Financial Statement: Budget, 1954. - I—General Survey. – Dáil Éireann (14th Dáil) – Wednesday, 21 Apr 1954

Minister for Finance (Mr. MacEntee)

The year which has just closed has been one of the most prosperous in the nation's history.

Mr. MacEntee

Yes, it is a good thing always to be thankful to Providence, even perhaps for the survival of the Deputy.

It was a year of progress in industry and agriculture, of increased trade and of higher incomes. The cost of living fell and prices generally were smoothed out. At the same time, the output of goods and services available for everyday living and for additions to the country's wealth was the greatest on record. Such a combination of higher output and stable prices signifies a rise in living standards. All this has been achieved with virtually no recourse to past savings to supplement current consumption or capital formation. It is an impressive demonstration of the capacity of the Irish economy to recover external solvency and internal financial stability without sacrifice of living standards, in other words, of the soundness of a policy of producing more and saving more as a condition of national progress.

EMPLOYMENT.

The all-round improvement in the economic situation is shown particularly in the sphere of employment. There has been a remarkable increase in the number engaged in manufacturing industry. As a result of this and of increased activity in the building trades, the number of persons registered as unemployed has fallen in recent weeks to almost 12,000 below that of the corresponding weeks of 1953. Unemployment has been considerably reduced by intensified progress with State capital projects, in particular by the initiation through the National Development Fund of certain works of a capital nature which in the normal course would not, perhaps, have been commenced for some years yet.

The number employed in manufacturing industry in December, 1953, was 142,300, which was some thousands higher than the figures for December, 1952, and December, 1951. The increase was spread over a wide range of industries—including the "silly industries" as they have been described by those who have not to depend on them for a livelihood. Employment in building has recovered in recent months from the temporary set-back in 1952 and the early part of 1953. As is well known, the slackness in this trade was experienced mainly in Dublin and was due to the delay imposed by planning difficulties and the laying of the North Dublin main drainage scheme. A number of schemes which had been held up in 1953 have now got under way and the recent improvement, I am glad to say, is likely to be fully maintained. Another indication of better employment opportunities is that there has been a rise in the total number of allocations of State grants for private housing in 1953-54 as compared with 1952-53.

NATIONAL INCOME.

Estimates of national income, savings and investment for 1953 are not yet available, but the position in regard to agricultural and industrial output, to which I shall refer in a moment, is indicative of an increased national income not only in money but also in real terms. The growth of trade and the general expansion of activity over the period are reflected in the rise in bank debits which were almost 9 per cent. higher than in 1952.

SAVINGS AND INVESTMENT.

Capital investment by the State rose last year and it is likely that the 1953 tables of national income and expenditure will reveal an overall increase in new capital investment. As in 1952, domestic capital expenditure was financed almost entirely from current savings, external resources being called upon to meet but a small part of the total amount. In addition to the satisfactory response by the public to the National Loan floated in October last, there was a substantial improvement in small savings.

AGRICULTURAL PRODUCTION.

Full details of agricultural output in 1953 are not yet available but the increases in live-stock, acreage under crops and volume of agricultural exports all indicate that there has been a significant rise in volume. The January, 1954, live-stock census recorded a rise in the numbers of cattle, sheep and pigs as compared with January, 1953. The acreages under corn and root crops also increased last year, wheat and sugar beet in particular showing a considerable expansion. In an effort to stimulate the use of fertilisers and raise agricultural output substantially, the Government made arrangements to ensure the availability to farmers generally of credit for the purchase of fertilisers. The co-operation of the commercial banks to this end was readily secured and a special scheme was inaugurated by the Department of Agriculture and administered by the Agricultural Credit Corporation. That our farmers are alive to the need for greater application of fertilisers is illustrated by the fact that imports of fertilisers increased by 55,000 tons last year. Another pointer to the increased awareness on the part of farmers of the need for more efficient methods is that imports of agricultural tractors last year amounted to 4,269, representing an increase of 800 over the number imported in 1952. All this reflected itself in the fact that the gross output in money value per male worker, permanently or temporarily employed on the land, increased from £285 in 1950 to £355 in 1952 and probably reached about £400 in 1953, which would be 40 per cent. above the 1950 figure.

INDUSTRIAL PRODUCTION.

A high level of output in manufacturing industry was reached in the September quarter of 1953. Not only was the September figure higher— contrary to the normal seasonal swing—than for the June quarter of 1953 but it was above that for the June quarter of 1951, which was the highest previously recorded. That the advance was not a mere spurt but indicated a continuing trend is evident from the further improvement manifested in the December quarter, when the index of the volume of production was 11.2 per cent. higher than in the December quarter of 1952 and 4.8 per cent. higher than in the June quarter of 1951. The main increase in industrial production were in the bacon curing, confectionery, textile, leather, furniture, vehicle, metal and engineering, cement and fertiliser industries. I have already referred to the increased activity in building and construction.

PRICES AND EARNINGS.

The main feature of the internal financial situation in 1953 was the downward tendency in the general price level owing mainly to a fall in the cost of imports. The consumer index for mid-February last, the latest available, is one point below the figure for mid-November, 1953, and two points below that for mid-May, 1953. The fall in the index over the past year was the first recorded since 1950. Average earnings of industrial workers increased by 2.3 per cent. in money terms in 1953, and, as this rise was accompanied by a fall in retail prices, real earnings have increased. The Dáil and, I am sure, the public also, will be glad to learn that the average earnings of an industrial worker, which in March, 1951, were 91/8d. per week, had by December last, the latest quarter for which figures are available, risen to 112/8d. In December, 1950, they were only 89/3d.

BALANCE OF PAYMENTS.

The improvement in the balance of payments achieved in 1952 was maintained in 1953: the deficit is likely to be of the same manageable size as in 1952, when it amounted to £9,000,000. The figures of external trade were again better last year than in the previous year.

Total trade, both in value and volume, was the highest ever, while the import excess fell to £69,000,000, one of the lowest since the war. Increased exports arising from the expansion of home production made possible a substantial increase in imports. We were also enabled to pay for additional imports by a fall in their average cost, with the result that there was no disimprovement in the balance of payments. Net invisible receipts probably showed little change.

Another satisfactory feature of our external trading to which I may refer was the further substantial fall last year in the deficit with the dollar area. Excluding Marshall Aid receipts, our deficit in 1951 was $70,000,000. This was reduced to $28,000,000 in 1952 and to $16,000,000 last year. Expenditure was virtually unchanged as compared with 1952 and the improvement was the result of increased earnings.

IMPORTS.

Imports rose last year by £11,000,000.

If import prices had remained unchanged instead of falling, as they did, by 4.4 per cent. the greater volume of goods imported last year would have increased our deficit on visible trade by £8,500,000. A further rise of £1,500,000 was recorded last year in imports of producers' capital goods ready for use. Such goods represented 11.4 per cent. of total imports as compared with 9.3 per cent. in 1951. In 1950 they were 9.7 per cent. Imports of materials for agriculture and industry increased by over £6,000,000 last year. These increases I should emphasise have not been gained at the expense of consumption goods, imports of which rose by £2,500,000. This is further evidence of the improvement in living standards which took place last year, without I am glad to say impairment of our internal or external balance. The recovery in the textile and clothing industries is reflected in increased imports of wool and other textile materials, to the extent of almost £8,000,000. Imports of wheat fell by £1.8 million as a result of the big increase in the home crop last year. Due to increased home production, imports of cement declined from 159,000 to 93,000 tons, that is by over 40 per cent. This is a commentary upon those who regard Irish industry as being uneconomic or inefficient. The import price also fell from £7 9s. 0d. per ton in 1952 to £6 14s. 0d. per ton.

One of the main features of our external trade in 1953 was the marked rise in imports in the second half of the year. This trend was continued in the early months of 1954 and I am bound to say that if our external trading position is to be kept right, the rise in imports must be matched by a continued development of our resources, a substantial increase in production and a further expansion of exports.

EXPORTS.

Exports exceeded £100,000,000 for the first time in 1952. Last year they rose to £114,000,000, £12,500,000 higher than the previous year and no less than £32,500,000 higher than the 1951 figure, and almost £42,000,000 more than in 1950. As export prices last year were less than 1 per cent. higher on average than in 1952, practically the entire increase was due to greater volume, to which exports of store cattle, pig meat, chocolate crumb and confectionery contributed in a notable degree. There was a slackening in the rate of expansion, and some tendency for prices to weaken, in the last quarter of the year. It is too early yet to say how these changes may affect the outturn for 1954, but they emphasise the urgent need not only to maintain, but to expand, our export trade if we are to continue to enjoy our present standards of living.

CONCLUSION.

Now, while we may take pride and comfort in the progress which the national economy has registered in the past year, we should not become complacent about its future course. There are a number of uncertain factors, especially in the sphere of foreign trade, which must be kept well in mind.

In Britain, the general withdrawal of food controls has brought about a situation in which our producers will be selling in a more competitive market than that which they have enjoyed since the Second World War. The recent negotiations, however, undertaken by the Tánaiste and the Minister for Agriculture, have, we are all glad to say, been eminently successful and have removed much of the uncertainty as to the course of cattle prices after the British meat market is decontrolled.

Mr. Rooney

Ask the cattle traders about that. They will tell you.

Mr. Dillon

By Jove, I am a big interrogation mark now.

Mr. MacEntee

In fact, the agreement which was reached assures to Irish live-stock the benefit of full British market prices, and it provides our farmers with the further safeguard that their store cattle will be covered by minimum support prices related to those payable to British farmers.

Mr. Dillon

Let us see the agreement.

Minister for Justice (Mr. Boland)

Try and take it now.

An Ceann Comhairle

The Minister should be allowed to make his Budget statement.

Mr. MacEntee

The new challenge to the resilience of our agriculture and to our competitive efficiency in the export market comes at a time, however, when the expansion of domestic activity to which I have referred earlier, is necessitating a higher level of imports. It is, therefore, essential, from the point of view of maintaining and improving our standards as a nation, that it should be met successfully.

Another possibility which cannot be left out of account is a movement of the terms of trade against us in the coming year. The fall in import prices has eased off in recent months, while the future trend of export prices, which remained practically unaltered during the course of 1953, is uncertain. The risk to our external balance which this situation presents is emphasised when it is remembered that the favourable outcome on external account in 1953 was due in some measure to a purely fortuitous fall in import prices which allowed us to import a larger volume of goods than the increase in our exports warranted.

A further cause of anxiety, and one which is the source of widespread speculation among commentators and economic experts generally, is the trend of business in the United States of America which, if it were to continue downward, could not but have an unfavourable repercussion on the export trades not only of ourselves but of other countries upon which we depend.

While some of these risks are outside our control as a nation, it is within our power to do much to negative their ill effects. Increased production in agriculture and industry, provided it is accompanied by increased efficiency and greater price competitiveness, will help to cancel out any adverse effects of external influences and developments.

II—CAPITAL BUDGET, 1953-54.

I come now to the review of the capital Budget of 1953-54. During 1953-54 maximum progress was made with the capital programme laid down in the 1953 Budget. Details of the outturn on capital account require to be set out in a double column and to avoid confusion will, with your permission, Sir, be included in the Official Report.

	Budget 1953 Estimates	Actual Issues
	£million
Voted “capital services	14.38	11.36
“Below the line” issues	22.63	20.10
Capital for Air Companies	0.76	0.59
Dublin Corporation (final instalment of underwriting commitment)	0.21	0.21
Loan repayments reissued to local authorities	1.06	0.91
Capital for Irish Steel Holdings, Limited	0.25	nil
Issue of shares by Industrial Credit Company, Limited	Not provided for.	0.25
National Development Fund (expenditure)	do.	1.17
TOTAL	£39.29 mill.	£34.59 mill.

It is only necessary for me to say that total issues for capital purposes amounted to £34.59 million. The difference between this figure and the original Budget estimate of £39.29 million was due mainly to the fact that on long-term, large-scale capital works the exact dates at which machinery will be delivered and payments mature cannot be accurately foreseen. Thus, for electricity, turf and hospitals, the cash which the Exchequer had to provide was some £3,000,000 less than was anticipated. In the case of Irish Steel Holdings, Limited, the payment of £250,000 for capital purposes has been further deferred pending consideration of proposals for the extension of the company's activities and the provision of additional capital. Meanwhile, the provision is being repeated in the capital Budget for 1954-55.

Under the National Development Fund Act, 1954, an issue of £5,000,000 was made to this Fund, which not only covered £1,170,000 of actual expenditure therefrom up to the 31st March, but enabled large commitments to be entered into against the balance.

The aggregate capital outlay of £34,590,000 which was financed by the Exchequer and the Local Loans Fund in 1953-54 is to be compared with £32.3 million in the previous year and £24.6 million in 1950-51. It is a feature, and a very pleasant feature, of the marked improvement which has taken place in our financial position that virtually all the money which the Government required to finance its capital programme was lent by our own people.

BORROWINGS, 1953-54.

After taking credit, to the amount of £2.83 million, for available funds in the form of loan repayments by local authorities and other borrowers, a net sum of £33.36 million had to be found in 1953-54 to finance the capital Budget, to provide £900,000 for defensive equipment and to cover the deficit of £702,000 on current account. The sources from which this sum was drawn may be specified as follows:—

	£million
1. Small Savings and net investment income of Departmental Funds	7.77
2. National Loan	24.25
3. Other borrowings	1.00
4. Net decrease in cash balances	0.34
TOTAL	£33.36 mill.

III—CAPITAL BUDGET, 1954-55.

I now turn to the picture of capital expenditure for 1954-55. Long-term schemes of national development will again require capital funds on a substantial scale this year. To complete the programmes which the Oireachtas has authorised for the E.S.B. and for Bord na Móna will take about seven years; and a special building programme for national schools will be spread over about ten. For some time ahead, also, provision must continue to be made by the Exchequer for new and improved hospital buildings as, despite the increasing income from the sweepstakes, the resources of the Hospitals Trust Fund cannot finance all the new works. In most areas local authority housing needs are likely to be satisfied within the next five to six years, but in Dublin and Cork the programme for housing is still heavy and will require time and a great deal of money to carry out. Further investment in land reclamation, forestry, civil aviation and other public enterprises will be called for over the years; and other items, now unforeseen, and contingent liabilities in respect of underwriting will almost certainly make demands upon the capital Budgets of future years. Eventually it is true, there should be a decline in State capital expenditure and a corresponding slowing down of the rate of increase in the national debt. But until the programme now envisaged has been completed the planning of our finances cannot be based upon that eventuality.

Including expenditure from the National Development Fund, capital requirements in 1954-55 under the main heads of expenditure may be estimated as follows:—

	£million
Housing	9.70
Sanitary services	1.33
Electricity development	7.50
Agricultural development	4.65
Hospitals	4.28
Schools and other State buildings	2.67
Telephones	2.00
Turf development	1.50
Transport	1.47
Afforestation	0.67
Fisheries	0.15
Wireless Broadcasting	0.02
Irish Steel Holdings, Limited	0.25
Min Fhéir, Teoranta	0.08
Ceimicí, Teoranta	0.22
National Development Fund (expenditure	3.00
TOTAL	£30.49 mill.

Of the items which I have mentioned there are only two on which I need comment. These are the provision of £220,000 for Ceimicí, Teoranta, and the £3,000,000 for expenditure from the National Development Fund.

CEIMICI, TEORANTA.

Ceimicí, Teoranta is to be provided with additional capital to enable it to convert the two industrial alcohol factories at Corroy and Labbadish into plants for the production of starch and glucose from potatoes. Imports of glucose are, as everyone knows, quite substantial and it is intended to replace them as far as possible by home production from native raw materials. It is expected that the factories will be ready in time to handle potatoes of the 1954 crop. The capital cost in setting up the new production units is estimated at £220,000, and that figure is exclusive of working capital.

NATIONAL DEVELOPMENT FUND.

The National Development Fund was established in December, 1953, when this House, having accepted the principle of the Bill then before it, voted a provision of £5,000,000 which was paid into the Fund last year. The total cost of the various development projects already approved as charges on the Fund on the basis of that provision is £4.2 million. Issues from the Fund for these projects exceeded £1,000,000 last year and it is expected that a further £1,000,000 will be expended on them this year. Further allocations will be made from the Fund according as new projects are approved and I propose to allow tentatively a sum of £2,000,000 for actual expenditure on these new projects, making a total estimated expenditure of over £4,000,000 from the Fund up to the 31st March, 1955, of which £3,000,000 will fall within the present year. It will be necessary of course to vote additional money for the Fund in the course of this year to enable commitments to be entered into in excess of the provision made last December, but the amount required within the statutory limit of £5,000,000 cannot yet be firmly estimated. Whatever the amount may be, it will represent cover for commitments rather than actual cash needs within the year and so may be ignored in the present context.

NET BORROWING, 1954-55.

After deduction of the funds provided by loan repayments, net Exchequer borrowing to finance the capital requirements detailed above will—apart from any casual variations —be in the neighbourhood of £37,000,000, of which

	£million
Voted “capital services” will require	14.36
“Below the line” issues as in the White Paper of Receipts and Expenditure	20.27
Capital for Irish Steel Holdings, Limited	0.25
Capital for Air Companies	0.09
Capital for Ceimicí, Teoranta	0.22
National Development Fund (expenditure)	3.00
	38.19
Less
Loan repayments to Exchequer	1.30
NET TOTAL	£36.89 mill.

Under the legislation which was recently before the House, the E.S.B. has been authorised to raise capital directly from the public. It is hoped that its first public issue will be made in the autumn. As the Board is a well-established and financially sound concern, I am certain that the issue will be greatly favoured by investors, particularly as I propose to extend to stocks of the Board the privilege, enjoyed by Government issues, of dividends being payable without deduction of tax. A successful issue for electricity development will reduce correspondingly the draw on the Exchequer for advances to the E.S.B. Public issues are also in the offing for Dublin Corporation to finance the municipal programme of housing and allied works, and for C.I.E. to provide further finance for the dieselisation programme.

Small savings and the investment income of Departmental Funds will, as usual, make their contribution to financing the capital Budget. While there was an abatement of the demand for savings certificates last year, there was, on the other hand, I should say, a marked rise in deposits in the Savings Banks, with the result that the net principal receipts from small savings generally came to £5.7 million, which represents an increase of almost 33 per cent. over the net yield of £4.3 million in 1952-53. This increase in small savings is very welcome for the indication which it gives of national stability and well-being. It shows the prevalence of a prudent outlook in the community, backed by a distribution of income and property which furnishes thousands of wage-earners and small proprietors with the means of saving for their future needs. I hope that during the present year the level of savings will show a further rise and that from this source, and the investment income of Departmental Funds, I may obtain no less than £9,000,000.

A further national loan may be necessary before the financial year is out, to provide direct capital outlay from the Exchequer, but the amount of this borrowing will naturally be reduced by reference to the relief afforded by the E.S.B. issue.

From what I have said, it will be admitted that the record of national development in recent years has been very satisfactory, not only because of the extensive progress achieved but also because of the degree to which it has been defrayed from current savings. While I recognise and appreciate the magnificent support which our loans have received from large institutional investors, I feel that I owe a special word of thanks to the thousands of individuals of modest means who had the confidence to invest in them and who have thereby benefited their country. The fruits of this capital investment are already appearing in the development of native fuel and power, in better roads and communications, in new houses in their thousands to replace unsuitable dwellings, improved amenities in the home and in farm and factory, modern schools and hospitals and more employment. Much, it is true, remains to be done to provide a securer livelihood for our people in increasing numbers here at home. This has always been the aim of the Party to which I belong. It cannot be achieved, however, unless there is a substantial increase in agricultural and industrial production. With this in view, productive enterprise in town and country must be fostered and assisted by the community at large; and so the State, acting for the community, is called upon to provide the fundamental requirements for economic progress—such as adequate power supplies, efficient transport by road and rail, encouragement, advice and assistance to farmers and manufacturers—in the same way as it is expected to provide good housing, schools and hospitals and other essential aids to material well-being and the enjoyment of a civilised social life.

IV—CURRENT BUDGET, 1953-54.

I now come to a review of the current Budget. As the published Exchequer returns indicate, the current Budget for 1953-54 closed with a deficit of £702,000. I, naturally, would have wished that it were otherwise; and it would have been otherwise, but for the fact that a bountiful harvest rewarded our farmers who last year put much of their land under wheat. In 1953 the yield of home-grown wheat per acre was the largest ever obtained; so that in order to keep the price of bread from going up, the subsidy had to be increased towards the end of the year by a gross sum of £853,000, of which £829,000 was actually spent. If it had not been for this one item alone, the current Budget would have closed with a surplus of £127,000. One other item which helped to unbalance the Budget was the large supplementary sum voted for social insurance to cover a short-fall in the contribution income of the Social Insurance Fund. I am glad to say, and I am sure all quarters of the House will be delighted to learn, that the trend in contribution income has become much more satisfactory since that Supplementary Estimate was introduced and this year's Estimate was settled.

I propose now to review very briefly the considerable progress which has been made in restoring order to the public finances.

The Budget of 1951, which this House, unfortunately, was not afforded any opportunity to consider and discuss, was an inheritance from the Coalition régime. It closed on the 31st March, 1952, with a deficit of £6.7 million. In the financial year which followed we had not merely to cover that deficit but to find money for the greatly enlarged social services which all Parties had promised the people at the General Election of 1951. In the 1952 Budget, accordingly, we had to try to bridge a gap of £15,000,000 and, in fact, fell short by only £2,000,000 of doing so. Last year, without any increase in tax rates, revenue, which was actually £1,500,000 more than I had budgeted for, came within an ace of covering not only the foreseen expenditure, but the wholly unexpected charges which we had to meet. In anticipation of savings in Supply Services I deducted £3,500,000 from my budgetary charge and, in the actual outcome, gained a relief of £3.6 million. In view of all this, it cannot be denied that 1953-54 was a year of substantial progress towards financial stability. In this connection the significance of the fact that there was no increase in our short-term indebtedness to the banking system will be clear. It shows not only that we have discharged our current commitments as they fell due but that our long-term capital programme, large though it is, has also been financed on a proper basis.

V—CURRENT BUDGET, 1954-55.

Now, let us consider the task with which we are faced in 1954-55. The White Paper shows that against a prospective revenue of £106,558,000 there is set, after reduction of £14,362,000 for capital services, a possible expenditure on Central Fund and Supply Services of £111,335,000.

REVISION OF EXPENDITURE.

With these two figures before me, naturally my first care has been to re-examine the Estimates of expenditure to see whether economies and reductions could not be made. Here I should remind the Dáil that most of the estimates for Supply Services were prepared as far back as November or December last, when even final expenditure for 1953-54 could not be closely predicted. It is now possible to review the figures against the background of actual expenditure in 1953-54 and earlier years.

In my speech last year I outlined the strenuous efforts which this Government found it necessary to make, on resuming office, to build up our Defence Forces. I drew attention to the fact that during 1949-50 and 1950-51 expenditure on defensive equipment was a mere £54,000 and £56,000 respectively, and I mentioned that within our first 20 months or so of office we had expended on such equipment almost £2,000,000 and had placed further orders for which it would be necessary to find £1,800,000 during 1953-54, that is, during last year. In fact, expenditure on defensive equipment last year exceeded the provision by over £215,000. As a result of these efforts we have now reached the position in which substantial progress has been made with the modernisation and reequipment of our Defence Forces. We have now an efficient Army which we can maintain at its present high standard without spending quite so much on equipment as the requirements of national security have obliged us to do since 1951. The Government have, therefore, decided that an expenditure of £1,000,000 under this head will suffice this year as against the £1,800,000 for which provision was made in the Estimates. This brings a saving of £800,000 and, on last year's precedent, we may permit ourselves some additional relief by again charging no more than £400,000 of this expenditure against current revenue. This done, our figure for current expenditure is reduced to £109,935,000.

For several years past it has been necessary to make Exchequer issues to C.I.E. to cover operating losses, interest and other revenue charges. These issues were made on request, but were always made subject to adjustment when the accounts of the year became available. The accounts for 1952-53 were published last autumn; and the examination of them has shown that the requests for subsidy payments from the Vote and for Central Fund advances to meet debenture interest had been framed on the assumption that a large proportion of expenditure on renewals and replacements was chargeable to current revenue. It would appear, however, that various items to which the Board proposed to apply the funds received from the Exchequer were proper to be borrowed for under the Transport Act of 1950 which authorised the issue of up to £7,000,000 of State-guaranteed stock. This limit of £7,000,000 was, indeed, fixed in contemplation of the need for O.I.E. to overtake heavy arrears of renewals and replacements, as well as meeting some additional capital expenditure.

Now, the accounts of C.I.E. have shown an increase year by year, in the provision for depreciation, until by 1952-53 it reached a figure of £1,483,000. On the other hand, Sir James Milne in his report considered that the average 1945-47 allowance under this head of about £800,000 was more than adequate. The line which in my view should be taken on this matter is a simple one. Where gross profits are sufficiently high, it is sound policy to make the largest possible allocations from profits to meet expenditure on replacements and renewals; where, however, profits are non-existent or inadequate and public funds are, in effect, being called upon to supplement revenue, it is necessary in protection of the taxpayer to take a less liberal view. This is particularly so where, as in the case of C.I.E., expenditure to overtake arrears of renewals may, under legislative authority, be charged to borrowing.

Up to the close of 1951-52, in recognition of the straitened financial position of C.I.E., almost all of the exceptional outlay on renewals was borne directly by the Exchequer. The position regarding expenditure on renewals in 1952-53 and 1953-54 is at the moment under discussion; in both years the Exchequer appears to have borne expenditure which would more appropriately be a charge to public borrowing. The information we now have indicates that the Exchequer would already have benefited from the marked improvement in the traffic receipts of C.I.E., but for the greatly increased charge against revenue for renewals—necessary though these were to make good arrears of proper maintenance and replacement. The position in fact is that, before allowing for depreciation and other charges, a working loss in 1951-52 has been converted into a working profit in 1953-54

C.I.E. is liable under Section 30 of the Transport Act, 1950, for the repayment to the Exchequer of moneys advanced from the Central Fund to meet interest payments on Transport Stock. The aggregate amount advanced for this purpose to the 31st March, 1954, was £1,924,000. The improvement in the financial position of the undertaking, which is an occasion for congratulation to all concerned, raises, however, for consideration, and particularly for the consideration of the Minister for Finance, the question of repayment by the organisation of some of its liability to the Exchequer.

The precise extent and form of the necessary adjustments in favour of the Exchequer are at present under consideration, but I am satisfied that no vote payment in respect of operating losses and revenue charges will be necessary in 1954-55 and that £1,000,000 or so will be repayable to the Exchequer in respect of previous years. I have already allowed for £500,000 of this repayment in the estimate for non-tax revenue and, as the total relief to this year's Budget is of the order of £1,500,000, I should, at this point, take account of the remaining £1,000,000.

General Mulcahy

Why not take another?

Mr. MacEntee

Well, of course, that is the measure of my moderation.

Looking to the future, I am hopeful that the improvement in the finances of C.I.E. will continue and that such assistance as may have to be provided for a time from the Exchequer will be capable of being repaid, in part at least, according as the dieselisation programme yields the benefits and economies which are expected of it.

In my review of last year's accounts, I referred to the £3.6 million of savings realised on Supply Services. It is true that some of these savings were of a casual rather than a permanent nature. Nevertheless vigorous efforts were made to achieve positive and continuing reductions in the cost of public administration and if these have not given in full measure the permanent saving which was aimed at, it is only because the problem of retrenchment in public expenditure is of its nature difficult and intractable. But the Government are determined to master it and every Department will again be required to review its personnel and services to this end. In the meantime, and forestalling the more general saving to be secured in expenditure, certain specific reductions can be made.

In the Vote for the Stationery Office, for instance, for which I am responsible, a sum of over £500,000 is provided for paper, printing and office supplies generally. I have directed the Controller to secure a saving of at least £50,000 under these heads.

For the year 1951-52 Dáil Éireann, at the instance of this Government, provided funds for a scheme under which, irrespective of distance, ground limestone was to be delivered to the farmer at a cost of 16/- per ton. The total paid out as subsidy in that year was £198,000. In the following year the amount voted for this purpose was increased to £450,000, of which £406,000 was spent. Last year the vote was further increased to £600,000, and the Estimates for this year provide for a similar sum. When the scheme was introduced, ground limestone plants were few, so that in most cases delivery involved long journeys between plant and farm. It was, at the same time, generally recognised that as the number of plants increased and supplies became more accessible, it would be possible, by imposing reasonable limits on haulage distances, to secure substantial economies. The position has now been reached where a beginning can be made. Accordingly, the Minister for Agriculture has made a regulation designed to discourage avoidable and unreasonable subsidies on transport by excluding charges based upon unnecessarily long hauls. Under the new regulation the transport cost of ground limestone will be fully subsidised in all areas up to a distance of 40 miles. In Wicklow and Wexford, however, where exceptional conditions obtain, the limit will be 50 miles.

General Mulcahy

What about Kilkenny?

Minister for Agriculture (Mr. Walsh)

There is no necessity.

Mr. MacEntee

I want to point out that, under this new arrangement, the farmer need not pay more for his limestone, but the taxpayer will be saved £120,000.

Mr. Morrissey

It is only yourself could do it.

Mr. MacEntee

It is to be regretted that those clamouring for retrenchment do not appear to like it when it is given to them. The manner in which expenditure on tourist roads in the Gaeltacht and Congested Areas should be provided for has been discussed with the Minister for Local Government who has agreed that it may henceforth be borne on the Road Fund rather than on the Vote for his Department. The normal income of the Road Fund, as the House is aware, continues to rise, and in the present year is not likely to be less than £4.45 million. The ordinary charges upon the Fund, however, I should point out, will not be prejudiced by the change; it was augmented in recent months by a grant of £1,000,000 from the National Development Fund and a further grant will, if necessary, be provided from that source this year.

The relationship between the contribution income of the Social Insurance Fund and the expenditure on unemployment benefit has so greatly improved recently that a reduction of £280,000 may properly be made in the provision under Subhead A of the Estimate for Social Insurance.

Difficulties for which the Government are not responsible make it impossible to bring the new health services into full operation as early as it had been intended. The slight—but inevitable—delay will reduce the sum required for grants to health authorities by £100,000.

Through the various reductions which I have specified I can count on a saving of £950,000. But apart altogether from these specific economies, to which I hope to add as the year progresses, I may legitimately, on last year's experience and in view of the higher totals, make an over-all allowance for undetected overestimation and general savings of £4,000,000.

SUPPLEMENTARY ESTIMATES.

The process of review to which I have subjected them has disclosed that the Estimates, as presented to the House, are not only comprehensive and adequate but in some respects may perhaps prove to be excessive. Yet, I must make some allowance for contingencies, as experience has shown that no year is likely to pass without some expenditure arising for which a supplementary vote will be required. There is every reason to believe that no additional sums of any magnitude will be required this year; for the new Social Welfare Act has been in operation for some time and we can now closely assess its cost, so that such a contingency as arose last year may be ruled out of consideration. The position in regard to the health services has already been explained; and so far as the probable expenditure on food subsidies is concerned this would appear to be amply covered by the Estimates, particularly when regard is had to the general trend of world wheat prices. Nevertheless, I shall allow something for unforeseen current expenditure and am including £750,000 under this head.

After these reductions and adjustments in expenditure, I can ask the Dáil to turn to the revenue side of the account with some degree of equanimity, since it will be realised that the prospect is not so formidable as it may have appeared at first sight.

I can in fact make some remissions —an announcement which I trust will not be unwelcome in any quarter.

Mr. Corish

This is the cheap sale now.

An Ceann Comhairle

Will Deputies allow the Minister to make his Budget speech?

Mr. Dillon

Particularly as he is going to take the tax off special marriage licences.

Mr. MacEntee

The manuscript which Deputy Dillon has, I think, has a note appended to it which informs him that it is distributed to Deputies as an act of courtesy by the Minister for Finance and that its contents are to be regarded as strictly confidential.

INCOME TAX.

It is quite obvious that some members of the Opposition have no regard for the condition of the people to whom I am about to refer. But the position of those in the lower and middle range of income whose earnings are directly taxed has long engaged the attention of the Government. In certain quarters the view is propagated that those who pay income tax belong to a plutocratic class set apart from and living on the rest of the community. This, as we all know, is far from being the case, for income tax now falls upon virtually all grades and shades of economic status and earning capacity. In my 1952 Budget I was able, by increasing the allowance in respect of earned income, to lighten the then prevailing levy on wage-earners, clerical workers, minor public officials, small shopkeepers and many in the professional classes. The increase in earned income relief, together with the other reliefs which were given at that time, must since have benefited up to 200,000 taxpayers, urban and rural, all with modest incomes. This year I am able to do something more for them.

The Exchequer position, unfortunately, does not permit of any reduction in the rate of income tax, but some substantial reliefs can be afforded which will ease the burden on those whose circumstances I have particularly in mind. I shall begin by increasing the personal allowances for both married and unmarried persons. The allowance for married persons will be raised from £280 to £300 and for the unmarried from £140 to £150. I may say that this is the first occasion on which the allowance for unmarried persons has been raised since 1947.

The increase in personal allowances will benefit all persons who pay income tax. Even so, there remain some groups to whom, in my view, a still greater measure of relief may properly be given. First among these are taxpayers with very small incomes. I propose to exempt from income tax every individual whose total income does not exceed £240 a year. Coupled with this, there will be a special provision for incomes just over £240, so as to ensure that there will not be a sudden imposition of liability at that point. This exemption, which will remove many thousands of taxpayers from the books, will be of particular benefit to agricultural labourers and other rural workers.

There is another class, too, whose position merits sympathetic consideration, namely, widows and widowers. For these I am providing, in addition to the increase in the personal allowance already referred to a further increase of £25, making the new personal allowance £175 in their case instead of the present £140.

The increase in their personal allowance to £300 will be of advantage to all married taxpayers. But for taxpayers with children. I am providing additional relief by raising the allowance for children. The existing allowance is £80 for the first and second child and £63 for each subsequent child. I propose to increase it to a flat £85 for each child.

Having especially in mind the position of young married couples setting up house, it is my intention to do something in relief of the owner-occupier of residential property. At present income tax is charged on fivefourths of the valuation of the dwelling. The levying of tax on this basis was adopted only as a temporary expedient, pending the carrying out of the long overdue general revaluation. Despite all the criticism directed against it the expedient was maintained and the higher levy enforced by the Coalition Government. I now propose to amend the law so that henceforth income tax on residential property occupied by the owner will be charged only on the actual valuation.

Under the Finance Act, 1941, relief may be claimed in respect of foreign income tax on income arising in certain foreign countries if the applicant was resident in the country of origin of the income for not less than ten years. The residence requirement has operated harshly in the case of persons who have earned pensions by foreign service aggregating ten years or more but who have not spent ten years in any one country. I propose to provide that residence may be aggregated to qualify for this relief.

These reliefs will, it is estimated, cost £442,000 in 1954-55. By virtue of them, some 40,000 persons in all, hitherto taxable, will no longer be concerned with the income tax collector. But everybody paying income tax will benefit from one or more of them, and in some cases the benefit will be quite significant. A few examples will illustrate this fact.

Take, for instance, the unmarried person with £240 a year, or £4 12s. 6d. a week. In 1951—in the happy years of the Coalition—if he were earning that income he would have paid in tax £8 9s. Henceforth he will pay nothing. A widow or widower without dependents earning £360 a year and with no other income had to pay £31 17s. in 1951, and since 1952 has been liable to £24 in tax. From now on the charge will be only £14 5s. A married man without children who is wholly dependent on earned income will be exempt from tax and will have to pay nothing unless his earnings exceed £400 a year. He had to pay £6 10s. in 1951. The value of the increased allowance in respect of children is quite considerable and may be gauged from the fact that a married man with one child will not be chargeable unless his earnings exceed £513. With two children he will not be liable unless he earns more than £627; the same man with that income in 1951 would have been charged £10. A married man with four children and earning £900 a year will now have to pay only £6, whereas since 1952 he has paid £19 4s., quite a heavy impost, it is true, but what a light one compared with what he had to pay in 1951, when he paid £33 16s.

General Mulcahy

Even after we had reduced the income tax which Fianna Fáil had in force.

Mr. MacEntee

Emphatically yes.

STAMP DUTIES.

The purchaser of a new house qualifying for a Government grant gets the benefit of a special 1 per cent. rate of stamp duty. Many transactions continue to carry the 3 per cent. rate of duty and in certain circumstances this may give rise to hardship—for instance, on young people setting up a home who, for one reason or another, find it more convenient to buy a house of the older type or perhaps a new house in respect of which a previous occupier has got the Government grant. This and similar cases will be met by a general relief which I am proposing for transactions under £2,500.

This relief will apply to all sales of property which at present attract rates of duty up to 3 per cent. and will take the form of a 1 per cent. rate of duty on property up to £1,000 in value and thereafter a scale of duties rising gradually from 1 per cent. at £1,000 to 3 per cent. at a point a little below £2,500. A 2 per cent. rate will be reached at £1,500 and a 2½ per cent. rate at £2,000. There will, of course, be no abrupt change in the rate of duty at any point. In this way some relief will be given on almost all transactions under £2,500 in value, and, in the lower ranges, the relief will be quite substantial.

Within the limits I have mentioned, the proposed new rates of duty will apply to conveyances and transfers of lands as well as of houses. I am hoping, therefore, that the changes will not alone help persons buying the less expensive type of houses to live in, but will also give a stimulus to the market in small properties generally. They will come into operation on the 1st August, 1954, or on the passing of the Finance Act, whichever is the later, and will cost roughly £45,000 this year.

Also in the field of stamp duties—and this is where Deputy Dillon disclosed a Budget secret—I propose to repeal the duty on special marriage licences. These licences are required only in connection with certain marriages in Protestant places of worship and the duty has become an anachronism.

General Mulcahy

What is a special marriage licence?

Mr. MacBride

That is a great concession.

Mr. MacEntee

If the Deputy will wait. I have well in mind the Deputy's abhorrence of people being photographed with particular persons.

Mr. Sweetman

Is the Minister talking of his Irish Times photograph with the Budget last year?

An Leas-Cheann Comhairle

Order?

MATCHES.

Mr. MacEntee

Since February, 1953, the Prices Advisory Body have had under close examination the position of the match industry in this country. They have come to the conclusion that as a result of sharply rising costs of production over a number of years the point has now been reached where some adjustment in favour of the industry is unavoidable. Normally this would take the form of an increase in the selling price of matches, in which case the minimum practicable allowance would be ½d. per box. The Prices Advisory Body, however, take the view, which I share, that the situation could be adequately covered by a reduction of excise duty. They have, accordingly, made a recommendation, which the Minister for Industry and Commerce has endorsed, that the duty per gross of standard boxes should be reduced from 6s. 3d. to 5s. 9d. I propose to give effect to this immediately. The reduction in the yield of duty will be about £21,000.

ENTERTAINMENTS.

The Minister himself cannot keep from laughing.

Mr. MacEntee

I find it very hard to keep my tongue off the Deputy.

The Financial Resolutions providing for the reduced duties on beer and matches will, because of a provision in the Provisional Collection of Taxes Act, 1927, be deprived of statutory effect by the dissolution of the Dáil. To ensure that these reductions will continue to operate after the dissolution the Government will make appropriate Orders under the Emergency Imposition of Duties Act, 1932.

FLOUR AND BREAD SUBSIDY.

The tax reductions which I have detailed so far will absorb £893,000 but will yet leave an appreciable surplus on the current Budget. In the past the very thought of such a position arising has evoked the strongest criticism from all quarters of the Coalition. Frankly, I think that when a reasonable surplus does arise on a Budget there is no good reason to deplore it. In our circumstances, indeed, it would be no more than factual evidence that the wise measures we had taken were bearing full fruit, that our budgetary problem had been solved and that our economy could sustain the heavy burdens which in latter years the expansion in our social services has imposed upon it. I am not, however, looking for any unnecessary surplus on this Budget, any more than I have done in other years. While meeting fairly the increased cost of the new or enlarged services which in one form or another the public have been demanding, it has always been the aim of this Government to keep taxation down to the minimum requirement. Therefore, since a surplus is in prospect, it is only right that the greatest possible number of our people should be given the benefit of it. This can be done to the advantage of every family and every individual in the community by increasing the provision under subhead J (1) of Vote 50 by such an amount as will enable the price of bread to be reduced as on and from the 1st May by ½d. per 2-lb. loaf, making that article 8¼d. in the baker's shop or 8¾d. if sold over the grocer's counter or from the baker's van. The price of flour will be reduced at the same time by an equivalent amount.

Mr. A. Byrne

You broke your heart.

Mr. O. Flanagan

This is the halfpenny Budget.

An Leas-Cheann Comhairle

Will the Deputies allow the Minister to make his statement? They will get every opportunity of making their own speeches later.

Mr. MacEntee

This statement may be distasteful to Deputies opposite but it is of some importance to the people. I was saying that the price of the 2-lb. loaf will be reduced by a halfpenny, and that the price of flour will be reduced by an equivalent amount.

We are now in a position to strike a final balance on the current Budget. The reductions in bread and flour prices will add £900,000 to the expenditure side of the account, making the net figure for that side £105,635,000. On the other hand, the reductions in taxation which I have announced total £893,000, so that the revenue must be written down by that amount to £105,665,000. We may expect, therefore, to close the year with a surplus on the current Budget of about £30,000.

CONCLUSION.

Concluding my speech on last year's Budget I explained how it marked the second phase in the effort of this Government to re-establish order in the public finances and in the nation's economy. This Budget is the culmination of that endeavour and gives to our people the first fruits of our success. We have been able this year not only to provide increased benefits for all classes but to reduce taxation. We have also brought under control the runaway deficit on external account which we inherited. If that deficit had been allowed to expand year by year the country would have been stripped of every external asset and reduced to the plight of a State in pawn. We have financed a programme of national development much greater than was ever undertaken before. The funds required for that work have been lent to us readily by our own people and it has not been necessary for this Government to look for foreign loans or to encumber future production and future Budgets with heavy external payments. We have removed—and this is of some importance—the shackles which, under our predecessors, prevented proven basic industries, like cement manufacture, from expanding to meet the needs of the home market. We have encouraged private enterprise to establish new industries and to teach our people new trades and skills. With our assistance and encouragement agricultural output has been raised to its highest level since the war.

With its public finances in order, its food supply secured, its industrial and agricultural output expanding and with opportunities for permanent employment increasing, the country can now face the future with confidence and courage.

Mr. O'Leary

Not for the old age pensioner.

Mr. MacEntee

On this accomplishment the Government stands.

Mr. Sweetman

The Government falls, is what you mean.

An Leas-Cheann Comhairle

Before I call on Deputy McGilligan, the Financial Resolutions and tables explanatory to the Budget will be circulated.

Mr. McGilligan

The Budget address to which we have just listened opens with a statement which for its audacity it is scarcely possible of matching. Yet the Minister in his last phrase did match it. The opening phrase was: "The year which has just closed has been one of the most prosperous in the nation's history." People do attempt at times to falsify history, but it is rarely that a person makes an attempt to falsify it so closely on the ending of the period which he attempted to glance back over. It ended with the phrase: "On this accomplishment the Government stands." That coming from a member of a Government that is tottering to its downfall is, as I say, equal in audacity to the opening phrase. If Deputy Killilea thinks the Government's position can be considered as expanding depending on such an ineffective crutch as Deputy ffrench-O'Carroll, Deputy Cogan, Deputy Cowan and Deputy Dr. Browne, he does not understand language as I understand it.

The Government is, of course, going to stand for another four weeks, after which the people will have their say. After that, there will be another two weeks during which the Government will retain their portfolios until their successors have been appointed and that is the short period for which they are likely to be there.

In between these two amazing statements, before we get to what they might call the fat in this Budget, we have a series of other matters to which this Budget is devoted. I notice that this year the Minister has devoted two whole pages out of 50 to unemployment and to employment. For two years back we on these benches have been drawing attention to the fact that the Minister was silent about what used to be the great Fianna Fáil plan regarding employment, lack of employment and emigration. The picture that he paints with regard to employment is, of course, fantastic. The Minister must himself get the returns that we all get, and we see that the unemployment figure is standing at a figure that is higher than it was when he took over, even though he may boast that at a particular point he brought it down from the really fantastic figure it stood at a year and a half ago.

He tells us that the agricultural position in this country, particularly in respect of production, has been helped by the co-operation of the commercial banks. That phrase was criticised already in this House. The commercial banks decided, and the Government hailed it as a victory, that they would give credit to creditworthy borrowers, and the people of this country were expected to sit back and admire both the tenacity of the Government in pressing that point and the liberality of the banks in acceding to that request.

We are told that there is a downward tendency in prices and that this is evidence of the improvement in the living standards brought about for the community without any impairment of our external or internal balance. I hope that the Minister will speak at length on the improvement in the living standard which occurred since 1951. One of the items of improvement in our living standard predicted for the future is the negotiations with the British in connection with cattle prices. These, we have been told, were eminently successful and they have removed much of the uncertainty as to the course of cattle prices after decontrol. Is anything very secure about that? Does anybody know what the terms of that agreement are? If that agreement is as successful as is claimed why are not the terms published? What is there to hope for a successful agreement? If there is an agreement—and I deny that there is any—I say that it would be published over the wires, over the radio, as a red-hot item of news redounding to the credit of those who went over to England. There is no agreement, and there is uncertainty about cattle prices.

We are coming now to the capital programme, and in one paragraph the Minister does what Deputy Cogan has said his chief was an adept at, the swallowing of his own words. The Minister in one half page accepts the whole programme of capital development which at its present extent we inaugurated. I have pointed out in this House before that we have the record of Fianna Fáil's first 15 years of continuous office when they devoted an average of £1,000,000 a year for capital development. We are now told that there is a vast leeway to make up. Why? Because it developed over the 15 years. We are told by Deputy Lynch, speaking for the Taoiseach as his Parliamentary Secretary, that the community ought not to be afraid of or approach in any timid manner the borrowing programme, seeing that we had so much leeway to make up. Deputy Lemass, the Tánaiste, told us at one of the by-election meetings that there was a programme of rural electrification predicted before the war at a cost of £14,000,000 which was now likely to cost £40,000,000. Why? Part of the leeway that has to be made up, part of the timid approach over 15 years.

Mr. MacEntee

Does the Deputy want some of his speeches read back to him?

Mr. McGilligan

The Minister, I notice, was rather feeble in his announcement, and I would not ask him to go back and read some of the things which must cause him anguish, because they were so accurate.

This Budget does one thing. We see the abolition of the industrial alcohol factories. Two of them are doomed and on the way out, but the others, of course, because they happen to be in delicately-balanced constituencies, will have to be kept alive at least until this particular electoral battle is fought there.

As far as the capital Budget is concerned, the position for the Government is going to be eased this year by the fact that the E.S.B., is left on its own. The E.S.B., the Minister says, being a very prosperous body and having got the people's confidence by its experience and initiative and prudence, will, no doubt, get whatever money is required. The Minister speaks as if merely to shift the burden of borrowing from the shoulders of the Government to the shoulders of another organisation will ease the capital requirements or the capital market scarcity. We will wait and see.

We are told that this year the Budget is going to balance. How has he got it? We know he was to save £90,000 last year but that was only a flourish in the Budget speech last year and the money has been spent. I do not know if it has been spent properly or not but it has been spent and the economies have not been shown to us. I doubt if they were secured. What the Minister did secure from his colleague, the Tánaiste, was increased taxation of about £4,000,000. We are told that during the year revenue was showing great buoyancy and was going to bring in £7,000,000 more than was promised. It brought about £6,000,000, which came from those scattered items which reflected not the Government's policy but the policy of the Government which preceded the present Government. There was an increase in customs duty representing no mean new taxation. That gave the Minister £3,000,000 in place of the £3,500,000 economies he said he was going to get. This year we are again going to have a balanced Budget. How? We spent a great deal of the last session of this House dealing with the Defence Forces, and last year we had a flourish from the Minister about what we owed to the Defence Forces and that it was necessary to provide them with the most up-to-date equipment even though it was costly. This year in order to have some money he could give away in little alleviations of the taxation he previously imposed the Minister proposes to save £1,200,000 on the Army. He proposes —and this will certainly represent a modern miracle—to get £1,000,000 from C.I.E. He says he will get savings of nearly £1,000,000 from other services— the Stationery Office, a mere matter of £40,000 which does not give him much one way or the other, and the transport of ground limestone, on tourist roads, on social insurance and on the great health insurance. There is to be nearly £1,000,000 saved in the coming year. We know that there will be a saving under health insurance. The Minister for Health has neither the mind, the money, the doctors nor the institutions to put through his health legislation; and if it has been thrust into the background it is because it is admitted that the people revolted when they compared what they were going to get in the way of public ward accommodation in the hospitals, as was proposed, with what they were being asked to pay through the increased rates imposed upon them. The Minister is only allowing £750,000 again this year for Supplementary Estimates.

With these supposed savings of £1.2 million, including £250,000 to be taken from the health, and social insurance, as well as tourist roads and the transport of ground limestone, he allows for no Supplementary Estimates above the item of £750,000.

The table we have had circulated to us is like the tipster in the racecourse, who says: "We gave you three losers yesterday but will give you a good winner to-day." The Minister says: "I gave you the great illusion last year of £3,500,000 of economies in public service. I did not get it. This year I am going to give you £4,000,000." Then the Minister proceeds to distribute these reliefs, having thus ensured that he is going to get the money for it, in these doubtful ways.

Certain alleviations by way of increased allowances under the income-tax code are given. They are very badly needed and will be welcomed, but let us get them in their proper perspective. The allowance for a married man is raised by £20 and the allowance for a single man by £10. Exemption from income-tax is given to people whose incomes do not rise above £240 a year. Whatever that may mean in present currency, it is about the equivalent of £95 of the old days' income. We think it a blessing to exempt a man whose income does not exceed £95 a year, who has not reached the old £2 per week level, from income-tax for the future. In addition, widows and widowers are being given certain increased allowances, while an increase in children's allowances has also been agreed upon and is very welcome. All these remissions come to some £440,000.

Again, without a blush, the Minister removes the increased tax on the valuation of residential houses which he imposed some years ago. Does the Minister remember when it was put there or the phrase which he used when he introduced it? I did not know, of course, that it was his intention to remove it to-day or I would have endeavoured to refresh my memory but without being word perfect I think I can quote the phrase from memory. The present Minister came in with that tax in 1932.

Mr. MacEntee

Wrong.

Mr. McGilligan

He spoke of it as

We know the circumstances under which the remission was given to the ballroom proprietors and the amount which that cost the community. Many an I.R.A. man was sent back to lick his wounds and to think that it would be far better if he were a ballroom proprietor instead of being merely a member of the I.R.A.

Donnchadh Ó Briain

They were looked after by this Government to a far greater extent than by your Government.

Mr. McGilligan

Remissions on the beer duty are being given to the extent of £350,000. One thing the Minister did not tell us was whether these remissions are going to inure to the benefit of the consumer. I hesitate to think that any other Minister for Finance would give certain alleviations to the liquor trade and not extend them to the people who consume liquor. Deputy Flanagan said that this was the halfpenny Budget, but if that statement is based on the assumption that something is going to the consumer in this instance. I think the Deputy is making a mistake. We then come to bread and we are told that there is to be a halfpenny taken off the 2lb. loaf and a corresponding decrease in the price of flour. The loaf, up to 1951, used to be 6½d. The present Government raised the price to 9½d. and they are now taking a halfpenny off that. It may well be called the halfpenny Budget, so far as that item is concerned. That is the full fat that there is in this Budget. With that halfpenny off the loaf the present demoralised group are going to seek the votes of the community; on that accomplishment they take their stand.

Minister for Agriculture (Mr. Walsh)

At Deputy Dillon's price for wheat you could take off a lot more.

Mr. McGilligan

These remissions are based on certain savings which the Minister has mentioned but the Minister knows well that that is a pretence. The Minister does not believe that he is going to save a million on the subsidies to C.I.E. nor does anybody else, and I doubt if his forecasts in regard to savings on social insurance will materialise. What then is he relying on in the future? He is hoping that, if he is there, the Tánaiste will help him by imposing new customs duties which will operate as a purchase tax on the citizen in the main.

The Minister told us that his aim was to keep taxation to the minimum. How has he operated that hope over the years? In 1952 increased taxation was imposed on the people to the amount of £17,000,000 and in 1953 that £17,000,000 of increased taxation was continued. That was the mood of those who now want to keep taxation at a minimum. He now informs us that we are enjoying the first fruits of Fianna Fáil success, which means that the Minister will reduce the £17,000,000 by £1.8 million. We have the additional £17,000,000 imposed in 1952, the additional £17,000,000 imposed in 1953 and the additional £15.2 million imposed this year. That is what the Minister calls keeping taxation to the minimum. That is the record on which the people are anxious to express their view in the weeks that lie ahead.

Mr. Norton

I read in the Press recently, about ten days before the presentation of the Budget, a raving letter from the Minister for Finance. After three months' absence from the House, he thought the best contribution he could make to the public weal was to write at considerable length to the Irish Press and the Evening Mail. In the course of this verbose letter, the Minister talked not on questions of unemployment or prices or emigration: the Minister's concern in the letters he wrote to the newspapers was about such subjects as rabbits with diamond necklaces, pink elephants—a change from the time when the Minister used to specialise in white elephants—and the Minister also showed how learned and knowledgeable he was on the subject of black magic. That was the Minister's contribution then. As I looked at this Budget and saw the manner in which it was constructed, I came to the conclusion—and I think the country will come to the same conclusion—that it bears all the evidence of being the work of a person who has frolicked with such fantasy as necklaced rabbits, pink elephants and black magic. As far as this Budget is concerned, it provides no relief of any tangible kind from the problems which are facing the people of this country to-day.

This Budget has been constructed on the mousetrap principle—a few tasty morsels are being set as bait in the hope, with polling day a few weeks away, that some simple credulous electors may be induced to vote for the Fianna Fáil Party on polling day. But the time has long gone by when people could be deceived by Budgets constructed in this manner. The people are not going to be deceived by a reduction of a halfpenny on the price of bread. They have memories going back to the 1952 Budget. When they contrast what is being done in this Budget with what was done to their standards of living in 1952, the reception for members of the Government Party will not be too cordial when the ballot boxes are opened on the 18th May.

This Budget statement opens with a declaration that during the past year the cost of living fell. Where has the Minister for Finance been living for the past year? Does any member on the Government Benches believe, in truth, that the cost of living has fallen during the past year? Is there any member of the community prepared to accept that statement as a statement of fact related to his everyday life over the past 12 months? Everyone knows perfectly well that the cost of living has not fallen in the past 12 months and that in fact—thanks to the Fianna Fáil Budget of 1952—since then, and now, we are living at a time when the cost of living is higher than at any time in living memory.

The Minister says there has been a remarkable increase in employment during the year, inferentially that there has been a very substantial fall in the number of persons unemployed. The Minister was "ikey" enough to make the comparison between 1954 and 1953. Let me quote to the Minister the 1951 figures. Let anyone contrast those with the 1954 figures—these figures in both instances being published by the Central Statistics Office—and then he will see the hollow pretence of the Minister in attempting to claim here to-day that unemployment has fallen. In April 1951, there were 54,900 persons registered as unemployed; in April 1954, there were 74,800 persons registered as unemployed; so that if you compare the unemployment figures——

Mr. Walsh

May be the Deputy would give us the employment figures—the numbers employed in the two years?

Mr. Norton

I will be delighted to give all the information you want. The Minister is sadly in need of information. I want to get these figures on record. In April, 1951, there were 54,900 and in April, 1954, that figure jumped to 74,800. If you compare April, 1951, with April, 1954, the number of unemployed has increased by virtually 20,000 in the meantime—and this, let it be known, notwithstanding the very substantial emigration which has taken place in the past three years.

Mr. Blowick

Yes—and which would add another 20,000 at least.

Mr. MacEntee

You set up a commission on it.

Mr. Norton

Mr. Aiken

It is a fact that cannot be denied.

Mr. Norton

The ordinary housewife who tots up the cost of all these things and knows the impact of these higher prices on her domestic budget and remembers that she is paying more for meat, milk and bacon and that her husband has to pay more for cigarettes and tobacco and a modest bottle of beer, is told that in this world-shaking Budget of the Fianna Fáil Party she will get relief from all this burden to the extent of one halfpenny on the 2-lb. loaf. That is what the electors are being offered in this Budget. They are being offered one halfpenny restitution by a Government which has raided un-ashamedly the domestic larders of the people. This is the restitution that is being made—one halfpenny on the 2-lb. loaf—three or four weeks before polling day.

This Budget is a mockery of the sufferings of the ordinary people. But Ministers do not know what way the ordinary people now live. Speeches made by Ministers, the actions of Ministers and this whole Budget clearly indicate that the Government is completely divorced from the realities of life in Ireland, that it has no knowledge of the problems which affect the ordinary householder and has no intention of making any substantial contribution to easing the burden on the people, a burden which was made all the more onerous by the Fianna Fáil Budget of 1952.

As I said at the outset, this Budget was constructed on the principle of the mousetrap. A few morsels are being set as bait in the hope of deluding simple electors. This trap will not work on this occasion and no amount of morsels such as are sprinkled in this Budget will save the Government from the indignation which the people feel at the way in which the Government has so savagely attacked the standard of living of the people and neglected vital problems which press with such rigour on the ordinary people.

Mr. Blowick

Listening to the Minister for over one and a half hours I could not help thinking that the Minister resembled a man who set himself the impossible task of shearing a pig. There was a lot of noise during that operation but very little wool after it. The first sentence of the Minister's speech: "The year which has just closed has been one of the most prosperous in the nation's history," disclosed not only the position of the Minister for Finance but that of the Taoiseach and the other members of the Government. It shows that they have completely cut adrift from the people and the problems of the people. I have not the slightest doubt that the Minister for Finance believed that statement even though there is not a shadow of truth in it when one comes to examine it. The Minister believes it because he is so far removed from the problems of the ordinary man to-day that he does not know the first thing about the privation and poverty that the policy of the Minister has brought into practically every home in the land, dating back to the famous, or rather infamous, Budget of 1952.

It is no harm to remind the Taoiseach and the Minister for Finance that on the 5th June, 1951, a few days before this Dáil sat for the first time, point No. 15 on the Fianna Fáil 17 point programme was: "To maintain subsidies to control the price of essential foodstuffs and the operation of an efficient system of price regulation." A few days previous to that, Mr. Lemass said: "A Coalition Minister has said that Fianna Fáil, if elected, would increase the taxes on beer and tobacco. Why should such taxes be necessary? There is no reason why we should reimpose those taxes." That statement appeared in the Sunday Press of 13th May, 1951. Mr. MacEntee, the present Minister for Finance, as reported in the Irish Independent of 15th May, 1951, said: “A number of persons were spreading a rumour that Fianna Fáil, if returned to power, would reimpose the tax on drink which was imposed by the Supplementary Budget of 1947. There is no truth in such a rumour.” Following that, the taxes were imposed, taxes such as the people of this country never even dreamt of.

Now, after these taxes have been in operation so long, many people thought there might be some relief (1) because there is a general election in the offing and, (2), because they feel they have been quite sufficiently blistered by this time by the Fianna Fáil whip. Instead of giving relief, the Minister for Finance walked into this House to-day, swelled out his chest and told us that he is reducing the price of the 2-lb. loaf by one halfpenny. That is the sum total of his Budget.

The Minister seeks to claim credit for relieving road workers and agricultural workers of liability to income-tax. If the Minister claims credit for not extracting income-tax from people whose income is about £3 10s. or £4 a week, bearing in mind the high cost of living which was brought about by this Government, I think he would find it a much more decent occupation to steal pennies from children.

One of the Minister for Finance's first actions was to restrict credit—to freeze the circulation of money all over the country. On the heels of that came the taxes which increased the prices of foodstuffs. Not only small shopkeepers but traders in general were practically paralysed in their business by that action of the Minister for Finance. The taxes increased the cost of the replenishment of their stocks at a time when they wanted credit for that purpose but the commercial banks, due to the order given by the present Taoiseach to freeze all credit, did not give these traders the credit which they desired. Now, after waiting so long, we are told that agriculture is in a most prosperous condition and that exports have increased by £32,500,000 over those of 1951. So they have, but how have they increased or why have exports—exports of food in particular— increased to such an extent since 1951? They have increased because the purchasing power of the people has been taken from them. Their pockets have been completely emptied by the present Government. The Minister claims that the increase in exports has been brought about through increased production. Where is the increased production? There might be a very slight increase in production: I would grant the Minister perhaps £2,000,000 or £3,000,000. However, I claim that the increase of £32,500,000 in production over that of 1951 is because we have less people at home, as the register of electors shows. There are 15,000 fewer people on the register of electors this year than on the last occasion it was compiled. People who were enabled by the prosperity which existed during the term of office of the inter-Party Government to buy their requirements of essential foodstuffs found that, under the Fianna Fáil Government, they were unable to make ends meet and they emigrated to Britain.

At the present time, there is a vast amount of butter in cold storage in this country. What does the Taoiseach propose to do about it? Where is the sense in having the dairy farmers of this country produce butter, a very essential item of food, and at the same time maintain the price at such a high level that the majority of the families in the country have not the wherewithal to buy it? It is not much consolation for the people of County Mayo, of Cork, of Donegal and of every other part of Ireland to have to go home in the evening after a hard day's work and have dry bread or perhaps margarine for their tea and to know that 500,000 cwt. of butter are in cold storage in this country at a price which is so high that they cannot consider it. The Taoiseach shakes his head and appears not to want to hear this kind of thing. I say that it is a very important issue indeed. The Taoiseach has brought about that set of conditions in practically every home in the country, because the majority of our people are living from hand-to-mouth.

I want to emphasise clearly that the greater part of the increase of £32,500,000 in exports from this country has been brought about not so much by increased production—I grant a certain increase in production but not to the extent of £32,500,000— as by depriving our people of the wherewithal to buy the food which is produced by our farmers.

The Taoiseach

That is sheer nonsense.

Mr. Blowick

It is not. I have been informed and instructed to say here in the Dáil that the fathers of families in the town of Castlebar who are earning their living in a local factory—and who were accustomed during the period of office of the inter-Party Government to have meat and butter on their tables, with the same wage as they are earning today—have meat only about once a week now, while they do not have butter at all? Will the Taoiseach explain that? That is a nice state of affairs in a home where there are eight growing children, most of them still going to the national school.

Mr. O'Hara

It is a pity they did not get the Ballina biscuits for them.

Mr. Blowick

It is appalling that the Taoiseach refuses to believe those facts—and I am sure that what is happening in Castlebar is also happening in every other town throughout the country and in Dublin City as well. If the Taoiseach has doubts as to the veracity of what I say, let us just examine the butter question alone.

The sale of margarine has trebled inside the past two years and the sale of butter has dropped steeply.

Mr. Aiken

You want to make it 1/- a gallon again.

Mr. Carter

He is afraid to say that.

Mr. Blowick

The Minister for External Affairs had a chance a very short time ago of testing his policy in his constituency and he got a kick in the pants which he will not forget in a hurry.

Mr. MacEntee

Senator Commons is after you and you had better be careful.

Mr. Blowick

Coming then to the agricultural community, the farmers, the whole tone of the Minister's speech was a playing of the old game of trying to raise class hatred, of trying to set the non-agricultural community against the agricultural community and suggesting in a veiled way that the farmers are rolling in wealth. The first question I want to ask the Minister is where the increased revenue which C.I.E. secured came from. I am sorry to say that a great portion of it came from the tens of thousands of the young men and women flying out of the country, in the form of passenger traffic from the West to Dún Laoghaire.

Mr. MacEntee

Has the Deputy the figures?

Mr. Blowick

If the Minister will talk to the Taoiseach beside him, he will find that the Taoiseach will tell him, as he has told us, that there are no figures available at present, that there is no means of ascertaining—very conveniently for the Government—the exact numbers of those who left the country. The Taoiseach has told us that many times and the Minister must not be keeping very much in touch with his colleagues in the Government when he asks me for these figures, figures which the Government deliberately killed or kept under cover and refused to make available. The farmers now are rolling in wealth and do not know what to do with their money, to such an extent that their sons and daughters are flying from them and it has become a first-class problem in most of the rural holdings in the West of Ireland for a father or mother, after rearing a family, to get even one boy to remain at home to hold on to the holding, as was the custom up to this.

The Minister has told us that he proposes to save £120,000 on Deputy Dillon's ground limestone scheme. He does not propose to subsidise the carriage of ground limestone farther than 40 miles. What about the farmer who happens to be 41 miles away, or 45 miles or 50 miles, outside of Wicklow and Wexford, the two counties mentioned by the Minister? Does his colleague, the Minister for Agriculture, propose to take steps to establish a sufficient number of ground limestone plants to ensure that this good work will go on, or is the ground limestone scheme to suffer the same fate as everything the inter-Party Government started? Are we again to have the position that, because it was the inter-Party Government started it, it must die an immediate death under Fianna Fáil?

Mr. Blowick

We have the same position with regard to the £120,000 subsidy which the Fianna Fáil Government gave in respect of fertilisers in 1944 or 1945 and of which only £19,000 was spent—earmarking sums of money for the benefit of farmers and not a single penny spent at the end of the financial year. I think it was Deputy Norton who described this Budget as a mousetrap set with a few dainty morsels here and there, but the people of a few constituencies who got a chance recently in the by-elections to give their opinion have walked Fianna Fáil into the trap which they themselves had set.

The Minister proposes a saving of £800,000 on the Army. Would he give us an explanation of that?

Mr. MacEntee

I gave it in my Budget speech. Read the speech.

Mr. Blowick

I followed the speech word for word and there is no explanation, good, bad or indifferent, of that. Along with the huge burden of £125,000,000 which the Minister has imposed on the country, we must not forget that the ratepayers are groaning under a tax load of £15,000,000 in rates, mostly imposed by the Minister for Finance and his colleagues, as a result of passing legislation, glibly and flippantly, sending it down the country and allowing the cost of that legislation to be borne by the ratepayers. That is one thing that is bearing fruit now and whatever Government comes in—it may come as a surprise to the Minister to know this—the day is coming when there will be a revolt against rates over the Twenty-Six Counties, due to the complete mismanagement of legislation and the placing of burdens on the backs of the ratepayers, regardless of whether they are fit to meet them or not.

There is only one ray of hope in this whole situation—that the Taoiseach has decided to dissolve the Dáil next Saturday night and that a new Dáil will be elected on the 18th May. That is the only ray of hope for the people of the country who were waiting for the Minister to provide some balm for the lash wounds which he imposed in his Budget of 1952 and which his colleagues have imposed, one by one, ever since. The only relief the people get now is ½d. off the loaf and some relief to publicans or to brewers in the matter of the 8/6 per barrel of beer. The people will be very glad of the opportunity to place this Government where they should have been placed long ago —in a position in which they will be unable to indulge in the petty tricks such as those indulged in immediately after the last general election to get them into power, with the ludicrous result that we had a minority holding the reins of Government. They will be very glad of the opportunity to put this Government, and any other people who may have similar inclinations, where they properly belong—not on this side of the House, but outside the House altogether.

Mr. MacEntee

Does the Deputy remember the bad odour in Castlebar in 1948?

Mr. MacBride

I suppose that inevitably it is difficult in the middle of an election campaign, to discuss a Budget objectively, or to expect the Minister for Finance to be candid with the House or with the people. I must say that the Minister has not done credit to his intelligence by many of the statements he made in his Budget speech. When he tells the House and the country that the year which has just closed was one of the most prosperous years in the history of the country, surely he is relying too much on the credulity of the country. Likewise, when he tells the country that the cost of living has fallen in the past year, he is surely relying on the gullibility of the public to an extent which even a Minister for Finance presenting a Budget is not entitled to do.

There is one small point which, I think, most of the Deputies on this side have overlooked, but which is of some relevance in connection with the halfpenny off the 2-lb. loaf. It is that, in addition to the increase of 3d. or 3¼d. imposed by the Budget of 1952, the public were called upon to pay a further increase on the 2-lb. loaf imposed by the Minister's colleague, the Minister for Industry and Commerce, a short time afterwards. In effect, therefore, the position created by the 1952 Budget as regards bread remains unaltered. The halfpenny which is being removed is merely the removal of the halfpenny which the Minister for Industry and Commerce had imposed on his own, apart from the Budget, so that the position remains as it was after the 1952 Budget as far as the 2-lb. loaf of bread is concerned.

I am really more interested in the omissions from the Minister's Budget statement than the contents. We have had numerous declarations from members of the Government denying there have been credit restrictions and denying that the Government had anything to do with the imposition of credit restrictions by the banks. On numerous occasions. I challenged the Government, through the Minister for Finance and through the Taoiseach, to give a clear and categorical indication that as far as the Government was concerned they wished to see an expansion of credit in the country. No such statement has been forthcoming and, indeed, any statements made by the Minister for Finance in the course of his Budget statements during the past two years have been a clear indication to the banks that as far as he was concerned he would welcome a restriction of credit.

The Taoiseach

Of course, that is not true at all—not a word of it.

Mr. MacBride

The Taoiseach has a marvellous way of saying things are untrue when they do not suit him. Let me quote what the Minister for Finance said in this House. I just happen to have the quotation here. I find it is necessary, when dealing with certain Ministers, to come with quotations in case they would deny them. On the 18th July, 1951, the Minister for Finance in this House said:—

I do not hold any brief for anybody who interrupts from the Gallery but he is speaking the truth.

Mr. MacEntee

Of course he was sent there. I suppose we will hear interruptions at the meetings.

Mr. MacBride

Let us see how prosperous was the year which has just closed. In 1950 the average in respect of the people unemployed was 53,000. In 1951 it was 51,000 and in 1953 it was 70,000. It was a very prosperous year for those 70,000 people. It was a very prosperous year for the 70,000 families who were depending on these unemployed men. The Taoiseach said there were no reliable figures in regard to emigration. He is strictly correct but he is quibbling. There are no reliable figures but there are certain figures which are a guide to the emigration position. He knows that and he has been told that by his advisers. He knows that the figures of passenger movements coming by sea in and out of the country while not comprehensive are an indication of the trends of emigration. He knows what these figures have been and he knows what they were in 1953. He knows that in the year 1949 the outward balance of passenger movement by sea was 16,607; that in 1950 it was 17,854; that in 1953 it was 31,113. He knows these figures—they are available to him in his Department—yet he will tell this House that there are no figures relating to emigration, that there is no emigration from the country or that there is less than there was.

In the same way it was first denied there was an increase in unemployment. One of the problems the Minister for Finance had to deal with in his Budget, at least in the year that is just ended, was that he had to find an extra sum of £1,000,000 to pay for the additional unemployment benefits because of underestimation in the number of people unemployed. The Minister for Finance in his Budget statement talked about improved employment. He remained extremely silent about the number of people employed on the land and about the 33,404 people who were disemployed in agriculture in the course of two years from June, 1951, to June, 1953.

I welcome any concessions there are in the Budget. I do not think they will be of very much benefit. The Minister for Finance has been rather silent as to who is to get the £350,000 relief in connection with the brewing industry. Is it all to be received by the licensed trade? Is portion of it to be retained by the brewers? Is the public getting any of it? We have not been given very much information on that. I must say that the gift of £21,000 to the match manufactures and the gift of, I think, £35,000 to certain cinema proprietors does not arouse very much enthusiasm. I wounder if there is lurking in the background another letter such as the one we had read in this House on numerous occasions in connection with dance hall proprietors?

Mr. MacEntee

"Dear Paddy".

Mr. MacBride

I wonder would the Minister like me to read the letter from the Secretary of the Dance Hall Proprietors' Association? I have it here if he would like to hear it. There was a subscription of £250 from one of them.

There is one other matter to which I would like to advert. I have not got the figures here in detail but I think it is a matter of some significance in regard to our foreign trade. I have noticed that in the course of the last two or three years there seems to have been, if not a net falling off, certainly a proportional falling off in our exports to countries other than Britain. Our exports to America and to other European countries have been falling off fairly sharply. That is a bad tendency. I had hoped we would be able to continue to build our exports to America and our exports to countries other than Britain. I had hoped the present Government would have pursued the same policy which we pursued in that respect. We were practically able to double those exports in the space of two or three years but since then a completely different trend has been showing itself. The exports to Britain have been increasing but proportionately the exports to the United States and to countries other than Britain have not been increasing.

Mr. MacEntee

Did the Deputy not go over with Deputy Dillon and six other members of the Cabinet to drown Britain in eggs?

An Leas-Cheann Comhairle

Deputy MacBride should be allowed to make his speech without interruption.

Mr. MacEntee

Did the Deputy not undertake to Sir Stafford Cripps that he would borrow 128,000,000 American dollars?

Mr. MacBride

I know the Minister may not like these things to be mentioned but we may as well face the facts. One of the facts of our present position is that we have been gradually losing our foreign trade to countries other than Britain. That is a pity and I think it is partly as a result of Government policy. Whether the Taoiseach and the Minister for Finance are alive to that or not I do not know. I know it is happening.

Dáil Éireann debate - Wednesday, 21 Apr 1954