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Committee on Finance. - Exchange Control (Continuance) Bill, 1966: Money Resolution.

Tuesday, 18 October 1966

Dáil Éireann Debate
Vol. 224 No. 10

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Minister for Finance (Mr. J. Lynch): Information on John Lynch Zoom on John Lynch I move:

[1426] That it is expedient to authorise such payments out of moneys provided by the Oireachtas as are necessary to give effect to any Act of the present session to continue in operation the Exchange Control Act, 1954.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon I accept the Minister's assurance that the proper relationship will be maintained by him between the Government of the country and its economic and financial advisers whencever they may come, be it from at home or abroad. But is an interesting facet — I fully understand it; I do not complain of it — that, in answer to Deputy O'Leary's queries about the superficially remarkable distinction between the British limitation of £50 and our limitation of £250, the Minister quite properly said, in effect: “When we borrowed from the International Monetary Fund last year, we promised to restrict the allowance——”

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch We promised in 1961.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon I do not complain of that. I am not trying to make the case that our Minister for Finance sold the pass or did anything discreditable or anything he should not have done in the circumstances in which he found himself. However, it is interesting for Deputies to know that, once the banks at Zurich, Threadneedle Street or anywhere else get their foot in the door, the astonishing fact emerges at once that the sovereign Parliament of Ireland is no longer free to act without consultation not with another Government but with an unrepresentative outside body over which neither we nor others have control.

I would ask the House this simple question: Do they remember the East Galway by-election? I remember being greatly criticised for making a speech in Ballinasloe in which I said to the people in the streets of Ballinasloe at night: “Remember this: if the balance of payments of this country gets out of control to the point that we have to go to an external financial authority for assistance, on that day the [1427] authority of the sovereign Parliament of Ireland will leave Leinster House and go where the money is.” Fortunately, the sum mentioned by the Minister for Finance is something between £5 million and £7 million. Taking the long view and considering our national income and our annual revenue and our total volume of trade, that is a relatively insignificant sum. Thank God, it is.

Let every Deputy see the red light shining that, the moment we let our affairs here get into the kind of confusion that imposes on us the necessity of applying to a body like the International Monetary Fund or the Bank of International Settlements for help, the ultimate authority leaves Leinster House. Do not forget that if we make a treaty with another sovereign power, we deal as equal with equal, as representative Government with representative Government, but if we enter into these kinds of contracts, we make a deed with a body responsible to nobody but suddenly acquiring power over our people through the only instrument the validity of which I recognise, the votes of the Irish people. That is worth remembering. I have no doubt the significance of that registers on the Minister for Finance as it has registered on me. I want only to assure him from this side of the House that such measures as he sees fit to take to deliver us from that qualification of our sovereign authority will be sustained certainly by this side of the House and I hope by every Deputy who wants to keep this country free.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch Realising that we are in Committee and that I may restimulate Deputy Dillon on the question of sovereignty, the Deputy will remember that this House became a part of the Bretton Woods Agreement which set up the International Monetary Fund whose main purpose was to free payments as between countries. The International Monetary Fund is financed by certain payments in countries' own currencies in proportion to the gross national produce or some other such basis. It was the sovereign decision of the Irish people, as represented by Dáil [1428] Deputies and Senators, that made us a part of the Bretton Woods Agreement through which we applied for membership of the International Monetary Fund. In doing that, we are one of 104 free nations of the world who are members and who subscribe to the Bretton Woods Agreement. We are one of a big majority of that 104 who have taken advantage of the facilities for solving balance of payments problems that the International Monetary Fund provides.

Mr. Dillon: Information on James Matthew Dillon Zoom on James Matthew Dillon It is a matter of immense significance. The statutory act we took authorised us to subscribe to the Bretton Woods Agreement and, through it, to the International Monetary Fund. That involved us in no obligation beyond making our contribution. Our obligations began only when we began to borrow. I quite agree with the Minister for Finance that a vast number of countries find themselves in exactly the same position but there is this fundamental difference. If the United States of America borrowed from the Bank of International Settlements and the Bank of International Settlements sought to interfere with the sovereignty of Congress, the United States of America is big enough, is strong enough, and is influential enough to tell the Bank of International Settlements to take a running jump at themselves. Whatever agreement they made, you know what they would say, namely, in effect: “If we owe you money, we will pay it to you.” We are not. We are not the only borrowers who are in that position. Any small country is in that position.

It is only because of the immense danger to small countries to pass that kind of power over into the hands of these international banking institutions that I draw the attention of the House to it and not by way of reflection on the Minister for Finance. It is important to distinguish that what we did by statute and authority of the House was to join the fund. The decision to borrow was the Government's decision. It would be perfectly true to say that probably four score of countries have borrowed but the vast majority of them are so circumstanced that if the International Monetary Fund began to give [1429] lip, they could tell them to take a running jump at themselves. A country that is not in a position to do that walks into the danger that it becomes dependent on the resources of such an institution. Like every other story, there is no crisis now but now is the time to see the potential crisis and not to allow such a crisis to occur.

Deputy O'Leary rose.

An Leas-Cheann Comhairle: Information on Cormac Breslin Zoom on Cormac Breslin Deputy O'Leary will appreciate that we are now discussing the Money Resolution which does not lend itself to Second Reading speeches.

Mr. O'Leary: It is just a query. If, in fact, we were able to prove that it did have an effect on our balance of payments, would we have the permission of the International Monetary Fund to cut expenditure on travel allowances abroad? I do not know how this procedure works, whether there is a code of behaviour to be followed in framing budgets or whether it is outside the agreement.

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch If we could prove limitation was essential to overcome a balance of payments problem, then, of course, we could proceed.

Mr. O'Leary: The Minister does not want to give away any secrets. Could he tell us if this is in the form of advice at the time of the loan?

Mr. J. Lynch: Information on John Lynch Zoom on John Lynch There is an article in the Agreement and, if we did not accept that, we would be in breach of our agreement; we would be in breach of our agreement if we proceeded without the consent of the IMF.

Question put and agreed to.

Resolution reported and agreed to.

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