in Bantry—again at a time when the country is allegedly “bust”.

Housing is relevant to this discussion to the extent that I am appealing to the Minister for Finance to use some of the moneys in this Budget for the purpose of housing, The Government's record in this field has been somewhat shattered in recent times by lack of capital available in the public and private sector. Housing, to me is, with education, one of the priorities. Without proper housing facilities the people cannot be expected to have much will for anything, least of all education. I have already commented on the state of the housing position in Dún Laoghaire proper. There are some 26 houses being built in Dún Laoghaire but this is only a mere scratch on the surface. There are some 350 applicants on the urgent panel for rehousing. There are many more people awaiting rehousing who are not on the urgent panel.

The position in Dún Laoghaire is deplorable. There are many factors and the Government are not to blame for all of them. There should be a lifting of the credit restrictions so that the housing programme may continue. It is one of the fundamentals. If people have not got proper housing it is difficult to ask them to co-operate. If people are living in bad housing conditions it is difficult to ask them to do anything. This is the point I am trying to stress. I would appeal to the [1565] Minister for Finance to do something to raise the restriction on the housing programme. The Minister for Local Government has a proud record, a first-class record, in housing and I would appeal to the Minister for Finance to let the Minister for Local Government continue with his record.

Taxation is the main point of the debate. A family living in an urban area, earning what is considered a middle income, has to look to mortgage repayments on a detached or semidetached house. Speaking for the new estates at the Rathdown end of the constituency I represent, one gets very little return for the payment of rates until the county council and the developer settle the perennial argument as to the taking in charge of a particular estate. In some instances, estates have been known to take 15 years to be taken in charge by the county council. Either the developer or the county council is at fault there. Generally, the argument is put up that there is a foothpath broken and, consequently, the county council will not take the estate in charge. This is invalid. There should be legislation introduced providing that the moment a new estate is completed it should be handed over to the county council.

On the question of taxation of the middle income group, it does not appear to me to be good social policy to be continually getting at the middle and lower income groups in increased direct or indirect taxation. I know of many cases in the middle income group where persons who had reached a certain decent standard of living found their standards difficult to maintain due to the continued increase in taxation such as I have pointed out and, of course, taxation on the so-called luxuries, cigarettes, beer, and so on. We must watch the tourist trade. Last year, we made over £70 million from tourism and if we continue to hit these so-called luxuries, we will price ourselves out of the tourist market.

However, no Deputy opposite has stood up to give alternative sources of revenue. This is the real crux of the problem. I also am guilty of this. I have not given alternative sources of [1566] revenue. We have experts on problems of this kind who could and must provide a solution to the problem. It is far too facile to continue to tax beer, cigarettes, petrol, motor cars and all the obvious sources.

Now I come to the question of petrol. Some weeks ago, by way of Parliamentary Question, the need to let people know the value they are getting in relation to the octane rating of petrol was referred to. Some companies are not bad in this respect. The situation is now so confused that a non-mechanically minded motorist does not know what value he gets for his money in regard to petrol. With so many grades of different brands the confusion is rife. There should be an obligation on the petrol companies to tell the people what they are getting in terms of real value for their money. This is a matter the Government should investigate so as to request the petrol companies to say what exactly the people are getting in real terms. How do the various grades of the same brand affect the engine of a motor car? That is a question to which I should like to know the answer and so, I am sure, would many other people.

There has been a lot of criticism of the Taoiseach inside and outside the House but in my view, he is the only person competent to lead the country through these difficult times. In his recent speeches, he has clearly indicated his willingness to continue to do so, despite the speeches of the Opposition, which, as I have said, do nothing but undermine national confidence. The Taoiseach will continue to guide this country without the so-called statesmanlike assistance of the “Party-against-everything” which is prepared to vote for measures which, in fact, they speak against. Is this political consistency? Certain recent measures, and not least this measure, introduced by the Government have not been popular, but accusations of political dishonesty for introducing measures of this kind is, in my view, a patent form of dishonesty. I think, as far as the true situation goes, we have reached the nadir of worldwide economic slump and I believe that in the near future we shall begin to climb [1567] out of this situation. This is agreed by very well-known economists. It was very encouraging to note the recent drop in the balance of payments figure of £21 million for the first five months of this year. One hears very little of this and other related matters from the Opposition, but if one did hear of these things from the Opposition, it might do something to restore national confidence, among other things.

Mr. Connor: Information on Patrick Connor Zoom on Patrick Connor I wish to say something about the effect of the financial crisis on our national economy. In Kerry where last year we built over 100 houses, we got sufficient money this year to build only 22. That is a very important thing in a county where there are so many poor people. Grants for arterial and county roads and tourist grants and so on have been reduced by one-third. All this is very bad for a county in which there are many poor people of the labouring class. Minor relief schemes of that kind which were very good for the small farmers are being done away with.

The turnover tax which started off at 2½ per cent in the case of dancehalls was increased by 7½ per cent to ten per cent in May this year and in the mini-Budget a couple of weeks ago, it was increased by another 2½ per cent, effective next October, which would mean 12½ per cent or 2/6d in the £1. This meant that fewer people went to dances and it made things difficult for the proprietors of smaller dancehalls who had to pay bands taking 50 or 75 per cent. Before the proprietor got any money, he had to pay for publicity and wages and general expenses. The result was that dancing in rural Ireland was declining. Taxation on foodstuffs is a sad thing for the poorer people. In Kerry a valuation of £1 brought in over £3 in rates which is a very big amount. I understand the same is true of some other poor western counties such as Mayo, Roscommon and Galway, but I think Kerry is one of the highest-rated counties. The effect of all this taxation is that nothing is coming down but the rain. It would be well if the Government would step into the [1568] breach and provide some relief for the poorer counties, wherever they find the money.

Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton I was glad to note that Deputy Andrews was quite frank in some of his remarks. He readily admitted that this country was refused a loan in America. He was also ready to admit that the housing position was very bad. He told us a little about the housing needs of Dún Laoghaire but coming nearer home, I think the housing needs of Dublin city are much greater than those of Dún Laoghaire-Rathdown.

Just before the summer recess when there was talk of a credit squeeze and a hold-up of money for housing, I remember the Minister for Local Government coming in here and denouncing everybody who spoke of restriction of money for housing or a credit squeeze as people trying to sabotage the housing drive. He assured the House that despite all the efforts of people on this side of the House, as he put it, to sabotage the housing drive, it would continue undiminished. Since then, however, we have all learned the true position. Around last Christmas, we discovered from Dublin Corporation that all loans for housing were completely stopped. We were told that they would stop to review the position, and that it was hoped they would start again at an early date. We know that, since then, no loans have been issued for houses previously occupied. We know that no applications are being sanctioned for loans that were not in before 21st January of this year.

I am glad to see Deputy Moore in the House. He is normally a very decent man. He is a member of Dublin Corporation Housing Committee and I must say that he takes a very active interest in it. I am sure he is well aware of the position there. I was rather surprised, when he spoke here previously, to hear him tell us that the Government were keeping housing going at a very high level. He assured us that this high level was being kept going by the Government. I think he himself is very well aware that unfortunately his assertion is not entirely true or that it is not as he would wish [1569] it. He told us that the Government, in this line, had kept faith with the people. I do not know how we can judge whether or not they have kept faith. We have now, for the second time, been deprived of the holding of local elections in which the people could give a true verdict. If we are to judge by the only chance the people got, then they, particularly the people of Dublin, have given a verdict in the recent Presidential election that the Government have not kept faith. In Dublin city alone, the Government suffered a defeat of 28,000 votes. I do not think that that shows that the people were satisfied that the Government have kept faith.

Deputy Moore also told us that when the Taoiseach agreed to this 12 per cent increase some time ago he did it in the belief that this increase would be absorbed without any prices increase. I do not think that either Deputy Moore or, very definitely, the Taoiseach is so simple as to imagine that that would happen. I might be correct in suggesting that the Taoiseach had another reason for this 12 per cent, the reason that two by-elections were in the offing.

The Minister for Transport and Power, although he has been widely criticised, did at least state in this House that our financial difficulties did not occur overnight, that they had been building up for quite a while. Yet the Taoiseach could not foresee that there were any difficulties prior to the last general election. He told us that everything was lovely, that nothing except a change of Government could halt this progress and that, given 12 months, not even a change of Government could halt it. I wonder what has now halted it?

When the Budget was introduced last March, we thought it was quite stern. Now, looking back on it, it seems as if it was only a pre-Presidential election budget. At that time, the Minister asked what had gone wrong with his 1965 Budget. I do not know if he ever got the answer to that question but we are now wondering what went wrong with his 1966 Budget. He gave a hint that it might be necessary [1570] for him to come back in the autumn to look for additional money. I do not know whether or not this is autumn. People blame the space age and the moonshots, and so on, for changes in the weather and changes possibly in the seasons of the year but I do not believe it is yet autumn. I am wondering if we shall have another Budget in the autumn.

Deputy T.J. Fitzpatrick of Dublin told us that the Taoiseach never denied that there were difficulties over the past seven years. If he did not deny it, he certainly gave every indication that they were not there. Deputy Fitzpatrick also told us that an Opposition should not criticise without suggesting alternatives. We all know that the Taoiseach, when in Opposition, said, in effect, that it is not the duty of an Opposition to tell the Government what to do.

Deputy P. O'Donnell in his speech on the mini-Budget suggested certain ways in which the Government could save quite an amount of money. If there are Deputies on the Government benches who think we should suggest other methods, then the only method left, and the only way of saving the country from the necessity of having two or possibly three Budgets in the one year, is for the Government to get out and to make way for a Government who can see at least 12 months ahead.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore Many wise words have been spoken on this Budget and yet, to judge by the speeches, we do not seem to get any nearer to a true appreciation of the difficulties facing the country and, indeed, Europe in general. The shortage of money we are at present experiencing is not peculiar to this country. In this month's issue of the OECD Observer, we read, in the first article, that the three great problems facing Western Europe are money, bread and food and much emphasis is put on the shortage of money, Being part of Europe, how could we expect to escape the effects of the money shortage? This Government have faced the difficulties and have kept the housing drive going, unlike two previous occasions under two [1571] Coalition Governments, when the housing drive almost ceased.

It is very easy to criticise the Dublin housing programme and its progress. Deputy Belton is well aware that, if we include the Ballymun scheme, roughly 3,000 dwellings are under construction at the moment.

Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton Almost 12 months behind schedule.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore Include the Ballymun scheme with the traditional building. Money had to be found for that and for other things, too.

Mr. James Tully: Information on James Tully Zoom on James Tully By taking the money from the other local authorities.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore The other local authorities say that but the Dublin fellows do not agree with it. Even Deputy Belton would not agree with that. I know that Deputy Tully and Deputy Belton are fair-minded men. They will agree that, despite great difficulties, the Minister for Local Government has kept housing going in Dublin city. It is true that there are difficulties with SDA loans at the moment but I believe this is only a passing phase and that before the end of the year, there will be an improvement in that situation and that we will go on to see the completion of the housing drive. At least it will not be hampered by lack of money.

The Opposition Parties criticised the turnover tax and some Deputies claimed that it was the whole cause of industrial unrest, the shortage of money and the alleged general unhappiness. I would put a question to the Opposition Parties and ask them to state honestly if they were returned to power, would they abolish the turnover tax? I asked Deputy Dillon when he was leader of the Fine Gael Party that question and all I got was a very evasive reply. It was so evasive that one could gather from the evasiveness that the tax would stay. We must come to accept that. None of us likes taxes but this is bringing in £16 million and probably most if it will go for housing. To abolish the turnover [1572] tax would mean that you would have to find money for houses somewhere else.

Mr. James Tully: Information on James Tully Zoom on James Tully Did the Deputy say £60 millions?

Mr. Moore: Information on Seán Moore Zoom on Seán Moore No, £16 million.

Mr. James Tully: Information on James Tully Zoom on James Tully Neither figure is withing the bawl of an ass of being correct.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore I will stand by your figure if you give it to me. A Government cannot crib money; they have to get it by taxation. If you are to keep the housing drive going, you have to say: “We think housing is worthwhile”, but you have to be fair and say also: “You will be taxed to provide for it.”

Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton It would not be so bad if they kept it going with the turnover tax.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore It is being kept going. I am not going to fall into the trap of going back to 1957 or 1953. Deputy Belton knows what happened then. He knows that there was a complete mess made of the Dublin housing situation.

Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton How many schemes are held up now for sanction?

Mr. Moore: Information on Seán Moore Zoom on Seán Moore Every scheme was held up then.

Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton How many are held up now?

Mr. Moore: Information on Seán Moore Zoom on Seán Moore Very few.

Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton Very many.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore We passed a scheme a fortnight ago in the Deputy's own area.

Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton It is long overdue.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore Not so long. If you had your way and abolished the turnover tax, you would slow down housing still more. The Opposition should be honest and say that they accept the turnover tax because they have got to. There is no use telling people airy-fairy stories, or telling them that they can have good housing and good living generally without [1573] taxation. That is only the drëam of an impractical idealist or of a dishonest man.

Deputy Belton referred to price control and to the fact that the Taoiseach gave the 12 per cent wage increase. I do not think the Labour Party would agree with that point of view. The fact is that the workers did get 12 per cent and I am sure you are bound to have some increase in prices, an inflationary touch——

Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton That is not what the Deputy said last time he spoke.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore It was in essence what I am saying now. I believe in facing facts although they may not be very palatable. It is the duty of any Parliament to face facts, both Opposition and Government; otherwise, people become fed up with this attitude of: “You can have everything for nothing.” The ordinary people know that you get nothing for nothing in this life. When the Opposition stop acting dishonestly, the people will respect them all the more. We have adopted Financial Resolution No. 2 which in effect will give increases to certain categories of workers but yet we found the two Opposition Parties voting against it. To my simple mind, that is inexplicable. I cannot understand that sort of thing. Either these men get this wage increase or they do not.

Mr. James Tully: Information on James Tully Zoom on James Tully They did not get it. The lower-paid workers employed by the Government have not yet got an offer.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore They will get it.

Mr. James Tully: Information on James Tully Zoom on James Tully When pigs begin to fly.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore You people are trying to play two games at the one time and you cannot do it. You have to face facts and be honest with people. There have been references to the recent Presidential election and to what the result meant. The result meant that an ex-Taoiseach was elected President. That is all I can see in it.

[1574]Mr. L. Belton: Information on Luke Belton Zoom on Luke Belton It meant that Dublin rejected him by 28,000 votes.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore I am not going to discuss the election with the Deputy. However, I think he will find on the next occasion, when the municipal elections are held, that perhaps his Party will be rejected much more decisively, next June, or whenever they are held.

Mr. James Tully: Information on James Tully Zoom on James Tully Whenever they are held is right. Would the Deputy like to put a bet on it? 1970?

Mr. Moore: Information on Seán Moore Zoom on Seán Moore I am calling for an honest approach from the Opposition to the problems which must be overcome. This Government set a headline for future Governments because when faced with grave difficulties, they did not panic or dissolve and call for a general election. They stood by their posts and fought to overcome these problems and they are overcoming them. Let nobody have any doubt about that. The problems are being overcome. The people recognise that the Fianna Fáil Government are the Government of the people, that their whole history is one of providing better social services, of striving to raise the standard of living and of a great housing drive, while at the same time being capable of doing unpopular things. They have done unpopular things because it was for the common good. As a result of their activities, we have a standard of living which is comparable with the standard of living in other European countries.

There are tremendous problems facing this country and the one hope of salvation is to be found in the present Government. It is a Government with a policy and whose Ministers have the ability and the courage to carry out that policy. We do not try to be all things to all men and we do not insult the intelligence of the people by asking them to believe that it is possible to have everything for nothing. When the Minister introduced his recent Budget, he was carrying out an unpopular task but he came out with a display of honesty and told the people just what we were up against. There are workers who have not yet received [1575] the benefit of the £1 a week increase and he made provision for that. The Government also made provision for increases, admittedly small increases, in social welfare.

Mr. James Tully: Information on James Tully Zoom on James Tully That is the understatement of the year.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore They have got the money for housing, for vocational education and for primary and secondary education. In regard to housing, we should look for a moment at our neighbouring island where there is a socialist Government who were forced to cut their housing drive by one-third. If this Government cut the housing drive by one-third, there would be an outcry and we would be told to socialise our finances. I am not criticising our neighbours. They have faced facts. Their trade balance was very bad and they had to do something about it and one of the things they did was to cut their housing drive and introduce a new selective tax which will curtail the housing drive further.

Mr. James Tully: Information on James Tully Zoom on James Tully Will it have the same effect here?

Mr. Moore: Information on Seán Moore Zoom on Seán Moore I am not criticising their Government——

Mr. James Tully: Information on James Tully Zoom on James Tully Will the selective tax have the same effect here?

Mr. Moore: Information on Seán Moore Zoom on Seán Moore We have not got the same type of tax. Ours is much better.

Mr. James Tully: Information on James Tully Zoom on James Tully We will talk about that in a couple of months' time.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore We should try to see the difficulties of our own country at the moment. We are not alone in these difficulties. The great European countries like West Germany and Holland also have their problems and money is the basic cause of these problems. Even the United States, which has invested so liberally in Europe, find that they too have a balance of payments deficit and will probably have to cut back housing and other services to deal with it. We have our problems and we will solve them but it is wrong [1576] to mislead the people by saying that there is a shortcut to that solution.

Opposition Deputies are continuously calling on the Government to resign but the Opposition do not want the Government to resign while there is a credit squeeze. When the credit squeeze is over in a couple of years' time, they will be willing to move in then, but they do not want to do that now. That credit squeeze is international. I would suggest to the Opposition, and particularly to the Labour Party, because I have not much belief in Fine Gael, that they should have another look at their attitude to the financial situation and to this Resolution. If this Financial Resolution is rejected, will the Labour Party stand over the fact that it is for the purpose of providing money for housing, education and for pay increases to certain categories of workers?

Mr. James Tully: Information on James Tully Zoom on James Tully Deputy Moore does not know that the Opposition traditionally vote against new taxation. Fianna Fáil, when in Opposition, also voted against new taxation.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore It is a good thing to break with tradition sometimes.

Mr. James Tully: Information on James Tully Zoom on James Tully The Deputy should tell that to the Taoiseach who seems to consider himself bound by tradition.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore The Taoiseach broke with tradition when he introduced the Conditions of Employment Act which has become the workers' charter today.

Mr. James Tully: Information on James Tully Zoom on James Tully The Conditions of Employment Act is long out of date.

Mr. Moore: Information on Seán Moore Zoom on Seán Moore The Taoiseach has spent his whole life breaking with tradition for the benefit of the workers. I have little more to say, except to pose two questions to the Opposition. The first is whether if they are returned to power, they will abolish the turnover tax? In all honesty they should answer that. The second question is whether the Labour Party and Fine Gael are going to persist in trying to deprive Government workers of the £1 a week increase against which they have already voted twice?

[1577]Mr. T. O'Donnell: Information on Thomas G. O'Donnell Zoom on Thomas G. O'Donnell This debate is now drawing to a close and there is no great point in going into detail, particularly since it is not so long since we had the annual Budget. The introduction of a supplementary Budget within a few weeks of the annual Budget is unprecedented and is difficult to understand because in recent years we have had taxation increasing every year and in more recent times we have had unprecedented borrowing. Year after year recently we have had new methods of taxation. Over the past nine or then years we can recall the abolition of the food subsidies which achieved a net saving of £18 million. We have had the introduction of PAYE in 1959 and we have had the turnover tax. In addition to these new methods of taxation, we have had the yearly increases on the hardy annuals, cigarettes, tobacco, spirits and petrol. We have had largescale borrowing in recent times. A total of £46½ million was borrowed in the last financial year.

Looking at all this taxation and borrowing, trying to reconcile all that with the position in which we now find ourselves of having to introduce a supplementary Budget, it is hard to blame the ordinary man in the street who is asking the obvious questions: Where has all the money gone, how has it been spent, what results have been achieved? It is our job to try to answer those questions to the best of our ability. Where has all this money which has been raised by the various methods of taxation and by the unprecedented borrowing gone, and what is being achieved? Depending on a person's political affiliations, there are various approaches to the answers to these questions. I will confine myself to the few points that are available from the various publications issued in recent times, particularly the reports of the NIEC and the Progress Reports on the Second Programme for Economic Expansion.

The acid test of Government policy is, as has been stated by the Taoiseach on previous occasions, employment. When we look at the results that have been achieved in the matter of employment, we find it stated in the NIEC Report No. 13: “Comments on [1578] Economic Figures in 1965”, page 25, paragraph 6:

The growth of employment has fallen short of target in all sectors. We are disquieted by this fact.

This is a terrible indictment of Government policy. It is a clear indication of the failure of the Second Programme for Economic Expansion. In 1965 approximately 14,000 people left the land and the increase in industrial employment was in the region of 7,000. That is a net loss of 7,000. The Progress Report on the Second Programme for Economic Expansion, a Government publication, deals in detail with the various sectors of the economy and that Report states, supported by facts and figures, that the progress made in the field of industry and agriculture, that is, over the entire sphere of economic activity, has not been satisfactory. The one picture right through is a picture of failure to reach the targets projected.

In agriculture, our major national industry, there has been a complete failure to reach the target set. I recall that, when these targets were being set, there was considerable disagreement about the targets fixed, not on the ground that they were too high but that they were too low. In 1965 the increase was one per cent. The very low targets set at the outset by the Second Programme for Economic Expansion have not been reached. In industry, the targets, particularly that in relation to employment, have not been reached. Certainly the target in housing has not been reached. The only sector in which the target projected was reached is tourism.

All this leaves no doubt in anybody's mind that the Second Programme for Economic Expansion has failed and, because it has failed, we have had to resort to what was described in the Capital Budget Statement as exceptional borrowing to the tune of £46½ million in 1965. All this money raised by borrowing has been spent. Otherwise, the Minister would not be here looking for more in the form of a mini-Budget. The money has certainly not gone towards achieving the targets set out in the Second [1579] Programme for Economic Expansion. It has not been spent on accelerating the tempo of industrial expansion.

Where has the money gone? It is impossible for an Opposition Deputy to even attempt to make a detailed analysis because he has not the facilities available to him to do so, but every Deputy, using his own common sense, in the light of his own experience and as a result of the experience of his constituents, has certain facts and has noticed certain things. Without going into too much detail there are certain directions in which money has been spent in recent times which have proved both unwise and unsound. There does not seem to be any great efficiency in the matter of investment management. There is no proper ranking of projects in order of priority. That has been commented on by the NIEC. We all are familiar with examples of money put into projects in recent times, projects which have unfortunately proved failures and some of which never got off the ground, such as the Potez project.

In my constituency of Limerick city, the CIE locomotive works were reconstructed some years ago at a cost of £120,000. I remember the Minister for Transport and Power coming to Limerick for the opening ceremony. I remember him assuring the workers that their future was bright. This was in 1963, three short years ago. I remember him assuring the workers that all was well. Out of the blue, some weeks back, it was announced that there would be redundancy in these locomotive works because CIE were changing from timber to steel in the construction of waggons. I cannot understand why this change of policy could not have been foreseen three years ago. I cannot understand how this expenditure of £120,000 can be justified when, after a couple of years, this works shows a considerable reduction in employment. I am sure there are numerous examples from other constituencies.

NIEC is an intelligent body of men who know their job and who are well fitted and well qualified to comment on economic policy. They have expressed concern because employment [1580] targets have not been reached. They have expressed concern about the manner in which investment is being handled. They have expressed concern about the manner in which projects are selected for State grants. It is difficult to understand, for example, why over £1 million was allocated to the proposed aircraft factory at Baldonnel. How was that vetted? Who vetted it? I have referred to this on a number of occasions but the public and the House have yet to be told what went wrong and who slipped up. While millions are available for projects like that, which never get off the ground, small businessmen and small industrialists, seeking relatively small amounts by way of grant to expand their little industries or businesses, or set up new ones, can get no assistance whatsoever. I am sure I am not the only Deputy who has had complaints from these people.

There seems to be no system of priorities in the selection of projects for investment. This is referred to in the NIEC Report No. 11, page 50, paragraph 71:

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.... 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.... In deciding on the appropriate ranking for productive investments and the share of resources to be devoted to such, close attention must be given to the increase in national output, and especially in exports, which is expected, relative to the size of the investment.... The priorities must be clearly defined if they are to be understood by the community at large.

These are excellent reports which have been published by the NIEC, and I am [1581] not saying they are excellent for the simple reason that their viewpoint coincides with my political views; they are the views of experts in their field.

There must be new thinking in the matter of economic development. An entirely new approach is necessary. The Government must learn from the failure of the Second Programme; the Government must fix realistic targets and must map out the paths by which these targets will be reached. It is there that the Second Programme, and the First Programme for that matter, fell down. They projected growth rates per annum, which is a simple mathematical formula which can be worked out, but they did not map out the road. I doubt very much if the Department of Finance experts on economics, finance and what have you, took into account the many human, psychological and social problems that have to be met and allowance made for them.

Therefore, if we are not to have another Budget in a few months' time with further taxation, and further taxation still in a year's, two years' or three years' time, we must get down to the task of economic planning, of making it possible for all sectors of our economy to expand and to play their part in national progress. As I said, I am no expert on finance but my humble opinion is that there will have to be a big shake-up within the Department of Finance. There will have to be far more expertise introduced in the matter of investment management and selecting products for investment, and in the matter of handling and managing the finances of the nation.

In another one of the NIEC documents, criticism was expressed of the lack of information on financial matters, the fact that certain information which should be available at a certain time was not available. It is not surprising then that mistakes have been made, that money has been invested unwisely in projects which did not materialise as expected, for the simple reason that these projects were not properly examined or for various other reasons. I do not intend to indulge [1582] in suggestions, which may or may not be unfounded, of undue political influence being used in the matter of having x project selected rather than y project. I am confining myself to facts and to the information, which I regard as being above board, from the various documents to which I have referred.

Despite the fact that reference is made to it on every Budget, there seems to be no effort made to effect economies in the cost of public administration. This is the age of the efficiency expert, the management consultant. The Taoiseach and various Ministers in recent years have been appealing to business men, industrialists and even to farmers to modernise their methods, tighten up their management, and effect economies where possible. Yet we have in Government Departments increasing expenditure on administration year after year. It is time that some of these modern management techniques were introduced in to our Government Departments.

There is very little more I wish to say on this, because if I developed these points in any great detail, I would merely be repeating what I said six or eight weeks ago on the occasion of the annual Budget. Let me conclude by saying that this state of affairs will continue, a state of affairs where we have increased taxation, increased borrowing and more spending. This will continue and must continue unless there is going to be an entirely new approach to economic planning and economic development. The Second Programme for Economic Expansion can now be written off. In the light of all the evidence available, it has proved a costly failure which I believe it will take this country many years to overcome.

Mr. Lyons: Information on Michael D. Lyons Zoom on Michael D. Lyons I suppose that speaking on the mini-Budget now might be said to be something like flogging a dead horse, but I believe that the views of the people in the rural areas, and particularly in the western areas, in regard to the effects of this Budget should be spoken about in this House. Many of the speakers, particularly from Dublin, have mentioned merely the question of [1583] housing and other problems relating to local authorities, and while many of the speakers on the Fianna Fáil side of the House have attempted to blame outside conditions for the position in which we find ourselves today, I believe that, in the main, the Government are responsible for the first Budget, which was described as harsh, and the second, which was described as mini, but which may become a major Budget.

Are there any underlying causes why money has to be sought inside a matter of months, why a second Budget has to be introduced by the Government in order to pay the interest on borrowed money to carry on very restricted services for the nation as a whole? It is not the policy of the Government over the past couple of years that has caused the problem, but I believe the policy of the Fianna Fáil Government from the day they first took office in this State is responsible progressively for the situation in which we find ourselves today. Why do I say that? Because I believe the policy of this Government in the early years, and indeed for the greater part of their term here, was based not on overall planning for the economy and the building up of the country but on political expediency. The moneys raised and spent were raised and spent in many cases to give a sop to many sections of voters who would support the Government and so ensure that they came back into office. I firmly believe this.

It is only in the past few years that some signs of major planning of the economy were shown by the Government. Everybody knows that a former Taoiseach was more interested in political ideals rather than economic ideals. The present Taoiseach was very successful, or appeared to be so, as Minister for Industry and Commerce during the industrial drive. When he became Taoiseach, it was felt that the economy would expand and everything in the garden would be rosy. Now, in 1966, this year of celebration of the Rising of 1916, we find that the economy is stalemated and that on all sides there is restriction of expansion and that as and from now this restriction will continue. There is no denying this.

What do the people in the west of [1584] Ireland think about a situation in which the grant for the Special Employment Schemes Office—a scheme which during the past 20 years has done such good work providing farm roads and drains in order to provide better conditions for the people in the West, even though they do not compare with the conditions in the cities and better parts of the country—is curtailed this year by £437,000 and that most of the staff will have to emigrate? The Vote for the Board of Works is cut by £1.2 million. They used to spend a lot of money down in the West. Yet, despite all these restrictions, the people find that the rates in Mayo are the highest in Ireland. Money is restricted for forestry and for land division.

Even though the Minister for Local Government has been telling us across the House there is more money for housing and that more houses will be built than ever before—he has been sending sheafs of literature dealing with water schemes to Mayo and every other county saying the target is water in every house—when we inquired at the last meeting of Mayo County Council what the expenditure on water and sewerage would be during the coming year, we were told there was no loan money available to finance it. The Minister also told me in reply to a question here that he had sanctioned a loan of £65,000 for housing in Mayo. On inquiry from the county manager last Saturday, I find the application is still being considered. The manager could give no indication when the money might be forthcoming.

With all this picture of restriction and decrease in employment and output, we find this extra tax on petrol, cigarettes and other commodities imposed soon after the slashing Budget of three months ago, and we are asked to believe by some of the speakers opposite that the country is still on the march. All the extra expenditure I have spoken about would be justified, if we provided for our people the services that other countries have been able to provide, if we had been able to assure the old age pensioner he would get more than 47/6d per week, if we had been able to look after our poor and underprivileged, if we had been able to [1585] provide the services other nations of comparable size and economy can provide. In fact, if we had given to all our underprivileged people the living conditions they deserve, it might be possible to justify a mini-Budget. But, as I see it, it is not possible in present circumstances. The Government must take the blame.

If, as I said, the Government had planned wisely and well, if instead of the policy of expediency, of giving money in order to satisfy various sections at various times as the outcry became greater and stronger, the Government had years ago based our economy on a set plan we could afford and not on conditions existing in the neighbouring country across the water, not on the living conditions in the United States and elsewhere, then we would not be in the situation in which we find ourselves today. If the Taoiseach were as competent as Deputy Andrews said here earlier, we would definitely not be in the situation in which we find ourselves.

We hear an outcry that the Opposition have been too hard on the Government, that the Opposition's duty is to say nothing that might rock the boat in order not to undermine the credit of the country. I believe the Opposition were very reasonable, but the message went around. It went to New York and elsewhere and we found ourselves in the sorry position that we were unable to raise a loan in a country of which we had the goodwill and in which millions of our descendants are happy and prosperous. What went wrong? The Minister asked it. I ask it. The country asks it. It is policy and not Budgets that went wrong. No matter how good a Budget may be in any one year, it will not take the place of a planned policy.

I say the Government stand indicted. The verdict is against them. There is no doubt that the verdict given by the electorate in the Presidential election was very definitely the result of the failure of the Government to do the things they promised when in the election previous they had asked the people to let Lemass lead on. In the west of Ireland in this [1586] year, there will be more emigration, more people attempting to get home assistance because they are unemployed, more and more money needed from the social services and, as everybody knows, less money available. That is the sorry history of the Fianna Fáil Government after almost ten continuous years in office.

Deputy Larkin rose.

An Leas-Cheann Comhairle: Information on Cormac Breslin Zoom on Cormac Breslin We had agreed that at 8 p.m. a Member nominated by the Labour Party would conclude for the Labour Party in this debate. I take it that Deputy Larkin is concluding on behalf of the Labour Party.

Mr. James Tully: Information on James Tully Zoom on James Tully Yes. It gives him an extra ten minutes.

Mr. Larkin: Information on Denis Larkin Zoom on Denis Larkin Unless the Minister for Education wants to take the ten minutes.

Mr. Colley: Information on George Colley Zoom on George Colley No; I would prefer to listen to the Deputy at this stage.

Mr. James Tully: Information on James Tully Zoom on James Tully He will not talk about the closing of country schools, I guarantee.

Mr. Larkin: Information on Denis Larkin Zoom on Denis Larkin The increase in taxation which is responsible for this debate on the Budget proposals cannot, of course, be taken in isolation. Nor can the increases in the imposts on the ordinary citizens be viewed completely objectively. The imposts, either direct or indirect, on the ordinary citizens arising immediately from the increase in the wholesale price of quite a number of commodities, which when passed on, will affect the living standards of citizens in town and country, and the increase on tobacco and petrol, which will affect them directly, can only be examined at this time in the light of the Government's history in recent years.

I do not think there is any great purpose to be served in dwelling at too great length on this Government's history over many years, particularly the history of their approach to problems affecting the workers, but it is notorious that down the years various Ministers for Finance and other Ministers of the Government have been ready to lecture, inside and outside this House, ready [1587] to admonish and to advise on the necessity to balance the national Budget. That was held by them as something sacred. Their exhortations, their advice, their supplications in this regard, having regard to the experience of the ordinary citizen in this year, can be viewed as a type of political whitewashing or misrepresentation. Repeatedly, the same Government as had expressed the view that it is essential to balance the national Budget, have, through one means or another, made it increasingly difficult for the ordinary citizen to balance his budget. The Government have used diverse and various ways to achieve this objective. One would not suggest that it was done deliberately. I do not think that even Fianna Fáil would lightly desire to impose hardships on the people. But, if it was not done deliberately, then it was done as a result of gross stupidity or through utter failure to anticipate, not for years but for months, the economic situations that would face the country at any particular time.

The Government have used many and diverse ways. They were the inventor in this country of the Wages Standstill order. They were the inventor of the phrase “closing the gap”, which was another attempt to bring about a standstill in wages and salaries. Of course, they did not use the legislative machinery on that occasion. They used exhortation and they endeavoured to use whatever influence they had outside this House to encourage employers to resist at this time legitimate claims for adjustments in wage rates made on behalf of industrial, agricultural, clerical and other workers.

In 1963, of course, the Government gave a very plain example of what they were capable of. It must be said that on a number of occasions the citizens have been fooled by the propaganda machinery of Fianna Fáil and sent them back to office. If up to that point the citizens had not had their eyes opened, certainly, in 1963, the Government demonstrated fairly clearly their lack of regard for the ordinary wage and salary earner, the ordinary agricultural worker and small farmer. When the Government at that time imposed the [1588] turnover tax they struck directly at the ordinary family man.

Let us consider this mini-Budget. This term is hardly the correct one. It might be described as a Budget from a mini-Government. If one looks at the situation since 1963, which is a fairly short period of time, one notices the lack of ability, lack of desire or some lack on the part of the Government. At the end of 1963 and early in 1964, the representative bodies of the trade union representing workers generally, on the one side, and employers, both private, public and others, reached an agreement providing for a 12 per cent adjustment in wage and salary rates. They rightly said that by that act they introduced a certain amount of stability into the wage structure. The workers had attempted to meet the situation then not only from the point of view of securing increases which were more than justified but also of securing a period in which they hoped there would be a certain stability in prices.

Government spokesmen at that time indicated here that in their view 12 per cent could not be fully justified and I think eight per cent was the figure suggested then by the Taoiseach. Yet, when the agreement was reached and accepted by the trade unions, Fianna Fáil were quick to take political advantage of it in the by-elections in Cork and Kildare. They had had a lesson in Dublin North-East where they got another lesson the next year and a third lesson this year. I suppose one should not grudge them the advantage or benefit of utilising circumstances politically. However, following this agreement, before a single worker benefited by one penny as a result of it, prices began to rise. Certain manufacturers increased their prices and in certain cases the increases were passed on through wholesalers and retailers.

The Minister for Industry and Commerce must have been aware of the situation. If not, he and his Government colleagues and the Departmental officials were living in cloud-cuckoo land taking no account of price increases, although they knew that stability had been achieved to some extent in the field of wage negotiations. If the Minister were a member of a [1589] Government of some imagination and ability, with some regard for the ordinary people, surely then he would have been thinking of what was needed to ensure continuing stability? As we know, nothing was done. The Minister and the Government sat back adopting the line they always adopted when questioned on any form of price control, that, in their view, prices should be left to seek their own level.

During 1964, the consumer price index rose steadily. In November, 1963, it was 164; in mid-February, 1964, it was 165; in mid-May, 171; in August, 173; in November, 175. In mid-February, 1965, it was 177 and in May-August, 1965, it was 180. It is now 181. I trust the Minister for Industry and Commerce and the Minister for Finance occasionally look at the statistical journals. These are published quarterly and one would expect the Minister would normally be aware of what is happening in such vital matters as consumer prices. The Index shows, at least in an official way, whether the ordinary families are finding it increasingly difficult to balance their budgets. Yet in that period from November, 1963, to August, 1965, there was a ten per cent rise approximately.

Deputies will remember that there was an election in 1965, and although the Government must have been aware of the price increases and difficulties arising in financing the rather generous capital programmes of 1964 and 1965, they kept their awareness very closely to themselves. Ministers and leading Fianna Fáil speakers from the Taoiseach down to the humblest Deputy and the Senators in that election period managed to conceal from the public that there were any serious economic difficulties, that there was any problem facing the country either through increases in prices or the growing impossibility of financing the capital programme. Of course speakers from other Parties during the election campaign referred to these problems but the Minister for Finance, the Minister for Industry and Commerce, the Minister for Local Government and the Taoiseach himself were very coy indeed. They did not run around the country, taking anybody into their confidence. But they were quick [1590] enough, once the election was over, to let out these problems and, to some extent, to expose their difficulties. We had, therefore, the emergence, in the latter part of 1965, of difficulties in the capital programme. How did these difficulties emerge?

In the early part of the year, we had the situation that the Minister for Local Government was trotting round the country almost shovelling out loans. Circulars were going out to local authorities to produce schemes. Members of local authorities were almost challenged that if their local authority did not have schemes in the Department of Local Government within 24 hours, the Minister would get up in this House and publicly upbraid them for not spending the money which he was making available for them. The Minister for Local Government was charging local authorities with impeding the housing programme: he had provided everything so that they could get on with the housing. That was in the early part of the year, before the election. In the latter part of the year, what did we have?

In the latter part of the year, we had the same Minister sending our circulars or avoiding questions in this House about sanctions for schemes and money to carry out the schemes of road development and housing development submitted to his Department. The same Minister was being queried about the delay in sanctioning schemes that were submitted. This is a Minister of a Government who claim they have some ability to plan the economic future of the country or possibly they are thinking in terms of a programme. I do not think it necessary to remind the House that it is not too long since the Taoiseach and his Minister would not even consider the words “programme” or “plan” as other than dirty words. There was a period when the Taoiseach and, I think, Deputy MacEntee, too, were not very fond of those words. The Taoiseach laughed to scorn any idea that the Government should try to prepare an economic plan for the country. However, Fianna Fáil have a way of being partly converted. That was the general situation which had developed.

[1591] Over that short period, from 1963 until the end of 1965, we had a situation where the efforts, to some extent on the employers' side, to bring about some wage stability had some little genuineness about them. The efforts of the trade unions and the thousands of workers organised in trade unions to accept the responsibility, to meet the responsibility as trade unionists, workers and citizens, were to be brought to naught by the failure of this Government. So, in 1965 we again had a problem.

The Minister for Industry and Commerce came into this House towards the second half of 1965, shortly after the election, with a Prices Control Bill. The Minister for Industry and Commerce was quite well aware that the Irish Congress of Trade Unions was having its annual meeting in the same month and that it had resolutions on its agenda about the necessity to increase wages—so he took time by the forelock. The difficulty was that he took time by the forelock 18 months too late. Even at that particular stage, another situation was developing.

While the Government were doing nothing, the representatives of the workers were again endeavouring to face up to their responsibilities, to look after the interests of the members as best they could and to avoid trade disputes if they could. They decided, in 1965, to approach the Federated Union of Employers for discussions and, in the meantime, to raise questions of adjustments, fringe benefits, additional holiday pay, and so on. Now, this attempt to narrow the field of disagreement on the industrial side was not met by the employers in the same spirit as in 1963. I am convinced that the attitude of the employers in 1965 —that was primarily responsible for the industrial disputes during that particular time—was not a little strengthened by the attitude of this Government. There was the failure to deal with and to negotiate.

We have heard the Taoiseach today in this House talk at some length about negotiation. One wonders what the [1592] Taoiseach meant when he talked about negotiations. Does he mean something other than what is meant by the Minister for Finance or the Minister for Industry and Commerce or the other Ministers of this Government, or is his interpretation something other than that given by the Federated Union of Employers during the latter part of 1965?

The Taoiseach repeatedly said that he thought that disputes could and should be settled by negotiation. He indicated that what he meant as regards that matter was that, if two sides had a problem and a dispute, it might be well to adjust that by some give-and-take on either side. The Taoiseach must not have conveyed that anywhere during the latter part of 1965 when we had the peculiar situation in this country of a downright official refusal by an organisation known as the Federated Union of Employers to negotiate on fringe benefit claims made on behalf of the workers—even at a time when members of that organisation were willing to negotiate and had, in certain cases, negotiated and settled claims. The Taoiseach is free with advice which he is fond of giving to the workers and the Minister for Industry and Commerce was a little bit free also. If they had tendered some advice to the Federated Union of Employers in 1965, perhaps there would not have been the loss of man-days which there was. The workers are beginning to think that there are two employers' organisations, one known as the Federated Union of Employers and the other known as the Fianna Fáil Government, because by a peculiar set of circumstances, their thinking appears to coincide very closely.

We had, then, during 1965, three things—a constant increase in prices, the failure of the Government to do anything about the increasing prices and a refusal by the main employers' organisations to negotiate on fringe benefits. That refusal was not confined to employers' organisations because certain semi-State bodies adopted the same attitude from July to December. Yet we hear the Taoiseach saying today that problems in regard to industrial workers, or in regard to agricultural [1593] or clerical workers, should be capable of being solved by discussion and some accommodation.

That statement would be laughable, were it not for the position of workers who are compelled to take strike action when they cannot achieve their legitimate objectives by free negotiation. We have in 1966 a development of what we had in 1965 and for which this Government are mainly responsible. I do not think that members of trade unions require any defence. Responsibility for our economic problems and for the increase in industrial strife which occurred in 1965 and 1966 should be placed on the shoulders where it belongs. More man-days were lost in 1965 through failure to do what the Taoiseach suggested today, to sit down, discuss and negotiate and try to reach accommodation. The employers failed to do that. In 1966, even in face of this difficulty, we have the organised representatives of the workers endeavouring again to play their part with a sense of responsibility, not only to their members but to the community, and their sense of responsibility to the community is probably greater than the sense of responsibility of anybody in this House because they represent the overwhelming mass of the community.

The situation was reached in which negotiations broke down and they went to their members and recommended that an adjustment of £1 a week be sought and secured in order to meet the increase in the cost of living which had taken place as a result of Government inactivity in the past two years. So we then have the Government showing a sense of responsibility or advising or exhorting the employers that they might meet this reasonable application, or that they might settle these matters by discussion? Oh no; the Government then play their old game of what they call “staying out of the ring”. They can come into the ring when they want to advise the workers to be good boys but otherwise they stay out. We had the situation in April that in this city 5,000 men and women had to go on strike to secure the £1. When they secured it, other workers—for which everybody is glad [1594]—secured it also, many of them without the necessity of having to go on strike.

However, these workers had been attempting to negotiate fringe benefits for six months. There was no discussion, or if there was discussion, there was no answer, no move. When they moved to get the £1, they were forced on to the streets for four weeks. Five thousand workers out of work for four weeks—that will be a statistic in the next Quarterly Bulletin. Today the Taoiseach referred to the £1 a week. The contribution of the Minister for Finance at the time was that they could not see the justification for anyone getting more than a 3½ per cent increase and that as far as he was concerned, any adjustment, even of the £1 a week, would be limited to those earning less than £1,200 a year. Perhaps the Minister might bring me up to date on this question of the £1 increase in respect of employees in Government Departments and the Board of Works. Up to a few hours ago, I was not sure that they had received it.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch The staff side are meeting the official side at present about it. When I say “at present”, I mean that there have been one or two meetings and there will be another one this week.

Mr. Larkin: Information on Denis Larkin Zoom on Denis Larkin I thank the Minister for that information. The situation is as I anticipated. Last week I had occasion to meet the Minister for Health about another matter and we discussed the question of male nursing personnel in various parts of the country who have only £8 or £9 a week. In many cases they did not get the £1 a week increase. As I understand it, the position was that they could not get sanction unless the Minister for Finance moved.

The Minister for Finance and every member of the Government must be aware that the £1 a week was sought in respect of increases in the cost of living between November, 1963, and November, 1965. There has been a further increase in the cost of living this year and the people hit hardest [1595] by these increases in the cost of living number among them employees in Government Departments, semi-State bodies and local authorities. Surely the Minister will agree with me, and I understand he is not an unkindly man, that somebody working on £8 or £9 a week is more likely to suffer hardship from an increase in the cost of living than somebody in his Department with a salary of £3,000 a year, £1,500 a year or £1,200 a year?

I do not begrudge people on satisfactory salaries getting an increase when the cost of living goes up, but I say again that the impact of living costs is hardest on those on low wages, those on social welfare benefits and social assistance. Whatever responsibility the Minister or the Government may have for other people, they have responsibility not to allow unjust wages to continue from week to week in the areas in which they have control, when workers outside their control have been enjoying increases for months now. Even the Agricultural Wages Board agreed to increase the wages of agricultural labourers by £1 a week months ago.

Today the Taoiseach calmly stated that the £1 a week increase had been secured by a majority of the workers. If that increase has been secured by the majority of the workers, it was secured by them by the very type of action which he was deploring, by the fact that these workers were forced to take the type of action he has been deploring. He and his Ministers should have been the first to set a good example; yet, they are among the last to concede that increase. The workers in the various Government Departments will probably have to wait another few weeks. Perhaps they will get back money, but if they get a lump sum, some one will try to take it from them by way of income tax. In the meantime they will have had to pay more for tobacco and their fares have gone up. I saw a reference in the newspapers to the fact that the fares in some sections have gone up by over 700 per cent. The people using public transport have to pay these fares out of their wages, less the increase.

[1596] Does the Minister for Finance ever look at his own statistics? Does he ever consider that it is not possible for a worker in this city to maintain himself and his family on the average wage set out in his statistics, a wage of £10 to £11 per week, which includes overtime in many cases? This £10 a week will be affected to a great extent by this new impost of five per cent. We know that it does not apply to all goods but it goes on to many of the commodities the worker has to have.

We now have a Budget introduced ten weeks after the main Budget by a mini-Government. I have endeavoured to show as reasonably as I can where the responsibility lies for the industrial unrest in this country. The responsibility lies on the shoulders of those who, up to the present time, appear to be incapable of anticipating developments. We now have a situation in this city where the citizens find it increasingly difficult to obtain housing accommodation. The price of houses is going up steadily and, at the same time, even those who can scrape together the deposit are finding it impossible to get loans from local authorities because of the restrictions on the money made available to the local authorities for this purpose from the Local Loans Fund.

In Dublin this year the situation is almost chaotic. We have heard of a scheme for financing house purchase by which the builder makes the money available to the housing society to lend it to the house purchaser. I do not know where the builders can get the money. The local authorities cannot get money to make grants available to them. In the case of my own local authority, people who apply for loans after 21st January last get a polite letter telling them that they will be put on the waiting list, and if the money is available, they will be approved for the loan and the money given to them.

I was myself critical of the then Minister for Local Government in the period 1955-56 in the then difficult circumstances. The Minister's colleagues in this House and outside during that period made it a condition, where they had control of local authorities, [1597] that no loan would be approved unless the money was available to be given out when the application was made. Now the situation is, and Fianna Fáil must be admired for their sleight-of-hand in bringing it about, that they tell local authorities that they cannot give them the money and that if these authorities get applications for loans, they should send the applicants a letter stating that they may be able to approve of the loan, if and when the Minister tells them that the money is available. This may be 1966, 1967, or some time in the future.

Reference has been made by many speakers to the increase in unemployment. There were 6,000 more unemployed in the last week of May of this year compared with the same week in 1965. Employment in the building trade has dropped considerably, and is still dropping. There is need, I think, for the Minister to have a look at the entire tax structure. Between direct taxation, indirect taxation and local taxation, the people who rely in the main on wages and salaries find themselves caught both ways. Yet, these are the people upon whose efforts, be they employed in industry, working as small farmers or as agricultural labourers, we depend, when all is said and done, for economic progress in both industry and agriculture; but these are the people who are worst hit by taxation.

It is hardly necessary for me to tell the Minister that his so-called mini-Budget will bear most heavily on these people. The five per cent sales tax will not apply to all commodities, but when one adds up the possible total on tobacco, petrol and the passing on of the other increases, it is quite obvious that those who will suffer most are the ordinary members of our community.

At the moment—I should like to bring this to the Minister's attention —there are 100,000 male workers earning less than £10 per week. Out of that £10, if they are single, they must provide themselves with shelter, clothing and food. If they are married, they have the added problem of providing these things, not only for themselves [1598] but for their wives and families. The Minister should have a study made to find out how a family subsisting on an income of £10, or less, per week can be other than undernourished, and badly clothed. There are 50,000 female workers who have less than £5 per week. Perhaps there is another credo in Fianna Fáil which leads them to believe that there is some wide divergence between men and women and that, because of that, women can exist on very little. Maybe they are second-class citizens. There are a great many second-class citizens in this country at the present time. Such a study as I suggest might be very useful. Many of these people work fairly hard; 50,000 of them have less than £5 a week.

These, of course, are not the kind of budgets in which the Minister is interested; these are not the kind of budgets about which he is concerned. The concern of the Minister and his Government is to talk in millions. A married man trying to live on £10 a week, or a single man in receipt of the same amount, or a girl with less than £5 a week, is hardly competent to budget and argue on the basis of millions. They are competent only in trying to stretch these miserable wages from week to week, in trying to keep out of the hands of the moneylender and the loan shark, in trying to keep ahead of the weekly bills that keep pouring in. These are the budgets with which they are concerned. These are the budgets with which I am concerned. It is time the Minister and the Government took some thought for the budgets of the ordinary citizens.

Mr. T.F. O'Higgins: Information on Michael Joseph O'Higgins Zoom on Michael Joseph O'Higgins In recent years, both here and in Britain, we have, I think, learned of the danger of stop-go budgetary and economic policies. There has been no greater source of economic disruption in recent times, no greater source of national discontent and lack of stability than the incompetence displayed by Governments in permitting the economy to go in a certain direction and then suddenly stopping it to apply contrary measures. The contrast between inflation and deflation has been felt, experienced and suffered by many [1599] thousands of small workingclass people in these islands over a number of years. In the last decade, in particular, there has been a demand, expressed in many ways, by many thousands of people for an end to economic recessions and reversions of policy which have led so frequently to wholesale unemployment, want and hunger in these two islands.

I should have thought that here, in for the two Programmes for Economic Expansion, it rested on the necessity to try, in our circumstances, to achieve a steady economic advance and economic growth over a number of years. That, indeed, was the understanding of the people in recent years; they understood we were at last getting away from the old type of stop-go policies and getting back to some sort of rational planning and programming of our economy. Unfortunately, whatever may have been wished for has certainly not taken place because we are back now again in the old days, in the middle of a period of capital shortage, of financial stringency. We are back in the circumstances and in the times when sudden reversals of policy lead to frustration and discontent amongst our people. particular, we would have learned the lesson of stop-go Government policies. Certainly, if there was any case to be made, and no doubt there was a case,

Whatever the present situation is, with capital short, with a credit squeeze affecting everybody, with the Government unable to pay their way in relation to the ordinary things people expect from them, it seems clear this situation has been brought about by extremely foolish mistakes made by the Government just two years ago. I do not think it is unfair to say that the general picture presented today by the Government is one of inefficiency, of faulty planning, of hasty decisions, of hedging and, generally, of tired and weak leadership. I have little doubt that the present situation which affects the country would, even in other times, and perhaps times when better had not been expected, have had a bad effect on public morale. The effect in our present circumstances has been particularly disastrous because in the past [1600] two years so much was promised and, therefore, so much was expected of the Government.

It is only two calendar years since the Second Programme for Economic Expansion was announced, was published, was ushered in as some kind of harbinger of good times, of steady growth in the economy, and of a more general prosperity for all. In 1964 when this Programme was announced, the people were led to expect that a conscious, sustained and determined effort would be made to organise our national resources to provide more jobs at home for Irish men and women and in order to achieve, if not the end, at least the lessening of the trend of emigration.

When the programme was announced, there was, as a result, a general feeling of euphoria created, created by the heady promises implied in this programme of the good things that were to come. So general was that feeling that it was fruitless at the time for us in Fine Gael to do as we did, to remind the people that this was a programme and not a plan, that being a programme, it gave no indications of how these targets were to be attained and that, above all, it did not aim at providing for the social advancement of the people. In 1964, it was particularly fruitless for us, at that time of slush money everywhere, of lavish expenditure and of all the appearances of prosperity, to indicate, because we were not heeded or listened to, that any economic programme, any economic plan, if it were to be implemented, if it were to achieve its targets, required the conservation of the national resources, of the finances available to the country, of national credit, towards productive ends.

Two years have passed, and we now have to look at the situation the Government have brought about. We can see in the first year of this economic programme the credit resources available in this country were frittered away on purposes and on objects that had no productive result so far as the country was concerned. Now in the third year of the programme, we look at certain dismal figures. In regard to employment, under the Second [1601] Programme in its third year, 35,000 new jobs were promised to our people. The actual position today in the third year is that there are 6,000 fewer jobs than there were three years ago. In regard to taxation, the programme envisaged this year, in terms of 1960 figures, that taxation would reach £211 million. In fact today it totals, in 1960 terms, £230 million, and the rate of taxation has increased 50 per cent faster than the programme envisaged. Today we have reached the position that in so far as the increase in national output is concerned, under the taxation burden proposed and operated by the Government, almost 60 per cent of the increase in gross national product this year is being taken in taxation. I do not know what the Taoiseach or the Government would like to call the difference between programming and planning, but if what they put forward as their considered policy in this Second Programme has led in three years to a fallback of 41,000 in relation to employment, to an increase in taxation at a rate of 50 per cent faster than was planned, to a situation in which we have in one financial year two Budgets and the danger of a third, I suggest that the time is fast approaching when the people of this country should get a little bit more of planning and a little bit less of programming.

Just look at this Budget. Amongst the items the Minister asks the Dáil to provide money for is the provision of another £100,000, a small item, for social welfare purposes. He has not specified the purpose for which that money is required, but apparently it arises from some failure to estimate just ten weeks ago.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch That was just an adjustment made in the social welfare benefits.

Mr. T.F. O'Higgins: Information on Michael Joseph O'Higgins Zoom on Michael Joseph O'Higgins On the very day the Minister announced he had to seek another £100,000 for that purpose, the Minister for Social Welfare, answering a question in the Dáil, disclosed that as a result of an increase in the pensions payable to our people who had been working in Britain and [1602] a consequent adjustment in their old age and widow's pension here, the Irish Minister for Finance has gained this year a total of £268,000. I wonder where is the adjustment for that? Are we to have a situation now in which this benefit of £268,000 has been received as a result of an increase being made available by the British Government to people who have British pensions but nevertheless on the day that is announced in the Dáil, the Minister seeks another £100,000 for adjustments necessary to social welfare benefits here?

We have not reached the target in employment. We have increased taxation well beyond the rates specified and projected in this Programme. As far as emigration is concerned, the drain is still there. Steadily, unchecked, month by month our people are continuing to leave this country. We have not even made any impact on trying to retain any reality in our money, in our wage structure and in our prices. Even in the past 12 months, the cost of living has increased by five points. I want to know whether the country can now regard this Second Programme as something to be committed into the museum as an odd exhibit in our economic history. Instead of advancing, we appear to be going backwards. Instead of providing jobs, we appear to be disemploying our people. Instead of ending emigration, we seem to be watching with complacency the continuation of the trend. Instead of providing stable economic conditions, we are now back in a situation in which it is “go” one minute and “stop” the next.

We used to hear from Government speakers in recent years, particularly in 1964, great play being made of the financial difficulties this country had to face just ten years ago in 1956. The Government—I do not blame them for it—certainly made as much play as possible with regard to the difficulties which faced this country just ten years ago. They never of course adverted to the fact that the economic crisis of that time affected not only us but every other country in Western Europe. Nor did they ever recognise the fact that [1603] in 1956 steps were taken in time which resulted in putting an end to those particular difficulties. Nor did they ever recall the fact that in 1956, despite the capital shortages the country faced, despite the financial stringency the country had to meet, despite all these things, the Minister for Finance and the Government ten years ago were not forced to borrow abroad. It is a doleful fact that in a Budget which ended at the end of March this year there was a deficit disclosed of £8 million. For the first time ever, we had the spectacle in relation to last year's Budget of the Minister for Finance borrowing in order to meet that deficit of £8 million. In fact, it was met as a result of an effort, first of all, to raise a dollar loan and later by raising a loan in Germany.

I am going to suggest that we are reaching a stage in which the patience of many people, particularly young people, is running out. I believe the people will be no longer interested in bromides and palliatives. They expect from the Government active and sustained leadership. They expect the Government to be able to point the way towards something worthwhile, towards national targets that can be achieved. They expect from the Government a sustained effort to see that these targets are achieved. The Taoiseach in this debate has told us of the high opinion in which he holds his Ministers. I am sure his Ministers also hold him in high esteem. But a little bit of mutual admiration is no substitute for a policy. The people from this on will mark with care the evidence of efficiency from this team of Ministers and from the Taoiseach.

The Taoiseach has said that there will be no election before 1970. I do not know how good a prophet the Taoiseach is. If Deputies are interested they might like to read volume 203, column 1406 of the Dáil Debates where they will read the Taoiseach saying in the Dáil in precisely the same words:

If anyone wants to know the date of the next election I will tell him [1604] here and now. It will be in the autumn of 1966.

When the Taoiseach said that—it was not in this Dáil; it was in the last Dáil —he received the same applause from his own backbenchers as his statement about there being no election until 1970 received the other day.

However, let us assume that there is no election until then and that is a little more than three years away—call it three years away—if this Dáil continues in that period, this Government will have to shake themselves; they will have to demonstrate to the country that the targets set out in their programme will be achieved; they will have to ensure that young people leaving our schools can have a confidence that they will be able to get a job here at home; they will have to be able to ensure that any increase in our national wealth, any money earned as a result of economic progress here, is fairly divided amongst our people; they will have to ensure that the burden of taxation will not continue to rise to such an extent that it almost stifles the effort of individuals.

If the Dáil continues, if an election is a number of years away, I want to assure the Minister that he will face from the Fine Gael Party sustained and constructive opposition. He will face from us in Fine Gael a Party who have a policy, a Party who know precisely the kind of Ireland we would like to build, a Party who believe firmly in economic planning, a Party who believe in planning towards a worthwhile end, the end of establishing here a just society. We will continue in Opposition to advance amongst the people the policies we believe in. We will continue in Opposition to provoke new thinking amongst our people, to instil in them a new and fresh interest in where this country is going.

There has been talk in recent weeks about national aims. Our national aims may be stated from time to time according to the particular beliefs of the person who states them but, fundamentally, the national aim which will remain important is raising the living standards of our people and providing a way of life at home in Ireland for more Irish men and women.

[1605] There is no political Party in this country that can now safely claim a monopoly of patriotism or of nationalism. Efforts to do it on behalf of particular Parties in the past have always been rejected by the people. I believe that we in this Dáil, no matter on what side of the House we sit, have a duty to give of our best in the interests of the country. So far as we in Fine Gael are concerned, we will do just that. We will continue to endeavour in Opposition to get the country thinking again, to seek amongst people a new interest in the ideas that we put forward and in that way we hope to contribute constructively to the work of the Dáil and to the future of the country.

This is the second Budget this year. I do not know whether we are to have a third one. But we have arrived at a situation in which the burden of taxation on ordinary people has reached a limit beyond endurance. There have often been assurances and promises by members of the Government that care would be taken in expenditure, that there would be economy in this direction and in the other. I do not know whether that is practised seriously but I do want to suggest that if the people are not to be driven in more hordes from the country some effort will have to be made to prevent the impact of taxation increasing further.

There are large bodies of our people that can react against the increasing burden of taxation. They can react by seeking some redress through organised effort but there are thousands of people who have no means of redress, who exist on fixed pensions and fixed incomes, who have retired on a pension fixed many years ago. These are the people, all individuals, whose voices can never join in a tumult and whom this steady increase in taxation affects and hits most disastrously.

I hope that this Budget will not cause the trouble and the disaster that some Deputies have suggested. I hope it does not result in a further increase in living costs because I do not believe that we can afford that. If we have anything like a repetition of the mistakes that were made in the last two [1606] years, I do not believe the country will be able to sustain what might be involved.

It is not possible for us at this stage in this Dáil to do more than criticise the Government. It is not possible for us to do more than to indicate that if there are further mistakes made we will point them out. I hope sincerely that this will be the last such Budget that we will see introduced. At some time—in the near future, I believe— some effort should be made by the Government to remove the restrictions which are at present strangling economic effort in this country. I believe we could afford to have a reduction in these restrictions, of freeing of credit. It is necessary that that should be done if we are to get out of our present difficulties. But, in any event, I hope that next October we will not have to pass here again, at the instance of the Minister for Finance, more taxation and I hope also that we will not see further efforts at borrowing at an expensive rate abroad because all this in the long run has to be paid by our people some day.

We have indicated our opposition to this Budget and to this Resolution. The Resolution which we are discussing is in relation to this new tax. Before I conclude, I should remind the House, as other Deputies have already reminded the House, that the tax involved in this Resolution introduced now by the Minister for Finance is something that might well have been thought of, might well have been considered, away back in 1963. The source of all our present difficulties, of all the economic confusion and turmoil which affected the country in the past two years was the turnover tax introduced in the 1963 Finance Act. That tax, which appeared so simple and attractive to a Government who did not understand it, led to the steep rise in living costs which had to be adjusted by the 12 per cent wage increases at the beginning of 1964. These, in turn led to the inflation of that year and brought about the difficulties which we have since experienced. At the end of all that, we now have a new tax introduced by the [1607] Minister for Finance which, if it had been considered, as a selective tax excluding necessaries of life and things necessary to ordinary workers' families back in 1963, might have avoided the economic difficulties we have since experienced.

I believe the Government have made grave mistakes. I hope these mistakes will not be repeated. I believe the country will be very exacting on the Government from now on because the ordinary people have realised that the promises made to them have not been carried out, that programmes which appeared so attractive two years ago have not been implemented efficiently. I have no doubt that in the years ahead the people will expect the Government to deliver the goods.

Minister for Finance (Mr. J. Lynch): Information on John Lynch Zoom on John Lynch This debate began on the 14th of this month on Resolution No. 3 which is preliminary to the introduction of Finance Bill No. 2 and, by agreement of the House, it was decided to allow the debate to range over much the same type of subjects as would be discussed in the course of a normal Budget debate. As a result, many speeches that we heard on the original Budget debate were repeated and I think the House will agree that it would be impossible for me in the time now available to cover the points raised in what, in effect, was a period ranging over three weeks of Dáil time.

I have decided to take three or four points made in the course of the debate and try to put some of them which were made with rather muddled thinking behind them, or perhaps more than muddled thinking—a direct attempt at misrepresentation — in proper perspective. I cannot remember a Parliamentary year in which there was so much debate or so much opportunity for debate, on our economic situation as this year. Starting with the Budget debate of just over a year ago, we had the general economic debate in July, one in November of last year, one in January and one in February, the Budget debate of last March and now this one. [1608] I doubt if there has been any year in which general economic issues have been so much discussed as they have been this year. Neither can I remember so many speeches, particularly in this debate, from Opposition benches that could have the effect of undermining confidence in our economy. It is a great pity that this and other debates to which I referred were availed of to such an extent to gain narrow Party advantage by misrepresenting important matters in such a way as to be capable of doing serious damage to the nation's economy and the national interest.

It is not enough for Deputies to make wild charges—some Deputies, of course, would be regarded as particularly irresponsible—but it is not good enough for them to do this, thinking that what they have to say will only get into the Irish papers and will only affect the thinking of our own people. There are men sitting in the Press Gallery whose job it is to report what they hear in this House objectively for our own papers and, indeed, for foreign papers and magazines. There are diplomats who come in here and whose duty it is to report back to their Governments the economic scene as they see it here in this country and report what they hear, as they do hear often when they come in, what is being said in this House. Therefore, every Deputy who makes wild charges, who tries to undermine our economy, no matter for what purpose, must realise he is capable of doing serious damage to our economy.

At the outset I want to deal with the point raised at the end of the Finance Bill debate in the House last night by Deputy Sweetman which I did not have an opportunity of mentioning earlier. He referred to the discrepancy in the publication by the Central Statistics Office in the unrevised figures for our trade for the month of May. The preliminary trade figures in any month are usually published about the middle of the succeeding month and they are necessarily, to say the least, in imprecise form and it often happens that there is an adjustment to be made when the figures are fully examined and when the documentation is fully to hand, of [1609] something in the region of £250,000 to £500,000 in any particular month.

As usual, the trade figures for May of this year were published on 15th June and not until Friday, 24th June was it discovered that there was more than the usual discrepancy, a discrepancy, in fact, amounting to £1.9 million, which, happily, was in our favour. This discrepancy, when corrected, indicated that our exports were almost £2 million higher for the month than they in fact appeared to be. Deputy Sweetman suggested that the figures informed the debates we had in the past couple of weeks and certainly informed the economic thinking of the Opposition and of the Government, and I cannot deny that. I asked for an explanation of this unusual discrepancy when I first heard of it and I have now been informed by the Central Statistics Office that in the ordinary use of the computing machine, cards are fed into it and on this occasion some of the cards that were fed in were damaged to the extent of being destroyed and their contents were not disclosed in the end result.

It was only on last Friday, 24th June, that it was discovered that this damage was done. It is an unusual happening. I suppose all machines can be defective to some extent. As soon as it was discovered, it was not possible to make an announcement on Friday but it was possible to do so on last Monday which was the first available date.

Mr. Corish: Information on Brendan Corish Zoom on Brendan Corish An inhuman error.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Yes. While it was serious to an extent, I do not think it was as serious as Deputy Sweetman suggested last night because I am sure no Deputy would have changed his speech in the House in the past couple of weeks by one dot or comma if he had realised that we were, in regard to our balance of payments position, £1.86 million better off than, in fact, appeared to be the case. However, I trust Deputy Sweetman and members of his Party will accept that as an explanation of what really happened.

Some opposition speakers endeavoured [1610] to saddle the Government with all the blame for the recent price increases. It is necessary, therefore, to put the facts on record. The Consumer Price Index remained virtually unchanged between mid-May, 1965, and mid-February, 1966, and the following were the figures. Taking mid-August, 1947, as equalling 100, mid-May, 1965, was 180; mid-August, 1965, was 181; mid-November, 1965, was 181 and mid-February, 1966, was 181. Between mid-February and mid-May of this year, the index moved up by 3½ points or two per cent to 185. Of this increase, 1¾ points, or half the rise, was attributable to the extra taxation imposed in the Budget of last March. The increase of the other 1¾ points was mainly the result of increased food prices, in particular, eggs, tomatoes and beef. However, it is obvious that the Government's surveillance of prices generally ensured that no avoidable increases in prices took place during this period. In the meantime, there have been increases of some six to seven per cent in remuneration, in salaries and wages, as compared with a rise of about three per cent in the volume of national production. These increases of six to seven per cent are at present being given on a wide scale and will very shortly, we feel sure, have been applied to most, if not all, of the employees in the country.

As I mentioned when introducing these resolutions, the Government accepted rises of this size, as recommended in the guide lines of the Labour Court, not because of the standards set down in the NIEC White Paper of what ought to be the level of wage increases, compared with the rise in national productivity, but because they accepted the judgment of the Labour Court and exercised their own judgment on the position that more serious economic results would follow——

Mr. Corish: Information on Brendan Corish Zoom on Brendan Corish They said “incomes”; the Minister said “wages”.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Incomes generally will increase, obviously.

[1611]Mr. Corish: Information on Brendan Corish Zoom on Brendan Corish He referred to wages and salaries specifically.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch It is a valid point and it remains valid that salary increases, wage increases, income increases, ought to be fairly well in line with the rate of increase in our national production. If it goes beyond that, as there is a danger in this case, there will inevitably be an adverse effect on prices. If pay increases greater than the rise in national productivity are insisted on, then increased prices are certain to follow and will have to be accepted. The taxation I imposed last week to meet the cost of maintaining the salary round to State personnnel and to pay for the income transfer to the farming community is estimated to increase the Consumer Price Index by one point.

There have been complaints during the course of this debate about the continuing rise of taxation and prices but no criticisms have been made about the main cause of the rise, that is, the increases in incomes.

Mr. T.F. O'Higgins: Information on Michael Joseph O'Higgins Zoom on Michael Joseph O'Higgins Does the one point include butter?

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch No. It may be somewhat attributable to butter—it must be, of course; I shall have to check that. I said the tax increases I imposed would amount to one point. Butter would hardly come into that and would probably have to be accounted for separately. If there have been increases in wages, in incomes, it is obvious that if they are in excess of national productivity, then there are bound to be repercussions both in taxes and in prices. If it is remuneration for the civil servants, teachers, Garda, the Army, that is in question, or higher incomes for farmers or for social welfare beneficiaries, it is necessary to have increased taxation and this increased taxation cannot but affect prices to pay for the rise in incomes.

If it is for remuneration in private business or in semi-State bodies, the prices of the goods and services provided by these are bound to be affected. This is particularly true of the [1612] services sector where an increase in productivity to match a large-sized increase in incomes is usually very difficult to achieve, certainly less likely to be achieved than in manufacturing industries. A case in point is the increase in CIE fares and freight charges. The Labour Party members have been particularly vocal in denouncing these increases but they had not thought, obviously, for what purpose the increases have been put into force. The £1 a week rise in wages will cost CIE £1,200,000 annually. In addition, since the last general increase in wages in March, 1964, improvements within CIE in wages, salaries, pensions, sickness benefits and other conditions of employment have added another £900,000 to the annual wage and salary bill of CIE. It is true that increased efficiency is being employed in so far as it can to offset these very big increases but it is obvious that these improvements in efficiency will have a limited effect on depressing fares and freight charges.

Deputy O'Higgins mentioned the introduction of the turnover tax and repeated what all Fine Gael people have been saying, that it was the root of all our evil. Let us examine that point. The turnover tax, as a cause of price increases over the past 12 or 18 months, accounted for three per cent of the increases as against 12½ per cent, overall, in consumer prices but it is so accountable, in the main, by increased wages, increased incomes. Therefore, it is untrue to suggest that the turnover tax has been the root and only cause of all the difficulties now facing the country.

I should like to raise at this stage the repeated allegations in this House of the effect of the introduction of the obligation in the 1963 Finance Act to disclose certain deposits held by the banks in this country. We have heard many alarming figures quoted as representing the amount of these deposits which were withdrawn and placed outside the country following the disclosure requirements of that year. The estimates have varied according to the views of the individual speakers and their disregard of [1613] the harmful content of the remarks made. Some parties have shown their anxiety in respect to the capital available in this country by explaining in great detail certain devices of which they are aware of placing deposits outside the country. I am sure that many of the financial houses from abroad who now have branches in this country will be pleased by the advice and free information given to them by members of this House.

I would like to state emphatically that I have been unable to obtain any reliable evidence from the banks or from any other source that even £1 million was withdrawn.

Mr. Corish: Information on Brendan Corish Zoom on Brendan Corish The Minister has made detailed inquiries?

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch I have made inquiries as far as inquiries can take me and I am quite certain that the amount so withdrawn was quite insignificant.

Mr. T.F. O'Higgins: Information on Michael Joseph O'Higgins Zoom on Michael Joseph O'Higgins How much?

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch I have said that it was hardly £1 million. In the first place, such withdrawals would have been of no avail to offset the disclosure requirements of the Finance Act of 1963 because it applied to interest paid or credited after 6th April, 1962. It applied to that interest. The deposits were already there; the interest paid was already given or credited to the depositors; and therefore there was no purpose in moving any deposits at that time. If there had been a net withdrawal of any consequence from this country before the Budget of that year which was introduced on 21st April, it would have shown up in the total figures of amounts held on deposit in the bank accounts. These figures show no such trend, and apart from normal seasonal fluctuations, they show a steady movement upwards which has continued from April, 1963 up to the present time.

We have not got the facilities in this House of asking that certain statements be entered on to the record without having them read out and for that purpose I propose to read out [1614] certain figures which will discount the truth of the assertions that have been made. I would like to hand these figures to members of the Opposition and would add that I have gone to this trouble because I think it important to quash once and for all the unfounded and startling allegations made about the withdrawal of money from this country. I propose to read these under the heading of current accounts, deposit accounts, and the total.

In April, 1963 current accounts totalled £153.9 million and deposit accounts, £246.4 million, making a total of £400.3 million. In May, 1963, the current accounts were £152 million, the deposit accounts, £241.1 million and the total £393.2 million. In June, 1963, the current accounts were £168.2 million, the deposit accounts, £243.8 million and the total £411.9 million. In July, 1963, the current accounts were £161 million, the deposit accounts £244 million and the total £405 million. In August, 1963, current accounts were £164.6 million, deposit accounts £243.1 million and the total was £407.7 million. In April, 1964, current accounts were £179 million, deposit accounts, £244.4 million and the total £423.4 million. In June, 1964, current accounts were £187.9 million, deposit accounts, £250.4 million and the total £438.3 million. In August, 1964, current accounts were £184.7 million, deposit accounts, £250 million and the total £434.7 million. In April, 1965, current accounts were £191.3 million, deposit accounts, £260.1 million and the total £451.4 million. In April, 1966, current accounts were £208.7 million, deposit accounts £283.1 million and the total £491.8 million.

That demonstrates very clearly that these wild allegations are obviously unfounded. Distortions due to seasonal fluctuations can be eliminated by comparing figures for the particular months in the different years. The figure for current accounts in April, 1963, was £153.9 million and in April, 1964, it was £179 million. The corresponding figures for deposit accounts showed a fall of £2 million but there was a net increase of £23.1 million [1615] between April, 1963, and April, 1964.

Mr. T.F. O'Higgins: Information on Michael Joseph O'Higgins Zoom on Michael Joseph O'Higgins Why does the Minister not give the figures for the other months in 1964 and 1965?

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Because it would take too long to read them out.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon And the Minister knows that the current accounts are as relevant as my left foot.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch I will talk to Deputy Dillon about current accounts and other allegations he made later on but I would appeal to Deputies to let me finish. There is another Bill to be introduced after the division and it must be done before 10.30 p.m. There was a rise of £25.1 million in current accounts between April, 1963 and April, 1964. The corresponding figure for deposit accounts showed a decrease of £2 million, giving a net increase of £23.1 million. This provides evidence that there was some small switching of money from deposit accounts. It shows conclusively that there is no net loss, that there was a net gain of £23.1 million in the 12 months following the 1963 Budget. For the subsequent year, between June, 1963 and June, 1964, there was a net gain of £26.4 million and a net gain of £27 million between August, 1963 and August 1964. As the table which I have distributed discloses, the April figures show a net gain of £23.1 million between 1963 and 1964, £28 million between 1964 and 1965 and £40.4 million between 1965 and 1966.

That is as far as I could go to establish what the true position is and to banish this obvious mock-belief that some of the Opposition Deputies have in their wild reports that something between £70 million and £100 million flew out of this country as a result of the introduction of the 1963 Finance Act. I am glad Deputy Dillon has come into the House because once again during the course of this debate he repeated his extravagant assertions about the state of the national finances. According to him, the country, and I want to quote him, “had its back to the wall and never [1616] stood in greater economic peril than it is in today.” These assertions, I think, went beyond legitimate criticism of the Government, both as being untrue and harmful to the country's credit and reputation. He made other assertions which I think I can establish as being unfounded as well. I hesitate to repeat these lest I give them further currency but I can only describe them as not only hysterical but malicious— the assertions that this Government were unable to raise £5 million in sterling and that the general reserves of the Central Bank were, again to use his own particular term, “gone and spent”.

Indeed, the announcement on the day following the Deputy's remarks, 15th June, of the negotiation of a loan of £5 million on good market conditions and good market terms with the Bank of Nova Scotia gave the lie to these assertions. The validity of the other assertions can be judged from the fact, and I want to stress this particularly for the benefit of Deputy Dillon, that the assets of the general fund of the Central Bank stand at over £100 million, of which £75 million is in gold and in foreign securities. These assets, I would like to remind the Deputy, are distinct from those of the Legal Tender Note Fund which amount to about £110 million. However much astray Deputy Dillon may be led by his horrible imaginings and reckless utterances, this country's financial position is sound.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon I hope you are right.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch How could it be otherwise when Irish citizens and institutions hold hundreds of millions of pounds worth of external assets and this makes Ireland one of the few strong net creditor countries in the world? How could Deputy Dillon's assertion be right when the level of our official reserves is higher in relation to our imports than in many advanced countries? Despite recent adverse criticisms, both internal and external, we are still one of the most creditworthy nations in the world. Our economic progress continues and not on the stop-go basis as asserted [1617] by Deputy O'Higgins, although admittedly at a slower pace than we would wish. Even in this difficult year, our exports have expanded by 12½ per cent and the improvement in the balance of trade up to the end of May is, as figures recently published disclose, over £20 million as compared with the first five months last year.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon They would want to be.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Added to that, our external reserves are rising. This is the country Deputy Dillon wants to describe as “bust”. This is not a picture——

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon There is no money to build houses.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch ——of a country which is, to use the Deputy's own words, teetering on the brink of bankruptcy. So far as the Exchequer finances are concerned, it was a mark of the Government's responsibility that they brought in a second set of tax proposals. There was no absence of planning because the likelihood of second taxation proposals coming before the House was projected in the Budget which I introduced in March this year. The increases in taxation are necessary to meet increases in current expenditure and to prevent scarce capital resources from being used up for the purpose of current account. The Government stabilised public capital expenditure in the region of about £100 million which is double what it was five years ago. This expenditure will be financed as far as possible from available domestic resources. The Government do not want to draw on foreign borrowings except in a careful and limited way.

Of course, Deputy Dillon shows no consistency in his criticism. He suggested that I should have waited until the autumn before introducing tax proposals when he thought I would have a clearer picture of what the position would be. In other words, he suggested that I should wait until the current account might have gone further into deficit before doing the job, at a time [1618] of year when it would have been largely ineffective. Deputy Cosgrave joined Deputy Dillon and some of his other colleagues in criticising the tightness of capital for housing and other purposes. The amount of money being provided is higher than ever before. They did not suggest how more capital could be provided for these purposes, unless by borrowing at home or abroad. I have the figures here and they are available to any Deputy who wishes to see them in Table 7 of the Capital Budget, 1966, and they indicate clearly that more money is being provided for houses——


Mr. J. Lynch: Information on John Lynch Zoom on John Lynch ——than ever before in the history of the State: twice as much as was provided five years ago.

Mr. T.F. O'Higgins: Information on Michael Joseph O'Higgins Zoom on Michael Joseph O'Higgins Costs have gone up.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Let us look at the criticism in regard to foreign borrowing. This criticism, I suggest, is both old-fashioned and insular. Every Deputy, even Deputy Cosgrave and Deputy Dillon, who used the phrase “hawking our credit from New York to Germany,” knows that this is something which happens in every modern, progressive State. The Fine Gael Party, when they talk about external borrowing, seem to have forgotten about the £40 million Marshall Aid they got and which we are still repaying in dollars. Much of it was spent on items of household and personal adornment of the most ephemeral nature.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon You do not believe that.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Indeed I do.

Mr. Ryan: Information on Richie Ryan Zoom on Richie Ryan Like houses, hospitals and schools.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Foreign borrowing has been the normal practice of advanced countries who wish to supplement their domestic resources. Indeed many of the most developed countries in the world, including the United States. Canada and the Scandinavian countries, have incurred balance of payments deficits over long periods as [1619] a means of importing investment capital. In reply to the Budget debate, I instanced some of the countries who were in the international bond market about the same time as we were who secured loans from other countries in order to supplement their own capital programme. I refer any Deputy who wishes to see my statement to the Official Report for 30th March, 1966 at column 365. He will find there that I instanced countries like Australia, Austria, Belgium, Denmark, New Zealand, Norway and Japan. All of these countries are progressive countries enjoying a high standard of living and they have had recourse to foreign borrowing.

However, there are two guiding principles which the Government have observed in regard to foreign borrowing. The first is that it should be by moderate action. The sum of £10 million, or so, for this year is in line with this requirement. Secondly, it should directly or indirectly add to productive investment and not current consumption. These two principles have the full support of the Organisation of Economic Co-Operation and Development.

Deputy Dillon beat his breast and proclaimed to us and to the world, urbi et orbi, that when he was in Government—I quote from column 448 of the Official Report:

We owed the joint stock banks of this country not a penny and we did not owe a penny abroad.

Let us examine these claims home; but, before I do so, I should like to give another quotation from a Budget speech. The quotation is as follows:

As the financial year advanced the financing of capital expenditure in the public sector became more difficult and more costly. The worldwide rise in existing interest rates and the severe dislocation experienced in the British capital market had a very inevitable effect on our economy. At home the up-turn in consumption and the decline in savings began to cause a grave balance of payments problem, the [1620] financing of which resulted in scarcity of capital for development purposes.

That is not an extract from a Budget Statement of 1966 or 1965; it is from Deputy Sweetman's Budget speech of 1956. That was the year in which taxation was increased by six per cent or £5½ million. In addition to that, two months earlier, the Special Import Levy was introduced, making £4½ million extra in taxation in that year.


Mr. L'Estrange: Information on Gerald L'Estrange Zoom on Gerald L'Estrange We were paying £9 million in food subsidies to keep the cost of living down.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch There are a few other facts of which I should like to remind Deputy L'Estrange. It was at that time, too, Government credit was so low that subscriptions to the issue of £20 million five per cent National Savings Bonds came to only £8 million.

Mr. P. O'Donnell: Information on Patrick O'Donnell Zoom on Patrick O'Donnell The issue was sabotaged by Fianna Fáil.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch It never happened in the history of this Parliament that any Party sabotaged a national loan.


Mr. James Tully: Information on James Tully Zoom on James Tully On a point of order——

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch That loan was an abject failure and demonstrated the severe lack of confidence in the Government at the time.

Mr. L'Estrange: Information on Gerald L'Estrange Zoom on Gerald L'Estrange The Minister had to go to the Eskimos looking for money.

An Leas-Cheann Comhairle: Information on Cormac Breslin Zoom on Cormac Breslin Order. Deputy Tully, on a point of order.

Mr. James Tully: Information on James Tully Zoom on James Tully Was it an order of the House that the debate would be concluded at ten o'clock?

An Leas-Cheann Comhairle: Information on Cormac Breslin Zoom on Cormac Breslin Yes, at ten o'clock.

Mr. Corish: Information on Brendan Corish Zoom on Brendan Corish It is well after ten o'clock now.

[1621]Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Deputy Corish intervenes, and there were several other interventions, deliberately trying to keep me from making my case.


Mr. L'Estrange: Information on Gerald L'Estrange Zoom on Gerald L'Estrange The lapwing cries.

Mr. Moran: Information on Michael Moran Zoom on Michael Moran You are far from the land that you sold to the foreigner.

Mr. T.F. O'Higgins: Information on Michael Joseph O'Higgins Zoom on Michael Joseph O'Higgins It is right to say, I think, that I gave the Minister ten minutes.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch I will conclude in about two or three sentences. I will have another opportunity of saying what I want to say. Deputy O'Higgins said they did not owe a penny abroad. They did not owe a penny abroad because they could not get a penny abroad.

Mr. L'Estrange: Information on Gerald L'Estrange Zoom on Gerald L'Estrange The Minister cannot get a penny abroad now.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch And, in that year, a State-sponsored body could raise £500,000 though the Government could not get a brown penny abroad, and I can prove that.

Mr. L'Estrange: Information on Gerald L'Estrange Zoom on Gerald L'Estrange The ESB got £10 million in ten minutes.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon A minute ago the Minister said we owed £40 million. Now he says we had not a brown [1622] penny. The Minister cannot have it both ways. Either we got £40 million and owed it or we got nothing and owed nothing.


Mr. T.F. O'Higgins: Information on Michael Joseph O'Higgins Zoom on Michael Joseph O'Higgins The Minister for Lands would do a great service to the country, I think, if he spoke no more.

Mr. Corish: Information on Brendan Corish Zoom on Brendan Corish I presume it is in order to put the motion now.

An Leas-Cheann Comhairle: Information on Cormac Breslin Zoom on Cormac Breslin It is, yes. Might I point out to Deputy Corish that the Labour Party speaker who concluded on behalf of the Labour Party spoke for 55 minutes?

Mr. James Tully: Information on James Tully Zoom on James Tully Might I point out that the Labour Party speaker finished at the time laid down by Standing Orders?


Mr. Corish: Information on Brendan Corish Zoom on Brendan Corish It is in order to put the Resolution now, is it?

An Leas-Cheann Comhairle: Information on Cormac Breslin Zoom on Cormac Breslin Yes.

Mr. Harte: Information on Patrick D. Harte Zoom on Patrick D. Harte The boys over there are very touchy.

Mr. Moran: Information on Michael Moran Zoom on Michael Moran We do not like the truth being suppressed.


Question put.

The Committee divided: Tá, 67; Níl, 51.

Allen, Lorcan.
Andrews, David.
Blaney, Neil T.
Boland, Kevin.
Booth, Lionel.
Boylan, Terence.
Brady, Philip.
Brennan, Joseph.
Brennan, Paudge.
Breslin, Cormac.
Briscoe, Ben.
Burke, Patrick J.
Calleary, Phelim A.
Carter, Frank.
Carty, Michael.
Childers, Erskine.
Clohessy, Patrick.
Colley, George.
Collins, James J.[1623]Gilbride, Eugene.
Gogan, Richard P.
Haughey, Charles.
Healy, Augustine A.
Hillery, Patrick J.
Kenneally, William.
Kitt, Michael F.
Lalor, Patrick J.
Lemass, Noel T.
Lemass, Seán.
Lenihan, Brian.
Lenihan, Patrick.
Lynch, Celia.
Lynch, Jack.
Crinion, Brendan.
Cronin, Jerry.
Crowley, Flor.
Crowley, Honor M.
Cunningham, Liam.
Davern, Don.
de Valera, Vivion.
Dowling, Joe.
Egan, Nicholas.
Fahey, John.
Fanning, John.
Faulkner, Pádraig.
Fitzpatrick, Thomas J. (Dublin).
Flanagan, Seán.
Foley, Desmond.
Gallagher, James.
Geoghegan, John.
Gibbons, Hugh.
Gibbons, James M.[1624]McEllistrim, Thomas.
MacEntee, Seán.
Meaney, Tom.
Millar, Anthony G.
Molloy, Robert.
Mooney, Patrick.
Moore, Seán.
Moran, Michael.
Nolan, Thomas.
Ó Briain, Donnchadh.
Ó Ceallaigh, Seán.
O'Connor, Timothy.
Smith, Patrick.


Barry, Richard.
Belton, Luke.
Belton, Paddy.
Burke, Joan T.
Byrne, Patrick.
Clinton, Mark A.
Connor, Patrick.
Coogan, Fintan.
Corish, Brendan.
Cosgrave, Liam.
Costello, Declan.
Costello, John A.
Coughlan, Stephen.
Desmond, Eileen.
Dillon, James M.
Dockrell, Henry P.
Dockrell, Maurice E.
Donegan, Patrick S.
Dunne, Seán.
Dunne, Thomas.
Esmonde, Sir Anthony C.
Farrelly, Denis.
Fitzpatrick, Thomas J. (Cavan).
Governey, Desmond.
Harte, Patrick D.
Hogan O'Higgins, Brigid.
Jones, Denis F.
Kyne, Thomas A.
Larkin, Denis.
L'Estrange, Gerald.
Lindsay, Patrick J.
Lyons, Michael D.
McAuliffe, Patrick.
Murphy, Michael P.
Murphy, William.
Norton, Patrick.
O'Donnell, Patrick.
O'Donnell, Tom.
O'Hara, Thomas.
O'Higgins, Michael J.
O'Higgins, Thomas F.K.
O'Leary, Michael.
Pattison, Séamus.
Reynolds, Patrick J.
Ryan, Richie.
Sweetman, Gerard.
Tierney, Patrick.
Treacy, Seán.
Tully, James.

Tellers: Tá, Deputies Carty and Geoghegan; Níl, Deputies L'Estrange and James Tully.

Question declared carried.

Resolution reported and agreed to.

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