The Minister's Budget Statement on last Wednesday was a comprehensive and lucid exposition of the economic position of the country as a whole. For clarity of expression and precision of phrase it ranks as one of the most remarkable Budgets ever presented to this House over a long period. It covered in a detailed way every aspect of the country's economy and it clearly outlined the policy that this Government proposes to pursue.
In addition, it pointed the difficulties which have to be overcome, and it expressed the confidence of the Government in its capacity to guide the economic affairs of this nation over the next four years. The Budget statement showed that our economic circumstances have improved considerably and, as the Minister said, that substantial improvement occurred during the last quarter of 1954 and was reflected not only in an improvement in our balance of trade but also in the public confidence which was shown in the subscriptions made to the £20,000,000 national loan floated in that quarter. These two factors indicate more clearly than any speeches or expressions of opinion by either supporters of the Government or Ministers of State the confidence of the people as a whole in the soundness of the policy being operated by the Government.
The Government depends to a considerable extent on the success of its policy in having public confidence behind it. The public confidence engendered by the terms of the loan floated last year, which was reflected in the improved terms of trade generally in the last quarter of last year, indicates clearly that not only is there confidence in the policy implemented by the Government but that this Government has inaugurated a suitable economic programme which has been reflected in an improvement in the employment position in the short period of ten or 11 months since the Government took office.
It is almost impossible in a short period of less than a year to alter substantially economic affairs, affairs which were in many cases the result of the misguided policy of the previous Government as enshrined in the Budget of 1952. While it is not possible to affect to any great extent some of these forces, this Government has minimised the worst effects of them and has lightened substantially some of the burdens that were then imposed. It is well to reflect on what has happened.
At the end of last year it was seen that in the first five months the adverse trade balance was £5,000,000 worse than in 1953; but, in the last quarter of last year, the improvement was such that it amounted to £8.7 million so that the out-turn at the end of the year was £4,000,000 better than in 1953. That improvement brought our balance of payments deficit to the lowest point reached in any year since 1946, which was an exceptional year because, while the deficit was artificially low, that was, in the main, due to the difficulty of obtaining supplies. It is right and proper that we should emphasise the circumstances and the main contributing factors to that improved balance of trade. It was almost entirely due to the substantially increased exports in respect of live stock and live-stock products.
During last year we exported a total of approximately 870,000 head of cattle. Our exports of cattle had increased in numbers by 163,000 over those of the previous year. The value of our exports had increased by £8.8 million which, in effect, compensated for the substantial drop in the exports of chocolate, chocolate crumb and confectionery, a drop inevitable because of the derationing and decontrol of sweets, sugar and sweetened commodities in Britain. At the same time, our exports of dressed beef and veal increased by 17,000 tons, or by £3.8 million.
That situation was achieved because of two factors. The 1948 trade agreement, which was negotiated by the previous inter-Party Government and which secured a permanent link between the prices paid to Irish producers and the prices paid to British farmers and, in addition, eliminated the differential which existed prior to that in respect of cattle fattened in England and cattle sent over from here, as well as reducing the period of time during which they were obliged to be fed in England before becoming eligible for the increased bonus.
That situation, which is extremely satisfactory, showed the wisdom of the previous inter-Party Government in negotiating the 1948 trade agreement, but in addition it enabled our farmers and those who work on the land, farm workers, all who depend for their livelihood directly as well as those who derive a living indirectly from the prosperity of agriculture, to secure a higher standard of living than they had ever secured before. The second factor that contributed to that position was the success of the measures initiated by the present Minister for Agriculture during his previous term of office in which he reduced the calf mortality, both the direct slaughter of calves and the deaths caused by various calf diseases, by the elimination, on the one hand, of the slaughter policy of the previous Government and the provision of adequate veterinary and scientific measures to prevent or reduce the death-rate from calf diseases.
These two factors raised the live-stock population in respect of cattle and enabled farmers and farm workers and all who benefit from the prosperity of agriculture—shopkeepers, business people, traders and others in towns and villages throughout the country—to share in the improved economic circumstances arising from that agreement.
Considerable discussion has been directed during the course of this debate to employment and unemployment. In the Budget speech of the Minister he adverted to the fact that there had been over the last ten or 11 months an improvement in the numbers employed and that in addition the number on the unemployment register showed a reduction of 5,000 or 6,000 persons per week on the numbers registered this time last year. I confess that I cannot follow the line of argument of the Opposition, who, on the one hand, deplore the fact that there is at, the present time such a heavy rate of unemployment and emigration but who refuse to face up to the consequences of the Budget which they introduced in 1952. That Budget imposed excessive taxation on all sections of the community. As the Independent leading article of the time described it, “Everybody was in the casualty list”. The result of that Budget was to raise the cost of essentials on every section of the community, to increase the burden of taxation borne by all sections in the State, both direct taxpayers and indirect in respect of higher prices for essential commodities.
One of the later speakers here this morning, Deputy Seán Flanagan, referred to the three by-elections following immediately after the 1952 Budget and he made the comment that because Fianna Fáil won two out of three by-elections the people had endorsed that Budget, but he omitted to tell us this, and in this I want to point to the contrast between the honourable way in which the present Minister for Finance proposes to bring in the benefits and the manner in which they were brought in by the previous Government. In 1952, when the by-elections were fought in North Mayo, Limerick and Waterford, the increased pension books were circulated to the various offices throughout the country. The recipients of those books knew in advance that although they had not actually got the increased benefit, these books were there and the increased benefit was written on them—books which they would be entitled to receive after 1st July. But what they did not feel the effect of was the increase in the cost of bread, tea, butter and sugar.
Those increases only took effect after 1st July and the result was that a great number of people were misled by that action of the Government. When by-elections were held in North-West Dublin and when subsequently elections took place in East Cork and Wicklow the people had felt the full impact of the effect of that Budget and the effects showed that they would be obliged to pay increased prices for essential commodities.
We have heard during the course of this debate some criticism from the Opposition, however fainthearted, that we had not made a better contribution towards easing the problem of the people by increasing the social benefits. I have here before me a Budget statement of the Minister for Finance in 1952, now Deputy MacEntee. He said:—
"The rise in retail prices consequent on the changes I have mentioned will not, however, amount to 2/-; in fact, on the average, it should work out at some 25 per cent. less, or almost 1/6 per head per week."
That is at column 1139 in the Dáil Debates of the 2nd April, 1952. He went on to say that an increase of 1/6 a week would be given to the old age pensioners to compensate for that rise in the cost of essential commodities.
Later in the debate the then Minister for Industry and Commerce, now Deputy Lemass, said that the effect of the subsidy changes contemplated was, as the House had been told, to increase the cost of these foodstuffs to each individual by approximately 1/6 per week. He said that the Minister for Social Welfare would introduce proposals to increase the old age pensions and unemployment assistance payments by way of compensation. That was at column 1298 of the Dáil Debates of the 3rd April, 1952. If it was right and proper, and if it was fair compensation for what had occurred in regard to the cost of these commodities as a result of that Budget, surely this Government is entitled to credit in this Budget for increasing pensions by 2/6. They have raised the pensions of the widows and orphans in respect of a total of 28,000 approximately by an extra 2/6, and they have increased the orphan's allowance to 7/-per week, benefiting in all 162,000 old age pensioners and 6,000 blind pensioners. With the widows and orphans already mentioned, a total of almost 200,000 persons have benefited. That benefit follows the reduction in the price of butter which was referred to in the course of this debate and which was put into operation last August and which will cost this year over £2,000,000.
I think that in these matters it is fair to reflect on what the average person thinks of these proposals and in doing so, I have only to refer to an interview given to the Evening Press on last Wednesday. The Evening Press calls on two average members of the community, and the first is a married man, who said: “I would like the £85 allowance free for each child increased to £100”; and he went on to say: “Another important aspect is old age pensions. These old people deserve more money.” A lady who is described as an average married woman said: “As a housewife, my interest is in the cost-of-living figures. I want to see prices reduced, cheaper tea and butter.”
Under the previous Government, the price of bread, tea, butter and other essentials was increased. The total effect of the increases was estimated at ? per head per week. To meet the increases, the old age pension was increased by ? a week. Nobody can deny the accuracy of those figures: nobody can deny that that was the estimate given by the then Government. Nobody can deny that that was their estimate of the increases and their agreement that the rise they proposed was adequate to meet the rise in the cost of essentials.
Yesterday, Deputy Lemass came in here and asserted that the increase of 2/6 was not sufficient. Surely, if ? a week was adequate to meet a rise which he estimated had been caused by their Budget in 1952, 2/6 is a substantial improvement? There is not anybody in the House who would not like to see more being given to these old people or to the weakest sections of the community such as widows in receipt of non-contributory pensions or blind pensioners. However, if ? a week was adequate at that time to cover the rise in the price of foodstuffs, surely 2/6 a week is a substantial improvement particularly when we have regard to the reduction of 5d. per lb. in the price of butter which was brought about by this Government. This Government reduced the price of butter by 5d. a lb., at a total cost of £2,000,000, without the additional burden of any increased taxation. As the Minister has clearly stated in the course of his Budget statement, these two improvements—the alleviation in respect of the price of butter by a reduction of 5d. a lb. and the improved social services for the various pensioners I have referred to—cost £2,000,000 in respect of butter and £.9 million in respect of the various categories of pensioners.
In the course of this discussion and repeatedly during the last few months, Fianna Fáil have alleged that we have not lightened sufficiently the burden of taxation. Surely it comes ill from the Party opposite to refer to the burden of taxation when, in the three years they were in office between 1951 and 1954, they substantially increased the burdens on all sections of the community. In the savage Budget of 1952, they increased taxation directly and indirectly. In 1953, the taxes were continued without any alleviation. It is true to say that some slight amelioration occurred in their Budget of last year—but when was that remission granted and why were those reductions operated only last year, at the end of their period of office? It was because of the results of the by-elections in Louth and Cork City and because of the results of the various by-elections that had occurred in the previous three years. It was because of the clear indication from the people that they did not want a continuation of a policy that added burdens to every section of the community and that made it dearer for every individual to live. It was because the impact of their policy on trade and commerce caused a serious increase in the numbers of unemployed and a serious diminution in the programme of house-building that had been initiated by the first inter-Party Government.
The best test of any policy is the results achieved. We believe the people will test this Budget and test the policy of this Government on the basis of the results which have been achieved and contrast those results with the policy operated by the Fianna Fáil Government. That policy will show that during the previous three years there was a substantial increase in the numbers of unemployed. It will show that during the winter and early spring of 1954 we had almost 90,000 persons on the unemployment register. It will show that that was caused because of the rise in interest rates. It will show that that unemployment was caused because of the dear money policy that had been operated by the Fianna Fáil Government. It will show that the Fianna Fáil policy placed added burdens on every individual and adversely affected trade and commerce.
We know the people realise that once a policy of that sort is operated, once a particular pattern of spending takes shape, once a particular rate of expenditure in respect of Government or State commitments is entered into, it is difficult to end it and, at most, all that can be done in many cases is to arrest the particular trend. Over that period, it takes much planning and a careful examination of the nation's economy, a close scrutiny of the Estimates of the different Departments, a searching into the various schemes that are in operation, an examination of the various factors involved before it is possible to decide on a line of policy or before it is possible to initiate schemes or to alter existing schemes which will reflect themselves in improved economic circumstances or improved employment.
The result of the policy of this Government over the past ten or 11 months has been such that in the December quarter of last year a record number of persons was employed in insurable industrial occupations. The number reached the record level of 150,000 persons. While that position was shown in respect of manufacturing industry, the number of males—as the statistics describe them—engaged in agriculture shows that the provisional figure for last year was 421,000, the same as in 1953. In other words, for the first time for ten years there has been no decline in the numbers engaged in agriculture. As the Minister's statement showed, over the period from 1945 to 1953, there was an aggregate fall in the numbers engaged in agriculture of 100,000—representing an average annual decline of 12,500 persons. Last year, for the first time, that annual drop was arrested and, at the same time, the figures for industry showed that we had reached a record high level of employment in the December quarter.
In the past few months, since the beginning of this year, following the improvement that had been shown in the latter part of last year, the numbers on the unemployment register show that there is a reduction of some 5,000 to 6,000 persons per week. It is quite true that the unemployment figures are still high. It is the aim of this Government, as undoubtedly it is the aim of all sections in the House, to work towards a position in which it will be possible to provide more employment for our people who are in search of work and who are anxious to secure a decent standard of living in this country. It is not, however, sufficient to talk about the desirability of that aim. It is not sufficient to deplore the effects of emigration or to deplore the large numbers who, for one cause or another, are leaving different parts of the country to seek alternative work either in the cities or towns or in Britain.
In order to provide employment we must plan effectively. The policy that was initiated by the Government's loan at the end of last year, the policy which secured money at a lower rate of interest for productive work, for building, for the capital programme, for afforestation, for land drainage and reclamation, all these capital schemes that are part of this Government's policy, some of which were initiated during the previous period of the inter-Party Government, such as the land reclamation scheme, offers not only employment but benefits which will inure for this generation and for future generations.
We have on many occasions referred in this House to the fact that agriculture is the cornerstone of our economy and the basis of our national prosperity. Until the land reclamation scheme was started, until the potentialities of that scheme, which were understood and appreciated by the previous inter-Party Government, were exploited to the full, as they have been and will be, no large-scale programme offering long-term prosperity on which agriculture can be expanded was initiated for the farmers or made available to them.
That programme, that policy, the improved fertility of the land, the increased live-stock population, the increased output, and all the advantages that flow from that programme are not benefits that can be seen overnight or that can be achieved in the space of a few months.
Some Deputies opposite, particularly Deputy Childers, who is bemused by statistics, referred to the fact that agriculture over a long period has not shown what he described as dynamic expansion. It is only those who know the practical workings of farmers, who have experience of the difficulties of trying to secure a livelihood from the land, who realise the tremendous exertions that our farmers have made, not only in recent years, but through the ages, who realise the traditional problems of farmers, problems that were created by the obstacles placed in their way through landlordism and by an alien administration which prevented proper exploitation of agriculture.
Those who know the difficulty of securing a substantial increase in output, who realise the immense problems that confront farmers and farm workers, will recognise that a dramatic increase in production cannot be expected. But, with the improvement brought about as a result of the land reclamation scheme and as a result of mechanisation and machinery, with the increased numbers of live stock that are saved in order to be brought to maturity, because of the drop in mortality as a result of improved veterinary and scientific services, because of the cessation of the calfslaughtering policy of the previous Fianna Fáil Government, all recognise that live-stock exports and the consequent improvement in our economic position will pay dividends, not only this year and in the immediate future but in increased prosperity for generations to come.
We cannot claim that it was any part of our policy to implement the whole of our programme in ten months but the previous Government, as the Minister for Industry and Commerce said yesterday, made enough promises to fill an album comparable with the Encyclopaedia Britannica. They promised to solve unemployment. They had expressed the view that in this country unemployment could be solved more easily than in any other country in the world. They would be going out with a bugle, as Deputy Lemass described it, to call back the emigrants. But, in their period of office over 500,000 of the people of this country have been obliged to emigrate. At the end of their period of office the present leader of the Opposition, when he was Taoiseach, said that it was a baffling problem and that they had not yet found a solution for it and that the numbers who wanted work and who sought employment were far greater than it was possible for the Government to provide work for.
It is quite true that many of our people who could get employment here seek work abroad because, for various reasons, they wish to go abroad but it is equally true that many of our people are obliged to go abroad because it is not possible to provide employment for them here. The policy of this Government, which has improved employment in industry and which has expanded agriculture, which is expanding afforestation, has contributed and will continue to contribute to an improvement in employment prospects as well as an improvement in the economic position of the country as a whole.
This debate was remarkable for the fact that the Opposition sought to criticise the Budget because we did not grant greater remissions of taxation, because, as some Deputies opposite asserted, we had moneys available which could be devoted to a remission. Compare conditions under this Budget and conditions under the three previous Budgets of the Fianna Fáil Government. In the Budget of 1952 they increased taxation by £9,000,000 or £10,000,000, increased the cost of essential commodities, raised the taxes which were paid directly or indirectly by every section of the community. The result of these increases was to affect every section of the community and to affect most seriously those who were worst off, those least able to bear them, the lower paid sections, the old age pensioners, widows and orphans, those in receipt of the various social welfare benefits. All these increases in taxation added to the difficulties, added to the burden and caused a substantial rise in unemployment. That was reflected in the rise in emigration.
Fianna Fáil have asserted that because this Government has not reduced the taxes, because we have not implemented in ten or 11 months all our aims and all our objects we have not been true to the undertakings we gave or true to the policy that we put before the people. I challenge the Party opposite to point to a single undertaking in which we said specifically that we would reduce the price of butter or that we would reduce substantially or maintain at a lower rate the price of tea. We said that it was our aim over a period of years to ease taxation and to reduce the burden on all sections of the community. Is it not an earnest of our policy, is it not an indication of our programme that we have lightened the cost of butter, that we have maintained the price of tea at its existing level when the price of tea increased across the water?
This is where we can contrast conditions under this Government and conditions during the period of the Party opposite. Is there a single person in the community to-day who does not realise that the people would be obliged to pay more for tea if the Fianna Fáil Party was the Government, that they would now be paying 5d. per lb. more for their butter? In this there can be no controversy, because under Fianna Fáil the people were obliged to pay 4/2 per lb. for their butter, whereas under this Government we increased the butter subsidy, thereby reducing the cost of this essential commodity by 5d. a lb.
At the same time as we did that we increased, under this Budget, the old age pensions, the pensions of widows and the pensions of blind persons. We also increased the allowances in respect of children for income-tax purposes from £85 to £100. The effect of this improvement is to give to those wage earners in the community who are at present liable to income-tax, as Deputy Kyne remarked here, and who earn less than £1,000 per year, certain reliefs. These reliefs now apply to categories which include skilled workers, and to various categories of middle class and average wage earners. They mean that every person who does not earn more than £533 a year, or £10 6s. per week, who has one child will not be liable to income-tax. The endorsement of that policy of the Government was given by a person interviewed by the Evening Press on the day of the Budget. Surely the person interviewed by the Evening Press would not be a supporter of this Government.
They called him "Mr. Average Married Man". The Evening Press said that they had interviewed all those people whose statements appeared that evening and that they had asked those people what they thought would make a good Budget. And “Mr. Average Married Man”, Mr. Maurice Lewis said: “I would like the £85 allowance for each child to be increased to £100.” Lower down we get what he said about the old age pensioners— that they deserved more money. I believe we have given in this Budget not only an earnest of our policy, but a practical example of how we propose to alleviate the burden of taxation on the section of the community that is obliged to meet the responsibility of raising a family.
In respect of the married man with two children, he will have to earn in excess of £666 a year before he is liable to tax. The married man with three children will not incur liability for tax unless his earnings exceed £800 a year. That increased allowance to married men will benefit 27,000 additional taxpayers and will exempt completely 3,000 taxpayers. Deputy Lemass from the Party opposite criticised the Government because, as he said, we have not alleviated taxation, because we have not reduced the burdens imposed by them on all sections of the community. But Deputy Lemass regarded as compensation for the old age pensioners the ? the Fianna Fáil Government gave them to meet the increased cost of essential commodities, not imposed by external factors, not imposed by the prices prevailing for tea in India or Ceylon, not imposed by the effects of the Korean war, and not by economic blizzards in Europe or Asia, but by deliberate Government action when Fianna Fáil raised the prices of essential commodities, when they increased the price of these commodities to every section of the community. They imposed burdens for which ? a week could not compensate.
But this Government reduced the price of butter by fivepence in the lb.; they maintained the price of tea at the existing level when it was rising by 3/-or 3/6 in Britain; they reduced the income tax allowances in respect of children; and in addition increased the pensions payable to aged and blind persons and in respect of widows and orphans. This Government eased the burdens imposed on every individual who buys the essential commodity of butter. The policy of the Party opposite was to raise the prices of all these essential commodities. That was done because of an alleged £15,000,000 deficit which was the result of inflation caused by themselves during the war and in the post war years. Whether or not there was a deficit is of but academic interest. What is of real interest is the comparison between living conditions under this Government and under the Budget introduced by Fianna Fáil in 1952 and continued in 1953.