Financial Statement.

The financial year which closed on the 31st March last betrayed all the hopes which were founded on its auspicious opening. The ever-increasing tension between some of the more powerful States of Europe, manifested in recurrent crises which were only partially resolved by the postponement of war, had repercussions of a most disadvantageous character upon our Exchequer position. For instance, the fall in stock exchange values occasioned by the uneasy and unstable international situation, showed itself in a decline of £84,000 in the receipt from estate duties, while a decrease in the turnover of the Sweepstakes was expressed in the reduced return from stamp duties, upon which the decline in the value of stamped transactions had an additional depressing effect. Corporation profits tax was likewise disappointing, as was the yield from excise. If it were not for the fact that an unexpected and unlooked-for overplus of £562,000 on the Estimate occurred in the customs duty form imported sugar, and that there was a small excess of £28,000 in the receipt from income-tax, as well as of £18,000 from excess profits duty, the revenue from taxation would not have filled our estimate by £291,000. Thanks to these, however, the actual yield from general taxation of £24,825,000, together with £1,162,000 from motor vehicle duties, exceeded by £317,000 the original Budget estimate of £25,670,000 for the tax revenue.

The main classified yields for the year are to be found in the Estimates White Paper which was circulated some days ago; while the aggregate figures for the tax and non-tax revenues, as compared with the original Budget estimates, are to be found in Table 1 of the tables relating to the financial statement, which, following the precedent of last year, have been circulated to the House. From this table it will be seen that the total revenue from tax and non-tax sources amounted to £31,884,000, or £379,000 over the estimate.

The position as regards expenditure was not at all so favourable. As Table I shows, the issues for Central Fund Services at £4,850,000 exceeded the Budget estimate by £41,710; while on the supply side the total outlay came to £28,260,000. Thus under all heads, capital and otherwise, covered by the Budget we spent £33,110,000.

The figure I have given covers the expenditure which took place on certain capital works, such as airport construction, to defray the cost of which, as I stated last year and as Table I shows, we were prepared to borrow. The borrowings, in fact, came to be much less than I had anticipated, for the reason that progress on the capital works being slow, expenditure upon them was much less than had been budgeted for. Indeed, of such savings as were made last year a large part, no less than £1,300,000, arose in respect of services such as airport construction and defensive armaments, in which there was a large capital element. On the other hand a great deal of overspending took place upon certain recurring public services, like unemployment assistance, which ought to be, and if the public credit is to be preserved must be, paid for out of revenue. The final position is that with a total revenue of £31,884,000 and a total expenditure of £33,110,000, of which only £698,500 can be charged to borrowings, there was a deficit on last year's Budget of £527,500.

During the year with which we have been dealing certain special circumstances aggravated the demands on the Exchequer and helped to bring about the deficit. The first of these was a deficiency of £68,000 in the Appropriations-in-Aid of Vote 61 on account of unemployment assistance. It arose through certain public authorities withholding payment of moneys due under the Unemployment Assistance Acts to the Exchequer. A Bill which will fully clear up the position in that regard will be introduced in due course. Another circumstance was the intensification of expenditure upon defence which in consequence of the increasingly critical international situation has continued at an accelerating rate since last autnmn. The larger expenditure has been mainly upon increased personnel, personal allowances and equipment, and supplies of munitions rather than upon what may be described as capital armaments. It is likely to be a recurring charge against revenue of approximately £200,000 per annum. A third circumstance was the increase in the cost of unemployment assistance consequent upon the higher rates of assistance granted by the Unemployment Assistance Act of 1938. It has been estimated that the higher rates in question account for approximately £200,000 of the additional expenditure from the Vote for Unemployment Insurance and Unemployment Assistance. Between them the three factors which I have mentioned were responsible in round figures for £468,000 of increased expenditure as compared with the previous year.

The Votes for the Army and for Unemployment Insurance and Unemployment Assistance were not, unfortunately, the only services in respect of which we had increased expenditure last year. The outlay upon four Education Votes was up by £243,700, of which teachers in primary schools received £131,580. Posts and Telegraphs took £125,000 more than last year, £81,379 being in respect of remuneration. There was an increase of £122,000 in expenditure out of the Employment Schemes Vote, with increases likewise of £139,000 on Agriculture, £115,000 on Industry and Commerce, £80,000 on Local Government and Public Health, £60,000 on Old Age Pensions, £66,000 on Lands, £44,000 on Army Pensions, £32,000 on Forestry, together with smaller increases on other Votes, making, with the figures which I have just mentioned, a total increase of £1,997,000 in respect of 55 Votes.

The increases were offset to the extent of £1,437,000 by reduced spending on 17 other Votes (including £1,405,000 in respect of Export Bounties and Subsidies, £14,000 for Property Losses Compensation, £3,700 for Secret Service, £1,500 for Law Charges, £4,800 for Science and Art, and £1,800 for the Industrial and Commercial Property Registration Office), and to the further extent of £60,000, making £1,497,000 in all, by the non-repetition of certain provisions made in the previous year.

In Table II the issue for each Vote for 1938-39, as compared with the corresponding figure for the preceding year, is set out. No doubt the figures given therein will receive the careful scrutiny of the Dáil—and, may I hope, of the taxpayer. They may not console him, but at least they will tell him where his money is going.

Before I go on to deal with other aspects of our public finances I may mention that last year 38.8 per cent. of our tax revenue came from customs duties; 23.5 per cent. from excise duties; 33.2 per cent. from taxes on income, property, profits and stamped transactions; and 4.5 per cent. from motor vehicle duties; while 18.5 per cent. of our total revenue came otherwise than from taxation. It may be of interest to mention that the yield from customs duty on sugar in 1938-39 amounted to 3.6 per cent. of the total tax revenue as compared with 1.4 per cent. in 1937-38.

Last year I gave, in Table III, a statement of the financial transactions and cash operations of the Exchequer for the period from the 1st April, 1932, to 31st March, 1938. I have extended that statement to cover the period to the end of the last financial year. It will be noted that in addition to the £10,000,000 raised by the Financial Agreement Loan, there were other borrowings for the Exchequer account amounting to £9,879,000, while the Exchequer also received in repayment of former advances £187,658, making a total receipt "below the line" of £20,066,658. To this may be added £60,000 secured by capital repayments on foot of funding annuities, making a total Exchequer receipt of £20,126,658. As against these receipts the cash outgoings for capital purposes for the year 1938-39 amounted to £19,954,014, which included the £10,000,000 paid to Great Britain under the Financial Agreement; together with issues such as £453,704 set aside for Sinking Funds; £450,000 provided for Local Loans Funds; £1,042,700 issued for capital expenditure under Shannon Electricity, Electricity (Supply) and Liffey Reservoir Acts, and Telephone Capital Acts; and £27,310 issued as a repayable advance under the Coinage Act, 1926. The net position, as may be seen from the table, is that whereas at the 31st March, 1938, the payments from the Exchequer for purposes such as I have mentioned exceeded receipts by £9,047,412, the excess of payments over receipts at 31st March last was only £8,617,733.

Turning to Table IV, which constitutes a comparative statement of the capital liabilities of the State as at the 31st March of this year and last year, respectively, it will be seen that the figure for our total gross liabilities has increased from £56,834,996 to £69,038,080. These figures, it must be noted, give only the liability immediately attaching to the Exchequer in regard to stock issued by it, moneys raised, and liabilities directly contracted by it. Against the liabilities there are certain off-setting assets, among which are repayable advances to the Local Loans Fund amounting to £14,455,084. In previous Budget statements I have pointed out that most of these advances have been made to finance loans granted to local authorities to enable them to undertake housing schemes under the Housing Acts, 1932-1938. The Exchequer, however, under the provisions of these Acts is itself charged to make good to the borrowers a very large part of the capital charges in respect of these loans. Accordingly, in so far as advances to the Local Loans Fund are brought into account as an asset of the Exchequer, the value of that asset should be written down by the equivalent of the Exchequer liabilities to the local authorities concerned in the advances.

Not only, however, do liabilities attach to the Exchequer in respect of housing loans made by the Local Loans Fund, it has liabilities also in respect of the housing loans which certain local authorities, the Dublin Corporation for instance, raise from other sources. One way of bringing these likewise into account would be to write-up the figure given in Table IV for the gross liabilities of the Exchequer by £2,270,000.

The full extent of the assistance given by the Government to the local authorities in this matter of housing, however, may be expressed more conveniently by an aggregate figure covering both the writing-down of the assets appropriate to bring out the net value to the Exchequer of the Local Loans Fund advances, and the writing-up of the Exchequer liabilities necessary to represent the State's liabilities in respect of housing loans from other sources. This figure is given in a foot-note to Table IV. It will be seen there that the liability of the State at the 31st March last in respect of the outstanding indebtedness of local authorities for moneys raised under the 1932 and subsequent Housing Acts was £7,320,000 after allowing for the operation of the Sinking Funds. The total outstanding debt contracted by the local authorities for housing was £13,285,000. A year earlier the Government liability in respect of the local authorities' housing debt outstanding was £6,100,000 out of a total of £10,575,000. It may also be mentioned that the initial capital value of the liability incurred by the State up to the 31st March last in respect of the total amount, £13,780,000, originally raised by local authorities under the Acts was £7,515,000.

The figures which I have given show that at the 31st March last the Exchequer had accepted responsibility for no less than 54½ per cent. of the cost of new housing for the people. In the light of this fact it must be admitted that the State's contribution towards the solution of this problem, which is as much a matter of local as of national concern, is ample and generous. It may not be out of place in this connection to mention that, up to the 31st March last, the liability which the Government had accepted for the programme carried out by the Dublin Corporation under the 1932 and subsequent Housing Acts amounted to 43½ per cent. of the total cost to that date.

It is necessary if we are to get a fuller picture of the capital obligations of the Exchequer at the close of the last financial year to add the figure which I have given for the capital value of the State's liability under the Housing Acts to the amount set down in Table IV for the Exchequer liabilities, raising it to £76,358,000. The corresponding figure at the 31st March, 1938, was £62,934,996, and at 31st March, 1932, £44,878,000.

Against the liabilities to which I have referred we have, as already mentioned, to put certain assets. These also are enumerated in Table IV. They were valued at £38,629,895 at 31st March last, £37,497,905 at 31st March, 1938, and £22,848,000 at 31st March, 1932. Setting these amounts off against the appropriate capital liabilities for the several years I have mentioned we get the dead-weight Exchequer liability at the 31st March last as £37,728,105, and as £25,437,091 and £22,030,000 for the corresponding days in 1938 and 1932 respectively.

It will be noted that between the 31st March, 1938, and the 1st April, 1939, the dead-weight liabilities of the State increased by 48.3 per cent. Such a rate of increase must be a matter of no little concern to the Minister in charge of the Exchequer. It would be more alarming if it represented a tendency which was likely to persist with unabated intensity. The fact is, however, that 81.1 per cent. of the increase, that is to say £9,964,000, is accounted for by the Financial Settlement with Great Britain. Of the remainder, £1,220,000, or 9.9 per cent., is due to the further progress which has been made with the Government's housing programme; £335,000 or 2.7 per cent. arose in respect of certain charges which fell upon the Export Bounties and Subsidies Account—the Vote hitherto accounted for by the Minister for Finance—prior to the coming into force of the Trade Agreement with Great Britain; £120,500 or 0.98 per cent. was incurred by expenditure upon the new airports, Volunteer halls, industrial alcohol factories, and defensive equipment; £215,000 or 1.7 per cent. by expenditure upon employment schemes; £28,000 or 0.2 per cent. by property losses compensation under the Acts of 1923 to 1933; £180,000 or 1.47 per cent. mainly by the 50 per cent. reductions which are granted in respect of new annuities under the post-1923 Land Acts; and £527,500 or 4.3 per cent. has been created by the deficit on last year's Budget. The aggregate of these items has been offset to the extent of about £300,000 by National Loans Sinking Fund transactions.

It will be appreciated that three of the causes which operated to increase the dead-weight debt last year, to wit, the financial settlement, the winding-up of the Export Bounties and Subsidies Vote, and the deficit upon the Budget, were clearly abnormal. Two of them cannot possibly, and the third is very unlikely to recur. Between them, however, they accounted, as I have mentioned, for 88.1 per cent. of the increase. So far as the other factors which helped to swell the dead-weight liability are concerned, some of them, such as the expenditure on industrial alcohol factories and on property losses compensation, have disappeared or are rapidly disappearing. But others, such as the Housing Acts, employment schemes, and the Land Acts, are still, and are likely to continue to be, active—a position which cannot but be regarded with uneasiness by the Minister responsible for the public finances.

Moreover, it has to be remembered that Table IV relates to only part of the public debt. The position of the local authorities must also be taken into account. The latest reasonably complete and firm figures available in this connection relate to the year which ended on 31st March, 1938. According to them the gross indebtedness of the local authorities at that date amounted to £28,178,664 as against £26,559,938 at the corresponding date in the year preceding, and £15,710,711 at the 31st March, 1932.

As I have pointed out on other occasions, however, statements of gross indebtedness tend to give a too unfavourable picture of the financial position of the local authorities. The important figures in fact are those for their net indebtedness and net dead-weight indebtedness. Taking those out, we find that at the 31st March, 1938, the aggregate net indebtedness of the local authorities came to £18,380,485, and their net dead-weight indebtedness to £12,028,160; while at 31st March, 1937, the figures were £18,260,173 and £11,796,173 respectively; and at 31st March, 1932, £14,081,815 and £9,210,815. Bringing these sums into account we may put the dead-weight public debt (national and local) at the 31st March, 1938, at £37,465,251. The corresponding figure at the 31st March, 1932, was £31,240,815, and at the 31st March of this year I think it may be taken to have been £51,000,000, assuming an increase of about £1,250,000 in the dead-weight debt of the local authorities. On the foregoing basis theper capita dead-weight public debt of our community worked out at £10.6 in March, 1932, £12.7 in March, 1938, and £17.3 in March, 1939.

The practical importance of the dead-weight debt lies in the fact that it represent uncovered charges upon the future revenues of the State and, therefore, upon the future incomes of all citizens. The amount of the charges upon the Exchequer which arise out of it in any particular year are, accordingly, of some significance when we are reviewing the financial position for that year and the outlook for the future. In this connection, I have prepared Table V to show, for the purpose of comparison, what the charges in respect of the dead-weight public debt (national and local) may be taken to have been in the years ending the 31st March, 1932, 1938 and 1938, respectively. The table is divided into two parts. On one side are set out,inter alia, the gross annual charges falling upon the Exchequer on foot of State debt outstanding during the years I have mentioned. On the other side in respect of the same periods is given the actual income as it was being received by the Exchequer from productive assets. For any particular year the difference between the annual income as it was thus being received and the gross annual charge which was falling on the Exchequer or local authorities in respect of the public debt may be taken for all practical purposes to represent the net annual charge in respect of the dead-weight public debt then outstanding.

Turning now to the table, and taking first the figures for 1931-32 it will be noted that the gross annual charges in respect of the State debt then outstanding amounted to £3,250,190. The details given represent disbursements actually made by the Exchequer on foot of obligations admitted by it in the year. These comprise,inter alia, payments arising out of the Ultimate Financial Settlement, as the local loans annuity and such-like. The pre-1923 land annuities are not included among the charges for 1931-32, as they are taken to be completely off-set by a corresponding sum, which otherwise would figure in the Statement of Income from productive assets in respect of the purchase annuities, payable in that year, and charged upon the Guarantee Fund. As a set-off against the debt payments, the Exchequer, in the year with which we are dealing, received £1,184,412 as income from productive assets, so that in 1931-32 the true dead-weight charge in respect of outstanding debt was £2,065,778.

The statement of the annual debt charges for the year 1937-38 includes not only all the payments actually made by the Exchequer in respect of obligations accepted by it, but also claims, arising out of the Ultimate Financial Settlement, which were not admitted by the Government. The statement for that year has also to take note of a new commitment in the shape of the dead-weight annual charge which would have fallen upon the Exchequer by reason of the halving of the pre-1923 land annuities if the ultimate settlement of the dispute in regard to them had gone against the State. In strict accounting we must regard this as a live and uncovered liability at the 31st March, 1938. It amounted, as may be seen, to £1,424,690 and with other items brought the total of charges against the Exchequer up to £5,285,193. The annual income arising out of assets had increased to £1,443,791 so that the nett dead-weight debt charge on the Exchequer for 1937-38 was £3,841,402.

In the year 1938-39 the Financial Settlement with Great Britain was made, and the beneficial effects of it stand out very clearly in the statement of debt charges for that year. The items in respect of the pre-1923 land annuities, the local loans annuity, the excess stock annuity, etc., etc., have disappeared, reducing the gross charge upon the Exchequer to £3,612,596. On the other hand, the productive assets yielded an income of £1,488,921, or £304,509 more than in 1931-32. In 1938-39, therefore, the actual dead-weight charge in respect of State debt outstanding amounted to £2,123,675 as compared with £3,841,402 a year previously when the Financial Agreement with Great Britain had yet to be concluded, and £2,065,778 in 1931-32.

To complete the account for the annual charges arising out of the dead-weight public debt we must bring in those which fall on the local authorities. Assessing these at 6¼ per cent. of the dead-weight debt outstanding at 31st March, 1932, and at 6 per cent. on the amount similarly outstanding at 31st March, 1938, and of this year, we get £575,000, £721,000, £796,000, respectively. Adding these sums to the corresponding figures for the State debt, we find that the annual charges paid in respect of the outstanding dead-weight public debt (national and local) were:—

In the year ended 31st March, 1932

£2,640,778

In the year ended 31st March, 1938

£4,562,402

In the year ended 31st March, 1939

£2,919,675

It is to be noted that the payment for 1938-39 did not cover a full 12 months' charges for the Financial Agreement Loan. If it had done so, then the figure for that year would have been £3,032,416. The figures which I have given show that though the dead-weight of public debt outstanding increased from £31,241,000 at 31st March, 1932, to about £51,000,000 at the 31st March last, the dead-weight annual charges thereon have increased in a much smaller proportion. They have in fact gone up from £2,640,000 to £2,919,000. In this connection, however, we have to bear in mind that the Sinking Fund conditions attached to the First National Loan were much more stringent than has been the case with subsequent issues. That fact may be taken to reflect not merely the stability of the State, but the easier credit conditions which have prevailed in latter years. It also carries the implication, however, that in regard to the reduction of debt we have followed less exacting standards than formerly.

We have now to deal with the position for the current year, in regard to which the usual White Paper of Estimates has been circulated to the Dáil. In formulating the figures given therein for revenue and for expenditure it has been necessary to proceed sometimes upon one, sometimes upon the other, of two assumptions not quite consistent with each other. The first of these assumptions has been that a major European War is likely and that it is necessary to take certain precautions against that contingency; and the second, with certain qualifications, has been that war will not, in fact, befall. The Estimate for Defence may, perhaps, be said to have been based upon the first assumption; those for most of the other Departments and for our revenues upon the second; while in regard to the Vote for Public Works, for instance, both assumptions had to be reconciled with the task of preparing Estimates which were to have a practical application in the immediate future. These considerations have to be borne in mind in relation to the figures with which we have now to deal —and above everything else it is to be remembered that the outbreak of a general conflict in Europe would render our Estimates, or indeed any Estimate that could be made here or elsewhere, of little value as a basis for public financing. Taking the figures as they have been presented, however, we find that our expenditure during the current year is likely to be of the order of £35,716,000, while our revenue on the basis of our existing rates of taxation should be about £31,130,000. How to cover the difference of £4,586,000 which exists between these two figures is the problem which we have to solve in framing the Budget for the year.

Our first consideration in that connection naturally must be to avoid the unnecessary imposition of taxation. At this stage we are precluded, I must suppose, form looking for any considerable reduction in the actual sums to be provided for the public services. As I have said so frequently in relation to public spending, economy is a virtue that is often preached but seldom practised. I have no doubt that when I finish to-day I shall be criticised for placing additional burdens on the people. I shall be told that in the year 1931-32 the total revenue amounted to £25,496,419, of which £21,286,000 came from taxation; whereas in the year which has just passed it amounted to £31,884,000, with £25,987,000 from taxation; while for the current year we are going to get from taxation—but it is too soon to go into that just now. The point is that all these millions are taken from the taxpayer for one purpose and for one purpose only, and that is to pay for the public services which the people, in so far as their representatives here in this Dáil speak for them, demand. If to-day the Minister for Finance has to get from the community so many millions more than in 1931-32, he is in that position because the public services are costing, and so far as the Dáil in regard to the Estimates for the current year has expressed itself, are to continue to cost, so much more than at that time.

Table VII which I have circulated should bring that home to us. It shows, for instance, that expenditure on old age pensions has increased from £2,702,000 in 1931-32, to £3,484,000 in 1938-39, and is likely to reach £3,506,000 this year. Similarly, as against £161,000 spent on unemployment insurance in 1931-32, there was issued last year for unemployment assistance and unemployment insurance £1,219,000, while the Estimate for 1939-40 is £1,137,000. Relief schemes and employment schemes got £156,000 in 1931-32; last year the actual issue for such schemes was £1,290,000, and £1,500,000 has been included for them in this year's Estimate. The Land Commission received £614,000 in 1931-32, it got £1,645,000 last year, and this year it wants £1,792,000. In brief, £9,780,000 was actually issued last year for what may be described as social services, as compared with an expenditure of £4,551,000 in 1931-32, and an anticipated outlay this year of £10,121,000. These services, therefore, account for over £5,500,000 of additional money in this year as compared with 1931-32.

But the increased spending has not been confined to social services only. The provision for educational services has risen form £4,690,000 in 1931-32 to £5,159,000 in 1938-39, and to an estimate of £5,318,000 for the current year. Army pensions cost £195,000 in 1931-32; they cost £588,000 last year, and will probably cost £587,000 in this. For afforestation £60,000 was expended in 1931-32, £185,000 is wanted this year. The Vote for agriculture took £375,000 in 1931-32. This year it stands at £594,000, plus £606,000 for export subsidies.

And production has gone down by 50 per cent.

The actual expenditure upon this batch of services came to £5,320,000 in 1931-32. This year the estimates for the same services amount to £7,290,000, representing an increase just short of £2,000,000.

What does the House want us to do about this position? Cut the services to reduce expenditure, or maintain the services and increase taxation? This is a matter upon which the Dáil cannot have it both ways. The estimates for most of the larger spending Departments have been taken. I have read through the debates upon them carefully. Apart from the formal reductions proposed for the purposes of initiating debate and a forthright, honest speech by Deputy Beegan, scarcely a voice was raised to advocate greater care or greater thrift in dealing with the public moneys! On the contrary, we had, not merely from these benches, not merely from watch dogs sent here by the perambulating farmers to safeguard taxpayers' purses, but even from the benches of the principal Opposition, demands for further expenditure.

We had members of the Labour Party calling for increased activity in the construction and repair of national schools, the provision of free school books for all children in primary schools, increased rates of pay and allowances for the Gárda Síochána, the provision of houses for the Gárda, the extension of the school-leaving age, with, naturally, increased costs for teachers and schools, fresh expenditure on the ports and a laxer administration of the Unemployment Assistance Acts. We had a certain farmers' Deputy asking for housing facilities for working farmers on the same lines as for labourers, the carrying out of big national works of drainage and the provision of residential agricultural and domestic economy colleges by the State. Even leading members of the Opposition, as I have mentioned, were caught by this infection of extravagance, and demanded family allowances, increased provision for drainage, turf development and mineral development, "more generous" administration of the Unemployment Assistance Acts and again, housing for the Gárda Síochána.

All these are excellent things in themselves, no doubt, and I am not to be taken as against them. But they are all proposals which, if conceded, would have to be paid for by someone. In this case they would have to be paid for by the taxpayers, by those who buy food and clothing, meat and drink for themselves and their families, out of means which, in the majority of cases, are straitened and scanty. The truth in this matter —and it must be grasped by the House and the country—is that, in so far as the framing of the Budget is concerned, it is not what the Minister for Finance may have been able to do within the three or four weeks preceding its introduction that is important, but what the Dáil and every Deputy in it have been doing in regard to the cost of the public services for weeks and months beforehand. When, therefore, in due course the prodigals of March, changing into Scrooges in May, go around the constituencies protesting that the Minister for Finance has put so much more on the income-tax, so much more on tea, or beer, as the case may be, let those who feel these imposts and resent them, burst in on all their eloquence and ask them one simple question: Why those who court popularity by opposing taxation now did not, at the right and proper time, risk unpopularity by opposing the expenditure which has made that taxation inevitable?

What about the £3,000,000 savings?

The problem, however, which at the moment we have to consider is, not what retrenchment we can make in regard to the proposed expenditure upon the supply services, but to what extent the aggregate total for all the services can be written down to allow for the fact that in each of them some allowance has been made for contingent expenditure which, indeed may not arise at all, and which, in any event, in any year is most unlikely to arise upon every service. The writing-down of the gross total in this way has been customarily described as making an allowance for over-estimation. The amount thus allowed has naturally varied from year to year and, as Table VI shows, the actual over-estimation that, upon the final out-turn of the year, was shown to have been made in estimates has varied likewise. Thus, in 1932-33, upon the normal services, those falling normally to be paid for out of revenue, it amounted to £318,476, or 1.1 per cent. of the Budget estimate for them; in 1934-35 the corresponding figures were £1,331,539, or 4.5 per cent; in 1937-38, £1,686,659, or 5.2 per cent., and for last year, £589,490, or 1.7 per cent.

These examples, taken from actual experience, indicate that it is a matter of some difficulty to fix the figure for over-estimation with any precision. In settling it, however, we must bear in mind that, if it be fixed too low, too much will be taken from the taxpayer; while, if it be fixed too high, the balance of the Budget will be endangered and perhaps some injury done to the credit of the State. In these circumstances, as good a way as any of setting our course, so as to steer between the Scylla of overtaxation and the Charybdis of a deficit, is to take the arithmetical mean of the actual over-estimation manifested in the Budgets of the past seven years. This gives us a figure of £961,000, which we can round to £1,000,000, and apply to the figures given in the White Paper, thereby making the probable net total of the expenditure to be provided for £34,716,000.

Not the whole of this £34,716,000, however, need be charged against the revenue for the year. It includes, for instance, in Vote 11, large sums in respect of airport construction. In that Vote, too, unusual provision has been made for barracks, magazines, stores, aerodromes, etc— all necessitated by the present special abnormal and pressing requirements for defence —while in Vote 65, springing from the same cause, there are still larger amounts for armaments and other defensive equipment. These have all to be provided now, but can, and we hope will, last a life-time. It would not be just that we who have to pay for them in these hard times should bear the whole cost of them, even if perchance we are to be the first to rely on them. In my opinion, therefore, we may spread over a period of years some part of the tax burden which they involve, provided we shoulder a fair share now. That argument holds good also for improvement works, road works, and development works, such as are financed from the Employment Schemes Vote, and for works like the construction of Volunteer halls. This year, in view of the need to keep additional taxation down to the minimum, we may accept it in regard also to the provision which is being made for afforestation.

We shall now apply this point of view to the amount which has to be raised for national defence. The Dáil, no doubt, when considering the Army Vote, Vote 65, will have noted that, in additional to the £3,252,199 which was provided thereunder, a further sum of £447,125 for Army purposes was included in the Vote for Public Works and Buildings. This figure covered, not only the normal provision for the reconstruction and improvement of the ordinary Army accommodation, but £35,665 for new Volunteer halls, £135,500 in respect of new magazines, stores and aerodromes, and £114,900 for one other major work of a special character. Against the cost of these, and other capital items for armaments and equipment, which come within the main Army Vote, it is proposed this year to borrow £1,350,000, leaving the balance of our expenditure on defence to be met out of taxation.

The current Estimates provide £185,424 for afforestation, of which sum £30,000 is for land acquisition, and £142,000 for cultural operations and maintenance. Against these two items it is intended to borrow £55,000. It has always been the practice to borrow the whole amount required for Property Losses Compensation, and, accordingly, the £3,650 standing against that service in the Estimates will be found in that way.

In the Votes for Public Works and Buildings, Transport and Meteorological Services, and Posts and Telegraphs, there are sums totalling £382,700, for the new airports at Collinstown and Rhynana for the Department of Industry and Commerce. The ultimate total cost of these with their equipment is expected to be about £1,575,000. It is the intention, as I said last year, to make statutory provision for financing these important works, and to spread the cost of them over a reasonable period of time. Owing to pressure of other business, however, it has not been possible to bring in the appropriate legislation yet; the matter, therefore, must be dealt with administratively. On the assumption that the whole cost of the works would be spread over a period of 15 years, it has been decided that at least £136,350, which is approximately equivalent to the annuity required to pay off the whole cost of the works in that period, should be charged against revenue each year. For this year, therefore, the balance of £246,350, representing the difference between the amount of the annuity and the total provision in the Estimates, is to be borrowed if required.

There is one service, for which a large part of the requirement was borrowed last year, but for which nothing may be borrowed this year. I refer to the provision for export subsidies on dairy produce, eggs and poultry, and certain classes of potatoes and other consignments exported abroad. Last year £557,500 was expended on subsidising these and other products. For reasons which were fully gone into in last year's Budget speech, I felt I could borrow £335,000 against that amount, so that of the total issue only £222,500 fell to be charged against revenue. This year the amount required for the service is £606,000, and the whole sum must be found from taxation. Like the Dairy Produce (Price Stabilisation) Act, the Pigs and Bacon Act, the Sugar Manufacture Act, and the reduction in the land annuities, these export subsidies represent a further substantial aid to agriculture. Since I have touched on this matter, perhaps I may say that, in my opinion, the monetary value of the assistance which the State, directly or by the beneficial effects of legislation, is giving to the farming community this year cannot be placed at less than £10,500,000.

And never so few working on the land.

The corresponding figure in the year 1931-32 would have been less than £2,250,000. The basis for this opinion is set out in detail in Table VIII.

I dare you to read it.

The Deputy will want all his courage.

I thought you would not.

Each year since the very large Vote for employment schemes was introduced it has been usual to borrow, if necessary, up to one-sixth of the total Vote of £1,500,000 in respect of the capital nature of certain of the works financed therefrom. If we borrowed only that fraction this year it would still leave too great a sum to be found otherwise; for, deducting it and the other borrowings which I have mentioned from the written-down Estimate of Expenditure, we should still be left with a balance of £32,811,000 to be met out of a revenue of only £31,130,000. Some reduction in expenditure is, therefore, unavoidable, and, to be effective for our purpose, it must be secured by administrative action over the balance of the current year.

The Parliamentary Secretary to the Minister for Finance has already told the Dáil of the great difficulty which he is experiencing in securing works which, in respect of the requisite labour-content, justify themselves as proper charges on the employment schemes Vote. Deputies, I am sure, will have noted also that, even so recently as the 24th of last month, a responsible municipal officer publicly stated that the Dublin Corporation was being pressed to carry out schemes under this Vote at a total cost of £100,000, when, in his judgment, only half that sum, or £50,000, could be economically expended within the year upon the particular type of works suggested. Furthermore, the audited amount expended from this Vote was £1,200,088 in 1937-38, while the total issue for last year was £1,290,088. Taking all these facts into consideration it has been decided to reduce the Estimate for this service to £1,400,000, thus saving £100,000. In the exceptional circumstances of the present year, the fraction of the expenditure upon this service to be met out of borrowed money may be raised from one-sixth to one-fourth. Accordingly, £350,000 out of the £1,400,000 will be borrowed if necessary, but the balance, or £1,050,000, must be provided out of taxation.

The Estimate for Public Works and Buildings at £1,370,000 is greatly in excess of the actual issues which were made therefor in 1938-39. After deducting a sum of £39,000 in respect of the borrowed expenditure upon airports and Volunteer halls, the nett issue for this Vote chargeable against revenue in 1938-39 came to £866,000. The Government has agreed that, while the capital works in connection with defence and the airports are to be pushed ahead, the expenditure upon works chargeable against the revenues for the year must not exceed £850,000. This will enable me to budget for a saving, over and above what might arise from over-estimation, of £100,000 on Vote 11.

Unfortunately this exhausts our tale of economies, but there are some other matters to be mentioned before proceeding to thedenouement. There has been some agitation about a difference between the law in this country and in Great Britain as to the method of assessing to income-tax the profits derived by a stallion owner from fees charged for the service of mares owned by other persons. In Great Britain if a stallion is standing on a farm of which its owner is occupier, the profits derived from service fees received in respect of visiting mares are regarded as profits arising from the occupation of the farm and as being therefore covered by the Schedule B assessment on the occupier. In this country it has been decided by the Supreme Court that in such a case the profits in question do not accrue from the occupation of the farm lands charged under Schedule B and that the stallion owner is carrying on a separate business the profits of which fall to be taxed under Schedule D. The result of this decision, which in my view is based upon sound principles, is, of course, that a stallion owner here is charged to income-tax on his real income and not on a figure based on the annual value of the lands. It has been widely contended, however, even in responsible quarters, that the transfer of certain stallions to England, which took place while the British customs duties on horses were in force—and in fact because of those duties—was due to this difference between the two countries in the treatment of stallion fees for income-tax purposes. That contention was never well-founded. The position all along has been that an English stallion owner was, under the double taxation agreement, exempt from our income-tax in respect of profits derived from a stallion which he had standing in this country, whilst an Irish stallion owner was liable to Irish income-tax in accordance with Irish law wherever the stallion stood. The Irish income-tax law on the subject did not therefore provide any incentive whatever for the removal of stallions from this country to Great Britain.

But it has now been represented to me that, because of the difference in the methods of assessing stallion fees, Irish would-be purchasers attending sales of high-class stallions are placed at a disadvantage as compared with British competitors and that, in consequence, the latter-mentioned can afford to outbid the former. Those who advance this argument claim that, if the taxation position in Ireland were the same as in England, the high-class stallions needed for this country would be provided by private enterprise. I must confess to some scepticism in the matter but, since the revenue involved is not large, I am willing to try the effect of the concession. I propose, therefore, to include in the Finance Bill a clause which will have the effect of providing that, where a stallion is standing on a farm occupied by its owner, who is chargeable under Schedule B in respect of the profits of such occupation, the service fees received by him in respect of visiting mares shall be deemed to be profits arising from the occupation of the farm. I estimate that the cost of the concession this year will be about £3,000, and the White Paper Estimate of revenue must be reduced accordingly.

The Minister for Industry and Commerce has found it necessary to recommend certain minor changes in existing protective duties, and his proposals will be submitted to the Dáil this afternoon. If the House accepts them, it will be necessary to further reduce the White Paper Estimate for revenue by £3,000, making it only £31,124,000. We may concede that at this stage the prospect for the taxpayer is, therefore, not a very pleasing one. But it would be worse if it were not for the Minister for Local Government who, in consideration of the fact that so large a proportion of the Employment Schemes Vote is spent on road improvements, has agreed to make available for the general purposes of the Budget £150,000 from the Road Fund.

There is another sum which in our present need may be appropriated for the purpose of this year's Budget. I have already mentioned that a factor in making-up the deficit last year was the non-payment by certain local authorities of moneys, totalling £68,000, which it was always intended they should pay to the Exchequer under the Unemployment Assistance Acts. I have also stated that a Bill to clarify the statutory position in this regard, and to provide for the due payment of the sums withheld, will be introduced at an early date. In the circumstances of the present year, I do not think it would be right to saddle the general body of taxpayers with a burden of £68,000 when that amount, which was withheld to their detriment last year, will be paid over to us in this. I am, therefore, bringing it in against the year's expenditure. Doubtless, it may be contended that the amount in question should properly be devoted to reducing the borrowing occasioned by last year's Budget, and I readily admit the force of that view. If this were a normal year, and these were normal times, when we could afford to draw readily upon our reserve of taxable capacity, I should defer to it. But as matters stand now, it will be admitted that the public interest will be served the better by not asking for any more in taxation than is found to be unavoidable, and this £68,000 is effective to that end. It must, therefore, be taken.

The position now is that, by allowing £1,000,000 for over-estimation, by borrowing £2,005,000 for capital purposes, and by cutting down proposed expenditure by £200,000, the prospective charges against revenue are reduced to £32,511,000. On the other side of the account, after allowing (1) for the diversion of £150,000 of revenue from one form of expenditure to another, (2) for the appropriation this year of £68,000 which we should have got last year and (3) for the tax changes which I have mentioned, we have £31,342,000. Therefore no less a sum than £1,169,000 has still to be obtained. It can only be obtained by fresh taxation.

It is not easy to find £1,169,000 by means which will be economical, convenient, certain and just. We will agree, I think, that there is no merit in devising new taxes just for the sake of novelty, or as experiments. New taxes involve new tax-assessing and tax-collecting organisations, new points of administrative difficulty, new opportunities for evasion, new formulæ for estimating—formulæ which experience either in the shape of a disappointing yield, or of a highly excessive yield, may show to be fallacious. They are, therefore, likely to cost more to administer than those which have been well-tried and long established, with the result that, while they will take as much from the taxpayer's purse as the older taxes, their nett contribution to meet the cost of the public services will be less.

New taxes, too, are likely to be much more uncertain, and arbitrary, and inconvenient in the demands which they make upon individual taxpayers than existing taxes are. Taxpayers have long experience of the latter. In so far as the adjective can be applied to the payment of any tax, they are collected at the time and in the manner which renders that distasteful operation as convenient as possible to the taxpayer. Individual taxpayers know that there is nothing uncertain or doubtful about them. They know when they are to be paid and, of course, what sums must be paid in respect of them. They cannot, therefore, be easily cheated by interveners between them and the Exchequer.

How important this can be from the taxpayer's point of view I may bring out by reminding the House of our early experiences with the package tax. In its early stages that was a comparatively simple and modest tax of 2d. per package. Yet I know that its imposition was made the excuse for increasing the cost of many articles to the consumer, often by three times that amount. It was a new tax, the incidence and amount of which was not generally known, so that the unfortunate purchaser was at the mercy of the unscrupulous middleman who came between him and the Exchequer. That sort of thing could not happen in the case of income-tax, or a tax on tea, sugar, tobacco, or even petrol. The taxpayer in the case of these commodities knows exactly what is the rate of tax, and where it falls, and how much, therefore, he ought to be called upon to pay in respect of it. He may deplore that his money is taken in this way, he may even resent it, but he has the satisfaction of knowing that he is not being cheated.

Turning now with all this in mind to face our problem, we naturally look to the income-tax as the first source of relief in the present position of the Exchequer. I am well aware of all that may be said against adding to the existing impositions upon some incomes, how heavily even a small increase in the standard rate will bear upon many households, of the economies in domestic expenditure which in many cases must ensue, even of the effect which an adverse change may have upon business activity. But if I fail to get, by means of this progressive tax, a fair and ample contribution to our needs, I must get the equivalent by taxation of a more regressive type, not only from those who now pay income-tax, but from those who constitute the mass of the population and whose cash incomes are even lower. Moreover, I may recall that while income-tax has been rising elsewhere, it has remained unchanged here since 1934-35 at 4/6.

Accordingly, I propose to increase the standard rate of income-tax here by 1/-, making it 5/6 in the £. I propose also to increase the allowances in respect of earned income to one-fifth, subject to a maximum allowance of £300, and to reduce the personal allowance to £120 for single persons and £220 for married persons, leaving such other allowances as I have not mentioned unchanged. As a result of all these changes we ought to get an additional £660,000 this year from income-tax, which is equivalent to £850,000 in a full year.

In regard to sur-tax I propose to increase the existing rates of charge upon all incomes exceeding £3,000, but not exceeding £8,000, by 10 per cent. and on all incomes exceeding the latter figure by 15 per cent. We may expect £40,000 from this proposal this year and £55,000 in a full year. The net effect of all the changes in the income tax and sur-tax taken together should be to give us a further £700,000 from these two taxes this year.

In recent weeks there seems to have been a widespread opinion that the re-imposition of a tax upon all teas was a certainty, and I find that, by a mere coincidence no doubt, the bonded warehouses are virtually empty of that commodity. I fear there will be no profits for the prophets—to the taxpayers' relief, the forecast has not come off. There will be no new tax on tea this year, but there will be an amendment of the law which will enable us to deal more effectively with forestalling.

Sugar, it might be argued, is in a different category. While elsewhere the taxes upon that commodity are fairly high and have recently been increased, our home-produced sugar bears practically no duty. The considerable revenue which we derived from sugar-consumers last year came mainly from customs duties upon imports. Indeed, if our present importations were to fall off in any significant degree, we should have to impose heavy additional taxation either upon the home-produced article or upon some other commodities in order to make good the resultant deficiency in the revenue. On the other hand, even with the present low excise duty, sugar here is as dear as it is in the larger centres in Great Britain or in the Six Counties—until a few days ago it was, in fact, dearer. With this in mind, and remembering that it applies to certain other home-produced foodstuffs also, it has been decided to allow the existing duties upon sugar to remain unaltered.

I cannot do that for petrol, if it be done for sugar. I am not going to say that a tax on petrol is a luxury tax. In a large number of cases it may be so described; in a greater number, as where the petrol is consumed in vehicles used for the purpose of commerce or public transport, it cannot. Some part of any increase in the existing tax will fall upon the luxury uses of the article, some part will fall upon the necessary uses. This would apply, however, in a much greater degree to a heavy increase in the tax upon sugar, or even to some increase in the tax thereon, combined with a smaller increase that I am going to propose in the tax upon mineral hydrocarbon oils, light and heavy. Weighing every consideration, the conclusion has been reached that, in all the circumstances, the customs and excise duties on mineral hydrocarbon oils must be increased as from to-morrow by 2d. per gallon. The increased duties will give us an additional revenue of £310,000 this year and £350,000 in a full year.

The Budget still requires £159,000, and this I propose to get by making our main rate of customs duty on tobacco approximate more closely to the average of the existing British main rates, and raising the excise duty on the home-grown article by a like amount, that is to say, by 8d. per lb. in both cases, which ought to give us £170,000. As in the case of the mineral hydrocarbon oils, the new rates will come into force to-morrow. It is to be presumed that they will be passed on to the consumer.

As a result of the several changes which I have mentioned, the estimated revenue for the year will be increased to £32,522,000. This sum will enable us to meet that portion of our expenditure which must be defrayed out of revenue, and ought to leave a small surplus on the year of £11,000.

Before I sit down I should perhaps say something about future budgetary prospects. This year's Budget has been prepared in a time of unusual difficulty. As the additional taxation, which I have had to impose, makes clear, the present tension in Europe had already cost the Exchequer a very great deal, not only by reason of the greatly increased expenditure which through many channels it has forced upon us, but because of the decline in our revenues, occasioned by the unsatisfactory business and trading conditions it has brought about. Stringent and straitened as our position is, I believe that we can endure it so long as peace is maintained. If a widespread war comes, however, our difficulties will be intensified beyond measure. I speak now only of the reaction of such a disaster upon our finances. But there I know that with a much diminished real income, we shall be called upon to shoulder vastly increased public burdens. Moreover, the problem in that regard will be aggravated by the fact that existing sources of revenue will rapidly dry up. The stamp duties are a case in point. And it will no longer be possible to get so large a part of our requirement by customs duties upon imported goods, for we may take it that our imports will be drastically cut down. We shall have to tax what we can and where we can. Taxes upon home-produced commodities will, I feel, be greatly increased; as will the standard rates of income-tax and surtax; while all the allowances which at present mitigate the full impact of these latter upon the taxpayer will be drastically reduced. Our standards of living, our whole mode of existence, our very philosophy of life will be changed radically—and in my opinion changed eventually for the worse—by war. It will bring to the mass of our people, whether we be neutral or belligerent, only increased want, hardship, and insecurity, not merely in that field of affairs which is the particular responsibility of the Minister for Finance, but everywhere. For that reason we ought to support with all our heart and all our will those whose efforts may defer war and prolong peace. For the prolongation of peace, even an uneasy and precarious peace, is the one hope we have that next year's Budget will not be even more burdensome to everyone than this year's has had to be.

Following are the tables referred to in the Minister's statement:

TABLE I—COMPARISON BETWEEN (i) BUDGET ESTIMATES AND (ii) EXCHEQUER RECEIPTS AND ISSUES IN 1938-39.

REVENUE

EXPENDITURE

Net Budget Estimates

Actual Receipts

Net Budget Estimates

Actual Issues

1. TAX REVENUE

£

£

£

1. CENTRAL FUND SERVICES:

£

£

£

White Paper Estimate

25,670,000

White Paper Estimate

4,383,290

Deduct for minor concessions in Tobacco and Entertainments Duties and remission of Customs Duties on Fire Engines, articles for use of blind persons and Rice Meal

6,000

Add increased provision for Service of Debt (Financial Agreement Loan)

425,000

4,808,290

4,850,000

25,664,000

2. SUPPLY SERVICES:

White Paper Estimate

30,322,710

Add increased provision for (i) increased remuneration of

National Teachers (£138,000),

Add for minor adjustments, etc., of Customs Protective Duties

6,000

25,670,000

25,987,000

& (ii) National Defence (£600,000)

738,000

31,060,710

2. NON-TAX REVENUE

Deduct (i) reduction in provision for Export Bounties and Subsidies (£1,442,010), and (ii) for general over-estimation (£1,500,000)

2,942,010

White Paper Estimate

5,835,000

5,835,000

5,897,000

3. TOTAL REVENUE

31,505,000

31,884,000

(Anticipated Surplus)

( 4,010

— )

28,118,700

28,260,000

32,926,990

33,110,000

3. CAPITAL, ETC., EXPENDITURE to be defrayed

Budget

Actual

(a) from Borrowing:

£

£

Airports

320,000

33,000

Defence Expenditure

300,000

47,000

Employment Schemes

250,000

215,000

Industrial Alcohol Factories

50,000

34,500

Property Losses Compensation

31,000

28,000

Half Cost Volunteer Halls

25,000

6,000

976,000

363,500

(b) from Surplus on Budget for 1937/38:

Export Bounties and Subsidies

450,000

335,000

1,426,000

698,500

4. DEFICIT

—31,500,990

527,50032,411,500

4. TOTAL EXPENDITURE PROPER TO BE DEFRAYED FROM REVENUE

31,500,990

32,411,500

NOTE: The "White Paper Estimates" referred to are those contained in Paper P. 3119, presented to the Dáil and circulated to Deputies on 9th M ay, 1938.

TABLE II.

STATEMENT COMPARING EXCHEQUER ISSUES FOR SUPPLY SERVICES IN THE YEARS 1937/38 AND 1938/39.

A—SERVICES ON WHICH ISSUES WERE GREATER IN 1938/39 THAN IN 1937/38, OR WERE UNCHANGED.

No. of Vote

SERVICE

1938/39

1937/38

Increase over 1937/38

*Principal Causes of Major Variations

£

£

£

1

President's Establishment

3,048

3,048

——

2

Houses of the Oireachtas

103,770

75,899

27,871

New Seanad and increased allowances to Deputies.

3

Department of the Taoiseach

13,292

13,097

195

——

4

Comptroller and Auditor-General

19,304

17,598

1,706

——

5

Office of the Minister for Finance

68,922

65,620

3,302

——

6

Office of the Revenue Commissioners.

847,021

811,746

35,275

Increased Establishment charges.

7

Old Age Pensions

3,484,476

3,423,822

60,654

Greater number of Pensioners.

8

Compensation Bounties

47,272

6,355

40,917

Bounty on Sugar Products exported.

10

Office of Public Works

120,360

100,094

20,266

Increased Establishment charges.

11

Public Works and Buildings

905,513

842,290

63,223

Airports, Army Buildings.

12

State Laboratory

7,966

6,325

1,641

——

13

Civil Service Commission

24,599

23,487

1,112

——

17

Rates on Government Property

112,631

102,019

10,612

General Increase in Rates.

19

Tariff Commission

5,101

4,584

517

——

21

Miscellaneous Expenses

9,219

8,616

603

——

22

Stationery and Printing

146,333

136,179

10,154

Establishment costs and higher cost of paper.

23

Valuation and Boundary Survey

31,693

31,220

473

——

24

Ordnance Survey

30,997

29,004

1,993

——

25

Supplementary Agricultural Grants

1,270,989

1,270,989

——

27

Haulbowline Dockyard

6,000

4,105

1,895

——

29

Widows' and Orphans' Pensions

450,000

450,000

——

30

Quit Rent Office

3,624

3,458

166

——

31

Management of Government Stocks

15,578

15,473

105

——

32

Office of the Minister for Justice

38,752

37,854

898

——

33

Gárda Síochána

1,849,739

1,823,575

26,164

Boot allowance and Sergeants extra rent allowance.

35

District Court

37,522

37,170

352

——

36

Supreme Court and High Court of Justice.

49,865

46,535

3,330

——

37

Land Registry and Registry of Deeds.

46,573

45,171

1,402

——

39

Public Record Office

5,470

4,873

597

——

40

Charitable Donations and Bequests

2,729

2,429

300

——

41

Local Government & Public Health

1,303,469

1,223,184

80,285

Housing Loan Charges.

42

General Register Office

11,887

11,705

182

——

43

Dundrum Asylum

15,340

13,934

1,406

——

44

National Health Insurance

295,194

287,915

7,279

——

45

Office of the Minister for Education

182,851

171,684

11,167

Increased Establishment charges.

46

Primary Education

3,714,024

3,535,639

178,385

Restoration of 5 per cent. of Salaries to Teachers.

47

Secondary Education

444,227

431,006

13,221

Increments of Teachers.

48

Technical Instruction

297,158

256,230

40,928

Increase in grants for more pupils.

51

National Gallery

5,317

5,211

106

——

52

Agriculture

802,390

663,306

139,084

Winter Butter and Fertilisers.

53

Fisheries

37,570

27,803

9,767

Expenditure in 1937/38 abnormally low.

54

Lands

1,645,701

1,579,763

65,938

Ditto.

55

Forestry

155,617

123,492

32,125

Increase in wages and number of Forestry workers.

56

Gaeltacht Services

92,597

82,728

9,869

Extra expenditure on Rural Industries.

57

Industry and Commerce

475,280

359,579

115,701

Expenditure in connexion with Industrial Alcohol and Turf Development not up to Estimate in 1937/38.

58

Transport and Meteorological Services.

61,780

45,763

16,017

Civil Airports and Subsidy to Aer Rianta, Teoranta.

59

Railway Tribunal

2,887

2,828

59

——

60

Marine Service

8,364

7,849

515

——

61

Unemployment Insurance and Unemployment Assistance.

1,219,067

896,589

322,478

Further payments, increased allowances and deficiency in Appropriations-in-Aid.

63

Posts and Telegraphs

2,313,598

2,188,776

124,822

Extra expenditure on Salaries and Mails contracts.

64

Wireless Broadcasting

72,989

59,574

13,415

Short-wave Station.

65

Army

1,766,375

1,469,079

297,296

All-round increase.

66

Army Pensions

588,973

544,477

44,496

Greater number of Pensioners.

69

Employment Schemes

1,290,088

1,167,728

122,360

Programme more advanced in 1938/39.

71

Peat Fuel Development

30,000

30,000

——

72

Industrial Alcohol

1,323

1,323

——

73

Repayments to Contingency Fund

1,090

1,010

80

——

TOTAL £

26,593,514

24,596,439

1,997,075

B.—SERVICES ON WHICH ISSUES WERE LESS IN 1938/39 THAN IN 1937/38.

No. of Vote

Service

1938/39

1937/38

Decrease from 1937/38

Principal Causes of Major Variations

£

£

£

9

Commissions and Special Inquiries

7,679

8,702

1,023

——

14

Property Losses Compensation

28,115

42,298

14,183

Dwindling Service.

15

Personal Injuries Compensation

496

596

100

——

16

Superannuation and Retired Allowances

449,662

450,095

433

——

18

Secret Service

4,838

8,523

3,685

——

20

Expenses under the Electoral Act and the Juries Act

16,711

16,769

58

——

26

Law Charges

61,009

62,467

1,458

——

28

Universities and Colleges

160,662

160,991

329

——

34

Prisons

77,552

78,531

979

——

38

Circuit Court

38,342

39,220

878

——

49

Science and Art

55,020

59,819

4,799

——

50

Reformatory and Industrial Schools

107,783

108,475

692

——

62

Industrial and Commercial Property Registration Office

13,753

15,616

1,863

——

67

External Affairs

75,923

76,297

374

——

68

League of Nations

11,545

11,733

188

——

70

Export Bounties and Subsidies

557,500

1,963,031

1,405,531

Settlement with United Kingdom.

74

Electrical Battery Development

46,000

46,000

No provision in 1938/39.

Repayment of Dáil Eireann External Loans

10,486

10,486

Grant to ex-Governor General

2,000

2,000

Air Transport

2,000

2,000

TOTAL £

1,666,590

3,163,649

1,497,059

Net Increase

Summary:

£

£

£

Total Issues on all Votes

28,260,104

27,760,088

500,016

Estimates

29,861,881

29,743,064

118,817

Net Decrease

Excess of Estimates over Issues

1,601,777

1,982,976

381,199

* No reference is made to the increased Cost-of-Living figure which resulted in increased expenditure on Votes bearing Salaries.

TABLE III.

FINANCIAL TRANSACTIONS AND CASH OPERATIONS OF THE EXCHEQUER FOR THE PERIOD 1ST APRIL, 1932, TO 31ST MARCH, 1939.

(The figures in italics indicate the position in the period from 1st April, 1932, to 31st March, 1938).

Period to 31/3/38

RECEIPTS

Period to 31/3/39

Period to 31/3/38

PAYMENTS

Period to 31/3/39

£

£

£

£

Raised for the purposes of the Exchequer:—

3,100,7967,500,000

Set aside for Sinking FundsPaid off: Exchequer Bills

3,554,500*13,500,000

7,500,000

By Short Term Bills

*14,250,000

3,223,000

Savings Certificates

3,824,000

4,123,000

,, Savings Certificates

4,662,000

600,000

Ways and Means Advances

1,550,000

5,880,000

,, Fourth National Loan

5,880,000

187,644 600,000

,, 4% Conversion Loan,, Ways and Means Advances

187,6442,950,000

537,000

Dáil Eireann External Loan

537,000

567,000

,, Advances to meet Capital Expenditure under Telephone Capital Acts

807,000

26,000

Dáil Eireann Internal Loan

26,000

,, 3¾% Financial Agreement Loan

10,000,000

18,857,644

38,736,644

5,183,000

Provided for the Local Loans Fund by way of Grants-in-Aid and Advances

5,633,000

1,003,882

Secured by transfer of Unapplied Sinking Fund of First National Loan

1,003,882

4,010,847

Advanced in cash to the Guarantee Fund

4,010,847

Paid for:

Received from Repayment of Advances:—

500,000

Shares in Comhlucht Siuicre Eireann, Teo.

500,000

132,450

Under Shannon Electricity Act, 1925

132,450

804,517

Shares in Industrial Credit Co., Ltd.

804,517

1,586,314

Under the Unemployment Insurance Acts, Road Fund (Advances) Act, Land Act, 1923, etc.

1,773,972

37,500

Shares in and Advances to Aer Rianta, Teoranta

63,800

414,000

Paid in connection with Improvement of Estates — Repayable expenditure only

615,000

200,000

Secured by capital Repayments on foot of Funding Annuities under the Land Act, 1933

260,000

Issued to meet Capital Expenditure under:

567,000

(a) Telephone Capital Acts

807,000

21,780,290

41,906,948

2,794,835

(b) Shannon Electricity, Electricity (Supply) and Liffey Reservoir Acts

3,597,535

632,182

(c) Miscellaneous Heads as Barrow Drainage, Purchase of Land for Afforestation, Industrial Alcohol Plant, Construction of Airports

806,182

1,459,584

Issued as Repayable Advances under Coinage Act, Unemployment Insurance Act, Land Act, 1923, and Road Fund (Advances) Act, 1926

1,486,894

276,957

Paid for Property Losses Compensation

304,957

Issued under Agreement with United Kingdom (Capital Sum) Act, 1938

10,000,000

31,672,268

51,626,282

By adjustment for variation in Exchequer Balance over the Period

9,047,412

Excess of Payments over Receipts

8,617,733

844,566

(Decrease)(Decrease)

1,101,601

30,827,702

50,524,681

30,827,702

50,524,681

* On 1st April, 1932, Exchequer Bills to the amount of £1,000,000 were outstanding. These Bills were subsequently paid off. On 31st March last there were short-term Bills outstanding to the amount of £1,750,000 which have not yet been paid off.

TABLE IV.

STATEMENT SHOWING THE CAPITAL LIABILITIES OF THE STATE ON 31ST MARCH, 1938, AND 31ST MARCH, 1939, AND THE ASSETS (INCLUDING THE EXCHEQUER BALANCE) HELD ON THESE DATES.

——

On 31st March, 1938

On 31st March, 1939

——

On 31st March, 1938

On 31st March, 1939

£

£

£

£

LIABILITIES:

ASSETS:

Funded and Unfunded Debt:

Exchequer Balance at Bank

895,159

638,124

5% Second National Loan, 1950/60

6,043,889

5,919,296

National Loans Sinking Funds unapplied

66,961

92,853

4½% Third National Loan, 1950/70

5,565,037

5,504,093

3½% Compensation Stock Sinking Fund unapplied

20,764

26,670

3½% Fourth National Loan, 1950/70

5,728,278

5,649,532

Savings Certificates (Interest Charge Equalisation) Fund

2,936,000

3,124,000

4% Conversion Loan, 1950/70

6,885,856

6,785,596

Exchequer Advances repayable:

3¾% Financial Agreement Loan, 1953/58

9,964,440

Shannon Power FundElectricity Supply Board

6,003,1305,444,570

6,005,8306,244,570

5% Compensation Stock

50

Road Fund

961,439

801,091

3½ Compensation Stock

26,436

26,786

Local Loans Fund (see Item below in regard to Housing)

14,005,084

14,455,084

Savings Certificates (Principal and Interest)

10,850,000

10,989,000

Advances to Guarantee Fund

Exchequer Bills

1,000,000

1,750,000

—Capital outstanding

3,810,000

3,750,000

Ways and Means Advances

1,400,000

Land Commission: Improvement of Estates, etc.—Estimated capital value of Excess Annuities outstanding

Other Capital Liabilities:Under Telephone Capital Acts, 1924/38

1,074,450

1,233,337

1,100,000

1,200,000

Under Land Acts, 1923 to 1936:

Purchase of Creameries

604,000

617,000

Advances for Costs Fund and State Contribution to Price (including 50-55% of tenant purchasers' liability for Land Bond Advances charged on Public Funds under Land Act, 1933)

15,166,000

15,346,000

Advances to Agricultural Credit Societies

16,663

14,238

Shares of—

Agricultural Credit Corporation

292,118

292,118

Industrial Credit Company

292,118

292,118

Comhlucht Siuicre Eireann, Teo.

500,000

500,000

Compensation Annuity under Damage to Property (Compensation) (Amendment) Act, 1926

4,495,000

4,470,000

Aer Rianta, Teo., and Advance

37,500

63,800

TOTAL GROSS LIABILITIES

£56,834,996

69,038,080

TOTAL ASSETS

£37,497,905

38,629,895

Estimated Capital Value of State Liability under the Housing (Financial and Miscellaneous Provisions) Acts (a) on 31st March, 1938, and (b) on 31st March, 1939

(a)£6,100,000

(b)£7,320,000

TABLE V.

STATEMENT SHOWING THE ANNUAL CHARGES IN RESPECT OF THE PUBLIC DEBT (NATIONAL AND LOCAL) FOR THE YEARS SHOWN AND THE NET CHARGES AFTER MAKING ALLOWANCE FOR INCOME FROM PRODUCTIVE ASSETS.

ANNUAL CHARGES IN RESPECT OF STATE OBLIGATIONS (AND CLAIMS AGAINST THE STATE*) OUTSTANDING

STATE INCOME FROM PRODUCTIVE ASSETS

1931/32

1937/38

1938/39

1931/32

1937/38

1938/39

£

£

£

£

£

£

5% National Loan, 1935-45

750,000

Interest on Unemployment Fund Advances

15,878

841

5% Second National Loan, 1950-60

443,663

439,104

439,881

Interest on Shannon Fund and Electricity Supply Board Advances

444,787‡

547,522

583,393

4½% Third National Loan, 1950-70

315,000

315,000

315,000

3½% Fourth National Loan, 1950-70

277,500

277,500

Interest on Road Fund Advances

35,200

56,219

48,486

4% Conversion Loan, 1950-70

358,750

358,750

Local Loans Fund:—

3¾% Financial Agreement Loan, 1953-58

362,259†

Interest on Advances since 1/4/'22

75,000§

567,629

587,844

5% Compensation Stock

151,943

888

53

Annuities 1931/32 on Loans existing at

3½% Ditto

12,766

6,571

31/3/'22

554,049

Savings Certificates

350,000

300,000

320,000

Shares of Comhlucht Siuicre Eireann, Teo.—

Exchequer Bills

26,765

17,425

41,959

Interest

19,375

19,375

Ways and Means Advances

118

4,105

Advance to Dublin and South Eastern Railway

Land Acts, 1923-36

85,387

721,261

738,495

—Interest

9,149

Compensation Annuity (British)

242,442

247,576

250,000

Interest on Exchequer Balance

29,499

19,255

15,823

Housing Acts

300,000

350,232

Interest on Advances to Agricultural Credit

Telephone Capital Annuities

84,384

111,013

126,213

Societies

1,800

950

800

Dept. of Posts and Telegraphs: Charge for Management of Savings Certificates

6,000

6,000

6,000

Advances to Guarantee Fund — Interest in Funding Annuities

192,500

191,200

Cost of Management of Government Stocks, including charges for Land Bonds

12,445

15,473

15,578

Land Commission:—Repayable Advances for Improvements—

Telephone Capital (British)

16,253

1,067*

Interest in Annuities

19,050

39,500

42,000

Local Loans Annuity (do.)

600,000

600,000*

Excess Stock Annuity (do.)

134,500

134,500*

Dublin Site Act Annuity (do.)

13,222

—*

TOTAL STATE INCOME FROM PRODUCTIVE ASSETS

Railways and Marine Works Annuity (do.)

10,254

2,180*

1,184,412

1,443,791

1,488,921

Payments towards issues for Third National Loan surrendered for Death Duties

7,814

3,250,190

3,860,503

3,612,596

Add:

For revision of Annuities under Land Acts, 1891—1909

1,424,690

3,250,190

5,285,193

3,612,596

Less: Income from Productive Assets shown opposite

1,184,412

1,443,791

1,488,921

NET ANNUAL CHARGE FOR DEAD-WEIGHT STATE DEBT£

2,065,778

3,841,402

2,123,675

Add:

Estimated charges in respect of Dead-Weight Debt of Local Authorities

575,000

721,000

796,000

TOTAL NET ANNUAL CHARGE (NATIONAL AND LOCAL)£

2,640,778

4,562,402

2,919,675

In a full year this would amount to £475,000

‡ In addition, arrears of previous years amounting to £295,509 were received.

*Items which came into dispute in 1932.

§In addition, arrears amounting to £25,000 were received.

TABLE VI.

STATEMENT showing for each year from 1932/33 to 1938/39, inclusive, the actual ascertained over estimation of the expenditure required to be met from normal revenue.

1938-39

1937-38

1936-37

1935-36

1934-35

1933-34

1932-33

£

£

£

£

£

£

£

1. Gross Total of Budget Estimates for Central Fund and Supply Services (including capital expenditure) before allowance is made for over-estimation

34,426,990

34,236,200

33,112,500

32,485,500

36,632,000

31,259,220

29,214,000

2. Deduct estimated sums to be defrayed from borrowing or abnormal revenue

1,426,000

1,970,000

1,979,000

2,159,500

7,212,750

3,025,000

137,100

3. Sum to be met from normal revenue, before allowance is made for overestimation

33,000,990

32,266,200

31,133,500

30,326,000

29,419,250

28,234,220

29,076,900

4. Figure for overestimation in Budget

1,500,000

1,200,000

950,000

950,000

1,190,000

388,220

329,535

5. Actual issues for Central Fund and Supply Services (incl. capital outlay)

33,110,000

32,052,541

31,227,688

31,106,840

31,203,499

31,550,298

28,849,739

6. Deduct actual sums defrayable from borrowing or abnormal revenue

698,500

1,473,000

1,637,501

1,593,860

3,115,788

3,760,000

91,315

7. Actual sum proper to be defrayed from normal revenue

32,411,500

30,579,541

29,590,187

29,512,980

28,087,711

27,790,298

28,758,424

8. Actual over-estimation, i.e., difference between 3 and 7

589,490

1,686,659

1,543,313

813,020

1,331,539

443,922

318,476

Average, £961,000.

TABLE VII.

SUPPLY SERVICES.

COMPARISON BETWEEN (a) AUDITED EXPENDITURE 1931/32; (b) EXCHEQUER ISSUES 1938/39; AND (c) ESTIMATES 1939/40.

Audited Expenditure 1931/32

Exchequer Issues 1938/39

Estimates 1939/40

£

£

£

Social Services Proper

1. Old Age Pensions

2,702,318

3,484,476

3,506,450

2. Widows' and Orphans' Pensions

450,000

450,000

3. Unemployment Assistance and Unemployment Insurance

161,204

1,219,067

1,137,875

4. National Health Insurance

301,955

295,194

292,888

5. Relief Schemes and Employment Schemes

156,206

1,290,088

1,500,000

6. Grants for Milk

86,261

90,000

7. Meals for School Children

13,187

24,195

24,500

8. Medical Treatment for School Children

16,593

33,003

35,000

9. Housing Grants:

(a) Free Grants (including Grants in Gaeltacht areas)

288,005

503,302

491,000

(b) Contributions to Local Authorities in respect of Loan Charges

1,515

351,921

383,279

10. Miscellaneous Public Health and other Grants and Expenses of Local Government and Public Health

254,099

346,798

372,055

11. Land Commission, etc., Expenditure

614,159*

1,645,701

1,792,028

12. Gaeltacht Services (other than Housing Grants)

42,750

50,586

46,379

(estimated)

4,551,991

9,780,592

10,121,454

Other Similar Services

13. Education:

Office of Minister

159,329

182,851

191,442

Primary

3,622,807

3,714,024

3,749,697

Secondary

332,079

444,227

473,475

Technical Instruction

176,453

297,158

323,762

Science and Art

37,525

55,020

57,453

Reformatory and Industrial Schools

117,738

107,783

112,771

Universities and Colleges

154,750

160,662

159,380

Construction of National Schools

89,810

197,500

250,000

4,690,491

5,159,225

5,317,980

14. Army Pensions

194,992

588,973

586,636

TOTAL SOCIAL AND OTHER SIMILAR SERVICES

9,437,474

15,528,790

16,026,070

Developmental Services (not shown above)

15. Afforestation

60,406

155,617

185,424

16. Agriculture

374,679

802,390

594,203

17. Fisheries

53,830

37,570

48,121

(estimated)

18. Export Bounties and Subsidies

557,500

606,000

19. Construction and Equipment of Airports

134,500

382,700

20. Turf (Peat Fuel) Development

108,421†

70,500

21. Production of Industrial Alcohol

125,833

22. Industry and Commerce (other than items 20 and 21)

98,901

271,026

237,164

23. Compensation Bounties

47,272

54,700

24. Beet Sugar Subsidy

57,280

—‡

—‡

645,096

2,240,129

2,178,812

25. Legislature (including President's Establishment)

108,975

106,818

128,672

26. Posts and Telegraphs (other than item 19)

2,064,346

2,309,898

2,359,570

27. Army

1,247,354

1,766,375

3,252,199

28. Garda Siochana

1,630,672

1,849,739

1,888,551

29. Courts

141,893

125,729

144,006

30. Prisons

81,490

77,552

82,215

31. Register Offices (General, Land and Deeds)

59,579

58,460

61,123

32. Valuation, Boundary and Ordnance Surveys

72,354

62,690

67,301

5,406,663

6,357,261

7,983,637

Miscellaneous

33. Supplementary Agricultural Grants

1,349,011

1,270,989

1,270,989

34. Local Loans Fund

1,170,000**

—‡

—‡

35. Property Losses Compensation

161,050

28,115

3,650

36. Wireless Broadcasting

41,213

72,989

69,303

37. Other Services (including certain administrative offices, etc.)

1,070,787

1,337,332

1,453,962

3,792,061

2,709,425

2,797,904

Ancillary Services

38. Public Works and Buildings (including administrative service and excluding certain items shown above)

577,290

715,873

889,358

39. Stationery and Printing

117,877

146,333

150,511

40. Rates on Government Property

82,890

112,631

125,000

41. Superannuation

1,663,537‡‡

449,662

467,605

2,441,594

1,424,499

1,632,474

TOTAL FOR SUPPLY SERVICES

21,722,888

28,260,104

30,618,897

PROPER TO BE DEFRAYED FROM BORROWING

974,200

698,500

PROPER TO BE DEFRAYED FROM REVENUE

20,748,688

27,561,604

(Figures in this Col. are for 1937/38, the last year for which Appropriation A/cs. are available.)

Administrative, etc., Expenses included above may conveniently be allocated as follows:

Salaries, Wages and Allowances provided in connexion with:

(a) Social Services Proper

598,708

891,499

976,077

(b) Other Similar Services

187,497

223,749

248,138

(c) Developmental Services

334,718

526,505

574,675

(d) Other Essential Public Services

1,887,133

2,001,319

2,220,137

(e) Miscellaneous Services, including central and general administration

797,183

1,041,310

1,159,090

(f) Ancillary Services

174,271

219,457

251,396

TOTAL FOR SALARIES, WAGES AND ALLOWANCES

3,979,510

4,903,839

5,429,513

* Including payment (£134,500) formerly made to Great Britain for Bonus and Excess Stock contribution.

†Including an advance of £30,000 for the Peat Fuel Co. Ltd.

‡Now subsidised through the medium of Protective Tariffs and Quotas at an estimated cost to the Exchequer of £15 per ton of home-manufactured sugar consumed.

**Includes £600,000 Annuity formerly paid to Great Britain and £570,000 Grant-in-Aid.

††The Fund is now financed otherwise than out of voted moneys.

‡‡Including £1,152,127 for repayments formerly made to British Government in respect of ex-R.I.C. pensions.

TABLE VIII

STATEMENT SHOWING THE VALUE OF THE PROVISIONS MADE FOR THE ASSISTANCE OF AGRICULTURE IN 1939/40 AS COMPARED WITH 1931/32.

1931/32 (actual)

1939/40 (estimated)

£

£

(a) Directly and Indirectly from the Exchequer.

(1) Vote for Agriculture

374,679

594,203

(2) Vote for Export Subsidies

nil

606,000

(3) Grants in relief of rates on Agricultural Land (Central Fund and Supply)

1,948,022

1,870,000

(4) Reduction in Land Purchase Annuities (Vote provision and loss to Exchequer)

nil

2,200,000

(5) Beet Sugar Industry (1931/32 Voted Subsidy, etc.: 1939/40 loss to revenue)

119,184*

1,050,000*

(6) Provision of funds to enable farmers to obtain certain phosphatic fertilisers at reduced prices (see † below)

nil

40,000†

2,441,885

6,360,203

(b) From ad hoc legislation for the improvement of Agriculture.

(7) Agricultural Produce (Cereals) Acts, 1933 to 1938:

£

Wheat Scheme: (a) Value of estimated increased production of wheat for sale to millers (on basis of Australian wheat price)

900,000

(b) Increase in value of (a) through operation of minimum fixed prices (allowing for excess of 2/6 over minimum price per barrel as paid by millers last year)

1,000,000

1,900,000

(8) Pigs and Bacon Acts, 1935 to 1938:

Increase in value of home produced bacon to producers as a result of Prices Orders (abated as to increased cost of food-stuffs)

1,300,000

(9) Dairy Produce (Price Stabilisation) Act, 1935:

Butter: Increase in value of milk to Irish producers (exclusive of Export Subsidies included at (2) above) through regulation of butter price

666,000

(10) Eggs: Increase in value of egg production as a result of State intervention (exclusive of Export Subsidies included at (2) above)

290,000

(11) Tobacco Act, 1934:

Receipts of growers from sales of tobacco to manufacturers

11,600

4,167,600

Total value of Assistance given directly and indirectly from the Exchequer and resulting from ameliorative legislation

2,441,885

10,527,803

Increase

£8,085,918

* Payments to growers amounted to £75,000 in 1931/32 (£405,000 in 1930/31) and are estimated to amount to £1,188,000 in 1939/40.

†Sum voted in Supplementary Estimate last year for purchase of fertilisers for 1939 season; the total cost for the year is estimated at £88,000 and the balance, £48,000, is, accordingly, included in this year's Estimate for Agriculture (see No. (1) above).

NOTES.

(a) The home market for agricultural produce has to a large extent been reserved for Irish farmers by tariffs and quantitative restrictions on the importation of certain agricultural produce. The value of imports of agricultural produce has fallen from £12,398,782 in 1931 to £8,632,358 in 1938).

(b) The annual agricultural price index number for Eire for 1938 was 111.9 as compared with 110.0 for

I presume that the usual procedure will be followed, that is that brief statements will be made by the leaders of the two Opposition Parties in the House, if they so desire, on the first Resolution. The debate on general financial policy —taxation and expenditure—will take place on the last Resolution, which deals with the amendment of the law. That debate will, I presume, be taken to-morrow. The Minister for Finance might move the first Resolution.