I am sure many Deputies were surprised that the Parliamentary Secretary, in introducing this measure, did not avail of the opportunity to deal with the general position, the almost emergency position, which he claims to exist. This Bill is continuation legislation designed for an emergency situation but one fails to find in it any profit from the experience gained by the former Government during the last emergency situation over the war period. There must be sufficient information in Government files, particularly in the Department of Industry and Commerce, to have enabled the Government to entrust the Parliamentary Secretary with a statement of policy, detailing how if an emergency situation should arise, they proposed to improve upon whatever measures were considered necessary, and perhaps in certain cases not found completely effective, during the course of the last war. Apart from that question to which no answer is given by the Parliamentary Secretary or to which the Bill provides no reply, there is the general question in which the public would be greatly interested, having regard to the very serious news which they have heard about the deterioration in the international situation and the grave danger which is looming up. They would be particularly interested in getting a comprehensive statement from the Government as to the position should a crisis arise, in regard to our supplies of fuel, raw materials and of the articles which are necessary for capital development works and for the proper functioning of our economy and industries. We know that there were serious gaps and serious lacunae during the last war and we should profit by that experience.
New Deputies to the House will not remember, but those of us who were here at that time will remember clearly that it was a cause of complaint that sufficient provision had not been made by the past Administration, in anticipation of war difficulties, in the realm of supplies, but for at least 12 months before the war the Department of Industry and Commerce had a special supplies section doing what was possible, having regard to the fact that none of the prominent statesmen seemed to believe that such a thing as a second world war could break upon us. We now seem to be confronted with the position that a third world war is quite within the bounds of probability, not merely possibility, and the House would like to receive from the Parliamentary Secretary a fuller statement as to what the position is.
There is the question of the husbanding and distribution of essential commodities and the question as to how the Government propose to improve the existing system. No less a person than the late Lord Keynes, at the beginning of the last war, when dealing with the question of inflation, described the rationing system, if purchasing power in the country is increased by factors which the Government cannot control, as a pseudo remedy, just as allowing prices to rise to whatever heights they may reach in the natural course of events, without intervention from the Government, is another pseudo remedy. The economist put forward his own remedy at the time and it may not be the appropriate remedy in existing circumstances. In any case, we do not know at present that we will be faced with the worst but, as has been said, while expecting the best, we ought to be prepared for the worst emergency that could arise.
Deputy Larkin, in taking Deputy Lemass to task for criticising the basis of computation of the present cost-of-living index, could not deny that it was made clear in 1947 that the new basis of computation of the index, then introduced, was temporary. Everyone knew that the basis laid down in 1922 could not be regarded as meeting the conditions in 1947, but there were difficulties in 1947, as there still are, and I suggest that they were much greater in 1947 than they are now, in introducing a new basis of computation of the index. There was the question as to whether, after the last war period, there would be a prolonged period of inflation or whether world economic conditions would recover to the extent that there might be a downward fall. In any case, I suggest, it would have been impossible to revise the basis until there was some kind of stability. It is true that we have not got that stability at the present time. Nevertheless, the Government has been driven to the decision to carry out very comprehensive budgetary surveys of household expenditure, thereby admitting that the present basis is not satisfactory.
Of course, it has to be borne in mind in that connection that up to the first world war it was only civil servants who were paid on the basis that they would receive an additional bonus in respect of an increase in the cost-of-living figure and the higher the remuneration the lower the bonus was.
The labour organisations and those representing workers can congratulate themselves on the fact that they have now achieved the position that, however imperfect the basis of computation of the cost-of-living index may be, at any rate, it is some basis behind which, I hope, there is some reality and which enables them to carry out their wage negotiations on a much more satisfactory basis than in the past.
It was mentioned in the Parliamentary Secretary's opening statement, at least it was implied, that labour under the present Government had received compensation and he suggested that previously that compensation was denied them. I beg to disagree with the Parliamentary Secretary on that matter because we on this side of the House can point to the fact that the Labour Court was set up in 1946 and, even before that year had concluded, very substantial increases had been granted, not to all sections, but to important sections of wage earners. For example, the Agricultural Wages Board had increased the remuneration of agricultural labourers by 85 per cent. I do not say that even at that level it was sufficient or proper but, having regard to all the circumstances, to the fact that the inflationary danger certainly existed to a much greater extent than it exists at the present time, and that, unquestionably, there was a shortage of goods in the country, that figure belies the suggestion that there was no compensation and also gives the lie to the often reiterated contention of Deputy Larkin that there was a complete freeze of wage increases. The fact that the Labour Court was set up and that it gave increases from 1946 onwards shows that that was not true. In that matter it was the lowest paid employees who received the greatest benefits. That should always be the case, in my opinion, when wage rates are being revised or working conditions improved.
The increases granted up to October, 1947, amounted to about 60 per cent. If the Parliamentary Secretary can contradict that figure I am sure he will do so. My recollection is that at the period shortly before we left, this compensation, in cases which had been heard, amounted to at least that percentage. It therefore compared very favourably with what had been done in Great Britain, with this exception, that in Great Britain workers had the advantages of additional earnings, working overtime and receiving special bonuses and incentives. It would be easy to argue that the total earnings which might be regarded by some as the real test were much higher in Great Britain. If that were so, it was because of the special conditions there and the anxiety to proceed with reconstruction work.
Labour organisations in this country, as elsewhere, accepted the policy that restraint in circumstances where there were serious dangers of inflation was necessary in demands for wage increases. This policy of restraint is based on what seems, as Deputy Childers reminded us, to be generally accepted, that is, that general increases in wages have no meaning before production has expanded at least to an equal degree. Furthermore, unless the output of goods corresponds to the increase in the aggregate purchasing power, you will simply have prices going higher and these demands for wages will start the inflationary spiral we heard so much about.
In this matter it would undoubtedly be better if we could proceed by way of agreement than by some form of penalisation, investigation and bureaucratic control. But I quite agree that the State has to intervene if there is injustice and if conditions of scarcity mean that the poorer and weaker elements of the community are going to suffer unjustly. We all believe that whatever sacrifices are to be made, they should be distributed evenly. That is the reply to the statement of the Minister for Finance that the national income should be distributed fairly. We have the corollary that the sacrifices or burdens should also be distributed fairly among the different sections of the community.
In other countries they have set up production committees representative of the different interests in industry and it was one of the features in the Bill which Deputy Lemass, when he was Minister for Industry and Commerce, introduced that you would have had these development councils, which would endeavour to deal with the problems of a particular industry and particularly with the great need for increasing production.
In this Bill we are having an advisory committee set up. The Parliamentary Secretary has not described it quite as a tribunal. I hope that in his concluding statement he will make it clear exactly what the powers of this body will be. If it has not rigid and very critical powers of investigation, then it could be argued that it must of necessity fail in its purpose. It must get the facts. On the other hand, if it is to have public sittings and if all the facts relating to the affairs of a particular employer, a particular factory or wholesaler or whoever he may be, are brought into the light of day, that is a matter, I think, that would require very careful consideration.
The policy we had in mind in 1947 was that the Prices Commission should be entrusted with greater powers, that it should make price orders from time to time and that these should be brought before the Dáil. There were also important provisions in that measure dealing with hire purchase, for example, and, of course, control, not alone of profits, but prices and trading methods, the object being to try to raise the standard of industrial efficiency. When people complain of bureaucracy—and I am not one of those who disagree with the point of view that we can have too much of it, and perhaps in many respects even in this State we have too much of it—it is forgotten that it is difficult to deal with these problems. There is, undoubtedly, considerable reluctance on the part of employers to sit down with employees and go into the details of their business. Where the point regarding getting necessary information ceases, and where the point of interfering in the control and management of the business begins, is a rather nice one.
One of the surprising things about the Parliamentary Secretary's statement is that the Government, apparently, take no responsibility whatever for this advisory committee as being an effective body. In column 1285 the Parliamentary Secretary says:—
"I should like to say in this connection that price control elsewhere has not been particularly effective. I do not believe that price control can achieve everything that those who advocate it think it can or everything that all of us would desire."
Later on, dealing with the setting up of this advisory body, he said:—
"The decision is based on the criticism which was made of the system of price control—more from the fact that it was alleged that sufficient information was not provided as to the circumstances which surround the fixing of prices, rather than from any conviction as to its effectiveness."
Are we to take it from that statement of the Parliamentary Secretary that the Government do not really believe that this committee they propose to set up, this advisory body, can be effective, but that it is in view of the criticism made to the Taoiseach and to the Minister by the trade union congresses—that they are replying to the criticism which was made by setting up a body whose only function will be to give certain information, not already obtainable by them, to the public, and which may very easily and very probably be regarded as leading to the conclusion that nothing could, in fact, have been done, rather than that anything will be done or can be done? It is not merely the Parliamentary Secretary who has pronounced on the ineffectiveness of the system of price control while, at the same time, claiming in column 1282 of the Official Report of the 23rd November, 1950, that the existing system has been reasonably satisfactory. The Parliamentary Secretary has found himself in the dilemma that, since he has operated this system for the past two and a half or nearly three years and has not endeavoured to improve upon it, he cannot now very well condemn it. At the same time, he has to give some justification for setting up this advisory body. The only justification he gives is that it will provide us with information. If that is the reason, surely the information could be provided through the ordinary channels of the Department, even as price control is at present administered or through the Statistics Branch. Either the committee is going to make recommendations of value which can be implemented, and will succeed in achieving the object by reducing prices, or it will not.
Take, for example, the particular case which Deputy Cowan has very pertinently put before the House, the increases in woollen goods. Is the advisory committee to be the body which is going to decide at what stage and to what extent the manufacturer, wholesaler and retailer, in the chain of distribution, are to be permitted to add on the increased cost of the raw material in the shape of wool which they have been buying during the present year? Is the position to be solved on the basis that allowance must be made for the fact that these different business interests are out of their capital for a certain period, and that, in fixing prices, allowance—as has, I think, been customary in the past—must be made for the cost of replacing existing stocks by new stocks which are much higher in price—or will the Government adopt the suggestion of Deputy Larkin that all prices should be frozen, that no increase ought to be permitted until the representatives of these different interests go before the tribunal to argue their case and convince the committee that the prices must be increased to the level they have in mind? It is preposterous to suggest that the advisory committee can determine that question. It is obviously a matter which is going to affect everybody in that particular industry from the manufacturer right down to the smallest retailer in the country.
The Parliamentary Secretary told us in the course of his speech that the result of any alteration in the tariffs will inevitably mean difficulties for the less efficient firms and that, in this connection, the least efficient is the criterion for the tariff because otherwise the problem of unemployment and difficulties created by a reduction in the tariff are such that the first people affected by it are those for whom the tariff is imposed. If that is true of tariffs which, after all, are a tax upon the community in order to help infant industries to establish themselves and other established industries to compete with unfair competition from outside, it is surely a much greater argument in the case of the smaller retailer or business man who finds himself in the position that these price increases are being handed down to him. He gets all the abuse and all the blame, but he is not in a position to explain to his clients—the people who deal with him —that he is no way responsible. He may even be getting a smaller margin of profit. Are we to take it, then, that the policy of the Government is that the least efficient, either in regard to tariffs or in regard to the distribution of essential goods, is to be taken as the determining factor? If that is so, is it not quite clear—as, I think, it will be generally agreed—that those who have a huge turnover are in a position to buy in a large way in spite of their heavy overhead expenses and can get away with profits that not alone the Tánaiste but the Taoiseach and the Minister for Finance used to describe in rather lurid language only a few years ago? In fact, the Minister for Finance was very strong on the drapers in 1947.
When the inter-Party Government put high up on its ten-point programme the reduction in the cost of living and the taxation of all unreasonable profitmaking, the Minister were very enthusiastic, one would have imagined, about undertaking this task. It was very easy to blame the former Administration for high prices. It was very easy to suggest that they were wholly responsible and that they were doing nothing about it. The Ministers have had ample opportunties of remedying the distortion in the purchasing power of the £—which was one of the targets set before him by the Minister for Finance in 1948. The £ was worth 8/- then: I do not know what, on that basis, it would be worth at the present time. At a later stage, the Minister for Finance threatened to reimpose the excess profits tax unless he got a very speedy and substantial reduction in prices. Did he get these reductions? That was in 1948. He did not. Did he reimpose the excess profits tax which he threatened would cut much deeper into the ill-gotten profits of all these manufacturers and distributors than anything that had been done under the previous Administration? After 1948 we heard no more about the reintroduction of the tax on excess profits. It must be a matter of congratulation to the representatives of Labour in this State that the trade unionists are now contributing so substantially to the revenue from income-tax—that the net has been widened so much and so many thousands of new income-tax payers have been brought in—that the Minister can refer to the additional numbers he has brought into the net as one of the reasons for the buoyant revenue.
It would be wearisome to go over all these past statements, but there is certainly one statement which must be put in conjunction with that which I already quoted, regarding the least efficient unit in the industry being regarded as a criterion for the tariff; and that is a statement by the Minister for Finance, as given in the Official Debates for the 25th May, 1948, column 2119, in which he said:—
"The community has paid too dearly for the industries that have been started, or for industries to start which an attempt has been made, easily to see them fade away. A lot of the people's money has gone to build up industries and gone, unfortunately, to give enhanced profits to the people who did not act in a spirit of patriotism when they were grabbing business. I say that as regards some of them, not them all."
We have not heard from the Minister about these defaulters. It was in the same speech that the Minister was so emphatic and so definite about what he was going to do if prices were not reduced. He said, as given in column 2120 of the Official Debates:—
"I put forward as a reasonable point of view what I have said here, that it would be a better thing that they should go back to lower prices than that we should get the money by way of taxation. We should leave it to them freely and decently to pass on this concession to the community through a reduction of prices. They should now break down the prices freely, or a changed Government will meet the changed circumstances with regard to industrial tariffs. They are no longer entitled to say that they must make money as fast as ever they can because a change of Government might mean a reduction in their profits. We demand from them, then, a good, speedy and a considerable reduction in the prices of articles and if they do not give us that they will bring the other thing upon themselves. I do not like going back to the excess profits tax. I would much rather deal with the situation in the way I have described; but let these people labour under no mistake, because I am the only barrier between this House and the reimposition of the tax."
Further on, he said:
"But if prices are not broken down, then all the arguments which have been used round the House must have their effect and the trading community must expect that there will be a move in this House to reimpose either the excess profits tax or some better form of it and the excess moneys which they are making will be taken from them. I say a better form of the tax, because the standard set by the excess profits tax was a fictitious standard. This standard was built up beyond which people were not allowed to go, but in effect people who were building up their business and who had not reached full capacity were taxed while it let people who had been profiteering before the war years get away with more money than they were in conscience entitled to. There will not be an excess profits tax, but a tax that will cut deeper into the excessive profits which were made by those people during the war years and we will not be baulked by any artificial standard that was taken for the purpose of that tax."
The Minister repeated that assurance more than once, that if prices did not come down the excess profits tax would be reimposed. If we have the same amount of sincerity and honesty behind the proposal to set up the advisory committee, all for the sake of getting information, and on the basis that the system of price control cannot in fact be effective, then we are in exactly the same position as when the Minister promised to reintroduce this tax. He had the opportunity. He said he was no longer depending upon the public statements of accounts of firms with whose affairs he apparently had made himself familiar. He presumably had more knowledge at his disposal as Minister for Finance and it was in all those circumstances that he made the statement to which I have referred. I do not know whether, in view of those statements in the past, we can attach any greater measure of sincerity or honesty to the trumpetings that we have been hearing about the flour millers and fertiliser manufacturers. If these interests are exploiting the community, as is suggested by spokesmen of the Government, is this the way the Government is dealing with the situation or is the Minister for Agriculture thinking out a policy and a plan of his own? He recommended nationalisation of certain industries to the country. Are we looking for nationalisation, then, of certain industries to deal with basic essentials, or are we depending on the advisory committee? It is not merely in these matters that the Government have been found wanting. It is at least a year ago since the Minister for Industry and Commerce, referring to the Inquiry on Flour and Bread, informed us—if my memory serves me arightthat the Government had then under consideration the recommendations of the committee. I think he went on to say that some of these recommendations had already been carried into effect. It was the same with regard to that other committee, the one dealing with restrictive practices in trade. It is at least a year ago since we were informed also that the Government had under consideration what they were going to do in that direction.
The disbelief of the Minister for Finance and now of the Parliamentary Secretary in the efficiency of any system of price control is the greatest commentary and criticism of the proposal now before us. The Government themselves do not believe it can be effected. They will not even say it can be effective. We must admire them at least for their candour. Why then pretend to the country that in some miraculous way the setting up of this committee is going to lead to a reduction in prices, while the Central Bank and the Minister for Finance himself in a recent statement admit that the inflationary trends and the present situation in the world make it inevitable that there must be a certain increase? He contented himself by saying a "not excessive increase." We seem to have heard that before.
We were told by the Minister for External affairs, in his rôle of financial expert, that money was losing its value. He said, some time ago, that money was losing its value and that there would be a further and more substantial fall in the value of the £ internationally, and he dealt at length with the disastrous policy which was being pursued. That was about the time our Government, following the example of the British, devalued the £. We are now informed by the Central Bank that one of the results of that is that the terms of trade, which seemed to be turning in our favour in 1948 and 1949, are now turning against us. They lay stress on the influence of our external trade on our economy, pointing out that with a high volume of exports a still higher volume will be necessary to pay for the high volume of imports required to maintain our present existing standard of living and if possible to increase it. Our import excess, at £69 millions, the Central Bank said in their Report for last year, is four times the excess we had in 1938, and the proportion of our imports, which we are paying for by exports, is not likely to improve. It it rather likely to decline. The relatively favourable terms of trade in 1949, according to the Central Bank report, unfortunately proved transient. In 1939, they stated, our imports were 27 per cent. in excess by volume of the 1938 quantity, while our exports were 11 per cent. below the 1938 volume.
They also dealt with the question of monetary circulation and having regard to the recent speech of the Minister for Finance it cannot be denied that increased monetary circulation, unless it is accompanied by an equivalent increase in the output of goods, will drive prices up still further. It is claimed by the Government that production has increased very substantially. It is however admitted that agricultural production is only now achieving the position of being greater than, or perhaps equivalent to, the 1938 volume so that there is no justification for complacency regarding our position. If the Parliamentary Secretary is in a position to give us the figure I would like him to tell us how he computes that the increase in production generally and also the increase in production per man affects the position. It has been stated more than once by Government speakers that production per man has increased to such an extent that increases in remuneration can clearly be fairly expected. If that is the position well and good, but I at any rate as one who gives whatever attention he can to these matters, have not been able to find any figures that would justify that contention.
Far from benefiting the community equally and having the result which the Parliamentary Secretary claims of increasing the standard of living of all classes, we know that the 10 per cent. increase in consumption has not benefited many classes in the community, particularly the white collar workers in whom leading members of the Government used to be particularly interested in the halcyon days when they were in Opposition in 1947. The Labour spokesmen claim that even those who have got the increase which the Minister claims should have compensated them up to the present at any rate for the increase in the cost of living have not yet attained that position.
The argument that this country is comparable to Britain or that we are in the best of all possible worlds because we are better off, according to Reynolds News, than the British people are at the present time, gets us nowhere. The trend of trade turned in our favour because we were producing food. The world was short of food and it went to a very high price, and will probably remain at a high or a very high price for a considerable time to come. Therefore, to compare this country which is a food exporting country with a surplus to a country like Great Britain, which has to import the greater part of its food requirements and is put to the pin of its collar to increase exports in order to pay for its food and raw materials, is not a good argument. Britain is not really a very good parallel for the Parliamentary Secretary to take.
I believe that the increase in monetary circulation which according to the Central Bank has gone up by £3,500,000 this year as compared with 1949, the advances made by the banks which have also gone up by £3,000,000 over the same period, and Government expenditure which is now running at about £11,000,000 higher than it was last year, are all factors. We need not go into the question of capital investment and all that, but whether one agrees or disagrees with the comments of the Central Bank which, in my opinion, are very moderate, and which take due cognisance of the difficulties the Government must have and the difficulties of the times, it is quite clear that the inflationary process is well on the way to full operation unless the Government takes some more definite and immediate steps than it has taken to ease the position.
In conclusion I only wish to agree with the Parliamentary Secretary that there is no hope of a perfect system of price control. Whatever the machinery may be, if price control concentrates on an examination of profits it will be found that the margins of profit are only one particular factor and not by any means the most important of the factors that go to make the selling price of goods. There are many other factors. The difficulties are very great and if this were not merely a gesture with nothing behind it and if it would serve a useful purpose one would welcome it, but it is only another example of a Government which is all at sixes and sevens and in which no two members seem to be able to put forward the same policy to deal with the problems with which the people are faced.
We have had outriders keeping off criticism from the Government carriage for the past two years and anxiously protecting it from the shafts and missiles which critics or opponents might be prepared to hurl; but now the outriders are more conspicuous by their absence. The carriage itself seems to be rather creaking under the strain that has been put upon it. The road it has to travel, I hope, will not be too difficult for it to make progress upon, but even if it is a reasonably good road I am afraid that the carriage is such a creaking one that it will not survive and that the wheels and finally the lynch pin will fall out of the vehicle before it gets very far.
