What has made the position more difficult is the fact that in 1949 we had the devaluation of the £. The Government here followed suit and, as a result, in the international market we had to pay 44 per cent. more in pounds for the imports that we are receiving from the hard currency areas.
Then we had Marshall Aid. For a period of two years the Marshall Aid moneys were being injected into the Irish economy. Everything was buoyant, and everything was lively. The Minister could say that he was giving the people and the country a very "easy time," but Marshall Aid has come to an end and no provision had been made to adjust the country and the economy of the country to that situation. It must have been foreseen that it would come to an end. We are now faced with the position that we have to stand on our own two feet. We are either going to be mendicants, going around with our hats in our hands begging for favours and for financial assistance, trying to make the best bargain we can, or we are going to face up to our responsibilities, as a free people and a free nation and citizens, with a polity that is worth struggling for and worth making sacrifices for. We are going to face our responsibilities or else we are going to let things drift. Where, I wonder, are we going to get the financial assistance? Who is going to lend us the money? In all this talk about capital investment and borrowing, it is apparent that it is forgotten that there are two parties to State or private borrowing: there is the lender as well as the borrower.
I quoted here a few weeks ago the former Minister for Finance in a debate in Seanad Éireann calling attention in connection with the question of housing finance to the fact that people cannot be forced to lend money to the State. They must be offered certain terms and, apart from the terms, they are interested to know what the money is being expended on, the kind of enterprises being embarked upon, whether they are productive enterprises, whether they are going to add to the real wealth of the country, whether they are going to benefit the country generally, or whether the Government is just borrowing money to get out of its difficulties and just framing up some kind of Budget and putting into it some new definitions. The items that formerly were paid for out of revenue collected from taxation, such as housing grants, the provision of schools and so on, items that had been regarded as proper to come out of revenue and to be chargeable to taxation, should be transferred into the capital side of the Budget.
There is a very serious question as to whether there is any sound argument put forward that they are productive. I would like to hear the case made some time in favour of treating housing grants, any more than day-old chicks, as proper objects of long-scale capital investment—borrowing money and repaying it by an annuity over a period of 30 years. The investing public, those who will have large sums of money available for investment, will look well around them to see where they will get the best value for their investments. They will ask themselves are the Government and the country serious, and they will ask themselves if the Government is meeting its normal obligations and meeting its Budget deficits in a proper orthodox fashion, or if it is simply postponing the evil day and trying to transfer as many as possible of what ought to be current obligations to the future.
We are told that if taxation is to be levied and money raised the very rich ought to pay. I am not aware that we have many millionaires in this country. There was a time when the Labour Party used to vote for an increase in the rate of income-tax, but now they vote against such increase. That is simply a proof of the changed situation and the new categories who are paying income-tax. I presume that the great bulk, perhaps not a corresponding bulk, but still a great bulk of the amount that is being collected is coming from the ordinary workers— skilled workers and salary earners. According to the figures available, about 80 or 90 per cent. of income-tax payers will be paying less this year owing to the increased allowances afforded by the Minister than they were paying last year. There are some 18,000 people who will be worse off to a greater or lesser degree. I think it has been clearly established that, so far as the ordinary income-tax payer is concerned—the ordinary worker, whether he be a skilled worker or a civil servant or other salary earner on a yearly income of up to £1,000—he will benefit in some degree by the Minister's proposals in regard to income-tax.
We are aware that, in order to raise the sum of money necessary to bridge the deficit of some £15,000,000, certain well-known revenue-collecting items have had to be attacked. We all know what these are. Unlike direct taxes, indirect taxation affords a choice. The income-tax payer has to write out his cheque and pass on the cash direct to the income-tax collector. He feels very sore about this. However, with regard to indirect taxation, he has the choice of restricting his consumption. If beer is being taxed, he may decide that, instead of drinking four pints, he will do with three. In the case of cigarettes, he may be satisfied with 30 per day, now that he has to pay an additional tax, while he formerly smoked 40. It is quite true that if food subsidies had been entirely eliminated during the present year, the Minister for Finance would not have found it necessary to impose this additional charge, while he formerly food subsidies. Social services and other benefits are being provided, and in the coming year between the proposals in the Social Welfare Bill, as introduced originally in this House and the amendments which are now being brought in to provide for compensation for certain people—recipients of certain assistance payments—the expenditure on these items alone will come to £7,000,000. Can the Labour Party claim that they are really consistent in voting against, let us say, increased income-tax rates or the increased tax on petrol in order to provide the moneys, a great part of which will be utilised in providing these additional social benefits? If they are not to be provided through taxation they must be provided through contributions. The Minister for Social Welfare has the agreement of the Minister for Finance and the Government in raising the moneys that are necessary very largely from taxation, and let it not be forgotten that these social service benefits, as I have said, form a very large proportion of the amount that is being raised by taxation.
It was never intended, as has been stated in the House more than once during this debate, that food subsidies should be permanent. Everybody knows that rationing will have to be brought to an end some time. There should be an administrative saving. It should be a convenience to the business community and to the public generally to have rationing done away with. We have the position with regard to bread and the wheat that produces the flour that makes that bread that we know that bread is actually being used to provide food for animals because it is cheaper than any other cereal for feeding purposes. Is it reasonable or is it contended that that is a situation that should be allowed to continue? Is there any reason, in an agricultural country like this, why we should continue rationing a day longer than is absolutely necessary, why we should not endeavour, even at the cost of some losses or some transitory difficulties when adjustments are being made in trying to get away from this artificial position, in which everybody is being subsidised for the main items of food they are consuming and the public generally is paying? There may be sense in providing social services and benefits for the lower paid or lower income classes who definitely cannot make ends meet, but is there any sense in collecting money to the tune—which it would have been this year, when there was an increase of £2,750,000—of over £15,000,000, to raise that money in taxation from the public generally to pay it out again in subsidies?
The British Labour Government were driven to fix a ceiling on subsidies. They saw that the position could not continue; two successive Chancellors of the Exchequer in the British Labour Government were responsible for that ceiling which amounted to a reduction. In this country, with food in plentiful supply, with fertile soil and with nearly half our population on the land, it is preposterous that it should be pretended that there is any justification for continuing a policy of subsidising foodstuffs at the taxpayers' expense. In any case it is thoroughly unreal and artificial. We know that agricultural prices are going up. Farmers complain that the cost of fertilisers, the cost of their raw materials, the cost of labour is affecting them. We know of difficulties, for example, about milk. Is that situation going to be made any more easy of solution by simply shutting our eyes to it? Is it not more natural and sensible to revert to the normal position so that, in the long run, milk like everything else will find its own price level. The arguments in favour of it should all be in the consumer's interests. In this agricultural country we should restore freedom to the production and the marketing of milk and milk products?
We had many references to the increased bank rate and endeavours made to fasten upon the Government the obliquy or odium of having had something to do with that. The Government had nothing to do with that any more than the former Minister for Finance had to do with it. I suppose it would be heresy or high treason if one were to suggest that Deputy McGilligan, the then Minister for Finance, was in any conspiracy with the banks, that he was a tool of the banks, in a conspiracy with them, when, in his Budget statement, at column 1879, Volume 125, of the Official Debates of 2nd May, 1951, he said:—
"In present circumstances it is desirable that the banks, while continuing to finance capital projects, the laying-in of essential stocks, and normal import requirements, should discourage any merely speculative or excessive borrowing."
Was the former Minister for Finance in league with the wealthy industrialists, these exploiters we hear so much about? In 1947 he attacked the Dublin drapers, the flour millers, the bacon manufacturers, and the former Tánaiste told us on a celebrated occasion that a great many of these exploiters, if they had their deserts, would find themselves inside the four walls of some of our penal establishments.
I remember hearing the former Minister for Finance reading out the enormous profits made by the Dublin drapery stores, and I remember, in 1948, when the first flush of enthusiasm was on him, as in connection with his retrenchment policy at the time, threatening those Dublin businessmen that if they did not reduce prices he would consider very seriously introducing an excess profits tax that would make them "sit up". He was not going to stop with that financial year; he was going to go back during the war period and find out what excess profits those gentlemen had been making when they were exploiting the consumers, as was alleged.
Then he had his opportunity when the Labour Party were in coalition with his Party of enforcing price control, excess profits tax and all the rest of it. Why did they not do it when they had this golden opportunity? The records were then available to them. They could make the case. It was not a case of making a speech in O'Connell Street. They could go and get the official evidence to justify the necessary legislation and excess profits taxation being imposed upon those people. It is rather sad at this hour of the day that the Trades Union Congress has to ask us now, after three years of inter-Party Government in which the Leader of the Labour Party was Tánaiste and Vice-Premier—the second most important person in that Government—with another Minister to support him, to do what they had ample opportunities of doing and did not do.
We have been told also that the speeches of the Minister for Finance and other Ministers, and the attitude of the Government in calling the serious attention of the country to the position with which we are faced and with which the people are faced, has done harm to employment and has created a panic and a feeling of crisis, and so forth. Does everybody not know that every country is faced with a trade recession? It is being experienced in Britain in the textile and other trades. It is in Sweden, and even in the United States. People stocked up when the Korean war started, and when the big rearmament campaigns began. They felt that goods were going to become scarce. The distributors and the big wholesalers stocked up their stores for all they were worth. Since then, they have been trying to unload these excess stocks on the market. We, with our limited market, are not like the United States. We are not accustomed to mass purchases. People do not buy six suits of clothes or a dozen pairs of shoes at a time in this country. Our market is limited.
When there is an amount of over-stocking, and when that over-stocking is a result of excess imports of manufactured and consumable goods into the country during recent years, it is quite natural that such stocking-up should have ill-effects on our Irish factories and create a certain amount of slackness. There is nothing peculiar to this country in that situation. It was making itself manifest before the Fianna Fáil Government took office.
As I said at the outset, the fact is that the State, like the private employer or the private consumer for that matter, has been faced with increased costs all the time. Costs have been piling up. When people have been calling upon the State to do more, to provide more social services, more health services, more large-scale schemes for the provision of employment, and the gearing up of housing activities to the greatest extent possible, they have not stopped to consider how the costs have been piling up all the time. It is only once a year that we have an opportunity of reviewing this situation. In fact, it was not reviewed last year. The former Minister for Finance, Deputy McGilligan, introduced his Budget. Then there was a general election and a new Minister for Finance took office. That new Minister for Finance, Deputy MacEntee, had to take over and carry on with the situation which faced him. He had to wait until the end of the financial year so that there could be no question or doubt about the position. The figures are there. The output and the income, the expenditure and the revenue, for the past financial year are there—and they are the surest indication of what is happening and of what is likely to happen in the coming year.
We have had these increased costs. If we are to maintain the schemes and services we should like to maintain we shall have to face the situation that the money must be provided and that when the Minister for Finance has balanced his Budget, in the narrower sense of providing for the actual administration—the Government Departments, and so forth—he must then turn round and contemplate the commitments which face him in the financing of these big capital investment projects. Anybody who examines these projects—for instance, the Electricity Supply Board—will realise that it is not even by hundreds of thousands of pounds but by millions of pounds per year that the expenditure is increasing.
Bord na Móna, also, is undertaking big projects which will run into millions of pounds a year. Where is the money to come from? The general belief of those who have studied these matters is that the State, or the community, is in no different position from the ordinary individual. If the ordinary individual wants to have a holiday abroad or to buy a car or a new house he must set aside a certain amount of his income for that purpose, even if he is going to borrow. He has to consider what proportion of his income he can set aside in order to provide for these amenities and for this improvement in his position and in his way of living. Very often he must give up something else if he is going to have his new house or his new car or his holiday—perhaps not even a holiday abroad but a holiday at home, which can be fairly costly in present circumstances, even if he is a total abstainer and a non-smoker, if he has a family to bring with him. The State is in exactly the same position. There is a certain national income. If we mean to go ahead with the policy of State capital investment, a certain proportion of that national income must be set aside for that purpose. If it is not set aside by way of savings and investment, the Minister for Finance has no alternative, short of closing down on all these projects or curtailing them very seriously with all that that entails, but to find the money by way of extra taxation. There is no impulse towards saving when consumption is increasing in every direction. People do not feel they have to save. It has not been brought home to them that they should do so. I suggest that it is our duty to make the people realise that if we are to have these national schemes we must pay for them. We have either to provide through taxation—the hard way— or we have to save. We must not encroach upon our accumulated savings except to the extent that is necessary to do so for worth-while projects. We must save from our current expenditure and keep whatever is there for the "rainy day". We cannot continue the position which has existed for the past two years where not alone were we using and spending and consuming far more than we were earning but where we were dipping heavily into whatever assets or resources we have. If that situation were permitted to continue much longer we should be beggars in a few years.
