Dáil Éireann debate -
Thursday, 12 May 1955

Vol. 150 No. 10

Committee on Finance. - Financial Resolution No. 5—General (Resumed).

Mr. Lindsay

I was dealing with the financial provision in the Budget for the proposals that aim at giving relief to people who insure themselves against illness and all the trail of possible adversity that can follow illness. I recommend that to the House. In my opinion, it is a provision that carries with it a very sound principle in relation to the lives of our people. This is not a mere provision in a financial proposal or something that will be incorporated in the Finance Act; this is a principle of such high importance in our social structure that it should not and cannot be allowed to go without being fully advertised, not for the purpose of advertising to the country that the Minister for Finance of the present Government, in his first Budget, was the first to do it but to advertise to the people of the country a social principle of which they could take advantage so as to bolster up their own personal independence and the dignity that goes with personal independence.

Far too often in other countries and, indeed, to some extent in our own, have we seen, in some cases, successful, legislative endeavours to purchase not only the support but the soul of the franchise and the people exercising it. Where that has happened people have lost their independence, have lost their dignity, have lost their sense of values and have lost the pride that has been associated, in this country at any rate, with families and members of families. It is very necessary, in my opinion, that that pride should be re-instituted and bolstered up so that it will regain what was once its real greatness.

I would like to see this principle of insuring against illness and the consequences of illness extended far beyond the present limited number of people who insure against it. In the Government's consideration of the scheme of insurance inaugurated by the Minister for Health some time ago and referred to by the Minister for Finance in his Budget speech, column 697, I would suggest that consideration might be given, in collaboration with the Department of Social Welfare, if necessary, to the extension of the principle up and down the country and into every household, so that for a very modest sum, a token sum, I would suggest, every family, big and small, rich and poor, or of moderate means would be protected against such happenings. Not alone would they be protected by insurance cover for which they would afterwards get relief if they were within the taxpaying class, against the loss consequent on the illness of the mainstay of the household, but they would have the further protection of independence where they would not have to be running to T.D.s, county councillors, urban councillors or any other persons of influence to request them to get rid of a hospital bill or a doctor's bill for them.

This is a principle which cannot be urged too strongly upon our people and cannot be urged too strongly upon the Government that is responsible for the framing of legislation into which this principle can be incorporated at all times. I think—and I do not imagine I can be contradicted in any successful way—that this is the most important matter that has ever come into any Budget proposals in this country even in the small way in which it has come in, that it is, as the Taoiseach has described it, the kernel of a great principle and a principle well worthy of extension not alone in the Department of Finance but in other Departments of either the national Government or local government throughout the country.

Having regard to that principle enshrined there, I can hardly accept the description of this Budget as being a Budget lacking in imagination or showing no real incentive. All through these budgetary proposals and indeed all through the administration of this Government from the day it took office right up to the introduction of these proposals, there has been that very necessary thing that is the fundamental basis to the quiet, successful progress of any economic structure, confidence. Confidence, you will recollect, is the key word in the article to which I have referred. May I repeat it and constrast it with the budgetary proposals so that the House may once again see how closely in line is the principle enshrined in this Institute of Bankers' Report with the budgetary proposals, when it says:-

"The real problem to be faced in promoting saving investment at home and enlistment of support for the capital programme of the State is again the maintaining of confidence."

Confidence is the Keynote, the incentive to any relationship whether it be a private, personal relationship, a business relationship or that very important relationship that exists between the Government and the governors. It is for that reason I think that all over my constituency, at any rate, since the introduction of these proposals I have not met one person who has said to me: "This is a bad Budget." I have met several who have said to me: "This is a good Budget. You did well for the pensioners and for the income-tax payers." I invite anybody to say it is a bad Budget, but coupled with that invitation must go the inevitable challenge to state wherein it is bad and, if it is bad, how you could improve it and what are the means wherewith you can effect that improvement.

I do not imagine for one moment that the Opposition in this House have improved their position or added any cubits to their stature by their demonstration of quotations and misrepresentation of those quotations over the past fortnight. I do not believe it would be accepted that their use of Parliament's time in dealing with these budgetary proposals in that manner will be regarded by the people as any contribution to national progress or towards giving any solution to the problems which they say have been overlooked.

The Minister for Finance is, in my opinion, to be complimented on what must be the result of very serious and very hard work, incorporating as it does the policy of the Government as a whole; incorporating relief for the people who are most in need of relief, who are the priority people, the income-tax payers on the one hand, and giving concessions by way of additions to those in receipt of pensions, on the other, doing all that without the slightest increase in taxation and having, prior to the introduction of these benefits, taken three very important steps. First of all, there was the reduction in the price of butter from 4/2 to 3/9 per lb. That must and did mean something to the people who consumed a great deal of butter, as is consumed in every family. The stabilising of the price of tea must and did mean a lot to the tea drinkers of this country and, speaking for the West of Ireland, I say we have a great number of them; they drink plenty of tea and drink it often.

The holding down of the bank rate here by the suggestion, which must have been a strong and earnest one, of the Minister for Finance, must go to his credit and to the credit of the Government. These three things resulting in a Budget of this kind must give an earnest to the people of the Government's response to the goodwill which the people have shown towards them. As the Taoiseach has said, "in time" are the operative words. There will be plenty of time. There are four more years in which to try to bring this country back to the state of economic security which was enjoyed before there was imposed upon it the Budget of 1952.

Whether you accept that it was shattering or not does not matter. Whether you accept that it was good or bad does not matter in this House. The essential thing is that the Budget of 1952 and the Budget of the same type which followed it in 1953, were rejected by the people in a general election in 1954. The result is that it is now possible for the Minister for Finance to bring in this present Budget of which there is no criticism of any serious kind—except in repect of the taxes on beer, spirits and tobacco—from any source beyond what I would call the dangerous source of Party bolstering up from the Opposition in this House and from the opposition in the country in order to try to bring together their broken and scattered forces which to my mind is a poor contribution to the nation's wellbeing and the nation's good.

Mr. Childers

The observations of the last Deputy in regard to the 1952 Budget could provide a talking point for this whole debate. The Deputy evidently has had little experience of examining the affairs of other countries and the affairs of countries that have had to take a choice between having a balanced budget or supporting a train of inflation and excessive expenditure whose inevitable result is to reduce the value of the country's money and to reduce the purchasing power of the people. Here is the statement, that it does not matter whether the 1952 Budget was good or bad—that is typical of the situation which we have had to face in the last few years in dealing with the small floating section of the population who change their views at election time.

Before going on to the major part of what I will have to say, I am prompted by the last Deputy to take out of its context the question of the increase in the bank rate. I am always a person who believes in stating truths frankly, whatever the result may be on the political fortunes of one Party or another. It is appalling to hear Deputies on the Government side talk about the stabilisation of the bank rate, as though the Minister for Finance was largely responsible and as though he simply informed the banks that the bank rate should not go up. It is very important, if we are to have a proper understanding of our economic life, that this fact should be stated over and over again. The banks exist on a certain margin of profit and reserves which come into their accounts each year; but the fact is that the people who have made stabilisation of the bank rate possible are the 50,000 depositors who have voluntarily foregone the increase in their deposit rate that would normally have come to them if the interest rates had gone up. It is to them that the country owes a measure of thanks, that they have voluntarily foresworn an increase in the rate on their deposits—they may be small, they go up to a certain limit, above which the deposit rate has been increased—and who have made possible the stabilisation of the bank rate.

It is a matter for consideration, it is a precedent, it may be good at the moment for that to have happened, though it may not always be good; but for the Minister to take upon himself the full responsibility for it is ridiculous. It is lucky that there are people for whom either the amount of the increase they would get would appear negligible to them or who for one reason or another have not demanded or insisted on an increase in their deposit rate. We had better have honest talk about financial matters here and get rid of the "guff", the loose thinking about interest rates, deposit rates and the credit of the people.

There is one thing I found both interesting and amusing. It was amusing to see Fine Gael going back full circle to the conventional type of Budget to which we have been accustomed from the Fine Gael standpoint for so many years. There are few amusing factors in political life but anyway we can watch with some amusement the ending of the haywire phase of Fine Gael economics. Apparently it is over at last and the utterly dull, orthodox, unchanging character of the present Budget can make us all smile —smile a little wanly, perhaps, after all the abuse we suffered, after all the mistruths that were uttered during the last general election, after the hysterical atmosphere created in the Cities of Dublin and Cork which were largely responsible for our defeat. It is interesting to see this Budget produced to the people, just about as dull and as ordinary as anything that can be imagined. The period of haywire economics, the period of crooked thinking on important economic matters, the period of false promises as to the benefits that the State could confer on the people, the period of exaggeration about State expenditure and Government extravagance—that appears to be over.

We find that if there is any novelty in the present Budget as compared with previous Fine Gael Budgets of many years ago, the only novelties consist in the adoption of practically every scheme initiated and put into operation by Fianna Fáil during 20 years of Government and by the existence of the capital services and of borrowing on a large scale for development, which, of course, was inevitable after the war when materials became available and for which Fianna Fáil had provided 99 per cent. of all the development schemes, had designed 99 per cent. of all the projects and had made plans, many of which were in operation in 1947 for the years when the economic war was ending and the abnormal war conditions were ended. Apart from these two factors, the Budget is just about as dull as it can be.

It is just as well to remind the people of the deception which is being practised, of the fact that we have had for about six years a group of Parties taking the maximum advantage of all those people in the population who have neither the time nor the inclination to study economics and who have been confused by the exaggerations, the promises and the distortion of common economic truths. I myself think we have been long enough an independent nation that we ought to have the same set of agreed economic formula which the people can understand as can be found, for example, in Great Britain where Mr. Gaitskill and Mr. Butler talk a common language, and in Denmark, Sweden and Norway where the Ministers for Finance, whatever the marginal or other differences in their views may be, have a general common language in which they talk and where the people do not become confused by ridiculous, exaggerated nonsense over matters of profound importance, which are extremely difficult to explain or even to understand oneself, such as the balance of payments and the value of borrowing, the balanced budget and budget equilibrium, capital services, and so forth.

I claim, and I am sure historians will say, that Fianna Fáil, having made the inevitable mistakes in the earlier period of office, set a finer example in trying to apply economic truths, and in trying to make the general economic position of this country appear reasonably simple to the average person. The confusion has arisen largely through what I would call the haywire phase of Fine Gael economics.

General MacEoin

Was that due to the initial mistakes of Fianna Fáil?

Mr. Childers

I can claim that we succeeded magnificently in ordering the finances of this country, and that we brought it through a difficult period of depression, and through the period of the emergency. At the end of it, our finances were in magnificent shape. I guarantee, when the economic history of this country is written, and when the financial state of the country in 1945 or 1946 is examined, no one will deny the competence of the Fianna Fáil Administration in the way it managed the finances, preserved the amenities of the people, expanded economic services of various kinds, and left the general financial structure in a very sound position.

The only thing of interest about this Budget is, I think, the fact that it lacks imagination, that it is a curious combination of Fine Gael and Fianna Fáil conceptions, and that it is staggeringly dull. There it is. It is just as well, perhaps.

Notice taken that 20 Deputies were not present; House counted, and 20 Deputies being present,

Mr. Childers

As I was saying, Fine Gael had a number of phases in the development of its economic outlook, and I think it is just as well to remind the House of the changes that took place. First of all, there was the ultra conservative phase of Fine Gael economics, which lasted until 1946. I am not denying the right of any Party or any individual to change policy. We have changed some of our policy, and I hope we will change more of it in the future. But it is not long ago since the Fine Gael Party temporarily changed its attitude towards finance. We had, until 1946, the ultra conservative phase, in which to borrow capital for development purposes was positively dangerous, and to invest in industries was still more dangerous. The idea that our people had the same potential industrial skills as those in other countries was ludicrous. The idea of encouraging development schemes through the large-scale use of Government resources was regarded as fraught with all sorts of difficulties. The idea, for example, of making use of our turf resources, was regarded as lunatic. Most of the industries were to be tariff rackets, in which the employers or promoters would make gigantic profits at the expense of the people, not to their advantage.

So far as the balance of payments was concerned, and the use of external assets, even the disappearance of £500,000 of external assets in one year was something which could make Deputy Dillon, the present Minister for Agriculture, shake in his shoes, and deliver the wildest outbursts of oratory in this House. That, in brief, was the ultra conservative phase of Fine Gael economics.

Then we had the haywire period. Who inspired it or how it started, we may never know. It could have been Deputy Seán MacBride who so signally failed to persuade the rest of the people to follow his own particular policy. The fact remains that, in 1946 and 1947, the new conceptions began, and they were based, first of all, on exactly the same kind of propaganda against Fianna Fáil as we had in the last election—allegations of corruption, of gross and enormous profiteering, of gross and excessive extravagance. The general language of the 1948 election and of the by-elections preceding it, was very much the same as in the case of the last election, the only difference being that the circumstances were slightly different at that time, but the general talk was the same.

Then, when they secured office we had the beginning of more haywire economic talk. We had an injection of £45,000,000 worth of borrowed American money into the economy of the country. It could have been used for more productive purposes, the whole of it could have been spent, over a period, on productive purposes designed to increase exports or reduce imports. We had this money injected into the country, just at the time of the Korean inflation, when you would not have found any reputable economist in the world who would say that was the time that money should be used.

Mr. Sweetman

The Deputy is going to get an awful kick from Deputy MacEntee who did it in 1951.

Mr. Childers

That was in order to pay the debts which you accumulated. That is the answer. We had another phase of the haywire economics. We had An Taoiseach speaking at a meeting of the Bankers' Institute in 1949, and he set forth in flowery language, a policy for repatriating the assets of the country. This statement was of an exaggerated character. There were very few reservations in connection with it. He talked about assets as though they were something that could be put on the train at Euston in London, and landed at Westland Row, in the course of two years. The difficulty of making use of them for productive purposes, of controlling anything but a minute fraction of these assets, was never revealed to the public. These difficulties had to be patiently and laboriously discussed in the Dáil. We were, according to An Taoiseach, on the eve of a great national offensive in which, somehow or other, all emigration, all unemployment, would be ended by the wave of a wand, and the coming back to the country of the external assets in massive volume, and that the whole thing was to be done as though you might put them on the train at Euston and land them at Westland Row.

General MacEoin

Shades of Joe Kennedy, and Hugo Flinn.

Mr. Childers

The latter went on for months. We had responsible Ministers, such as Deputy MacBride, the then Minister for External Affairs, going around the country, and, without attempting to secure the correct facts, telling people with no natural inclination for economics, and no natural inclination for studying them, that there were £500,000,000 of investments in Great Britain; that they were the cause of under-development and emigration, they were all going to be brought back; and that we were slaves to the British tradition of economics, in wanting to keep any of them there at all.

Of course, Deputy MacBride's figures are slightly inaccurate. No one knows exactly the amount of the foreign investments, but they would be about £400,000,000. Against them we have liabilities, money that we owe to other countries, estimated at about £250,000,000, leaving us a net balance of external assets of £150,000,000. These were being steadily diminished. One hundred and twenty-one million pounds disappeared between 1947 and 1951. Some of those assets were properly used to restock the country with materials. The fact remains that we took office at a time when everybody was talking deliriously about repatriating the remainder of the assets, when they were equivalent to only one year's imports and when we had patiently to explain that we believed in repatriating assets, if the result was largely one of increasing national production, but that we believed there should be an absolutely unchangeable reserve and we had to repeat over and over again throughout the country that the amount was not the lovely £400,000,000 of Deputy MacBride, but £400,000,000, less the many millions which we owed to other countries or to banks outside this country and that you had to subtract one from the other to get the net figure. If that is not haywire economics, I should like to know what is.

In the present Budget, we hear these satisfactory references to the fact that there appeared to be no net adverse trade balance in the year 1954. We in Fianna Fáil are not going to accuse the Minister for Finance of having secret conventions with the British Chancellor of the Exchequer in order to achieve that absolute balance. We are sufficiently responsible not to accuse him of having agreed to accept Mr. Butler's complete and absolute dictation in having stabilised the movement of the assets, in having left them, according to the Minister, at an almost zero figure, so that in fact, according to him, in 1954 there was virtually no repatriation of a net character, even for productive purposes. We in Fianna Fáil are not going to try to get cheap votes by making that accusation against the Minister and that is probably one of the reasons why we are still the largest Party in the State with the great and undivided support of a huge number of people.

General MacEoin

With the fewest number of votes.

Mr. Childers

But all of us remember the propaganda that took place when Deputy MacEntee, the then Minister for Finance, saw fit to discuss general economic questions with the British Chancellor of the Exchequer at that time. In 1951, the total net adverse balance of this country was equivalent to 10 per cent. of the adverse balance of the sterling world for that year, which was then £600,000,000, because the sterling world was in its period of post-war difficulty. The fact that the two Ministers might discuss finance together was surely a natural thing, but, of course, the whole of our attitude towards, shall we say, stopping the flow of external assets to a reasonable extent and adopting a proper constructive attitude towards the whole problem was construed as a fell plot by which we were once more coming under English domination and that in future Mr. Butler would dictate to Mr. MacEntee and tell him what to do. This was all part of the haywire phase of Fine Gael economics.

Then there came the period of division within the Coalition ranks, the election and the subsequent defeat, and we found that there were £6,000,000 not provided for in the Budget, which created difficulties for us; we found that the real problem of dealing with the serious inflation had not been faced by the previous Government; we found that Government costs were rising; and we found that we had to honour promises made by ourselves in 1948 in regard to the expansion of social services and in regard to other types of Government services, health services and so forth, so we faced the difficulties of the inflation and of the increased costs of Government.

There is no need to reiterate the general history of the period, except to say that the price level rose steadily. It rose considerably between 1950 and 1951 and rose steadily thereafter, and when the period of inflation was over, the cost of living here had risen somewhat less in some respects than, or about the same as, that of half a dozen countries within the sterling area, a half dozen other countries which based on sterling and in which there were difficulties of Governments with a large number of social services, with costly services of various kinds. It rose as much in other countries where subsidies formed a very important part of the total Budget and where rationing was beginning to cease and the cost of subsidies, if left at their full volume, was becoming impossible to stand.

We have never yet had any explanation from the members of the present Government, either when in opposition or at the present time, of how it was possible for other countries with Socialist Administrations—not Conservative Administrations—some of which had been neutral during the war and had made fortunes during the war, to reduce or abolish their subsidies for exactly the same reason as here, and what could make it possible for us to retain the full panoply of subsidies when rationing ended and when, quite obviously, it was essential that there should be an adjustment in the standard of wages and salaries rather than a continuation of subsidies, because to a certain extent they had become unreal.

When Fianna Fáil took the action of leaving the subsidy on wheat because it, of all essential commodities, appeared to have increased in price more than anything else and to abolish the principle of subsidies in respect of other commodities, we felt that we were making the wisest compromise we could make in the circumstances, and the proof that we were right lay in the fact that, at the end of our period of Government, earnings had increased more than the cost of living, so far as the ordinary man in the street was concerned. We had to admit that the people in the lower income and middle income groups did suffer severely and, as a result, there were in the 1952 and 1954 Budgets income-tax remissions in order to help that particular group, although I myself believe that their position has not yet been restored in the way we would like.

It is very interesting to remind the House of some of this haywire thinking on the subject of the balance of payments. Deputy Norton in Volume 127, column 606 of 8th November, 1951, said:—

"What is wrong with having a disequilibrium in the balance of our payments if we have utilised our foreign assets for the purpose of buying goods to put into our own granary for the use of our own people instead of allowing our money to remain under British control and British domination depreciating there in accordance with Britain's current economic and military fortunes?"

Further on, at column 621, he makes the same sort of observation:—

"It is an archaic notion to imagine that in 1951 in our circumstances with £400,000,000 invested across Channel we should ask our people to do without the decenies of a civilised life. We should not do it and they are fools to listen to a philosophy of that kind."

There was a great deal more of the same thing. We would like to know whether Deputy Norton discussed with the Minister for Finance the regrettable fact that the balance of payments is now stabilised and shows practically no change and whether he now thinks that is altogether due to British domination and British influence, or in what way he has changed his opinion in regard to this matter, because we want to make our position quite clear. We would not mind seeing some of these assets repatriated, until we had reached the point at which we had the minimum trading reserve. All assets have to be repatriated in the form of transferable goods. If we could increase exports, diminish our imports, by bringing in a greater quantity of agricultural machinery or machinery for making any articles and, as a result, our investments in Great Britain were diminished, we would approve such a course. But now we do not even hear that from the present Government. We hear nothing but this conventional satisfaction. What a stirring time we have had over the past three years and now we hear again the views expressed by the most conservative type of economist in this country! Economists, as a rule, have to be conservative. We have heard nothing but these dull phrases about the fact that the balance of payments has been stabilised. I agree that to approve of stabilisation is better than to continue the former haywire discussion, but we would like to have something that is constructive and a little bit more advanced than what we have heard.

Even though, as I have said, the second phase of the Fine Gael economics seems to have concluded for the moment at any rate we can hardly tell what will happen in the future. There are still members of the Fine Gael Party who do not talk in the same terms as the Minister for Finance. I noticed that when he referred to the expanding economy of the country in 1954, the Minister made no effort to take full credit for that upon himself. Being a responsible person he knew very well and he expressed it in his Budget that no Government in six months could alter a country's economy or alter substantially a country's trading position but not so the other Deputies in Fine Gael.

We have the Parliamentary Secretary to the Minister for Agriculture parading Leix-Offaly Sunday after Sunday saying that the improvement in trade and the rise in cattle prices at the end of 1954 were entirely due to the new Government and that the people could thank the new Government for the increase in the prices of cattle of £7 or £8 and for the boost in the exports of the country in the last quarter of 1954.

Of course, there are people who will believe that. There are people who will genuinely refuse to face the facts that high cattle prices are due partly to the results of four cattle pacts three of which were Fianna Fáil and one of which—an excellent one—was a Fine Gael Coalition pact; that they were due to the fact that the last cattle agreement was made by Deputy Walsh, the former Minister for Agriculture, just before the Government was defeated and the major cause was that cattle prices increased because rationing ended in Great Britain and because British housewives immediately revealed a willingness to pay more for high quality beef and mutton to the point where it has been found difficult to sell the British housewife the poorer quality of frozen beef or mutton. Finally the rise occurred partly because the dictator of the Argentine failed to live up in principle to the agreement made for the first time, I think, with the British Minister of Food to include a very big increase in the export of chilled as compared with frozen meat.

All those factors, together with the boom in Britain which resulted in an increase in the average share level of the British Stock Exchange, created and brought about the increase in the price of cattle. I was glad to see that the Minister for Finance set no example to the many Deputies of the present Government to go around the country talking about the high cattle prices and the prosperity of the country being due to a change of Government.

Mr. Sweetman

The Deputy is not suggesting that his Party had anything to do with the high cattle prices?

Mr. Childers

I think the Minister is probably so exhausted by this debate that he was not listening to me carefully. I said that a partial contribution to the recent high prices of cattle was the existence of four cattle pacts, three of which were Fianna Fáil and one, which I said was fair and honest, carried out by the Coalition Government. That is what I said and I then went on to describe the prosperity in Great Britain and went on to describe——

Mr. Sweetman

I think an even greater reason is the fact that young cattle live now. Let not the Deputy forget that.

Mr. Childers

If the Minister for Finance compares the population of cattle at various periods he will notice that it has not fluctuated much since 1926 and that this emphasis on the slaughter of cattle does not seem to be borne out. However, we will leave it to them if they wish to talk about the slaughter of calves. The main facts in regard to the live-stock population of the country do not seem to bear out the great significance of any change that has taken place. The Minister for Finance restrained himself. I think it was politically fair for him, under the circumstances, not to add to his statement the expanding economy in 1954 and the expanding economy in 1953. I do not blame him for not publishing the revue of 1953 as well as 1954.

I think that is possibly fair game politically, but we must state it beyond all doubt that the main phase of the expanding economy of this country took place in the year 1953 and the present Government have published and authorised all the figures in connection with it. In 1953 there was a great increase in the volume of exports. In 1953 there was for the first time a resumption of a very tiny increase in agricultural production which was repeated again in 1954.

In 1953 the people of this country saved four times as much of their personal incomes, apart from the savings of companies, as they did in any year of the Coalition Government. In 1953 the people of this country spent more in personal expenditure than in any year of this country's history with the exception of 1951 when they spent about 2½ per cent. more, owing to the Korean inflation and the stocking up of goods. The removal of the stock pile——

Mr. O'Donovan

I do not know how the Deputy made these calculations.

Mr. Childers

The Parliamentary Secretary will find them in this little yellow book—the Statistical Abstract—I have quoted.

Mr. O'Donovan

I still do not know how the statisticians calculated them.

Mr. Childers

I hope the Parliamentary Secretary is not suggesting that Dr. Geary is a necromancer.

Mr. O'Donovan

I am only stating a fact. How are the calculations made?

Mr. Childers

The Parliamentary Secretary should take an opportunity of having a discussion with that very eminent, notable and excellent man, Dr. Geary, some of whose statements have been denied by implication by Deputies on the other side of the House although they know that they have the general sanction and authorisation of the Government and the personal sanction of the Taoiseach. I do not think we should discuss——

Mr. O'Donovan

I think I know the basis on which they are calculated. I still do not understand how they are calculated. The figures may not necessarily be accurate.

Mr. Childers

Although there must inevitably be distortions in regard to these figures which tell an interesting human history, not in a dull statistical way, of how the people live and how much they spend on drink, tobacco and clothing, and, although there may be distortions in regard to individual items, in most cases the distortions are repetitive and at least one can make comparisons, therefore, between one year and another. One can make another comparison in relation to the statistics for the live-stock population, statistics which are regarded with cynicism by a great many people because of the way the Garda Síochána are alleged to obtain the figures. As the Parliamentary Secretary knows there is a certain sample check taken by the inspectors of the Department of Agriculture in various areas throughout the country and we have been informed by the Central Statistics Bureau that there again, whatever the inaccuracies, the distortions are repetitive and from year to year one gets a general picture of the decline or the increase, as the case may be. Surely the Parliamentary Secretary does not want to disturb me from the tenor of my speech by starting an argument as to how the statistics upon which his Government acts are compiled.

Mr. O'Donovan

I am only warning the Deputy not to put his trust altogether in these statistics. We all use them because it is an easy way out.

Mr. Childers

I am getting a little bit tired of the Parliamentary Secretary.

An Leas-Cheann Comhairle

Yes. I feel Deputy Childers should be allowed to continue his speech in his own way.

Mr. Childers

No member of the Government can seriously question the figures published in their own statistical abstract. As I have said, the inaccuracies are repetitive and, if there was a boom in the consumption of commodities in 1953 we can take it that is a fact and the present Minister for Finance made use of the provisional figures for 1954. All I am saying is that the expansion of our economy and, to my mind, the certain small and totally insufficient growth in our prosperity began in 1953 under the Fianna Fáil Government; and, but for that expansion, the money would not have been found for the national loan issued later in 1954 and neither would revenue have been reaped in the form of income-tax, excise duties and all the other taxes which pour into the chest of the Minister for Finance to a sufficient degree to enable the present Budget to be framed. That is all I am saying.

I challenge any reputable economist in University College, Dublin, including all the gentlemen with whom the Parliamentary Secretary is personally associated, to deny my statement that the present Budget relates to a growth —a small growth—in our economy which began in 1953 and continued right through 1953, as well as that which took place in 1954. If any of these noble professors desire to contradict me, they have the Seanad in which to do so and they can make any pronouncements they like there.

Mr. M.E. Dockrell

Perhaps Deputy Childers would admit that the figures are capable of other interpretations.

Mr. Childers

I do not know. I am quite willing to spend hours this afternoon on this subject. When you have a statement of what the people spent their money on in any given year, and you have that repeated for five years, there must be some foundation in it. I take it the Coalition Government which initiated this particular volume would hardly have let it continue to be published during their three years in office if the facts were not the facts, if they were distortions. This is their own propaganda. If it is not correct, surely they themselves would have changed it.

We know the people drank and smoked roughly as much in 1953 as they did in 1952, or to within 2 or 3 per cent. at any rate. The figures are there. We know they spent roughly the same amount, allowing for the increase in the cost of living, during 1953, the year in which the people were alleged to be oppressed under brutal taxation, living under a cloud of despair because of the taxation imposed upon them. We were told about that taxation being completely unnecessary. We were told beyond all doubt in the general election that a great deal of the taxation could be immediately remitted; that it was so constraining public expenditure that the remission of it would automatically bring more money into the Exchequer and, as a result, everybody would be happy. We were told all these things and I want to make it quite clear that the last election was fought in a sordid, vulgar atmosphere, deliberately created——

Mr. O'Donovan

Quite so. We had some of the advertisements here yesterday.

(Interruptions.)

An Leas-Cheann Comhairle

Order! Deputy Childers is in possession, and perhaps the House would now allow Deputy Childers to continue.

Mr. Childers

We were told that our economic principles were wrong. We were told that we were strangling the people. We were told that the taxation imposed was completely unnecessary. Although the Taoiseach this morning made a statement in which he showed how careful he had been in making no promises and in saying that it would take time to bring about all the things they hoped to achieve, the difficulty is that unless one repeats the same facts over and over again—and we have learned the value of repetition from the members of the present Government and their associates—they do not sink in.

I want to make it clear once more that the election campaign was fought very cleverly. The official speeches of the Fine Gael members of the present Cabinet were wise and conservative. It was the canvassing, the explosive atmosphere, which suggested there was a kind of stranglehold on the people and all one had to do was sever the hand and the grip would be released; it was the promise of the possibility of an immediate collapse in the cost of living and an immediate reduction in taxation—it was in that atmosphere that the election was fought, as we know how to fight elections in this country. It was fought by canvassing the people down the back lanes and down the boreens, not by making speeches in the great centres of population. We had to fight the accusation of the strangling grip which, it was alleged, could be removed by another Government.

Mr. M.E. Dockrell

Who introduced the whispering campaign into Irish public life?

Mr. Childers

Fine Gael.

Mr. M.E. Dockrell

That was done 20 years ago and more.

Mr. Childers

I think it is well to remind Deputies that even in this House, where there was no question of being misreported, there were Deputies associated with the present Government who very definitely suggested that taxation was both excessive and unnecessary. We had Deputy McGilligan, who was reported in Volume 131 of the Official Report at column 565, saying: "To my mind, at least £9,000,000 could be remitted straight away." That was on the 29th April, 1952. He had started the campaign then of the idea that taxation was unnecessary and that we had adopted the principle of the law of diminishing returns: if you overtax the people they will not spend and, if they do not spend, you will not get the money. Therefore, the thing to do was immediately to scrap a whole lot of taxation; the people would then spend and the Government would get the money. That was the propaganda of the election. It did not matter what the present Taoiseach said on important occasions. It did not matter what some of the more important and responsible Fine Gael propagandists said: the atmosphere was there.

As I have said, we all know now as a result of this deadly, dull Budget that there was no extravagance on the part of the last Government; that there was no major over-taxation; that we had taken account of the law of diminishing returns; and that it was not possible to take the taxes off the whiskey, the tobacco and the beer on the ground that everybody would merrily spend more and eventually we would get the money back again. We know these things now and, as I have said, it is a good thing for the country that for one year at least we should have a deadly, dull Budget because it has proved to the people that we in Fianna Fáil were correct in our statements. An examination of the Book of Estimates clearly shows that.

There is no evidence in the Book of Estimates, from one end of the volume to the other, that we were extravagant. The changes in the main administration expenditure are absolutely marginal and the economics achieved in supply services expenditure— £1,400,000 at the time of the publication of the volume—were due largely to the reduction in the wheat subsidy and to three or four casual windfalls, such as the reduction in the contribution to the Pensioned Teachers' Fund, the closing down more or less of the Transitional Development Fund and one or two other things of that kind.

One can go through Vote after Vote and service after service; some are up by a few thousand pounds and some have been reduced. One finds services where we increased the amount and the present Government has gone on increasing, and vice versa. One finds no evidence of extravagance and no evidence of acting like lunatics in the spending of the people's money without regard to the people's purses. Nevertheless, all that propaganda was poured out against us accompanied by vitriolic abuse in the last general election.

Now, so far as the details of the present Budget are concerned, I think enough has been said on this side of the House and there is not much need for me to say more. The Government had a surplus of £3,000,000 and, because they were under pressure from the Labour Party, as we believe, they spent £2,000,000 of that sum in a reduction of the price of butter. I think it would have been better if they could have waited until they had the whole of that £3,000,000 to consider and then have used it to reduce taxation or give increases in social services in one way or another. I think it might have been better, for example, if they had kept the principle of subsidy to wheat only and if they had given another reduction in the price of bread rather than expand to butter because one cannot see that there was any social advantage in it—it did not result in any noticeable increase in butter consumption, which might have been one of the objectives. It would have been much better for the Government to have waited to examine the possibilities of the whole of that £3,000,000 and then spend it in the wisest possible way in helping those with less extensive incomes and at the same time doing its best to assist in some way the country's economy. As I said, one can argue for hours about £3,000,000, and as to how one can spend it. All I can say is, that I think it would have been better if they had waited until they were able to examine the position as a whole.

Having said it was a dull Budget, I think we can discuss to what extent the Budget could have been different in its fundamental implications. We, in Fianna Fáil, have had to face many, many years when economic circumstances were abnormal and when it would have been almost fatal to conduct large-scale—or even small-scale— innovations in budgetary practice. No one could blame us for having severely correct Budgets during the period of the economic war with Great Britain, when we were being attacked fiercely and continuously by the Opposition. It was necessary at that time that everything should be absolutely correct when we were engaged in constant innovations such as industrial expansion and expansion of social services without giving an opportunity to the group of very conservative economists who then attacked us.

Equally no one can blame us for such an entirely conservative attitude during the entire period of inflation from the beginning of the war in 1939 and the beginning of the scarcity of commodities right through the years up to the post-war period of deflation which came immediately after the war. Nobody could accuse us of being overconservative, but I think it is about time that we began to show a little more imagination in regard to budgetary practice. I think, now that we are no longer in a position of acute inflation, when there is some hope of a reasonably stable position both here and in Europe until another war scare comes or some new incident takes place over which we have no control, we would hope the Government would show a little more imagination in distributing taxation so as to encourage greater production.

There is a considerable field for examination there both in relation to the incidence of income-tax and the method of imposing it. There is a considerable field for examination in connection with agricultural development considering that, in spite of increases that have taken place in our exports we have had to a large extent through the years a more or less stagnant economy. It is the principal obligation which we all have to face, the problem of the stagnant economy in this country and although we have these very welcome though small increases in agricultural production from time to time, the general picture is unchanging. If one examines, for example, the extent to which output in industry per man has increased in Great Britain and here between 1946 and 1950—the figures have just been published and there is no need for me to give them—it shows there is a good deal of encouragement yet to be given, even perhaps some slight disciplining or a combination of both to protected industries. I think, judging by the figures published for Dublin Chamber of Commerce in regard to depreciation rates, that the whole matter requires fairly speedy examination and I hope the Minister will have the report of the committee established by the last Government in regard to that problem. I am not saying that the Government should act with unnecessary haste. Any changes in taxation incidence are fraught with difficulties and fraught with danger, but I think that we do need in the future a little more imagination in regard to this whole problem.

From reading the Minister's Budget statement there does not appear to be much in his mind of that kind. He did give some vague hint that the depreciation on machinery—that the whole of that report—was coming to him but I did not notice any of the more exotic features of budgetary practice which were alluded to during the last Government's period of office when we were regarded as deadly, dull respectable and conservative in a world of expanding economy, and losing all the chances in the world of developing the country's trade through our slavishness to Mr. Butler and our complete dependence on the British economy, all of which I have dealt with before.

I suppose the most important thing we have to face is the statement that has not been contradicted by either the present or the previous Minister for Agriculture that something like three-quarters of the grassland of this country is, from the standpoint of modern agricultural practice, virtually virgin in character and it is a problem of inducing a voluntary change in that sort of production which should concern the present Government.

As I have said, their Budget is dead, dull and respectable but it is time for more innovations, at least in respect of factors which assist production and encourage expansion in our economy.

Mr. S. Collins

One takes the Budget yearly as the yardstick of the Government's general economy and in so far as one judges this year's Budget one must say: "Well done" to the Minister. I look upon this Budget, as a Government supporter, purely as an earnest of the results of efforts made and of efforts to come. I feel that the Minister has effectively succeeded in steadying the ship of State finances. There is no doubt at all about it, looking purely objectively at the economic policy of this country, that Fianna Fáil has been hopelessly conservative and inutterly dull. To get this whole picture into proper focus one would have to review in general the impetus that was given to our economy from 1948 to 1951 and then what I might describe as the catastrophic reversal that was effected from 1951 to 1954, and it is idle for anybody in this House to suggest that it would be within the possibility of the Minister for Finance no matter how able or how capable suddenly by some miraculous process to turn back the wheels of that extraordinary reversal.

From 1948 to 1951 we saw expansion after expansion in effort in all fields of endeavour. Indeed, we saw in the normal revenue of 1949-1950 a tremendous buoyancy that showed that the people were doing better, were earning more wages and were able to procure more for their wages. Side by side with that impetus we saw the Government building up an economic fabric and a financial effort that allowed the Counterpart Fund to be used as a siphon, to help and encourage the use of money borrowed from the Irish people in our own development. You had the position that, where there was a short fall of any type, the Government could use the moneys of the Counterpart Fund to siphon them into further expansion where further expansion was practical and necessary, where it was in the form of extension of rural electrification, expanding development on our bogs, further development under the land rehabilitation scheme or more effective work in relation to minor drainage or surface water clearance.

For three short years we saw a picture of an economy that was expanding and that was geared up to further expansion. Then we saw a sudden change. I am not going to go into the method by which Fianna Fáil got office in 1951. The jury of the public have given a very effective verdict already on that method and those who were once with us are now with us no more. However, it does not alter the fact that 1951 saw Fianna Fáil take office in an era of expansion and in an era of ever-increasing public confidence in the Government. They took office in 1951 not, as the present Minister for Finance took office some months ago, with an empty till, with the pot scoured to its bottom. We saw Fianna Fáil take office in 1951 with a tremendous balance to the extent of nearly £24,000,000 of the Counterpart Fund and with a tremendous amount of money in the Counterpart Grant Fund.

Mr. Allen

It is still there.

Mr. S. Collins

We saw the Counterpart Fund disspiated in a profligate way in some seven or eight months— not in the way that was designed by the expanding economic plan of the inter-Party Government that was going to continue to get more and more of the people's savings for national development and, where there was a short fall or where it was necessary to subvent money in aid of development, to use the Counterpart Fund over a long period to keep national development geared to its maximum. That was thrown overboard and we saw the structure of possible effective development torn into shreds and destroyed. In its place, we got the paralysing Budget of 1952. Thrown overboard was the faith of the people to produce more and more and to expand production under the impetus of leadership. Gone was that urge to expand. Gone was the wise direction, the helpful counsel and encouragement which the previous Government had given. In one bludgeoning blow, we saw a combination of bad economic and political spite mallet the head of the Irish nation.

Let people read what election literature they like, they cannot get away from the one salient fact that, in one effort, the then Minister for Finance— Deputy MacEntee—completely burst the effort of the previous Government to keep increasing wages and buoyant production level with the cost of living. In one afternoon in this House the relationship between earning capacity and the cost of living was broken because the Fianna Fáil Government, in one act, projected an increase into that cost that no increase of wages could offset. They disrupted the basic economy. Then they come along to-day and talk about this Budget as being a dull Budget when, in fact, they—in one act—reduced a nation that saw a future and that had an expanding conception to what the former Taoiseach, Deputy de Valera, described as staggering under the load of taxation.

I am not going to deal with broken promises or the trail Fianna Fáil have left except in so far as it relates to our economic pattern. We saw the tragedy of their economic war. We saw the disastrous consequences that flowed from their once proud boast that the British market was gone and gone for ever. Without a doubt, were it not for the wisdom and the genius of the 1948 Trade Agreement, the economy of this country which the Minister finds satisfactory in 1954 might have been in tragic difficulties if that British market that Fianna Fáil once so loudly despised and condemned were not available to the Irish farmer to-day. We saw the catastrophic results of that type of thinking.

In some cases Fianna Fáil could then claim the excuse that they were only growing. We saw the sterile policy of economy that was operated from the years 1939 to 1947, the excuse always being that there were difficulties, that there were war clouds, that there was some deterring circumstance always preventing them from doing economic thinking or planning. But it was after the effective lesson of 1948-1951 when they saw in a realistic way what the Irish people could do, that they turned around, from no better motives I submit to this House than political expediency and spite, to tear down an economic fabric that held promise of full expansion and development for this nation: 1952 saw the blow fall.

We saw the tragedy that flowed from that. We saw the consequences to our national economy of the disastrous loan that was floated by Deputy MacEntee at 5 per cent. We saw the economy of every individual in this country—his own personal household economy—burst wide open. Through this devastating stupidity we saw all those who had ambitiously set out to build their own homes in a panic about the extent of their commitments and others who were ready and geared up discouraged, never to continue with their efforts. We saw all over the country that the various local authorities had to bear the impact of increased interest rates, an impact that ultimately was to be carried back to the ratepayers. We saw the whole pattern of our economy disrupted by, what in the light of events since happening, could only be described as national catastrophe and political idiocy. Not only that, but we witnessed the spectacle in this House of an Irish Minister for Finance boasting that he was able to get the money raised for that loan at that rate of interest—at a rate of interest the effect of which it will take years of wise Government and of sound finance to offset.

Let us come to grips with the facts. Every household in this country, big or small, felt the impact of the 1952 Budget: 1953 saw a repeat performance, saw the people continue in their overburdened state of direct taxation and saw the position of the local rates become more and more serious. We saw the impact on employment because of the increased rates not only operating in the building industry but on various economic factors and various other industries. The effect of the Minister's loan and of the rate of interest he paid for it was to have consequences that led to tension in every facet of our economy. We saw the spectre of industries geared up for expansion afraid to expand or unable to expand because of the rates of interest they had to face. We saw in general a tremendous falling off in the amount of houses being built under the Small Dwellings (Acquisition) Act. We saw a growing feeling of apprehension within the State. All this arose through a Government clinging tenaciously by every means in its power to office, an office which they knew and which we knew no longer had the confidence of the Irish people behind it. We saw right up to the date that they had to face the verdict of the people, that their economic policy had heaped ruin upon ruin, because there was no imagination, no strength, no courage and no leadership among them to revive the national economy.

We have a Budget now. Let us analyse it objectively for what it is worth and I say to the Irish people it is going to be a very significant Budget because it is a Budget that is going to call a halt to the progress on the road to economic morass and dull initiative in national planning. It is not possible for anybody, no matter how vivid an imagination he might have, to conceive that it would be possible to undo all the havoc that was perpetrated during the short period this Government has been in office. But first of all this Government, on the road to doing this, has put a brake on expenditure. It has, as far as it was able to distribute the load in any way this year, redistributed it in a way that is not only equitable but commends itself very readily to the Irish people.

Let us analyse objectively and on its merits what has been done. Is there anybody in the House who will deny that the most oppressed section of the community since 1952 have been the unfortunate old age pensioners, the widows and orphans? Are they not the people who felt the first most deadly bludgeoning effect of the 1952 Budget? It must be a matter of extreme commendation of the Government that when they had even a small amount to dispense they dealt with that very serious problem immediately. I can remember many taunts that were thrown at us about old age pensions. I want to say that this will prove finally and effectively for ever to that unfortunate section of our community that it is only a damnable political lie to suggest that the old age pensioner and the widow and orphan are not in safer hands with such a Government as this than they would ever be with the Simon Pures, as they allege themselves to be, across the House. That is a job well done. We on this side of the House expected that if the Government had anything to redistribute, they would deal with that necessitous class. Let us go on from there.

There is no class in this community more meritorious of next consideration than the family man living on a salary or living on a fixed income. Even though the relief that the Minister found possible may not be as great as some people might have hoped for, at least, is it not an effective earnest of the realistic approach that the Minister has to various sections of the community?

The Minister has brought an innovation into his Budget. Deputy Childers speaks of lack of imagination. I think the Minister has struck a blow for Irish self-respect, and a very imaginative blow, when he has taken the line he has taken in this Budget in relation to premiums for insurance against illness. I am not afraid to say that that is an effective contribution to a reestablishment of self-respect in a great section of the community. Certain people in certain income groups for too long have been crippled by the impact of fortuitous sickness on their family circumstances. All of us in this House know how difficult it has been for some of the people in these classes and groups to extricate themselves from the difficulties in which they were placed by illness. The Minister has taken an imaginative and a courageous line by giving this type of concession. It will encourage a rapid extension of that type of insurance that will ensure that no family will suffer dire consequences as a result of fortuitous illness.

People in Fianna Fáil say that this is a bad Budget but nobody from Fianna Fáil will tell us what is bad about it. They are afraid to say it is wrong to give relief to the old age pensioner because there are local elections pending. They are afraid to condemn the concession given by way of tax relief to the family man because it would look as if they were opposing a large section of the community. They are afraid to admit the basic fact that governs the whole matter, which is, that the last Government made such a disastrous effort at running this country that the stabilisation of our economy again and the gearing up for further expansion has been an immense task and that the Government, in its 11 months, has really made a first-class contribution to putting us back on the road to an expansionist policy.

I shall not labour my speech on this Budget. I say effectively and earnestly that the Irish people have been waiting for an earnest of change. This Budget has given them that earnest. It shows, for the first time, an improvement of the lot of certain sections of our community without the bludgeoning effect of increased taxation. It is showing the way for further development and expansion that will lead to a return of confidence and will to work in the people that will leave us within our economic structure a capacity for development which, as year succeeds year, will enable the Government to reduce the load of taxation that the people have to carry.

It was a great effort to get as far as we did in 11 months and that is really what is sticking in the craw of every Fianna Fáil Deputy. What is really tearing at their vitals is the fact that the earnest is so good in so short a time and that they have to go now into the humdrum business of fighting a local government election against the effort that a Government has been able to produce in 11 months after three years of the most deadly and catastrophic type of Government ever foisted on this country.

Let us get down to realities and ask ourselves what hope flows from this Budget. On that particular aspect of the Budget I shall wax eloquent because we have now reached the position where we have stopped the rot and where Irish confidence in its Government is running at a level unprecedented.

I move to report progress.

Progress reported; Committee to sit again.

The Dáil adjourned at 5 p.m., until 3 p.m. on Tuesday, 17th May, 1955.