In listening to the singularly uninformative speech of the Minister for Finance last night, I gained very strongly the impression that he was endeavouring, as far as possible, to give the House and the country the impression that he was disclaiming responsibility for the enormous expenditure proposed in the Book of Estimates presented by him to the Dáil this year. He used phrases such as: "The volume of Estimates must give us all food for thought" and he spoke about his anxiety as Minister for Finance looking at the ever-increasing cost of the public service. He implicitly if not explicitly criticised the members of this House for what he called their uncritical approach to the problems of Government expenditure and public finance. He said that in recent years we had become so accustomed to think in terms of millions that an entirely uncritical attitude had developed with regard to proposals for State expenditure. I wonder did he recall the statement made by his colleague, Deputy Dr. Ryan, the Minister for Health, last year, when speaking on the general resolution for the Budget, he said, as reported at column 1529, Volume 130, No. 10: "We speak in millions"? Was it an echo from that phrase that induced the Minister for Finance last night to say that the members of this House had developed uncritical faculties in dealing with matters of public finance?
I have always understood that the Estimates as presented in the annual Book of Estimates gave at least an indication of Government policy. The Minister himself last night made use of an expression to which I think, having regard to what I have said, some importance must be attached because while realising and recognising, to some extent at least, the fact that these Estimates as they are presented to the Dáil, do give an indication of Government policy, he added the rather significant phrase:—
"Because the Vote on Accounts founded as it is, on the detailed Estimates of public expenditure set out in the Volume of Estimates, presents a statistical survey of public policy as formulated by the Government".
Passing from that statement which is entirely unexceptional he went on to use a very different phrase: "And endorsed by Dáil Éireann." What is the significance of the phrase: "And endorsed by Dáil Éireann"? Am I not justified, at least in entertaining the suspicion, that the Minister is trying to make it appear to the public that it is these uncritical Deputies of Dáil Éireann who have so lost a sense of financial responsibility, so lost a sense of their duties to their constituents and to the public generally as to have no right critical approach to any matters of public finance and who have an irresponsible attitude to State expenditure, that he wanted the public to think: "I am the just man amongst all these irresponsible Deputies, I am the person who is forced to bring in this Book of Estimates having on the face of it the record figure of £100,500,000"?
I have always understood that the Book of Estimates constituted an indication of Government policy. It is presented to the Dáil whose duty it is to accept or reject these proposals but whether they are accepted or rejected, before they are, to use the phrase made use of by the Minister for Finance last night, "endorsed by Dáil Éireann", they represent Government policy by which the Government must stand or fall. There is no use in the Minister making the pretence, as I think he did last night, that he is thejust orthodox financier standing between the public and a rapacious Dáil, who have no sense of their responsibility and no critical faculty so far as a proper examination of the expenditure on State services is concerned.
If the Minister for Finance wishes his statement to be accepted as having any degree of bona fidesin it, then what he should have done is this. If he is satisfied, and apparently we are to take it from what he said that he is satisfied, that the rate of Government expenditure is excessive, that there must be a halt and that unless some effort is made to curb Government expenditure the problem of next year's Budget will be grave indeed, his duty was, not to bring in that Book of Estimates for £100,500,000 which it is proposed to expend on Government services for the coming year; his duty was to take a stand, even at the risk of losing his position as Minister for Finance on what he was trying to say throughout his entire speech—that he does not like the Book of Estimates, that he does not really stand over it and that it is the irresponsible and uncritical members of the Dáil, including his own colleague, Deputy Dr. Ryan who said last year that he spoke in millions, who are responsible for forcing him and his colleagues in the Government to bring this record figure for public expenditure before the Dáil this year. I think also that a greater degree of credence would have been given to his posturings last night had he not in the course of a speech in which he was dealing with this high degree of public expenditure which was searing his orthodox financial soul, taken occasion from time to time to make boastful references to the extent to which he himself and his colleagues in the Government had increased public expenditure on certain items over and above what the inter-Party Government had provided in their time. The Minister for Finance and his colleagues must face their responsibilities in this matter. They have brought in this record figure for public expenditure. It is is higher than it has ever been before. They have put it into a Book of Estimates in such a form that it is impossible to say which of these itemsare capital, which of these items are appropriate to be financed out of borrowings, which of the items must be paid for out of current expenditure and whether or not there is any financial policy with regard to capital expenditure on productive enterprises in this country. They brought it in in that form. They have recommended to the House Estimates of a character higher than they have ever been before —and for that they must take full responsibility.
There is no use in saying that there must be a curb on public expenditure Before that Book of Estimates was brought in was the time to curb public expenditure and to say, in the Minister's view and in the view of the Government, in what respects each or any of the items in that Book of Estimates could be pruned or curbed or cut. The Minister and his colleagues in the Government must now take responsibility for the fact that they have proposed to this House and to the people of the country an expenditure of £100,000,000 odd in the course of the coming year and at the close of a financial year during which this country has suffered from the economic and financial policy of the Government to such an extent as to bring havoc and human suffering to all sections of the people.
I have little doubt, without having the full or proper information before me—without even having an accurate estimate of the revenue and expenditure of the Government in the financial year which is just ending— that what all the Minister's posturings and posing mean is that the Government know that they must decrease taxation or get out of office; that they know that they can decrease taxation, having regard to the experience which they have gone through during the past year, and that they intend to decrease taxation.
I want to recall to the minds of Deputies of this House the forecast which we gave last year on the debate on the Budget Resolutions. We said then that the Minister for Finance was bringing in a harsh, oppressive, unjust and unnecessary Budget in order that he could pose before the country as afinancial purist dealing with a difficult situation which only a policy of austerity could solve and in order that, this year, he could show that he had accomplished that difficult and thankless task and is now in a position to ease the burden of taxation on the people. I have no doubt whatever that that is what is at the back of all the talk which has been going on in the past few days.
All the Ministers who have been touring the country over the week-end have been singing the same tune. They are all saying that the limit of taxable capacity has been reached by the people. The only light interlude that we had was that the Tánaiste— the Minister for Industry and Commerce—instead of having the country round corners, now has the country going across a hump. We have reached the limit of taxable capacity. Who brought this country to that limit and was there any justification for so doing? That is the investigation that we have to conduct during the course of the discussion on this Vote on Account.
The Minister disclaimed last night any idea of justifying his economic or his financial policy. Before this debate closes, however, I think that he will be forced—even in anticipation of his Budget statement—to give at least some justification for the measures that he took in April of last year and which have brought such suffering to every section of the community. I propose to give, in as short a space as possible, some attention to a critical examination of the philosophy underlying the financial policy of the Minister for Finance and the economic policy of the Government, as evidenced by their financial proposals last year, in the course of the remarks I have to make. I approach that task of critical examination of the Government's financial and economic policy with all the more assurance because we on this side of the House over the past year and a half have expounded in detail a policy, financial and economic, which would have solved all the economic and financial ills of which the Minister for Finance made such complaint lastnight and of which his colleagues have been complaining throughout the country for the past 18 months.
We do not come here as destructive critics. At the Fine Gael Árd Fheis of last year, at the Fine Gael Árd Fheis of this year, in speeches made in Kilkenny, Cavan, Carlow, Cork, Dublin and elsewhere, I gave details of our policy, following upon the policy initiated and put into operation by the inter-Party Government, and of all these matters which would have relieved the State expenditure of the appalling burden which is now placed upon it by the Minister for Finance's proposals and the policy of his Government. We gave details of our proposals. There has never been a single criticism by any member of the Government of any of these detailed proposals which we expounded as our policy and as our cure for the economic ills from which this country is suffering at present.
There is no use in the Minister for Finance throwing up his hands when introducing this Vote on Account and saying that there must be a limit to Government expenditure. It is quite clear that the only policy that the Minister for Finance has in reference to the Budget is what we, in some of the speeches that we made in recent times, have called the book-keeping approach to the Estimates and to the Budget. They are nothing but bookkeepers. So long as the account books on public finance are balanced and in proper order it matters not to orthodox finance, as expounded by the Minister for Finance, whether or not there is unemployment, progressively increasing emigration, stagnation of business, restriction of credit, a falling off in purchasing power and human suffering in every section of the community. That was the British teaching, example and practice during the years 1930 to 1936. That was the orthodox financial policy of the British Treasury between 1930 and 1936—a policy which was proved to be a failure. That is the foundation and the root of all the financial and economic policy of the present Minister for Finance and his colleagues in the Government. So long as the Public Accounts are balanced—so long as a good public accountant can say: "That is good accountancy"—then the Department of Finance is satisfied with that policy, and it matters not that the budgetary policy has no part in framing economic or financial policy for the purpose of dealing with the economic problems of the country.
Last year we heard the philosophy of the Minister for Finance when he introduced the Budget. During the course of his speech on that occasion we heard the Minister for Finance's urgent statements about the necessity for more production. I want to quote now from column 1114 of the Official Report of the 2nd April, 1952—Volume 130 No. 8. The Minister for Finance stated:—
"Agricultural produce in fact is the foundation of by far the greater part of our export trade."
With the realisation of that very fundamental fact, he then, in a later part of his speech, dealt with industrial production, and, speaking at column 1117 of the same volume, he proceeded to deal with the role that industry had to play in this country in reference to a contribution towards our export trade. He realised the value of agricultural production in our export trade and this is what he said about the contribution that is to be given by trade and industry to that export trade:—
"If these industries are to play their part in providing employment, those who are engaged in them must concern themselves not only with the home market but most urgently with the development of an export market for their products. Coupled with an increase in agricultural production for export, this would be a remedy for most of our problems."
That is an entirely unexceptional statement. He then goes on to speak about the necessity for efficiency and low costs and in connection with our export market he said:—
"The export market, however, is highly competitive, so that efficiency of production and low costs are of first importance."
Later, about the middle of column 1118, he said:—
"Nor should it be overlooked that the element of cost, which is so frequently submerged in a highly protected home market, is of predominant importance in the export trade."
Let us see how those principles have been worked out in practice as a result of budgetary policy. So far as agricultural production is concerned, Ministers are complaining that it is not as high as it should be. They are talking about agricultural production. Last night, the Minister for Finance again repeated the practice to which I referred in a recent speech that I made as to the policy of Ministers going around appealing for harder work and talking about more production, but providing no policy which would lead to greater production either agricultural or industrial.
In the speech which I made recently —I am quoting it for the purpose of brevity and so that I may not be repeating myself at too great length— this is what I said:—
"Ministers of the present Government indulge themselves in repeated exhortations to increase production, while at the same time pursuing a financial policy which has only had the inevitable effect of reducing production and increasing unemployment. We cannot be content with mere exhortations to harder work and increased production, but must, instead, take steps to change the conditions of production in such a way as to lead to that creation of wealth which alone can bring a greater measure of prosperity."
Last night, the Minister for Finance appealed for more production in the same general sort of way without giving the slightest indication as to what the policy was which would lead to such increased production and greater wealth. He said towards the close of his speech, following upon the statement to which I have already referred, that the volume of the Estimates "must give us all food for thought," and then he asked, "are we going to be able to raise thenecessary revenues," and said that the only way in which we can do that is by increased production.
What has been the effect of the financial policy of the Minister and his colleagues, as put into active operation during the financial year, and of the budgetary policy of April of last year? So far as agriculture is concerned we have now reached the point where it is almost visible that agricultural production for export is no longer economic. The red light must be flashed and flashed insistently before the minds of the Government, because, as a result of the financial policy put into operation by the last Budget, costs have been increased in every direction, both by the withdrawal of subsidies and by increased taxation, by the increase in prices and by the assault that was made on purchasing power. Agricultural wages, the same as for every other class in the community with the one exception— the civil servants—have been increased and have had to be increased
All that has been the effect of Government policy. So far as agricultural production is concerned, we have reached that point of extreme danger to the agricultural industry. I cannot emphasise that aspect of our economic condition too strongly. It will be dealt with in greater detail by a greater expert than I can claim to be on agriculture—by my colleague Deputy Dillon—in the course of the remarks which he will have to make on this Vote on Account. But it is of vital importance that the people of this country should realise what I have said. I do not wish to indulge in hyperbolic expressions. I content myself merely by saying that this serious condition is there by reason of the effect of the budgetary and economic policy of the present Government on trade, agriculture and industry.
Already, certain of those agricultural products have become uneconomic for export. We are facing the grave danger that some of our stable agricultural products will no longer be capable of being exported atan economic figure. That is a very serious danger for this country. The Minister for Finance, in the quotation which I have given from his speech made last year, realised that agricultural produce is "the foundation of by far the greater part of our export trade." If, as a result of the financial policy of the Government, that export trade is in jeopardy, then the condition of this country is very grave indeed.
What has been the effect upon our industrial production for export? That was the second limb on which the Minister based his policy of restoring financial order, as he called it, last year—increased agricultural production with increased industrial production for export. In the course of his remarks, which I have referred to and quoted, he laid emphasis on the fact, as Deputies know, that efficiency and low costs enter very largely into the question of our capacity to export our industrial products.
What is the position at present as regards industrial production? Everyone knows that industrial production here by reason of circumstances, historical and otherwise, is high cost production at the best of times, which makes it difficult for us to compete with other States in the export market; but, in respect of every single item that enters into the costs of industrial production, those costs have been increased enormously by the policy of the present Government as put into operation by the last Budget. Wages have been increased. Purchasing power in the hands of the community has been cut. There has been a refusal by the members of the community to purchase. There has been restriction in credit, no matter what members of the Government may say. There has been stagnation in trade.
How is it possible in that state of facts for any hope to emerge under the present Government and its financial policy for anything in the nature of industrial exports to come to the aid of our balance of payments situation as he hoped for last year?
We have got really to the pointwhere the effect of Government policy has been to damage our competitive position by increasing the costs of our industrial produce and we have done that at a time when in many commodities and on many items world costs are falling.
There is the picture of the result of Government financial policy in the last financial year on our agricultural industry and on our industrial production. Of course, we have balanced our international accounts—we all knew you could balance your international accounts—but at what a price. We have balanced our international accounts at the price of depression, deflation, unemployment and human misery. It is very easy to do that. We always knew that that could be done. The Central Bank pointed out the way and the Minister for Finance and his colleagues took the path pointed out to them by the Central Bank. But we would not take that path which led to these results of deflation, depression, unemployment and human misery.
In the course of the remarks I have to make I will have something to say on this problem of the balance of payments which was put last year in the forefront of the Minister's speech as the problem that had to be solved. Let us say that the problem has been solved. Let us assume, contrary to the facts, that the problem has been solved by the budgetary devices adopted last year by the Minister for Finance, by his assault on personal incomes, by his deliberate policy of creating unemployment. By increasing the price of essential materials, and thereby decreasing the purchasing power in the hands of the community, he has undoubtedly cut imports; he has undoubtedly cut consumption, but, equally undoubtedly, he has caused lack of confidence, depression in trade and industry, stagnation in business, unemployment, emigration and human misery and suffering throughout the country.
The Minister for Finance last year stated that the reason why he was having an early Budget was the urgent need to restore order in the public finances and in our general economy—column 1113 of the Budget Debate, 2nd April, 1952. Further on, at column 1154 he was dealing with his intention of having a loan and he said:
"With all due regard for the position of our existing bondholders—"
The existing bondholders now reading that phrase will certainly take a poor view of the concern the Minister had for them.
"—we shall do our part to make the new issue attractive to all classes of potential investors. We can say truthfully to them that in this Budget onerous as it may be, we have done what is essential, but no more than is essential to put the public finances in order and to revive confidence in the credit and stability of the State."
Take these two statements of the Minister for Finance now and judge them by the results of the Budget in the last 12 months. Can anybody say that there exists at the present time public confidence in the stability of the State? Is not the outstanding feature of our economy at the present moment the entire lack of confidence, the fear that nobody knows what the future holds, the fear of the unemployed, the fear of those who are in part-time employment that to-day, to-morrow and next week there may be no employment, the fear that those in full employment now will be in part-time employment in a short time or in full unemployment in perhaps a shorter time still? Can anybody say that the Minister had done nothing more than was necessary to restore public confidence in the credit of the State? Has he not done exactly the direct opposite to that by the financial proposals that he put into effect, proposals which were based, as I will show in a moment, upon the thesis that the people of this country had more income than they required for their needs and that they were eating too much and living too well? That was the philosophy behind the Budget.
The food subsidies were reduced. I will take the Minister's own figures, although I objected to them last year. The Minister said that he would save£3.9 million in this financial year on the cut in subsidies and he put £11.2 million on taxation. What has been the effect of the saving of that £3.9 million on food subsidies and of the extra taxation to the extent of £11.2 million on the economy of the people and on the human sufferings of individual citizens? It does not require any advocacy on my part. It needs no over-painting of the gloomy picture which obtains in practically every home throughout this country to show the effect of the Minister's onerous Budget on each individual citizen.
Anybody, whatever his walk of life may be, can truthfully say to the Minister that he did not truthfully say that he had done nothing more than was necessary to achieve order in the public finances by his onerous Budget of last year.
In the course of his financial statement the Minister stated that incomes generally had advanced beyond the cost of living. I want to get the exact quotation so that I may not be accused of misquoting the Minister. At column 1137 of the Official Report he said:—
"In agriculture and in industry earnings have advanced since 1938 by more than the cost of living. The food subsidies are now, in practice, nothing more than a State supplement to income generally..."
As reported in the following column, he said:—
"The Government have given careful consideration to this problem over recent months. They are satisfied that, as incomes generally have already advanced more than the cost of living and as essential foodstuffs are no longer scarce, there is now no economic or social justification for a policy of subsidising food for everybody."
There is the philosophy which is the basis of the Minister's financial outlook and policy. He and his colleagues in the Government were satisfied that incomes had advanced more than the cost of living. Nobody but the Minister and his colleagues believed that. Having stated that, being satisfied that incomes had advanced beyond the costof living, they came to the conclusion therefore that there was too much money in the hands of the people and that it had to be got from them by taxation, they proceeded to get it from them by unjust and unnecessary taxation.
There was too much money in the hands of our people last year, according to the Minister, and that is the philosophy behind the Budget. They had too much money for spending purposes and it had to be scooped in by heavy taxation. It had to be scooped in by an increase in the price of ten essential commodities which were released from subsidies. Food subsidies were cut or reduced to the extent of £3.9 million. The price of tea, sugar, butter, bread and other essential commodities was increased. That is how the Minister assaulted the personal incomes of the citizens of this country and prevented them from doing what they had a right to do, using their excessive income over their necessary expenditure in any way they liked, either by saving or otherwise. The people were living and eating too well, apparently, and as personal incomes had advanced beyond the cost of living they had to be taken from them in heavy taxation. As they were living too well the price of butter, tea, sugar and bread had to be increased so that their standard of living might be depressed as well as their capacity for purchasing commodities had to be curtailed.
That was not sufficient, however. Having stated that as his philosophy and finally put that philosophy into practice by means of cutting the subsidies and the unnecessary increase in taxation, the Minister then proceeded to give the real view at the back of his mind, because at column 1127, having stated what he called the necessary steps which must be taken to produce a healthy economy, he said:—
"As a necessary corollary to these two conditions of economic recovery there must be the greatest restraint in relation to increases in income, whether in the form of profits, wages or salaries."
Personal incomes had increasedbeyond the cost of living, according to the Minister. There was too much purchasing power in the hands of the community. They were living too well and he would see that they ceased to live so well. He would take the necessary measures to see that they would not have in their hands any excessive purchasing power to spend in a way he did not want them to spend. Accordingly, he attacked and assaulted their personal incomes in that way and then issued this warning: "I am taking from you the excessive income that you have over the cost of living and require that you must not try to get an increase of wages because of that."
Having given the history of the food subsidies in an earlier part of his speech, when he said that the original idea of the food subsidies was conceived and put into operation at a time when there was a Standstill Wages Order, he stated that it was in order to relieve the effect on incomes that could not go up because of the Standstill Wages Order and the increase in the prices of essential commodities that subsidisation was resorted to in 1947. But the Budget proposals of that year and the increases put on by the Supplementary Budget of that year were designed for that purpose, because when the Standstill Wages Order had gone the taxes remained and were put on again in increased force and pressure by the Minister last year. He warned as loudly as he dared at the time in these words to people, whether wage earners or salary earners, "you are not to look for any increase in wages or in salaries." Of course what the Minister had in mind was, "We will increase the price of essential commodities and we will tax your surplus income so that you cannot spend it upon consumer goods. You are to stay that way. You are not to try to get any compensation in the way of increased wages because of what I have done."
The Minister's purpose was thwarted and it was thwarted by the very necessities of the occasion and it would be still further thwarted. There would have been higher wages granted that perhaps ought to be granted, having regard to the impositions put on thepeople by the Minister, were it not for the fact that working people and people earning salaries were afraid of unemployment if they asked for more wages. At all events, workers and, to some extent, salaried people in public companies and otherwise were able, notwithstanding the Minister's warning contained in the statement I have adverted to, to gain certain additions to their wages and salaries.
So far as the Minister's intention was concerned, however, his object was to prevent any increase in wages or salaries as far as he could do it, and he did it as far as he could do it with the only people over whom he had any control, the civil servants, the teachers and other public servants of that kind. He has prevented those people from getting the increase to which they are justly entitled because of the conditions which the Minister has created deliberately and as a result of deliberate Budgetary policy last year which inevitably led to demands for increased wages and salaries in the Civil Service as well as in unemployment outside. That indicates the Minister's mentality in reference to these people over whom he and his colleagues had any control. He stated: "We are going to have a Standstill Wages Order," because that is what we meant when we stated: "We are going to assault your personal incomes, take away your excess purchasing power and prevent you from using that excessive purchasing power. We are not going to let you thwart our efforts by getting any compensation by way of increased wages or salaries."
What has been the cost of this to the community? It is incalculable, perhaps it is irreparable. If it is not irreparable, it certainly will remain as an injury to the economic fabric of the State for very many years after the present Government have ceased to be the Government. The position has almost become frozen. Any Government that succeeds the present Government will have a task of appalling difficulty to contend with.
The cost to the community has been incalculable. A sum of £3.9 million was saved to the Exchequer andorthodox finance was pleased because there was a book-keeping gain, there was a saving of £3.9 million. At what expense to the community? Wages have gone up. The costs of industrial production have gone up, and the costs of agricultural production have gone up to a point, as I have already said, at which both agricultural and industrial products have reached the stage where it is almost uneconomic to export them and so reap their contribution to our international payments problem.
We do not know the cost to the community, but in every respect as a result of these impositions and as a result of deliberate budgetary policy costs have increased. Rates are going up. Business has become stagnant. There has been a restriction of credit by the banks following what they believed to be Government policy. No matter what any member of the Government says, be it the Taoiseach or a Minister, there has been a restriction of credit in the last 12 months. One of the things that has contributed most to the disrepute in which the Government is held to-day by decent people is the insistent denial by Ministers that there has been no restriction of credit. Speak to any man whose credit has been restricted, speak to any man who has suffered at the hands of the banks because of the operation of that policy and he will tell one very quickly that there has been a restriction of credit. He will tell one very quickly as to whether or not it is an illusion, as the Minister and the Government would have it. He will tell one very quickly whether or not it is a hard and cruel fact. There has been a restriction of credit and a consequent restriction of business. The greatest damage that has been done, however, is the creation of a lack of confidence that pervades the entire economic atmosphere to-day as a result of Government policy. The cost to the community is incalculable. But orthodox finance has been justified. A sum of £3.9 million appears on the credit side of the financial accounts. Human misery and suffering appear nowhere on those accounts. With those orthodox finance is not concerned.
In the forefront of the Minister's statement last year he placed what he called the nature and magnitude of the problem of the deficit in the balance of payments. I have already said— indeed we have always said this—that that balance of payments deficit could easily be liquidated at the expense of depression, deflation, unemployment and human suffering. Apart from that altogether, Deputies and others in responsible positions who are capable of thinking clearly and in a detached way will remember the exposure through which we put the Minister and his White Paper in the autumn of last year when we exposed the fallacies, the inaccuracies, the falsehoods, the underlying incorrect assumptions, the erroneous statistics and the inaccurate calculations made in that White Paper. We pointed out to the Minister and to his colleagues at the time that they appeared to be making a fetish of the deficit in the adverse balance of trade; that they were obsessed by the fact that they must at all costs and with extreme urgency wipe out for all time the deficit in our international balance of payments.
We pointed out to them at the time from the figures available to us—and we have been justified by every figure that has since become available—that that deficit in the balance of payments which appeared to obsess the Minister and his colleagues in the Government was caused by accidental circumstances in a particular crisis due to international conditions in the year 1951; that because of those conditions and the international uncertainty stockpiling took place; that we in the inter-Party Government had as a deliberate policy encouraged and so far as governmental action was concerned had made effective the stockpiling of essential commodities against the possibility of international disruption of business and trade. Because of that there was inevitably a deficit in our balance of payments but we pointed out that the deficit would automatically tend to correct itself and at the time when we were discussing this White Paper in October, 1951, that automatic trend was even then coming into active operation and the deficit inthe balance of payments, which was then stated by the Minister to be in the order of £70,000,000, was nothing of the sort; that, in any event, in the course of a few months it would correct itself and that this year there would be very little, if any, deficit in our adverse trade balance.
The Minister, of course, stuck to his £70,000,000 as long as he could. Subsequently he reduced it to £60,000,000. In his Budget statement, having put this problem of the deficit in the balance of payments in the forefront of the problems that he alleged were then facing him, he proceeded to make two statements of a remarkable character, statements which show how fundamentally unsound and how erroneous were the assumptions on which the Budget was framed and based. At columns 1123 and 1124 of the Official Report on 2nd April, 1952, the Minister said:—
"Similarly, on the earnings side, while we may expect some increase in export prices the immediate outlook in agriculture would not justify us in counting upon any material increase in the quantity exported. The trade deficits for January and February of this year provide little ground for optimism and it seems clear that, without an improvement in personal savings and a reduction in inflationary Government finance, the deficits in the balance of payments will remain excessive. Allowing for a favourable turn in the terms of trade, for some drawing down of stocks and for increased tourist income, the balance of payments deficit which we faced at the beginning of 1952 was about £50,000,000."
That was one of the assumptions upon which the Minister framed his Budget. In the very forefront of his speech he referred to the problem of the deficit in the balance of payments and on the assumption that there was that year, 1952, a deficit at the rate of £50,000,000 —I am accepting it that the Minister was speaking at the time at the rate of £50,000,000; at all events he said it was going to be excessive—the balance of payments was to remain excessive.The balance of payments last year was practically nothing. I have reason to believe in point of fact that there was not merely no deficit but there was actually an increase in our sterling balance.
In the course of the year following this ridiculous statement by the Minister for Finance and his colleagues that the deficit in the balance of payments would be of the order of £50,000,000, his colleague, the Tánaiste and Minister for Industry and Commerce, attending various banquets was cutting a few millions off that £50,000,000 at every banquet he attended. Finally at a meeting of the Professional Bodies Association in Bray he said the deficit in the balance of payments was in the order of £10,000,000. Between April and October, it had come down to £10,000,000 according to the Minister's colleague.
Let it be £10,000,000 or let it be £12,000,000. I believe myself it would in fact be less than £10,000,000. Let it be a £10,000,000 deficit. Look at the returns for years past and one will find that year by year something in the order of £15,000,000 was coming into this country by way of capital investment from abroad, thereby not merely wiping out that £10,000,000 deficit but leaving an actual surplus of something in the order of £3,000,000 to £5,000,000. Instead of there being a deficit of the order of £50,000,000 last year, a deficit on which budgetary policy was framed, I believe we had a real balance in our international trade because of the policy put into operation by Deputy McGilligan as Minister for Finance in the inter-Party Government.
Again, the Minister was wrong in his diagnosis and in the assumptions upon which he based his Estimates when he said:—
"While we may expect some increase in export prices the immediate outlook in agriculture would not justify us in counting upon any material increase in the quantity exported."
The Minister stated there that there would be no material increase in our agricultural exports. There was anincrease of £20,000,000 over and above what we thought we would get last year. Over £100,000,000 worth of agricultural products were exported last year. Of course, the Minister for Finance in order to justify his assault upon personal incomes, in order to justify himself in the eyes of those people upon whom he was inflicting unemployment and hardship and making an assault upon their personal incomes, had to say that there was no significant increase in agricultural production. There was a dramatic increase last year in our exportable surplus of agricultural products but because of the assault that has been made by the Minister and his colleagues in the Government upon our entire economy that agricultural industry is now in grave jeopardy. We are at the point where the red light must be flashed. Because of the increase in costs of production in the agricultural industry, we may find ourselves in the position of not being able to export sufficient agricultural products to support our economy.
Those are some of the effects of the Minister's Budget. I looked in vain in this Book of Estimates for the capital items. Deputies will recall that our policy in the inter-Party Government was based upon the machinery of the dual Budget. We believe as a fundamental principle of economic policy that it was the Government's duty so to order our economic affairs, so to regulate our economy as to produce the maximum degree of employment. We started out to achieve that and we achieved it. Through the financial and economic policy we adopted, we regulated, as far as government can do it, the level of economic activity to provide the maximum possible of employment in the country. We succeeded, for the first time in the history of the country, in reaching the position where there was practically full employment when we left office in June, 1951. Now we have nearly 90,000 unemployed. We have far more than that 90,000 unemployed because added to that figure there must be the figure of those people who have emigrated in the last 12 months. We have no real guideor index to the number of people who emigrate but we do know you cannot really find the exact figure of unemployed in this country until you find the number of those who, because of lack of employment, have emigrated to England or elsewhere. As against that, we in the inter-Party Government appealed to our people in Great Britain to come back and build our houses over here. We asked them to come back and they came back. The skilled workers are now leaving the country in their hundreds every day.
There is a further consideration which may be a very tragic consequence. It may very well be that the pool of employment in England is reaching saturation point and that there will be no work for our people going over to England, because so many of them have gone. I heard it related a few weeks ago, at the time the flood disasters occurred in certain parts of Great Britain, that one Irishman said to another: "There may be some good in that because if we go over there we may get employment." That was said by one Irishman to another over the last six weeks.
The inter-Party Government left this country with a condition of full employment. We did it because our policy was based on the fundamental principle that it was the duty of a Government so to regulate its economic activities as to provide the fullest measure of employment possible. We did that through the instrumentality of the dual Budget. We set out on the face of our Book of Estimates the items which we regarded as those on which public money should be spent. Those items which we thought were, and which proved to be, items of productive capital enterprise were being financed out of public moneys lent to us by the people of this country. We financed that policy of productive capital enterprise through the device of a deficit in the balance of our international payments. We felt, as I have already stated and as has been said so frequently in this House, that by the policy of prudent and controlled repatriation of our sterling assets, we could develop our country—which was underdeveloped in men and materials—and, particularly, the soil of the land of Ireland. We believed we could develop our underdeveloped economy and give full employment to our people. We justified ourselves in that policy.
What is the policy of the present Government in relation to repatriation of external assets? The only deduction that can be made from the form in which this Book of Estimates is framed is that they have now abandoned altogether that policy of the repatriation of our external assets. That prudent, controlled repatriation of our depreciating sterling assets which we initiated and put into operation with such beneficial effect during the inter-Party Government's term of office has now been abandoned.
I know the Minister for Finance and his colleagues have repeatedly stated they are in favour of productive capital enterprise but nowhere have they given credence to, or expressed their faith in, the fundamental commonplace of modern economics that you cannot have repatriation of our sterling assets without a deliberate deficit in our balance of payments. The whole financial policy of the Minister for Finance was based last year and still, apparently, is based, upon the eradication of any deficit in our balance of payments. We had the policy of prudent and controlled repatriation of sterling assets which involved necessarily, as an economic commonplace, a deliberate creation of a deficit in our balance of international payments. We had the nature and the priority of the investment of that money controlled in accordance with strict financial probity.
The policy of the present Government is to leave our assets not merely to increase but to depreciate, as they have done in the last few years. We considered it better to repatriate them and use them here instead of allowing them to depreciate in England. The policy of the Minister for Finance, which he put in the forefront of his economic statement last year, to eradicate the deficit in our balance of payments has brought about the position that we have increased our holdings of sterling assets last year. Instead of repatriating those sterlingassets, using them over here for the purposes of productive enterprises, giving employment and developing our undeveloped resources they have left them over in England. I am afraid we must gather from the Government's attitude that they are still to be left over there.
There is nothing to be gleaned from this Book of Estimates except that it reverted to the old system of orthodox British Treasury policy. The Estimates were framed from an orthodox financial British Treasury point of view. Provided an accountant could say the books were balanced, it did not matter if there was no policy enshrined in them. It made no difference if the Budget was not used as it ought to be used, as an instrument of economic policy. The orthodox financial principles, which were put into operation in the British Treasury and which proved to be incorrect in 1930 and 1936 were given approval here by the present Minister for Finance.
There is no indication in this Book of Estimates, providing for £100,500,000 of proposed expenditure, of what is the policy of the Minister regarding the repatriation of sterling assets, or what is his policy in regard to productive capital enterprise or how it is to be financed. Amongst many errors of which he was guilty, the Minister made two cardinal mistakes last year. He, first of all, failed to go for a loan in the autumn of 1951 at a time when he could have got that loan at a very much lower rate of interest than he was ultimately forced to offer to a number of greedy financiers who fell on our loan with avidity because of its wholly unauthorised and unexpected rate of interest. That was the first mistake he made but he made a bigger mistake, one upon which he started out from the very time he occupied those benches after the change of Government, when he attacked the credit of the country itself. Having attacked the credit of the country and having raised that spurious crisis which it took us months to dissipate, and having formed in the minds of the people in this country and people abroad a feeling of lack of confidence in our credit, instead of going for the loan at a time when hecould have procured it at a comparatively reasonable rate of interest, he sought it at a time when he was forced to give a greater rate of interest than was necessary, as has since been clearly proved because the national loan now stands at a premium. In other words the taxpayers will be taxed to give to those people who invested in the national loan two or three pounds of a premium on every £100, over what they paid for it. That was another of the cardinal errors of the ministerial policy that has brought us to the position in which we find ourselves at present.
I want to say that, as far as my colleagues and I are concerned, we shall give, not merely lip service but full co-operation to any proposal for genuine economy and the elimination of waste in public expenditure but we believe that wise spending is the wisest policy for the country in future—wise spending, and not merely pleas by the Minister for Finance such as he made last night to "uncritical, irresponsible Deputies" not to be asking for more money or greater Government expenditure. We believe that wise spending is the wisest economic policy and that a policy of wise spending can be operated in the way that we gave an indication it could be operated—through the medium of the dual Budget, as an instrument of economic policy, and the prudent repatriation of our external assets. I have indicated as I said detailed constructive proposals which are designed, I believe, to effect a remedy for the economic ills from which we are now suffering. I have heard no detailed policy from the Minister beyond his statement that Treasury orthodoxy must be adhered to, that he must balance or burst and that it does not matter about policy.
We shall support and co-operate with any genuine effort to eliminate waste but as I say there are items in this Book of Estimates that are put in there solely for the purpose of buying votes, for the purpose of getting support politically to keep Ministers in office and without full advertence to the vital facts of the present situation. The Minister speaking last night of Governmentexpenditure and what this country may have to face in the years to come, if it should still have the misfortune of having the present Government in office, asked rhetorically: "What is the Dáil going to do about it?" I know what I should like the Dáil to do. I know what the people would like it to do and that is to say to the present Government to get out and let in some Government that will bring an end to the human misery that has been created by every aspect of Government policy in the last few years.
