Opening my review of the financial year which ended on the 31st March last, I think it advisable to remind the House of the preliminary estimates of Revenue and Expenditure upon which the Budget for that year was based. These were set out in the White Paper No. 2641 which was presented to Dáil Éireann and circulated to Deputies on the 10th April, 1937. Together with other relevant figures, they will be found in No. I of the Tables relating to the Budget which I have had prepared, and for the convenience of Deputies have circulated to the House. The White Paper, as may be seen, indicated that the various taxes then in force were expected to bring in about £25,679,000, which with £6,027,000 form Non-Tax sources gave £31,706,000 as the total Revenue for 1937-38. This preliminary figure was subsequently increased to £31,741,000 consequence of certain minor readjustments of taxation which were made in the Budget.
Against the preliminary estimate of Revenue of expenditure amounting to £33,624,000. In the Budget itself, however, this estimate, as the Table shows, was considerably increased by providing:—(1) an additional subsidy of £350,000 upon exported butter; (2) an additional £200,000 for the service fo the Widows' and Orphans' Pensions Fund; (3) a further £40,000 for Wounds and Disability Pensions; and (4) £22,200 for improved Post Office Services. In this way the gross figure for the year's expenditure was brought up to £34,236,200; and it was on this that the Budget for 1937-38 was based.
We may now consider the out-turn of that Budget. Referring again to Table I, the House will find there an epitome of the assumptions which were made in framing it. The assumptions in question were, first of all, that the expenditure in the gross had been over-estimated to the extent of £1,200,000, and secondly, that if necessary we should borrow to defray certain expenditures.
At this stage I must refer to this latter feature of our Budgets, for it seems to be the cause of some confusion. In every year since 1922 our preliminary Estimate for expenditure during the year has been a comprehensive one, and has included every penny which there has been reason to anticipate would be spent in that period on the public services, whether that expenditure was for their ordinary annual maintenance or for capital purposes. Thus, in the case of the new airports which we are building the expenditure which it was anticipated would be incurred theron during last year was brought into account under the Estimate for Public Works and Buildings and the other appropriate Estimates for the ancillary services, such as those relating to the purchase of land and the provision of equipment for wireless communication. The same procedure was adopted in regard to the expected expenditure on industrial alcohol factories and capital outlay on Volunteer halls. In like wise the statement of the actual expenditure for the year, which is issued by my Department annually on the evening of the 31st March, has always been a comprehensive one and has invariably included moneys issued for capital purposes, such as those to which I have just referred. I have been at pains, as was my predecessor, to direct public attention to this fact year after year. May I ask that it be kept in mind by those who take it upon themselves to comment upon our public finaces, so that henceforward the national credit may be secured against the injury which is inflicted upon it when persons who may be presumed to carry responsibility proclaim that such and such a year has closed with a deficit on the Budget, even though, in fact, such has not been the case.
In order to make the position in this matter quite clear, I would remind the Dáil that the practice of framing comprehensive supply estimates of the year's expenditure, irrespective of the nature thereof, is by no means a general one. In Great Britain, for example, when capital expenditure on a relatively large scale is to be undertaken, the usual practice is to pass legislation giving authority to borrow jfor the purpose, and only the amount annually required for epayment is charged against annual revenue. When, therefore, at the close of the year the accounts come to be published, such expenditures as the Chancellor with the sanction of Parliament has decided to defray out of borrowings are not charged against revenue beyond the yearly sum which has been prescribed for their repayment. In these days of doubt and foreboding, when it is easy to shake the public credit of even the wealthiest States, Great Britain may congratulate berself on the foresight which led her to adopt this procedure. It has certain disadvantages, but it does safeguard her credit against such manhandling of her Exchequer returns as ours are sometimes subjected to.
On the otehr hand our practice regarding expenditures of a capital nature has come down to us from our predecessors and has something to recommend it, particularly at this stage of our national development when the State is called upon to provide the community with new assets and to acquire so many new properties. It does serve to check the tendency to over-borrow for such purposes. But if the result is to leave the credit of the State open to injury by misrepresentation, it may be as well to abandon the practice and to deal with our capital expenditures on the lines followed in Great Britain. However, last year the Estimates of expenditure having been prepared in the customary comprehensive form, it was necessary, as may be seen from Table I, to adjust them for unavoidable borrowings on capital account or for abnormal services. By the adjustment so made, together with the deduction of £1,200,000 in allowance for over-estimation, the original gross figure of £34,236,200 was reduced, as may be seen by the table, to £31,066,200, all of which we undertook to provide for out of revenue. Since the total revenue for the year, at the old rates of taxation, was expected to be £31,741,000, there was thus in view at this time last year a surplus on the Budget of no less than £674,800.
It will be recalled that this prospective surplus was utilised to reduce the duty on tea and on sugar, and to abolish the customs duty on wheat; to reduce the stamp duty on consolidated bank notes; to grant minor income-tax concessions, and to reduce certain Post Office charges. The estimated cost of each of these reliefs is set out in Table I, and from the same table it will be seen that the net estimate for the year's revenue was thus brought down to £31,073,200; so that we were left looking forward to the end of the year for a scarcely-discernible surplus of£7,000.
I am glad to say that, as Table I indicates, the actual out-turn of the 1937-38 Budget was much more satisfactory. Notwithstanding the reductions in the rates of taxation to which I have referred, the actual tax revenue collected during the year amounted to £25,327,000. This figure is to be compared with the final Budget Estimate of £25,287,000 in 1936-37, when the higher rates of taxation prevailed. On the other hand, the non-tax revenue at £5,881,583 failed by £124,617 to make good the estimate of £6,006,200. This shortfall, I may say, was due mainly to the fact that the anticipated receipt of £166,840 from sales of industrial alcohol and wash did not materialise. The net result, however, was that the sum of the tax and non-tax revenue for 1937-38 was £31,208,583, as against a Budget Estimate for that year of £31,073,200, and a collection of £31,034,710 for 1936-37.
Perhaps I ought to say something as to the sources from which our tax revenue is derived. Of the total revenue of £31,208,583 which came in last year, £9,683,000, or 31 per cent., came form customs duties; £5,920,000, or 19 per cent., came form excise duties; £1,115,000, or 4 per cent., came from motor vehicle duties; while taxes on income, property, profits and stamped transactions brought in £8,609,000, or 28 per cent.
Of the main branches of the revenue none, I think, receives more attention or is the subject of more erroneous statement than the customs. It would seem almost as if everyone who writes upon the matter labours in the misconception that our customs revenue to an undue and alarming extent is derived from protective tariffs. It is true that our customs duties may be divided into two broad categories— those imposed primarily for revenue purposes and those intended to protect native industries. Within the former category come the import duties on tobacco, mineral hydrocarbon ils, tea, sugar, etc., beer, wheat, wines and spirits, cinematograph films, fired fruits, matches, newspapers, and motor cars, parts and accessories, the customs entry duty, and the emergency duties generally. The remaining import duties may roughly be classified as protective. I have circulated a table, Table II, in which are set out the aggregate net yields derived from taxes within these two categories since 1924-25.
The table in question shows that the importance to the Exchequer of the yield from the protective duties is usually much over-stated. It shows also how little foundation there is for the suggestion which is sometimes made that the success of the Government's industrial policy would create a serious financial problem for the State. Indeed the fact, which the table brings out, that the return form the duties has constituted a fairly constant fraction of our total revenue over a prolonged period, would seem almost to suggest that a large part of the money is secured from those who are willing to pay for the luxury of having goods made abroad.
In another connection I have seen it stated that the fact that our receipts from customs should be nearly one-third of our total revenue is a questionable matter for congratualation. But I cannot see any substance in that point of view. Just as they are now of great importance to the revenue of Great Britain, where last year they accounted for over 23 per cent. of the whole, customs duties since 1924 have been important to us. In no year since 1923-24 have they provided less than 27 per cent. of our revenue, and in no year since 1927-28 less than 30 or more than 33 per cent. Having regard to the considerable tax concessions which were granted in the Budgets for last year and the year before, mainly at the expense of the yield form customs, the revenue from this very important source shows no signs of drying up, but exhibits a rather marked, and of course healthy, tendency to expand. This fact in itself should be sufficient to ease any doubts for misgivings there may be as to the stability and fruitfulness of this great source of revenue.
We shall go on now to consider the expenditure side for 1937-38. Here again Deputies may find it convenient, as before, to refer to Table I. There was paid out during the year £4,292,453 in respect of Central Fund Services, as against a Budget Estimate of £4,353,731, and an actual expenditure in 1936-38 is accounted for mainly by the fact that in the former year £312,453 had to be provided for the Industrial Credit Corporation, as well as £196,758 in respect of the final instalment for the repayment of the Dáil Eireann External Loans. There was no outlay under those heads last year. I may mention also that the amount required for the service of the Public Debt in 1937-38 was only £1,721,983, as against £1,812,547 in 1936-37, and £2,076,297 in 1931-32.
On the Supply Services, the actual expenditure for 1937-38 was £27,760,088 as against £26,416,906 for the preceding year. The difference between the figures for the two years is accounted for: (a) as to £591,956 by increased expenditure on public works and buildings, and employmetn schemes (offset as to £222,742 by lower expenditure on unemployment assistacne and insuracne); (b) as to £96,493 on the Vote for Local Government and Public Health, mainly on housing; (c) as to £200,000 by widows' and orphans pensions; (d) as to £168,833 by Posts and Telegraphs; (e) as to £194,828 by the Army and Army pensions; (f) as to £43,263 on Transport and Meteorological Services, arising out of aviation developments; and (g) as to £38,000 by electrical battery development. After allowing £161,643 for increases of expenditure on agricultur, lands, forestry, education, and science and art, the balance of £70,908 is accounted for by the requirements of the Revenue Service.
The £27,760,088 spent on Supply, together with the £4,292,453 on account of Central Fund Services, gave us a total expenditure for the year 1937-38 of £32,052,541. In order, however, to place the the actual results in their proper relation to the Budget for that year, we require to make the necessary adjustment for which borrowing was designated when it was framed. These are set out in Table I and they amount to £1,473,000. After deducting them from the expenditure side of the account we find that at the close of the last financial year the Exchequer position was £622,042 better that we had expected it to be when the Budget was passed.
It may be asked whether there was a surplus on last year. I think the answer must be that if the British standards of public finance and exchequer accounting be applied to our results, then we had a suprlus of £629,042.
This favourable result is not to be ascribed to any unexpected or abnormal expansion in the revenue. Such expansion as did take concession were made last year. Indeed, so close was the final estimate for the revenue that the acutal collection only exceeded it by 0.435 per cent. For the purpose of comparison I may say that in Great Britain the corresponding excess appears to have been 0.969 per cent. In both cases it will be admitted that the Revenue Estimates were remarkably keen. On the expenditure side of the account, the actual expenditure finally chargeable against revenue was £486,659 less than was expected, and even here the estimate was so close that the saving was only 1.57 per cent. of the final estimate of net expenditure,a s arrived at in the Budget by deducting the original allowance of £1,200,000 for over-estimation.
I have said that according to standards even so high as those set by British practice in regard to public finance, we had a surplus on last year's Budget, as we had on its predecessors. I do hope that gentlemen of the Press will allow that fact to seize their minds, so that we shall no longer read, as I do so often, statements like the following:—
"Even his political opponents will no begrudge Mr. MacEntee a measure of sympathy in the unpleasant task on which he and his officials are these days engaged, preparing the Budget. For the sixth year in succession he has failed to achieve what is the ambition of every Finance Minister—a balanced Budget."
This paragraph is but typical of many that have appeared during the past few years. I have no doubt that it was honestly and sincerely written. It is, however, clearly so damaging, not merely to the reputation of the Minister and the Government, which many indeed may think of small account, but to the credit of the State, that it should not have been written or published unless the most careful investigation had substantiated the allegation. Since it has been published in a widely-read provincial journal, it is necessary to show that it does not accord with the facts. I can begin by reminding the House that there was incorporated in last year's Budget Statement an account which set out the financial transactions and cash operations of the Exchequer from the 1st April, 1932, to the 31st of March, 1937. That account showed then a very substantial surplus. I have brought it up to the 31st March last and it will be found in Table III, which Deputies have before them. I should like them to study it carefully. It will be seen from it that the total borrowings by the Exchequer between the 1st April, 1932, and the 31st March, 1938, together with Capital repayments thereto, amounted to £21,780,290. On the other hand the amount of debt repaid and the value of new assets acquired totalled £31,672,268. As, jpwever, the Exchequer Balance during the period decreased by £844,566, this amount must be deducted from the credit side, leaving it £30,827,702. The statement, therefore, shows that over the whole period from 1st April, 1932, to 31st March, 1938, payments on Captial Account exceeded receipts by £9,047,412. And it is perhaps worth noting here that the surplus built up over those six years is less than £1,000,000 short of the amount which we have undertaken to pay to the United Kingdom under the recent Financial Agreement. Where did it come from?
Before answering that query, I should perhaps direct attention to the fact that moneys set aside for Sinking Funds during the period covered by the statement have been brought in on its credit side. The moneys in question amounted to £3,100,796, and as the practice here is to regard Sinking Fund obligations as a first charge upon the Budget, it may be that some would insist that this sum should be omitted from the account. It may be suggested even that the credit item of £4,010,847 for cash advanced to the Guarantee Fund should likewise be omitted, on the ground that the money in question was provided out of the Suspense Account established in 1932. Conceding these items, but merely to prove my point beyond yea or nay, the cash account of the Exchequer, nevertheless, still shows a surplus of Capital payments over receipts which amounts to £1,935,796. This surplus could not have accrued otherwise than from the Budgets which covered the period from the 1st April, 1932, to 31st March last. And it could not have accrued at all if our Budgets had not been so framed that the average surplus on each of them amounted to £322,628.
I have felt constrained to deal with this matter of our budgetary position over the past six years at some length, and to lay a great deal of emphasis upon it, because now that we are about to ask for a very large loan it is of the utmost importance that there should be no uneasiness whatever in the public mind regarding it. Putting the account on the narrowest and most conservative basis possible, as I have done just now, it shows a substantial surplus even over a period when abnormal demands were being made upon the Exchequer for highly abnormal services. If at the end of that time our accounts had shown some small deficiency, it would not have beena matter for grave concern, since it would be reasonable to expect that with the return to normal conditions of trade the deficiency would be made good. When instead of a deficiency the account shows a surplus, the honest soundness of our budgetary position is so clearly demonstrated that investors may have complete confidence in the credit and integrity of the State and feel assured that whatever commitments may be entered into on its behalf they will be as full provided for in the future as in the past. I trust that they will not permit a confidence so merited to be disturbed by statements such as those to which I have had occasion to advert, even if, despite anything that may be said here, we still may have them in the newspapers from time to time.
It will be noted that certain new credit items figure in Table III for the first time, to wit, £37,500 representing our investment in Aer Rianta, Teoranta; £260,000 on account of expenditure upon the new airports at Rinanna and Collinstown, and £414,000, being repayable expenditure on improvement of estates.
Legislation has been introduced to regulate the investment in the industrial alcohol factories. When kthat legislation, and similar legislation which it is proposed to introduce to deal with the finances of the airport construction, has been enacted, our investments in these undertakings will figure among the assets brought into the annual statement of the Capital Liabilities and Assets of the State, which for the 31st March 1937, and 1938, respectively, will be found in Table IV. It is to be noted that in addition to the liabilities which are set out therein, an uncovered obligation provisionally assessed at £3,600,000 exists in respect of the pensions of national teachers. The matter in question is at present the subject of an actuarial valuation, as are also the charges for Civil Service pensions. Other commitments which should not be lost sight of are those arising out of the Housing Acts, 1932 and 1933. In respect of them there remained outstanding at the 31st March last obligations to certain local authorities amounting to £4,200,000 for moneys borrowed from the Local Loans Fund, and £1,900,000 for moneys borrowed from other sources, notably by the Corporations of Dublin and Cork. I may say that the total gross liability of the local authorities due to housing developments under the Acts aforementioned, which was outstanding at the 31st March last, amounted to £10,575,000.
When we are dealing with the debt position of the local authorities it is important to bear in mind the figures which I have just given. If the gross figures for local indebtedness be taken, they will milsead. The significant figures are those for the net indebtedness and, but much more so, those for the net deadweight indebtedness. At the 31st March,1937, the latest date to which complete returns are available, these were £18,260,173 and £11,796,173 respectively. They are to be compared with £17,245,387 and £10,741,860 for the 31st March, 1936, and £14,081,815 and £9,210,815 for 31st March, 1932.
The increase, therefore, in the net deadweight debt of the local authorities over the five years which ended on the 31st March, 1937, amounted to £2,585,358; and of this, Dublin City and Dublin County, with an aggregate population of 587,000 and an extremely conservative valuation of £2,644,336, accounted for £1,398,621. Accordingly, the average annual increase in the net deadweitht debt for the metropolitan area, including the county, was at the rate of 9s. 6d. per head, or 2s. 1d. per £ of valuation. For the remainder of the Twenty-Six Counties the annual average was 2s. 1d. per head or 6d. per £ of valuation.
While naturally any increase in the deadweight debt of a community should be a matter for concern and careful consideration and for avoidance if possible, there is nothing in the figures which I have given to occasion panic, alarm, or even uneasiness. In connection with them it is to be remembered that a considerable outlay upon housing and public health works generally was long overdue, and though much still remains to be done in this regard, nevertheless, a great deal of leeway has been made up during the past six years. Moreover, as I have indicated, the rateable valuation of the country, particularly in the urban areas, stands on an extremely conservative basis, and on the whole no longer fairly represents the commercial values of the hereditaments which constitute the basis of local government finance. This is a situation for which an early remedy must be sought, for it operates to cripple the finances of the local authorities, and to impair their credit.
Since the capital needs of the local authorities are met, to a very large extent, by advances from the Local Loans Fund, perhaps I ought to say something regarding a very important element thereof. It will be remembered that the annuity of £600,000 per annum, which was being paid to Great Britain prior to 1932, arose out of certain advances which had been made from the Local Loans Fund of the United Kingdom. For convenience these advances are now commonly referred to as old local loans. After writing them down to allow for the reduction which under the Land Act, 1933, was granted in the pre-1903 land annuities, these old local loans, with the accrued interest thereon, were transferred at £5,432,087 to our Local Loans Fund on the 1st May, 1935, and that fund now retains all the repayments in respect of them which are made on account of principal.
The House is aware, of course, that the British annuity would have expired in 1946. Accordingly its value at the 1st May, 1935, assuming it to run for its original term, would have been £5,434,670, taking interest at 3 3/4 per cent. Now if its payment had not been stopped, but had been continued, the full amount of the repayments (both principal and interest) made to the Exchequer in respect of the Old Local Loans, would have been absorbed in providing for it. When, therefore, it would have run off as in 1946, we should have had no remanet surplus to set against our outgoings and no asset to show for the transaction. As it is now, the greater part of the original capital is being conserved in the Local Loans Fund, and the Exchequer draws interest, amounting to £227,468 per annum, upon it. Against this we may set the fact that in respect of monies borrowed up to 31st March last from the Fund by local authorities for housing, the State is in effect paying back to the Fund on account of rural housing loans £132,000 per annum, and in respect of urban housing loans £130,000 per annum. These figures, of course, do not include the annual subventions payable to Dublin, Cork and other authorities in respect of housing loans raised from other sources.
Before I pass on to consider the position for the present year, the House, no doubt, will expect me to say something as to the immediate reaction of the recent Agreements upon our Exchequer position. I shall begin by recalling that the several sums which were paid over to the United Kingdom Exchequer during the year which ended on the 31st March, 1932, amounted to £5,079,270.
By the efflux of time the claims to be made upon us in the current year on account of the Agreements under which this money was paid, would have been somewhat abated under certain heads. They would have amounted in all to £4,686,000, as follows:—
|
(1) Land Annuities |
£2,925,000 |
|
(2) Bonus and Excess Stock Contribution |
134,500 |
|
(3) R. I. C. Pensions |
900,000 |
|
(4) Civil Pensions |
110,000 |
|
(5) Judicial Pension |
12,500 |
|
(6) Local Loans Annuity |
600,000 |
|
(7) Telephone Capital Annuities |
1,000 |
|
(8) Railway and Marine Works Act Annuities |
2,500 |
|
(9) Audit Services |
500 |
|
£4,686,000 |
I need not remind the House of the estimate which was made in certain quarters as to the capital value of these payments. It was of ther order of £100,000,000. The community, therefore, may feel satisfied that, however great or little validity the claims had, it was on the whole advantageous to settle them for £10,000,000. But though the full benefit of this settlement inures immediately to the advantage of the community as a whole, save to that extent, and to the extent to which it imposes obligations in respect of the £10,000,000 which we have yet to find, it will have little direct effect upon the Exchequer. An examination of the manner in which the sums retained here have been disposed of will make clear why this must be so.
First of all, the largest item in the claim for the current year would have been in respect of the land annuities, which, to the extent of £2,925,000, would have accounted for over three-fifths of the total. The concession which has been made to the farmer in respect of his land annuity is withing the recollection of everybody. By the Land Act of 1933 the annuity was halved, so that for every 20/- which the purchaser by the terms of his bargain undertook to pay in order to buy out his holding he is now called upon to pay only 10/-. This concession has cost and is costing the Exchequer no less than £1,615,000 per annum in respect of the pre-1923 annuities alone.
But that is not all. Not merely was the reduction in the purchase annuity granted to those farmers who are buying under the Birrell, Wyndham and earlier Acts, it was given also to those who are purchasing their holdings under the 1923 and subsequent Acts. The result to date has been to add no less than £12,500,000 to the capital liability of the State, and to place an annual and rapidly increasing charge upon the Exchequer. The charge, in fact, amounted to £577,939 in 1936-37, and is expected to rise to £612,000 in the current year.
Then we must also take into consideration the amount which, as compared with former years, is now being spent under the sub-head Improvement of Estates in the Land Commission Vote. In 1931-32 the original estimate for this service was £211,250. In the current year it is £709,300, representing an increase of £498,050. Moreover, a considerable increase has taken place in the other expenses of the Land Commission, not only under its own particular Vote but under other Votes in respect of services rendered to that organisation. Excluding a provision of £134,500 in respect of the Bonus and Excess Stock contribution to Great Britain and the requirement for improvement of estates, the other expenses under the Land Commission Vote were estimated at £233,151 for 1931-32. The corresponding figure for the present year is £419,080, an increase of £185,929. Similarly, in 1931-32 the estimated cost of the services which other Government Departments provided for the work of the Land Commission totalled £54,284; while in this year's estimates the figures stand at £80,925, showing an increase of £26,541.
The position therefore is that as against the £2,925,000 which under the 1923 and 1926 Agreements might have been claimed from us in respect of land annuities in the current year, there must be set the following sums representing the decrease in Exchequer receipts and the increase in Exchequer expenditure directly attributable to the halving of the purchase annuities and to other costs arising out of land division and land purchase finance.
|
£ |
|
|
(1) In respect of the halving of the pre-1923 annuities |
1,615,000 |
|
(2) In respect of the reduction of the post-1923 annuities (in some cases by as much as 55 per cent.) |
612,000 |
|
(3) In respect of the increase (as compared with 1931-32) on the Vote for Improvement of Estates |
498,050 |
|
(4) In respect of the net increase (as above) under other Land Commission sub-heads, excluding the 1931-32 contribution to Great Britain in respect of Bonus and Excess Stock |
186,000 |
|
(5) In respect of the increased charges under other Votes for ancillary services |
26,500 |
These items in themselves amount to £2,937,550, every penny of which inures to the immediate and direct benefit of existing and presumptive tenantpurchaseres.
Let us now consider the position in regard to the payments which were once made, and which, in other circumstances, might have been made this year in respect of R.I.C. pensions. The amount paid under that head in 1931-32 was £1,152,127. This year, had the payment continued, it would have cost us £900,000, and this latter figure represents the saving which may be taken to accrue to the Exchequer by reason of its cessation. The Dáil, of course, is aware that while we have been able to retain the rate of duty on imported sugar at 1/frb/3/4/fre/d. per 1b.—the figure at which it stood in 1931-32—it has been necessary to reduce the tax borne by home-produced sugar to ?d. per 1b., so as to permit the sugar beet industry to be developed without imposing an inordinate burden upon the consuming public. The net result has been that whereas the total revenue from the sugar duties in 1931-32 amounted to £1,426,190, last year we got only £466,942 from them, and in this year expect only £469,300, that is, a decrease of £956,890. We must not, however, overlook in this connection the fact that for the year 1931-32 a subsidy amounting to £57,280 was paid at the rate of 10/10 per cwt. on 5,306 tons of sugar made from Irish-grown beet in that year. We have, therefore, to deduct this amount from the loss in sugar revenue in order to arrive at the net cost to the Exchequer of the sugarbeet industry in the current year. It comes to £899,610, and accordingly just offsets any saving which accrues to the EXCHEQuer by the non-payment of the R.I.C. pensions. As in the case of the annuities, the whole gain in this case also has been passed on to benefit the rural community.
The payment next in order of magnitude of those made under the 1923 and 1926 Agreements was the local loans annuity of £600,000. It included a considerable, and of course continuously increasing, provision for repayment of principal. I have already dealt with this capital element, and have shown how we are conserving what remains of it. It will be agreed, I am sure, that it is much more desirable in the public interest to conserve the original principal in this way than to dissipate it in meeting current expenses, and that it would not be to the better advantage of the community to treat the whole £600,000 as a disposable saving. Accordingly it is only that saving which arises out of the non-payment of the interest element in the annuity that may be taken into account here.
We have now to ascertain what this saving may be. For this purpose we may consider the case of an annuity of £600,000 running from the 1st January, 1938, until the 1st January, 1946, payable in half-yearly instalments, the first being due on the 1st July next. Taking interest at £3 15s. 0d. per cent., the capitalised value of such an annuity at the 1st January last would have been £4,113,936. If the Exchequer by a lump sum payment had extinguished the £600,000 annuity at that date, such is the amount which in all probability it would have had to pay, leaving wholly out of consideration any question of arrears. Accordingly, the annual interest on £4,113,936 at £3 15s. 0d. per cent. per annum may be taken as representing fairly the disposable saving which accures yearly to the Exchequer by reason of the fact that the local loans annuity is not being paid. It amounts to £154,273. We may add to that certain other sums in respect of other items which, in the circumstances of 1931, might have been paid this year to Great Britain, as follows—(a) Excess and bonus stock contribution (£134,500); (b) civil pensions (£110,000); (c) judicial pensions (£12,500); and (d) sundry minor items (£4,000), and we get a total of £415,273 as representing the disposable gain accruing in the current year to the Exchequer in respect of all the items within the terms of the Agreement of 1926, with the exception of the land annuities collectable and the R.I.C. pensions.
On the other hand, the provision for the service of Agriculture under the Vote for that Department was £469,978 for the year ended 31st March, 1932. Last year it was £774,054, and this year it is £659,320. The increase in the Estimate for this year as compared with 1931-32 is £189,342. Then under Votes 57 and 71 we have provided £123,952 for turf and peat fuel development—a service, by the way, which did not exist in 1931-32—and this year's Vote for afforestation shows an increase of £83,515 over the provision for 1931-32. These are three services in which the rural community is primarily interested. The amount provided for them shows an increase as compared with 1931032 of £396,809, and we may set this figure against the disposable saving of £415,273 in respect of local loans, civil and judicial pensions, etc., to which I have just referred.
Deputies may wish at this stage to refer to Table VI. It sets out in a compact and convenient form the manner in which the moneys that in other circumstances might have been absorbed in payments to Great Britain, have been utilised. It shows that after making the necessary adjustment for the Old Local Loans capital, the total sum which the stoppage of the payments made available for disposal amounted to £4,240,273. Practically every penney of this, as may be seen, has been disposed of for the benefit of the farmers: They have secured the last remnant of gain arising out of the struggle to retain the annuities, and for them, at any rate, the campaign begun under the Land League has ended in indubitable victory.
But apart from this, Table VI also shows that the moneys have been disposed of largvely for capital purposes, and in ways calculated to yield lasting profit. Thus, for instance, under items (1) and (2) the capital burden on existing farms arising out of the purchase annuities, has been halved. Under (3), (4) and (5) the amount has been spent in creating new holdings, which of course is in essence a capital expenditure, and one from which great social and economic benefit may be hoped for. Items (6) to (9) all represent expenditures incurred for the fuller development and better utilisation of our natural resources. In short, Table VI makes it clear that the moneys which formerly were taken out of our country as a rent or a tribute from Irish agriculture, are now being put back into that great industry to make it more prosperous and more remunerative than it has ever been. Arising out of this are great gains which will accrue to the State and the community in future years. We may set these against such increase in taxation as has been necessary in order to bring our public services more nearly into conformity with modern needs.
In relation to the public services, may I advert to the fact that they are responsible for one of the msot cynical inconsistencies of modern life. Everybody demands them upon the most grandiose scale, but nobody wants to pay for them. Publicists and propagandists cry out for better schools, higher standards of education, modernised roads, rebuilt cities, houses for the people, pensions for the aged, work for the unemployed, more money for art, more for public health, more for the teachers, more for the Civil Service, more in short for every purpose and for every person——
