Dáil Éireann debate -
Wednesday, 20 May 1970

Vol. 246 No. 11

Committee on Finance. - Resolution No. 3: General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(The Taoiseach.)

Mr. E. Collins

I wish now to deal with what I consider the most contradictory and controversial aspect of this year's Budget, that is to say, the complete absence of any measure to deal with the current insidious inflation in our economy or, indeed, the absence of any measure to counter the most serious position of our balance of payments. Because of the recent political crisis I have information that there has been a large-scale cancellation of hotel bookings throughout the country. This will have severe repercussions on the balance of payments and on our economy as a whole. In regard to the inflationary position I should like to quote the speech of the former Minister for Finance on the presentation of this year's Budget, at column 1721, volume 245, of the Official Report of Wednesday, 22nd April, 1970:

Prices here are now going upwards faster than in most other countries in the OECD and the dangers for the future wellbeing of this country if the trend continues are obvious.

Later on he said:

We cannot sustain such a rate of price increases and have satisfactory economic growth as well. If prices continue to rise and our unit wage costs to increase as they have been doing our goods will cease to be competitive on either the home or the export markets.

That is a serious position. That view is backed by a number of publications. I should like to quote briefly from the spring issue of the Central Bank Report:

It has been evident for some time that Irish prices and costs are rising so fast that competitiveness and the future growth of output and employment are being jeopardised. Action to restrain the excessive rise in prices and the related increase in the external deficit is an urgent priority.

Or, again, in Report No. 27 on incomes and prices policy of the National Industrial and Economic Council, at page 9:

There is now a real danger that many Irish goods will become less competitive both on the home and export markets. The external deficit could be widened beyond the possibility of recovery and employment and output could suffer.

Or, even again, the Report of the Industrial and Social Research Institute, page 1; speaking of rising prices:

The worst part of the damage done by rising prices is the part that is least visible, the damage to the prospect of new jobs and of ending emigration.

All these pronouncements by experts, which should be taken into account by any Minister for Finance presenting a Budget, have been completely ignored by the Fianna Fáil Minister for Finance in this year's Budget.

For a number of years reports of the Central Bank have been criticising Government monetary policy and, indeed, Government fiscal policy, all to no avail. One must come to the opinion that the Fianna Fáil Government do not care about the economy as a whole. Lust for power, apparently, is the overriding factor and, I venture to say, especially in times of election, proper and sound monetary policy has been thrown to the wind on a number of occasions. This is a pity because proper monetary policy is very essential to the country's development.

We are, I am sorry to say, reaching a crisis in the matter of inflation. This crisis could have been avoided if successive Fianna Fáil Ministers for Finance had had the guts to manage the economy properly. It is evident that they have not done so. The effects of this rampant and insidious inflation have been felt and indeed will be felt in the coming year perhaps more severely than ever before on a number of fronts. It is expected that in the coming year investment in the economy will decrease.

I should like to quote again expert opinion from the Quarterly Economic Commentary, March, 1970, of the Economic and Social Research Institute:

Other features of the forecast for 1970 which is set out in Table 2.2 include a strong growth in consumption, a reduced expansion in investment and a lower rate of stock building.

That in any economy, perhaps more especially in a developing economy such as Ireland, is very, very serious. It is fair to say that it can be directly attributable to the inflation which has persisted in our economy for a number of years. The long term effects of inflation upon our export potential must be obvious to all.

It is all right for a Minister to come into the House and to say that we can have inflation once we keep it more or less in line with our customer countries. That is not quite so; it is a false statement. We must keep inflation in line with other countries who are exporting to our customer countries.

It is fair to say that the Irish Sea is the costliest expanse of water across which to transport goods. It is probably fair to say that it is as cheap to transport meat from the Argentine to London as it is to transport meat from the west of Ireland to London. This is a crazy state of affairs. Nobody seems to comment upon it. Nevertheless, it is a fact of life which has serious connotations for our export industry.

All costs, labour costs, taxation costs—we must remember that taxation bears heavily on business people —building costs, equipment costs have gone very high in the last few years and if we are to remain competitive someone, sometime, in Government must take sound action to ensure that we at least will survive. It is apparent that the Fianna Fáil Party are not capable of such action.

Inflation has a serious effect in the social field. There are people living on pensions, people living on incomes from investment, perhaps a bit of old property or land. The Fianna Fáil Government do not seem to care about these people. This is very serious. Our country has a higher proportion of persons living on social services than most other western European countries. It has a higher percentage of older persons. Inflation hurts these people very much, deep in their pockets. Again, the Government do not seem to care.

The real danger of the balance of payments position was referred to by the Minister for Finance in his Financial Statement of 22nd April at column 1720 of the Official Report, as follows:

A surplus of £15 million in 1967 gave way to a deficit of £22 million in 1968: last year, the deficit was about £60 million. This year, despite a small improvement in the first quarter, the deficit could be substantially higher. This trend has grave implications for the economy. Unless we abate the excessive increases in domestic consumption and costs, the gains of the past decade and our potential for further progress in the seventies could be put in jeopardy.

That is a serious quotation from the Minister's speech which is worth examination and worth bearing in mind. The fact is that in official reports a figure as high as £90 million has been given as the possible balance of payments deficit in 1970. Another figure that has been given is £75 million. The country's reserves will not stand up to that kind of continuous buffeting.

Again the Minister for Finance ignored expert advice. It is all right coming into this House and giving increases in social welfare allowances but the Budget which he prepared ignored his responsibility to the economy, a responsibility which is a grave one and which must be faced up to if we are to survive within the EEC or within any free trade area.

It is a dangerous policy to pursue to say that capital inflows will offset the balance of payments deficit over a period of years. This money could disappear as quickly as it came in and the recent political crisis will encourage it to disappear. Perhaps, it has disappeared; we do not know. Continued inflation has resulted in a large number of serious strikes. It is all right for people to say that the trade unions have been pressing for higher and higher incomes but the fact is that the Government have been the main cause of that inflation and to a very large extent they must bear the responsibility for the number and extent of the strikes we have had in the last few years.

The inflationary position is going to hurt the tourist business and if we are to survive in the tourist field, we must contain price rises at all levels. As I have already said there has been a reduction in hotel bookings throughout the country because of the recent crisis. The position is far more serious than it might first appear. The present inflationary crisis can, in fairness, be attributed to some small extent to the increase in the cost of imports, imports which may be essential to our economy, imports of capital goods. It is, perhaps, an aspect of the matter which must be acceptable to the Government and the people; if we are to industrialise we must have these essentials.

Perhaps, the main cause of inflation has been an excess in domestic expenditure on all fronts. The greater factor in this expenditure is Government expenditure. No longer is the yearly budget balancing the country's essential services which are run by the Government. In our position we should be budgeting for surplus but the Government have not got the guts to manage the economy properly.

Under the third heading of excess incomes there have been excess incomes granted and sought in the last few years but it was an excess under all headings: excess of incomes from house rents and, indeed, there has been extortion in the rent level in the last few years especially in Dublin and in other major cities; there have been excessive profits which should be controlled; there has been an excess of incomes from dividends and in the incomes of members of the trade unions. We must make a conscious effort to produce an acceptable and voluntary policy of prices and incomes. It is essential for the survival of our economy that the people on all fronts should come together and agree on such a voluntary policy. The Government have not engendered the proper atmosphere in which this could come about.

I should like to refer to a few recent references to a policy on prices and incomes. The first is a reference by Michael P. Fogarty in a report produced under the auspices of the Economic and Social Research Institute "We Can Stop Rising Prices". He suggested that a prices stabilisation level should be imposed on both dividends and pay. He said that there would be an exemption from the tax for any firm or other organisation which satisfied the appropriate Minister—Labour in the case of pay, Finance in the case of incomes—that it intended in the next year to follow a pay and dividends policy in line with national incomes policy. It is an idea worth discussing. It has not been discussed and no action has been taken so far. He was quite unhappy with the present method of negotiating price increases. In the same report he said:

If you look at Con Murphy's report on the maintenance dispute last year, or the report of my committee on the ESB—or for that matter, at the Mulvey report on Bord na Móna—you will find a common thread. Both reports stress the sheer, flaming chaos of the process of deciding on, putting forward and handling pay claims, especially, though not only on the union side.

That is a serious statement by an expert. Perhaps, a more important report was the NIEC report on incomes and prices policy, No. 37. This discussed at some length the inflation in our economy and the practical and institutional necessity for a proper incomes and prices policy. The report stated:

In our view an effective incomes and prices policy is urgently needed to help in protecting production and employment from the disruption threatened by the accelerated rise in costs, prices and the external-payments deficit.

For an appropriate prices and incomes policy there are four essential steps.

The first requirement is the promotion of a general understanding of the national need for a closer and more orderly relationship between incomes and output.

That is fair enough.

The second requirement is an explicit commitment by the Government, the Irish Employers Confederation and the ICTU to exercise their particular responsibilities fully towards creating the general understanding referred to above and the environment in which an incomes and prices policy, based on this understanding, would have reasonable prospects of success.

The third requirement is that the general trends of productivity, prices and money incomes in the economy should be reviewed periodically and guide-lines enunciated for increases in money incomes for the appropriate period ahead (which need not be as short as a year).

The fourth requirement, therefore, is to translate the NIEC guide-lines into terms which are operationally useful for those who would be engaged in detailed negotiations on wages and salaries.

That report looked forward to the development and the establishment of a new employer/employee relationship. It says:

A comprehensive incomes and prices policy would, however, need more institutional backing than this.

There is, therefore, need for a deeper analysis of the relationship between incomes, prices, productivity and employment; for the development of a wider public understanding of those relations.

The report goes on to discuss at some length two ways in which the functions set out could be performed: first, by establishing an independent incomes and prices board and, secondly, by using the existing bodies—the Labour Court, the prices section of the Department of Industry and Commerce and the Fair Trade Commission, which are already concerned with some aspects of these functions.

As an economist, I honestly think the Government should consider seriously implementing the recommendations in that report. They are vital to the survival of our economy. In the Budget the Minister for Finance referred to initial discussions he had had with employer and labour interests, but I would like to see the Minister for Finance, the Minister for Labour and the Minister for Industry and Commerce coming together and producing an acceptable prices and incomes policy. The present system of price control has failed and there must be a fresh approach.

I welcome the increases in social welfare allowances but no allowance is given for the dependants of recipients. The subvention to agriculture is not such as favourably to affect that part of our economy. Because of increased prices more will be taken out of agriculture than will be injected into it. It is a pity, but it is a fact, that the farmer will pay heavily under this Budget. The tax adjustments have complicated rather than simplified the situation. The turnover tax will lead to excessive price rises. That is already becoming apparent and the prices section of the Department of Industry and Commerce is not capable of coping with the situation.

There is nothing in the Budget to contain inflation or combat the dangerous situation in which our balance of payments is. I was looking forward to some export incentives, not only for new industries but for old established industries. The latter have been neglected to a certain extent. We are facing a very tough year. Negotiations are to commence for entry to the EEC. On the home front we are faced with unprecedented inflation. There will be a rise of 10 per cent or 12 per cent in the consumer price index. This will not help us in our negotiations for entry to the EEC. It will bear heavily on our export industries. Let no one make any mistake about that. I believe there will be an autumn Budget in an effort to combat inflation and redress our balance of payments situation. Such a Budget would have been rendered unnecessary had marginal corrections been made over the past few years to combat inflation, to contain imports and to promote exports. Such marginal corrections would have resulted in a complete avoidance of the present serious situation. The Fianna Fáil Government must bear responsibility for the present economic crisis as it must bear full responsibility for the current political crisis.

Minister for Labour and Social Welfare (Mr. J. Brennan)

I want to deal with those portions of the Budget which deal directly with my Departments, the Department of Labour and the Department of Social Welfare. The previous speaker, as did many of those who preceded him, referred to what he regards as an absence of a prices and incomes policy. There is a good deal of uninformed thinking on this by people who apparently have not followed the trend of events. Deputy E. Collins quoted from the NIEC report and accused the Government of doing nothing about it. He does not seem to be aware of the rapid movement of events since the report was published. The Government have decided to adopt the report and to implement it. Meetings have been held with the FUE and ICTU. The Taoiseach, the Minister for Finance, the Minister for Industry and Commerce and myself have decided on the procedure to be adopted.

A temporary committee has been set up. That led to the setting up of an employer/worker committee on the lines visualised in the report and that committee is having its first meeting before the end of this week. No time whatever was lost in implementing this suggested formula of the NIEC Report. The committee is composed equally of management and worker elements and representation from State bodies. It is a 42-member committee under the chairmanship of Professor Chubb and we look forward, not to criticism of it, but to support from all sides without which its work cannot be as successful as it should be.

To those who talk about a prices and incomes policy I say it is very easy to use the old clichés in this sort of criticism but nobody indicates whether he wants a statutory prices and incomes policy, one that has enforceable legislation in which the Government are directly involved, or whether he wants it on a voluntary basis operated by representatives of both sides in industry. The NIEC report to which the Deputy has been referring and which is now being implemented is on a voluntary basis, not supported by any enforceable legislation, and it will depend for its success on the attitudes and acceptances of those who operate it. It has the elements of success in it and it can work, given a right will and proper disposition on the part of all concerned.

The NIEC will set the guidelines and the worker-management body will articulate these guidelines and translate them into action. The Labour Court will act in its capacity of deciding disputes that may arise as a result of the interpretation of guidelines. It sounds a little complicated but it is quite simple in practice and should tend to bring about a more orderly procedure in future in regard to the relationship between production and wage increases and the growth of the economy. This is what we aim at. This is all one can do. If people who talk about wages and incomes policy mean we should become directly involved——

Mr. Tully

Prices and incomes. The trouble is most of you talk about wages and incomes.

Mr. J. Brennan

Very seldom. I mean prices and incomes. If the Government are to become directly involved in the enforcement of a prices and incomes policy, that is a separate consideration because irrespective of whatever legislation we may introduce it depends on the attitudes and acceptances of those involved as to whether it is a success or not. Sometimes people pretend not to realise this. Many people have been talking and indeed writing about the lack of involvement of the Minister for Labour and the Government in current strikes while they know that the necessary institutions for the settlement of these disputes have been provided and that intervention on the ministerial or Governmental level should only be a last resort. If ministerial intervention is to be looked on as another stage in the settlement of a dispute then his intervention will be invoked in every dispute.

We have set up adequate machinery for the processing of negotiation and we must insist that it be used. Merely setting up some new procedure does not necessarily bring new thinking. If those concerned would use the institutions available I think they would find them adequate. Some people think their strikes are in some way superior or different to other strikes and that the Minister, the Government or the Taoiseach should intervene because of their special circumstances. People say glibly: "Why does the Minister not intervene?" The Minister could settle every strike if he wanted to force those concerned to give all demanded. That is one way of settling strikes but there are always two sides, at least, to strikes. As far as I am concerned there are three, the workers, the management and the general public or the whole economic set-up. One can only deal with trade disputes in the context of the national economy; and if we suffer seriously as a result of a strike that is prolonged we must also think of what could result from accepting unbridled demands over an extensive period which would ultimately be serious for the economy in any case.

Everybody must deprecate a prolonged strike and while we must endeavour to ensure that the institutions available for settling them are used we must also think, in the context of the whole of the economy, of what can and what would happen if some measure of orderly procedure is not adopted and these demands permitted to run without restraint. I am not prepared to accept that any one strike has a special right to ministerial intervention more than another. There are occasions when, perhaps, one must seek other means but until such occasions arise the people involved have no right to invoke measures not available to others or not used in other instances.

In regard to the cement strike and the bank strike at present there is ample scope for further negotiation and ample machinery for it. We can only see that every effort is made to ensure the machinery is used. It is fully representative of both sides in any dispute. I think this is quite adequate and it certainly must be seen to be used. If the Labour Court and the institutions attached to it, the conciliation service and the joint industrial councils, which were set up in a serious effort to place at the disposal of people in dispute the machinery capable of processing any dispute and bringing it to a successful conclusion, are to be by-passed and a dispute treated in some special way by Government procedure we are merely placing ourselves at the disposal of all disputants and leaving the Labour Court and its machinery in a very secondary place.

Lack of goodwill and, very often, what would appear to be a lack of commonsense lead to a good deal of unnecessary delay in settling a dispute which must eventually end. Sometimes we are not too happy at people becoming involved who are not directly concerned in the dispute. This may not be a very significant factor but it is one worth watching. We have free collective bargaining in this country; it is at present undergoing a very severe test. It must be tried to the bitter end, so to speak, before we attempt to deal with trade disputes by any crisis or panic methods. That stage has not been reached.

In the production of this new formula as outlined in the NIEC report which we have now sought to implement—and we have set up the first committee which meets this week— we have made a fresh effort which, given the necessary assistance by all concerned, should result in an institution that will provide orderly procedures in the future and will bring production into relationship with the national growth and wage increases.

Nobody in this House can visualise perpetual leap-frogging in wages. It cannot go on for all time. Some order must be restored at some stage. If we are called on to take legislative action, this is anathema to any person who has any regard for free collective bargaining and, in any event, coercive measures are never seen to work successfully. No one wants to adopt them while it is possible to use other means. All those concerned, including the Department of Labour, must at every opportunity point out the inevitable consequences of the present system going on unchecked and without restraint. If both sides concerned with disputes do not take heed of this at some stage, we may reach a crisis in which we will have to adopt measures which certainly would be distasteful to everybody concerned and, indeed, might not be very successful anyhow.

This is a field in which one has to tread wearily. One can appear to be very active but, as I said in answer to some supplementary questions here the other day, it is not a field in which I should like to introduce gimmicks and stunts on the pretence of doing something. One must be sincere. One must make a genuine appraisal of the position, deal with it and eventually create the necessary confidence that will induce acceptance and bring about the necessary change of attitude.

I do not want to deal with it at this stage and I would not deal with it in this debate were it not for the fact that so many Deputies referred to what they regarded as the lack of a prices and incomes policy. The last speaker actually read the NIEC report and accused us of doing nothing, whereas we have moved rapidly towards setting up the institutions recommended in that report.

I should like to deal in full with the social welfare services as improved in this Budget. I will not keep the House too long. Other speakers have to come in at the right time. Now that the Department of Social Welfare is again my responsibility I want to repeat what has been said so often. The Fianna Fáil Party attitude of improving the social welfare code as circumstances permitted and in accordance with the availability of resources, has proved to be a wise policy. We have always kept trust with it. We have always honoured it.

Our social welfare payments as provided for in the Book of Estimates this year are something in the vicinity of £64 million. That does not take into account the insurance fund side of the scheme. If we take into account the disbursements from the social insurance fund, the figure is £102½ million, which is a fair amount of money payable under the social welfare code. This does not take into account anything provided for in the current Budget which is now being discussed. The Budget makes provision for a further £16 million in a full year. That, together with the increases that have been granted in every one of the past ten years, is a creditable performance by any Government and one of which nobody should be ashamed.

It is very easy to say it is not enough. I would say it is not enough. I have always said I hoped each year would see us a step further ahead. That is exactly what is happening. We are not just taking a step to meet the rising cost of living: every single increase given in the past ten years was far in excess of what would be demanded by the increase in the cost of living. In other words, the social welfare classes were not the residuary legatees when the Budget was being prepared. They took priority in the allocation of money and the re-distribution of incomes. We did not hesitate to impose the necessary taxation in order to bring these people up to a higher level, somewhat in keeping with the general improvement in the standard of living which all sections of the community have been enjoying progressively each year over the past decade or more. This is a duty on any Government with a social conscience. We have done our duty.

The former Minister for Finance certainly never neglected his duty and responsibility to these classes. The rates across the board are increased comparatively generously this year. We have got away from the 1s and the 2s 6d. We are now giving increases of a decent amount. Not merely have these rates been increased, but the scheme has also been extended in recent times. Legislation which it will be my duty to introduce here shortly will make provision for the payments coming into effect on 1st August and 1st October. The House will notice that this brings forward the payments this time. It used to be January.

It will also include many new features which have already been referred to in the House. It will include a limited scheme of retirement pensions at 65, invalidity payments at the same age and death grants. It will provide £4 5s per week for deserted wives. It will make provision for an extension of the age in the case of dependants payments, and welfare payments from 16 to 18 years. There are several other provisions which highlight the improvement in the rates and expand the service to take in under the social welfare umbrella many classes who did not have that protection in the past. Many people in the House will say— and I would say—it is time these people were brought in. I would also say there are others yet to come in but we are rapidly moving in that direction. The free travel scheme, the free electricity scheme, the provision in relation to incapacitated old people who are living alone and require some relative to take care of them have all been moves in the right direction.

The Minister showed his social conscience—and I was very proud of it in this Budget—in his endorsement of the work being done by social committees in the various localities. I have frequently had the pleasure of paying tribute to these social committees, these community associations, who are doing such good work throughout the country. It is very easy to pay lip service to them. We all know they do work which nobody else can do. With their personal contact and intimate knowledge they can get through to the people concerned and they can do work for them which mere monetary benefit cannot equal. They do much more than that. They provide meals on wheels, clothing, entertainment. As I say, we have paid lip service to them and rightly so. They were doing a good job.

This time the Minister has endorsed their work by giving them money. There was £100,000 already provided under the Health Estimate for these committees. The Minister increased that by another £150,000, bringing it up to £¼ million to be disbursed by these committees, to encourage the formation of new committees and to assist them in the great work they are doing. This is a very generous innovation in this Budget and one which is welcomed by everybody but highlighted by few. We all tend to point out what is not in the Budget. Naturally, this applies to the Opposition. They seldom refer to what is good.

There is more good in this Budget than was contained in any Budget hitherto introduced. It has been achieved simply by the adjustment of one tax which was already in operation and which does not require the setting-up of any new machinery. The addition of 2½ per cent on the turnover tax, which is an indirect tax, is the fairest way of enabling the Government to give the new benefits to the social welfare classes apart from the many other benefits which are contained in this comprehensive Budget. A determined effort was made to do something worthwhile for the social welfare classes at a time when the Minister for Finance might be expected to revert to the old 1s to 2s 6d increase of the past.

During the past year, every income improved and some incomes improved very considerably. This took up more than the buoyancy of revenue available to the Minister to meet the bill and particularly the bill as regards the public sector. Many people thought—incorrectly—that very little provision might be made to cushion the impact of the rising cost of living on this occasion. Not merely was the increase in the cost of living met but it was far exceeded right across the board to the social welfare classes.

This is a Budget to be proud of and, as Minister for Social Welfare, I consider it a step in the right direction. It is in keeping with Fianna Fáil policy down through the years. We promised that our social code would be expanded and improved according as there was an expansion and improvement in our resources and we have kept our word and acted most generously. The taxation that had to be imposed should yield the revenue necessary to enable the Government to meet the cost of the additional benefits which have so thoughtfully and generously been provided under this Budget. Therefore, the position should be faced fairly and squarely and this Budget should unanimously be accepted by this House.

Mr. Tully

The Minister should be congratulated on being able to maintain a straight face while making that statement.

Mr. L'Estrange

The Minister for Social Welfare concluded by stating that it was necessary to impose only one tax. In the situation confronting the Taoiseach and his Government on Budget Day of a shattered Cabinet, they took the lazy way out by asking themselves what was the easiest way of getting £20 million and then resorting to that method without examining the detailed effect it would have on the economy. Certainly, I do not agree that this is a good Budget. It is a cruel and a harsh Budget. Many experts claim it will bring about increased prices ranging from 12 to 15 per cent on an already overtaxed people. All of this is due to gross neglect and incompetence. It is due to a strong-arm, dictatorial, ruthless and corrupt Government. A few moments ago, I read the heading in this evening's Evening Press—Insurance Shock: Motor Rates Soar. One of the biggest bombshells for years, according to the Evening Press, hit the Irish motorist today when it was confirmed that the Government had given the green light to insurance companies for a 17½ per cent increase on all motor insurances from 1st June next. That indicates that our cost of living may indeed increase beyond 12 or 15 per cent. We are reaping the bitter harvest of a divided Government, led by a Taoiseach who is not in control of his Cabinet and with a Minister for Finance who is not in control of his steed. It would take much more now than the grasping of a leaden gutter to save the Irish nation from the effects of this Budget. For years, the nation and its finances have been allowed to drift from bad to worse by a Government and by Ministers who were more interested, it seems, in tearing down the institutions of this State than in building up its financial viability, a Government of incompetent meddlers and muddlers who have deceived the nation on financial affairs. They have lost the confidence of the world—a fact which is humiliating not only to them but to each and every one of us. The recent Government Cabinet crisis will probably have very severe economic repercussions on this country during the coming year. We shall be lucky if irreparable damage has not been done. Our tourist industry may lose from £20 million to £25 million this year which would be disastrous for many people. The present Taoiseach is responsible for this unwholesome situation because he was not alert to current events. The members of the Cabinet and, indeed, the Fianna Fáil Party in general cannot escape blame.

During the past four years we have had three experiences of a stop-go policy. In 1967, when Deputy Haughey became Minister for Finance, we had a balance of payments surplus of £15 million, having emerged from an unfortunate recession lasting four or five years. In 1968, instead of having a balance, we had a deficit of about £58 million and last year we had a balance of payments deficit of £69 million. If trends continue, it is reckoned that, in the coming year, we may have an adverse balance of £80 million to £90 million. This situation must not be allowed to continue. I do not want to list the organisations, societies, trade unions, and so on, that warned the Government about inflation. One would have expected at least mild corrective measures but this Government have dithered and hesitated and done nothing. Lack of resolute leadership is responsible for many of our ills and particularly for our present very unsatisfactory economic situation.

In November, 1968, after the Referendum we had a second Budget. That Budget was definitely a deflationary Budget. A total of £19 million in new taxation was imposed in that Budget. There was an effort then to tackle the problem of inflation; the Government pursued that policy but they did not seem to be succeeding too well. On the 19th March, 1969—we should all remember that date—the position became so serious that the then Minister for Finance, Deputy Haughey, with a widening deficit in the balance of payments which was then approaching £50 million, spoke on radio and appeared on television proclaiming a state of national emergency. He appealed to the workers and to the trade unions to tighten their belts; he said things were bad, that we were faced with an economic crisis. The situation seemed to be so serious that the Ministers of the Government, in an effort to give a lead to the rest of the country, met and in blaring headlines on the newspapers the next day and on radio and television it was announced that they had imposed on themselves a 14 per cent cut in their salaries. That was on 19th March, 1969. The Government, it seems, at that time had their minds made up to go to the country in a general election.

Then things started to deteriorate in the north and the Government, again putting party before country, realised that if things got worse during the summer it would not be an opportune time for Fianna Fáil to go to the country the following winter. Therefore, on 7th May, less than seven weeks after, what do we find? We find a complete somersault. We have an inflationary Budget introduced in this House. The Fianna Fáil Party again change horses—they do not fall off them this time—and the Fianna Fáil Government and Party again show the people that they are prepared to stoop to anything, just as they have being doing for the last fortnight to cling to power.

That Budget was an inflationary and an election Budget to try to get back into power. Overnight, according to the Taoiseach, according to the Minister for Finance, and indeed according to all the Fianna Fáil Deputies, the recession was over and the country had become more prosperous. The message was preached at every crossroads, on radio, on television and in the innumerable speeches made throughout the length and breadth of this land by the Taoiseach and by Government Ministers. Indeed, to the people I suppose the message sounded reasonable enough. The man in the street, unfortunately, believed Fianna Fáil and they were returned to office. Again they deceived, in that Budget of May, 1969, the Irish people for their own low, petty ends—to get back into power.

Now, as the Minister said, we have only one tax here this time. Certainly it is a lazy man's tax. It means doubling the turnover tax which was imposed on the people in 1963. Up to October, 1963, it could be said that we had stability. Wage demands and strikes were few until the Government introduced this iniquitous turnover tax. This was a new tax imposed for the first time in the history of our country —a tax on bread, butter, tea, sugar, fuel, meat, medicines, clothes and all the necessities of life.

The strange thing is if one wants to buy a pill for a greyhound, to make him run more slowly or run more quickly, there is no turnover tax to be paid; but if a working man's child has a pain in his tummy and must go into the chemist for a pill or a powder turnover tax must be paid. That is certainly a very unfair tax. That was imposed on the people despite the fact that Mr. Lemass, who was then Taoiseach, had stated at Waterford shortly before that that Coalition Leaders were threatening the country with high food prices and a lot more besides if Fianna Fáil became the Government. He said that the Fianna Fáil Government did not intend to do any of these things. "How definite," he asked, "can we make our denials of those stupid allegations?" At that time the loaf was something like sixpence. I do not know what it is now—2s 2d or 2s 4d. The price has been increased so often lately that I do not think even the housewife knows what it is.

Fianna Fáil have always claimed down through the years that they are concerned with the lower paid people, the poor, the workers. If they are concerned with those people why did they impose a tax on bread, butter, tea, sugar, meat, fuel, clothes and all the necessities of life? It might be no harm to quote Mr. de Valera at Belmullet on 28th February, 1957. He said that they did not want the price of bread, so important an article of diet for the poor, to be increased. I do not want to repeat how much it has been increased since then. At the same time, the late Deputy Oscar Traynor, at Doyle's Corner, said that the warning issued that a Fianna Fáil Government would withdraw the food subsidies or increase food prices were blood-curdling stories. We now know who was telling the truth and who has told the truth to the Irish people down through the years.

Fine Gael and indeed Labour speakers and others in Opposition pointed out at that time the bad effects of these ill conceived policies. We pointed out how a tax on the necessities of life was bound to increase the cost of living, how it would kindle again the flames of inflation, with all its harmful effects on our economy. Unfortunately, our forecasts have been proved right. Immediately after that there was a sudden jump in prices, as we are having now, a sudden jump in the cost of living, as we are having now. At that time too the Government were asking for restraint, as far as the workers were concerned, in wage demands. How could the workers be expected to have restraint when their living standards were dropping and when the money they were getting was buying less and less, as it is at present?

The Fianna Fáil Party have said we voted against the social welfare benefits provided in the Budget. We did no such thing. We voted against the increased taxation. It would be no harm to bring Fianna Fáil's memory back to the past when they were in opposition and when they also voted against increased taxation to give increases to social welfare beneficiaries. When Fianna Fáil are in opposition they always want taxation reduced. Let me quote from column 624, volume 155, of the Official Report of 15th March, 1956, where Mr. Seán Lemass said:

Surely some explanation is due why the Government not only failed to keep that pledge but why the cost actually has gone up by £10,000,000. Some apology is at least due to those whom they misled by that statement by a responsible representative of the Coalition parties.

Again let me quote what Mr. Seán Lemass said at column 49, volume 157, of the Official Report of 8th May, 1956:

We announced that we had made up our minds on that fact and, that so far as we were concerned, there would be no increase in tax rates above the 1953 level. We made it clear that, if any Budget difficulty arose, that difficulty would be met by a reduction of expenditure and not by increasing the burdens on the taxpayer.

When he made that statement the cost of running this country was £105 million and today it is £452 million. Therefore, Fianna Fáil kept that promise to the Irish people by breaking it to the extent of £347 million, because at that time they were criticising an increase of £10 million and since then the cost of running the country has increased by £347 million.

The Minister for Social Welfare said here about ten minutes ago that Fianna Fáil always kept trust with the poor, with the unemployed, the old age pensioner, etc. I remember that in 1947 there was a motion in this House asking for an increase of 2s 6d per week to be paid to the old age pensioner. When Fianna Fáil talk about their record in relation to the old age pension, remember they came to power in 1932 and the old age pension was 10s per week. A war took place afterwards and prices increased for the householder and the old age pensioner. In 1948, 16 long years afterwards the £ had depreciated and was worth only about 16s and the 10s which the old age pensioner was still getting from Fianna Fáil was worth only 8s. Let credit be given where credit is due, and Fianna Fáil are not prepared to give such credit: it was the first inter-Party Government who by the time they were going out of office in 1951 had increased the old age pension to 17s 6d per week, whereas from 1932 to 1948 it was only 10s.

The moment Fianna Fáil get into power public and local expenditure starts careering upwards, and they have always been true to form. Twelve or 14 years ago the amount of rates collected was less than £15 million. This year it is expected that £49 million will be collected from the rate-payers. Never in the history of this country was it more desirable or more necessary than it is at present to have a period of stability so that agricultural and industrial producers can prepare and equip themselves for the more competitive period which undoubtedly lies ahead when we enter the EEC. The only way in which tax revenue can be increased without causing inflation, without causing an increase in the cost of living, without bad industrial relations is by growth in national production, which would provide larger taxable incomes. If public expenditure maintains its upward course of recent years it will outstrip, as, indeed, it is outstripping, the real growth of the economy. When that happens we shall not be able to export our produce and we shall have mass unemployment. Many of our industries are affected and more will be affected as time goes on.

History has proved again and again that the Irish people will endure almost any hardship if they have a clear and desirable object in view. Where today in this country is the grand design? Where is the vision without which the people perish? Where are the leaders in this country today who will restore us to a sense of national pride and national purpose? I believe the answers to those questions will not be supplied by the discredited and the demoralised crew which today passes for the Government of this unfortunate nation, because it appears that their nationalist ideals have been put in the deep freeze along with their guns or they have been thrown overboard long ago. The Government, in each new crisis, seem to be able to see no further than their noses.

While I admit the overall economic position in Europe and in Britain has improved, it leaves no room for complacency. Absolute care is needed in the planning of national investment. There is no scope for extravagance in Government spending. When in opposition the Government preached about this but when in power they continue to increase expenditure.

The time has come when the Government should take the people into their confidence and tell them the truth. The Government fooled the people before the general election in 1965. They told them that everything in the garden was rosy. They fooled the people again last year before the general election. According to the Taoiseach in his speech here on the Budget we may now be facing another crisis. According to Fianna Fáil we are always breasting the hill but we never seem to be able to get over it. There have been three bouts of stop-go under Fianna Fáil in the last ten years. What they ought to do now is to replace the mink wrap they used to win the general election with a hairshirt. That would be more appropriate.

If Fianna Fáil misgovernment continues almost impossible measures will have to be taken by them or by some other Government if the economy is to be put on an even keel and if the country is to be saved from what we have at present, a downhill rush towards bankruptcy.

The Government have made fatal mistakes in the last two years in telling the people they never had it so good and in painting rosy pictures. A policy of optimism based on rosy hopes and fond imagination is definitely bad for the people. That is unfortunately what we have had from the Government.

As I said, last year we had a balance of payments deficit of £60 million. It is reckoned that this year the figure may reach £90 million. The people may well have to pay a further price for the way the Government fooled them in the 1969 general election. It was an election gamble which as far as the Government were concerned may have paid off but as far as the people are concerned I doubt if it paid off. Inflation is becoming rampant. As we know, in a period of inflation the rich get richer and the poor get poorer. The speculators, the racketeers and the tacateers may prosper but the ordinary people definitely suffer.

The farmers of Ireland have fared badly in this Budget. There is no denying that for many years they have been hewers of wood and drawers of water. For the dairy farmer there is very little in the Budget; for the tillage farmer there is little if anything. The farmers represent roughly 30 per cent of our people. Directly or indirectly they are responsible for 60 per cent of our exports. Over the last few years they have received only 16 to 17 per cent of the national income. They are our principal producers but they have been neglected by the Government.

Last year I asked a question in the Dáil as to the average income of those engaged in industrial employment and those engaged on the land. At that time the gap was something like £3 10s per week. It is reckoned that the gap is now between £4 10s and £5. Deputy Blaney, as Minister for Agriculture and Fisheries, announced that the farmers would need something like £21 million this year to meet the rise in costs, the rise in rates, in taxes, in costs of production, cost of living, et cetera. He told them that he had made a strong case and a recommendation to the Government for £14 million. During the by-elections in Westmeath and Kildare he made an announcement that the farmers would get this £14 million. He was immediately contradicted by the then Minister for Finance. When the Financial Statement was read out here we found that the farmers, instead of getting £14 million, would get only £5½ million. So Fianna Fáil had deceived them to the tune of £8½ million. With rising costs of production and rising cost of living, instead of the £21 million mentioned by the former Minister, it would take nearer to £25 million to meet them. The farmers this year may suffer to the tune of approximately £20 million.

The Minister also spoke about the cattle trade which we are told is booming. There is very little thanks due to the Fianna Fáil Government for the fact that the cattle trade is booming. There was a period when they had no time for the cattle trade or for the British market. Despite Deputy Blaney's pronouncements that he was interested in the small farmer of the country, the small farmer of Donegal and the west, we find that the sheep population has dropped by almost 1,000,000 in the last seven years.

Last week I saw a "Seven Days" programme in which farmers from Donegal took part. The farmers said that not one of the 26 small farmers in that area of Donegal benefited from the heifer scheme because in order to qualify one had to have over two cows and the majority of them had only two and therefore did not qualify. The Government have let down the farmer, both large and small, through the years.

Things are bad in this country at the present time. Being a constructive Opposition, having the national interest at heart, we have not only the right but the duty to ask ourselves what lasting value have we got from this huge expenditure or where is the country heading. If as a result of this huge expenditure there were more people at work, credit could be given to the Government. The Government come in here time after time and tell us halftruths. They tell us there are so many more persons employed in industry than there were last year and the year before and the year before that. I have the figures before me of the number of persons at work in 1951 and the number of persons at work in 1967. Fianna Fáil have been in power during that period with the exception of three years. In 1951, there were 1,217,000 persons at work in this State. In 1969, there were 1,079,000 at work. In other words, there were 148,000 fewer persons at work in 1969 than there were in 1951. We have heard too many halftruths in the last fortnight. It is time for the Taoiseach and the Government to come clean with the people, to take them into their confidence, to tell them the truth about the crises we are going through at the present time, the Cabinet crisis and the crisis in the Government, and to give them a true picture of the financial position existing in the country.

As I have said, things are bad in Ireland today and the Government are keeping the full truth from the people. I have quoted Deputy Haughey's speech made in March to show that the Government knew last year that we were faced with an economic crisis but the Government went to the country under an umbrella of false prosperity. They fooled and deceived the people.

Fianna Fáil talk about records. Certainly, there are many records. We have a record national debt today of over £1,000 million and if we add to it the amount of money owed by the county councils of Ireland, by the State and semi-State bodies, the total amount owed is in the region of £1,500 million. It is costing about £120 million each year to service this debt. The time has come when the Government must realise that the country cannot continue to pile debt upon debt year after year. I remember 1951 when the national debt was only one-tenth of what it is now and when the Government of that day borrowed money to build hospitals to cure the scourge of TB and to build houses for our people, and at the general election that year the Fianna Fáil people outside every polling booth told the people "put them out, the country is in pawn". The money borrowed then was spent to good effect. If the country was in pawn when the national debt was around £130 million what must it be in today when it is £1,500 million? The unfortunate thing is that we have had to go to Canada, Germany and England to borrow money. Two years ago we were refused a loan in England and this nation was humiliated. We asked for a loan of £8 million and we got less than 25 per cent of it and the underwriters had to put up the rest of it.

Dr. O'Donovan

Less than 10 per cent.

Mr. L'Estrange

I am sorry my figures are wrong. Less than 10 per cent. It is time the Government realised the situation which exists here today and realised also that while they are taking more and more from the ratepayers—they intend to take £49 million this year—and more and more from the taxpayers—they intend to take £450 million this year—emigration is still rampant. We are losing 25,000 people per year and if we had not got the safety valve provided by Britain, to which people can emigrate, God knows what would happen. In the last 14 or 15 years over 400,000 boys and girls have had to emigrate to seek work in Birmingham, Coventry, London and other cities. All these things should be taken into consideration but, unfortunately, they are not.

A total of 300,000 people left the land during the last 14 years because they were not satisfied with the Government and because they were being taxed out of existence. The Government's mismanagement of our economy is directly responsible for many of our economic ills and difficulties of today. The decline in our affairs was caused by a deliberate decision to place party interests above national interests in last year's general election and also in the 1965 general election. The consequences of those reckless decisions are now a concern to many people, even if they are not to the Government. The Government still do not seem to realise our serious economic position.

Remember the people are concerned with economics and with social conditions and they are completely dissatisfied with the Government's handling of our financial affairs. If Fianna Fáil want to speak for Ireland in the years ahead and negotiate our entry into the EEC, then their tarnished authority needs to be refurbished and cleansed by an appeal to the people. If they cannot secure the right to speak for Ireland, then that right must pass to others. We have now a Government which is in complete disorder. Fianna Fáil have achieved a miracle because they took over this country when its foundations were basically strong and it was wealthy, but now we have a fumbling economy and our finances, due to a fumbling Government, are in utter confusion. The Fianna Fáil Cabinet are squabbling, the Fianna Fáil Party are divided and the people have lost all confidence in their administration.

We urgently need a reduction in wasteful Government expenditure; we need a reform in our archaic taxation system and we need to place more emphasis on savings, increased exports and on making a bigger national cake. The time has come for this arrogant and dictatorial Government, who have failed the people, to go. I do not want to go back over the Dáil debates and quote many of the things that were said. I could quote what Deputy Blaney said about collective responsibility, about a sound Government and the fact that there were no divisions in the Fianna Fáil Party, that they were united—this was on the very day that the Taoiseach is supposed to have warned him and asked for his resignation. I want to know whom are we to believe? Could Deputy Blaney make the speech he made about unity in the Fianna Fáil Party if the Taoiseach really had warned him that day? The important point I want to bring home to the country is that when those people criticise inter-Party or Coalition Governments they should remember that today we have a Government who are kept in power by a coalition of gun-runners, doves and hawks, and of national and international saboteurs, and it is time, in the national interest, that they resigned, went to the people and asked for a mandate.

Parliamentary Secretary to the Taoiseach (Mr. Andrews)

There are a number of points which came up in the debate on Friday and Saturday week last which I should like to deal with before coming to my main points on the Budget debate. Deputy Cosgrave, the leader of the Opposition, made a point that I and the Minister for Posts and Telegraphs clapped Deputy Blaney and the Taoiseach at the same time during that recent long debate. He also made the point that even the most gullible Fianna Fáil cumann would not accept that. I should like to tell Deputy Cosgrave and members of his Party, first, that there are no gullible Fianna Fáil cumainn and, secondly, that if anybody reiterates his loyalty to the Fianna Fáil Party then I certainly would clap him and give him support on the basis of his reiterating his support for the great party of which we are members.

Mr. Desmond

The ghost of Charlie Haughey has caused a few anxious moments——

Acting Chairman (Mr. Carter)

The Deputy will refer to other Deputies in proper terms.

Mr. Desmond

Deputy Charles Haughey.

Mr. Andrews

The Deputy should not dabble in things about which he knows nothing. He might be considerably out of his depth. People take a lot of chances in this House in that respect.

(Interruptions.)

Mr. Andrews

In regard to the Budget, it gives me great pleasure to see the provision for deserted wives. Here again we have a positive contribution to the welfare of the country as distinct from the totally negative attitude of Deputy L'Estrange who in his contribution said we must have this and we must have the other thing but there was no question of the pricing of this sort of thing. While the provision for deserted wives is very welcome the amount is not sufficient, at £4 5s. I believe it is a beginning and I should like the Minister for Finance to take the view that it is a beginning and that it is not sufficient having regard to present day values, the value of money and so on, and the very dire circumstances in which many of these unhappy women live. There are a great many desertions. We now recognise the social need there is to support these unhappy people in their unhappy circumstances.

Coming to the Fianna Fáil national collection, I should like to bring to the attention of the Fine Gael Party the fact that the church gate collection was a record.

Mr. L. Belton

Fianna Fáil will need it all.

Mr. Andrews

That is bad news to Fine Gael in their present euphoria. The collection was up by 75 per cent.

Mr. L. Belton

Someone else said 30 per cent.

Mr. Andrews

Thirty per cent, 40 per cent, 50 per cent and 75 per cent. In some areas it was up 100 per cent.

We should be moving towards the concept of the quality of life within the community. I represent an urban constituency. This is Conservation Year and a sum of £100,000 has been set aside for that purpose. More money must be devoted to the development of community centres. Because of technological developments and computerisation people will have more leisure and they will have to be educated in the proper use of that leisure. There will have to be a comprehensive inquiry into the problem of leisure. We are moving in the right direction, but not rapidly enough. There are not sufficient community centres. All sections of the community should be embraced in a proper scheme. The younger people should be geared to look after our senior citizens. There should be complete integration from a community point of view and I look forward to next year when the Minister for Finance introduces his Budget——

Mr. L. Belton

Whoever he will be.

Mr. Andrews

The Fianna Fáil Minister for Finance next year, the following year and the year after that again. This brings in the whole concept of the quality of life and the living and environmental standards of our people. All this is bound up in conservation.

With regard to land ownership, another aspect of conservation, the high cost of building land must be examined into. Young people nowadays find it difficult enough to live without being asked to pay exorbitant prices for the land on which their houses are built. It is just not good enough.

There is a great deal of brouhaha in connection with the ownership of our fisheries. I have always advocated, long before the Labour Party got on to it, nationalisation of our fisheries. The Minister for Agriculture and Fisheries said that nationalisation would be a tremendous burden on the Exchequer. Nationalisation may not be an immediate priority but it will have to be dealt with as a matter of urgency. The ownership of land and water should vest in the people of Ireland.

The Minister for Health adverted to a report on the care of the aged. I do not think we can pay a high enough tribute to the efforts being made by voluntary organisations in this respect. They are doing a magnificent job in caring for the aged. I believe people would be willing to pay more by way of taxation provided they knew that that taxation would be devoted to caring for our older citizens. The Minister accepts the recommendation of the commission of inquiry and agrees that a national council should be established. This is an urgent matter and I would appeal to the Minister to implement this recommendation without delay. This is above politics. It is something upon which all Deputies agree. If the people know where their money is going I believe they will have no objection to paying the extra few pence here and there.

Mr. Treacy

It seems to me that the Chief Whip of the Government Party, Deputy Andrews, Parliamentary Secretary to the Taoiseach, intervened in this debate primarily to try to give some kind of moral boost to the waning fortunes of his party at present by telling us that the Fianna Fáil national collection last Sunday was a record one. I am sorry he has left the House because I wanted to elicit further evidence of this claim. Those of us who took a particular interest in the annual collection found all the evidence was to the contrary and that the collection on this occasion, certainly in my constituency, reached a new low level. The Fianna Fáil supporters, the old diehards in particular, were shying away from the tables, obviously disillusioned and crestfallen by the internal strife that has shown itself in recent times and utterly disenchanted with the party that has been so discredited and which has disgraced itself so seriously. Telling us about a record collection will not convince anybody. The only thing that will convince us of the true position of the Government party now is a mandate from the people as a result of a general election.

We can well understand Deputy Andrews trying to raise the hopes and morale of the ordinary members of the party by a statement like this. It must be evident to everyone that the country is in a serious mess and has been for years past. It cannot be gainsaid that inflation is rampant, the cost of living at a dizzy height and the balance of payments deficit the highest ever. The NIEC forecast for this year indicates that we shall have a balance of payments deficit of about £90 million. The banks have been closed for some time and the building industry has ground to a halt as a result of the cement strike. Nobody seems to care a damn about our economy. In recent weeks the most senior Ministers have been proved to be more concerned with gun running than with running the affairs of the country.

Last year the then Minister for Finance deliberately ignored the danger signals evident all around and, obviously for selfish party reasons, painted an untrue picture in the early part of the year in order to gain votes in the general election of last June. It is true that he went on television and rightly alerted us to the gravity of the economic position but when it became known to him that the Taoiseach was about to declare a general election he did an about turn and completely changed the complexion of the picture from dark and dismal to rosy and bright and for petty electoral gains and selfish party advancement allowed a most serious situation to develop in our economy. One would imagine that, having been caught out in that irresponsible attitude over 12 months ago, on this occasion a more sensible approach would have been adopted. Instead, on this occasion all the economic pundits and political advisers found themselves completely out of the picture when the Budget proposals were announced. It was a lazy, indolent and irresponsible Budget and instead of doing something worthwhile to reduce growing inflation the then Minister for Finance deliberately threw an incendiary bomb into this inflationary situation. He must have known it would send the cost of living spiralling and make life miserable for the average family.

No serious attempt was made to tax luxuries or exempt essentials. No effort was made to tax items like jewellery, furs and costly motor cars or to single out specific items for tax purposes such as amusements of various kinds. The irresponsible decision to increase the turnover tax by 2½ per cent across the board, irrespective of the consequences, has done a serious disservice to our people. When the turnover tax was first mooted in this House I remember the present Minister for Transport and Power, Deputy Lenihan, being accused then of saying in his constituency that this tax would apply only to luxuries such as costly furs, jewellery and expensive motor cars. We now know how untrue that was. All commodities are affected by this tax. Anyone who got the impression on Budget Day that it was a "cushy" Budget involving no specific increases on traditional items such as the price of beer, spirits or cigarettes or bread and butter and essentials of that kind had a real feeling of relief that nothing had, in fact, been increased.

The people were quickly shaken out of their complacency. They got a rude awakening. While it is true that the beneficiaries under the Budget, the social welfare classes, must wait until August or October of this year to gain their rather small increases, within days of the Minister's announcement in this House, increases in all commodities were evident; 1ds, 2ds and 3ds were added on all along the line. The pint drinker now knows that the price of his pint was increased. It was increased by 2d a pint in some towns and 3d a pint in others. The price of whiskey has been increased by 2d a glass in some places and by 3d a glass in other places. The price of cigarettes has been increased. The price of petrol has been increased. The price of everything has been increased as a result of this Budget.

It was a shabby pretence, but the Irish people are no fools and, even the social welfare classes who in the initial stages were agreeably satisfied because they were securing increases of 10s or 17s 6d in their pensions, now know that they have been "had". They now know that it would have been a far far better thing if we had some price stability and no increases. They now know that the 10s or 17s 6d they hope to get in August or October will have been completely dissipated by spiralling prices.

Mr. O'Higgins

Hear, hear.

Mr. Treacy

When the old age pensioners call to the grocer's shop for the necessaries of life, they know that they are paying extra shillings per day for essential commodities. The inter-Party Governments of recent years have been denigrated time and time again in this House by Fianna Fáil spokesmen for the things they did or the things they failed to do, but be it said to their eternal credit that, in respect of the essentials of life, bread and butter, those humane Governments were concerned about the welfare of the least well off in our community and saw to it that standards were maintained. They achieved that end by subsidising the essentials of life. That is a far cry from Fianna Fáil who adopt a shabby pretence of doling out 5s or 10s annually and make no attempt whatsoever to stabilise the cost of living. They left our people the victims of every exploiter. Every exploiter, every extortioner, usurer, is given unbridled liberty to fix prices and rob our people wholesale.

Mr. O'Higgins

Hear, hear.

Mr. Treacy

We have here tonight a Minister for Finance who until recently was Minister for Industry and Commerce. I do not believe in saying behind a person's back what I would not say to his face. I accuse that Minister of abject dereliction of duty in respect of price stability. He made no serious endeavour whatsoever to utilise the price control and legislative measures which were at his disposal. He operated the full tenets of a capitalist society. He allowed prices to find their own level. We all know what happens in such an economic situation.

Deputy Colley, Minister for Industry and Commerce until recently, has an awful lot to answer for in relation to the upset in our country at present, the difficulty for the average family to exist here, the difficulty in maintaining standards, the industrial strife and strikes we have had as a result of the vicious circle of wages chasing prices and prices changing wages in recent years, with no attempt at providing an incomes policy.

Indeed, the only indications of an incomes policy we have had from the Fianna Fáil Government were admonitions that wages should be controlled; always wages, with no endeavour whatsoever to restrict profits, prices or interest. All the strictures were laid down for the working classes. In an atmosphere of irresponsibility of this kind created by Government Ministers, how can we expect the working classes to show restraint and responsibility when we see standards eroded in this fashion, when we see wage increases quickly eroded and quickly dissipated by increases in rents, foodstuffs and the other essentials of life?

As I say, the Minister for Finance has an awful lot to answer for in respect of the situation which exists in this country at the present time. His was the policy of free trade. His was the policy of tearing down protective barriers, of giving our industrialists a taste of free trade, of letting them feel the icy blast of freer competition with the removal of the swaddling clothes in which they were wrapped for many years.

He was an enthusiastic supporter of the Anglo-Irish Free Trade Area Agreement signed at Christmas, 1965. This agreement was signed in anticipation of our gaining entry into the Common Market by 1970. All those prognostications proved to be incorrect. We have had free trade virtually with Britain for the past few years and we now see all the signs of a widening gap in our balance of payments, of the order of £90 million this year. We now see a much greater percentage of foreign goods on the shelves of our shopkeepers. We see a dislocation of industry which is growing. We see closures and pending closures, unemployment and redundancy.

All this was quite unnecessary because what people failed to realise was that we did not have to sign a free trade agreement with Britain. This country enjoyed free trade with Britain since the foundation of the State. At the same time, it enjoyed protection for native industry. To commit us to this battle with Britain was a retrograde step and has done us untold harm.

It is high time the Free Trade Area Agreement was looked at again and amended before irreparable harm will have been done to our industrial sector. For dubious gains, agriculturally, we sold our industrial arm to Britain. The Fianna Fáil Government committed us to a battle with the industrial giants of Britain and are seeking to commit us to battle with the industrial giants of Europe. It is a battle between pigmy and giant. It is a battle where all the advantages lie with Britain in these industries and all the disadvantages are here and are very evidently here.

There is to be a general election in Britain next month. It is my ardent hope that Mr. Harold Wilson and the Labour Government will be returned to office. I feel pretty certain that Irish hearts and hands are working for him over there where there are many millions of Irish people as well as people of Irish extraction. They are working with might and main to bring about a return of that great Labour Government so that they may continue their great work for the advancement of their country.

Mr. Wilson is very slow to commit himself to free trade with the Continent unless and until he is satisfied he has got the best possible terms. His association with the Commonwealth countries is preserved and similarly his great friendship with the United States is preserved. It is difficult to understand how this Fianna Fáil Government, at this point in our history, could be so enthusiastic about signing the Rome Treaty. Fianna Fáil signed the Free Trade Area Agreement with Britain when our economy was at its weakest. Much needs to be done before we can think of engaging in free trade with the countries of Europe.

As far as my party are concerned, we want work for our people on the Shannon, on the Liffey, on the Nore and on the Suir—not on the Seine, the Tiber or the Rhine. We are not against going into Europe but we want to go in under the best possible conditions. We want to go in as equal partners. We want to get the best possible bargain out of it. We are not anti-European in our approach. This party of ours is not merely nationalist in outlook: it is internationalist in outlook as well. For us, poverty and insecurity anywhere in the world are a threat to freedom and prosperity everywhere. We want dearly to join in a community of nations of Europe. We want to share in the growth, security and happiness of those people —but we want to do it as equal partners. We appreciate that, if Britain goes in, we have no alternative but to follow that market.

The posturing of the present Government and the pretence that we are economically and financially strong enough to go into Europe at the present time is absolute nonsense. I appeal to the Minister for Finance to give deep consideration to this vitally important issue. He knows best how long more it will take before Ireland, Britain and other countries will become members of the Common Market but, if it will take many more years to evolve, I earnestly beseech him to seek a speedy amendment of the present Free Trade Area Agreement with Great Britain which is having a most deleterious and ruinous effect on our economy.

This is clearly to be seen in our shops where a greater proportion than ever before of foreign goods is on display. This is to be seen in the virtual take-over by foreigners of our distributive trade. This is to be seen in very many other ways. The yawning gap in our balance of payments is evidence of this. We must admit that all the advantages lie with Britain. We must reaappraise the situation before untold damage is done to our economy.

The "Buy Irish" campaign is now a huge joke. It is very difficult to find anything of Irish origin or manufacture in very many of the major stores in this city. The interlocking company, the cartel, the monopoly, seem to be the order of the day. Everything big goes— to the exclusion of the small grocer, small trader, small factory and small farmer. This is a standing situation. Fianna Fáil seem to accept it as inevitable. The poor we shall always have with us. The unemployed we shall always have with us. That everything small in this country is going out of existence seems now one of the inevitables. All our endeavours to focus attention on these things, and to seek redress, have met with little or no ready response by Government spokesmen.

I have been seeking to prove, very briefly, in the limited time available to me, that the Free Trade Area Agreement with Britain was essentially a bad bargain for all of us in Ireland in the agricultural sector and in the industrial sector. I well recollect the then Minister for Agriculture and Fisheries, Deputy Haughey, telling the Irish farmers on television and in this House that the Free Trade Area Agreement with Britain would mean an extra £10 million per annum for them. That has never materialised. On the contrary, agricultural produce to that region in recent years has fallen—considerably in some instances. However, the focal point is that our balance of payments has worsened from £22 million in 1968 to £60 million in 1969 and will worsen to an expected £90 million this year— 1970. Even allowing for the appropriate price increases for various commodities the import excess from 1968 to 1970 was, at a very minimum, £33 million. It would be difficult to find a Government who have been more out of touch with the needs of the people, who have shown more indifference in recent times and, indeed, have acted so irresponsibly in so many areas.

The outcome of all this has been that standards of living are falling; that we have to contend here of late with a lot of industrial strikes; that our ability to compete in the export field has worsened considerably. All this will lead to further depression and to further unemployment in the very near future. It is as if the minds and the time and the attitude of the most important Ministers of State have been devoted to other things altogether and our economy and the welfare of our country have been of the least importance. Certainly we have had a situation which has brought us to the verge of economic ruin and political anarchy. From any standpoint this country, its institutions, its economy, its standards, has reached a new low. It is time a hard look was taken at the situation. It is time we had more sincerity and devotion to duty on the part of the Government.

Time does not permit me to deal, as I would like to, with the various aspects of the Budget. We have been accused by Fianna Fáil spokesmen of opposing increases for the underprivileged, the social welfare classes generally. This, of course, is utterly untrue and cannot be substantiated. Our every endeavour in this House is to improve the standard of living of the least fortunate in our society, the aged, the sick, the widowed, the orphaned, the infirm and the unemployed. Every endeavour we make here is to spread human happiness among that unfortunate section of our people. What we have opposed in this Budget is the vicious irresponsible system of turnover tax which increases all prices, bears down heaviest on those least able to bear the burden, drags down living standards and accelerates inflation. We welcome, naturally, the increases granted to social welfare recipients but it is pertinent to point out that while increases have been granted, for the first time, I think, in the granting of increases to social welfare recipients certain categories such as contributory old age pensioners will only get a personal increase. There is no increase whatever for the pensioner's dependant. This was a smart alecky trick. Heretofore, when an increase was granted to a pensioner, a similar increase was invariably granted to the dependant of the pensioner—his wife and likewise his children. Here for the first time we have the tricky, unfair precedent that no increase has been granted to the pensioner's dependant. Last year 10s was granted to the pensioner and 10s to his wife. This year 17s 6d has been granted to the pensioner and nothing to his wife.

I understand that the non-contributory classes will secure their increases in pension in August next and the contributory categories will be granted their increases in October. I want to ask the Minister whether the contributory classes will be entitled to opt for the non-contributory pensions on which the increase is payable earlier, in respect, say, of the wife of a pensioner. I understand this was normal procedure in the past—that the dependant of a contributory pensioner was entitled to opt for the non-contributory pension to secure the increase at the earlier date. I would like if the Minister, when replying, would be kind enough to say whether this facility will be afforded to the dependants of these pensioners on this occasion—that the contributory section will be entitled to opt for the non-contributory pension in August and revert to the contributory pension at a later stage if they so desire. It might be no harm, if this facility is again conceded, to advise the dependants of contributory old age pensioners of their rights in this matter.

I wanted very much to deal with matters appertaining to housing, health, education, industrial grants and various other things. The Taoiseach speaks in such glowing terms about these things that he seems to be out of touch with the situation. He seems to ignore the fact that we have a serious housing problem. He said that Fianna Fáil were providing homes for our people at rents they could afford. I contend they are providing neither of these two things. Not only do we not have the houses for the countless thousands who are living in appalling circumstances but when it does come to determining rent we have the impostition of the differential rent which is the bane of the lives of our people, the great scourge of the tenants of this country and is causing widespread unrest and agitation as can be evidenced by the many thousands who are marching in our various cities every day. The differential rent system is all right in principle—it is a principle we would all condone—but in its administration it has become a most objectionable thing, making inroads into the privacy of the lives of our tenants, stripping them bare in respect of information as to means, income and the like and imposing on them unfair rents, economic rents stripped of any State subsidy.

It has reached proportions of indignation and agitation which the Government should take cognisance of and give back to local authorities the power to fix rents in accordance with the needs and the wishes of our local communities. This is not the position now. The differential rents system is imposed upon all of us in housing authorities and the penalty for not adopting that unfair and inequitable system is that State subsidies will be withdrawn and that the Minister for Local Government will not approve of any scheme but the differential rents scheme drawn up in accordance with his rules and regulations. Again, I avail of the opportunity of deploring that system and calling for redress.

Very great progress has been made in the matter of education. This is due, in the main, to the endeavours of the then Minister for Education, the late Deputy Donogh O'Malley. If we are to have a free educational system in the real sense of the word I submit that this matter of free books be resolved. The free books scheme as such does not exist. An odious means test is applied to the unfortunate children based on whether or not they are in receipt of a medical card. This is a most humiliating and degrading system which I know personally to have had a demoralising effect on little children, causing great embarrassment. I would ask the Minister to end this unsavoury system and to provide for children free books devoid of a means test.

The free school transport system leaves a lot to be desired. It is saddening to us all to learn of and, in fact, to see little children being passed on the road by school buses just because they are outside the appropriate limit laid down by the Department. Every effort should be made to collect the younger children, especially those in the rural areas, whose lives are endangered on main roads and who have to be out in all kinds of weather. The Minister should be more magnanimous in respect of free transport and relax this ridiculous stipulation of a two or three-mile limit which is being adhered to too strictly in many instances.

It is not generally realised that up to ten years ago, prior to the advent of PAYE, only one of every four workers was paying income tax. Now three out of every four workers are caught up in the mesh of income tax. I am not unmindful of, indeed, I am grateful for the very small concession made to income tax payers in this Budget, but I do not regard it as at all adequate. Most of us hoped that the PAYE system of income tax would be a painless extraction from wages on a weekly basis. There should be a better deal for the real producers of the wealth of this country, the working class. I want to point out the anomaly whereby farmers are exempt from income tax and their unfortunate workers have to pay it. The agricultural worker should share somewhat in the grants and bounties that are going, because he is the real producer of agricultural wealth. It is a terrible anomaly that he should pay seven shillings in the £ over approximately £7 a week, while his employer, who may be a very rich man, pays no income tax at all.

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

Mr. O'Higgins

The Budget debate this year will surely rank as unique among Budget debates. It started off on the 22nd April with the House being informed that the man who prepared the Budget would be unable to present it because he had suffered an accident, and on the 22nd April, just four weeks ago, the Taoiseach presented this year's Budget to Dáil Éireann and he read out to the Dáil, with an appearance of conviction and belief, a speech prepared by Deputy Charles Haughey four weeks ago. Much has happened since. Much water has gone under the bridge. In the course of these four weeks heads have rolled, plots have been discovered. This debate, indeed, has been interrupted three times—once to get this House to agree to a token payment, the appointment of a new Minister for Justice, and then we had a marathon debate on the appointment of the other new Ministers of the Government; then we had a confidence motion and now, at the end of it all, we resume the Budget debate. The din has subsided; the dust has cleared away and look now what happens: sitting in Deputy Haughey's seat is the Minister for Industry and Commerce of four weeks ago and Deputy Haughey's great rival for leadership of the Fianna Fáil Party.

Dr. O'Donovan

A lonely figure.

Mr. O'Higgins

This has been a most extraordinary Budget debate. In these four weeks the Fianna Fáil Party —I will not say they have been rent asunder—but they have had a very bad attack of indigestion, constipation and then a purge to relieve the constipation and now, to conclude the debate when I sit down, the former Minister for Industry and Commerce will talk on behalf of an entirely changed Government, talk in defence of a Budget that was prepared by a man in whom the Taoiseach has no longer any confidence, a man whom he dismissed from his Government because he did not think it was proper that he should continue. Not even in the fertile imagination of some of our more sensational authors could such a story have been evolved and such a four weeks saga have been recounted.

The debate on the Budget always has been and should be a debate in which there is a review of the policy of the Government and an inquiry from these benches as to what the policy is going to be for the year ahead and before dealing with the terms of this year's Budget I think it is relevant to have a look at what has been happening to our economy over the last six or seven years, years in which successive Fianna Fáil Ministers for Finance have been in charge of the economy, years in which a number of vicissitudes and difficulties have affected the country, but years in which there has been a significant lack of any coherent plan or policy by the Fianna Fáil Government.

At the end of the fifties, the beginning of the sixties, a very good start was made with the First Programme. Of course, the First Programme must have caused a sensation to the then Fianna Fáil Government. They did not understand it. They did not prepare it. They knew nothing about it. It was the work entirely of the then Secretary of the Department of Finance, Dr. Whitaker, who, fortunately, was appointed to that position by the inter-Party Government. The First Programme brought to this country the first appreciation of what economic growth could be. The First Programme put this country somewhat in line with what was happening in other countries in Europe. We began to experience economic growth. The trouble was that the Fianna Fáil Government of the time did not know how to use this growth. They did not appreciate how to plan what was happening in the development of our resources and the growth of wealth in our community.

We had then the Second Programme and that stated a number of economic aims and set out a number of targets but no effort was made to lay down the methods whereby these aims were to be achieved and the targets reached.

The Second Programme obviously suffered from the fact that it was bedevilled by interference from the Fianna Fáil administration who were concerned to put a political complexion upon it and, of course, the Second Programme for Economic Expansion suffered very rapidly from the fact that the Government themselves refused to observe the discipline necessary to enable the programme to be a success.

In 1964, inflation broke out—serious, definite, unambiguous inflation. This inflation was not controlled because of electoral considerations. In fact, the inflation of 1964 was initiated directly and exclusively by the then leader of the Government who wanted to win at all costs two by-elections, one in Cork and the other in Kildare.

The year 1964 was a bad year, a year that we could not afford to experience, a year in which the progress won previously was being endangered by inflation, but no steps were taken to deal with it because it was planned to have a general election in the early months of 1965 and it was planned to get the people voting at the election in an atmosphere of euphoria created by inflation, and so on.

Then we had 1965, when the present Taoiseach became Minister for Finance. I think Deputies who were in the last Dáil will remember Deputy Lynch coming in as Minister for Finance, reading out the stuff that was prepared for him, some of which obviously he did not understand. He introduced, in 1965, a Budget designed to deal with the inflation that had been allowed to go uncontrolled in the previous year. The year 1965 and the measures then introduced led to a recession, led to the damping down of our economy.

We had 1966 and then we had 1967, years in which economic growth tapered off, years in which unemployment grew and there was a general recession in economic activity. Growth was resumed in 1968. But as it was resumed, very rapidly the dangers of inflation began to reappear. In November, 1968, we had this inflationary Budget introduced again by the Taoiseach, again in the absence at the time, because of an accident, of the then Minister for Finance—£19 million extra taxation. So we came to 1969. In the early part of that year it became apparent to everybody that inflation was in danger of growing again. As has been pointed out again and again in this debate, we had the crisis situation in March, 1969, with the Minister for Finance going on radio and television telling the people that we were facing a possible deficit of £50 million, that the country could not afford that, that there would have to be a retrenchment, a tightening of belts and all the rest. This was followed by an inflationary Budget on the 7th May, 1969, and since then inflation has been allowed to rage uncontrolled.

I have only gone back over the past six years but I suggest that that story in itself demonstrates that this Government have no plan, no policy, and no ability to follow any consistent action. We have had inflation, disinflation, we have had the old classic stop-go activity, but there has not been any effort whatever to follow any clear and defined road. A few years ago there was a debate between different sides of the House as to the difference between economic planning and economic programming. Whatever term can now be used it is perfectly clear that there was neither a plan nor a programme on the part of Fianna Fáil.

An inflationary Budget was introduced this time last year—again for what purpose? Because the decision had been taken to have a general election. No other purpose. There is that consistency that when electoral expediency dictates it, the requirements of prudence and caution, the national interest, cease to be important and Fianna Fáil will do anything with other people's money to buy votes and support for themselves.

So we had the Budget of last year followed immediately by an election and the return of Fianna Fáil, only eleven months ago, with an overall majority. What an amazing eleven months. Look at them now—disillusioned, cowed, terrified, apathetic and afraid to face the people. The year rolled on with inflation gathering in strength. Deputy Davern may smile. It does not matter to him that unfortunate women, the wives of workers in this city had to face the fact that their husband's earnings were being eaten up by rising prices. Deputy Davern does not mind. Inflation went on and we came to the days immediately before the Budget of this year. The outcome of last year was not a £50 million deficit. It was a £60 million deficit. It became apparent that last year not only was the country importing and buying more than it was selling but worse than that we were financing our deficit by borrowing abroad—borrowing by the Government, by State bodies and also by ordinary individuals. We were borrowing abroad and in that sense mortgaging our future. In that way we were paying for the fact that we were consuming and buying more than we could produce. That was a serious situation, a bad situation and an unhealthy situation. It was a situation which was indicative of the fact that the Minister for Finance, the leader of the Government and every other Minister were being too damn lazy to face up to their responsibilities. We were borrowing all over the world with foreign banks coming in here and giving loans to citizens at 15 per cent. Of course, money was coming in in order to keep up the euphoria, the spurious prosperity, to allow the good time Charlies and all the backslappers to wallow in a kind of synthetic wealth, but at the back of it all there was a corrosion of the value of every worker's pay packet; at the back of it all there were rising prices and there was ultimate hardship for the ordinary people.

Five weeks ago the Government were told clearly that unless positive action were taken the deficit in our balance of payments this year would rise by £90 million, that there were going to be further wage increases of the order of 8 per cent and that the country and the economy were going to be in a very serious position. All the bodies charged with accepting responsibility for looking after the economy—the NIEC, the Department of Finance, the Economic and Social Research Institute and the Central Bank—indicated clearly that we were moving into a disastrous situation. What happens? This Budget was introduced by the Taoiseach on behalf of the injured Minister for Finance. This Budget utterly and completely ignored the situation. Not only did it ignore the situation, which was bad, but by doubling the turnover tax the Budget was calculated further to shove up and increase prices. In case it is not realised I can say without fear of contradiction now, on the 20th May, that since the first day of this month, every woman who has gone into a shop, a store or a supermarket has come out livid at the steep increase in prices that has taken place. The snowballing has only started to take place. Prices are soaring. Costs in every sphere of the economy are increasing. We have tonight an intimation that motor insurance will increase by 17½ per cent. This is the direct effect of an ill-considered Budget, a most injudicious tax increase which, in a situation of inflation, is bound to make a bad situation considerably worse.

This Government, and I accuse them of collective incompetence, ask Dáil Éireann to approve this Budget as a means of dealing with the present situation, a situation of soaring prices and a widening deficit in our balance of payments, and, behind all this, if one listens carefully, one can hear the pathetic bleating of the Taoiseach asking people not to increase wages by more than 7 per cent. Seven per cent in a year in which prices will rise by, at a minimum, 10½ per cent. The Taoiseach says 7 per cent. No one listened to him. It was an utterly ridiculous appeal to make. Already increases far beyond that have been granted, and more increases will be granted. Deputy Colley, as Minister for Industry and Commerce, was charged by this incompetent Government to say that he would disallow price increases if no one gave a wage increase beyond 7 per cent. Utter rubbish. This situation was allowed to develop by an incompetent Government concerned with other things.

Why have we not got a prices and incomes policy? In 1965, the Fine Gael Party indicated, defined and wrote out in the Just Society policy the proper way in which to approach a prices and incomes policy. In 1966 our point of view was accepted by NIEC, a body representative of employers and trade unions; that body said: “Yes, this is the only way in which real progress can be made. It will bring stability to money and it will ensure that wage increases have a real value.” 1966! What has been done since? Absolutely nothing. These incompetent Ministers have been parading themselves around the place as so many gladiators all looking for a little bit of extra notice in the eternal queue to find out who is going to lead Fianna Fáil. That has been their concern, not the ordinary people and the trust the ordinary people imposed in them.

Four years have passed without even the initial steps being taken to introduce a prices and incomes policy. Now we have Fianna Fáil talking about it again. Talking about what? Talking about a wages policy. A prices and incomes policy of a broad dimension is what is needed. The problem will not be solved by controlling profits or controlling wages. The solution will come about only with understanding, with co-operation, ensuring, as we suggested by the provision of a dividends equalisation tax, that those who earn money from profits will not gain as a result of the understanding and the concession made by wage earners. It will be a hard and difficult task, but not even the initial steps have been taken to introduce such a policy. Nothing has been done because this Government have no policy. They have no programme. They have no idea what they will do next month, not to mind any solution of the problem facing them now.

The result has been that for the last four or five years we have had a wages/prices spiral. Industrial relations are non-existent. We have had a Minister for Labour for the last five or six years. Doing what? Making polite announcements about the things he is thinking of doing. But he has never done anything. We have reached a situation again, for the second time in five years, in which we have the highest strike record in Europe. There is a cement strike which is being relied on by the Government, because it is forcing up unemployment, to help in the solution of our balance of payments difficulty.

We have a bank strike and, in the course of that bank strike, the available money in circulation is being siphoned off by those who have it for other purposes. Is this being contrived at by the Government to take some of the heat out of the economy? Certainly, in relation to positive action, positive policy, an incomes policy, a prices policy and industrial relations we might as well be back seven, eight or ten years ago. There is no progress, no policy. I doubt if the Government at this moment would be able to indicate what their plans are.

We are in a situation of galloping inflation, a growing trade deficit, a situation in which our costs of production are, for the first time ever, exceeding those of Britain. That may have happened on an odd occasion before, but now a new pattern has been set. Does anyone realise how dangerous that is? Is it appreciated what the consequences are likely to be? In the situation that has been allowed to develop the cost of producing the goods we depend upon to maintain and improve our economy has put us at a disadvantage in relation to others. With a balance of payments deficit of £90 million one just does not know what the future will hold. The plain fact is that our £ has been endangered. If our £ collapses great harm will be done and great suffering will be caused to many.

What should the Government do? They are not going to resign. They will hang together because otherwise they would hand separately. Late as it may be, I would suggest that, first of all, they should try to set going the initial steps towards achieving a prices and incomes policy. It will be a long road, a hard haul, but it is essential that the effort be made. Secondly, I should like to see some evidence of a policy in regard to industrial relations. I should like to see adequate and immediate steps taken to stabilise prices. I should like to see a proper effort being made to encourage savings by proper incentives. It is quite absurd that a situation should be allowed to exist in which it is only the fool who saves since what one saves is devalued and depreciated. These are urgent matters because within the next couple of months we face impending EEC negotiations, negotiations which, unfortunately, so far as we know at the moment, will be in the hands of incompetent Ministers.

Are we going to negotiate with the hard-headed men of Europe in a situation of disadvantage, with a balance of payments difficulty, uncontrolled inflation and a situation in which we are pricing ourselves out of export markets? If that is the way we must negotiate we shall suffer very significantly. I have little doubt that some efforts will be contrived to remedy our present economic ills. I can only hope it is not too late and that the harm that has been done by the year of neglect, 1969, which has ended in this inappropriate Budget is still controllable. Let there be no doubt, action must now be taken by the new Minister for Finance. He cannot afford to permit a continuance of the silly euphoria of the last 12 or 18 months. This bubble of spurious prosperity must be pricked if the way of life and employment of ordinary people is to be preserved. Doing that will be injurious and difficult but I hope there will at last be some resolute decision of the Government. What was called the crisis of the past fortnight or so may pale into insignificance compared with the real dangers which face our people now in a situation brought about by neglect, considerations of political expediency and lack of any clear policy and uniform plan. All this adds up to a very bad situation.

We now have growing unemployment with close on 75,000 people unemployed. In our sister country the economic difficulties appear to have been solved. Compared with Britain we are now in a highly disadvantageous position. We should be going into Europe, although a small country, as a strong country. We should be going into Europe having reaped the benefits of economic growth over the past ten years. We should be going into Europe, had we applied to ourselves through our Government the discipline that was essential to the maintenance of economic growth, in a strong way as a country that could contribute significantly to Europe's economic development. All that has been rendered impossible by the years of neglect by different Fianna Fáil Ministers.

They talked about their programmes and their plans. They did not believe in them themselves. They talked about preserving the resources of the country to develop the country. They did not do that themselves. They dissipated our resources through the years and the result is that we have limped along, achieving a 4 per cent growth one year, not achieving it in the next year and so on. It has been a sorry and pathetic story and it has been due to the fact that the Fianna Fáil Party have been continuously in office. I believe the eyes of the people are now opening to realise that if we are to develop in a highly competitive world, one of the first things we must ensure is that every Government here are kept on their toes because there is an alternative to them.

The other day the Taoiseach in the debate on the confidence motion or some such debate said that although they had their difficulties they had now composed them and they would go forward as a united party. He went on to say: "Anyway, who is going to oppose us?" I want to make it clear to Deputy Colley, Minister for Finance, and every member of Fianna Fáil that that hare will not run any longer. The people will provide an alternative to Fianna Fáil immediately they are asked to do so and our democracy will function as it should. At the moment Fianna Fáil are in office charged with the awful responsibility of dealing with these economic problems. It will be our duty from these benches to see that these problems are tackled. If we find in the coming months that our money, assets and resources have been endangered or devalued by action or negligence on the part of Fianna Fáil I can assure the Minister for Finance and the Government that not even we on these benches would control the mounting anger that will sweep them out of office.

Minister for Finance (Mr. Colley)

Listening to a number of the speeches in this debate and, in particular, to the winding-up speeches on behalf of the Labour Party and the Fine Gael Party, the distortion and misuse of some facts, the gross exaggeration and misrepresentation of other facts and the running away from economic realities, one really is not surprised that they are over there and we are over here. However, despite that, I propose to treat the Opposition Parties with the courtesy which an opposition should deserve and endeavour to reply to the major points raised in the debate. It will, of course, be understood that in the time at my disposal I could not attempt to deal with all of them but I shall endeavour to deal with the major ones.

I do not think it will be contested that the major criticism levelled at this Budget has been the allegation that it has done nothing to curb inflation and that Government policy in general has done nothing to curb it. In framing the Budget the Government have been particularly concerned not to take any action which would push our economy into recession. Growth remains our main objective and the Government do not propose to act in any way which would harm this objective unless such action is absolutely necessary. It is, perhaps, strange to see the Opposition, including Labour Party Deputies, calling for harsher measures which would result in rising unemployment and emigration and depressed business activity generally. The Government will continue to watch the situation very closely.

One of the primary objectives of policy this year is to ensure that the balance of payments deficit does not exceed £50 million. If there is any danger that this objective may not be achieved, the Government have made it quite clear that they will not hesitate to introduce further measures of restraint. A £50 million deficit this year, while representing an improvement on last year's estimated deficit of £60 million, would, of course, give no cause for complacency. Our aim is to get back to the more moderate deficits of £35 million to £40 million which were envisaged in the Third Programme but, as was pointed out in the Financial Statement, to attempt deliberately to achieve a deficit much smaller than £50 million this year might well involve excessive disruption of the economy.

To listen to some of the speakers from the Opposition benches, one might well think that nothing whatever had been done by the Government to curb inflation. Let me remind the House that last January the severest hire purchase restrictions ever were imposed. The credit restraint of 1969-70 had increasing effect through that period. The guidelines then set were virtually fully met. For the next 12 months the credit curb will continue to operate and will be more stringent still.

The Central Bank advice to the associated banks provides for an increase of 12 per cent in lending, which is the maximum increase compatible with the policy objective which I have mentioned of a balance of payments deficit of the order of £50 million. This increase of 12 per cent in bank lending in the 12 months ending in April, 1971, compares with an increase of 13 per cent in the calendar year, 1969, and 23 per cent in the calendar year, 1968.

In periods of rising incomes and prices, it is not an easy task to restrain increases in public expenditure. Government services and expenditures essential to growth and to the general well-being of the community have to be maintained and improved where possible. Nevertheless, an exhaustive review of both capital and current expenditures was carried out and very substantial economies were made in the proposals which were put forward for the current financial year from the various Departments.

Indeed, cuts in the region of £30 million were made in the public capital programme and, on the current side, the cuts were in the region of £22 million. The public capital programme which makes such large demands on national resources—it is directly responsible for more than half of gross domestic fixed capital formation—is estimated to rise by 12 per cent in 1970-71. This represents a considerably reduced rate of increase as compared with recent years. I should, perhaps, point out that in 1968-69 the rate of increase was 28 per cent and last year it was 23 per cent. The smaller rate of growth in the capital programme this year should result in a significant reduction in the pressure on our resources as compared with recent years.

The combination of tight hire purchase restrictions, restraint in bank lending and moderate increases in the capital programme, together with the balancing of the current Budget, should keep a tight rein on the economy in 1970 and help to reduce the inflationary pressures without, at the same time, pushing the economy into recession. A particularly positive way of combating inflation is by the encouragement of savings.

In the Budget it was indicated how, in order to give incentive to savers, it is proposed to introduce a new type of savings scheme which would encourage people to save by regular monthly instalments over the period of a year, to retain their savings on deposit for a further period of two years and then be paid a bonus calculated at the rate of 9 per cent per annum compound interest free of tax, which is the equivalent of about 14 per cent gross.

The first quarter of 1970 saw some improvement in the external trading position. Our provisional trade returns show that exports increased by 23½ per cent and imports by 13½ per cent as compared with the first quarter of 1969. Overall, the import excess declined by £0.6 million in the quarter. While it is true that special factors played a part in this improvement, it is also true that, if moderation in seeking income increases were accepted, we could look forward to a continuation of the improvement and the attainment of the objective I mentioned, namely, a deficit in the balance of payments not exceeding £50 million in the present calendar year.

What I have just said about credit restraint must, of course, now be considered in the context of the bank closure. As I have indicated, the Budget was drawn up on the basis that credit curbs would continue to operate. As I have said, the Central Bank's advice to the associated banks, as issued in April, provided for an increase of 12 per cent in bank lending in the 12 months ending April, 1971. As a result of the closure of the banks, a new and important factor has been introduced which could not have been provided for in advance. During the previous bank closure which took place in 1966 there was a significant expansion in credit. This was not injurious to the economy at the time as there was scope for such expansion.

The economic background is quite different now and any marked addition to credit beyond the limits indicated in the Central Bank's guideline could have serious effects. If the closure should end in the near future, our problem would not be very great. A lengthy closure, which I hope will be avoided, would cause more difficulty. It is not, clear, however, that, even if the closure were lengthy, credit would expand to the same extent as on the previous occasion. Conditions have changed since 1966 and the closure may give different results in the credit sphere. If it should transpire that credit expands in a way that threatens to place the Government's basic objectives in jeopardy, then consideration will have to be given to the introduction of further appropriate restraints. The developing situation will be watched carefully so that appropriate remedial action can be taken in time if it should be necessary.

It is obvious—and many speakers in the debate referred to this fact—that central to our whole economy and its prospects is the question of an incomes and prices policy. The Minister for Labour and Social Welfare spoke here earlier today and dealt at some length with this matter. I want to say something further. First of all, I want to underline the fact that the recent NIEC report on incomes and prices was accepted by the Government. Within, I think, three days of its publication a meeting was held between the Taoiseach and some Ministers and representatives of the Irish Congress of Trade Unions and of the employers' side. At that meeting an ad hoc committee was set up to formulate the arrangements for the employer-labour conference envisaged in the NIEC report. That ad hoc committee met within, I think, a week of that meeting. The composition of the employer-labour conference has been established and they are to hold their first meeting within the next few days. If any evidence were needed of the Government's determination to utilise to the fullest every opportunity open to them to get an incomes and prices policy operating here, it is clearly shown in the picture I have just given of what has happened since that report was published.

It seems to me that we had better get this quite straight—that in a democracy in which all political parties and all those who represent broad sections of the community have indicated clearly that they favour free collective bargaining, an incomes and prices policy can work only if there is a commitment on the part of all the people involved to make it work. That commitment implies that there is a common good, a national interest, which is bigger, higher and more important than any sectional interest. If that is recognised, then this commitment is possible. If it is not recognised, such commitment is not possible.

I am aware that no effective incomes and prices policy has operated in other countries, at least to my knowledge. Consequently, I recognise that while one may draw up many blueprints which look excellent on paper, it is quite a different matter to get a workable policy. I do not say that the NIEC proposals are the panacea for all our ills but I do say that they provide a framework within which the Irish people, if they are sufficiently disciplined and committed to the national interest, can operate that system, that machinery, in the interests of everybody in our community.

It requires a great deal of discipline and a great deal of patriotism—a word which, perhaps, is sometimes considered out of date but is always relevant and is particularly relevant in this context.

Mr. L'Estrange

Hear, hear—in the Cabinet at present.

Mr. Colley

It seems to me that, given the proper lead by those who can influence the parties concerned, our people have sufficient patriotism and sufficient intelligence to see that their interests lie in operating an effective incomes and prices policy.

I personally have sufficient faith in our people to believe that this is possible. However, I think that whether or not it happens will depend very largely on the lead given by all of us in the House and by some people outside the House—in particular, by the leaders on the employers' side and on the trade union side. I also believe that they know, as everybody in this House knows, that it is vitally important to the future of every man, woman and child in this country that that policy be effective. What is required is that they have sufficient commitment to stand up and be counted when the going gets tough—and it will get tough —in operating this.

Mr. L'Estrange

It is tough as it is but they are not standing up and being counted.

Mr. Colley

The Government have clearly indicated their commitment. I believe that the necessary commitment from the other parties will be forthcoming. If it is, then I think we can look foward to a considerable improvement in the whole situation of our economy. I have already indicated to the House the steps which the Government have taken—the overall strategy in regard to inflation—remembering all the time that we do not want to plunge the country into a recession.

The hire purchase restrictions, the credit restrictions, the reduction in the growth rate of our capital programme —all of these things are essentially features of that strategy. But in conjunction with these measures it is essential and most important to have an incomes and prices policy. As I have indicated, I believe it can be done. I believe it will be very difficult. It can be done and it is well worth the while of everybody in this country to see that it is done.

Listening to some of the speeches and particularly that which we heard this afternoon from Deputy O'Higgins when he talked about spurious prosperity and the squandering away over the past ten years of benefits that might have accrued, I wondered if they really knew what has been happening.

Mr. L'Estrange

We do not. That is the worst of it. What is the true story about the gun running?

Mr. Power

Do not talk, if you do not know what has been happening.

Mr. Colley

The growth record of our economy in recent years has been one of which everybody in the House can be proud because this was achieved by the Irish people in this State; all their efforts went into this. It is one which, ten years ago, would not have been considered feasible, I think, by anybody. I want to remind the House that, despite the temporary interruptions and difficulties, our growth record has been such that any other country would envy it.

Over the past ten years, our economy grew by an average of 4 per cent per annum. In more recent years, the momentum of economic growth, which was re-established in mid-1966 after the slow-down of the previous 18 months, continued strongly in the three years 1967, 1968 and 1969. In 1967, the volume of production rose by 5 per cent. While, in 1968 the rate of increase was of the order of 7 per cent as a result of a combination of exceptionally large increases in the three sectors —industry, agriculture and services. In 1969, the growth rate is provisionally estimated to have been of the order of 3¾ per cent, a rate which, though below the exceptional level of the preceding year, was more in line, perhaps, with the long-term growth potential of the economy.

The rapid increases in industrial production over that period were in no small measure due to Government activity in the promotion of industry, in the provision of industrial grants, in the provision of concessions on export tax relief. The record of growth which we have had is one of which we can all be proud but we must take every opportunity to ensure that the real fruits of that growth are not frittered away in a senseless pursuit of excessive nominal income increases which are not real income increases. It is true that, as in most countries, the agricultural sector has tended to lag behind, mainly because of external marketing difficulties. However, the future for agriculture remains hopeful, especially in view of the prospects of entry into the EEC which should help agriculture very considerably.

Fianna Fáil have made it clear in the past and continue to make it clear in the present that in the ultimate, in the circumstances of our economy, the test by which a Government must be judged and by which they must stand or fall is in the creation of new jobs. Despite the emergence of a number of somewhat adverse trends during 1969 and, in particular, the large incomes and prices increases and the widening of the balance of payments deficit one very satisfactory aspect of economic progress during that year was the record increase in industrial employment. Employment in manufacturing industry was, on the average, 11,000 more in the year compared with increases of 2,000 and 3,600 in 1967 and 1968 respectively. The figures for total employment are available only for one point in the year, namely, mid-April. Between mid-April, 1968, and mid-April, 1969, the increase in employment in the total non-agricultural sector was 16,000, something that we have never remotely approached before and on this test by which we asked to be judged many years ago and still ask to be judged there has never been anything like the success of the Fianna Fáil Government in 1969.

A Deputy

Hear, hear.

Mr. Corish

What was the total employment in 1960 and in 1969?

Mr. Colley

The Deputy can refer back when he reads the report of what I said and he will perhaps realise the significance of it.

Mr. Corish

I asked a simple question. The Minister knows it but he will not give it.

Mr. Colley

The Deputy got a simple statistic which he does not like.

Dr. FitzGerald

It is a selective one.

Mr. Colley

It is selective when it does not suit you.

Dr. FitzGerald

It is selective because it is incomplete.

Mr. L'Estrange

It is a half truth.

Mr. MacSharry

Keep quiet about half truths.

(Interruptions)

Mr. Colley

There is another aspect of the economy which is, in my view, a cause of serious concern. This was referred to by Deputy O'Higgins and I think it bears repetition because it is a matter of serious concern to all of us.

I am referring to figures available on unit wage costs in our economy. As a result of increases in productivity, that is, output per man hour, which almost exactly counterbalanced increases in average hourly earnings in manufacturing industries, unit wage costs showed practically no change in either 1967 or 1968. Unit wage costs in Britain over the same period also showed little change. In 1969, however, the picture altered dramatically. Productivity in Irish manufacturing industry improved by about one per cent while average hourly earnings rose by about 13 per cent.

Mr. T.J. Fitzpatrick

(Cavan): General election.

Mr. Colley

The net result was an increase in unit wage costs in this country of nearly 12 per cent as compared with an increase in unit wage costs of approximately 5½ per cent in Britain. Even when allowance is made for the distortion of the annual figures due to the maintenance men's strike, unit wage costs in this country still rose by about twice the rate of increase in Britain. The failure of productivity to rise more than marginally in 1969 is partly explained by the fact that productive capacity had largely been taken up by the end of 1968 and the scope for further productivity increases was limited. However, the rapid rate of increase in average hourly earnings in 1969, which was about 1½ times as great as that which occurred in Britain, was particularly disquieting and was clearly a trend which, if it were to continue, would undoubtedly price us out of not alone the British market but every other market abroad.

References were made to the social welfare increases granted in this Budget. Suggestions were made that they would not be worth anything. In fact, I told one Deputy last night, as he developed his theme, that if he kept on long enough he would prove that we were taking money away rather than giving it and I think a Labour Deputy was inclined to agree with him. Just to keep the matter in perspective I should like to tell the House that between mid-February, 1969, and mid-February, 1970, the consumer price index rose by 6 per cent. If one takes the position of what was needed on that basis to compensate for an increase in the cost of living for an old age contributory pensioner on his or her own one gets a figure of 4s 11d. The Budget increase is 17s 6d. If one takes such an old age contributory pensioner with an adult dependant the necessary increase to compensate for the cost of living increase would be 9s 2d and the Budget increase is 17s 6d. For the old age non-contributory pensioner the cost of living increase would be 4s 6d. The Budget increase is 10s. If one compounds with those costs the effect of the turnover tax increase imposed in the Budget one finds that for the single old age contributory pensioner the increase in cost was 7s 1d as against the 17s 6d in the Budget. For the old age contributory pensioner with adult dependant the increased cost is 13s 2d as against 17s 6d in the Budget and for the non-contributory old age pensioner 6s 6d increased cost as against 10s increase in the Budget. So far as the increase in the old age contributory pensions is concerned it might be remembered that since less than 40 per cent of such pensioners have dependant wives the majority receive 10s 5d per week more than what would be needed to offset the rise in living costs, including turnover tax, at the date of the Budget.

Mr. T.J. Fitzpatrick

(Cavan): Those increases will not come into force until the end of the year. In the meantime the cost of living has gone up.

Mr. L'Estrange

Hear, hear.

Mr. Colley

It is not the end of the year but I am taking the position as it was, as it could be calculated when the Budget was introduced.

There have been references to the Free Trade Area Agreement with Britain. I should like to remind the House that this is kept under regular review and that the agreement itself provides that in the year commencing in July next there is a specific provision for an overall review of its operation. I would also remind the House that following that review and after discussion with the British Government our Government would be entitled to exclude from the operation of the agreement goods accounting for not more than 3 per cent by value of total imports into Ireland from Britain in the immediately preceding year. There are no grounds for assuming that these provisions would not be adequate for the purpose of dealing with any difficulties likely to be encountered by Irish firms as a result of the operation of that Free Trade Area Agreement.

Another matter to which I should like to refer is the report of the Public Services Organisation Review Group, commonly known as the Devlin Report. There have been a number of references to this in the debate and it has been suggested that the treatment of that report in the Budget speech was perfunctory. I think, however, that Deputies will appreciate that the Budget Statement is not the appropriate place to discuss a wide-ranging report of this nature in detail. I hope to make another opportunity available to the House at a later stage to consider that report.

However, there is one point I should like to make perfectly clear and it is this: the Government attach the greatest importance to this report. If we were not alive to the problems and needs in the area covered by the report we would not have set the body up in the first instance. It is because of the very importance of the recommendations and their far-reaching implications for the public service as a whole that hasty or partially informed decisions must be avoided. The examination of the recommendations is being carried out as a matter of the first priority and we propose that interim decisions will be issued in so far as this is feasible. The fundamental issue in that report is the organisation and management of the whole public service, and it is this aspect that the Government have considered first. Central to this issue is the question of the location of the new Public Service Department, or unit, mentioned in the report. I expect that we shall be in a position to announce a decision on this matter in the very near future. Deputy FitzGerald has said that the financing of the Exchequer's residual borrowing requirement of £75 million in 1970-71 will either mean depriving the private sector of bank credit or involve foreign borrowing which is both costly and inflationary. The extent to which the Exchequer's bank borrowing will reduce the availability of credit for the private sector will, of course, depend on the total amount of bank credit that is made available and on the amount of this that is set aside for the Exchequer. The Central Bank have already advised that new bank credit in 1970-71 should be limited to £75 million and that £50 million of this should be reserved for the public sector, leaving £25 million for the private sector.

It should be borne in mind that a large part of the finance that is raised each year for the capital programme goes directly to finance capital expenditure undertaken by the private sector. Expenditure of this kind includes advances and grants for private housing, loans to industry and agricultural grants and loans. These and other similar expenditures represent between 35-40 per cent of the total programme. Furthermore, the availability of these grants and loans induces substantial investment from private sector funds which might not take place otherwise. Exchequer bank borrowing has been held at £50 million approximately last year and the year before in spite of increases in public capital expenditure. There is no indication that the private sector has suffered for the want of credit; in fact the indications suggest the contrary.

The question of consumer prices has been referred to in the debate and a certain amount of confusion seems to me to have been created by some Opposition speakers regarding the likely trend of consumer prices in 1970. It has been suggested that prices may rise by 10 per cent this year. This suggestion is completely unwarranted. Contrary to previous years, the pre-Budget publication Review of 1969 and Outlook for 1970 did not give a definite forecast of trends in 1970 because of the many imponderables in the economic situation.

Mr. Corish

Was this not a forecast of the NIEC?

Mr. Colley

Instead it expressed its opinions on what was likely to happen in two eventualities. It was pointed out that in the first eventuality, namely, acceptance of the Government's norm of 7 per cent for the first year of the new wage agreement, certain desirable results would follow, including a balance of payments deficit significantly smaller than in 1969 and not exceeding £50 million. The other eventuality was that the pattern laid down by the maintenance men's settlement would become general. It was pointed out that in this case the balance of payments deficit could be up to £80 million and the increase in consumer prices could well approach last year's figure of 7½ per cent.

This figure was calculated as realistically as possible. It has, therefore, to take account of the possibility that taxation would require to be increased to finance the higher level of public expenditure which this eventuality would produce. It is still too early to forecast the likely rise in consumer prices this year, but the indications are that taking into account the effect of taxation changes, the increase will be of the same order as last year.

This Budget debate has been outstanding in one respect, that is, the evident bankruptcy of ideas in the attempt at criticisms made by the Opposition Parties. They have been clutching at straws in their endeavours to find plausible grounds for complaints.

Mr. L'Estrange

Straws are better than guns.

Mr. Colley

None of them has objected to a single item in the broad spread of concessions and improvements which this Budget has made possible. Of course they could not do so. This Budget has spread those benefits far and wide throughout the community. The Government believe that the increase in the turnover tax is not a big price to pay for those benefits and improvements, and they are confident that those who have to pay for those benefits and improvements will not grudge it.

In default of a better stick with which to beat the Government the Opposition Members have complained that the Budget is not severe enough. They would have preferred even more taxation than the £20 million which is being raised on the turnover tax. They pretend to believe that the Budget has been designed to end up with a deficit rather than being in balance.

One would have thought the Opposition would have learned a lesson from last year's experience. We all remember that when the 1969 Budget was introduced the Fine Gael and Labour Members said it was dishonest, that the revenue would not be enough to cover the expenditure and that we would have to bring in a supplementary Budget in the autumn. They sang this song very loudly all through the summer and indeed they resumed it again with gusto when the House reassembled. However, the chorus began to fail as we got near Christmas without any sign of a supplementary Budget as they had been predicting. Then it trailed off into silence.

All the distinguished economists who adorn the opposite benches were proved wrong in their dismal predictions that there would be an autumn Budget in 1969. I am sure the Opposition Parties do not like to be reminded now that there was not an autumn Budget and that the Budget of May 1969, was an honest Budget. It is a measure of their desperate search for any grounds on which to criticise the 1970 Budget that they have to fall back again on the criticism which failed them last year. I want to assure them that it will not serve them any better this time.

Our economist critics have complained that this year's Budget should have been more severe, not merely on the grounds that more taxation was required to finance Exchequer spending but also because the brakes should have been applied more sharply to economic activity in general. I should like to remind the House that these are the same economists who criticised the Government for having been too restrictive in 1964-65 and 1965-66. For years afterwards we had to listen Deputy Garret FitzGerald and many others bemoaning the fact that economic activity had been slowed down too much and that the potential for economic growth which they said was lost in those years had been irretrievably lost. Of course, they were very careful to wait until after the event before venturing that opinion. Now, in rather similar circumstances, they are backing the other horse.

Mr. L'Estrange

They are not falling off one, anyhow.

Mr. Colley

They are telling us that we are not being restrictive enough. I suppose that, having tried the one and having come out so wrong, it is logical enough if you accept that crazy kind of logic, that they should try the other one and see what happens. They want us to give the economy a much more abrupt jolt in the taxation we impose this year. They are not satisfied with the extra £20 million which the turnover tax will yield. They would like to see us turning the screw tighter. Of course, I do not suppose this should surprise us very much when we remember that when both these parties were in office that is exactly what they did, and look at the mess they made of the country. Fianna Fáil are not going to make that mess again.

Mr. L'Estrange

You made a queer mess in the last fortnight.

Mr. Colley

I know the Deputy wants to divert attention. I want to tell the House and I want to tell the country that we are going to exhaust every other possible line of approach and restraint and control before we resort to the kind of measures to which the Fine Gael and the Labour Parties resorted when they were in office.

Mr. Coogan

Before you resign.

Mr. Colley

I have a suspicion that a number of the Members opposite have actually learned from that experience and that if asked individually they might not agree with what was being said on their behalf.

Mr. M. O'Leary

Obviously, the Minister has not learned.

Mr. Colley

However, if it is their view that more additional taxation should have been imposed, perhaps they might, since they did not have the courage already, tell us what taxes they would have imposed and by how much they would have increased the existing taxes.

The Government fully realise the serious problem that exists in this economy at present and that that problem requires very careful treatment if we are to escape its worst effects. We believe that the credit restrictions and the budgetary policy are the most effective means within our control for dealing with this situation as we foresee it throughout the current year. However, it is in the field of incomes that we are most vulnerable and most dependent on co-operation from employers and employees alike.

We realise that development in the economy may not be entirely in line with our predictions and we are, therefore, prepared to take further corrective action as and when we judge it to be necessary. We shall keep a very close eye on the course of events during the year and all facets of economic activity will be kept under constant and detailed scrutiny. We are confident that the monetary and budgetary strategies are the ones most likely to keep the economy on an even keel and that if they are matched by a rational approach on incomes we shall be able to overcome our economic difficulties and to record 1970 as another year of satisfactory progress.

However, there is one thing of which I can assure the House and the country and that is that the affairs of this country are safe in the hands of a rejuvenated, dynamic and confident Government, a Government which will be implementing enthusiastically the true Republican policy and——

Deputies

Oh.

Mr. Colley

——that is a policy which is specially concerned with the small man, with the weaker sections of the community, with the men of no property of whom Wolfe Tone spoke and that concern, which I know is something to be derided on the other side of the House, is of very great importance to Fianna Fáil and to this Government. We know that the most effective way of serving that policy is by the prudent management of an economy geared always to growth, and that is what this Government are going to give this country.

Mr. O'Hara

May I ask the Minister this question? Why did he not make some comment on what a former Taoiseach described as the greatest problem of our times—the problem of the west? The time is up now. The Minister has forgotten all about it.

Mr. L'Estrange

The west is long forgotten.

Question put.

The Committee divided: Tá, 71; Níl, 60.

Tá

• Aiken, Frank.
• Allen, Lorcan.
• Andrews, David.
• Barrett, Sylvester.
• Blaney, Neil.
• Boland, Kevin.
• Boylan, Terence.
• Brady, Philip A.
• Brennan, Joseph.
• Brennan, Paudge.
• Briscoe, Ben.
• Brosnan, Seán.
• Browne, Patrick.
• Browne, Seán.
• Burke, Patrick J.
• Carter, Frank.
• Carty, Michael.
• Childers, Erskine.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard C.
• Cowen, Bernard.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• Fahey, Jackie.
• Faulkner, Pádraig.
• Fitzpatrick, Tom. (Dublin Central).
• Flanagan, Seán.
• Foley, Desmond.
• Forde, Paddy.
• French, Seán.
• Gallagher, James.
• Geoghegan, John.
• Gibbons, Hugh.
• Gibbons, James.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Herbert, Michael.
• Hillery, Patrick J.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael F.
• Lalor, Patrick J.
• Lemass, Noel T.
• Lenihan, Brian.
• Loughnane, William A.
• Lynch, Celia.
• Lynch, John.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Thomas.
• Molloy, Robert.
• Moore, Seán.
• Nolan, Thomas.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Leary, John.
• O'Malley, Des.
• Power, Patrick.
• Sheridan, Joseph.
• Sherwin, Seán.
• Smith, Michael.
• Smith, Patrick.
• Timmons, Eugene.
• Tunney, Jim.
• Wyse, Pearse.

Níl

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Browne, Noel.
• Bruton, John.
• Burke, Joan.
• Burke, Liam.
• Burke, Richard.
• Burton, Philip.
• Byrne, Hugh.
• Clinton, Mark A.
• Cluskey, Frank.
• Collins, Edward.
• Coogan, Fintan.
• Cooney, Patrick M.
• Harte, Patrick D.
• Hogan, Patrick.
• Hogan O'Higgins, Brigid.
• Kavanagh, Liam.
• Keating, Justin.
• Kenny, Henry.
• L'Estrange, Gerald.
• Lynch, Gerard.
• Malone, Patrick.
• Murphy, Michael P.
• O'Connell, John F.
• O'Donnell, Patrick.
• O'Donnell, Tom.
• Corish, Brendan.
• Cott, Gerard.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Donegan, Patrick S.
• Donnellan, John.
• Dunne, Thomas.
• Enright, Thomas W.
• Esmonde, Sir Anthony C.
• FitzGerald, Garret.
• Fitzpatrick, Tom. (Cavan).
• Flanagan, Oliver J.
• Fox, Billy.
• Governey, Desmond.
• O'Donovan, John.
• O'Hara, Thomas.
• O'Higgins, Thomas F.
• O'Leary, Michael.
• O'Reilly, Paddy.
• O'Sullivan, John L.
• Pattison, Séamus.
• Ryan, Richie.
• Spring, Dan.
• Thornley, David.
• Timmins, Godfrey.
• Treacy, Seán.
• Tully, James.

Tellers: Tá, Deputies Andrews and Meaney; Níl, Deputies Kavanagh and R. Burke.

Question declared carried.

Resolution No. 3 reported and agreed to.