The Government is not to be criticised for at long last doing something about the rapid deterioration in the balance of payments position. They are to be criticised because the measures they have announced are ineffective and inadequate and because they have given no indication of having any idea of how the position can be permanently rectified. They are also to be criticised, and will be criticised, because by their own policy and many ministerial statements during the course of the past year or so they have greatly aggravated the problem with which they are now trying ineffectually to deal.
This country has had a deficit in its international payments in every year since the end of the war. In some years it was a considerable deficit and in others not so considerable. There have been only two occasions upon which the situation appeared to be getting out of hand, requiring immediate action by the Government. One was in the last year of the first Coalition, in 1951, and the other is now.
The situation in 1951 was serious enough but not quite so threatening as the situation now because there were international circumstances of a temporary character then operating which do not exist now.
The Minister in the course of his speech in this debate said that the position which is developing is one that no Government could ignore or fail to deal with. The most interesting feature of the debate so far has been the marked contrast between the speeches made by members of the Government now and those they made when the Fianna Fáil Government in 1951 was trying to rectify a similar situation. On that occasion they did not appear to realise that there was such a problem as we contended existed in relation to our balance of payments. They scoffed at the whole idea. They denied there was any need to take action and that there was any problem which the Government could not ignore.
If there is any widespread public misunderstanding about the gravity of the situation, it is because of the attitude they took then, because of the recollection of the campaign that they conducted throughout the country to disparage the Government then in office and to defeat the efforts it was making to cope with the situation with which they are now faced. When in 1952, the Fianna Fáil Government tried to handle a similar situation, we got little help from any members of the Government in getting public understanding of the need for action. We got, on the contrary, continuous assertions from presumably responsible leaders of the Parties now in the Coalition that there was no need for action; that there was no problem to be dealt with and even that what was happening—the growth in the deficit in the balance of payments—was, in fact, something that we should welcome.
On that occasion the present Taoiseach, Deputy Costello, scoffed at the suggestion that the country was spending more than it could afford, more than its production would support. He said, as reported in the Irish Times on the 9th June, 1952:—
"Of all the most ludicrous and inappropriate catchwords which have been produced in the economic debates of this last year, none is more irritating or less justified than the suggestion that we are living beyond our means."
Deputy McGilligan, who was then regarded as the financial expert of the Coalition groups, was reported in the Press on the 10th May, 1952, as saying: "It is the height of nonsense to say that the country is living beyond its means."
Deputy Norton, the present Tánaiste, speaking in the Dáil as reported in Volume 127, column 603, said:—
"We are told that we are consuming too much, that we are eating too much, that we are wearing too much clothes, and that we are enjoying a standard of living such as we ought not to aspire to—that, generally speaking, we are living beyond our means."
He went on to add, at column 609:—
"If anybody believes in these theories on economics, he is welcome to them, but I think that they are the economics of the mentally deficient."
The present Minister for Finance during the course of the election campaign, as reported in the Leinster Leader, described the balance of payments as a fetish, on the altar of which the employment of many of our people was being sacrificed.
It is a good thing that members of the Government have awakened to economic realities even if they do not know what to do about them and even if the actions they are proposing to the Dáil are suggestive of panic. It is a good thing that the public of this country should be awakened to economic realities also. Will the Minister for Finance, who says that the present position is one that no Government could ignore or fail to deal with, say that the position that arose in 1951, the similar position, was one which no Government could ignore or fail to deal with? The actions taken by the Fianna Fáil Government then were denounced as cruel, unjust and unnecessary, but they put the position right, and when the present Government came into office in 1954 they were able to record that the deficit in the balance of payments was the lowest in any year since the war. Have they any hope that the measures they are taking now will be equally effective?
I have said that the proposals of the Government in relation to this situation are inadequate and ineffective. There was in our visible trade last year a deficit of £94,000,000. Our imports exceeded our exports by that amount. There was, according to the Minister's calculation, a net deficit, taking all items into account, of not less than £35,000,000. On his own admission the sum total of his proposals here will, if all his expectations are realised, be a reduction of imports by about £7,000,000 and if the terms of trade turn against us this year, as he expects, it is not impossible that the deficit in 1956 will not be less than it was in 1955 and may be more.
Is the Government satisfied that the measures they have proposed to the Dáil, these 68 new duties which they have imposed, will be adequate to deal with the situation? Have they any other proposals to make, any more constructive ideas to put before the House for its consideration? They hope, by these numerous duties, to reduce the value of our imports by £7,000,000. During last year we imported £10,000,000 worth of wheat, barley and other cereals, and £2,000,000 worth of sugar, that could have been produced here. Has the Minister or the Government any proposals for getting them produced here this year? Surely it would be far more beneficial to this country to reduce the adverse trade balance by getting these imported goods produced here where we can produce them than by imposing unnecessary burdens on our people by forcing up the price of goods that they may desire to purchase.
There is no need for the Government to clap itself on the back and congratulate itself because it is making it harder for people to buy things that have to be imported and things that they may need. That was not their attitude when this matter was being debated here in similar circumstances before. Let me read a quotation from a speech delivered by Deputy McGilligan in the Dáil on that occasion, as reported in Volume 127, which I think is not inappropriate to the proposals now before the Dáil. He said in column 1717:—
"If people who have reserves want to spend them, why should they not do so? Have we not got at least to that degree of liberty in this country where a man, if he has a few hundred pounds and wants to buy a wireless set with it or improve his house by putting in a wash-basin or by putting in new carpets or furniture, is at liberty to do it? What is the merit in preventing him from doing it? We are getting completely authoritarian if we say that even the owner of savings who has reduced his consumption at an earlier period in order to get those savings cannot put those savings to some purpose which he considers advantageous if not profitable to himself."
It is not an advantage to this country to impose restrictions which will make it impossible for people to buy many of the things upon this list by making them dearer. That is a hardship which must be recognised and described as such, justifiable, perhaps, as a temporary measure, but only if the Government has behind it proposals for permanent rectification, for making it possible for us to buy and import those things in the future and to have the standard of living which their availability represents. In that respect we have received no suggestion of a plan or a policy from any member of the Government who has spoken in this debate.
These proposals, or some similar proposals, might be justifiable or excusable as representing a temporary device pending the effective application of constructive policies or the coming into office of another Government, which would mean the same thing, but they are not to be represented as something advantageous to this country. It is not contemplated that any of these proposals will have a protective effect. They may, incidentally, have that, but firms who may benefit have been warned that they are to be regarded only as temporary and removable at will at the discretion of the Government. It is, furthermore, exceedingly doubtful whether they will have the effect of reducing the flow of imports at all. If the increase in the volume of imports last year was due, as the Minister said, to excessive spending by the Irish public, to the availability of purchasing power which was in excess of the amount distributed through production and productive effort here, then that purchasing power will find an outlet somewhere and, if it is prevented from being utilised for the purchase of the goods which are listed in the schedule to the Minister's Order, it will be utilised for the purchase of some other goods and, maybe, perhaps imported goods at that; so that there is no assurance whatever that the effect of all these Orders made by the Government will be to reduce imports as a whole, though they may and probably will reduce imports of the listed goods.
The Minister has said that if these restrictions are not effective there will be further restrictions. That is the prospect which they are now holding out to the people of this country. In view of the unattractive nature of that prospect, there surely is an obligation on members of the Dáil not in the Government, no matter in what part of the House they sit, to urge on the Government that they should start doing some constructive thinking. For good or ill, they are the Government of this country for the time being, and what they do or say will be decisive in its effects upon the public welfare.
Are they thinking only of the symptoms of the illness that is affecting the national economy? Is their sole concern to conceal those symptoms by artificially cutting down imports, many of which are desirable imports, or are they seriously examining the circumstances to find out the real causes of our troubles with a view to cradicating them? These restrictions are going to have an effect upon employment. That is certain. Has the Government made any estimate of what that effect will be? Have they examined the position in any of the trades that are likely to be prejudicially affected by these restrictions to find out how many men are going to lose their jobs by reason of that Order? Or do they care?
Surely a Government that was concerned about the effect of its acts upon the public welfare would have made some examination of the likely consequence of its decision on the employment of workers and be able to give the House some estimate of what that consequence will be. Do the Government know how many men are likely to be deprived of their employment by reason of the Orders they have made? It is certain that some will be. Is there any arrangement in contemplation to ensure that new employment opportunities will open up elsewhere to offer the prospect of alternative work for those who are likely to be affected?
I have said, and I repeat, that to a very great extent the situation with which the Government is now faced has been aggravated by their own policies and by their own statements. The Minister for Finance said in his introductory speech that we cannot vote ourselves progressive increases in our standard of living. Who told the people that they could? Who campaigned up and down this country to tell the people that lower prices, lower taxes and better times were to be secured merely by voting, merely by going to a polling booth and marking ballot papers as they directed? Who told the people of this country all during last year that, if prices rose, people could protect themselves against the consequences of rising prices by getting more money, more wages, more remuneration of one kind or another—that they could be better off notwithstanding the fact that prices were rising and production was falling?
When last October I brought in here a motion of no confidence in the Government because of its failure to make any attempt to redeem its election pledges to lower the cost of living, there was an amendment moved, supported by every member of the Government, in which that fallacy was repeated, that people could protect themselves against rising prices by getting higher wages and on every occasion when the matter was debated here that opinion was expressed by some member of the Government.
The Minister for Finance now tells us that there is some connection between higher wages and still higher prices. Why is he so mealy-mouthed about it? Why not say out openly and clearly what the connection is?
Do they not think the people of this country are entitled to get leadership from the Government in office in a matter of that kind? Do they not realise how important it is to get it understood by every section of our people that a higher standard of living can come only as a result of higher productivity, higher output? Is it not about time that this fallacy that people can vote themselves a higher standard of living, vote themselves lower prices, lower taxes and better times, should be finally killed? The Minister's meagre attempt in his speech to propagate a new viewpoint on behalf of the Government is futile unless all the members of the Government who have been saying the very reverse during the past six months will stand up and reiterate what he has said. If the speech which the Minister for Finance made here on Tuesday, if the Orders which the Government brought into force that night, have shocked public opinion, it is because public opinion was not conditioned to receive them, because they represented such a complete reversal of the previous attitude of the Government that the public were unable to follow them.
I have said here in an earlier debate and I repeat now that it was the promise of the Coalition Parties to reduce prices, their assertions that it was practicable to reduce prices and their subsequent failure to do so, that were responsible more than anything else for the general urge that there was last year by every section of our people to get more money, to get the higher standard of living which the lower prices would have represented but which they were denied. During all that period there was no Minister who had the courage to stand up and say that that was an illusion, to warn the people that there was a connection between higher wages or higher remuneration of any kind and still higher prices, to tell them that they could not get themselves by their votes, their decisions or their resolutions, a higher standard of living, that that could only be got by the road of work and productivity.
Has the Government attempted to diagnose the cause of this situation which has developed? Why is it that there has been this increase in imports, this upsurge of spending which resulted in the increase in imports? Was it not reasonable to think that when a Minister came to the House with a whole series of proposals to deal with a situation that he described as threatening he would attempt to explain the Government view as to the origins of that situation? What brought it about? It is no answer to say that similar circumstances have developed in other countries. The Government in these other countries have tried to diagnose the causes and to explain the causes to their people and, in so far as they have done so, the circumstances that operate elsewhere do not operate here. We have this inflation of imports, this upsurge of consumer spending, in circumstances completely different from those which have created problems elsewhere and there is a need to examine that position, to analyse it and to explain to the people precisely what has happened. How can the public co-operate with the Government or with any plan that the Government may eventually devise, or how can they be brought to accept the restrictions the Government are now imposing, without having explained to them what is happening?
Why is it that there was this expansion in consumer spending last year, this enormous increase in imports which has jeopardised the whole national economy? Is not there an obligation on some member of the Government to attempt to analyse that situation for the public information?
There are two possible causes. One is that, somehow, there was an injection into our economy of more money which did not represent more work or more production. The other is that there has developed in the minds of the people the belief that more money for less work is Government policy, that the Government regard it as a practical policy and that everybody is consequently free to spend up to the limit of his income without any fears of the consequences. If that belief exists, and I believe it does exist, the responsibility for it rests squarely and fairly on the shoulders of the members of the Government.
In any case, it is quite clear that anything the Government have done so far can have a merely temporary effect. It offers no prospect of a permanent rectification of this situation. Have we to reconcile ourselves to steady, continuous lowering of our standard of living? Is the only prospect the Government holds out to the people one of mounting restrictions upon imports, a forcing down of the standard of living of our people by depriving them of the imported goods which they may desire to buy, goods of a character not now being produced here? Have they any plan, any idea for a plan, any suggestion to make as to how the people can help them, can help the country, can help themselves to secure the rectification of this position in a permanent way which will enable us to enjoy our present standard of living and enable us possibly to increase that standard of living while at the same time avoiding these heavy deficits in our international payments?
The Government bleats about increasing production. Will they come out of the cloud of generalisation and get down to the solid ground of particular products? What are the classes of goods, the production of which they think can be increased here and what are they going to do to bring about that increase? All this exhortation to the people to produce more, all this talk about the need for increased production, is futile if it is not followed up with an effort by some Minister to pin-point the directions in which the public can help and in which increased production is practicable.
Deputy Desmond was speaking some moments ago about the attitude of farmers to increased production and he was blaming them for their failure to expand output and criticising all previous Governments for all the grants and assistance they gave to farmers without getting the desired results. Every member of this House who has any contact with the rural community must know that there is a general belief among the farming community that increased production does not pay. There is a general belief that higher output invariably means lower prices. They regard themselves as being urged to risk more effort and more capital in expanding production without any prospect of greater reward. That is a factor in the situation. It may be that we may think that idea of the farmers to be wrong; we may feel that in present circumstances, even if it is true, we should still strive to get higher output because the country will benefit by it, but when Ministers talk about the need for higher production they cannot ignore that fact, and it is a fact that has to be dealt with before any plans or any proposals for increasing output can produce results.
Has the Government any idea as to how that attitude of the farming community to the matter of increasing output can be changed? Have they any suggestions to make, any practical proposals to put before the Dáil for its consideration which will deal with that definite fact bearing upon the whole question of national policy here and now? No exhortation to increase production will be effective so long as that belief persists. If higher output must mean lower average prices—and it is difficult to argue that it will not—has the Government any proposals to bring down production costs so that farmers will gain in increased profits from their greater efforts?
In relation to manufacturing industry we have the Government apparently building all its hopes upon the illusion that there will be an inflow of foreign capital to develop our industrial potentialities. That is a complete illusion; it is not going to happen. I do not say that no foreign capital will come in but there will be no very substantial industrial development because of an inflow of foreign capital. I realise politicians are always unwise when they commit themselves to prophecies but that is one I make with confidence. It is a complete illusion to think that we can sit back and wait for foreign financiers to come in and push our industrial expansion forward. Because that illusion has been created, no attention is being given to the specific problems holding down the development of industry by Irish enterprise and the utilisation of Irish resources. It is obvious there are factors operating at the present time to restrict our industrial development.
In his speech here the Minister for Finance spoke about the abnormal cost of money and said that capital funds are dear and scarce. That is a simple problem for the Government because the Government has the power to relieve itself of the consequences of that situation if it choose to use the power. For the Government it is a problem which can be readily solved if they want to solve it; it is an insoluble problem for the private industrial group that wants to get ahead with a new industrial project. A number of industrial projects are being held back at the present time because of anxiety about the prospect of raising capital and he would be a courageous man who would urge that any substantial issue of shares to the Irish public would find a ready response at the present time. There are others who feel that the price of money is such that an industry starting under present circumstances would carry a permanent handicap.
Why is money scarce and dear? This was not the Government's policy even a few months ago. This time last year we had the Taoiseach, Deputy Costello, saying here in this House as reported in Volume 149, column 227:—
"An essential part of our policy is that the price of money borrowed for capital expenditure must be low. Ours is the policy of cheap money."
And on the same occasion we had the Minister for Agriculture, Deputy Dillon, saying:—
"The day of borrowing by an Irish Government at 5 per cent. is gone and gone forever."
Other declarations of the same kind were made by other members of the Government holding out to the country the prospect of cheap money. It was asserted that never again would an Irish Government have to pay 5 per cent. for a loan. What has happened to change that situation? Have the Government attempted to make any examination of the circumstances that have arisen which have so reversed the position in their view in the course of 12 months? Why is money scarce and dear? The Minister for Finance must surely be doing something more than wringing his hands about it. Can he answer that question here in the House? Why is it that at the present time in this country capital for public or for private purposes is scarce and dear? No one can see any development in this country which can have brought about such a change in 12 months as to explain that situation.
There has been, undoubtedly, a development in Britain and it may be that the explanation for the scarcity and the high price of capital here is what has happened in Britain. But is that something we are going to allow to continue without any effort on our part to remedy the situation or protect ourselves against its consequences? In Britain, investment in manufacturing industry has run far ahead of the estimates of the British Government. The British Government publishes an economic forecast at the beginning of each year and in 1955 investment in industry far exceeded what was calculated in that forecast. Investment in manufacturing industry, according to a statement published in the last couple of days, increased in 1955 by 18 per cent. There is a demand for capital to finance the expansion of the British economy which is the only possible explanation of the scarcity of capital funds here and of the price our people have to pay for them.
Other countries have had similar problems to deal with and have dealt with them. I do not know how effective the measures they took have proved or will prove to be, but is it the view of the Government here that we can do nothing about that except sit back and deplore it? Are we to see our prospects of industrial expansion here held up until some change has occurred in Britain, some change which we can neither influence nor control, to make capital available for the financing of the industrial projects which are ready to start if these problems can be overcome?
Ministers are pleading with the people to save, and exhortations have been addressed to all classes of people that they should save money. Saving committees have been set up. Exhortations of that kind do little good in the absence of prospects of price stability. Nobody in his right senses will exert himself to save when the outlook is one of continually rising prices. He faces the probability that the money he saves will buy less one year or two years hence than it will buy now.
Those who invested in the recent Savings Bonds have no reason to congratulate themselves upon their response to the Minister's exhortation to save money. They have already lost in capital value more than half the interest that they will get in the first year. I would like to know if the Government knew when they were urging the people to subscribe to the 5 per cent. loan issued a few weeks ago that they were going to issue national savings certificates at the rate of 4 per cent. tax free. Did they not have their tongues in their cheeks when talking to the investing public about the advantages of subscribing to the bonds and to some extent misleading the public when commenting on the terms?
If there is to be a permanent solution to this problem, and a permanent solution can come only through an expansion of production, it is clear the Government must take a very definite part in bringing that about. It will not just happen because they make speeches for the need for it. The solution will have to be planned and directed and led on by incentives and checks provided by the Government, and in so far as it is possible for them to get a response from the public in that regard, they can get it only by coming down to earth and specifically indicating the things they want—the things they regard as practicable to do—and by giving the assurances necessary to get the right response from the public. There is this problem of the scarcity and dearness of money here when there is nothing in our circumstances to justify it. The scarcity of capital funds is not due to any sudden expansion in capital investment here in recent months. On the contrary, all the indications are that there probably was a net disinvestment here last year.
The increase in consumer spending may have eaten into savings to some extent and diminished the amount available for new investment but it is not the whole explanation of what has happened. In this situation we just cannot afford to follow routine procedure. This country is faced with a crisis, whether the Government like that term or not. In relation to that situation they have got to take, and will be justified in taking, crisis measures in order to protect our people against the consequences which are now threatening them, against the situation which present trends indicate may arise.
The debate on this Vote on Account has very largely concentrated upon the specific proposals mentioned by the Minister for Finance when introducing it rather than with the Estimates. In so far as any indication has been given in the Book of Estimates, the Government apparently do not consider there is any obligation on them to do what they are urging the public to do. There is no sign of any effort on their part to curtail expenditure, no sign of any effort on their part to lessen the burden of taxation which the level of expenditure involves for the people. On the contrary, the Minister for Finance has warned us to face the Budget with fear and trembling. That, of course, may have been a political bluff. He may have been building up these apprehensions for the purpose of allaying them when the Budget proposals come before the Dáil.
However, if Ministers' statements are to be believed the country has got to face a heavy increase in its tax burden in the Budget because of the Government's failure to fulfil or even attempt to fulfil any part of their election pledges. They sent one of their most prominent members to Radio Éireann during the election campaign in 1954 to broadcast a statement, heard by hundreds of thousands of voters, in which a pledge was given to reduce the cost of Government by no less than £10,000,000 a year. Surely some explanation is due why the Government not only failed to keep that pledge but why the cost actually has gone up by £10,000,000. Some apology is at least due to those whom they misled by that statement by a responsible representative of the Coalition parties. We will have other opportunities of discussing the details of the Estimates. There is not any evidence of any great change in policy in any Department, but the over-all picture is one of administrative costs mounting out of control. There is no evidence of any efforts being made by the Government to deal with that situation or to apply to themselves the exhortations which they are addressing to the public. I suppose the only possible solution of this problem is to get rid of this Government. That will come sooner or later.
