Last night I was dealing with this Budget and the debate on it in three ways— first of all, the line that had been taken by the Opposition that there was no change from the Budget of 1952; secondly, the political point, and thirdly, I intended to speak on the Budget itself. I had practically completed what I had to say on the first of these points. There is just one matter which was mentioned by Deputy O'Malley yesterday which I think worthy of comment. He said that in the Budget of 1951 Deputy McGilligan, then Minister for Finance, made no provision for the award to the Civil Service; £3,500,000 is the figure he mentioned. The first comment on that is that it is rather old— I heard it a long while ago. The second comment is: how could the Minister make provision for something that the arbitrator was sitting on? What would the comment from the opposite benches be like if he had put in a certain sum of money prior to the election? There would be the same kind of comment as we had yesterday from Deputy Corry—that we had bought the Civil Service—an innuendo of that kind.
Committee on Finance. - Financial Resolution No. 5—General (Resumed).
And paid them.
Exactly. The Deputy does not withdraw it. I am not doing him any injustice in suggesting that he said that.
I did.
It is all right, then. We are ad idem. What would Deputy Corry have said if, while the arbitrator was sitting, the Minister for Finance had provided a couple of million pounds for the Civil Service, at a time when an election was coming?
Did he not know what the award was going to be before he introduced it?
He did not, because the award was not made until after the Budget. The award was made late in the month of May of that year.
Does Deputy Derrig seriously challenge that?
I cannot believe that the Minister for Finance did not know an award of that character was going to be made.
There was bound to be some award, of course.
Deputy Derrig must know very little about the method of arbitration.
He is thinking of the Fianna Fáil type of arbitration.
That brings me to another point—the last point I will make on the 1952 Budget—the question whether there was £10,000,000 of over-taxation in it or not. Of course there was £10,000,000 in it when it was introduced, as there was £9,250,000 of Supplementary Estimates which were financed out of it when it was introduced. As a matter of fact, the Minister would have been dead on the line if he had paid the Civil Service the odd £900,000. However, I want to give the Department of Finance and the Revenue Commissioners credit for being technically line-ball and having prepared it perfectly, but it would have come out at the exact £10,000,000 if he had paid the Civil Service.
One other suggestion made was that we still have the Budget of 1952 with us. I want to make a number of answers or points on that. The first is that there have been substantial wage increases since that Budget was introduced. Secondly, there have been substantial tax concessions since it was introduced. Thirdly, an increase like the increase that is being given now to the old age pensioners of 2/6 and to the widows of 2/6 and to the orphans of 1/-, is going to make a further difference in that Budget of 1952. In other words, that Budget will be systematically whittled away by the Government now in office. The Minister has started it this year. Deputy McQuillan said yesterday that there was no difference between both sides of the House.
Except in name.
Well, Deputy, there is no point in that interruption.
The Deputy, after the answer he gave to Deputy O'Higgins, would be wiser not to interrupt again.
It is Tweedledum and Tweedledee.
The Deputy has not got the courage to decide what he wants to be. Is that not what it came to yesterday?
Deputy McQuillan suggested yesterday that there was no difference between the two sides of the House in the manner in which they had implemented the policies they had put before the electorate. I should like to say this: even if the present Government achieved none of the points of policy which were set out in the statement which they issued, they would still be in a better position than the Party now in the opposite benches for a very good reason; at least they would not have gone back on the specific things they said; they would do better, that is to say, maintain the existing position as regards the subsidies on food.
I come now to the present Budget. I think that the Minister has made a remarkably good job of a position which he inherited, and which gave him very little room to move. What has he done? It is quite easy to see how much money he found: £2,000,000 for butter subsidies, £1,000,000 for old age pensioners and income-tax reliefs, £750,000 for health services—a subject on which the Deputies opposite, less than 12 months ago, were ranting in this House. They said that this Government was out to kill the Health Act. Is it not perfectly true that when the Minister for Health, Deputy O'Higgins, brought in that Bill, this House was regaled with rubbish from the opposite benches about what the strong Fine Gael Party in the Government would do to the Labour Party, and to the Health Act of 1953? The answer is here. The Minister has provided £750,000 for the implementation of the Health Act. Deputy Corry's local council will have to pay 50 per cent. of it, too.
You got it off the old farmer.
The Party opposite make great play on the farmers. I already spoke about it in this House last November. Talking of this play on the farmers, they are a bit late in the day for that game.
Are we?
In implementing the reliefs which were given by Deputy MacEntee this year, the Minister had to find £600,000. How did the Minister find this money? The money was found in two ways. One was by the confidence restored in this country last autumn. That confidence has made revenue buoyant, and the Minister is able to count on somewhere between £3,000,000 and £4,000,000 for that. In addition, there has been a cut in the cost of Government to the tune of about £2,000,000. In other words, the Minister found all this additional money, without imposing any additional taxes.
Deputy Aiken yesterday said that the cutting off of the subsidy on confectionery was taxation, and he mentioned various other things of this sort. Where Deputy Aiken gets this definition of taxation, I do not know. A subsidy is a benefit which is conferred by the Government. If it is taken away, you certainly are not taxing the people who were getting it previously. I, for one, do not mind who may be hurt by the removal of that particular subsidy—I do not believe anybody will be hurt. Supposing somebody did get hurt, how can you justify having a subsidy costing, in a full year, £750,000, on confectionery? I do not believe that anybody will justify it when one considers the hardships which were created for the poorer classes of the community by the reduction in the food subsidies in 1952.
In his analysis of the Budget, Deputy MacEntee made two points. The first one I will come back to later. Since I am now talking on food subsidies I will quote what he said in the Sunday Press of May 8th. He said:—
"Just consider under this dispensation what the position will be if a man elects to lunch on a sausage roll. The sausage, apparently, will be helped on its last journey by a subsidy from Mr. Sweetman, but its modest covering of pastry will have to fend, unsubsidised, for itself."
I will comment on that. When I eat sausages they are not normally covered with pastry, and I think most people eat sausages which are not normally covered with pastry. The main point, however, that Deputy MacEntee made was that there was no reduction in taxation, and it was about time there was. In column 708 of the Dáil Debates of 4th May, 1955, Deputy MacEntee said:—
"If it were not for these pledges which were given so irresponsibly and are being so niggardly fulfilled, tax reductions might be given and let me say this, that a reduction in taxation is long overdue.
"I notice some people are laughing because there are no reductions in taxation."
Of course, we all know what the people on this side of the House were laughing at; that no Minister for Finance ever created in this country the record that Deputy MacEntee created in increased taxation in 1952. There was no parallel ever in the history of this country for that. When Deputy MacEntee made that point, I notice he got off it immediately. I will give him credit for that. When he saw the people on this side of the House laughing, he did get away from it.
I am not saying there should not be reductions in taxation. There is not the slightest doubt, from an economic point of view, and the general good of the community, that the operation by which a Minister for Finance might bring the greatest good would be to reduce taxation by 6d. in the £. There is no reasonable doubt about that. It would cost £1,500,000 as the yield of income-tax has gone up so much since the war. The Minister has no £1,500,000.
I will now come to two final points. First of all, there was a general suggestion from the opposite benches that the cost of living was the main issue in the last election. It was, but the issue was this: that the inter-Party group had kept the cost of living stable in this country from 1948 to 1951, at a time when it had gone up 13 points in Britain. Subsequently, by a deliberate action on the part of the Government of the day it was increased a certain number of points— there is some disagreement as to how many. The Deputies opposite, in the autumn of 1950, when the Korean war began, realised that, inevitably, prices would go up. They then started to attack the inter-Party Government for not keeping prices down, when nobody in this country could have kept them down.
You promised in 1948 to reduce the cost of living then also.
Did not the Government from 1948 to 1951 increase incomes in this country? Were there not wage increases, and salary increases, on two occasions during that period? Was that not equivalent to bringing down the cost of living, and to a lowering of the taxes imposed in the autumn of 1947? Yet they financed the country, balanced every Budget that was completed during that period.
I should like to ask Deputies opposite one question. Import prices reached their highest level in March and April of 1951, and, when Deputy Lemass came into office, he signed price Orders by the score, giving increases to manufacturers on the basis of these import prices. Since then—in subsequent years the trend has been reversed—import prices went down by 10 per cent. It may be taken that broadly through the whole industrial world imported raw materials are about half the cost of production, but, although import prices went down by 10 per cent., I have no recollection of Deputy Lemass, as Minister, ever rescinding or reducing one of his price Orders. He may have done so in an individual case, but I am not aware of it.
If we assume that imported raw materials fell 10 per cent. and that they are half the cost of production, why was there not a reduction of 5 per cent. in the price of these commodities during the latter part of 1952 and the beginning of 1953? I have my own reasons why that was not done. I believe the Government were trying to get over the ill-effects of the 1952 Budget by allowing manufacturers to accumulate large profits but it is ridiculous to say that the price of imported raw materials fell on the average by 10 per cent., forming half the cost of production of the industrial community, and that there should be no reduction in prices as a result.
I come now to the question of unemployment. First, there was very little mention of unemployment from the Opposition Benches, but there has been in recent months an underlying suggestion that there is complacency on this side about the unemployment position. There is no complacency on this side about the unemployment position, but the Tánaiste rightly pointed out that the unemployment position was improving consistently until the recent strike. I believe that, now that that strike is over, there will be a considerable improvement again. I am glad to see Deputy Major de Valera nodding his head in agreement. It shows that we all wish that that problem could be solved for this community.
Major de Valera
That is a most dishonest statement. I was not nodding my head. I was not even listening to you.
I thought I saw the Deputy nod his head and make a note.
Major de Valera
Yes, but it had nothing to do with you. I am terribly sorry—I was very rude—but I was not listening to you.
I will not comment on the peculiarity of nodding one's head as one takes a note. Some good thought must have struck the Deputy at that moment.
As regards the outlook for the future, I want to say that I am concerned—and I have indicated it in this House previously—about the inflationary symptoms that have come to the fore again in Britain in the past six or eight months.
Let us hear you on unemployment. You did not say very much about it. You mentioned it and then passed away from it like a shot.
I am going to say a few words about it now. A book was produced recently in Britain by a man named Brown, in which he defines inflation as an inordinate rise of prices. The title of the book is The Great Inflation, 1939-1951. What interested me about the book was that the preface to it was written in May, 1954, and Mr. Brown, in writing this book, writes as if inflation was something past. He is described as Professor of Economics in the University of Leeds and that is one of the most interesting things about the book—that he writes as if the inflationary period were over.
What I fear is this, that when you have a country like Britain, with limited sterling reserves in the form of gold and dollars, and in the position that it has to import a great deal of food and raw materials, if there is any downturn in the demand for the products produced from its factories, a balance of payments difficulty looms up immediately. In such a country, even though the Government may have pursued a policy which has brought about increased production and created full employment, inflation seems to me to be ready to pop up through the floor like a spring, no matter how you batten it down at various places.
Very few people understand how inflation operates and why that should be I do not know—I just notice that it happens. A Government seems to balance its Budget and has an enormous surplus and that should, strictly speaking, create a condition which would at least be on an even keel, if one is to believe the kind of economics written in many budgets in western Europe in the past six or eight years —that once you have a big surplus, you are damping down inflation. It is not for me to answer that, for the very good reason that I never believed in that particular theory on the subject, but the people who do believe in it have something to answer. They have to answer the question: how then, when Mr. Butler had this enormous surplus in Britain, did this huge inflationary surge that has happened through the winter in Britain come about?
I do not mind being quite frank. I do not know how it came about, except that I think it stems from this danger of balance of payments difficulties. It is noticeable this spring, for example, that the sterling reserves are barely holding their own—they have gone down somewhat—whereas normally in springtime—and this is not a matter of yesterday or to-day; it is the case for 60 or 80 years—Britain has been in credit in her balance of payments. In the autumn, traditionally, she has had to make payments for what used to be called long ago the movement of the crops—bringing wheat, cotton and tobacco from the United States. It is a sign, to my mind, of a coming difficulty in Britain. There has been no increase—in fact, there has been a reduction—in the British sterling reserves during the spring and it is quite obvious that this is a serious underlying point in the general election in Britain and in the discussions taking place there.
This Government at least has done one thing which I think is greatly to the credit of the people who took the decision. That is the decision to keep the bank rate here stable. Nobody suggests that we are in any balance of payments difficulty at the moment. Perhaps I am a little radical in this matter, but I am in a way a little disappointed that we did not have more imports last year. I would have liked to have seen more imports, and particularly imports of raw materials. It would indicate a higher standard of living here and as to whether a particular figure indicates the whole story or not, I do not know, but I do think that, in a time of inflation, in a time when inflation is likely to recur it is very advisable to build up our capital resources here.
With regard to the bank rate, I have a quotation here from the Journal of the Institute of Bankers for April, 1955, a short note on the position, which reads:—
"On representations made to the banks by the Irish Government that conditions underlying the increase in interest rates in Britain were not operating in Ireland, that inflationary trends here had been brought under control, and that an increase in advance rates might create employment difficulties, particularly in the building industry, the banks signified their agreement and decided not to make any change in lending rates in Eire. This was probably a wise decision, and, moreover, it has served the useful purpose of establishing a precedent."
The precedent is that we do not more exactly as they move in Britain. I am glad to be able to compliment the Minister heartily on his achievement. Moreover, the signs already this year are favourable to the outcome of the Budget. It is not advisable very often to take short-term figures. Let me quote from Iris Oifigiúil of the 10th May, 1955. For the first five or six weeks of the year revenue is up £600,000 and expenditure is down about £100,000. The other issues are also down. That means at any rate that the Minister's Budget has got a good start and I am glad to have the opportunity of congratulating him on that.
I should like to express the hope that we in this country would, from now onwards, turn our attention more to the development of the commercial life of this country. I feel that there are some aspects of that part of our national economy which would repay development. Generally speaking, the development of economies throughout the world is characterised in the first stage by the development of the primary industries, the output of agriculture, mining, and so on. The second stage is the development of industry, and the third stage consists in the development of commercial life, services and that kind of thing. I feel that a great deal has been done by private enterprise in that connection, but I also feel that the time is coming when the State capital programme ought to be partly diverted in the direction of the development of commerce in this country.
I should also hope that we would be able to make in the future years better provision for education. I was glad to see by an answer given yesterday that the Minister for Education is making certain arrangements in connection with the training of national teachers so as to provide trained teachers where at present they are not available.
Finally, and on this matter I think the Opposition Party are with me, I would like to see still more capital being ploughed into agriculture, especially by the farmers themselves or by the State. I think that if the Minister can proceed to implement the policy of the Government steadily during a number of years, as he has done on this occasion, there will be no doubt in regard to the answer the Government will receive when they have to answer for its period in office.
Major de Valera
Listening to this debate, one wonders how far we have allowed considerations in the past, and considerations of the immediate political present to dominate our approach to this discussion anyway. Personally, I prefer to look at the Minister's Budget this way. Fundamentally, his approach is reasonably sound, sound because, in the first place, he has, I think, resisted the temptation to yield to the pressures of the moment. In so far as it has been a continuation of budgetary policy for the past few years, we should be able from that basis to develop, but I think we are not putting enough emphasis on providing money for development, in the sense of capital development, that will give us a return in the future and enable us to build up and balance our economy.
In parenthesis I will say this. The Parliamentary Secretary, before he sat down, said he was sorry that there were not more imports and referred to the capital position. If the Parliamentary Secretary was referring to the imports of machinery and capital goods of that nature or even to the imports of essential raw materials which cannot be obtained in this country, I think there are many people who would have some sympathy with the view he expressed. However, it is a totally different matter if one is talking about consumer imports. They, to my mind, are simply a form of waste, if the goods can be produced here.
That being said by way of parenthesis, I should like to ask why we should not go a little bit further in our development programme here. We have been talking for some little time past about agriculture and about the resources of the land. I am not going to go into the technical details but, quite clearly, there are a number of developments possible in that field. The provision of funds and a State stimulus to such activities appear to me to be desirable because there seems to be no possibility that action on a big enough scale can be taken without some incentive from the State.
Leaving aside the actual immediate agricultural problem with which I am hardly competent to deal, there are the questions of the ancillary industries related to agriculture. I would have liked to have heard the Minister come out in his Budget and say that we will now in the forthcoming financial year make some definite provision in regard to the manufacture of fertilisers or the raw materials for fertilisers in this country with a view to a planned economic production of these essential things for agriculture.
I would like to say, arising out of that, because it is closely related to it —another occasion will be the proper time to debate it in detail—that there is the development of certain aspects of the chemical industry which can be related to the fertiliser industry, or more accurately, industries designed to produce the basic raw materials which are needed for the fertiliser industry in so far as we can do so having regard to the raw materials available to us in this country.
One can multiply the examples. The extension of rural electrification, while essentially an amenity, can contribute in the direction in which I am pointing. The extension of power development and power resources is a very direct contribution in that direction and is, in a modern economy, an essential thing. It is the perquisite to any industrial development here. We need, in spite of all the things that are sometimes said, a more fundamental industrial development here.
Heretofore, development has been both creditable and gratifying in so far as it went, but it largely dealt with what might be described as secondary industries with a few major exceptions. The primary type of industry that we can develop here will need an activity on the scale of, say, the E.S.B., Bord na Móna or the presently developing Sugar Company. Since the stimulus is needed from the State, I think the Minister might have had something more positive to indicate in that regard. I know that there is always the problems of finding the money and that, in turn, raises some rather wider issues as to what the plan or the policy is.
In the lifetime of the previous Government there were certain trial steps being taken in that direction. I would like to see those followed up. I do not know whether or not they are being followed up, but the years are slipping by and the time has come when not only mere follow-up is needed but there is necessity for concrete proposals in relation to development and action. A Government which will undertake that task will provide in a very definite manner for the security and continued prosperity of the country irrespective of whether we find ourselves faced with peace or war, crisis or anything else.
That development must in its essence be planned with reference to the land and to our agricultural potential. It is almost trite to say it, but the hard fact is that our main resources are in the land and development should be built up around them. So much for general comment on the Budget.
This Budget is interesting from yet another point of view. Because the Minister has taken the line he has taken, I do not want to belabour him; but the fact is that he has adopted a policy in this Budget which will be more advantageous to the country than the type of policy adopted by the first Coalition Government. We have heard a good deal about Budgets in past years with particular reference to the 1952 Budget. The fact is that it was the situation which had developed under the first Coalition which necessitated the 1952 Budget. The fact is also that it was the 1952 Budget, so to speak, which stabilised the ship of State thereby enabling us to move forward on a more even keel, as is indicated by the Budgets of both this year and last year.
Having got the State back on a sound basis, I would like to say that there seemed to be certain indications in the present Budget at any rate that some people with a proper sense of responsibility are endeavouring to ensure that a situation does not again develop in which there will be the unbalance that was there before. I do not know whether or not the Minister will regard my remarks as helpful, but that is beside the point.
The Minister and his colleagues have been very properly open to criticism on the grounds of rash promises made and undertakings given, together with the failure to implement them. Let me say again that when we indict the Government for these promises and for their present performance, it is not because they cannot work miracles or because they are expected to work miracles. It is not because they cannot do the impossible that they are being attacked and indicated; it is because they promised the impossible and because they promised to work miracles, miracles which they should have known they could not work because in their three years in office before they had ample opportunity to learn their lesson. There was perhaps some excuse for the indiscriminate promises of 1948 but the problems they met during the years from 1948 to 1951 should have been enough warning to them. Nevertheless, we had a repetition of that in 1954.
People may say: "We promised nothing," but admittedly some did. I will not repeat my contribution on the Supplies and Services Bill; I gave chapter and verse then to show that promises were given. The point is that it is not a question of the promises given explicitly; the whole atmosphere was one of promise, but there is something more than promise and performance involved in the points I am now about to make.
Unfortunately, there has been a tendency on the part of certain people for political ends to set the country against the city, and certain people did succeed in fomenting a certain amount of animosity on either side. Let us see now how the two can go together and how the two can benefit, or otherwise, by going together. The Minister for Agriculture cut the price of wheat and the farmers will lose. I do not intend to go into the economics of the farmer but that action will certainly tend to discourage the production of home-grown food. Nationally that is a bad thing. Nationally it is a dangerous thing. I will freely concede that there are certain problems of balance and so forth, but the fact is that the price of wheat has been reduced and the farmer will suffer as a result of that reduction.
Where is the compensating advantage to the consumer? A number of people were waiting on this Budget to see if anything would happen to the price of bread. Despite the reduced price for wheat to the farmer the consumer of bread will still have to pay the same price for that commodity. The farmer has lost the advantage of having a price to which many people would argue he is entitled. We hope the Exchequer will benefit. I know that arguments can be developed to show where that has gone, but I want to draw attention to the fact that whereas the farmer suffered a reduction the consumer has got no compensating reduction in the price of bread. Bread is as dear as it ever was; and apparently continuing that trend flour, in one particular direction, will be a little bit dearer still.
Such things give one to think. Consider the question of bacon. I know the problem is a vexed one. I know it is a complicated problem, and there is always the danger of over-simplification in making a statement. Nevertheless, the Minister for Industry and Commerce threatened and blustered about the price of bacon at various times in the past and certain pressures, direct or indirect, were brought to bear on the becon factories in order to bring about a reduction in the price of bacon, all allegedly for the benefit of the consumer. There was also a tendency for feeding stuffs to increase in price with the result that very rapidly a situation was brought about where the farmers or pig producers stopped producing at the rate at which they were producing.
As I understand it, the position now is that there is an acute shortage, or certainly a threatened acute shortage of pigs and the price of bacon is going up. Bacon is to be dear and in short supply for the consumer, and a source of income for certain elements in our rural population has been, to some extent, dried up. All that picture is to some extent complicated by the British situation but, nevertheless, there is a lesson in all this that yielding to immediate pressures, the irresponsible attempt to try to please or do the popular thing at every turn can result in damage to the people whom it is sought to please, in this case the consumers, and it will be questionable in the end, unless some other factors intervene, whether the policies adopted by the Tánaiste and the Minister for Finance—and, indeed, I suppose I should put in the Minister for Agriculture, too—whether these policies adopted by them, having brought about a situation where now there is a threatened scarcity of bacon and a higher price for bacon, will not continue to be damaging.
But it is all good bacon.
Major de Valera
I might deal with the gallant gentleman on another front but I do not want——
You do not want to get involved in bacon at all.
Major de Valera
The housewife was very worried about availability and prices.
It worried the Deputy's Party.
Major de Valera
It is not to use bacon as a specific propaganda weapon to beat the Minister with that I discuss it though he may be wide open to a good flake with that one.
Not with bacon.
Major de Valera
Collective responsibility. The point is this—what I am trying to say is that the approaches to these problems, the short-term, apparently-popular approach, the carrot dangled to the electorate can be a poison for that same electorate. It is not that the elector is merely fooled but he can be positively damaged by it. The electoral carrot can, as I say, very often be something more than a deception—it can be a positive poison. By and large what has the Minister for Finance been able to do? He has been able to do nothing more than his predecessor last year was able to do, but in so far as he has resisted certain pressures and tried to produce a sound Budget without becoming the victim of the temptation to live on to-morrow he has not done too badly.
Now, what about the situation in regard to the people who were expecting things from the Minister? I think these problems should be faced up to and mentioned. There is no doubt that this Government and every Party in it from 1948 onwards carried on a propaganda campaign the whole burden of which was: the cost of living is unnecessarily high; an efficient Government can reduce it; give us the power and we will reduce it. It was explicit in 1948; it was still actually explicit in 1954 although certain Ministers and the Taoiseach covered themselves by saying: "We are making no promises." Very well. What were the promises? You may argue with me; you may produce your statements and I will produce your counter statements, but what matters is the impression on the ordinary man in the street—did you or did you not make these promises? Was not one of these promises: We will reduce the cost of living? And, talking about 1954, there was a continual harping on the increase in the price of bread, but the Government has not reduced the cost of living by reducing the cost of bread.
The Government have not been able to reduce the cost of living by and large at all; in spite of them it has gone up. Why? I would be just as dishonest as some of the Minister's colleagues when they said that the previous Government did these things deliberately if I said the present Government did that deliberately. I do not think it is right to try to fool the people by saying that the Government has deliberately put up the cost of living with malice aforethought. The fact is that the Government was not able to keep it down and a large part of the reason for that is that there are factors at work outside the control of the Government, outside the control of any Government. Is it not about time we were frank and honest with the people and that that was realised? We will still beat the Government about irresponsible promises and I think we are entitled to do that, but in the interests of the country we must realise that there are certain problems and certain economic factors at work that are not wholly controllable by the Government of the day and that it is illusory to make wild promises or make wild statements of that sort.
It is dangerous also to have people making isolated, or incomplete cases for specific reductions in the cost of certain commodities if they do not take into account all the factors that are involved. It is to a large extent illusory to talk about price control as a great weapon which a Government can wield and which will give results if only the Government is determined enough. Let us face that bogey once and for all. Price control can be effective only in certain circumstances but the circumstances are those of dictatorship. Price controls are effective in war circumstances such as the war circumstances we had here—within limits—but war circumstances are to all intents and purposes very close to an autocratic situation or dictatorship.
One cannot work and get the advantage of a free economy—free within certain balanced limits—and control individual prices rigidly with effect or with justice. It is no harm that that was realised. Therefore, when there is talk about the reduction of the cost of living, by all means let anything that would be suggestive of exploitation of the public be checked. We are long enough here now, and we have seen successive Governments come and go, to know that there is no road for effective relief for the public in that direction because, if there had been, action would have been taken long ago by the various Governments that have been here. Therefore, the cost of living is one of these economic problems which has to be faced as one of the hard facts of life. I hope we have now seen the end of irresponsible promises to work miracles. If the Government have to suffer a little bit longer, and have to take the consequences of the promises and impressions which they rashly gave and created, I must confess I have not an awful lot of sympathy with them because they asked for it.
I come now to the question of the price of drink. Here is another matter where precisely the same type of thing operated. Everybody knows that the licensed trade were virtually organised by the Fine Gael Party and, one understands, subscribed very large sums to that Party. On the basis that what was described as Deputy MacEntee's murderous Budget would be adjusted, it is quite clear that there are no reliefs available to the Exchequer to effect these things. It would have been better if such facts were recognised and the temptation to exploit a situation like that had been resisted.
I should like to get back again to the question of development, that I have been talking about. There were proposals, I understand—certainly in the lifetime of the last Government and I think they go back to practically the end of the war—whereby the development of a plan for fixing nitrogen for fertiliser purposes was under consideration as the starting point for an industry that would have a bearing on the fertiliser industry and ultimately on supplying certain chemical needs in this country. Is that to be proceeded with? It will need a certain amount of capital. I think it would have to be State-sponsored a lot of the way. Is it going to be proceeded with, and, if it is, how much more time will have to be lost before some definite action can be taken? Is there going to be a planned effort to link that up with the other sides of the problem—agricultural development, on the one hand, and possible chemical development on the other hand? It might well pay the Government to set up a special board of competent people to deal with that problem alone.
I think investment on those lines would ultimately contribute very largely to the balancing of our economy and to our prosperity. Perhaps there will always have to be a certain amount of importation in regard to certain materials for the fertiliser industry. Some reserves, such as they are, may only be emergency reserves but, even so, there is a strong case for developing the industry here even if it has to operate on imported raw materials. At least you have the plant. At least a greater perecentage of the production activity takes place at home, with consequent benefit to us. If you have a certain reserve there, you are insured for limited periods in time of crisis. I would urge that particular approach very much on the Government. I should like to see that the necessary funds are set aside to enable that type of development to take place. It is only one instance of the type of development we should like to see here.
I come now to the subject of unemployment. I should like to take this opportunity of saying this from these benches now: we have already said it from the Government side of the House. Whatever the facts and figures about unemployment, there are at least two factors in the situation to be considered. Firstly, there appears on the register a certain number of partially employed people during the year. In other words, there are a certain number of people on that register, particularly in rural areas——
The majority.
Major de Valera
——who are not really unemployed in the ordinary sense in which we talk about it. These people are being subsidised for a period and they are in gainful and useful employment in their normal occupation the rest of the year. Could that particular load not be segregated from the main figures and regarded this way? There is a group of people whom we are, so to speak, subsidising for a period and who will be and are normally fully employed during other periods. Could we put them in one category so as to enable us to get down to examine them? On the other hand, you have unascertainable on present figures in any satisfactory way a group of what I might call chronic unemployed and unemployables. If you could separate the two categories I have mentioned in your figures you would then be left with a pool of what you might call the real unemployed— and it would be the pool of the real unemployed that would give you the true index to the unemployment situation.
Talking about these total figures, as we frequently do, we are often misled by the bulk size of the figures. I feel that perhaps I would be more helpful in mentioning a thing like this from this side of the House than from the Government Benches: it was the Parliamentary Secretary to the Government who mentioned the matter. If these figures are segregated in that particular way we can be much more realistic in our talk about unemployment and the real facts of unemployment. How much the chronic unemployable type contributes to the figures I do not know.
On the various Estimates we will have an opportunity of discussing a number of matters which arose in this debate. I have purposely tried to avoid quoting promises and performance against the Minister in this particular discussion. I could probably take up a good deal of the time of the House in doing that, but I want to say this again, that if we are going to approach elections on this basis of dangling the carrot before the electorate when that carrot cannot be produced after the election, it is not only deceiving the electorate but it can actually be a poison as I have instanced in the case of bacon and in disappointment that can arise and the dissatisfaction in the case of bread. The dissatisfaction in the case of bread will arise mainly in the country areas. Perhaps even yet some benefit may accrue to the consumers.
The Minister for Agriculture talked about August. Probably by that time the wheat situation will be clarified but meanwhile the price of wheat is being cut to the producer and the price of bread remains the same to the consumer. As far as I can see it is only the Exchequer which benefits. Of course, when I say only the Exchequer, I must also say that the Exchequer has to find the wherewithal to finance the funds of the Government. I must be perfectly fair to the Minister. He must find the funds in order to give any reliefs he has to give. There is nothing very much more I can contribute to this debate but to express the hope that, whatever the discussions on the Budget were, in the coming year we will see some purposeful drive here towards an increase in profitable and productive activities and the further development of our agricultural resources.
I also want to see that our backward areas, if they may be called that, are made more productive and more attractive to live in. We should also see the development of the host of ancillary activities to agriculture and from ancillary industries to service agriculture; and from such development I can see an improvement in our other activities conducive to an improvement in our standard of living here under our own steam as against the necessity for importing consumer goods. Many real improvements can be achieved by any contribution in that direction and in so far as we here can produce at home what we consume at home instead of importing it. That will be a step in the right direction towards prosperity, I think. That is what I would urge upon the Minister and upon his Government. Let us look to the years ahead on that basis.
I can assure Deputy Major de Valera who has just spoken, in reply to his appeal for positive proposals for productive investment, that that is the whole fundamental basis of this Government's programme. Their endeavour since they undertook office has been to create a situation favourable to productive investment— productive capital investment—by the State and by private individuals and so to create real national wealth and an increase in the national income. The outstanding feature of the debate on these Budget proposals so far has been that there have not been any of these suggestions to which we have become accustomed. In regard to this Budget there has been no real criticism of the fundamental principles on which it is founded. In fact it has been implied in all the speeches from the Opposition Deputies who approached the matter in a reasonable attitude, like the last speaker, and even in the speeches of those who adopted the reverse attitude, that this is a sound Budget and a constructive Budget. That is the greatest tribute to the achievement of the Minister for Finance.
The proposals embodied in this Budget have not been produced by sheer luck. They have not just happened. They have been the result of hard work; they have been the result of undeviating efforts in the last 11 months to secure conditions which will bring about a possibility of increasing the national wealth, of increasing the people's incomes and of increasing the probability of a reduction in the rates of taxation. I should have liked to follow on the lines of Deputy Major de Valera and, in particular, to avoid this controversy on the difference between promises and achievements, but there have been so many distortions of the truth and so many misrepresentations by some of the Deputies on the opposite benches in the course of this debate that at least I must make my position clear as Leader of the Government. I must also make clear the policy I pursued during the general election campaign as Leader of the Opposition.
Two lines of discussion have been adopted by Opposition Deputies during this debate. We had the line set, or endeavoured to be set, by Deputy MacEntee when he made his preliminary remarks on the Budget proposals, and we had the line set by some of the other speakers of taking a reasonable and a somewhat constructive approach to these proposals.
In fact we had some of the Deputies from the opposite benches saying it was a good Budget. These were two contradictory lines but that, too, demonstrates the fact that the Opposition were paying a real tribute to the achievement of the Minister for Finance in his Budget proposals. Deputy MacEntee, in the second sentence of the remarks he made at the conclusion of the Minister's speech on May 4th, as reported at column 701, Volume 150 of the Official Report, said:
"It is a Budget which tells us that the Taoiseach—who, in 1952, pledged himself, if not implicitly then by implication, that taxation could be reduced by £10,000,000 — has been compelled to swallow his words."
The former Minister for Finance was so anxious to get out that phrase and was so anxious to get it over that his tongue got twisted, because he said I had pledged, if not implicitly, then by implication. I presume what he wanted to say was: "If not explicitly."
That headline set by Deputy MacEntee was taken up by Deputy Lemass in the speech he made on the following day when he criticised these proposals and he took the line, in very inelegant language, that it was a "sweet Fanny Adams Budget". That was something different from Deputy Briscoe's line when he said it was a good Budget. Deputy Lemass, at all events, proceeded to endeavour to set the course of the debate on these Budget proposals on the lines that he laid down. He alleged I had made a statement and a promise that I would reduce taxation by £10,000,000 in ten minutes. Fortunately I was here to make an explicit denial of that statement and to ask him to produce the text which he did not produce. Of course I never made such a statement and I ask the House for some of their time to draw attention to some of the explicit statements I was careful to make during the general election campaign in practically every speech, if not in every speech, from my first speech at Ringsend in opening the election campaign on the 23rd April, 1954, until the conclusion of the campaign in O'Connell Street the night before the poll.
I am, apparently, accused on other grounds by Deputy Lemass—and by some of the other speakers, if the report in the Irish Independent of yesterday, 11th May, is correct. Deputy Aiken is reported in that issue of the Irish Independent as saying that I had promised that I would not remain in office unless taxation was cut “but he remained in office although taxation had been increased”.
I opened the election campaign on the 23rd April, 1954, at Ringsend. I took the precaution during the course of the election campaign to supply a script to all the newspapers of the speeches I was making so that there could be no possibility of misrepresentation or, rather, no really effective possibility of misrepresentation or distortion of what I said, although I knew that, no matter what I said, my speeches would be misrepresented and words would be put into my mouth that I had never uttered.
I set the policy for the Party that I represented during the course of the general election campaign, the Fine Gael Party, at Ringsend, on the 23rd April, 1954, and this is what I said in reference to the general principle underlying all the policy that we had adumbrated and advocated during the course of the election campaign—I am quoting from my script which was given to all the newspapers, including the Irish Press:
"We fully realise the meaning and significance of the direction given by the people in the recent by-elections. The people are resentful of the burdens which they have been made to bear in the last few years and they desire that those burdens, so far as is humanly possible, should be eased. It will be the task of the new Government to give their undivided energies to methods designed to bring about the lightening of those heavy burdens. The difficulties are great and the task will not be an easy one. Policy designed to engender confidence and inspire hope for better times cannot be based on the flimsy structure of extravagant promises made during election times but on the calm consideration of all the factors when they have been definitely ascertained, and the knowledge that what was done before can be done again."
I made a speech at Sligo the following night, 24th April, 1954, and I there gave a very comprehensive outline of our policy for production, industrial and agricultural, detailed proposals for that policy and those proposals are the foundation on which this Government was formed. I ask the liberty of the House to trespass upon their time to quote from that speech at far greater length than perhaps otherwise would be justified. I proceeded to give a general account of our policy and I said:
"At the present time in Ireland, there is nothing like enough employment provided each year. As a result, many must emigrate and many more remain at home unemployed. For most people, whether employed or not, the cost of living is excessive in relation to the people's income."
I pause there in the quotation and draw Deputies' attention to that phrase—the cost of living in relation to the people's incomes. That phrase will be found set out in clause 2 of the principal objects of policy of the inter-Party Government, which was issued on the formation of the present Government and it is vital to all consideration and talk about a reduction in the cost of living. Now may I proceed with the quotation?
"The object must be, either to lower the cost of living or increase the people's incomes. We believe that these objects are capable of achievement and are convinced that if the right policy is put into operation more employment can be found and prices and incomes can be brought into line. No miracles can be performed and time will be needed, but there is no reason why taxes could not be got down while the same or even improved services are provided. Apart from what can be done by a good Minister for Finance, who is as superior to an unwise one as a good housekeeper is to an unwise one, in the value he can get out of public expenditure, lower taxes can provide higher revenue if there is an increased national income. What is needed, therefore, is not exhortation for increased production but a policy for production.
We do not intend to stifle our future endeavour by promises hotly secured in the midst of an election campaign. We will enter into no such competition and it should be appreciated that anyone who holds out to you rosy prospects of expenditure on benefits is offering to spend your money for you. We will make no such promises, which would dishonour you as much as they would dishonour us. We do not believe that the Irish people are to be bought, but we will promise earnest service, the endeavour so far as we may to see that only the best talent is employed in Government, and a determination to be untiring and undistracted in the search for economic amelioration and social peace."
May I say that that paragraph which I have read out epitomises the objects of policy on which this Government was founded and the aims which we are working every day and all day since we became a Government to achieve?
I pointed out that the increase in the cost of living was something people were entitled to complain about, that it had to be taken into account in relation to people's incomes, that either the cost of living had to be brought down or the people's incomes brought up and that the way you could bring down taxation was by increasing the national income by a policy for production and not a policy talking about production. That was the basis of our policy and I draw the attention of the Deputies of this House and of the public outside to the very explicit words I used on behalf of my colleagues in the Fine Gael Party to the effect that we were making no promises.
However, I am satisfied that the Irish people know full well and place at its proper worth the effort that has been made by the Fianna Fáil Party since this Government was formed, to speak about promises and the failure to fulfil promises. The whole basis of our election campaign was that we were making no promises, that we would do our best when we did ultimately become a Government.
That speech was followed by a comment by the then Taoiseach, Deputy de Valera, now leader of the Opposition, and he is quoted in the Irish Independent of the 3rd May, 1954, as saying these words:—
"The leader of the Coalition, Mr. Costello, has over the past few days been saying that he is making no promises. He speaks wisely."
I spoke on the 3rd May, 1954, the day on which that speech by Deputy de Valera appeared in the newspapers, and to my own constituents in Rathmines on that night I repeated in different words but in the same context that we were making no promises in this election. Having dealt with certain issues which at that time were being made, spuriously, as we thought, election issues, I said:—
"As to the other spurious issue—it has now become a falsehood to tell the people the truth about the rise in prices and unless the Opposition are prepared to tell them in great detail how they are immediately going to reduce them, they are not permitted to refer to the Government actions raising them which the Opposition at the time opposed. In 1951 the Tánaiste, Mr. Lemass, went around the country saying that the inter-Party Government had achieved one record, a record high cost of living. The Tánaiste broke the record soon enough and made a few more. The Tánaiste accused the inter-Party Government of raising the cost of living: did he say that he would reduce it? It is just as well he did not because the only promises Fianna Fáil made—to keep on the subsidies and not to put back taxes —Fianna Fáil broke both of them.
We are not prepared to mislead the people to get their votes. We are entitled to protest against the measures which put up the prices because we opposed those measures and because they were unconscionable coming from a Government which had promised not to adopt them. We are perfectly well aware that if prices are pushed up by bad Government it will take good Government time either to get them down again or to raise the people's incomes so that they will be able to bear them. I am accused of being wise and clever in choosing not to go out on a vote-catching campaign as if there was something dishonourable in an Opposition about to enter Government refusing to tie its hands for the sake of electoral gain. It is a curious position for a Government to have got itself to that it descends to taunting an Opposition for not making dishonest promises."
I went to Tullamore on the 4th May and spoke again on the same topic. I pointed out, criticising the speeches of the then Government spokesmen:—
"There is no talk about their own policy and little about their record.
Instead we are taunted with not making promises as if there was something immoral in an Opposition which refused to dishonour the Irish people by a vote-catching campaign."
The Irish Press took a hand and wrote a leading article on the fact that I was making no promises. The heading of their leading article was to the effect that I was saying nothing and they talked about my caution. They went on to say:—
"It must be assumed that Fine Gael leaders have no policy on prices. They will not say what their canvassers are saying, and in that way they are showing the two faced character of their campaign. Mr. Costello talks mostly of caution and little else."
I do not think I made use of the word "caution" in any of my speeches. There is a reference also to Deputy McGilligan's broadcast speech:
"Deputy McGilligan's broadcast speech was no more enlightening."
May I interpolate here that that is written in spite of all that has been said about the broadcast and the things he is supposed to have said:—
"He made clear his dislike of social services and subsidies but he said nothing about prices. Mr. Costello was resentful when Mr. Lemass described his two-faced policy as a ‘shabby fraud.' He said he did not want to rush into making ‘irresponsible statements!'"
Now we are supposed to be making all these irresponsible statements although we were criticised in this leading article in the Irish Press for saying nothing and making no promises. I am quoting now from the Irish Press of the 8th May, 1954, in which there is a large heading showing the purport of my observations in Limerick. The heading says: “Fine Gael policy. Costello's Denials.” Then in inverted commas: “Not Making Promises.” The concluding paragraph of this report of my observations at Limerick is headed again: “No Promises” and is as follows:—
"While they were not going to go out and buy votes with promises to spend the people's money for them they were entitled to expose the falsehood of the campaign against them."
The Irish Times took a hand and, doubtless for the benefit of their readers, they put before the then Taoiseach, now leader of the Opposition, and myself, a series of questions in a questionnaire. My answers to those questions are contained in the issue of the Irish Times of the 13th May, 1954. I answered the first two questions together. Those two questions were:—
"(1) If returned to Government, do you propose in the coming year to reduce the cost of living by increasing food subsidies?
(2) If returned to Government, do you propose in the coming year to retain taxation as it is at present on beer and spirits, motoring and cigarettes?"
My answer to those two questions was as follows:—
"An object of our policy is to reduce the cost of living and to relieve the burden of present prices by using all practical means of increasing the real value of people's money. The extent to which, and the rate at which, revisions in subsidies combined with readjustment in taxation are possible cannot be determined in advance by an Opposition. Responsible decisions on these two matters require (1) access to all relevant facts concerning the condition of the Exchequer, and (2) the ascertainment of the effect on the Exchequer of a fundamental reform of the present financial policy.
I do not propose to repeat the action of our opponents in 1951, when they made specific promises which they subsequently broke. They failed to keep their specific promises to maintain subsidies and not to restore certain taxes. I am prepared to make only one promise — to provide good government to the best of my ability."
The final speech in O'Connell Street was made on the 17th May, 1954. I repeated most specifically — and even more specifically than in any other speech — that I was making no promises. There was a very large crowd at that meeting and I warned the people there that anybody who voted on the morrow for me or anybody associated with me was voting in the clear realisation that we were making no promises except that we would do our best.
I was reported in the Irish Press the following day as follows:
"Mr. Costello said that the most determined question put to him, and repeated on platforms all over the country was: ‘Is Mr. Costello going to reduce the prices to the 1951 level?' He said he would put the question in ‘its proper' form: ‘Is the new Government going to work in government to restore this country to the state of comparative prosperity at which it stood in 1951?' The answer, he said, is that it will, and in time the country could look forward to the prosperity of 1951."
All those speeches to which I have made short reference to-day are entirely consistent with the objects of policy and the aims of policy on which this Government was formed. We made no promises; but, having become a Government, we have set forth our aims of policy and those aims of policy, which are contained in the document that was published when we decided to join together as an inter-Party Government, are all based upon the speeches that I made and which I have referred to very shortly here this afternoon.
We had no delusions about the difficulties that we had to face. We knew that we were going to face up to a difficult situation, following upon the three wasted years of Fianna Fáil Government. We came into office and we have been in office for 11 months. During that period, from what we have been able to ascertain inside, we have had no reason to change the view that we held during the election and before the Government was formed, that the task that we would have would be a herculean task, a difficult task, but one that we would be able to meet with, the difficulties of which we would be able to grapple with, and that finally we would in time be able to give good government and fruitful results from our aims and our objects of policy.
Every time that I have mentioned our policy—and it is laid down in our comprehensive programme on which we formed the Government, in our 12 points programme—I never said we could do everything at once. We said it would take time, hard work and a proper policy for production, to achieve the aims we set out to achieve. This Budget, as the Minister for Finance said in his opening statement, is only the first instalment and it is a result of very hard work, sustained effort, during the last 11 months, with the headline all the time in front of us of what we were setting out to achieve in the course of time.
Deputy Lemass said that I had promised to reduce taxation by £10,000,000. Some of the other speakers referred to this question of the £10,000,000 which I had raised during the debate on the 1952 Budget proposals of the then Minister for Finance, Deputy MacEntee. Apparently, because I had stated and demonstrated by the figures I gave that there was over-taxation in the Budget to the extent of some £10,000,000, because we had said at that time that it could be demonstrated that there was over-taxation, unnecessary taxation, in the Budget of 1952, the suggestion is that we could reduce taxation, in the present year and by the present Budget, by the same £10,000,000 that we had referred to in 1952. What happened since 1952? Those Budget proposals dealt a shattering blow to the economy of this country. We had recession of trade, restriction of credit, unemployment and distress of a character perhaps hitherto unknown since this country achieved its freedom. We had business instability and insecurity and we had political instability and insecurity and nobody knew what was going to happen. We had, I think, 11 by-elections and two general elections in the course of three years.
Confidence begets good business; good business produces employment; employment increases purchasing power; and the revenue benefits accordingly. There could be no increased business, no stability in business, no real increase in productivity, because of the political instability and economic uncertainty that existed in the three years of the last Fianna Fáil Government.
Our first object—which we declared in every by-election that was held during the three years when we were in Opposition—was to restore confidence to the people, as the first essential, to restore confidence in the economic conditions existing here in the country and, having restored confidence, the other things would come in time with good government and a good policy. The last 11 months have been remarkable for the quiet that exists in the country, for the calm, for the confidence that has been restored. There has been no political instability, none of that uneasiness that existed throughout the country for the three years of the last Fianna Fáil administration. We have achieved some little result for the very great service that the electorate did to this country by the change of government this time 12 months.
As I understand from Deputy Lemass and others who spoke on the same lines, we are supposed to reduce taxation by £10,000,000, we are supposed not to take into account the effects, on the country and on the economy of the country, of the conditions that subsisted, and to which I have shortly referred, during those three years. Equally we are supposed to overlook the great increases which have taken place in public expenditure over those three years.
If Deputies will look at the explanatory table to the current Budget, which was circulated with the Budget proposals, they will see that the estimated current expenditure for the present year is £110,503,000. Compare that figure with a similar table that was circulated with the Budget proposals of 1952. The explanatory table to that Budget sets forth the figure for expenditure, which is £97,761,000. In other words, in the years that have elapsed between the introduction of Deputy MacEntee's infamous Budget of 1952, and the current Budget, there has been an increase in public expenditure of £12,742,000, practically £13,000,000 of an increase.
According to Deputy Lemass and the other people who followed him we are supposed to be able—with that additional expenditure imposed upon the people during those three years, and with the instability, insecurity and economic collapse almost during the three years of the Fianna Fáil Government—to reduce taxation by £10,000,000, because we said that the Budget of 1952 was capable of being reduced by the unnecessary taxation that was imposed then by Deputy MacEntee. This increased expenditure over the three years, of almost £13,000,000, is being financed by Deputy Sweetman's Budget this year, without the addition of one penny additional taxation and, in addition to that, the benefits, which he has detailed in the conclusion of his Budget speech, to the extent of £4,250,000, are being given to the people. Surely that is an achievement for the Minister for Finance, one on which we are proud to be able to stand by him, and congratulate him upon. That did not just happen. It was not just luck. It was the result of hard work, and of the Minister's own policy directing that hard work during the past 11 months. That is something of which, as an inter-Party Government, we should be proud and of which, I am sure, all right-minded and reasonable people in the country are proud.
The type of propaganda used in this debate is, I am sure, the type we will be faced with in the course of the local government elections campaign. I am sure the people will be told that we promised to reduce taxation by £10,000,000, and did not do it. I have given one reason why we did not do it, and I have also stated what has been done, on top of that. With nearly £13,000,000 of an increase in expenditure, benefits have been given to the people by this Budget, without the increase of one penny in taxation. That is "the sweet Fanny Adams Budget" of which Deputy Lemass spoke. It is the poor Budget that Deputy Briscoe talked about, and the very poor Budget that Deputy Vivion de Valera spoke about a short time ago this morning.
For some reason that I cannot understand, Deputy Lemass decided to quote from the observations that I made during the course of the debate on the Budget of 1952, which was to the effect that I would resign rather than be a party to the proposals contained in that Budget. That was true then and it is true now. I would not have stood for a Budget of that kind. It is perhaps an academic question, but no one, with the colleagues with whom I was associated at that time, would have stood over such a Budget, no one would have been so incompetent to misread the economic conditions upon which they purported to pass their unjust and burdensome proposals contained in that Budget.
I said, at that time, that if we were able to get into office, we would reduce those taxation proposals by approximately £10,000,000. I believe we could have done that if we had been able to get into office there and then, or before the 1st July of that year. Deputy McGilligan has been accused of saying that he could reduce by £10,000,000 in ten minutes those Budget impositions. Of course, he has already pointed out in this House, while speaking on the Vote on Account, that what he did say was, that if he got the opportunity before the 1st July, 1952, he would have done it; and any of us would have done it. The Party opposite is now trying to make out that, because it could have been done in 1952, it could be done now, ignoring all that has happened ever since.
I would not waste the time of Deputies in dealing with this matter were I not assured that Deputy Lemass, by these distortions and misrepresentations, was trying to set the tone for the debate in this House, and set the tone in the election campaign for the coming elections. It is very hard to keep up with the lies, and all I can do is to ask the indulgence of the House to-day, and, through the Deputies, make known to the people the real truth of the matter, the real arguments against these distortions and misrepresentations.
Deputy Aiken—if he is correctly reported, and I assume he must be the Official Report has not yet come out— on Tuesday, said that I had promised I would not remain in office unless taxation was cut, and that I was remaining in office although taxation had been increased. Was there ever such a dishonest statement as that? Where did I make that promise? How the quotation that Deputy Lemass gave, and which I made, I think, as an interruption during the course of the 1952 Budget debate when I said I would resign rather than be a party to the Budget of that year—I would do it still, I would not be a party to it—how that can be twisted to the statement that I had promised I would not remain in office unless taxation was cut by £10,000,000, I fail to see.
Deputy Lemass then proceeded to another line of attack on the Budget. In column 820 of the Dáil Debates of the 5th May, 1955, he said:
"It may not be generally appreciated by members of the Dáil and the public who are to-day discussing the Budget that when the Government came to prepare it they had before them an estimate—prepared, I presume, by the Revenue Commissioners—that the revenue from existing taxes in this year would exceed the revenue last year by £3,000,000. That was a very happy position for any Government to be in. They could face the problems of preparing the Budget knowing that, without action on their part —without any alteration or adjustment of any tax rate — they could count upon getting £3,000,000 more tax revenue than in the previous year. I think that is the most significant and perhaps the most important fact in relation to the Budget."
At column 822, he said:
"I do not remember any occasion when I was a member of the Government on which the Minister for Finance was able to come to a Cabinet meeting and say: ‘I have here an estimate from the Revenue Commissioners that shows that, without alteration in tax rates, we will have £3,000,000 with which to give relief in the coming year.' The present Minister for Finance and his colleagues were in that happy position. The main issue that has to be debated here to-day is what happened that £3,000,000."
I do not think anybody has referred to that issue since, but I had better answer it. I do not know whether Deputy Lemass is on his old line of misrepresentation and distortion and giving the half truths and whether he is making a distinction between total revenue and tax revenue, total revenue being tax revenue and non-tax revenue, or what he is at, but here are the figures at all events.
Estimated total revenue for the current year, before the adjustments made in the Budget, is £3.895 million greater than last year. Possibly Deputy Lemass was referring to that figure of £3.895 million and possibly he did not advert to the distinction between total revenue, consisting of tax and non-tax revenue and tax revenue. That is the extent to which total revenue in the current year is greater than the total revenue for last year. In the previous year, 1954-55, the corresponding figure was £3.755 million, and, in 1953-54, £5.254 million. These figures disprove the allegation so glibly made by Deputy Lemass that there was never a time when he was a member of the Government when the Revenue Commissioners came to the Minister for Finance and said: "You have £3,000,000 additional revenue." In 1954-55 the Minister had £3.755 million over and above what he had the year before and, in 1953-54, he had £5.254 million more.
Deputy Lemass said that with this £3,000,000 we were supposed to have— I quote from column 822 again of the same date:—
"The taxpayers of this country could be enjoying reduced income-tax and reduced taxes on beer, spirits and tobacco—reduced tax levies to the extent of £3,000,000."
Why did he and his Government in 1953, when they had £5.254 million additional revenue, not reduce taxes to that extent, and why, in the following year, when they had £3.755 million excess revenue over the previous year, did they not do what he says we can do this year? I suppose Deputy Lemass thought it was a good talking point— it sounded well—and he wanted to make it the issue of the debate in this House, but in that he failed. Possibly Deputies were much more cautious than he was in that matter.
Deputy Lemass has forgotten, conveniently, doubtless, that last year we had a current deficit of £1.63 million and that the meeting of this deficit was the first claim on the increase in the revenue. The net increase in the revenue was, therefore, only some £2,000,000. I wonder did it also escape the attention of Deputy Lemass that the overall estimate for current expenditure is up this year by £2.144 million on last year, an increase accounted for by increased service of the public debt and increased payments to the Road Fund, the variation in the Supply Services being negligible, as I will point out very shortly, despite the extended benefits provided? In other words, the anticipated revenue was fully bespoken.
Put another way, suppose we have this £3,000,000—it seems to worry Deputy MacBride, or not so much to worry him as to appear to him to call for an explanation, and he gave the proper explanation—if we have this £3,000,000 excess revenue over last year, it has been given back to the people in benefits. We are giving £2,000,000 for butter subsidy to keep down the price of butter by 5d. in the lb.; we are giving £900,000 to old age pensioners, widows and orphans and blind pensions—a total of £2,900,000. We are giving £120,000 in relief of income-tax payers and other benefits. That is how we used this sum of over £3,000,000 that Deputy Lemass said we had to spare and could utilise in reducing the taxes on beer, spirits and tobacco and income-tax. We have given over £3,000,000 back to the people in the benefits conferred on them by the Minister's Budget, but, in addition to that, we have borne, as I have already said, increased expenditure to a very high degree—an increase of £750,000 on health services and other matters, not to speak of the additional cost—£600,000—of the benefits given by Deputy MacEntee in last year's Budget. There is the £3,000,000 more than fully provided for.
Of course, if we had not given £2,000,000 for the butter subsidy, we could have reduced other things, but we took the view that it was proper that the price of butter should be reduced. We could have utilised that £2,000,000 in other directions and perhaps it is a matter of opinion whether it might not be better to have done so, but you cannot have it always as Deputy Lemass wants to have it. He ignores the fact, and other Deputies who have spoken along his line tried to ignore it, that we have given that contribution, at all events, to a reduction in the cost of living and the alleviation of the lot of all sections of the people by that reduction in the price of butter.
I have already explained on a previous occasion in this House—I think, on the Vote on Account—the reasons that impelled us and myself in particular to agree to that reduction in the price of butter. It was my experience from the first speech I made in Ringsend that, in every city constituency, every country constituency and everywhere I went, the one question I was asked by the people as I walked up and down the platform was: "Are you going to reduce the price of butter?" It was not rich people who asked me that. It was poor people, and women with shawls on them asked me that in Waterford. People in O'Connell Street, Ringsend, Rathmines and Longford asked me that question and asked nothing else, even by way of interruption, and it was not by way of interruption that the question was asked, but as I went up and down the platform—"Will you reduce the price of butter?"
We gave them no promise even of that—I passed them by—but that did impress itself on my mind and I consulted the Director of Statistics when I came back into office and he informed me that the result of the inquiries made during the course of the Household Budget Inquiry was to the effect that now the habits of the people were such that butter was a staple and necessary article of diet in the dietary of every section of the people, rich and poor. It was for the purpose of giving the benefit of that decreased price of butter that we decided that the best way we could spend the taxpayers' money was in reducing the price of butter, and incidentally it gave some little relief to the dairy farmers. We had to export butter in the last financial year.
The farmers are complaining—they complained to us by way of deputation—of the competition they suffered from through the sale of margarine. If we did not reduce the price of butter, people from every section of the community, particularly from those sections of the community in which we are most interested, the poor people and the middle class people, would have been deterred, as they were being deterred, by the high price of butter, from the consumption of butter. As I said before, I knew people who for months before the change of government were unable to afford to bring butter into their house.
Those are the reasons that impelled us to concentrate on butter rather than on other things in respect of which, perhaps, we would have gained greater political advantage by the expenditure of £2,000,000, that is, if we wanted to look for political advantage. Those Deputies who speak so glibly about promises to reduce the cost of living and who say that we have done nothing try to ignore that £2,000,000. They say it is nothing. They say that the reduction of 5d. per lb. in the price of butter is nothing.
Is it nothing that we kept the price of tea stable last year when we had to take a very difficult decision, to back our judgment against the possibility of fluctuations in price in the coming months? We felt we ought to do that for the people. I am glad to say that our judgment, taken in difficult circumstances, has, so far, no illeffect. That is some contribution towards bringing down the cost of living.
Is it not some contribution that my colleague, the Tánaiste, has set in operation machinery to try and control the price of bacon? That was a difficult problem to deal with.
On the one hand, you had the claims of consumers who wanted to have bacon cheap and procure bacon at a lesser price than that at which they were getting it before. You had fluctuations up and down in the price of bacon. You had the position where not merely the consumers' interests had to be considered but the producers' rights had to be safeguarded. It was very difficult—and it is still very difficult—to reconcile the just claims of those who produce agricultural produce such as pigs, so that they will get a proper price for their labour, and the claims of the consumers so that they will get that produce at a price they can afford to pay. We can say that the Tánaiste devised some machinery to meet that situation which, we hope, will at least be effective.
The Tánaiste in his speech dealt effectively with the charges that we had done nothing to bring down the cost of living. We cannot and we never claimed to work miracles in that respect but we can claim—and it is a claim which cannot be controverted— that we are adopting in regard to prices a policy fundamentally different from that which was adopted and put into action at such enormous cost and distress by the last Government who deliberately increased the prices of essential foodstuffs. It was not that the Korean war or economic blizzards from abroad brought about conditions in regard to the cost of essential foodstuffs that no Government could control. By the 1952 Budget Deputy MacEntee declared it a fundamental basis of his policy that incomes generally had advanced beyond the cost of living and that there was not any longer any justification, economically or otherwise, for the maintenance of the food subsidies at their then level.
He proceeded, as a matter of deliberate policy, to increase the price of essential foodstuffs. That was done deliberately. The prices of foodstuffs were increased deliberately. Some monetary compensation was given but, even taking the most favourable interpretation that can be put on it, by deliberate governmental policy, the cost of living was increased by at least seven points. That was done deliberately. At least we are trying to get down the cost of living. We may fail but at least we are not bringing the cost of living up. As a matter of deliberate policy, we are trying to bring it down.
In the reference I made to clause 2 of the objects and policy of the inter-Party Government, I pointed out that our policy is either to bring down the cost of living, if we can, or else increase the people's income so that they will be able to meet it; increase purchasing power for the people, if possible, and if not, increase incomes.
I think any reasonable people will, if they give any consideration to the matters I have urged to-day, see that this Government have come together on a policy which was shown to the people before the change of government and in reference to which no false promises were made. Deputy Lemass, again, in the course of his speech, had the extraordinary effrontery to say, in regard to what he called a "sweet Fanny Adams Budget" that the old age pensioners, those unfortunate people, were getting less than justice, but the history of his dealings with the old age pensioners is certainly a record in brazen effrontery.
He said in respect of the classes of beneficiaries who benefit by the proposals of the Minister in this connection that we were only increasing the purchasing power of the old age pensions to what it was when the last increase was given. I want to deal with that matter because Deputy Lemass founded that outrageous statement on a wrong basis. He drew a contrast between the consumer price index of 115 which was the level of the index when the pensions were last increased in 1952 and the present index of 126.
As I have already emphasised, the 1952 increase in the cost of living was brought about by deliberate Government action. Having increased the cost of living deliberately, the then Government felt that they were under some obligation at least to alleviate the lot of those people who draw old age pensions and to try to cushion them in some respect from the evil consequences that were bound to ensue, and which they foresaw would ensue, from the deliberate policy of increasing the cost of essential foodstuffs. This increase in the old age pensions in 1952 was deliberately introduced to compensate those pensioners for the reduction in their living standards consequent on the reduction in the food subsidies made in the Budget of 1952.
Those proposals and the compensatory allowances came into operation in July, 1952. It must, therefore, be admitted that there is a vital distinction between the cost-of-living figure of 115 which was the figure before the Budget of 1952 brought about the greatly increased rise in prices and the cost-of-living index figure in August, 1952, which came into operation after the Budget of 1952 and reflected the consequences of that Budget. That index figure in August, 1952, had gone up from 115 points, at which it stood before the Budget of that year, to 122; it is now 126 and the contrast, therefore, is not, as Deputy Lemass would have it, between 115 and 126; it is between 122 and 126.
Deputy Lemass says that the old age pensioners are being given less than justice. Did he, because his soul was seared for these people when their cost of living had gone up and their purchasing power had gone down as a result of the deliberate policy of his Government, try to induce his colleagues to give them that justice that he now says we are only barely giving them by granting the increase of half-a-crown? He did not.
Another line of criticism has been that we promised to reduce taxation. I read extracts this morning from the speech I made in Sligo giving a résumé of our policy as indicated to the people at that time, a policy which is now in every essential respect the policy of this Government. May I direct the attention of Deputies now to our programme as outlined? Clause 3 of our programme of policy reads: "To reduce taxes. By eliminating extravagance and waste, by increasing the national income and the yield from taxes, the existing rates of taxes can in time be reduced."
Every speech that I quoted here this morning, and I could have quoted many more, emphasised that what we wanted done and the main objectives of our policy could only be achieved in time. We were hardly a week in office when Deputy Lemass was asking us: "Why are you not reducing taxation? Why are you not reducing the cost of living?" He was at that again within the last few days—why have you not done this and why have you not done that? I said in the speech from which I quoted this morning that the aim must be either to lower the cost of living or to increase the people's income. No miracles can be performed. Time will be needed, but there is no reason why taxes cannot be brought down while at the same time the same, or even improved, services are provided. Lower taxation can provide higher revenue if there is an increased national income.
Our principles were clearly stated before the election. On them we have been operating since we came into office.
It is on those principles we intend to continue operating. That is clearly stated here in our policy. We will eliminate extravagance. So far as possible we will cut public expenditure and by a suitable production policy, and not just mere talk about production, we will bring about a situation whereby the national income will be increased and the real wealth of the country will be increased. We hope we will be able to reduce taxation and yet get a better revenue yield; and that better revenue yield will help us to reduce taxation still further and, at the same time, give to our people those benefits we wish to confer on them.
"In time" are the operative words in all my speeches. "In time" are the operative words in clause 3. Have we not in this Budget given concrete evidence of our intention to carry out our policy? Have we not, in fact, reduced taxation? Of course, Deputy Aiken and some of his colleagues have said that there is some kind of hidden taxation for which we are in some way responsible. He and others allege that we have not reduced taxation. Is it not something that we have reduced the liability to taxation for some 27,000 families? It may not be a whole lot but it is at least something. It is at least a reduction in taxation. Because of what we have done in the last 11 months, we have reached the situation now in which the Minister for Finance is able to come in here—and it was not by luck or chance that it happened—and produce a Budget in which there is no additional taxation, though we are bearing £13,000,000 of increased public expenditure compared with 1952, in which there is some remission of taxation, and in which there are benefits for old age pensioners, widows and orphans and other sections of our community.
Not only did we prevent taxes from going up but we have given some remission of taxation. In the course of this and other debates, criticism has been made of our policy in relation to the removal of the subsidy for rural electrification. It is alleged that that is in some peculiar way a concealed tax. The Minister for Industry and Commerce has dealt effectively with that criticism; he has assured the House that rural electrification can be carried out and will be carried out by the E.S.B. without any increase in charges to the consumer and without any slowing down of the programme. I am quite satisfied that the E.S.B. will be glad to take upon itself that burden and not be subjected to the interference that inevitably follows when they have to come with their hands out to Government Departments looking for subsidies and subventions. The E.S.B. is one of the most efficient business organisations in the country. They are well able to carry that burden and they will be glad to carry it. We have taken the subsidy for rural electrification off the back of the taxpayers and we have not put the subsidy on the back of the consumer.
I want to emphasise once more that the basis of our policy is increased production, which will, in turn, increase the national wealth, thereby enabling us to impose lower rates of taxation while at the same time obtaining an increased revenue. I think we are entitled to say to the people after 11 months that they have got good service from this Government and that they have, in particular, got first-class service from the Minister for Finance. The greatest tribute to his Budget is the type of speeches and the quality of the speeches that have emanated from the opposite benches. There has been no real criticism of his proposals. There has been, however, an effort to divert the attention of the House and the attention of the people from the benefits that have been conferred as a result of arduous effort, constant and vigilant watchfulness over the last 11 months upon the finances of the country and the direction of policy.
Was it by chance that when the Minister for Finance floated his loan last autumn at a lower rate of interest than that which obtained when the former Minister for Finance, Deputy MacEntee, floated his loan, that that loan was fully subscribed? The response to that loan showed that the country had confidence in the Minister for Finance and in his policy. It showed also the determination of this Government to reorientate downwards the cost of Government borrowing. It underlined the distinction between the policy of this Government and the policy of the last Government.
The last Government acted on the policy of dearer money. We demonstrated by a reduction in the rate of interest on that loan, which has proved so successful and which has gone to a premium since, that this country was creditworthy and could get better terms from the public and the people did give their savings to this Government at a lower rate of interest than they were prepared to give it to the last Government. That was an outstanding tribute, from the people who lent their savings, to the present Minister for Finance and to his policy.
That policy of keeping down prices, keeping down both the cost of government and the cost of living, was also emphasised when we took the decision, in conjunction with the banks, not to increase the bank rate here this year. It was emphasised that we would deal with these matters by reference to our economy—we weighed and tested them by that and by nothing else. The last Government increased the bank rate of interest in 1952 when Mr. Butler at that time increased the bank rate of interest. Deputy MacBride has pointed out how vitally important to our economy is this question of the bank rate, and what people have been saved from by the Minister's action in maintaining our own bank rate and not following the British as Deputy MacEntee so hurriedly did in 1952.
We have been content—and we are still operating on that principle no matter what criticism the Opposition may raise against us—to operate our policy carefully, taking decisions after due consideration, so that the economy will not be jolted unnecessarily. We felt that the measure of reliefs that have been given to the limited extent that they have been given in this Budget was the proper policy, and, as the Minister has indicated, the first instalment of what we hope to give in the years to come. Deputy Lemass's criticism that this Budget shows no indication of its being used as an instrument of economic policy is without foundation; it is being used for that very purpose, and is framed as an instrument of economic policy, to carry out our policy.
We hope to be able to consolidate, and if possible increase the advances that have been made in the last 11 months. We did make a start in trying to cut expenditure notwithstanding what Deputy Lemass has said. It is not an easy matter to cut public expenditure. There are the ever-increasing demands for increased grants from public moneys and increased public expenditure. The history of the last decade has shown that public expenditure has advanced every year. Certainly in the last four or five years there have been fairly steep advances each year until this year.
Deputies, I am sure, are aware that the public expenditure is divided into three main groups, the Central Fund Services, Payments to the Road Fund and Supply Services. I pointed out in the speech that I made on the Vote on Account this year that there is a tendency for certain items of Government expenditure to increase almost automatically while other—and even large—portions of public expenditure are becoming so inflexible so as to be almost rigid. The payments to the Road Fund automatically vary with the receipts from motor vehicles and there is little we can do in that respect by way of economy or cutting down.
Except to oppose them when they are being increased.
I did not catch Deputy Derrig's remark.
I said—except to oppose raising of the revenue from the Road Fund when the proposals are brought before you.
Certainly we oppose them and I will say this: that I agree entirely with Deputy MacBride's statement on this matter the other day when he said that that expenditure on the roads, in particular in view of the way in which the money has been raised from taxation, is entirely unproductive or very largely unproductive and one we must get away from. We opposed the frightfully heavy increased demands on the Road Fund and we do feel that there has been gross waste of public money on roads due to the type of luxury spending on the roads that we can see every day up and down the country. It is most unproductive. This year our Minister when faced with a situation that we could not change—or change drastically—with roads half-up and half-down, and many contracts out, changed the direction of the expenditure away from the trunk roads to the county roads. Our policy will be directed, as I have said at the outset, towards productive investment and expenditure and not to unproductive expenditure on the roads. It will be directed towards afforestation, rural electrification and all other matters that were detailed in the Minister's statement. It will be a fundamental point of our programme to see that public moneys are invested productively and not spent unproductively on the roads.
The second group of public expenditure covers Central Fund Services, mainly the service of public debt. That increases constantly, and if the wishes of Deputy de Valera, Leader of the Opposition, were given effect to, as stated, he would have loans every year and it would go up and up. And if they continued along the lines that Deputy MacEntee started when he gave a loan at 5 per cent., from which we are suffering and from which the country is suffering and will suffer for many years to come, that particular item of public expenditure would rise very steeply.
The third group—and this is really the only one where there is scope for effecting economies—is the Supply Services. Let us look at the figures for Supply Services over the years. Certainly in each of the years from 1949-50 to 1954-55 inclusive, the Budget figure for Supply Services has exceeded, and often substantially exceeded, the actual expenditure on Supply Services for the previous year. In 1952-53 the excess over the previous year was £4.9 million; in 1953-54 it was £.4 million; in 1954-55 it was £1.1 million; and this year, after our efforts, the excess was only £.035 million.
Mr. de Valera
You were not left with a deficit.
We were able by our efforts at pruning extravagance in expenditure to wipe out almost any excess at all in spite of the fact that we were given over from the last Government a legacy of debts and a legacy of heavy commitments. At all events, we can show that we did, in our efforts in the last few months, seriously tackle the problem of reducing current expenditure. We will continue these efforts but, no matter how successful they may be, they will only supply a fraction of the help that will be required to carry on the social and financial and other policies that we have in mind. We can only do that, as I have already insisted, by having a proper policy for production which will increase the national wealth. That has already been indicated. Productive expenditure is the headline—public investment of public moneys on productive enterprises, where necessary supplementing private effort and in no way supplanting it.
We can continue pruning Government expenditure, but it will get us only partly along the road and yield only a small contribution. What is required is a well-balanced and expanding programme of capital investment, which we believe we have—both public and private—financed to a certain extent by domestic savings and thereby securing an increase in national production and income. We cannot be content and are not content and will not be content to increase our capital expenditure indiscriminately, irrespective of whether or not the best use is made of the money or whether or not a proper balance is being maintained between the different sectors.
To assist us in securing an appraisal of the present programme and in determining the proper allocation of resources in the future, we have arranged for a comprehensive review of the capital programme. There are priorities which we will see are strictly adhered to in the capital programme we envisage and that we hope ultimately to carry out. As in all other sectors of our programme, time will be required. Priorities must be maintained. In this, our first Budget, we maintained the principle that there were priorities amongst those people who are entitled to some relief and, as between the taxpayer and the old age pensioner, we felt that the old age pensioner, the widow, the orphan and the blind pensioner were entitled to the first call upon whatever we had to give, and we have given effect to it in the Budget. All of us are bound to a policy which is based upon giving and maintaining the utmost measure of social justice to all classes and we believe we have done that in this Budget.
There are one or two small items in the Budget that have, perhaps, not been given the notice they deserve. For those who use that glib phrase, which has its basis in ignorance, that this Budget is neither spectacular nor imaginative, may I comment on a particular proposal of the Minister to give relief from income-tax to those who have the initiative and the enterprise and the feeling of personal independence to effect insurance against the hazards of sickness and ill-health? That looks a small proposal but it has in it the germ of a big principle. We gave undertakings that we would give this country the best health service we could possibly devise, founded upon the moral law. We want our people not to have their hands out to the taxpayer for their health services but rather, to be enabled, out of their own resources, to establish and maintain their own independence by providing against their own ill-health or the hazards of illness.
That proposal in this Budget, small as it is, contains a big principle—the principle by which personal dignity and personal independence can be maintained at the same time giving the best possible health service to those who really want it and helping those who, while they do not come within the categories in the Health Act, feel the impact of the rising prices of the modern drugs and medicines. We feel that this line offers the best approach both from the point of view of the individual and of the moral law.
There is a last point in the Budget that has also been given no very great consideration and that is the additional relief being given to charitable organisations who are carrying on charitable work which provides them with a profit. Up to this, unless certain conditions were fulfilled, a charity which carried on charitable work and secured an income from that work was subjected to tax. The Minister's proposal enables educational authorities who come within the legal definition of charities and hospital authorities who carry on private hospital work mainly by their own members to be relieved from taxation.
We are told by way of criticism that this Budget is not spectacular. The 1952 Budget was very spectacular. We are not looking for anything spectacular either in the Budget or in our policy in this House or outside this House. We are satisfied with the calmness and the confidence that has descended on the country. We are satisfied with the calmness that has been invested in the people by reason of the change of government and we are prepared to work together as a team for the benefit of the country to carry out the policy we have outlined in our programme. We hope—unless international affairs, over which we have no control, interfere with our plans—that, in time, we will achieve all the results we desire.
There is a character in juvenile literature called Little Lord Fauntleroy, who is generally very beautifully dressed and attired and who is exhibited on special occasions. Listening to the Taoiseach, my mind goes back to that juvenile character. The Taoiseach is sent in here as the perfect moralist in political affairs— the not merely political or Government leader but the moral leader. It is necessary that the moral impeccability of the Taoiseach should be maintained at all costs. The Taoiseach started off in the general election by telling us he did not make any promises.
He was speaking for himself and presumably for his Party. But later on he spoke of "we". He said: "We do not make promises." The Taoiseach had a rather double personality. He was, in the first place, looked upon as Leader of the Fine Gael Party, and secondly, as potential Taoiseach if an inter-Party or Coalition Government were returned to office. In which capacity—was it as leader of the Coalition groups or as leader of Fine Gael—did he change from the original pronoun to the pronoun "we".
At the risk of wearying the House, may I recall to the Taoiseach's memory that general elections are not fought merely on the pronouncements of the political leaders of a particular group or Party in opposition or in Government? There is a whole background of propaganda. There are very many speakers, very many statements made. Programmes and policies are issued. But according to the Taoiseach, the fact that he made a statement in Donnybrook or somewhere else, that he made no promises—and later on that "we" made no promises—is to be entirely divorced from everything that had been said, not alone by his colleagues in the Labour Party who now form part of his Administration but by himself and by leaders of the Fine Gael Party. The statement made by the Taoiseach that he would resign in a minute rather than be a party to a single provision of the Budget in 1952 has been carried on in every by-election campaign and in every Dáil debate on food prices and Budgets from 1952 right up to the general election last year.
"There is no doubt," said the Taoiseach, "that the Government, whether wittingly or unwittingly, embraced a policy of taxation for a surplus." He went so far as to tell us we were budgeting for a surplus of some £10,000,000. That was the tenor of the Fine Gael Party and of the other Coalition groups throughout the country from 1952 to 1954—that the Government had imposed taxation on the people and that they had imposed that taxation unnecessarily; that not alone were they responsible for high and unnecessary taxation but they were responsible, in the words of Deputy Declan Costello, for imposing hardships on the community in the form of high prices, mounting unemployment and emigration which were avoidable and unnecessary.
Deputy McGilligan, of course, after the 1952 Budget, as reported in the Irish Independent of May 10th, 1952, dealing with this “awful, brutal Budget of Mr. MacEntee”, said that he could save £1,000,000 a minute in ten minutes. Deputy Donnellan, the present Parliamentary Secretary to the Minister for Finance, repeated the same statement in the last general election campaign. But to come down to taxation and Fine Gael, does Deputy Costello, now Taoiseach, deny that he stated in Wexford, as reported in the Irish Times of May 15th, 1954:
"What good did the tax on whiskey do? The Government got less revenue, the price went up savagely on the consumer and the consumption dropped over the two years by 80,000,000 half ones."
If Deputy Costello, now Taoiseach, did not promise a reduction in whiskey prices on that occasion, perhaps the publicans listening or reading his speech may have been deceived into the belief that instead of the brutal Budget of Deputy MacEntee they would get a Budget in 1955, when the Coalition was returned to office, which would reduce the duties on whiskey and perhaps on beer.
We had the famous statement, repeated here to-day, that there was no reason why taxes should not be cut down while the same or improved services could be provided. If the Taoiseach believes that he can by some miraculous manner improve services and at the same time reduce taxes as stated by him in Sligo in 1954 and repeated here to-day, he had an excellent opportunity in the present Budget of doing so.
At Fairview, as reported in the Irish Times of the 27th April, 1954, the Taoiseach said:—
"The inter-Party Government reduced taxes and increased benefits and what has been done before could be done again."
What a pity that this miraculous power, presumably possessed by the Taoiseach and his colleagues, did not permit them to increase benefits on the one hand and to reduce taxation on the other. They could not have given a better or a more convincing display of their power than in the present Budget. The Taoiseach said at Fairview in the speech from which I have quoted:—
"Consideration might be given as to whether as a general principle, industry might benefit through a reduction in the duty rate rather than through increased protection which tended to rise prices and to put up the cost of living."
I think the industrialists who may have looked forward to some of the Taoiseach's suggested reliefs will find themselves in the same position as the salaried and professional classes in the Taoiseach's and other constituencies who had been led to believe that the cost of living could be reduced for them and who are bemused by the posters which are still flaunted in the Taoiseach's and the Parliamentary Secretary's constituency—posters which say that if Fine Gael and the Coalition were returned to office there would be lower taxation, lower prices and better times.
The Taoiseach has told us, as reported on May 3rd, 1954, in the Irish Times:
"Fine Gael planned to change the position under which the Government scooped the pool of national savings by large-scale loans and high rates of interest, which raised the price of money and made it short for anybody else. That would end."
A great part of the Budget statement is taken up with the necessity for savings. We are told we are to have a capital development programme of roughly £33,000,000. In his apologia here to-day the Taoiseach failed to give any indication as where this would be found.
Of course, it is quite easy for the Taoiseach and other Ministers to reconcile inconsistencies, as for example, in the speech of the present Attorney-General, reported in the Irish Independent of the 27th April, 1954, the right policy was to increase wages and salaries and to let the people spend the money for themselves on whatever they wanted to spend it.
Are we to take Deputy McGilligan then as fooling the people and fooling the workers in telling them that there was a probability of increased wages and salaries and that they would have more to spend when, in the Budget, we are told, very sensibly, in my view, by the Minister for Finance, that the cost of living may be affected by the rise in prices of imported materials? He goes on to say:
"We can meet this effectively only by exporting more, which means, in the first place, producing more and doing so more efficiently. This is the way to keep up and even improve our living standards in face of a rise in import costs. No real or lasting protection is given, in these circumstances, by increases in money incomes alone; indeed, if we sought refuge in this, we would risk being costed out of the export markets,"
and so on. He enters a plea that nothing will be done in the way of industrial disputes which might lead to our internal and external stability being jeopardised and development being retarded as a result.
As Deputy Vivion de Valera pointed out, it is well that we should be realistic in these matters. Having heard the Taoiseach's apologia that he made no promises I am compelled, at the risk of repeating what has been said frequently from these benches, again to place on record a statement made by the former Minister for Finance, Deputy McGilligan, who, as far as the public knew, would be the new Minister for Finance and who went to Radio Éireann and made a radio broadcast dealing with financial matters.
As reported in the Irish Press on 8th May, 1954, Deputy McGilligan, in his election broadcast, said:—
"When State expenditure has risen to its greatest heights there must be economies ready to hand for a Minister who is serious in his quest of them and who knows how to go after them."
He added that there was little doubt that savings in the cost of government amounting to several millions a year could be secured without much effort. "A distinct change of policy was required, however, and a new outlook on the part of Ministers was demanded if the reduction of £20,000,000 and upwards desirable in everybody's interests was to be achieved."
The taxpayers, whether the professional class, the salaried class, the workers or the industrialists, will find very little consolation in the present Budget. Although there is an estimated increase in revenue of nearly £4,000,000 and although the Minister compliments himself on the buoyancy of the revenue, which, presumably, will continue, the relief that he is giving to the income-tax payer amounts to £100,000. I calculate that to be less than one-half of 1 per cent. of the income from income-tax, apart altogether from super-tax, which the Minister estimates he will receive this year. In fact, the estimated yield from income-tax alone is up by £1,200,000. It can be said, therefore, that if the remission, amounting to £100,000, were in a form that it could be spread evenly over the income-tax payers and if they all received the same rate of relief, it would work out at less than ½d. in the £.
We cannot, of course, be surprised that the old age pensioners have had their limited subventions increased. While the civil servants and public servants generally have been looked after fairly well by the arbitration award of £3,500,000 brought into operation by us, and back money of nearly another £1,000,000 given by the new Government to the Civil Service, the Government could scarcely, with any semblance of self-respect or even common decency, refuse to make a gesture to the old age pensioner. The increase to old age pensioners is only a fraction of the increases that have been granted to other people. As Deputy O'Malley said yesterday evening, if the old age pensioners had the right to go to the Labour Court or if they had an arbitration board to which they could resort to make their case, is there any doubt that they would get not merely an increase of 2/6 but, probably, an increase of at least 15/-?
I agree with the plea that has been made that old age pensioners, particularly those who are living by themselves and who have to pay their own rent, which is very often equivalent to the rent payable by families who are earning, should have some allowance made in their case.
The Taoiseach referred to the question of butter and to the fact that that question was examined by the Government when they came into office. It is quite true, of course, that people talked a great deal about the increase in the price of butter. The question of food subsidies raises the whole issue as to whether food is to be permanently subsidised in this country at the expense of the taxpayer.
As I said on the Estimate for the Department of Industry and Commerce, those who believe that food subsidies must continue ought to try to persuade the country that the £10,500,000 that we are spending at the present time on food subsidies is the very best way in which we could help the classes in question.
People talk of Fianna Fáil slashing the food subsidies, and so on. One would imagine that Fianna Fáil introduced food subsidies as a permanent feature of our Budget. That was not so. Food subsidies were introduced in order to meet a special inflationary boom which must inevitably have meant a general increase in wages, costs, and prices if steps were not taken to deal with the situation in 1947. The former Minister for Finance, Deputy McGilligan, speaking in the Seanad on the Finance Bill, 1950, quoted at column 497, Volume 38 of the Official Debates of 22nd June, 1950, a statement of the former Taoiseach, Deputy de Valera, in October, 1947 in which he said:—
"The Fianna Fáil Government does not in general favour subsidies; it is only as a very emergency policy that they are adopted at all."
He went on to quote a further statement by Deputy Lemass, speaking, he said, on the 13th November, 1941:—
"In announcing the decision of the Government, I made it clear that the sum of approximately £2,000,000 which was being provided this year for the purpose was the utmost that would be provided and, if any additional costs arose, these additional costs would have to be reflected in the ordinary way by an increased price of flour and bread."
Deputy McGilligan, the then Minister for Finance, went on to say at column 498 that the subsidies were simply a form of taxing the community:—
"... not merely to subsidise the price at which bread is sold, in the bakeries and in the bakers' shops but the community is actually paying a subsidy to provide the cost of transport of bread to houses in, say, Ailesbury Road and Merrion Road. The community is paying the costs of distribution and the costs of transport; these are being paid out of subsidy, to say nothing of the cost of these magnificent buildings, which almost rival Store Street, that one sees in different parts of the city."
He went on to say:
"Once you have too many subsidies there is no way of seeing that they are applied to the purpose for which they were originally meant."
I take the case against the subsidies, except in case of special stringency, in a war situation or in a case of an acute shortage of necessities, to be simply the cost of collecting taxation, the impositions upon the public to raise the £6,000,000 and then the cost of distributing the subsidy to ensure something that I think those with experience of their administration must feel doubtful can be achieved, that in fact it is the consumers and not the people along the line of distribution who are going to reap the benefit.
Deputy Norton, when the subsidies were first introduced, seemed to have no doubt whatever in his mind. He is now boasting about subsidies. The main plank of the Labour Party in the last general election was food subsidies. They would increase the food subsidies. Not alone would they reduce the price of the staple articles of diet but they would reduce the taxes on beer, spirits and cigarettes. Everything would go back to the level at which it stood before the 1952 Budget. That has not been denied and cannot be denied. Speaking in the Dáil in October, 1947, Deputy Norton is reported at columns 435, 436 and 437 as referring to the subsidies introduced by Fianna Fáil when they taxed beer and cigarettes in order to enable the poor and working people to get tea, bread and sugar at the existing prices and to stabilise these prices. What was Deputy Norton's attitude on that occasion although the amounts being spent on subsidies then were about the same as the present time?
"The highlight of the documents put before us is, I take it, the subsidies to reduce the prices of tea, bread and sugar. I think these are sham reductions. I do not think they make any perceptible contribution to relieving the plight of the ordinary working people to-day.... I took the trouble of trying to calculate hastily what the reductions in the prices of tea, bread and sugar mean to a family of six people.... A family of six, consuming two ounces of tea per head per week, will save 1/7½ in the week. If they consume 4 lb. of bread per head per week they will save 1/6, and if they consume ¾ lb. of sugar each per week they will save 9d. At the end of the week this family of six will have saved 3/10½.... One would think from these proposals that our people live on bread, tea and sugar and it would seem that this represents the Government's ambition from the point of view of the average person's diet."
It has been pointed out by a wellknown authority recently that whereas in 1922 the average family for whom statistics are available in this community paid about 57 per cent. of their income on food, in 1952 the figure was reduced to 37½ per cent. No figures have been given during this debate regarding the consumption of butter.
I offer the opinion that the consumption of butter was fairly high in 1952. It is well known that we are one of the largest butter eating communities in the world next to Australia and New Zealand and I wonder what the effect of the increase then and the latter reduction has been. Perhaps when he is replying the Minister for Finance will be able to tell us whether in fact the increase in 1952 caused a big reduction in the consumption of butter and whether, so far as the information is available to him, the figures for the period since the reduction of 5d. per lb. was made, have indicated that there has been an increase in consumption. I know that the two things are not necessarily related but as showing the trends in butter consumption over recent years it would be interesting to see because we are told by this authority that while there is higher consumption of bread in the lower income groups, as most people know, the better off people are, the more they go on to other foods.
In the lower income and the necessitous groups obviously bread will be the mainstay of the family diet. This authority found that there was more bread consumed in the lower income groups than in the higher. If, therefore, we intend to spend money on food subsidies, if we have no way out of it, I suggest there is some wisdom in Deputy MacEntee's recommendation that we ought to concentrate on a single and a most important foodstuff and that is bread, because this authority said the consumption of butter showed a remarkably similar figure in all groups. He said fresh meat and eggs were, of course, much more in the higher income group. The reduction in the price of butter, valuable as it may have been, has not compensated the consumer for the increases in other directions. The increase in the price of meat more than counter balances it, as it is greater than the reduction in the price of butter.
The Taoiseach referred to the bank rate and he made use—I take it, deliberately—of a statement which I consider to be untrue and which I could express very strong feeling about, but to remain within the bounds of parliamentary decorum I will just say that it is untrue. It is giving a wrong impression and was probably used for that purpose. Deputy MacEntee, he said, hurriedly raised the bank rate in 1952. I am not aware that Deputy MacEntee, Deputy Sweetman or Deputy McGilligan have the function of raising the bank rate: it is the banks that determine it. The Minister may make representations to them. Is it suggested by Deputy Costello, now Taoiseach, has he advanced so far on the road to socialism, that he wants to believe that it is the Minister who fixes the bank rate, or is he speaking from ignorance? In any case, I consider it to be part of what might almost be described as a conspiracy started here in this country to pretend that we, as a Government, when we were in office, were in the pockets of the bankers, that we were doing something in the interests of bankers, of industrialists, of unknown speculators and, above all, something not even in the interest of our own people but in the interest of foreigners and particularly in the interest of the British Government.
The Taoiseach has brought Mr. Butler in again here to-day. Mr. Butler figured in Deputy O'Higgins's speech yesterday. Why? To create a false and untruthful impression that whatever Deputy MacEntee may have done as Minister for Finance in 1952 he did at the behest or request of Mr. Butler, Chancellor of the British Exchequer. There is no foundation whatever for that statement. I contradict it and I will contradict it so long as God spares me, wherever I hear it and wherever I have the opportunity of contradicting it. I subscribe to the view laid down by the Minister for Finance. He said, as given in the Official Report, Volume 150, column 691:
"We who live and work here must recognise that our personal fortunes are bound up with those of our economy. It is broadly true to say that none of us can hope to become much better off or attain a higher standard of living unless the country as a whole is developed and made more prosperous. It is equally true that this development, if it is to be done at all, must be planned, financed and carried out by ourselves. There is no outside agency that we can rely upon to finance this work for us and the Government can operate only within the limits of the means placed at their disposal by the ordinary members of the public."
The suggestion that Deputy MacEntee as Minister was in some way false to his trust, as custodian for the time being of the financial interest of the Irish people, in doing something that was not in the interest of our people and not for their advancement or welfare, but that he embarked on a policy deliberately because he was instructed to do so by a Minister in another country, is really too contemptible.
There are instances of other Ministers, in the Fine Gael Government——
There are. I want to remind Deputy O'Higgins of the run across to Chequers when the Republic of Ireland Act was under consideration and we were severing not the link with sterling but the link with the British Empire. Then Ministers had to run across to Chequers. I wonder what they were doing over there? Had they gone over as they believed to do a job of work on behalf of the Irish people, or were they going there as suppliants? If I wanted to make political capital out of it, I could answer Deputy O'Higgins. They went back in 1948 and what happened? The Marshall Aid money was coming in. The Government here had determined that they would not apply for a loan of American dollars, which presumably would have to be paid back, as they now are being paid back, in dollars. They decided, and the decision is there, that they would not borrow, but they went over to London and had discussions there and then came back and altered their decision—because, as members of the sterling group, let us put it that way, they were persuaded that it was in the interest of that group that the maximum amount of dollars should accrue and therefore they went ahead with borrowing dollars to a very large extent, over 120,000,000, under the Marshall Aid.
When Sir Stafford Cripps, as Chancellor of the British Exchequer, having denied frequently that he was going to devalue the £, was forced by circumstances into devaluing it, the former inter-Party Administration decided to follow suit. They said that "the balance of advantage", as far as I remember, lay on that side. It is for them to show that the balance of advantage rests in pursuing the line that the Taoiseach has taken up to-day, that they are going to tell the banks their business. If we follow that out to its logical conclusion, we shall have some very interesting situations.
The Irish banks hold large deposits. One would imagine from the statements made by the present Government, that these deposits were at the behest of the Government. To hear Deputy MacBride and even Deputy Dillon, Minister for Agriculture, talking of the millions of money invested in Britain, one would imagine the Government here was responsible. It is private money. These depositors have the right, and I hope always will have it, to say: "We are, therefore, going to place that money in investments."
It is the duty of the Minister for Finance—and he has emphasised it at several points in his speech to persuade them to invest in this country. One would imagine that the reason they invest was that they were in love with An Tánaiste and liked those pictures of him going up the Shannon, that appear in the daily Press. They invest because they have the security of the State behind them, because they are getting a good return for their money, because their money is safe, and because Deputy MacEntee, as Minister for Finance, gave them valuable concessions when, for example, he announced that the holdings they held would be accepted, in case they had to pay estate duties at their par value. These concessions are being continued by the present Government.
The fact that there is an increase or decrease in the bank is due, I suggest, to very many circumstances, some of them, such as the valuation of the pound, which compelled the Government here to follow whether they liked it or not, completely beyond our control. It is simply deceiving the people, and I am afraid, deceiving them deliberately, to pretend that our Government increased the bank rate, when they had nothing whatever to do with it. The bankers said that, if they were not allowed to increase the deposit rate, large deposits held by them would leave the country, and go across to the English banks. Moreover, all the banks in this country have not their headquarters in this country. We are a partitioned country, and the difficulty of dealing with that situation is obvious.
But the Taoiseach should certainly not deceive the people by making them believe that Deputy MacEntee, as Minister for Finance, paid high and unnecessary rates of interest for his loans. What was the position of the last loan which was floated by Deputy McGilligan as Minister for Finance? If we are going to deal with these matters, let us deal with them in orderly sequence. How did that loan fare? When we came into office we found a deficit upon the Budget that has been spoken of so frequently, of £6.7 million. That was a deficit for the year 1951-52, but the deficit which the Minister added to this for the coming year was about £15,000,000. If he were going to proceed with the social services, the health services, and the other commitments and expenditures which the Government had to carry, we would have a very serious trade situation also.
Deputy McGilligan brought in a Budget in which he laid down certain policies. First and foremost, items amounting to £12,000,000 or £14,000,000 for which we were accustomed to pay out of current revenue were taken out of the current Budget. That gave Deputy McGilligan leeway, elbow room of £12,000,000 or £14,000,000. He could say: "I am going to reduce taxation by that amount" or he could say: "I am going to spend this £12,000,000 or £14,000,000 in some other way." He took the £12,000,000 or £14,000,000 out of the current Budget and said: "We will borrow for this over a period of years." In addition he built up a large capital development programme, but what use are these programmes when the wherewithal, the finances, are not available to put them into operation? Deputy MacEntee, as Minister for Finance, was faced with this deficit in the 1952 Budget. He was also faced with the situation that the preceding year had shown a disastrous situation in regard to our balance of payments. We were £67,000,000 or £68,000,000 on the wrong side.
We have not heard very much, during the past year, about repatriation of assets. We pointed out, because we had to defend our policy: "If you were going to continue at that disastrous rate to deplete your external assets, they will not last for more than a few years." What is the objection to building up external assets? Prices have gone up enormously and are two and a half or three times as high as they were. The country requires a reserve to finance its foreign trade. Moreover, you can only liquidate those external assets by imports, and we are entirely in favour of liquidating them. If you import raw materials, machinery, and productive equipment, we think, naturally, that it is a bad policy. I think the present Minister for Finance agrees with that and that even Deputy McGilligan agrees with it. It is a bad policy to liquidate, to realise your assets, just for the purpose of importing consumption goods.
Germany, as I pointed out, has built up her present position because, whatever she earned, she took good care to see that it was only spent on raw materials, on equipment necessary for the building up of her industries. We would imagine that we could go on importing motor cars at the rate of £10,000,000—or perhaps in a few years time it may be £15,000,000—importing, as I said, the finished product, and exporting the old cars. This is giving the foreigner the benefit of the employment given to Irishmen and the benefit of the full value in paying high-class wages, instead of trying to build up such industries here.
The Taoiseach said that Deputy MacEntee, as Minister for Finance in the Government to which I belonged, dealt a shattering blow to the economy of the country. If he did this, it is an extraordinary thing that every other Minister for Finance in Europe had to take similar steps. There was hardly a European country, or Government, which had not to take drastic steps to combat inflationary pressure after the outbreak of the Korean War. Do we not remember the present Minister for External Affairs coming in, in the autumn of 1950, when there were outcries about the sudden increase in prices, and explaining that this was due to the Korean War. That situation continued, and the stocks which were accumulated at the high prices then ruling—all-time peak prices one might say—had to be disposed of later on.
Was it suggested that the Government should come in and make up the loss to the importers? Perhaps they should have, seeing that they advised them to import on such a large scale. But they did not do that, and the importers and distributers had to recoup themselves from the consuming public. It took a few years before those stocks were entirely disposed of. Germany, Italy, Holland, Sweden and Denmark, all these countries had to take steps to deal with the inflationary situation.
There was one point mentioned by the Taoiseach recently at the Fine Gael Ard Fheis, I think, when again telling the country that he had made no promises with regard to reducing the cost of living and reducing prices. They never gave the impression, he said, that, in spite of world circumstances no matter what happened in the world outside, they would still be able to reduce the cost of living. I have referred already to the statement in the Budget that "prospects for price trends in the coming months are less settled and that the cost of living may be affected by the rise in prices of imported materials."
The Tánaiste also told us recently that "if, through pressure of world conditions, if, through inflationary tendencies elsewhere, or if, through deficiencies in our own economic fabric, we find it is not possible to do it, I for one will not have the slightest hesitation in resigning." He refers to the external forces and the Minister for Finance at column 682 of the Budget statement says:—
"Import prices which had been falling practically unchecked since September, 1952, continued to decline in the first half of 1954. In the second half of the year, however, this falling trend was reversed and import prices are now more than 3 per cent. above the level of a year ago. Export prices were slightly lower on average in 1954. In view of the tendency for import prices to rise, there is a danger that the terms of trade may deteriorate further this year. In that event we shall have to export more if we are to keep a reasonable balance in our external payments."
He goes on to say, in the concluding part of his statement:—
"The cost of imports has risen in recent months and there may not be an equivalent resilience in export values. This, therefore, is a year for watchfulness lest forces be released which might disturb our internal cost and price structure and upset our balance of payments. For that reason, the Budget must be constructed in such a way as to moderate, rather than aggravate, any unsettling tendencies in the economy."
I am sure that, if Deputy MacEntee had been Minister for Finance, such a statement by him would have been questioned, particularly by the Tánaiste and the Labour Party, and perhaps, for all we know, it has been questioned.
Has the Deputy no comment to make on that?
No. I am amused to find the Tánaiste in his speech on the Budget taking some show of credit for the fact that the country is creditworthy and that the Government have found the money. As I suggested earlier, perhaps it is owing to the exceeding popularity of the Tánaiste with the investing public in this country that our finances are in such an extremely good condition, that the revenue has been buoyant, that the balance of payments question has almost been settled and that the deficit in that account has been wiped out, because the Tánaiste tells us to get away from the gloom and the distress—he is very strong on these terms of lamentation and I dare say he studies the Book of Job very closely— and to look at the wonderful change that has been brought about since the Tánaiste took charge of the next most important Department of State to that of the Minister for Finance.
But what is the position? Is the position not that the economy of the country, the present boom or level of prosperity is depending upon the cattle trade, the inflation in cattle prices? The Trade Statistics of Ireland—an official publication—at page 9 points out that the total value of domestic exports in 1954 was almost exactly the same as in 1953, but there were significant changes in composition. Exports of foodstuffs of other than animal origin fell by over £14,000,000, but this was completely offset by an increase of £8.8 million in the value of cattle exports, of £1.6 million in exports of other live animals and foodstuffs of animal origin and £3.9 million in other exports, particularly secondhand cars, cardboard and stockings. Cattle counted for 30 per cent. of domestic exports compared with 23 per cent. in 1953, and foodstuffs of other than animal origin accounted for only 9 per cent. of domestic exports, compared with 22 per cent. in 1953, and although there was a calamitous fall in certain items of foodstuffs of other than animal origin of more than £14,000,000 the deficit was made up to a great extent by the extraordinary increase in the value of cattle exports. It is on the present high prices of cattle—and I hope they will continue—that the economy and prosperity of this country are depending.
The Taoiseach referred here and there to production, but he gave us no account of what the Government had in mind. The annual Budget statement is supposed to be an occasion upon which the Government lays down its programme and announces any important developments which it has in view, in preparation. There was no such announcement, just as there was no announcement which would cheer the heart of the income-tax payer, or the vast majority of income-tax payers, and no announcement to cheer the investor whom the Minister for Finance is so anxious should come forward and place his savings either at the Minister's disposal or in other Irish enterprise. In the same way, there is no great comfort for those who are emigrating and those who are unemployed in looking at the capital Budget.
We have not even been told, as I suggested, where the money is going to come from. Is it going to be raked off, as we were told during the general election, because the State can pay higher terms and give better yields, leaving nothing to be ploughed back or invested in the development of Irish industry which, as the Tánaiste stated recently and as everybody recognises, has now reached saturation so far as supplying the home market is concerned? If it is going to maintain its position and if we do not want to go forward we will surely go back. If we are going to attempt to maintain and extend the foothold, such as it is, in the foreign market for Irish manufactured articles it certainly is deserving of more encouragement and consideration than the Minister gave it in his Budget or the Taoiseach in his speech to-day.
Of the £34,000,000 set out as the capital Budget, we find that housing takes £9.32 million. That represents about 25 per cent., I calculate, of the total, as much as is being spent on housing, electricity development, agricultural development and turf development—or almost as much as on those three items together. Where is that £9.32 million being largely spent? Is it being spent throughout the country? Is it not being concentrated very largely in further aggrandising the City of Dublin and bringing another 100,000 people into the city away from the country, weakening the rural population and continuing the unsatisfactory, and even dangerous, unbalance to which the report of the Commission on Emigration and Population refers when stressing the need for decentralisation and particularly the building up of provincial towns and urban centres throughout the country?
If you take housing, sanitary services, hospitals, schools, telephones and wireless broadcasting, about half the amount of £34,000,000 is in the nature of providing for what you might call social or amenity expenditure, which might be very necessary. I am sure a great deal of it is necessary, particularly in regard to housing, but it does not add directly to the wealth-producing assets of this country.
Last year the savings to finance this capital expenditure fell. The net sales of savings certificates and deposits in Savings Banks came to £5,000,000 or £640,000 less than in 1953-54, so that we are spending many millions. The Minister says that for the most part the funds required for capital expenditure during the year were provided from Irish savings, but he does not say what proportion. He has only dealt with the public sector. There is not a word in the Budget about encouragement or incentive for investment in the private sector.
The Government say they believe in private enterprise. They want to get away from State control and State interference. They want to get away from the State running other people's business. They want to get away from that situation but where is the encouragement; where is the directive; and where is the policy in this Budget? We are not even told what the position is with regard to saving and investment, as far as the private sector of our economy is concerned. We are not even given the information let alone given a policy to encourage investment and bring the minds of the people round to the position which the Minister for Finance desires that instead of spending on goods very often of foreign manufacture and on things that are unnecessary they would turn their minds to saving where they are paid good returns by investments in Irish securities. In order to make this capital programme possible it is obvious that very much more will have to be done.
The Minister spoke of a campaign for savings but I suggest that the best campaign and the best incentive would have been a flat rate reduction in income-tax. The Parliamentary Secretary mentioned that. He did not deny by the way, that we were in an inflationary situation. He expressed surprise that an English professor should feel that the inflationary period had finished. We know that the world is going through a period of inflation since the war finished and that the inflationary period has not yet ended. I wonder does the Taoiseach really believe what he said to-day that one of the aims should be to increase the value of the people's incomes?
How can you increase the value of the Irish £; how can you make it an international unit that will be acceptable; that will point to a stable, prosperous and developing economy in a country where foreigners will be anxious to invest their money if they do not take steps to counter-inflate? The Minister for Finance said that we have got to be careful about the tendencies which are looming up and which have an unfortunate habit of suddenly taking disastrous dimensions which affect our daily lives and economy and in respect of which we can do nothing.
The Parliamentary Secretary to the Taoiseach referred to the thin margin our neighbours had and to the fact that they are practically walking on a tight rope, one might say, in trying to keep their economy in balance. We are told that Deputy MacEntee did something that almost amounted to treachery to his country in taking the steps which have enabled the present Government to give the remissions they have given this year and which have enabled them to say that they have an accretion and an increase in revenue and that the revenue is buoyant.
I suppose it is a waste of time referring to these matters, but in the hope that it may strengthen the position of the present Minister for Finance in dealing with any unforeseen or foreseen situation which may cause difficulties for him either in the coming year or in future years, if he happens to be there, it is no harm to ask Deputies to look at the Newsletter published by the Netherlands Government, page six, where they point out that as a result of the Korean War they had to take steps to reduce consumption.
There was a general set-up such as we had here, budgetary difficulties, balance of payment difficulties, and the Netherlands Government was running into debt. The combination between these monetary conditions and the persistent rise in the prices of all imported materials forced the Government to impose internal restrictions on consumption.
The cost of living rose by 100 per cent., as it rose in nearly every European country, but the workers were patriotic enough and sufficiently farseeing to accept a wages increase of only 5 per cent. so that the population at large deserves the credit of having made their great contribution to getting through a very difficult time for the whole country by accepting the temporary necessity of a lower living standard. Once again recovery was the result.
Apparently we cannot face the situation that we are bound to have these recessions. The Taoiseach, the Tánaiste and the Minister for Finance have all called attention to the fact that we cannot completely control the situation here. No Government can. We are open to the influence of external forces, probably to a much greater extent than in the past, so that, instead of promising the people better times, lower prices and lower taxes, the Government would be well advised to concentrate upon the problem of modernising our industries, enabling them to carry on and enter foreign markets and of showing more consideration for the agricultural industry upon which, as I have said, the whole economy and prosperity we are at present enjoying is dependent.
Somebody had the temerity during the discussion to suggest that the present boom in cattle prices is due to something the Coalition Government had done in 1948. I should like to know what connection there could be between the agreement of 1948, derationing and the ending of the Ministry of Food in Great Britain, and the establishment of the free market. Let us compare for a moment the difference in attitude between the Minister of Agriculture in Britain and the Minister for Agriculture here. Although in Britain hundreds of millions of pounds are being paid in the way of subsidies, although Britain is very anxious about her balance of payments situation, although she does not want to increase her costs in any way, if she can avoid it, she at least appreciates the position of her farmers. She understands their difficulties and makes allowances for the losses they sustained last year.
When the Minister of Agriculture over there was introducing the result of the annual survey he said that three things had profoundly altered the situation since the last review. A year ago costs were dropping. This year they were rising fairly substantially. The need had arisen to stimulate the production of home-grown feeding stuffs because heavy imports had had their effects on the balance of payments position. The third factor was the exceptionally foul season which might be expected to have some effect on the next harvest. He thought prices to consumers would be unaffected by the guarantees.
Now if you guarantee prices to the farmers over a period of time you enable them to maintain their production. You enable them to meet the cost of the very expensive equipment that they have to instal. Perhaps the cost of that equipment in the case of a small farmer would be about £1,000; perhaps he may have to spend another £200 or £250 on fertilisers. Therefore, when we give guaranteed prices we give them in the cause of national security, in the first place, to make sure that our farmers will produce the wherewithal in case of need. Secondly, we want to give them that assurance over a period of years if possible. The British Government, although the farming vote over there represents only a small percentage and can scarcely affect the issue in the coming general election because of the overwhelming industralised consumer vote, has shown some consideration for the farmer. The Minister for Agriculture admits that costs have gone up.
There is nothing in the present Budget, no reference whatever in the statement of the Minister for Finance, to the increasing costs of the Irish farmer—increasing costs in wages, in fertilisers and in other materials. Presumably the Minister wants to keep off the subject but surely he will recognise, as the representative of a rural constituency, that the future of this country, our prosperity and our well-being, is bound up with this long-term programme for the farmers. If they feel that upon a change of Government the situation will be radically reversed and that there will be a change of policy in their regard, that will discourage them; it will mean that, instead of providing them with an incentive, one will be giving them a disincentive, and they will do less.
What should be done? They should be encouraged to produce more. What is the simplest and the best way in which to accomplish that? It is to make them feel that they will get adequate and economic prices for the produce they sell. To the extent that the Government fails to live up to that it shakes the confidence of the farmers; it does the economy of the country an injury and, unfortunately, its long-term results are unpredictable.
The Taoiseach referred to county roads in his speech this morning. I could not avoid reminding him that when the last Government introduced proposals here to raise the necessary revenues to enable the Road Fund to tackle the enormously difficult task of bringing our roads up to modern standards we were met with stiff opposition just as we were met with stiff opposition on every occasion on which the Government tried to do its duty by the country, do its duty to the taxpayer in seeing that the services that were provided in the Post Office, for example, were paid for by those who were using those services. On all such occasions we met with stiff opposition. That the Taoiseach should come along now at this hour of the day when the county surveyors have been embarking for the past few years upon a comprehensive policy of improving the country roads and when they were given a special stimulus and a special direction by the former Minister for Local Government to embark upon that work, certainly shows that the Taoiseach is rather out of touch with rural conditions.
That is no wonder: he is certainly out of touch with the position as far as Local Government policy is concerned. We changed the policy of the allocation of money for main roads so that county roads would get a fair share. We established the principle that they would have to come into the picture but that did not mean that we were going back on the main roads or on the trunk roads. We knew that the expenditure on them would have to increase and how were we going to do both things? It was not merely the problem of maintaining the trunk roads and the county roads and the main roads but everybody knows that in rural Ireland there has been an entire change of situation since farm mechanisation was introduced. Farmers are now looking for improved roads and laneways to their own villages and townlands and even to their individual dwellings.
As I have said, the Government could do nothing, like Deputy McGilligan when he was Minister for Finance when he failed to face up to his responsibilities and obligations and left a distastrous budgetary situation and an even more distastrous balance of payments situation to his successor to clear up. They saw expenditure mounting upon the roads. There had been an excellent programme of road development left in the Custom House by us when we left office in 1948. They knew that programme would be a costly one, that it would have to be carried out over a long period of years. They had the advantage of being in the administration. They came in and obstructed the Government when it tried to raise the revenue from the road users to pay for these roads. Now they have the hardihood—I suppose brazen effrontery would be the proper term—to claim credit for spending more money on the roads. Just as it was Deputy MacEntee's taxation proposals that provided the revenues in this Budget which the present Minister for Finance has not seen fit to alter, in the same way it was the last Government that made the moneys available, and they were opposed by all the Coalition Parties who are now going down the country before the local elections telling the people about all the money they are going to spend upon the county roads.
I referred to the attitude of the Minister for Agriculture towards our wheat producers. When we remember that we have no control over the level of cattle prices in the English market; when we consider that last year our exports of eggs went down by nearly £2,500,000 in a single year, and when we consider the position of our bacon industry with farmers going out of production all over the country, it is certainly a very extraordinary thing that in the statement setting out the Government economic policy or what ought to set out its economic policy for the coming year, there is no suggestion, no reference whatever to improving the position or even to having regard to that position that has arisen for the farmer in respect of some of his main products, the products that are the mainstay of the small holding and upon which the small holder mainly depends although he is faced with increased prices for feeding stuffs and fertilisers. There is no indication whatever in the Budget statement that the Government has given any consideration to improving the position of those who are trying to make a living out of the production of eggs and the production of bacon.
I think we are making progress. We have found that promises recklessly made cannot be fulfilled; we have found that it is now necessary to settle down to hard work. The Government has taken over its responsibilities and the country will be looking forward to see what steps will be taken in regard to industry, whether anything will be done to relieve the burden of taxation on the industrialist to encourage him to modernise his equipment and build up his export trade. The country will be anxious to see whether during the coming year any steps will be taken to re-establish the dairy industry, the foundation of our live-stock trade, and to give the farmers confidence that the Government is behind them in taking whatever steps are necessary to bring that industry into the state it once was in, when we exported freely to other markets.
The people will expect that with regard to eggs and bacon the Government will have some definite proposals to enable the farmers to continue in the production of these essentials. They will expect that income-tax payers whether professional men, salaried men or workers in factories or industrialists, will benefit from the greatest incentive, as the Parliamentary Secretary admitted to-day, the greatest encouragement that could possibly be given to the community so far as encouragement to go ahead and prosper and make money and give employment and build up the country is concerned.
In the consideration of budgetary proposals such as in this, or, indeed, in any other year, in my opinion, it is important to distinguish between Party considerations and national considerations, and as this debate has gone on now since the 4th May up to to-day and is likely to continue, it must be perfectly obvious to us who sit in this House, both on this side and on the other, that Party considerations from opposite benches are weighing much more heavily with them than constructive proposals as to how this Budget could be improved or altered in any way.
A great deal of stress is being laid on the 1952 Budget, the Opposition arguing strenuously and at great length from ample quotations the necessity for that Budget of 1952. Having regard to the effect of the Budget of 1952 on the country and having regard to the results of the by-elections held after the impact of that Budget could be felt, and having regard to the general election results of 1954, one is driven to the only sane conclusion that can be reached and it is this, that the people of the country rejected the Budget of 1952. Once the Opposition realised that, as they should have realised it by now, then there could be no more talk or argument about the necessity for it because we are no longer bound by what is now a time-honoured saying that "the people have no right to do wrong."
The people are the last judges in every issue, both national and local, in this or any other country. When the people come to the polling booths to deliver judgement on a régime or régimes—and that judgement has the result of defeating the Party that imposed on them a Budget such as the one enshrined in the 1952 Finance Act —there cannot be any doubt in their minds as to who made those harsh proposals and who imposed them. The people were not satisfied with Fianna Fáil and rejected them in the general election of 1954 which was the first opportunity in a nation-wide way they had, having given several instances of it in by-elections leading up to that time.
I think we must be realistic. Deputy Major de Valera and Deputy Derrig both used the word "realistic" to-day. If we are going to be realistic in our approach to the consideration of the budgetary proposals, is realism not simply this question: Do we approve, having regard to all the circumstances of the present time and the reasonable anticipation of the future, of the proposals in this Budget? Will the members of the Fianna Fáil Party go into parts of this country and say it was wrong to raise the amount of child allowance for income-tax purposes from £85 to £100? If they are not prepared to say it was wrong to do it, then they must fall into the category of people who will say that the figure is insufficient and that it should have been increased. Are they prepared to go to the country or, indeed, to get up in this House and say "You should not do it" or "Now, having done it, you have done too little?" If they come to that latter conclusion, let them say, further, by how much more it should be increased and, having made that suggestion, how they propose to get the necessary money to meet any increases which they might suggest.
Is any Opposition Deputy prepared to go to his or her constituency, as the case may be, and tell the old age pensioners and the widows and orphans and the blind that the 2/6 a week which it is proposed to give them in this Budget should not be given to them, that the country could not stand it and that they should not get it? Will any Opposition Deputy ask himself this question: "If we had not been rejected in 1954, and if we were still on the Government Benches, would we have given 2/6 a week to these various pensioned classes?" If the Opposition are not prepared to say that, in any budgetary proposals which might be at their control, they would not do it, then they are not in a position to criticise the doing of it by the present Minister for Finance in this Budget. If, on the other hand, they agree that old age pensions, widows' and orphans' pensions and blind pensions should be increased then there must be no further dishonest criticism of the budgetary proposals in this respect. If they say: "We would have given more than 2/6 if we were in office," then let somebody tell us from what source the revenue would come whereby a sum larger than 2/6 could or would be given.
I have examined this Budget speech with some degree of particularity and some degree of care. I have examined it in relation to all its heads. I have contrasted it with an essay by M. R. J. Eaton which I have recently come across—an essay on Irish Banking, Currency and Credit under the heading of "The Institute of Bankers in Ireland," 20 College Green, Dublin, and published in 1954. In the second paragraph on page nine of this essay on Irish Banking, Currency and Credit we read:-
"...the real problem to be faced in promoting savings investment at home and enlistment of support for the capital programme of the State is, again, the maintaining of confidence. The State, by setting an example of economy in administration and careful direction of investment to sound and productive ends, can do much to attract the necessary capital from private sources, some of which, if the inducement is strong enough, will no doubt come from external disinvestment. The private investor—in the widest sense—will respond to the stimulus of a wellconceived programme of national capital development which shows a prospect of reasonably early returns, where he would otherwise resist attempts to dictate to him what he should do with his money."
In my view, the present budgetary proposals of the Minister for Finance are in full accord with the sentiments expressed in that paragraph which I have read out.
There is one final point which I want to make on the consideration of this Budget—it has already been touched upon by the Taoiseach in his address— and that is the position which is new to Finance Acts in this country and which is referred to at column 697 of the Official Report of the 4th May, 1955.
I move to report progress.