This Budget, in my view, is a well-designed and a practical Budget. The Minister, in his statement, showed that he clearly appreciates the economic situation as it is to-day. In the new taxes, he has done very well in providing the money to meet the extra charges which arise. Let us remember that these extra charges include £2,500,000 pay increase for public servants, including civil servants, Board of Works employees, Guards, Army, Post Office servants and other public officials. The Budget is designed also to secure revenue which will enable repayment of the Marshall Aid loan to be made. It is intended also to meet the cost of health services under the Health Act. It is designed to increase the amount of rates abatement in respect of agricultural holdings and to give increased grants to colleges and universities.
I have not heard Opposition speakers criticising the purposes for which the extra revenue is required and I should like to say that this Budget, and the manner in which it has been designed, has certainly avoided the danger of the unemployment that can easily result from a clumsy Budget such as that of 1952 which caused 20,000 people to lose their jobs. I doubt if this Budget will cause 20 people to lose their jobs. I think it was most important for the Minister to select a means of securing extra revenue which would not upset the economy or increase unemployment.
In addition to that, the new taxes will not cause hardship to the housewife. Those taxes will not go into the household as a burden on essential commodities normally required for domestic purposes. The new taxes on petrol and tobacco are certainly severe, but at least they are directed towards non-essential commodities in the main. They are not food taxes. With the economic situation as critical as it is within the State, it is obvious that the Fianna Fáil Party would immediately have directed their attention towards a reduction in the spending power of our people by removing the subsidies on various classes of food which enable the food to be purchased cheaply by the housewives. Let us remember that in the 1952 Budget the Fianna Fáil Party taxed hungry children by putting up the cost of bread, butter, tea and sugar.
Deputy Briscoe to-day talked about the increased cost of lemonade to children. There is a very big difference between taxing food for children with healthy appetites and taxing tobacco, petrol and gambling. These new taxes were decided upon to pay the increased cost of public services which resulted from the ordinary machinery of conciliation and arbitration. The taxes here are obviously designed in a small way to improve our position in so far as our balance of payments is concerned but we must rely mainly on increasing our exports if we are to improve the balance of payments situation.
We are capable of doing that. This Budget is mainly intended to meet current expenditure from the revenue that will be obtained from taxation in the normal way. In this country we have noticed for a number of years that the inflated purchasing power of the community is bringing financial difficulties upon the nation. We took over a situation in 1948 where deflation operated to such an extent that it was hardship. There was hardship in the homes of our people and it was necessary to reverse the policy of Fianna Fáil who had kept down the standard of living and who had kept down the power of our people to meet the cost of essential commodities associated with normal living. Since the war years, there has been an inflationary tendency and it is keeping pace in this country with the tendencies which have manifested themselves in other countries.
Inflation, in fact, has not come to us to such an extent as it has to Great Britain and France, where the economy is different. We have noticed in the last 12 months that industrial production here has gone up by 2½ per cent. That is very heartening. It is a pity, therefore, that though we had the best ever harvest last year, the volume of our agricultural production did not show at least a similar increase. We must devise a policy whereby agricultural production will be brought up very quickly in order to improve our position in so far as our balance of payments is concerned because, though the volume of industrial production has gone up, the real value there is the amount of employment provided rather than the value of the exports from industry.
Our real potential is in the possibility of increasing agricultural exports. We have noticed in recent years that in the matter of our agricultural economy we are being priced out of world markets. That has happened apparently because modern methods have not been adopted quickly enough by our agricultural community. Large quantities of machinery have been brought in here since 1948 and the benefit of that is that, although only one-third of the man-power works on the land now, the output is almost the same as it was at that time. With modern machinery, we ought to be able to get that extra output which would make all the difference in our trading position.
I was glad to hear from the Minister that at last he has received a report from the Industrial Taxation Committee which he can consider as a possibility of giving to the industrial community certain advantages which would enable the volume of goods produced here to be increased. At the moment we are importing large quantities of goods which, in the long run, we may be able to produce ourselves. Owing to various circumstance there are many commodities being imported here which could be produced in the country were it possible to get the manufacturers established here. With a restricted home market it is possible the manufacturers might also need to be able to export and here again the question of being priced out of world markets arises. Many of these larger combines which are producing the goods imported into this country to-day find it more economical to operate if they are in outside countries from which they can export the manufactured goods to this country. However, with the purchasing power of our people so strong, it is obviously necessary, if we are to harness and regular that purchasing power, that we must try to encourage the establishment of industries here which will put an end to the importation of many goods of a semi-essential nature. Many classes of goods are being imported which cost a lot to this country which we cannot produce ourselves but, in the case of goods which we could produce, we must try, with the aid of this industrial taxation report, to set about the establishment of suitable industries.
It is obvious that the very strong purchasing power of our people is making difficulties for us, so far as controlling the balance of payments and the adverse trade balance is concerned. These difficulties arise from the large variety of purchases being made by our people. I was interested to see by the Minister's speech that he proposes, at last, to give a 20 per cent. allowance towards wear and tear of plant and machinery used in industry. I think this will be a very valuable encouragement to manufacturers to modernise their factories. In the absence of this relief for many years past, many manufacturers have been using old machinery which is out of date and not capable of keeping step with the volume of production that can be achieved by similar factories in other countries with more modern machinery.
I feel that our manufacturers appreciate that and that they will immediately set about taking advantage of the concession to put more modern plant and machinery into their factories. This will immediately bring up the volume of industrial production. Last year, it showed an increase of 2½ per cent. and we can expect a very substantial increase from the larger industries when they get an opportunity of installing modern machinery. In addition to the persistent inclination of our people to import various classes of non-essential goods with the balance of cash which they have on hands over and above that which is necessary to meet the cost of the necessaries of life, people are inclined to import certain classes of goods which in fact are being manufactured here. Many are inclined to believe that these foreign manufactured goods are somehow of better quality than goods manufactured at home. In that respect, I feel it will be necessary for us to have a positive policy, and in that connection I would mention the import duties which the Minister considered it desirable to impose some time ago. I believe that is a step in the right direction and, when it is carefully used, that system of increasing import duties may be a valuable deterrent to people who desire to export their money for the purpose of purchasing foreign goods.
These foreign goods, added to the essential goods, make the high standard of living which our people have at the present time, but we must appreciate the fact that our present high standard of living is, to a great extent, based on the large volume of goods which we are purchasing from outside this country. It is not a sound basis; it would be better if our high standard of living at present were based to a greater extent on home-produced goods and raw materials. We have noticed in the figures in connection with the balance of payments with various countries that world prices have gone up because of increases in the cost of machinery and raw materials. These things of course are bound to have their effect here in the normal way by increasing the retail price of the finished article if it came in here in the form of a raw material.
It is significant to see in the Minister's statement that our national income in the past 12 months has gone up by about £12,000,000. It means that the earnings of our people have gone up by an average of £1,000,000 per month, but, although that has happened, the savings of our people have not gone up. They have gone down, because more people are persisting in spending their money, instead of saving it, and they are spending it mainly on various classes of goods not produced here, many of these goods being consumer goods. In any case, these goods do improve the standard of living of the people who purchase them. They bring a certain amount of luxury, comfort and pleasure, but, in the long run, if we have the national income going up and national savings going down, we cannot expect that trend to continue indefinitely.
Another point I want to make in this connection is in regard to the criticism which the Opposition levelled at the Government for the fact that we have sent a number of our Ministers to various places for the purpose of studying modern methods which, in the long run, would bring great advantage to this country. We sent the Minister for Industry and Commerce some months ago to America, and it is obvious that the purpose of his visit was to encourage the establishment here of dollar industries. Those dollar industries would immediately assist us in repaying the Marshall Aid loan. If we can have established here a sufficiently large number of dollar industries, we will have very little difficulty in repaying the principal and interest of the Marshall Aid loan which has already brought us considerable advantage.
I do not intend to say any more on this matter, but I feel that the Budget, apart from being realistic, is a clever Budget, and it shows that the Minister appreciates the position as it exists at present. He was very careful in his Budget not to take any steps which would either confuse or upset our internal economy, or cause a considerable amount of unemployment. These matters are very important, and I was glad to learn from the Minister's statement that, in fact, there are more people earning a week's wages to-day than ever before, and that, particularly with the growth of industry which has taken place over the years, we have nearly 2,000 extra people earning wages in Irish industry. That is a good trend, and I feel that this Budget, as it has been introduced, although it is going to cause hardship among certain types of petrol users, particularly industrial and commercial users of petrol, shows that the Minister made a proper selection when selecting the items to tax.
I am glad he did not decide to increase the cost of food or to take away the subsidies on food, which are there at present to help the weaker sections of the community. The Budget also shows that the Minister appreciates the difficulties which inflation is causing to people on fixed pensions—people who retired many years ago on pensions which were good at that time, but, owing to inflationary tendencies which have taken place in this country since the war, are now very much reduced in value. The Minister has shown that he appreciates the difficulties which these people must face, owing to the change in money values, and his decision to give increases to those pensioners was very welcome, and it was a very fair thing to do. I am sure that most of us know that these people have to live on comparatively small pensions these days and would like to see a situation in this country which would ensure that the purchasing power of their money would be constantly under review, just in the same way as the incomes of able-bodied wage earners are increased, according to the way the cost of essential goods is going.
I was also very glad to see that the Minister gave income-tax concessions to persons who are on fixed incomes from investments. They were in the same position as those pensioners who retired many years ago and whose purchasing power had fallen. Similarly, people dependent on fixed revenue from investments were finding it increasingly difficult to meet present day costs out of the income from these investments, which was their only source of revenue over a large number of years and on which they are solely dependent.
