Dáil Éireann debate -
Wednesday, 9 May 1934

Vol. 52 No. 6

Financial Statement.

Minister for Finance (Mr. MacEntee)

It is pleasant to know that there is one matter upon which all Parties in the State are agreed, to wit, that last year we had a surplus on the Budget— and a very substantial surplus at that. True, a month or so ago some of those who now write and speak as with authority on the matter were proclaiming that we had an equally substantial deficit. However, since it is clear even to our critics that despite all dismal forebodings the State is not bankrupt, and that we have not had to borrow to balance the Budget—in fact since it has been put on record that the position was never so blue as they had depicted it, I presume I may affirm, without risk of challenge or contradiction, that for the second year in succession the Budget has produced a substantial surplus. Revenue has surpassed, indeed, even the most optimistic expectations and has given a bumper yield; while supply expenditure, carefully scrutinised and controlled, has been less than the Estimates by over £600,000. In consequence the financial year closed with a total expenditure for all Services and for all purposes of £31,550,298 and a total actual Revenue of £30,229,182. The first-mentioned figure included the full amount required for the payment of the export bounties and subsidies. More noteworthy still, it also included certain payments for capital purposes which, accordingly, are not to be charged against the annual Revenue. These payments were: (a) the sum of £500,000 provided for the purchase of 500,000 Ordinary Shares in the new sugar manufacturing company, Comhlucht Siuicre Eireann, Teoranta; (b) £492,000 provided in respect of a corresponding number of £1 shares in the Industrial Credit Company; and (c) in addition to the £550,000 provided out of the Suspense Account surplus for the Local Loans Fund, a further £1,600,000 mainly in respect of loans to local authorities for housing purposes. These items in themselves amount to £2,592,000, and when we add to them £35,000 for compensation paid under the Damage to Property (Compensation) Acts, £8,000 in respect of repayment of the Dáil Eireann Internal Loan, and £41,000 in respect of the Barrow drainage scheme —all of them expenditure for which, by the established practice of years, we are justified in borrowing—we get the figure of £2,676,000. The whole of this sum represents payments which beyond question are not normally chargeable against Revenue. Accordingly in order to arrive at the true sum which is properly so chargeable we must deduct that amount from the total expenditure for the year of £31,550,298, reducing that figure to £28,874,298, and thereby arriving at the true annual cost of the Administration.

Against the Administrative Expenditure of £28,874,298 we were able to set a total Revenue of £30,229,182 and after defraying out of taxation the whole cost of the export bounties and subsidies we found ourselves, at the close of the last financial year, with the truly remarkable surplus of £1,355,000.

I frankly confess that the magnitude of the surplus has been a great surprise to me and to my advisers. We claim no credit for it, beyond such as must be given for having framed our Budget upon a cautious and not over-optimistic basis. That so large a surplus should have accrued is a striking and convincing testimony of the financial and economic strength of the State and its people, a testimony which should be gratifying to every citizen and to every interest. Newspapers, howerver, would seem to be an exception. It is difficult for the layman to conceive why an account of a Budget surplus would not make as good a "story" as any other—from the reader's point of view it would have at least the spice of novelty. But there it is, a surplus apparently makes no appeal to some newspapers, so on the 2nd of April last truth was slaughtered in order to serve what I may describe as a calf-and-veal story of a deficit. There is scarcely anything more damaging to the credit of a State than the realisation of a Budgetary deficit, scarcely anything which so generally injures the citizen in his own private affairs, making it more difficult for the State to fulfil its obligations to him, and for him to fulfil his obligations to the State, his creditors and his fellow-citizens. It is regrettable, therefore, that responsible newspapers should neglect to ascertain the facts in a matter of this kind, and by their failure to make the necessary enquiries in the proper quarter as to the true position, give currency to a statement so injurious to the public credit.

I have said that the magnitude of the Revenue surplus is a convincing testimony to the financial and economic strength of our people. The items which have built up that surplus are, in turn, striking evidence of the fact that conditions here are steadily improving. Every single tax heading contributed its quota. On the Inland Revenue side, estate duties bettered the Estimates by £17,000, as also did stamp duties by £65,000. On income tax, surtax and supertax there was an excess of £12,000. Excess profits duty yielded more than we expected by £93,000, as did corporation profits tax by £11,000 and motor vehicle duties by £16,000. In regard to Customs and Excise taxes, the Customs, upon which we had counted for £8,199,000 gave us £9,689,000, or £1,490,000 more than we expected, while the Excise duties, which were forecasted at £5,020,000, capped that sum by an additional £300,000.

These are noteworthy figures, indeed, but even more worthy of note are the principal individual items in respect of which the estimated yields have been exceeded. I shall refer to a few. The yield from motor car duties was just £376,000, or over £130,000 higher than last year, the Estimate being exceeded by almost £276,000. Tea gave us £467,000; £77,000 over the Estimate, and £126,000 more than last year. From what is popularly known as the petrol tax we got £1,087,000—£87,000 more than was expected. Then four minor duties, unimportant in their yield but significant as indications of the general economic trend, contributed their mite to the general well-being of the Exchequer. Of this batch, the tax on wireless apparatus was the most fruitful. Notwithstanding the development of the assembling industry here, which, of course, tends to eat seriously into the revenue, that tax, producing approximately £21,000 over the Estimate, gave £6,300 more than in 1932-33. Similarly the yield from the duty on dried fruit, beating the figure for 1932-33 by £4,584, made the record amount of £46,494; cinematograph films gave £49,300, also a record, beating the figure for 1931-32 by almost £9,000; while the duty on clocks and watches exceeded the Estimate by £5,600 and did better than in 1931-32 by £3,200.

So far so good, but we may congratulate ourselves indeed when we find that the entertainments duty, notwithstanding the exemptions which were granted last year, bettered the preceding year's receipts by £30,000 and surpassed the figure for 1924-25, the previous highest, by £25,000; and then we have the betting duty, which gave us £17,300 more than last year—and beer.

Once upon a time the beer duty, with its millions, was one of the giants of the Exchequer. That was before it became stricken with a wasting disease—the declining consumption that has sapped its strength and made it so pathetic a figure in later Budgets. But this year it has bucked up with the rest; in the improving circumstances of our country it has taken on a new strength, it has overcome its old disability, it has begun to expand. Last year it was better than the previous year, and this year, at £2,720,000, it was better even than last. In fact it exceeded the Estimate by over £270,000 and the yield for 1931-32 by £172,000.

If, as we are told, the country is in the trough of an economic depression, if there is truth in the statement that conditions here are the worst in Europe, is it not strange that so many more people should be spending so much more money on motor cars, petrol, tea, beer, betting and amusements generally—so very strange indeed as to require no other comment.

It is desirable that I should refer now to the debt position.

A memorandum issued recently laid great stress on that aspect of our public finance. Let me say at once that I welcome any manifestation of interest in the finances of the State, and that I am grateful to those who took the trouble to prepare that statement. It is a pity, however, that by taking the year 1930-31 as the basis for comparison, their labours have been rendered less valuable than they might have been.

Mr. Corish

On a point of order, Sir, every Party in this House has been supplied with a copy of the Budget save the Labour Party. I do not think that is fair. Some Parties have got two or three copies.

An Ceann Comhairle

The Deputy will have a copy in a few minutes.

Mr. MacEntee

It is hard, indeed, to conceive why that particular year should be chosen for comparison with 1933-34. In 1931-32 world conditions in general, as well as conditions here, more nearly resembled those now prevailing than did the conditions of 1930-31. If the real purpose of the memorandum was to compare our record as administrators with that of our predecessors, then we should remember that they did not relinquish office until the 9th March, 1932, when the financial year had but three weeks to run. From a financial point of view that year closed as they had planned it; expenditure during it was all incurred in the execution of their policy; the revenue for it was collected through the taxes imposed by them. Moreover, comparisons between this year and that year would have been facilitated by the fact that in my Budget statement for the year 1932-33 I dealt very fully with the general financial position of the State as it stood at the close of our predecessors' last year of office.

I think, also, that I ought to question the manner in which some of the figures have been presented. For instance, we are given, on the one hand, figures for the capital liabilities of the State in 1931, and these figures do not include any allowance for the borrowings of local authorities; and then, on the other, we get an Estimate for what is described as the total public debt, in which is incorporated an Estimate of the borrowings of local authorities up to and including the year 1933-34. These two figures are set side by side in the statement in such a way that, though in fact they are not comparable, uninformed persons reading the memorandum would almost inevitably weigh the one against the other. The fact is that the only official figures for the local debts available relate to 1930-31, when in the aggregate they amounted to £17,140,236. It would have been more natural to add this figure to the national debt figure for that year, and to have put forward the composite figure of £46,453,538, in relation to it, rather than have guessed at a figure for 1933-34, thereby instituting—even though unwittingly—a misleading comparison. As I have referred to the question of local debts, it may be advisable to point out that of the total capital liabilities of the local authorities, fully £11,500,000 is due to the Local Loans Fund, and is fully secured on earning assets and real estate; so that if the figure for 1930-31 were adjusted accordingly it would be just under £35,000,000.

To return now to the year 1931-32, when this Government took office on the 9th March, 1932, the direct liabilities of the State, as handed down by our predecessors, amounted to £38,687,469; the contingent liabilities to £25,369,909; and the capital value of the payments which they had been making on foot of the Secret Agreement of 1923 to £92,565,000. Against the direct and indirect liabilities, which together amounted to £64,057,378, there were assets that might have been valued at £16,312,498 —if we took an optimistic view of some of the items. We might also have set certain other assets valued at £25,250,000 against the payments under the Secret Agreement. There was as well one other liability which, as at that time its extent had not been ascertained, I was unable to include in the statement for the year ended 1931-32. I refer to the loss incurred on the working of the Dairy Disposals Board to the 31st December, 1931. Amounting to £112,000 it was wiped out by us in March, 1933, a Supplementary Estimate being introduced for the purpose. If it had been included in the total of our direct liabilities at the 31st March, 1932, the corresponding figure would have been £38,799,000. The net result was that in the circumstances as they existed when we came into office the citizens of this State were bearing a burden equivalent to a National Debt of over £115,000,000

What is the present position of the items constituting the direct liability of £38,799,000, to which I have referred?—Or rather what was the position at the close of the financial year on the 31st March last—I may say that the position at to-day's date is more favourable to us. There were outstanding at 31st March, 1934, the following direct liabilities in respect of:—

	£
First National Loan	7,644,342
Second National Loan	6,478,334
Third National Loan	5,779,184
5% Compensation Stock	14,150
Dáil Eireann (Internal) Loan	24,000
Dáil Eireann (External) Loan	1,000,000
Savings Certificates	9,598,500
Capital Liabilities under—
Telephone Capital Acts	804,000
Liability under Land Acts 1923 to 1933 for contributions to Price and Cost Funds	2,593,073
Compensation Annuity	4,586,000
Total	£38,521,583

To which we may add:—	£
4th National Loan	6,000,000
3½% Compensation Stock	1,850
Making a Grand Total of	£44,523,433

That is the total of our direct liabilities at the present moment.

Against this amount we may set cash amounting to £7,896,211, as follows:—

	£
Exchequer balance at Bank	5,350,348
National Loan Sinking Fund unapplied	891,365
Savings Certificates Interest Equalisation Fund	1,654,498

and also certain Exchequer advances amounting to £19,599,438, and comprising:—

	£
Unemployment Fund	396,000
Shannon Electricity Fund	5,988,855
Electricity Supply Board	3,867,762
Road Fund	1,511,419
Local Loans Fund	6,018,451
Purchase of Creameries	509,000
Agricultural Credit Societies	23,769
Shares of Agricultural Credit Corporation	292,118
Shares of Industrial Credit Company	492,064
Shares in Comlucht Siuicre Eireann, Teo	500,000

It will be noted that no reference is made to the sum of £179,400 which figured in my 1932 statement as a debt owing by the Great Southern Railway. Under the provision of the Railways Act of last year, that sum has been remitted by the Government as a contribution to assist the reorganisation of the railways. It has, therefore, been omitted from the list, but otherwise all the items I have mentioned, both on the Debit and Credit side, are fairly comparable with the statement of direct liabilities and off-setting assets which I made to the House in the financial statement for the year 1932-1933. Accordingly at this stage we are justified in comparing the two sides of the account as they stood at the 31st March, 1932 and 1934, respectively.

Taking 31st March, 1932, first—at that date the State's direct liabilities amounted to £38,799,000 and its off-setting assets to £16,312,000, so that there remained a net total of public debt, uncovered by off-setting assets, amounting to £22,487,000. That was the position as we found it on taking office in March, 1932. Now take the position at the 31st March last. Our direct liabilities then stood at £44,523,000, our off-setting assets at £27,495,649, and our net direct public debt, after allowing for these assets, at £17,027,000—a reduction of £5,460,000 in two years.

Having said that, however, I must also point out that owing to the provisions of the Land Act of 1933 the Exchequer has assumed responsibility for half the cost of all land purchase transactions carried out under the Land Act of 1923 and subsequent Acts. The effect is, of course, to saddle the Exchequer with a capital obligation amounting now to £11,546,749, but ultimately expanding, when land purchase is completed, to about £17,000,000. We may, however, set against this the pre-1923 annuities as reduced, which, with their funded arrears, may be conservatively valued at £27,000,000, after allowing for the cost of collection and administration. Incidentally, of course, it may be noted that, since we have assumed direct liability for half the service of the Land Bonds, our contingent capital liability in regard to these has been reduced to £11,100,000.

I have mentioned the Fourth National Loan. I propose now to make some references to that issue. The lists for it were opened to public subscription on December 4th and closed on December 12th. The issue terms were much more favourable to the Saorstát Government than those of any preceding issue, being from the Exchequer's point of view no less than £1 4s. 10d. per cent. per annum better than the Third National Loan, even though that carried the special concession of being tenderable at par for death duties, while the Fourth National Loan carried no privilege of this or any similar kind. It will be recollected that the circumstances attendant upon the opening of the subscription lists were somewhat unpropitious. Notwithstanding this, the public response on the opening days was entirely satisfactory. I should like in that connection to express my special appreciation of the public-spirited way in which the issue was supported on the one hand by the trade unions and labour organisations generally, and, on the other, by a number of the larger interests in the country, not identified with politics and certainly not associated with the present Government, who came forward and by larger subscriptions than was customary gave practical proof of their trust in the future of this country and its people and, if I may say so, the good faith of the Government.

Having said that, it is with great regret that I shall have for a moment to refer to a statement made during the period when the lists were open to the effect that the amount raised by the Loan, £6,000,000, was going to be spent in bribes for votes, and that in the middle of all the bribery a general election would be called and county surveyors sent out to give work, and arrangements made for free supplies of milk, to get Mr. de Valera back.

That statement was a foolish attempt to injure the public credit, so foolish and irresponsible indeed that there are many who will think that to treat such an utterance seriously is to concede it infinitely more consideration than it deserves. But it must be remembered that the Government has many projects in mind, for the execution of which it may require to enlist the services of foreigners with the technical skill and experience to carry them through. In most cases these non-nationals will of necessity enter into substantial capital commitments here. How could they be expected to do that if there were a vestige of truth in the statement that the present Government was borrowing £6,000,000, ostensibly to finance industrial development and execute social works of national importance, but in reality for the purpose of bribing voters? Would any man with a care for his money adventure a penny here if such a condition of affairs existed? For the sake, therefore, of the good name of this country and its people, and to reassure those who may have been or may be deterred by that wild charge from engaging in constructive enterprises here, I propose to show how baseless it was.

I have pointed out how, when we took office, the direct loan obligations of the State amounted to £38,799,000, and the contingent liabilities to £25,370,000; and that these were offset to some extent by assets formerly valued at £16,312,000. I should like to point out that in drawing up that table of assets one of our first actions was to delete from it the item of £50,000 representing the nominal par value of shares in the Industrial Trust Company of Ireland. That Company, having lost virtually all its capital, went into voluntary liquidation last year. Its shares had long been valueless. We faced that fact, and wrote them off accordingly.

Savings certificates were first issued in June, 1923. They are an easy way of borrowing money and of leaving it, if one chooses, to one's successors not merely to find the principal originally borrowed, but the accumulated interest thereon as well. When we came into office that was one of the legacies which was left to us, an accumulation of years of issues of savings certificates with interest unprovided for to the extent of almost £500,000. It was a grave situation to have to meet in a year in which, on account of the ordinary public services, the revenue was showing a heavy deficiency. Some people may think that as the position was not of our creation we could have put the matter on the long finger, and have left the future, as it had been left to us, to take care of itself. It would have been so easy, but also so detrimental to the credit of the State, and so grave a source of embarrassment should any uneasiness as to the public finances be aroused among the thrifty by reckless statements such as that with which I am now dealing. We refused to take the easy road, and in the years 1932-33 and 1933-34 we provided over £864,000 to cover the full amount of the accrued interest on the savings certificates.

It will be remembered that during 1926 and subsequent years our predecessors purchased certain creamery concerns. Some of these were disposed of to co-operative creamery societies but the remainder were left on the hands of the Department of Agriculture and were worked at an accumulating loss. No part of that loss was provided for until March, 1933, when, as I have said, we brought in an Estimate for £112,000 to reduce the bank overdraft by that amount and to pay off the trading loss incurred to 31st December, 1931. The money to do this was provided out of taxation. It was not borrowed.

Among other things for which our predecessors borrowed, this time I will admit with justification, was to secure the money required for the purpose of the Local Loans Fund. That Fund, having been virtually dormant for a number of years, began to function again in 1926. When we came into office six years later it amounted to £2,834,134; to-day it stands at £6,018,451, an increase of £3,184,317. The money has been provided mainly to finance the housing schemes which at the instigation of the Government the local authorities are carrying out. The Opposition tell us that these local authorities are in the main controlled by their supporters. They are so controlled, it is true, in Dublin City and County—and yet the authorities there are spending hundreds of thousands of pounds provided through our instrumentality in building houses, and it is they and not we who are reaping all the credit therefor with their followers. Would a Government which borrowed £6,000,000 to bribe voters tolerate a position like that?

The facts in this matter speak not merely for themselves but for us. Let me recite them again. Since we took office we have redeemed £1,000,000 of Exchequer Bills issued by our predecessors; we have made good the trading loss of £112,000 incurred by the Dairy Disposals Board under our predecessors; we have provided a full cover for the interest on savings certificates in two years, setting aside over £864,000 to do it; we have accumulated £3,184,000 for the Local Loans Fund, mainly for housing; we have raised £500,000 for the new Beet Sugar Manufacturing Company; £492,000 for the Industrial Credit Company; £1,071,000 for the purposes of the Shannon undertaking and the Electricity Supply Board; and £149,000 for the completion of the Barrow drainage. Furthermore, over and above the annual amounts provided for them by our predecessors in their last two years of office we have provided in our two years, for the Services I am going to mention—the list is by no means exhaustive—additional sums as follows:—

	£
For Relief Works	1,438,000
,, Old Age Pensions, Housing, Supply of of Milk and Fuel to poor families	1,113,000
,, Grants in relief of Rates on Agricultural Land	800,000
,, the encouragement of Agriculture, including Export Bounties and Subsidies, Dairying, Industry, Tillage, etc.	4,048,000
,, the Land Commission	808,000

All the items to which I have referred account for £15,579,000. To achieve all this we have had to raise one loan of £6,000,000, and of that amount still had in the Exchequer at the close of the last financial year over £5,350,000. It sounds almost unbelievable, but it is true. The figures are incontrovertible. The State, and, therefore, the community as a whole, is financially stronger and sounder than when we took over.

Let us now consider the prospects for the present year.

According to the White Paper, published on Monday, giving the Estimates for Receipts and Expenditure for the year ending on the 31st March next, the amount required for Services chargeable on the Central Fund will be £5,587,893, while for Supply Services, including the further £470,000 earmarked for the Additional Grant in Relief of Rates on Agricultural Land and the £300,000 which the Minister for Local Government and Public Health has promised to the county councils, we shall want £30,479,107. On the basis of the Estimates as published, the total requirement for the year would, therefore, be £36,067,000, of which £29,709,107 would be in respect of Services set out in the Volume of Estimates. My predecessor found that the total actual expenditure upon those Services never, in fact, attained the aggregate of the Estimates, but almost invariably was substantially below that sum. That has been my experience also. Before going on to consider how the year's expenditure is to be provided for, it is advisable, at once, to reduce the Estimate for the Supply Services to the amount which in all human probability will be actually spent. After careful examination of all the figures for the preceding ten years I have come to the conclusion that we may safely reduce the aggregate for the Supply Estimates, as given in the Volume of Estimates, by 4 per cent. or in round figures by £1,190,000, thereby making the figure for the actual requirement for the year, as at present disclosed, £34,877,000. Included in the Supply Estimates, however, is the net sum of £1,186,000 required to pay Unemployment Assistance and Unemployment Insurance. Certain other provisions and new Services to which I shall refer later will reduce the amount required under these heads by about £75,000, bringing the figure of £34,877,000 down to £34,802,000, which is the amount for which we have to Budget.

Taking now the Revenue side, we find that the existing taxes will yield £23,282,000, to which there is to be added non-tax revenue amounting to £5,301,000, so that we get £28,583,000. We shall, however, secure a little more than that by reason of minor changes which we propose to make in the existing Revenue laws, to which I will now refer.

In order to simplify the administration of the existing tariffs and to facilitate both the Customs authorities and traders in general, four Resolutions will be introduced consolidating various scattered provisions of the law relating to customs duties on motor cars, woven tissue, wearing apparel, and boots and shoes, so that, while these goods will remain liable as before, the relative statutory provisions relating to them will be reduced in number from forty to four. Another Resolution will alter the scope and the rate— downwards as well as upwards, in certain cases abolishing the preference— of a number of duties already applied to articles such as galvanised hollowware, fire extinguishers, cast-iron articles, wire manufactures, spades and shovels, disinfectants and ointments, photographic prints, fruits in syrup, metal frames and sashes, manufactured articles of linen or cotton or union cloth, and woven piece goods of these descriptions, etc., etc. This Resolution will also confirm certain duties which have already been imposed from time to time by Emergency Orders, will put a tariff on kippered, smoked, filleted and canned fish, and will extend protection to a few further industries which we believe are capable of being developed here. A further Resolution will increase the duty on imported newspapers to two-thirds of a penny per copy. Consequential upon the Resolutions to which I have just referred, there will be two other Resolutions, one repealing and amending certain existing Customs enactments, and the other terminating certain existing duties. A Resolution will also be introduced providing for the imposition of a customs duty on imported vehicles propelled by the operation (direct or indirect) of a steam engine. At the present time this duty, in practice, will apply only to steam-driven lorries. As these have not been dutiable up to now, they have been operating across the frontier free from the control or restrictions which applied to petrol-driven vehicles. Advantage has been taken of this to claim exemption in respect of parts and trailers which are said to be for steam-driven lorries but which, in fact, are indistinguishable from motor parts and trailers. The Resolution will contain certain exemption provisions. It is difficult to compute the nett financial effects of all the changes which I have mentioned, but I am advised that the Exchequer may expect to benefit by about £150,000.

The existing duties on such articles as furniture and musical instruments has occasionally prevented the entry into the country of antique articles of great value and cultural importance, the importation of which should not— in the public interest—be impeded. We propose to remedy this, and accordingly a Resolution will be introduced to exempt henceforth from Customs Duty articles which are over 100 years old.

Mr. Belton

The old top hats will come out now.

Mr. O'Kelly

The Deputy need not be afraid. Politicians will not come under it.

Mr. MacEntee

There will be a Resolution to remove an anomaly in the income tax code whereby the owner-occupier of certain classes of buildings receives, for income tax purposes, a repairs allowance on the double. As a consequence the Exchequer will probably receive about £24,000. We shall also have a Resolution withdrawing from bequests for charitable purposes expended outside Ireland the exemption from legacy duty which at present operates. There will be other Resolutions which are necessary to secure the death duties against evasion, and a Resolution which will provide that in the case of salaries, etc., from which deduction was made last year under the Public Services (Temporary Economies) Act, 1933, the assessment to income tax in the current year will be on the basis of the full salary before deduction.

When the present Administration first took office the position of the native concerns engaged in tobacco manufacture was such that it was not considered advisable to impose the full burden of the increased tobacco duty upon them, and, accordingly, a rebate of 7d. per lb. was granted to such firms as fulfilled certain prescribed conditions. Since then, however, the position has materially improved and such of the undertakings as have been directed with energy and enterprise are now in a much stronger position. In these circumstances, it is felt that the full rebate is no longer justifiable. It has been decided, therefore, to reduce it to 3½d. per lb., and to save about £35,000 to the Exchequer.

General Mulcahy

Poor Gallaher's.

Mr. MacEntee

As a result of all the changes which I have indicated, we expect that the total Revenue for the year will amount to £28,792,000.

We have now the two fundamental figures required to construct our Budget; the difference between them is £6,010,000; and the problem is to reconcile that difference with the greatest possible advantages to everyone.

Several interesting speculations as to how this may be done have appeared in the Press. It has been commonly stated, for instance, that the task will be easier, because as a result of the settlement of the primary teachers' pensions issue the Exchequer has received a windfall in the shape of the Teachers' Pensions Fund. The Exchequer has not received a windfall as a result of that settlement; on the contrary, in order to secure the teachers in their pensions it has had to accept an increased and increasing obligation; and as to using the fund to defray administrative expenditure and to balance the Budget, the Minister for Education and myself have already given categorical assurances on that point to the Dáil. The assets of this fund are not going to be dissipated; on the contrary, they are going to be carefully maintained and conserved to meet some part, at any rate, of the growing burden to which I have referred. The House may, therefore, eliminate the Teachers' Pensions Fund as a factor in the problem. We are not going to touch it.

It would be too early yet to say the same in regard to the other hints and tips which certain public-spirited citizens have been good enough to supply. Unfortunately, most of these were rather lop-sided variations on the theme, "tax everyone but me." Many of them would remind one of the small boy who, when asked to compassionate a delinquent brother on the results of an interview in which their parent had not only been angry but painfully energetic, remarked rather callously that he himself could bear twice as much more—in exactly the same place. That, I think, must have been the attitude of the gentleman, evidently a non-smoker, who wrote suggesting that I should double the duty on tobacco. He said this would be a very popular measure. I myself also thought it would be—with our friends the Opposition.

However, before dealing with the taxation aspect of the problem, I should like the House to consider for a moment a few of the items in the expenditure account. There is first of all the amount of £110,750 required for the payment of compensation in respect of property injured or destroyed by warlike action during the period 1916-1923, that is, part of the cost of the struggle for independence. Our predecessors borrowed every year to meet this item, as we had intended to do last year and the year before. We propose again to do that, if necessary. Then there is the sum of £102,000 required for the erection of the industrial alcohol plant, clearly a capital expenditure which may be legitimately borrowed for. Included in the Estimate for the Central Fund there is the sum of £1,000,000 for the repayment of the Dáil Eireann External Loan, an old-standing and honourable obligation contracted by the First Dáil, and since assumed inevitably by the successors thereof. It ought to have been discharged years ago, and clearly it also should be borrowed for. Last year we felt justified in proposing to borrow one-half of the cost of the export bounties and subsidies against the security of the funded land annuity arrears which had accumulated in respect of three gales in the years 1932 and 1933. Owing, however, to the unexpected inflow of revenue, borrowing for this purpose has been obviated until now, so that the funded arrears account remains unencumbered. In view of this it is felt that this year we might properly charge against it something more than we proposed last year. I agree with that view, and, accordingly, intend that only one-third of the £2,250,000 required for the payment of export bounties and subsidies shall be met by taxation.

The House will recollect that as well as the funded arrears, to which I have referred, that is, of the land annuities which were due in respect of three of the gales of 1932 and 1933, and against which nothing new was deducted from the agricultural grants payable to local authorities, the outstanding accumulated arrears of the three half-years preceding June, 1932, were also funded. It is difficult to determine exactly what such arrears now amount to, but they may be taken not to exceed £500,000. Our predecessors, in respect of them, withheld during the years in which they arose corresponding sums from the local grants. As already announced by the Minister for Local Government and Public Health, in order to release £300,000 of this money for the benefit of the local authorities it has been decided to advance that amount to the Guarantee Fund. As this advance will ultimately be redeemed by the collection of the arrears, and is to meet a temporary emergency, we feel justified in borrowing an equivalent sum. With the other items to which I have already referred, this makes £3,012,750.

There is left one other provision which requires special consideration: the £4,200,000 for the Local Loans Fund. It has been one of my hopes that I might be permitted to establish the practice of devoting every year some share of the tax revenue to the purposes of the Local Loans Fund. For this reason: ours is a comparatively undeveloped country, wonderfully rich in natural beauty, but otherwise unkempt and uncared for. Our sea shores, with their fine beaches, are too frequently disfigured by atrocious tin shacks, and litter and rubbish of all kinds, where a little care and planned attention might make them places of wonderful delight; our mountain roads are often impassable for vehicle or wayfarer. Along the countryside we have weeds where in many places we might almost as easily have flowers. Our towns are without design and almost without ornament; they have few agreeable buildings, few public gardens, few spacious streets or delightful squares, few of the amenities which elsewhere lend so much grace and charm to life. Though their social value is unquestionably great, it is not possible to assess the material return which accrues from such possessions. Possibly it is for this reason that our local authorities seem to be slow to undertake the provision of them, even though that would be one of the most agreeable ways of giving employment. If we could only change all this and if our public bodies and public-spirited citizens could be induced to consider schemes of local improvement and beautification it would be well worth while to set aside something every year in the Local Loans Fund, to be advanced for such works upon particularly favourable terms, until the fund for this purpose became self-supporting and a substantial sum was being spent every year in making our country more and more charming, more and more beautiful still. I have hopes that this may not be altogether a dream, and that with the enactment of the Town Planning Act and as one of the results of an investigation to which I shall refer later, we may yet see something done to realise it. Meanwhile, however, I find that the Local Loans Fund is being used mainly to finance housing schemes, public health works and drainage schemes, to all of which we are already making very substantial contributions by way of free grants through the medium of the Votes for Local Government and Public Health, for Public Works, and for Relief Schemes. I feel that in the present year it would be inequitable to ask the taxpayer to do more; and, therefore, for the purposes of the Local Loans Fund, to make all such advances therefrom as will be repayable by the local authorities, I propose this year to borrow, which disposes of a further £4,200,000.

I think I may say at this stage that it will not be necessary to adopt my correspondent's suggestion and double the duty on tobacco—or even to increase the income tax. On the contrary, over and above all our administrative expenditure, we shall have the substantial surplus of more than £1,202,000 to dispose of. That is a pleasanter task than has fallen to my lot for the past two years.

In considering how we shall allocate the surplus our thoughts naturally turn first of all to a great measure of social amelioration which when in opposition we, in conjunction with our friends of the Labour Party, pressed the then Government to undertake. I refer to the provision of pensions for widows and orphans.

Mr. Corish

Hear, hear!

Mr. MacEntee

That matter has been under careful and constant consideration since the report of the committee set up to inquire into it came to hand. It has been exceedingly difficult to prepare a practicable and satisfactory proposal. The difficulties, however, have now been overcome, in fact the administrative details of the scheme are being worked out by the Departments concerned. As soon as these have been finally settled, legislation will be introduced and, it is hoped, will be passed by the Oireachtas with the greatest possible expedition, so as to allow the scheme to come into operation for the latter half of the year. The proposal will cost about £400,000 in a full year and about £250,000 in this, and the latter sum is being set aside accordingly.

I have already referred to the fact that this year's Supply Estimate provides £1,186,000 for the purpose of the Unemployment Assistance and Insurance Acts. The Acts in question represent the workers' ultimate safeguard against destitution, but they by no means represent this Government's policy in regard to the unemployed members of the community. On the contrary, it is the aim and purpose of the Government to provide work for the workless rather than maintenance, and where this can effectively be done through the agencies at our disposal we propose immediately to do it.

Unfortunately the capacity of such machinery as exists to deal with the problem is limited. On the other hand the creation of a more flexible and more effective organisation for the purpose entails a good deal of preliminary investigation as to the nature and distribution of the unemployment and the very careful analysis and collation of a large number of factors that in this country have not previously been brought under review. I hope to deal with that aspect of the matter when an opportunity offers on a motion which has already been under consideration by the House. In the meantime we have already included in the published Estimates for the year the sum of £350,000 for relief works; we propose to add to that an additional £150,000, making £500,000 in all, which with our existing organisations represents the utmost amount that could be spent within the 12 months upon such works to secure therefrom an adequate social return. With the £1,186,000, therefore, which we are providing for unemployment assistance, and insurance, we shall devote this year the sum of almost £1,700,000 to the assistance and relief of the unemployed. In addition to this, we are providing for housing purposes the sum of £4,500,000, which in itself is a huge contribution to what I may describe as the short-term solution of the unemployment problem.

I should like to make some further reference to this question. As I have just said, our efforts to deal with it have been gravely handicapped by the lack of an adequate organisation to plan and supervise the execution of large scale relief works, to determine to what extent such works are necessary, and to decide what kind they shall be. When we came into office we found that little or no consideration had ever been given to the matter, so that we had at least 20 years leeway of thought and experience to make up. In our first years, therefore, schemes and organisations had to be hurriedly improvised to carry on until such time as we should get the Unemployment Assistance Act on the Statute Book and should have an opportunity of fully considering the whole problem.

We have already made certain considerable advances in attacking it upon practical lines. Thanks to the efforts of the Parliamentary Secretary, Mr. Hugo Flinn, the policy of planning out beforehand the works to be carried out through Relief Grants in any coming year has been definitely adopted, and an effective administrative organisation has been set up to co-ordinate and execute such works on the limited scale on which hitherto it has been possible to undertake them.

In this way, last year we were able to spend almost the whole £500,000 in providing work and secured a fair social return for it. That may be taken to represent a fair beginning, but it is by no means a solution to the problem—at any rate we do not regard it as such. It is our purpose to replace as large a portion as possible of the present expenditure on Unemployment maintenance by expenditure on socially remunerative work. Accordingly, following the essential preliminary investigations and inquiries which have been going on for some time past, a Committee has been set up, under the chairmanship of the Parliamentary Secretary to the Minister for Finance, to consider the whole problem, with the following Terms of Reference:—

To consider the extent to which it is practicable to devise a scheme of useful and desirable public works with a view to reducing the expenditure on Unemployment Assistance to a minimum, and to report upon the nature and extent of such works, the steps to be taken to initiate them, the best method of financing them, and the organisation to be set up to carry them out.

From the preliminary surveys to which I have referred it is apparent that it may be necessary to take further legislative action to enable us to deal adequately with the problem. I can promise, on behalf of the Government, that the Dáil will be asked for all such powers as may be necessary. As a result of the introduction of the Scheme for the Widows' and Orphans' Pensions this year, and the further provision which we are now making for Relief Works, it will be possible to reduce the amount required for Unemployment Maintenance by £75,000. I have already pointed out that fact and have indicated that credit for this amount has been taken in preparing the Budget.

The provision of proper houses in the Gaeltacht has been engaging the attention of the Government, and a measure making further provision for dealing with this aspect of the housing problem will shortly be introduced by the Minister for Lands. For the consequent expenditure in the balance of this financial year I am earmarking £80,000, of which £60,000 will be given by way of free grants—and will, therefore, have to be provided out of the Revenue surplus; the remainder being for housing loans will, of course, be borrowed.

One of the things which since the Civil War has occasioned great resentment and ill-feeling in the country is the manner in which our predecessors dealt with the soldiers of the Irish Republican Army, who failed to support the Cumann na nGaedheal attitude in regard to the Treaty. These men gave the best years of their lives to the service of their country. Many of them are quite broken in health and are totally incapable of earning a livelihood. They have been left in some cases in almost absolute destitution. That this should be, is a stain upon our good name as a nation, which ill-accords with the reputation for chivalry and generosity which we ascribe to ourselves, and which, doubtless, we enjoy and deserve. I am sure, therefore, that the decision of the Government in this matter will meet with whole-hearted approval, and that there will be a generous welcome for the announcement that the Government proposes to introduce this year a measure to provide pensions for former members of the Irish Republican Army who fought for the maintenance of the Republic. For that purpose we are setting aside, out of the surplus, the sum of £180,000. The total cost of these additional provisions and new Services will be £640,000 and we shall then have left the sum of £562,750.

The disposal of the remainder of the surplus is a matter which requires grave consideration. We have provided for relief works, for housing, for widows' and orphans' pensions, for unemployment maintenance, for old age pensions, for everything in fact that could be done this year to raise our social services to a standard fairly comparable with our neighbours'. Now that this has been done, now that the public finances have been put on a sound basis, now that for two years in succession our administrative Budget has shown a considerable surplus, I am satisfied that a substantial remission of taxation may safely be made, and made in the certainty that we shall not be passing on to our successors any part of the burden that properly should be borne by us.

Accordingly, I propose to devote to that purpose the whole of the surplus remaining, and to allocate it as follows:—

There will be a reduction of 4d. per lb. in the duty on tea which, in order to allow for the clearance of existing stocks in the hands of retailers and others, will come into force as from the 1st of July—in the present year this will cost the Revenue £290,000. Income tax will be reduced to 4/6 in the £, which will cost £250,000 in the present year. The rebate which, in accordance with the statements made by the Minister for Agriculture early last February was to be given this year on home-grown tobacco, will be increased by a further 2d. per lb., and for this we shall have to allow an additional £9,000.

The last morsel goes to provide for the exemption from entertainment tax of all outdoor athletic sports. The total cost of these remissions is £560,000, so that we are left looking pleasantly forward to the 31st of March next with the extremely modest surplus of £2,750.

Last year I had the hardihood to say that we were able to look forward to this year in the confident hope of better things. This year I think we may all congratulate ourselves that our hope has been realised.