Dáil Éireann debate -
Tuesday, 19 Jun 1956

Vol. 158 No. 4

Committee on Finance. - Finance Bill, 1956—Committee Stage (Resumed).

SECTION 21.

Mr. Lemass

I move amendment No. 8:—

In sub-section (1), lines 35 and 36, to delete "issued after the passing of this Act".

The purpose of this section is to give relief from estate duties by assessing at two-thirds of their value shares of Irish companies issued after the passing of the Act, subject to the limitations imposed in Section 7 of the Finance Act, 1932. While the main purpose of that section has our approval as being in accord with the general policy of our Party to induce, by tax measures, interest in Irish, as against external investments, it seems to us that the Minister has gone a long way towards defeating the purpose—if that is his purpose—by limiting the concessions to future share issues.

I doubt if the enactment of this section will influence very much the success of future share issues by Irish manufacturing concerns, but there is advantage to be secured by inducing greater stock market activity in the shares of Irish concerns generally. If that can be done by measures of this kind, or any other measures, then new issues are likely to have a much better chance of succeeding than otherwise.

The difficulty, I think, at the present time is that stock market news relates more frequently to British stocks than Irish stocks. There is not a great deal of movement in Irish stocks but there is always some development of interest on the British stock market. The result is that the attention of prospective investors is more frequently directed to British market news than to Irish news. That is detrimental to our industrial development. Anything which tends to create greater interest in the issues of Irish companies and greater activity in regard to them can be very beneficial.

I think it would help to secure that position if this very limited concession—which will not involve a very great deal of money—was extended to all issues of stock. There seems to be something anomalous and wrong in giving a concession of this kind which can only be realised upon the death of the owner of the stocks, to persons who in future may decide to invest in issues of Irish companies and to withhold it from those who so invested in the past.

I do not know if the Minister or his advisers have fully considered all the complications which these proposals may involve for companies whose shares are quoted on the stock market and for the management of the stock market itself. A financial writer in one of the morning papers commented on the provisions of the Finance Bill— both the section dealing with the extension of Section 7 of the 1932 Act and this section. He said in relation to the earlier section we have already discussed dealing with Section 7 of the 1932 Act and having given an illustration of the effect of that section in relation to a particular company—this is from the Irish Independent of Monday:—

"It was therefore essential to distinguish between the old and the new capital."

The writer was referring to the effects of the limitations in the Act of 1932:—

"The only way around the matter was to create a second equity and as preference shares were also similarly issued, it was necessary to create a new line of preference shares."

Further down, he said:—

"There are quite a number of Irish companies whose capital is spread over several different issues in a similar way and for the same reason. The new amendment of the Finance Act of 1932 will clear the way for a welcome consolidation of these issues, providing as it does for the formerly ineligible capital to become eligible for the abatement of income-tax."

The Minister is reintroducing these complications all over again. The writer did not appreciate apparently that this section is limited to shares issued after the passing of the Act.

I think that the very limited scope of this section has not been appreciated by those interested in these matters. There are many Irish companies with authorised capital in excess of their issued capital. No doubt at some stage they intend, if business expands, to issue shares to the authorised limit. Is it contemplated that these additional shares issued will have a different standing to those already issued? They are, according to the Bill, to be described and designated so that they can be clearly distinguished from the earlier issues. Is it contemplated that these two classes of shares will have different quotations on the stock market? This section only applies to shares issued to the public in respect of which there is a stock market quotation. What is the position regarding shares of which only a part of the nominal value was subscribed and on which there is a call liability? Are these shares deemed to have been issued before the passing of the Act and therefore not eligible or will they qualify under this Act because part—perhaps the major part —of the total amount to be subscribed will be paid after the qualifying date?

I attemped to make a calculation as to what the cost might be if this section was extended but I could not. There is always considerable doubt as to what the yield of estate duty will be in any one year. The Minister announced in the financial statement that he got a "wind-fall" yield from death duties last year. That can arise any year, but, so far as it is possible to estimate, it does not appear to me that the cost to the Exchequer over any length of time can be very considerable. This concession is limited to shares of companies which have been issued for public subscription.

We know from the report of the Industrial Taxation Committee that the amount of capital put into Irish industry by public subscription for issued shares is much less than half the total investment in Irish industry. The great majority of companies engaged in industry here are private companies, the shares of which have not got a public quotation and which do not qualify either for this concession or for relief under Section 7 of the Act of 1932. Having regard to the nature of our industrial organisation, to the experience of the past of the manner in which industrial capital is raised, there does not appear to me to be any reason why this concession should be restricted to shares to which Section 7 of the 1932 Act applies.

I think it is inevitable that, whatever form our future industrial development may take, a large part of it will result from the activities of private companies. I should imagine that is not an unusual position in smaller countries where industrial units are smaller in size also and where there is a natural desire to hold the control of these smaller units within the family group of the person who initially started them. I do not know if the Minister has considered this point. If he is not prepared to do so, I do not suppose any arguments here will persuade him to change his mind, but it seems to me that if he has in this section the idea which I expressed——

Mr. Sweetman

The Minister always listens to good arguments.

Mr. Lemass

We have not noticed that so far on this Bill.

Mr. Sweetman

Then the Deputy's arguments are not good.

Mr. Lemass

That must be the explanation. If the Minister has in mind the idea of promoting greater interest amongst potential investors in Irish companies, then it appears to me he is far more likely to get that result if he extends this concession generally to all such shares issued by these companies rather than confine it to future issues. There certainly will not be, until after the passing of the Act anyway, any new flotations; and the Minister could not even specify the date of the passing of the Act at the moment. I ask him to remember that this section is a permanent section. It is not merely intended to apply this year only; it will remain in force until repealed. In ten or 15 years' time, people holding shares in Irish companies will be trying to check back to find out whether these shares were issued before or after some date in June or July, 1956, knowing that, if they were issued after that date, they will be worth more than they would be if they were issued prior to that date. I think, inevitably, as soon as this section has been in operation for a few years and that position arises, some Minister for Finance will have to extend it generally; and it seems to me to be preferable to do that job right now than leave a situation such as I have described to be tidied up at some future date.

Mr. Sweetman

I agree with Deputy Lemass that one of the difficulties in relation to interest in Irish industrial stocks is the lack of a market for those stocks. It is a fact that people who are investing in Irish industrial equities invest to hold rather than to buy temporarily and sell again at a later date; that has been the experience and the practice all through the years. Greater stock market activity would undoubtedly arise and make the position easier for future industrial issues, if that were not the position.

If the Deputy looks back, he will, I think, find that the Party to which I have the honour to belong made that point rather forcibly to him when he was on this side of the House. If he looks at a blueprint for prosperity, he will find that that is clearly set out as one of the ambitions and one of the aims. It is precisely because of that, and because of our anxiety to assist in that, that I widened the scope of Section 7 of the 1932 Act. There is something to be said on both sides in relation to this section, but my principal aim is the incentive or inducement.

The Deputy will agree with me at once that, in relation to issues in the past, there is no question of inducement or incentive, and, to do as he suggests, would be to give an uncovenanted benefit in so far as existing holders of shares are concerned. I do not think the wording of the Deputy's amendment quite carries out what he had in mind. I am not, however, making any point against him in that respect, but, purely for clarification, I ask him to realise that amendment No. 8 would mean that any issues made here not merely since 1932 but since the inception of the State, or even prior to that——

Mr. Lemass

Section 7 of the 1932 Act must apply to them.

Mr. Sweetman

——would reap the same benefit. In relation to sub-section (5), he will find that the relief would apply irrespective of whether or not they were 1932 Act cases. As I understand the Deputy, the case he wants to put, irrespective of the wording of his amendment, is that any issue made since the passing of Section 7 of the 1932 Act should have the benefit of this provision. I have provided that it shall apply to new issues because it is in relation to new issues that I want to provide the inducement for further industrial development, so that, with these new issues for further industrial development, we will be able to get a greater employment potential in industry.

The Deputy mentioned preference shares. It is perhaps unfortunate that, in existing international financial circumstances, preference shares have ceased to have the appeal they had some time ago. At the moment I think I must certainly ignore their existence. There is another way of dealing with the matter somewhat on the lines of the Deputy's suggestion, that is, to give the concession to the shares of any company when a further new issue is made. I considered that because I wanted to avoid any sub-division. It is a possibility, but, on the other hand, if we did that, we would be giving a certain benefit in respect of past issues to shareholders in one company as against shareholders in some other company.

On the whole, there seems to be a preference for the incentive and inducement side of the picture, bearing in mind that what I was particularly anxious to do was to promote the ease and interest in new issues rather than that I should give a benefit to the holders of past issues. It was solely because of that that I ultimately suggested to the House the framing of this section in this particular way. So far as existing issues are concerned, the Deputy will agree with me that they are there, and that there would not be any benefit to the national economy as a whole by merely improving the status of those holders. In respect of further extensions and new investment, there would be a benefit to the economy if it was easier in any way to induce capital to flow into those issues. It was that which particularly influenced me when I was framing this section and I think the Deputy will agree that, over and above everything else, it is the incentive provision which is the overriding question. I am not saying that I am shutting my mind in any way in respect of a greater extension of the concessions which I have introduced at a later stage. I am not.

I do not want to talk Party politics on this section because I regard it in a different light, but there is something to be said for the view that it is desirable to try it out in this way to see if it works as an inducement. Perhaps, if it is a successful inducement, it might be worth while extending it at a later stage.

Mr. Lemass

I think the Minister completely misconceives the prospects of the whole situation. It would be much more important to give the concession to existing issues rather than to shares not yet issued. It would create more interest in them and would promote more dealings in them in the market. It would create a better atmosphere in the market which would tend to encourage investors to put capital into Irish issues. When a company decides that it can extend its operations and employ new capital, the first thing it does is to see how its existing shares stand. If they are at a discount that settles that issue there and then because there could be no attempt made to get capital from the public in such circumstances. To give concessions to existing issues would be far more likely to create interest and to extend activities, rather than to give a slight concession in respect of new issues.

When a company finds it possible to make a new issue, it is the prospect of earning profits and paying dividends that will attract investors. The new issues will not attract investors unless there is that interest in the Irish stock market which does not exist at present. It happens that, at the present time, the stock market is almost completely stagnant. It would be futile for anyone to think of raising any substantial amount of money until that situation is changed and it is the business of the Government to try to change it. There is no desire, in my mind, to reward people who have already invested.

Mr. Sweetman

That would be the effect.

Mr. Lemass

The amount provided would create a far more attractive trend if it was provided for existing issues.

Mr. Sweetman

I do not see how it would create a more attractive trend.

Mr. Lemass

If I thought I was near the time to render my final account——

Mr. Sweetman

The Lord forbid.

Mr. Lemass

——my widow would not be worried by death duties but if I thought I was near that time I would see an advantage in realising any investments I might have in England in order to acquire shares of this kind.

Mr. Sweetman

The difficulty is that shares of that sort are already held firmly. It is very hard, in many instances, to get them at all.

Mr. Lemass

The attempt to get them would, in itself, introduce liveliness in the market.

Mr. Sweetman

I will turn it over between this and the next Report Stage. I was in some doubt myself when framing the section.

Amendment, by leave, withdrawn.

Amendment No. 9 not moved.

Sections 21 and 22 agreed to.

SECTION 23.

Mr. Lemass

I move amendment No. 10:—

In sub-section (1), line 25, before "on" to insert "in any accounting period ending."

Perhaps it would be more useful to discuss the amendments and the section together. The main purpose of the amendments is to effect some improvement which I think is necessary in this section. I have been asked to move both the amendments standing in my name by persons concerned with the operation of the section. So far as the first amendment, which deals with the accounting period rather than with specific dates, is concerned, the approach came from firms of accountants who anticipate difficulties arising out of the provisions of the section. The other amendment comes on behalf of particular firms who happen to be caught in the sense that they have incurred substantial capital expenditure this year, but will not qualify for the initial allowance under this section.

All we are talking about here is an advance of the wear and tear allowance. Over any length of time, it will not cost the Exchequer anything. The amount of depreciation allowed on any machine will not be any greater but the effect of the section is to allow a greater proportion of the total in the first year. I take it that a firm is entitled to choose whichever it prefers and that a firm does not have to take the initial allowance unless it sees some advantage in it.

There is something to be said for the proposal of Mr. Lynch, in his minority report of the commission, that every firm should be allowed to fix its own depreciation policy and to take 100 per cent. allowance in the first year, if it so wishes, and to forego all allowance in the subsequent years, or, on the other hand, to spread it equally over the life of the machine. That has been the system in Sweden but I see that a Swedish commission on industrial taxation has recommended that that arrangement be terminated so there must be some defects in it. From the viewpoint of the Minister for Finance it is undesirable to have any provision which makes it impossible for him to estimate what his revenue in a full tax year will be. I take it that this section is drafted to ensure that it will cost nothing this year. I propose the first amendment which will improve this section and will cost the Exchequer nothing this year.

I have asked the Minister to clarify, if he can, what is meant by the term "the day on which the sum in question becomes payable". Nobody seems to know precisely what that means. A firm which has ordered a new boiler, or some new machines, or new plant of one kind or another, may have to pay part of the total cost with the placing of the order and may have to pay another instalment at some stage during the process of manufacture of the machine before its installation here. The final payment may come later, either on the installation of the machines or some time after they are in operation. Their difficulty has been to know what is meant by "payable". Is it the date on which the firm becomes liable to make the payment, or is it the date on which they actually pay? I admit that that problem would arise, not quite as acutely but almost certainly in some cases, if my amendment was accepted.

The purpose of the first amendment is to remove the possibility of arguing with the Revenue Commissioners as to whether the date upon which the sum becomes payable was before or after 6th April, 1956. If it is clear that the amount became payable within the accounting period ending after 6th April, then there is less room for contention and less need for precision as to the actual date on which the sum became payable. So far as I can see, it makes no difference whatever to the Exchequer, but it will, according to the very responsible firms of accountants which have made representations to me on the matter, ease their task very considerably.

The other amendment is different. It is the practice at present—indeed it is prescribed by the regulations of the Revenue Commissioners—that the normal wear and tear allowance does not begin to be calculated until the machine has gone into productive use. That is a common-sense provision. I do not know why it is being departed from in this case. There are many instances—I know of some myself— where a company purchased additional machinery with the intention of embarking on a new line, or of extending production, and for some reason or another they decided not to bring the machines into use for some months, or perhaps even a year; they decided that the market was not favourable for the launching of the new line or encountered some other difficulty, perhaps even a capital difficulty, in getting the machinery into use. They can have it paid for, installed in their factory and ready to go into use, but the wear and tear allowance does not begin to be calculated, except from the day they press the button and put it in productive use. The mere fact that it is there in the factory and has been paid for does not qualify them for the wear and tear allowance on it. It would simplify matters for everybody if the same regulation applied in this case and that the first year of the operation of the machine, the year in which it first came into productive operation, would be the year for which the initial allowance should be granted.

These are the two proposals. I do not know if either appeals to the Minister. Both have been urged and put forward by very responsible interests, and I think they should be considered. I have another amendment here which I think I should deal with. It concerns secondhand plant——

Mr. Sweetman

Are we going to deal with the three together? I am quite agreeable.

Mr. Lemass

Yes. The Minister knows I have many times in the past expressed strong opposition to the starting of new industries with secondhand plant. In so far as it was possible to do so by means of official pressure, it was always exercised to encourage the acquisition of new up-to-date plant rather than secondhand plant. But there have been many cases where that was not practicable, except at the cost of very considerable delay. There have been other cases where the acquisition of secondhand plant, which was by no means obsolete, was of very considerable advantage to the firm concerned. Indeed, the Minister may know of a new project which is developing at the present time and which is based upon the purchase by a company here of the whole of a plant which was in operation in another country by another company. The plant is as up-to-date and as efficient as any in the world, and that decision to buy the complete plant and transfer it from another country to a factory here makes it possible for that industry to be established in much less time than would otherwise be necessary, and with other very considerable advantages. It would seem to be unfair, in that instance, at least, to deny the advantages of the initial allowance, assuming that the firm desire to claim the initial allowance in respect of that equipment.

I am quite certain that throughout industry as a whole there will be many cases where the right decisions will be to acquire a secondhand machine or a bank of machines, which are technically sound, because immediate delivery can be secured, or because they can be acquired in a variety of circumstances at somewhat less cost than new machines. It is drawing the line far too tightly to deny the advantages of the initial allowance completely to machines which are classed as second-hand—I am not quite sure what is meant by secondhand—and it is going to be a continual source of difficulty to the Revenue Commissioners to decide whether any particular machine is secondhand.

In another capacity, I had to supervise the purchase of a very elaborate machine some years ago, and because the machine was elaborate and very costly and represented a big underhand— taking by the firm concerned, we insisted that it should be installed completely and put working by the manufacturer before being dismantled and transferred here, so that the defects or inadequacies in the machines would be fully exposed before we incurred the cost of transporting and erecting it. That machine could not in any sense of the term be described as secondhand, but it was, in fact, used in another country before being transferred here. For how long would it have had to be in use to merit the description "secondhand"?

I think that this official discouragement of the use of secondhand plant, if that plant is not modern in design or as modern as can be secured, should be left to the Minister for Industry and Commerce, and in so far as this section is concerned, the capital expenditure on the plant should rate for the initial allowance, irrespective of whether it was new or secondhand. I would strongly support the Minister for Industry and Commerce in using his authority to discourage the acquisition of secondhand plant, if new plant is available, but I think it is his job and not the job of the Minister for Finance.

With regard to the section itself, I should say that, in our view here, the initial allowances for which this section provides are not nearly adequate to the requirements of the present situation. We can have different views as to the effect of tax concessions and tax inducements in stimulating industrial expansion.

In my own opinion they are a very effective stimulant. We need at the present time a very considerable expansion in industrial production. The Minister for Industry and Commerce spoke last year on his Estimate about the satisfactory progress of industry. Last year industry recorded a 3 per cent. increase in its total output—an increase which was far short of that attained by any other country in Europe and very far short of what we need here if we are to deal with the unemployment and emigration position by the expansion of the number of new jobs.

The number of new jobs in industry increased by 1,500. On my calculation we need about ten times that increase if we are to secure a reasonable prospect of employing our people and of checking emigration. We would not even abolish emigration but check it in its abnormal features.

I personally was very disappointed with the report on industrial taxation. I admit the committee was not asked to advise on the measures required in the emergency situation which has now developed. They were asked to deal only with the incidence of the existing taxes on industrial profits with a view to eliminating anomalies and considering how they could be modified so as to encourage industrial expansion without prejudice to the general revenue; but in the present circumstances we need a great deal more than that if we are to bring into industry that influx of new capital and enterprise which is needed to get expansion on the scale we need it.

In any event the Minister has only taken one of the recommendations of the commission and has implemented it here. I urge him to say as soon as possible during the course of the passage of this Bill through the Dáil, if he can, and, if not, later, that all the recommendations of the commission will be implemented, if not in this Finance Bill, then in next year's Finance Bill. That announcement made now would have as stimulating effect as the actual enactment of the sections of this Bill which would give effect to the recommendations.

The stepping up of the wear and tear allowance is perhaps the more important of these recommendations and if firms knew they could go ahead now, incurring new capital liabilities to acquire new plant knowing they would get the initial allowance to help them in their financial difficulties in this year, and this higher rate of wear and tear allowance in other years, that would be far more likely to do good than the absence of the Minister's declaration in that regard. All the evidence which we have is that the rate of taxation in industry is restrictive of development. That was said by the American experts brought over here after the war to report on economic conditions and whose report aroused a great deal of discussion at the time. It is the view of everyone who examined the position objectively. While we could perhaps defend the heavy burdens of taxation on industry by reference to the whole tax position, in times when the country was going forward, anyway, we have got, in a period like the present in which we appear to be going backwards, to take more revolutionary steps to change that situation. A reduction in the taxation on industry would be a step in the right direction even if that reduction in taxation was so arranged that firms could not benefit by it except they used the additional resources made available to them for the expansion of their activities or to improve and modernise their plant.

In Britain, after the war they brought in this initial allowance and in a very short time they repealed it again and replaced it by the investment allowance. The allowance was far more effective in stimulating new industrial expansion. Indeed, so effective was it in stimulating new industrial investment that they withdrew it again and replaced it with the initial allowance this year. But their problem is entirely different from ours. They have to stamp down upon the rate of expansion of industrial investment. We have to stimulate it very urgently and very definitely. It would seem to be good policy to use here the instrument they found effective there. There is one further point I want to make. It is not clear from the wording, although I take it it is intended, that this initial allowance will apply to mining concerns. The Minister might let us know.

Mr. Sweetman

They are assessed as a trade.

Mr. Lemass

In Britain, of course, the Government for its own reasons gave a much greater initial allowance in the case of mining concerns than in the case of ordinary manufacturing concerns. I think there is a case for that but I do not suppose it is possible to get that.

Mr. Sweetman

In Britain mining has not got the benefit of the provisions I introduced here six months ago.

Mr. Lemass

And neither has any existing Irish mining concern. If the Minister is not prepared now to consider the much wider aspect of policy which I raised in my remarks, these specific amendments will improve the section and eliminate the possibility of difficulty arising in regard to administration.

Mr. Carew

I should like, under this section, to draw the Minister's attention to the position of small Irish shipping companies which are in a very different position from industrial concerns which buy machinery from year to year. From representations made to me by the people concerned, I feel they have a case and I should like the Minister to give it consideration.

We are aware that any Irish shipping company which wants to acquire a new ship and has to place an order has to put down capital with the order together with so much as the ship is being built. Most small Irish shipping companies do not buy new ships. I understand that the practice with most of them is to buy secondhand ships. Secondhand ships could sometimes be described as new ships. When a ship is four years in operation and is due for its first survey, it is usually at that period or some time afterwards that the small Irish shipping companies acquire their ships.

According to sub-section (6), "new" means unused and not secondhand. That being so, these small Irish shipping companies are completely debarred from any benefit whatever even though they acquire a ship after being four years in operation. I understand that the shipping world considers a ship four years in use as a new ship. It is a ship that has stood its test. I would respectfully say to the Minister that consideration should be given to Irish companies who have to purchase ships in that way perhaps through lack of capital. Furthermore, I feel the Minister should allow a company who have acquired a ship within the accountancy period of that company to benefit from this concession. He has stated that, after the 5th April, the initial allowance will apply. Consider a company whose accounts are made up to the 31st December each year. They would be within the accountancy period and yet they would not be entitled to get any allowance.

The Minister comes from a county where racing is either the chief or else one of the big industries. Even the horse that comes second at the Curragh always gets some consolation. I should like if, in a sporting way, the Minister would give some concession to small shipping companies who may have acquired a ship within the accountancy period. I understand that shipping has always been treated in a different way from ordinary industries from the point of view of taxation and in particular from the point of view of wear and tear. I understand, further, that the revenue authorities in England treat ships so acquired in that way. Therefore, I would respectfully ask the Minister to consider that point and give Irish shipping companies, who have their difficulties, the benefit of the concession. These companies may not be able to acquire new ships and have to depend upon getting ships that have been in operation for six or eight years and that might be considered good ships and seaworthy in every way.

Mr. Lemass

Does the section apply to ships at all?

Mr. Sweetman

Yes.

Mr. Lemass

Are they new machinery or new plant? If the section does apply, I think it should be stated definitely.

Mr. Sweetman

They carry on a trade.

Mr. Lemass

They must incur capital expenditure.

Mr. Sweetman

Look at lines 25 and 26.

Mr. Lemass

Capital expenditure on new machinery or new plant. Is a ship a plant?

Mr. Sweetman

The ship owner carries on a trade.

Mr. Lemass

The Minister's word is good enough for me. I hope the courts will not misinterpret the section.

Mr. Sweetman

If the courts have any different interpretation, I will put it right.

Mr. Lemass

If that is correct, this point arises. I knew that the committee had recommended this initial allowance for ships but I assumed the Minister let it stand over with others and that he merely implemented it for industry this year. However, if the Minister states that this section applies to shipping and to shipping companies, then I would strongly support Deputy Carew's point that sub-section (6) should be reconsidered. I think the great majority of the smaller Irish companies acquire ships which could be classed as secondhand ships. They should not be prevented from acquiring ships of that type by the provisions of the section.

Mr. Sweetman

I am glad that Deputy Lemass is discovering, as we go along, that I did more than he thought I did when he made his rather petulant comment about my reading of the Industrial Taxation Committee's Report on the Budget debate. Having regard to the time at which I received this report, it is somewhat surprising not that I have failed to implement all these provisions but that I have been able to take provisions out of it and to implement them in this year's Finance Bill. I happen to know that every single member of the committee believed when they presented the report to me that they were presenting it too late for me to do anything in this year's Finance Bill. Occasionally, we are able to outpace even the most ambitious hopes of the businessmen concerned in this problem.

Mr. Lemass

I think the Minister's officers could have guessed a year ago that this would be one of the recommendations.

Mr. Sweetman

The Deputy had plenty of opportunity to guess what would be in it when he was sitting on this side of the House, but he did not. I am interested also to hear the Deputy say he believes there should be taxation incentives in relation to our problems. I think I can fairly say that only two taxation incentives of any substantial consequence were provided in recent years. There is the mining tax about which the Deputy is wrong when he says it does not apply to any existing Irish company. Irish companies are able to get benefits under that Bill. The Deputy need not worry himself in that respect. The second is these initial allowances. If Deputy Lemass or any other member of the House will turn to the summary of the recommendations that are in the majority report, I think he will agree that, since this report was presented to me approximately one month before the introduction of the Budget, it is not a bad effort to deal with matters that have been included to the extent to which I have included them.

The initial allowance for industry covers shipping. Certain of the other problems and particularly the main question of wear and tear rates being changed are larger problems. In relation to wear and tear rates, I would particularly draw the Deputy's attention to paragraph 142 of the majority report in which it is stated:—

"We were frankly surprised to find that revenue wear and tear allowances amounted to approximately 80 per cent. of the depreciation actually written off by industry, and that an increase of approximately 25 per cent. in wear and tear would be adequate to bridge the gap completely. The 1946 values shown for plant and equipment for the 83 companies provide an important clue as to the actual position. In that year the written down value was £0.8 million, so that it may be safely assumed that less than £0.4 million would be included for pre-1947 plant and equipment in the 1953 balance sheet figure of £2.4 million. In other words, the wear and tear allowances shown relate to post-war plant and equipment almost entirely."

I think that not merely were the members of the committee surprised by finding that that was the fact: I think very few people appreciated that such was the case. I do not want anybody to fail to appreciate the wealth of information that there is in the survey made by the committee. Deputy Lemass suggested he did not think it had adequately covered the task. I do not know whether the Deputy meant that in any way as a criticism of the committee but probably he did not. Still, I think it would be wrong to allow it to go on the records of the House without saying that I, for one, appreciate and accept very fully the vast amount of work that was put by the public-spirited members of this committee into their analysis of the situation and their recommendations.

I hope that the report, as I have already stated, will be read by everybody who is interested in this proposal. I hope it will be studied carefully and that we will have an opportunity later, when there has been more time for more detailed study, of discussing the problems thrown up by it. I have made it clear already, in respect of the other recommendations and other matters that arise from the analysis of the committee, that I shall examine them as soon as possible, but it would be quite unrealistic for Deputy Lemass or anyone to suggest that I should indicate my views either for or against those other problems at this stage.

Members of the House may also remember that some time ago there was a fairly consistent canvass of Deputies and members of the other House and generally of the public, on certain calculations that had been put before them. The main majority report, in its analysis, shows where these calculations went awry. I do not suggest that in any criticism of the author of those calculations but he had not available to him all the information in the normal order of things. Much of the information upon which it is necessary to base an analysis of the kind in question will be confidential to the companies concerned, and because of its confidential nature could only be analysed accurately and satisfactorily by those who had not merely the published accounts but also the full accounts before them. The paragraphs from No. 152 onwards deal with that aspect of the situation and I think it would be desirable that those people who have read the previous memorandum should read those paragraphs so as to enable themselves to ascertain and to appreciate the facts.

Before I come to any amendments that are tabled by Deputy Lemass in any detail—or rather to the first two amendments—perhaps I might deal with the matter that was raised by Deputy Carew initially: the question of ships is one that is treated separately in the committee's report. I felt, however, when I was framing this section, that it was desirable that shipping should be given the initial allowance. I received some representations from the Irish Shipowners' Association only last week. The representations are based on two points. In the first case, they wish the allowance to be given in respect of the last period prior to the 6th April, 1956. They based their representations for that concession on what transpired in England. They suggested in a memorandum to me that the British Chancellor of the Exchequer in 1945, when he was introducing the initial allowance which was to come into operation on the 5th April, 1946, allowed for such initial allowances, expenditure that had taken place since 1944. The Shipowners' Association suggested to me that because of the fact that he had, so to speak, brought back the date in his case, I should do the same here. They completely overlooked, however, the facts of the situation. The facts were that in Britain the Chancellor announced his concession in the Budget of 1944 and indicated that he was going to give initial allowances in respect of any machinery or plant that qualified for them as from that date.

He brought the legislation into existence a year later, but it was stated by him that the legislation would be operative as from 1944 and it is clearly correct that it should be from the date of the announcement that the legislation would be operative rather than from any earlier date. Again, the reason for that is the same as that which we discussed on an earlier section, that the whole purpose of this allowance is to provide, if you like, by means of interest-free loans— which is one of the terms that it has been described by in the Taxation Concession Committee's Report—an incentive to persons or firms or companies to buy new machinery.

I am afraid, therefore, I cannot possibly accept that representation that we should date the operation of the allowance back, as it was made to me by the Shipowners' Association. The case upon which they founded their representation, as I have indicated, has no justification in fact.

So far as Deputy Lemass's amendment No. 12 is concerned, I cannot accept it. This is the one dealing with the question of secondhand machinery. I feel very strongly indeed that too often secondhand machinery has been brought in and what has happened in effect is that the old clothes have been passed on to the poor relations by certain companies, to those who did not go into the modern machinery that we need if we are to make our goods highly competitive, make them efficiently, or to increase our productivity. I think Deputy Lemass agrees with me that it is undesirable that in any case secondhand machinery rather than new machinery should be purchased.

Mr. Lemass

I said I would not agree with it as a policy for the Minister for Industry and Commerce to encourage.

Mr. Sweetman

The Deputy cannot blow hot and cold. You have a taxation incentive inducing people to carry out the policy, and this cuts across the policy. I believe the policy of utilisation of new machinery is the right policy, and equally I believe that, when it is the right policy, the incentive in the taxation code must follow rather than cut across that policy. One of the reasons is that I feel some of the machinery introduced in that way was not as modern, as up-to-date or perhaps as efficient as it might have been. There were cases where it was the contrary, but Deputy Lemass knows, just as I do, of the case where it was not all that it might have been. In the incentive provisions I am putting into this Bill, I am not going to cut across that policy, except where there is a clear basis of certification.

The reason I say "except where there is a clear basis of certification" is that I accept the point made by Deputy Carew that there is, in shipping, a basis of certification, that it is possible to consider shipping on a different basis. Some of our smaller ship-owning concerns would unfortunately find it impossible to purchase new ships, no matter how desirable the purchase of new ships might be. In shipping also, there would not be the same possibility of switching from one company to another as might exist in respect of ordinary machinery or plant. The House can appreciate that it would be extremely difficult in the case of secondhand machinery to prevent companies passing secondhand machinery from the parent to a subsidiary company or from one subsidiary to another subsidiary. If we permitted secondhand machinery, they would in that way be able to obtain initial allowances again and again.

That possibility does not, in my mind, arise at all in the case of ships and I am prepared therefore to consider, between now and the Report Stage, whether it might not be possible to meet the case put forward by Deputy Carew, and which was made to me by the Irish Shippers' Association, and supported by Deputy Lemass in respect of the waiving of the restriction on secondhand commodities in Section 6 as far as shipping is concerned. I am not prepared to accept it in respect, of industry generally because I think it would cut across what is the correct policy.

In so far as amendment No. 10 is concerned, the effect of that would be to do what I do not think this House should do. It would mean that we would be giving concessions to a firm on the fortuitous basis of the date on which not this House but the firm itself fixed its accounting period. I do not think the House should do that in relation to taxation provisions. In relation to taxation provisions, we should ourselves lay down the date and should accept the responsibility for so doing. The date should be that named by the House.

Let me give a simple example to the Deputy. Take two firms. Firm A has an accounting period ending on 31st January each year; firm B has one ending on 31st December each year. Both firms buy machinery and in due course the amount due for that machinery becomes payable. Let us say both firms pay on 15th January, 1956. Under the amendment of Deputy Lemass, firm A, which has its accounting period up to 31st January, does not get the allowance because its accounting period closed on 31st January, 1956, but firm B, which has its accounting period up to 31st December this year, does get the allowance. Frankly, I think that is wrong. I think it should be the same for all taxpayers concerned and that it should be a date fixed by this House. There should not be the fortuitous period of time which the various concerns fix for their own convenience rather than the income-tax year.

Amendment No. 11 seeks to fix the basis upon which the initial allowance will be given as being the year of the coming into use of machinery rather than the year of the expenditure. I think the expenditure is the better test. The purpose of the initial allowance, as clearly the Deputy has shown in his remarks he appreciates, is to provide an incentive which will induce the firms to go in for the purchase of more modern machinery.

Very often that purchase will be spread over a period of time. As far as the future is concerned, therefore, the allowance based on expenditure will be more beneficial to the firms than the allowance based on the date operative for the wear and tear arrangements. If a company decides to-morrow to purchase machinery, and places an order for machinery that may come in in four six-monthly periods, it would mean that they probably will pay an initial deposit when they place an order, a further sum when the first part of the machinery is delivered and further sums right through the contract up to its conclusion. If the contract for that machinery extends over one year, then the effect of my provision will be to give the firm concerned their allowance sooner than they would get it under the Deputy's amendment. Under the Deputy's amendment, they would not get the allowance at all, until the whole machinery was installed and in operation. Under the provisions in the Bill, they will get the allowance as and when each sum becomes payable——

Mr. Lemass

Even though there is no wear and tear on machinery?

Mr. Sweetman

Even though there is no wear and tear on the machine, because the whole purpose of the allowance is to assist in the purchase of the machinery in question. It is because that is the purpose that the allowance is based on expenditure, and, being based on expenditure, where a company has to put down money in advance, it will assist it to purchase on a basis like that.

I can see people who have already made payments naturally being anxious, if they could utilise their ingenuity, to find any method of asking me to go back without making it appear too obvious that that is what they are doing. So far as the future is concerned, my suggestion would be far more beneficial to industry and I would suggest to the Deputy that, when he was framing that amendment, he was not really thinking of the future at all. I must think of the future and I am sure the Deputy also will think of the future because this will be permanent legislation and it would be unwise to prevent that future benefit being given by reference to past circumstances.

Frankly I do not understand the Deputy when he indicates that there has been a suggestion that the words "become payable" create difficulty in interpretation. If I make a contract for the purchase of machinery, on that contract it will probably be set out that I have to pay a deposit of x per cent., that I will pay a further sum perhaps when a certain amount of work has been done on the contract and a final sum when the machinery or plant in question has been installed and is in working order. In so far as the meaning of the words "shall be payable" is concerned in relation to the deposit, it will be payable on the signing of the contract. Therefore, the date of that payment is the date of the signing of the contract, and as from that date that sum so paid as a deposit ranks for the initial allowance.

In respect of further payments on account, the contract provides when they must be paid. As soon as the circumstances arise in which they become payable, they will rank for initial allowance as from that date. The anxiety is to ensure and to provide that, all through, in relation to expenditure on new plant and machinery, immediately the money becomes payable, the benefit will accrue as from that date, so that if the contract is one payable for a series of periods the concession that is given here to the extent of the tax on the initial allowance will go to create a reserve to meet the next instalment.

Mr. Lemass

On the question of secondhand machinery, I think the Minister is misinterpreting the function of the Minister for Finance. The Minister for Industry and Commerce has the responsibility for guiding and directing the industrial development policy. When I was Minister for Industry and Commerce I repeatedly made known, by speech here and elsewhere, my dislike of any developments based upon secondhand plant. On many occasions where individual concerns came seeking protection or assistance under the Trade Loans (Guarantee) Act, or some other form of Government help, they were refused it because their plans contemplated reliance, in the main, on secondhand plant. I insist that it is a matter for the Minister for Industry and Commerce and it is entirely wrong for the Minister for Finance to seek through this tax arrangement to give effect in a hit or miss manner to that policy which in the case of the Minister for Industry and Commerce is based upon examination of individual proposals and knowledge of particular cases.

I can give certain examples which have arisen to my knowledge in this regard. I know one case where a company purchased the most up-to-date plant in the world to go into a particular industry. It purchased plant so expensive that it ran out of cash and within three or four months of starting operations, it ceased operations and went into liquidation. It was a first-class plant. No better plant could have been purchased and it had been working merely for three or four months when it was then purchased by other firms and transferred to their factories. These firms that purchased that plant would not qualify for the initial allowance on that capital expenditure, notwithstanding all the Minister said about the need to give them aid at that stage, merely because that plant was in operation for three or four months. The Minister for Industry and Commerce, if that case came before him as a trade loan application or in some other way, would know precisely what was involved and would know that there was no departure from the policy of securing the most modern and up-to-date plant in that case.

I mention again the other type of case which is now arising, of the actual transfer of the whole of a very modern and up-to-date plant from a factory in Europe to a factory in Ireland. That arrangement involves not merely a considerable saving in capital outlay, but a far more important saving in time to the firm concerned, because a complete unit is being transferred, a unit the parts of which were originally purchased from a number of different suppliers, specialists in their own line. There will be many instances where a firm desiring to get plant quickly will find that they can do so only by buying plant already in use. It is still true, as far as British suppliers are concerned, as well as some continental suppliers, that there are long waiting periods for the delivery of new plant. No doubt that situation will change in time, but it has not changed yet. It is improving to some extent, but any firm now proposing to buy new equipment must expect a long waiting period before any manufacturer can deliver it to them.

If that will mean, as it often might mean, the survival of a firm, it is not unusual for it to seek to obtain equipment of the type it requires from some place where it is already in use and from which it can be transported without delay. That equipment need not be inefficient or obsolete equipment; in fact, it may be quite suitable for the purposes of the firm. While recognising that these cases are exceptions to the general policy of discouraging the building up of Irish industry on secondhand plant, I still say that the acceptance of such circumstances as a justifiable departure from policy is a function of the Minister for Industry and Commerce rather than the Minister for Finance. I am quite certain that that section of the Bill will land the Minister into a great deal of trouble. He has already had to undertake to modify it once to meet the case of the shipowners and there will be many other cases of a similar kind which will arise, where he will regret his insistence on retaining the section as it stands.

Mr. Sweetman

Does the Deputy not know very well that, if I brought in a section here that was contrary to the policy adopted and carried out by the Minister for Industry and Commerce, he would make the welkin ring about the division there was in the Coalition?

Mr. Lemass

No.

Mr. Sweetman

Indeed he would.

Mr. Lemass

I am saying that the Minister for Industry and Commerce has a function in that regard and he has powers to fulfil his function.

Mr. Sweetman

And I am not going to do something that is contrary to the policy adopted by the Minister for Industry and Commerce.

Mr. Lemass

I am not asking the Minister to do that.

Mr. Sweetman

The Deputy is.

Mr. Lemass

On the contrary.

Mr. Sweetman

It cuts right across it.

Mr. Lemass

Let me be quite clear about that. What I am asking the Minister to provide is that where the Minister for Industry and Commerce agrees that some particular development is desirable, even though it involves the use of plant already in use, and he undertakes to assist that concern by a tariff or by a trade loan guarantee, the Minister will not negative his decision by refusing——

Mr. Sweetman

That is not what the Deputy is suggesting.

Mr. Lemass

Is not that how it will work out? Even though the Minister for Industry and Commerce considers it desirable and encourages the firm concerned to go ahead on the lines proposed and although he undertakes to help them to get into production, the Minister for Finance will say, nevertheless: "That firm will not qualify for the initial allowance under my Act." The Minister has not even attempted to define what he means by secondhand plant and ultimately that matter will go to the courts and anyone can guess what interpretation the courts are likely to put on it.

Regarding the other points that I raised, I think the Minister realises how far-fetched his arguments were— this importance of dealing with the future—but this issue of the future only arises in the case of a firm which some time in the future may incur payment for plant which will be spread over two years and even there I cannot quite see the relevancy of his remarks. It is quite true that one of my amendments is mainly concerned with the problem that arises at the transition period. The Minister says it is fortuitous that some firm's accountancy period may end in January and another firm's accountancy period may end in December. It is equally fortuitous that some firms, in 1956, installed plant in March and others did not install it until May. One qualifies and the other does not qualify for the allowance.

Mr. Sweetman

I do not blame the Deputy in the very least; but is it not quite obvious that his amendments are framed ad hoc on certain specific cases?

Mr. Lemass

Only one of them, to deal with a specific case that I know of. It is equally fortuitous, I say, that in the case of one firm the plant was brought in and paid for and in the other case it was brought in on the same day and not yet paid for. In one case the allowance is given; in the other case it is not given. I think the Minister should be concerned to remove these anomalies. Undoubtedly, the line suggested in the case of ships would do it—date it back a year anyhow, but that would involve some diminution of revenue to the Exchequer this year.

Mr. Sweetman

If I may interrupt the Deputy, in regard to the case he mentioned, surely it is not whether it was paid but whether it was payable. As I understand the Deputy, in both the cases he mentioned a minute ago the amount was payable.

Mr. Lemass

The point I am making is that the machinery did not come into use and does not qualify for the wear and tear allowance until after 6th April. That is what we are talking about. We are not talking about a sum of money that the Minister takes out of the Exchequer and pays out. We are talking of an advance of the wear and tear allowance. The total wear and tear allowance that the manufacturer gets is not increased by one penny. If he elects to take it in ten equal instalments, as in the past, he can do so or he can get 20 per cent. in the first year and reduce the allowance in subsequent years. That may be of some advantage to him. The Minister described it as an interest-free loan. It is not quite that, but that description is near enough to convey the general idea. There is no question of the manufacturer getting a greater allowance in toto because of this Bill. He merely gets part of the allowance pushed forward in time and I submit, therefore, that the calculation of that allowance and the dating of that allowance should be based on the same principles as the principles on which the present wear and tear allowance is based. That wear and tear allowance is calculated from the day on which the machine goes into productive use. If that date is adopted for the initial allowance, no problem will arise in any case, in the particular case I am aware of or in the numerous other cases that I may not be aware of.

The other amendment is different, in so far as this is a permanent arrangement. It did not prove very permanent in England; it went on and off and on again.

Mr. Sweetman

As the Deputy has already admitted, they have a different problem from ours.

Mr. Lemass

Yes, but my argument is the other way round. It is a question of the accountancy year. It is to avoid difficulty in persuading the Revenue Commissioners of the day upon which the machine was paid for or the cost of the machine was payable. It is just as simple to take the other device, to say that, if in that accounting year this amount became payable, the initial allowance is paid. Again, what difference does it make to the Exchequer? Not a penny.

Mr. Sweetman

What is the difference in persuading them if a sum was payable in a financial year, an income-tax year or an accounting year? There is no difference. If there is difficulty in one case, there is difficulty in the other.

Mr. Lemass

Take the accounts of a company. The accountant makes up the accounts and calculates the profits. There is a calculation as to the amount of depreciation that may be deducted before tax liability is assessed. That is the job of the accountant in relation to the accounting year. Now, the Minister is introducing a new complication. That depreciation allowance is different if the expenditure was incurred after the 6th April from what it would be if it was incurred before the 6th April in this year. That will be an immense complication in many cases.

In any case, I have said that very reputable and responsible firms of accountants in Dublin—more than one —have urged this change. It does not cost the Minister a penny to make the change and there can be no disadvantage to anybody if the change is made.

Mr. Sweetman

The Deputy is wrong in that statement.

Mr. Lemass

How does it cost the Exchequer a penny?

Mr. Sweetman

It would have an influence, undoubtedly, on the next financial year.

Mr. Lemass

Surely.

Mr. Sweetman

Yes, without any question.

Mr. Lemass

I just cannot see that.

Mr. Sweetman

In relation to the two companies that I gave, firm A would be out, firm B would be in. That is another case of back-duty.

Mr. Lemass

I admit, but there is going to be some result on the revenue in the next financial year in any case.

Mr. Sweetman

Most certainly.

Mr. Lemass

The Exchequer will forego some revenue next year because of this provision.

Mr. Sweetman

Certainly.

Mr. Lemass

The difference in the amount they forego under the section as it stands and under the section as I want to make it must be a mere bagatelle. It cannot be very much and I doubt if the Minister would forecast on which side of the account— whether it is an advantage or a disadvantage.

Mr. Sweetman

The Minister has forecast it already.

Mr. Lemass

I have long since found that arguing with the Department of Finance is like arguing with a brick wall.

Mr. Sweetman

The Deputy appears to me to be confusing the purpose of the initial allowance and the purpose of the wear and tear allowance. They are different.

Mr. Lemass

What is the initial allowance but an advance of the wear and tear allowance?

Mr. Sweetman

No. The purpose of the initial allowance is as an incentive to get the new machinery. The purpose of the wear and tear allowance is to give a diminution because the machinery is being used. They are two different things.

Mr. Lemass

It is the same thing. It is an initial payment of the wear and tear allowance.

Mr. Sweetman

Its purpose is as an incentive.

Amendment, by leave, withdrawn.

Amendments Nos. 11 and 12, by leave, withdrawn.

Section 23 agreed to.

Sections 24 to 28, inclusive, agreed to.

SECTION 29.

Mr. Lemass

I move amendment No. 13:—

In sub-section (2), line 30, before "which" to insert "or twenty-five per cent. of the net revenue of the board whichever is the lesser".

This section imposes a charge on the revenue of the Racing Board. I am making two propositions here.

Mr. Sweetman

So far as the second is concerned, I think I can clear the Deputy's mind. I am advised that it is an allowable expense and may I make it clear that if it is suggested at any stage that it is otherwise, I shall immediately introduce amending legislation? I think it is undesirable to state something that we believe is the law. I do not think there can be any doubt about it at all.

Mr. Lemass

And if you are found out to be wrong——

Mr. Sweetman

I will eat humble pie.

Mr. Lemass

The Revenue Commissioners have often been wrong.

Mr. Sweetman

The Deputy must not criticise a body from whom the State has got very valuable service.

Mr. Lemass

I am merely adverting to the fact that there have been cases when the interpretation put on the law in the courts was different from that given by the Revenue Commissioners.

Let us consider the question of the amount of money that it is desirable to take from the Racing Board for the purpose of the Exchequer this year. I think it is undesirable that we should take anything. I think it is indeed a breach of faith on the part of the Government to attempt to take it. There was an implied undertaking given to those responsible for the organisation of horse racing when the Act establishing the Racing Board was passed here that the machinery set up for the purpose of securing revenue for that board would never be used for the purpose of securing revenue for the State. The Minister has decided to attempt to do so.

I argued on the Second Reading that the revenue of the board is not sufficient to enable it to meet the charge put on it without very serious consequences to the whole horse-breeding industry here, for which the racecourses are the shop windows. I admit that the accounts of the board would suggest that some sum in or around £70,000 or £80,000 might have been paid out to the Exchequer this year. The board last year appropriated to various reserves that amount of money and assuming that it gets the same revenue this year as last year it could, perhaps, pay that amount to the Government for this year, but not for two years.

The Minister suggested in the course of a few remarks on the Financial Resolution that this is a charge for one year only and may not be repeated next year. I think it is obvious that it cannot be repeated next year and that whatever damage may be done this year by the imposition of the charge, it will be impossible to levy a similar charge next year.

We had some discussion here as to the possibility of the board's revenue contracting this year. I expressed the view that there were signs that the board's revenue would be substantially less this year than last year, that its ability to meet this charge this year would be substantially less than last year. The Minister referred to a meeting where the attendance and tote receipts were larger than last year and apparently relied on that to sustain his hopes that revenue would not contract.

Rather than express a personal view I am going to quote an article from the Irish Field which can be taken as authoritative and indeed it is obvious that some of the information which it obtained must have come from official quarters:—

"The revenue demands would appear to be badly timed for already there has been a very noticeable decrease in betting through the tote at recent meetings and this can be taken as an indication that the bookmakers will have handled considerably less. Since the Curragh meeting on May 9th there was a drop in tote takings at all except four of the 19 meetings up to Leopardstown of Saturday last, while at the Limerick Junction meeting on Thursday the amount handled was £6,521 against £11,104 last year. The total decrease for the period mentioned is over £30,000 and thus over £3,000 in the amount accruing to the Racing Board."

The revenue of the board last year would have made it possible for approximately 25 per cent. to have been paid to the Exchequer without diminution of the services provided by the board, or any increased charge on anybody.

Therefore, I move that the Minister should content himself with taking, this year, 25 per cent. of the board's gross revenue. I think he should have regard to what the revenue of the board is likely to be before deciding how much of it he is going to take. I suppose there will be no likelihood that the board's revenue will contract so much that the £140,000 he is going to take will absorb the whole of it, involving the elimination of all their expenditures on the subsidisation of stakes, transport and so forth, but nevertheless, some contraction of revenue is likely and the Minister's claim on the board should be expressed, in my view, as a percentage of its revenue rather than a fixed sum, regardless of the revenue.

The board decided, as we are told, that it would be impracticable to seek to recoup the amount the Minister is going to take from them by increasing the levy on bets with bookmakers. They announced their view that to attempt to do so would involve such a substantial falling off in the amounts staked and attendances at meetings that they could conceivably get less money from the higher levy than they are getting from the present levy.

They have decided to increase by 5 per cent. the deduction from the tote pools in order to off-set this charge, making a total deduction of 15 per cent. We do not know what that may yield in revenue to the board. Its total gross revenue from the tote last year was £190,000 and it is possible that a 50 per cent. increase in the amount of the deduction will bring about a 50 per cent. increase in that revenue, and bring in, say, £90,000. Personally, I think that is unlikely. Even if the tote dividends are not likely to be seriously reduced, there is likely to be a falling off in betting with the tote by reason of the fact that the public are being made aware of what they did not perhaps previously appreciate, namely, that there was this deduction from the pool. The additional 5 per cent. deduction will mean less than a 5 per cent. diminution in dividends, but that is not the way in which the public will think of it. The public will think of the 15 per cent. that the board is deducting, deducting to hand over, in the main, to the Minister for Finance for Exchequer purposes.

Now, if my proposal were adopted, the amount of the charge on the board's revenue which the Minister would impose would be limited to the additional revenue the board may get in by reason of that alteration in the deduction from the tote pools. I am sure most members of the House were perturbed to learn that the chairman of the board, who was at one time a well-known figure in this House, Mr. William T. Cosgrave, has resigned as a protest against this action of the Minister for Finance. Mr. Cosgrave, although politically opposed to this Party, was appointed to that position by the Fianna Fáil Government and retained there by us, because we believed that he, as chairman of the board, would ensure its proper direction, its development on sound lines, and because we expected, too, that he would, through his personality and administration, bring prestige to that organisation we had set up for the specific purpose of aiding the industry here. It is, I am sure, a matter of concern to everybody that he has taken such exception to this proposal of the Government that he preferred to resign rather than be associated with it. That may perhaps bring home to members of the Government and its supporters in this House how strong the feeling is that the Minister for Finance has made a serious blunder in bringing this proposal to the Dáil.

I feel sure the Minister realises that now and would not, if he were framing his Budget over again, propose this charge upon the board's revenue. I urge on him that he should consider fully the desirability of withdrawing the proposal now. I think he will add to his personal reputation, if he does so. The effect upon the Budget will be negligible. The Minister is budgeting for £130,000,000 and nobody can believe that he will not be £1,000,000 out one way or the other: no body of men, however clever, could estimate the volume of expenditure or the yield of taxation so accurately that the margin of error would not be at least £1,000,000. Within the limit of £1,000,000 the Budget will balance or fail to balance and the £140,000 the Minister hopes to garner from this charge is of very little importance in relation to the soundness of the Budget as a whole.

The importance of that revenue to the Racing Board is very considerable and the evidence that the Government, having made a blunder, could appreciate that it had done so and rectify it would be encouraging to many sections of the community, many sections which expect the Government to make many more blunders, which, everybody will hope, they will be equally prompt in rectifying when they are pointed out to them. Whether the Minister accepts the proposal I put forward, that he should be content with 25 per cent. of the board's revenue this year, leaving the other 75 per cent. for the discharge of the functions for which they were set up, or would prefer the substitution of some other percentage, I would ask him to agree that his claim upon the board's revenue should be expressed as a percentage of the whole and that he should not just merely state a figure and say: "I will get that, no matter what harm it does, no matter how you have to contract your activities, no matter what percentage of your total revenue it may be and no matter to what extent it may exhaust your revenues and leave you unable to carry on in the future."

On a percentage basis, the board could, perhaps, plan its activities with more accuracy and more efficiency, whereas, on the basis of the Minister's proposal, it will find itself in the position that of all the money it gets in by deductions from totalisator pools, by levies upon bookmakers, or in any other way, it has, first of all, to set aside by far the greater part to hand over to the Exchequer and can only plan its programme for the year on the basis of what it calculates the residue will be after the Minister for Finance has got his whack.

I have some hope that the Minister will recognise that he has made a mistake here. I am quite certain that this levy was his idea. Looking along the Front Bench of the Government, I cannot think of any other member who might have suggested it to him or forced it on him. This was his idea and I am quite certain that, if he decides to drop the idea of the tax, no member of the Government will object and certainly no member of the Party sitting behind him will object, either.

Mr. O'Malley

I should be amazed to think this was the Minister's idea. The Minister comes from County Kildare. All I can say is that, if he intends to go through with this, then the sooner the Abolition of Hanging Bill is brought in, the better it will be for the Minister, because the people of Kildare, and indeed the rest of the country, will not take very kindly to this.

Mr. Sweetman

The people of Kildare will not take very kindly to the Deputy's misrepresentations.

Mr. O'Malley

We are under the impression that the Minister rushed into this, without having given it serious consideration. When one studies the accounts up to 31st March, 1955, as presented by the board, one sees that the revenue from the tote was £190,000. When the overhead and operating expenses were deducted, the balance to the general purposes account was £113,000. There was, therefore, out of the tote account a net figure to the general purposes account of £113,000. Now, from the collection of levies on bookmakers' bets, the total taken in was £134,000. Expenses reduced that sum to a net £125,000. We have two figures: £113,000 from the tote and £125,000 from the levy collection on bookmakers' bets. That gives a total of £238,000. Interest on investments yielded some £9,000 and there was a small balance from the previous year of £4,000. If the Minister insists on a sum of £140,000 being assessed on the board in the present financial year, he must agree that the board will have to cut its expenditure under one or more headings.

What are the main items that will suffer? Outside of office expenses and general expenses, the board last year contributed in stakes alone £105,000. They subsidised, or contributed, in whole or in part, to the carriage of horses to the extent of £37,000. They made grants for the improvement of racecourses and of the totalisator buildings to the extent of £15,000. To the Irish Horse and to the Irish Racing and Breeding publication they contributed over £3,000 which is distributed all over the world as an advertisement and towards throwing a good light on the potentialities of the bloodstock industry. They had a figure of £40,000 in reserve for stakes and for the carriage of horses and after all this expenditure all that was left to carry forward was a little over £12,000.

The Minister has not stated which of these sections is to suffer. Is it to be the contribution towards stakes? We all know that many an owner can ill afford to run a horse without winning at least one stake in a year.

Mr. Sweetman

Did the Deputy not listen to what I said in concluding the debate on the Budget or did he not even take the trouble to read it?

Mr. O'Malley

I read what the Minister said.

Mr. Sweetman

Then do not distort truth.

Mr. O'Malley

I am not attempting to distort truth.

Mr. Sweetman

The board said that this would not affect stakes, the carriage of horses or propaganda and they know more about their business than the Deputy now speaking.

Mr. O'Malley

The Minister has made no statement as to how the revenue is to be obtained. The board has since repudiated his statement and has said that it would not be in the interest of racing to impose any further tax on the revenue from the bookmakers. They have got that out of their heads. Suppose that there is no interference with the contribution towards stakes. That means that that figure of £105,000 stands. Suppose also that the Minister does not touch the grant which is being paid towards the improvement of racecourse buildings. There are contracts being carried out at the present time which will run into the next financial year. That figure of £15,000 seems to be an average figure. If the grants towards the stakes, the carriage of horses, and the publication of the Irish Horse and Irish Racing and Breeding are to be continued, would the Minister tell us where the revenue is to come from? Looking at the matter in the best possible light, if the board will get in this year the £250,000 which it got in last year, and if they are to continue to expend the money as I have stated, and, at the same time, to pay the Revenue Commissioners £140,000, I think it is a physical impossibility for them to do so. They cannot do it unless they dispose of some of their investments.

The tenth report of the board should be out by now, but I find in the ninth report that the gross revenue for 1955 showed a contraction of £10,375.

Mr. Sweetman

Does the Deputy say that the last report was the ninth report?

Mr. O'Malley

It was the tenth report. According to that report, in 1953, the yield in the levy on course bets, the bookmakers' section, to the Racing Board, was £153,000. In 1954, the figure fell to £144,000, a drop of £9,000; and in 1955, the yield fell further to £134,000. From 1953 to 1955, we have a drop of nearly £20,000 in the levy on course bets, one source of revenue to the board. In 1953, the totalisator took in nearly £180,000. In 1954, it took in £195,000 and in 1955, there was very little difference as it took in £195,000 odd.

It was pointed out in the ninth annual report, signed by the chairman, Mr. W.T. Cosgrave, in the fourth paragraph, that racegoers in general are not concerned with gambling as was evidenced by the fact that 80 per cent. of the tickets on the totalisator are purchased in 2/- and 4/- units. The marked proportion of the purchases of tickets is on the minimum unit. It is quite obvious, and the Minister will agree, that there is a move on to squeeze out the small man from race meetings in this country. Some weeks ago, the Minister gleefully announced that the figures for the Gowran Park meeting had increased. Gowran is not characteristic of the other race meetings as it was one that was started comparatively recently, or one that has been revived recently. In the past number of months, the only meeting which has shown increase in receipts was a recent Curragh meeting, which could be regarded as exceptional, owing to the fact that it might be looked on as a try-out for the Derby. The day after the Minister brought in his Budget was a fine day and there was no apparent reason why the attendance at the Curragh should have dropped to the fantastic figure which it did.

Mr. Sweetman

Did you look at the card?

Mr. O'Malley

Yes. I studied the card.

Mr. Sweetman

It was a rotten one.

Mr. O'Malley

The figures were down by thousands of pounds. The fact is that the punters said to themselves that there was obviously no point in considering going racing under the present Minister. In the first place, it cost them more money to get there owing to the increased tax on petrol. The punter was paying extra to get to the course and then was getting very little yield from any bets he might place. I am trying to bring home to the Minister what the ninth annual report of the Racing Board states— that 80 per cent. of the investments on the totalisator are in 2/- and 4/- units. The Minister is now going the right way to squeeze these small people out. If the Minister studied the reports, he would see that the dividends on which the totalisator is paying off have also dropped considerably. I do not know whether the public is generally aware of the amount which the Racing Board contributes to various racing activities whereby the admission charges are kept down.

It now appears that this is one of the sections, apparently, or one of the headings under which the Racing Board will have no option but to make a change. The expressed wish of the Minister is that the stakes will not be interfered with, but in order to comply with the Minister's request it is quite obvious that the board will have to get its revenue somewhere. It would appear that a reduction in the amount they contribute towards admission charges will have to be made or that the contribution will have to be done away with altogether.

There is another matter to which I would like to refer. The Minister referred to it in a very vague way. Would he state, or could he state, whether it is definite that it is only for this year that the board will have to comply? That would change the complexion of the whole matter. If Deputy Lemass's amendment were carried, it would mean, on the latest available figures, about £65,000. I think that the board could manage to meet that for this year, and they could then postpone any drastic decision, such as cutting the contributions for the carriage of horses, for stakes or for racecourse improvements. If they could not meet it on that occasion, they could realise some of their investments, but that should only be as a last resort. I trust that the Minister will say it is only for this year.

Mr. P.J. Burke

I support the amendment put down by Deputy Lemass. I feel that in introducing this taxation the Minister is taking a retrograde step. It is only a few years ago since a Bill was introduced in this House for the improvement of racing in this country. As has been ably pointed out by the mover of the amendment, this is a completely retrograde step from the national point of view because it interferes with an industry which is merely struggling along and endeavouring to improve from year to year.

We all know the state the racing industry was in before this Bill was introduced. We now have the position that the punter must pay everything. We are told that no matter what extra taxation is put on, it is not going to interfere with racing at all. The Minister is well aware that this increased taxation which has been introduced in the Budget is bound to have a detrimental effect, not alone on the board but on the encouragement of racing generally.

It is a big obligation to put on the "bookies". They have to come along and collect this money. It has been pointed out here that the small man may be squeezed out altogether. I feel that in this instance we could aptly apply the old saying that it is often dangerous to kill the goose that lays the golden eggs. I feel that that is what the Minister is really doing if he insists on having his pound of flesh collected. He is doing great harm to the industry that this House tried to protect some years ago.

Mr. Sweetman

I do not propose in any way to offer any comment on one portion of the remarks of Deputy Lemass except to say that I too regret that the chairman of the Racing Board thought it fit to resign. The service that he has given to that board has been extensive and has been long. It was with great regret that I learned of his decision. The chairman of the board, of course, is appointed as chairman by the board and not by the Government or by any Minister. Deputy Lemass was somewhat incorrect to that extent.

As I understand Deputy Lemass's amendment and the statement he made, his purpose is to make the amount that would be payable fluctuate according to the takings. That was my original proposal, and if I made any blunder then in the eyes of Deputy Lemass, the blunder I made was in acceding to the request of the Racing Board's deputation that came to see me to change the fluctuating basis, which I had originally announced, to the basis of the fixed sum.

So far as the proposal introduced is concerned, Deputy Lemass said I was the sole author of it. I have no desire to shelter from any responsibility. I introduced the Budget; I brought in the provisions of that Budget to this House; and I stand over all of them. I have no desire whatever to avoid any responsibility in that regard. I will say this: that throughout the 12 months preceding the Budget I received many representations from many parts of the country, let alone this House, that I should, in considering the financial proposals that I would bring to it, consider putting horse racing on the same basis as, shall we say, greyhound racing or other entertainments.

Greyhound racing pays entertainments duty. Those who go through the turnstiles to greyhound races pay duty as they pass through. Those who go to horse racing do not pay that entertainment duty; and I freely give this to Deputy Lemass: that I refused to accept those representations that were made to me because I accepted the view—I knew it was always the view of the Racing Board and I agreed it was the correct view—that the better method of dealing with the finances of horse racing was to keep the admission charges down as low as possible and to take what was necessary from the betting, whether it was through the bookmaker or through the totalisator. So far as the totalisators are concerned, I saw figures computed which showed that the additional 5 per cent. would have a very small effect, indeed, on the payment of any dividends, other than the extreme outside price dividends. I do not think there would be any great difficulties amongst punters if the dividend they got on the tote were 21/- instead of 22/-.

Mr. Lemass

That would be a fair price, anyway.

Mr. Sweetman

Most of us, if we won that amount, would be quite satisfied to take the 21/-. On the smaller dividends, there was, in fact, no real difference on a series of figures that were worked out for a specific series of meetings. In France, for example, the tote deduction is 15 per cent. It does not have any effect there and, frankly, I do not think it will have the slightest effect here, notwithstanding the statement of Deputy Lemass.

My original proposal included that additional 5 per cent. for the tote and it also included a further 2½ per cent. for the levy on course bets. The form of the legislation is such that all I could do was indicate to the Racing Board that they could increase the levy on bets laid on the course by that amount, if they so desired. In that respect, it was not for me to fix the percentage they should charge.

I do not agree with the members of the Racing Board that a change in the levy from 2½ per cent. to 5 per cent. would have the disastrous results they suggested. I did not agree that was so before they came to see me and nothing that has been said or that I have heard since would lead me to that belief. In fact, as we all know, when the board was set up initially, the levy was 5 per cent. and it was subsequently reduced to 2½ per cent. The purpose of the manner in which I originally introduced these proposals was to take a fluctuating percentage not from the Racing Board, but admittedly, as Deputy Burke said, from the punters. That is a better method of doing it than doing it by entertainments duty. I think the method I suggested could have operated without detriment to the functions of the Racing Board and without the suggestions that have been made.

The Racing Board came to see me. They said that, rather than leave it on the fluctuation basis I had suggested, they preferred to have the amount set as a fixed sum. It was at their request that I changed the basis from 2½ per cent. levy on course bets and a 5 per cent. levy on the tote to the fixed sum now contained in Section 29. I told them that, so far as I was concerned, once I had accepted their request in that respect, how they made the money available was their business, but that there were three things I wanted to be assured upon and I obtained an assurance from them.

I wanted to be assured that the way in which they would do it would not prejudicially affect the assistance given in the form of State money, because I felt that, without that assistance, that State money, it would not be possible for owners to keep horses in training in the present circumstances. I got that assurance. I told them that, so far as I was concerned, I regarded the assistance given for the carriage of horses to meetings as being essential to ensure an adequacy of runners. Without an adequacy of runners, there would not be the public attraction. It was because of that inadequacy, due to the hard going, that the meeting to which Deputy O'Malley referred was so badly patronised.

The third thing I said I thought was essential for the bloodstock industry was that the board should be enabled to continue its propaganda, publication of the Irish Horse and the Year Book which had an immense effect in making the Irish bloodstock industry known throughout the world, particularly as apart from the British bloodstock industry. I got a specific assurance from the Racing Board in respect of these three items.

Deputy O'Malley referred to the tenth annual report of the board. He omitted, however, to refer to one sentence of it: "Most of the essential schemes for reconditioning and improving racecourse tracks and buildings have now been undertaken." That was in the report for the year ending 31st March, 1955. There was the further task of completion largely carried out last year.

I just want to correct one suggestion made by Deputy Lemass on an earlier stage. He purported to quote an article from the Financial Times and to suggest that the correspondent of the Financial Times had described this proposal as like a factory owner disposing of his tools. The Financial Times correspondent did not so describe this proposal. If the Deputy looks at it, he will see that the Financial Times correspondent was quoting an opinion that was given to him, not his own opinion, and one which he was controverting to some extent.

This is not as it has been construed, perhaps deliberately, by some people, a tax on the bloodstock industry. I want to be perfectly fair. I do not include Deputy Lemass amongst the people who so deliberately construed it, though it was quite clear that he had one purpose in one suggestion. As I said, this has been construed as a tax on the bloodstock industry. There is no justification whatsoever for that construction.

The proposal which I introduced was a tax on less essential expenditure, and if anybody can suggest to me that betting, either through bookmakers or through the tote, cannot fairly be described as less essential expenditure, then he is a better man than I am. It was a tax on the less essential expenditure and not in substitution for the levy that was there already to go to the Racing Board, but one to be superimposed on the ordinary revenue of the Racing Board, so that the Racing Board would have their revenue which they had collected over the years for the purpose of improving the bloodstock industry.

I have not the slightest difficulty in defending the tax on less essential spending of this nature. In the circumstances of our times, it is not a tax on the bloodstock industry. It is not going to affect, according to the assurance given to me by the board, the three vital methods of assistance they have already given and are giving to the bloodstock industry.

Quite frankly, I think the Racing Board have made a mistake in refusing to alter the levy on course bets. However, the Act gives them the power to do so. They requested me to fix that sum, instead of fixing it by a percentage. I think that my way would have been a better way. I am not, I hope, so obstinate that, when people suggest a method to me by which exactly the same revenue will be made available to me, I am not prepared to consider their suggestion. That is what I did in this case and it is on that basis that the section is framed.

Mr. P.J. Burke

The Minister inadvertently made a case himself for a reduction of the tax. He said that at one time it was 5 per cent. Why was it reduced?

Mr. Sweetman

Because the Racing Board were collecting more money than they needed.

Mr. P.J. Burke

The Minister states that, no matter what taxation he will put on the punter, it will not affect the Racing Board. To bring that statement to its logical conclusion, it means that no matter what taxation you put on anything, it will not affect industry, and, in this case, the assumption is that it will not affect the Racing Board at all? Why, then, did we introduce a Bill to try to help one of our national industries? The Minister inadvertently made the best case as to why that tax should not be imposed. Listening to him, one could only come to the one conclusion. He wanted to prove that, if taxation was imposed, nobody would suffer. Of course somebody will suffer. Surely if the punters, the bookmakers and all concerned have to pay more, it follows that the Racing Board will have less money for carrying out the job this House wants them to carry out so far as horse breeding and racing in this country are concerned.

No matter how the Minister may phrase it, I hold, with my colleagues, that any further tampering with this national industry, so far as taxation is concerned, will be detrimental. It is easy enough to talk about non-essential spending. If we were to take that kind of talk literally, if everybody cut down drastically on spending and walked instead of taking the bus or left his car at home and used a bicycle rather than buy petrol and gave up drinking and smoking and all other non-essential spending one could go so far west that he might go east and round about, and maybe north and south. All this non-essential spending can be brought too far. We have heard so much about it recently that it could easily damage the economy of the country, if it were brought too far.

I fear that this is interfering in a detrimental way with our national industry. We introduced a Bill into this House to protect it because we felt it was falling by the wayside. We are concerned with the well-being of all sections of the community. In his reply, the Minister made the very best case for us and the worst case possible for himself.

Mr. Lemass

I think my opposition to this section can best be shown by voting against the section.

An Ceann Comhairle

Therefore, the amendment is withdrawn, as is also amendment No. 14?

Mr. Lemass

Yes.

Amendments Nos. 13 and 14, by leave, withdrawn.

Question—"That Section 29 stand part of the Bill"—put.

The Committee divided: Tá, 62; Níl, 50.

Tá

• Barry, Anthony.
• Barry, Richard.
• Beirne, John.
• Belton, Jack.
• Blowick, Joseph.
• Burke, James J.
• Byrne, Patrick.
• Byrne, Thomas.
• Carew, John.
• Casey, Seán.
• Coburn, George.
• Coogan, Fintan.
• Costello, Declan.
• Costello, John A.
• Crotty, Patrick J.
• Crowe, Patrick.
• Desmond, Daniel.
• Dillon, James M.
• Dockrell, Henry P.
• Donegan, Patrick S.
• Donnellan, Michael.
• Doyle, Peadar S.
• Dunne, Seán.
• Esmonde, Anthony C.
• Fagan, Charles.
• Finlay, Thomas A.
• Flanagan, Oliver J.
• Giles, Patrick.
• Glynn, Brendan M.
• Hughes, Joseph.
• Kenny, Henry.
• Keyes, Michael.
• Kyne, Thomas A.
• Larkin, Denis.
• Larkin, James.
• Leary, Johnny.
• Lindsay, Patrick J.
• Lynch, Thaddeus.
• McAuliffe, Patrick.
• McMenamin, Daniel.
• Manley, Timothy.
• Morrissey, Dan.
• Mulcahy, Richard.
• Murphy, William.
• Norton, William.
• O'Carroll, Maureen.
• O'Connor, Kathleen.
• O'Donnell, Patrick.
• O'Donovan, John.
• O'Hara, Thomas.
• O'Higgins, Michael J.
• O'Higgins, Thomas F.
• O'Sullivan, Denis J.
• Palmer, Patrick W.
• Reynolds, Mary.
• Roddy, Joseph.
• Rooney, Eamonn.
• Sheldon, William A.W.
• Spring, Dan.
• Sweetman, Gerard.
• Tully, James.
• Tully, John.

Níl

• Allen, Denis.
• Bartley, Gerald.
• Beegan, Patrick.
• Blaney, Neil T.
• Boland, Gerald.
• Brady, Seán.
• Brennan, Joseph.
• Brennan, Paudge.
• Breslin, Cormac.
• Briscoe, Robert.
• Burke, Patrick J.
• Butler, Bernard.
• Carter, Frank.
• Childers, Erskine H.
• Colbert, Michael.
• Colley, Harry.
• Collins, James J.
• Crowley, Honor M.
• Cunningham, Liam.
• Davern, Michael J.
• Derrig, Thomas.
• de Valera, Eamon.
• Egan, Kieran P.
• Egan, Nicholas.
• Flynn, John.
• Flynn, Stephen.
• Geoghegan, John.
• Gilbride, Eugene.
• Gogan, Richard.
• Harris, Thomas.
• Hilliard, Michael.
• Kelly, Edward.
• Kenneally, William.
• Kennedy, Michael J.
• Killilea, Mark.
• Lahiffe, Robert.
• Lemass, Seán.
• Lynch, Celia.
• MacCarthy, Seán.
• Maguire, Ben.
• Moher, John W.
• Ó Briain, Donnchadh.
• O'Malley, Donough.
• Ormonde, John.
• Ryan, James.
• Ryan, Mary B.
• Sheridan, Michael.
• Smith, Patrick.
• Traynor, Oscar.
• Walsh, Thomas.

Tellers:—Tá: Deputies P.S. Doyle and Mrs. O'Carroll; Níl: Deputies Ó Briain and Hilliard.

Question declared carried.

Sections 30 and 31 agreed to.

SECTION 32.

Question proposed: "That Section 32 stand part of the Bill."

Mr. Lemass

This is the section which authorises or legalises the raid on the Road Fund which the Minister announced in his Budget statement. It seems to be an extraordinary procedure in present circumstances, when employment is going up, when emigration is increasing, when the number of workers employed on road works and other constructional activities is less by 6,000 than the number employed at this time last year, that the Minister should decide to take from the Road Fund, from the money paid by motor users for road improvements, the amount of £500,000 for Exchequer purposes this year.

The proposal of the Government in that regard is all the more noteworthy by reason of the fact that every member of the Government opposed most vehemently the proposals brought in here in 1953 by the previous Government, to increase the road tax on motor vehicles in order to expand the revenue, so that by reason of that expansion of revenue the volume of road works would be maintained. If there had been no increase in revenue, the rising costs of materials and labour would have involved very considerable contraction of the volume of that work and very considerable diminution in the employment it affords.

There was not a member of the Parties supporting the Government who did not pledge himself most specifically to repeal these additional taxes when they got the opportunity. We know they did not repeal the taxes, and surely it is treating the public who elected them with something more than contempt to deprive them even of the benefits of the revenue to which these higher taxes yield. If the Government think it is possible to maintain the roads of the country, notwithstanding the increasing volume of traffic upon them, with less money the obvious course for them is to reduce the charge upon the owners of motor vehicles which is the source of the Road Fund revenue. There is apparently, judging by some remarks of the Minister, an idea in the mind of the Government that road works expenditure is in some way undesirable and unnecessary.

I expressed the view here on another debate that the trunk roads of the country are, generally speaking, good enough for the traffic which is now passing over them. I said there were exceptions to that general statement, particularly in relation to the trunk roads in the immediate vicinity of Dublin. By and large, however, the expenditure required upon the trunk roads is maintenance expenditure only. There is not a Deputy in this House who does not know that the minor roads of the country are in an appalling state of disrepair. These roads may have been good enough for the farmers living off the main roads at a time when the farmers were using horse traffic entirely.

Nowadays, however, even the farmer has become mechanised. His means of transport now is the motor car, his method of operation is with the tractor rather than the horse. Consequently, there is a growing demand from all the rural areas for some scheme for remaking and maintaining these minor roads. I have personal experience of the bad condition of many of them. I was brought by indignant owners of farms and dwelling-houses to see the type of roads they were required to use.

If the Government thought there was in the Road Fund this year a sum of £500,000 more than is needed for main road maintenance and reconstruction, surely the best use to make of it is to put it to the reconstruction of the minor roads concerning which there is such a tremendous volume of justifiable complaint, if indeed there is this surplus revenue available. The cost of main road maintenance is going up and it is doubtful if the volume of the maintenance work that could be done with this year's Road Fund revenue would be any greater than what could be done with the Road Fund revenue yielded by a lower rate of tax four or five years ago.

If so, it may be that some deterioration in maintenance standards will result. But if the Government think otherwise and believe there is this surplus, there is an obvious place in which to use it—the reconstruction and maintenance of the minor roads. The Road Fund revenue comes entirely from the taxes motor users pay for the maintenance and reconstruction of roads. That being so, that is where it should be used and not raided and absorbed into the Exchequer by a decision of the Minister for Finance. If the Government want to use motor transport as a means of revenue for the Exchequer, I have no doubt the normal procedure should be to operate the petrol tax to that end.

This year, however, not merely has the petrol tax been very substantially increased, not merely is the road tax being maintained at the level that Deputies opposite thought was too high, but the revenue derived from that tax is not being allowed to go into the purpose for which it was intended. This is a completely unjustifiable decision and I do not think there are any Deputies outside those supporting the Government who would stand up and attempt to defend it. I do not know what argument the Minister will put forward in defence of this proposal, but I feel sure those who vote with him will be interested to hear it because they have been racking their minds for some arguments to use in their constituencies in defence of it. They have not found any yet and I doubt if the Minister will. We on this side are completely opposed to the section and will divide the Dáil on it.

Seosamh Ó Cinnéide

Do chuir mé ceist indiu chuig an Aire Rialtais Áitiúil faoi an méid mílte bóthar atá faoi'n dtuaidh, agus tá a fhreagra agam anseo. His reply says that there were 9,648.85 miles of main roads in the country and 39,501.37 miles of county roads. Of the main roads, 8,276.28 are dust-free roads and of the 39,501 miles of county roads, 8,276.28 miles were dust-free, leaving a balance, approximately, of 31,000 miles of county roads to be done. The Party opposite came into my constituency, as they did into every other constituency, and emphasised the necessity of doing the county roads. They got many votes by that device. They referred to the mechanisation of farms and to the fact that most of the farmers living along county roads were using motor vehicles, that motorcycles were coming into use, that those going into industry in towns like Athlone, Clara and elsewhere, needed good roads. They blamed Fianna Fáil for devoting money to main roads and claimed that not only would the inter-Party Government maintain the main roads but that they would increase expenditure on county roads.

In the same table of figures which I received to-day, we got these facts for 1954. There were 217 miles of road made dust free in the year 1954. Last year there were 132 miles of main road made dust free. In the year 1954 there were 891.17 of county road made dust free. In 1955 there were only 825.98 made dust free; and the figures for the year ending 31st March, 1956, are not yet available. Since then wages have gone up and through this Bill the Party opposite who were to make more and more miles of county roads dust free eliminated all possibility of improving the position. We have a duty to our constituents to charge the Government here with a breach of faith on every platform in the country two years ago when they said they had a better programme and one which would give quicker results. At the rate of progress which is indicated by the robbing of the Road Fund by £500,000, this century will go out and the county roads of Ireland will not be done.

If ever there was justification for amortising a fund it would be the Road Fund. As Deputy Lemass has pointed out the roads represent one of the best sources of employment. There is not a rural area where there are no other industries in which the men do not look forward to the road grants and to the employment which it entails. In my constituency, both in the counties of Longford and Westmeath employment on the roads has decreased and when the representatives of the inter-Party groups have been challenged on local boards about this they have stated that it was Government policy to let the men work in Bord na Móna at this period of the year. I can categorically state and prove beyond doubt that people have gone to Bord na Móna for work in County Westmeath and they have been told the employment lists are full and they cannot be given work. Consequently, as compared with this time 12 months, there is a rise in the number of unemployed at the labour exchange. I do not know what will face these men when it comes to the latter part of the year when they look forward to work on the roads. For January, February and March the same amount of money is being allocated as was provided last year but the wages have gone up since last year and we certainly will not be able to do the same amount of work in these counties as we did in the last financial year.

In relation to my own county—and I would point out that the Department of Finance gets a substantial amount of revenue in respect of cars from that county and it is not the biggest county —there are 821.60 miles of country roads and according to this statement, of that 821 miles 95.4 miles are steam-rolled. The extent of road that has been made dust free is 13.10 miles, and at that rate for county roads, when will that 800 miles be done? It will not be done in the foreseeable future. The people who pay tax on their motor cars and go to Mass and meeting every Sunday are entitled to consideration. Whether you are in Connemara, Westmeath or Donegal, motor cars are the main type of transport. The person with the hackney car brings in the older people who pay so much a seat. That is the picture at every country chapel. The people who were looking forward to the yield from the Road Fund being committed to this work on the roads will be gravely disappointed. This is the most serious blow that this Government could give to rural improvement. It is a grave injury to the rural community who, as Deputy Lemass says, are mechanised in farming and in every other way.

We were criticised for our huge expenditure on what were called autobahns. I do not intend to enter upon an argument at this stage of the Bill on that question, but I will say that as an individual I stand by the Department in their policy of constructing good roads. In smaller countries than this I have seen better roads than there are here and if merchandise of every description from our farms is to be conveyed on the roads, the roads would want to be a certain width to ensure safety. As regards the roads leading from Dublin, all of them, with the exception of one or two, are unsafe. Going out from Dublin along the Navan road you have to go into County Meath before you are safe because it winds like a serpent and is too narrow. If we want to be progressive we must construct good roads, roads that can stand up to the amount of traffic put on them.

The main point I stood up to make in this debate is that the Government have broken faith with the people in dealing with this Road Fund. They are not honouring their word and they have gravely disappointed the people. They are creating unemployment in County Westmeath and other counties.

Mr. O'Leary

How many engineers have you sacked?

Mr. Kennedy

The laugh will be on the other side of Deputy O'Leary's face when he goes back to Wexford and next January tries to explain the position in regard to the Road Fund which has been created by the present Government.

Mr. Cunningham

The pilfering of £500,000 from the Road Fund can mean only one or other of two things. It can mean that the present Government are satisfied with the rate of progress that can be carried out by spending £500,000 less on our main, county and other types of roads or that the present Government, due to their blundering of one kind and another, have decided that the financial position is such that they are prepared to let the roads of this country go hang.

If the former is the consideration which has given rise to this raiding of the Road Fund, I should like to point out a few facts to the Minister and to the Government. First of all, there is the question of roads leading into food producing and fuel producing areas. The Government know, the people of the country know, everybody knows that this country is facing a fuel crisis of the first magnitude. Month after month there are steep increases in the price of imported fuel coupled with a steady decrease in the quality of that fuel. Any Government that would look ahead even for a couple of years would see that a fuel crisis is developing. If the Government did look ahead and saw that such a crisis was developing at a very rapid rate, instead of pilfering £500,000 from the Road Fund, they should make that sum available for the reconstruction of existing bog roads. They should go further and make some of that £500,000 available for the construction of new roads into virgin bogs to enable those bogs to be opened, developed and to become a source of production for the nation.

An Leas-Cheann Comhairle

The question of bog roads does not arise on the section.

Mr. Cunningham

The question of £500,000 does arise.

An Leas-Cheann Comhairle

Yes, and the Deputy is entitled to refer to that, but not in the details into which he is going as far as roads are concerned.

Mr. Coogan

He is bogging a bit.

Mr. Cunningham

Somebody will be bogging and it is not anyone on this side of the House.

Mr. Hilliard

The men who will be looking for work from the county councils will be bogging.

Mr. Cunningham

There are many men at the moment bogging in unemployment.

Mr. Hilliard

Exactly.

Mr. Cunningham

They could be employed usefully and the £500,000 could be expended very usefully to take these men off the unemployed register and put them into useful work of the type I have mentioned, work which would provide employment and which would produce wealth for the country and which would also prevent the fuel crisis to which I have referred. It would also have the effect of preventing the Minister coming in next year, as he did last year, with import levies, purchase taxes and so on. There would be a healthier position in regard to our balance of payments if there were a reduction in the importation of fuel of a type that has deteriorated to the extent that hardly justifies the cost of transport.

An Leas-Cheann Comhairle

There is nothing in this section about imported fuel.

Mr. Cunningham

My second point is that more money should be expended on the development of roads leading into food producing areas. As the other two speakers have mentioned, farmers who have changed over to modern transport and modern methods of farming find that they cannot make-do with the roads which were in existence years ago and upon which very little, and in some cases nothing at all, has been expended in the interim. Over the past 12 months, the public mind was being conditioned for such a move as has taken place. There was a great deal of talk about the construction of autobahns and it was made clear that autobahns would not be constructed. The main roads will suffer. Even with the £500,000 the same amount of work as was carried out last year could not be carried out this year because of increases in the price of road materials, the cost of labour and so on. Admittedly, the Road Fund is greater this year than it was last year. Notwithstanding that, even if the Road Fund had not been raided to the extent of £500,000, the amount of road construction and reconstruction that would be possible would not be greater than last year. As a matter of fact, it would be less. How much less will it be when the figure is reduced by £500,000?

I can assure the Minister that there are many useful roads leading into fuel producing areas and food producing areas that require a great deal of expenditure. If this raiding of the Road Fund is to become a practice and if £500,000 or a greater sum is taken out of the Road Fund next year, we can only conclude that the second alternative that I mentioned in opening is the policy of the Government, that is, to let the roads, county roads, roads into food producing areas and roads into fuel producing areas, go hang.

Mr. Childers

Other Deputies are dealing with this question from the standpoint of the employment content. I should like to say a few words about this question in relation to the problem which the Minister is facing of finding it difficult to raise capital for projects of State. I believe that for a great number of years we have had an entirely escapist attitude towards the whole problem of communications in this country. I do not think that any Government has ever investigated fully facilitating communications, reducing the time spent by the whole community in getting from one place to another and transporting goods from one place to another and I do not believe that the present Minister for Local Government has worried his head about consulting some of the very valuable sources of information in the Federation of Road Research Laboratories in Great Britain in regard to the wear and tear resulting from poor communications.

I remember reading some information, that is accepted by most road authorities as accurate, about what happens when in a period of increasing transportation the amount spent on main, or any other class of roads, is reduced. The Minister wants to avoid imports; he wants to avoid capital expenditure on non-essentials. I would not be in the least surprised if the cut of £500,000 in the Road Fund did not have a net adverse effect from the standpoint of imports and the standpoint of unnecessary replacement of capital assets in the form of transport and from the standpoint of the cost of producing food for export in this country.

I cannot remember all of these figures but I remember a very interesting memorandum presented by the Federation of Road Research Laboratories some years ago.

It was clearly demonstrated that to reduce expenditure on road maintenance and improvement, when traffic was increasing, would result in a net increase in capital expenditure for the replacement of vehicles and a net increase in maintenance expenditure. It is more than likely that the Minister will not succeed in reducing capital commitments for less essential purposes and non-productive purposes.

I am well aware of what has already been said about the effect of poor communications on agricultural production. We suggested to the Minister for Local Government that he should make a survey of the whole country in respect of non-public roads. We pointed out that there were some 50,000 miles of public roads and an estimate of between 15,000 and 20,000 miles of private roads.

This is a matter about which there is far too little discussion in this House. The entire social structure of the countryside is changing, due to the poor character of non-public roads. There is a reduction in the sale value of tens of thousands of farms at the end of boreens, because of the inability to till or cultivate the land. There are thousands of acres of land upon which no limestone can be applied, because of the poor approach down the boreens. Yet there has been no genuine study of the problem and no Government since the war has yet attempted to find the net beneficial result from seeing what could be done to bring up to date these non-public roads and trying to make it possible to carry out modern agricultural processes at the end of these roads, instead of the position, as it is to-day, of cultivation beginning to decrease at the end of these boreens.

I am well aware that funds are spent every year—funds initiated by the Fianna Fáil Government—some based on unemployment in the area and some of them contributory grants towards the repair of these roads. The problem has never been properly tackled, has never been properly examined and has never even been, in the surveys, so far as I know, of a number of counties by the Minister for Local Government, so that the whole problem could be examined with the object of seeing whether capital expenditure on road improvement would be genuinely beneficial to agricultural production and not related to giving employment, but related definitely to quick transportation of agricultural produce and increasing agricultural production.

There are two aspects to this matter, one related to employment and the other related absolutely to the pure question of agricultural production. It, I admit, is quite an elaborate and technical study and there are a great many papers which, for the ordinary person like myself, it is quite impossible to understand. They involve technicalities as to the relationship of wear and tear of vehicles, usage of vehicles and the type which will pass along various roads and the expenditure on them. But work of this kind has been done. There are estimates which can be made; they have never been made in this country.

Here we have £500,000 in the Road Fund and yet we know that the social structure, the pattern of farm life, is changing very rapidly in many areas as a result of the fact that the improvements in roads are not related to the improvement in general living standards and the number of tractors and mechanical appliances now passing along the roads.

I think it is a serious problem and I am putting it up to the Minister to consider in that light whether a transfer of capital such as this from one purpose to another is of genuine advantage to the country.

Mr. Allen

The proposal of the Minister for Finance to raid the Road Fund by £500,000 is, to say the least of it, very bad news for rural communities and local authorities all over the country. We well remember only a few short years ago when the previous Minister for Local Government, in the Fianna Fáil Government, brought in a proposal to increase the Road Fund with the definite object of providing funds to enable local authorities to improve their road services all over the country and to give more rural employment. We also remember that the then Opposition, and the Leader of the Opposition, asked for a specific promise from the then Minister for Local Government, Deputy Smith, that the full revenue from the increased Road Fund would be spent on roads.

He gave the assurance, as long as he was Minister and as long as Fianna Fáil were in office, that no portion of that fund would be used for anything but the improvement of roads and that it would be all allocated to local authorities for that purpose.

We are all aware that there are tens of thousands of miles of roadways used by ratepayers and taxpayers which are impassable. Instead of robbing the fund most rural Deputies on all sides of the House will agree that the time is opportune for some additional capital to be provided from the Exchequer towards helping local authorities to bring up their roads to a decent standard.

Deputy Childers has adverted to the non-public roads. There are thousands of miles of them and tens of thousands of our best citizens living on impassable boreens. Local authorities have never a hope of directly taxing land and the primary production of the country to bring those boreens up to any kind of decent standard. No wonder we have the flight from the land and a reduction in rural population because the man at the end of a boreen is not satisfied to try to exist by the use of the spade and the "loy" as did his great-grandfather. He is entitled to modern implements just as the man living on a main road is. No case has been made for this.

We have not heard a single voice from behind the Government or the Minister justifying the proposed act of raiding the fund to the extent of £500,000. The Labour Party are completely silent. They are dumb whether of malice or otherwise.

Mr. O'Leary

You were dumb when we were striking the rates in the county council.

Mr. Allen

They are dumb probably of malice. Do the Government realise that there is a larger number of rural unemployed to-day than for the past 30 years? This £500,000 would have been very valuable and would have given a full year's work to 2,000 men.

Mr. O'Leary

Where has it gone to?

Mr. Allen

We do not know. We do not know where it will go, but we have a suspicion. All the funds that were available to the Minister for Finance and to the Coalition Government have all been dissipated and squandered because of their policy during the past few years.

Mr. O'Leary

Keep shouting that.

Mr. Allen

I want to know will this £500,000 give a full year's employment to 2,000 men? How will it be spent? It is a matter for the Government.

Mr. O'Leary

For the county council, too.

Mr. Allen

The county council will not handle one shilling of it, and well the Deputy knows that. Deputies of the Labour Party know quite well that there is increased rural unemployment.

Mr. O'Leary

That is what the Deputy wants. The Deputy is letting them be sacked in the Wexford County Council at the moment.

An Leas-Cheann Comhairle

Order!

Mr. Allen

Deputy O'Leary is a member of the Wexford County Council and of this Coalition Government.

Mr. O'Leary

Deputy Allen voted with Fine Gael against the Labour Party.

An Leas-Cheann Comhairle

Deputy Allen on the section.

Mr. Allen

I assure Deputy O'Leary I never got a chance of voting with anybody. The Coalition Government have a policy in operation now under which they are closing down quarries and letting off road men all over the place.

Mr. O'Leary

Deputy Allen is telling them to do that.

Mr. Allen

That is the policy that is in operation. Surely they do not take any notice of what I tell them. Indeed, if they did, we would not have unfortunate labourers travelling the roads to-day.

An Leas-Cheann Comhairle

We are not discussing the policy of Wexford County Council.

Mr. Allen

The results that will flow from the policy in operation will not be out of order, I respectfully suggest. If Deputies of the Labour Party get up here and defend the Minister for Finance in this Coalition Government in relation to his policy of robbing the Road Fund and thereby preventing 2,000 agricultural labourers getting a year's employment, we will be delighted to hear them explain that policy to the satisfaction of this House. I, for one, will give way to any member of the Labour Party who wants to explain that now.

Mr. O'Leary

The Deputy cut down the loan in Wexford County Council himself.

An Leas-Cheann Comhairle

Order!

Mr. Allen

This is bad news for the rural workers. I am sure, however, that each and every member of the Labour Party here will trot into the Division Lobby behind the Minister for Finance to support him in his policy of robbing the Road Fund and depriving 2,000 labourers of a full year's employment. I am sure Deputy O'Leary will tour the crossroads in Wexford and explain that in full, and a lot of other things too, perhaps, that need to be explained as well.

Mr. O'Leary

I have always voted for an increase in wages, anyhow. I did not vote against it like the Deputy did.

An Leas-Cheann Comhairle

Deputy O'Leary must cease interrupting and allow Deputy Allen to make his speech.

Mr. Allen

His stock-in-trade is that he voted for an increase in wages. When the Minister comes to rob the Road Fund and deprive these men of full-time employment on road works, Deputy O'Leary plays another tune. The Minister, in his statement, so far as he explained the position at all, said that he proposes to use this money for capital development. God bless the mark! We have travelled a long way in a few years. The Minister for Finance in the last Coalition Government was always very optimistic in his announcements. He came in here in the last Coalition Government and explained about the two Budgets —the capital Budget and the ordinary day-to-day expenditure Budget, the under-and over-the-line-Budget. We remember the Taoiseach, Deputy Costello, sitting over there, thumping the desk in front of him and saying that this was the type of Budget that should have been in operation for many years. It was the Coalition's idea, conceived by the brilliant Minister for Finance at that time—a two-way Budget, an under-and over-the-line-Budget. Then we heard about the capital investment and the repatriation of external assets.

An Leas-Cheann Comhairle

The question of external assets does not arise on this section. The Deputy cannot relate everything to this section.

Mr. Allen

There would be no need to rob the Road Fund of £500,000 or something else of £5,000 if any of the £225,000,000 of external assets that were to be repatriated had been re-repatriated. But they were not repatriated and invested in order to improve the resources of the country and get greater output. That was the boast of the present Taoiseach and the present Attorney-General, Deputy McGilligan. They were to do everything under the two-way Budget, the under- and over-the-line Budget. And now the Minister for Finance has to raid the Road Fund in order, I suppose, to secure more credit. That is all he can do. I think the Deputies sitting behind him, particularly the Deputies of the Labour Party, should give us some reason for this procedure.

The fact that the Road Fund has increased since 1953 as a result of Deputy Smith's proposals is no justification for robbing it to-day. Those proposals at the time were opposed by the then Opposition, tooth and nail. The Government had only a slender majority in this House and organised groups were set up to try to bring the Government down and wean the slender support they had from them. The galleries of Leinster House, Leinster lawn and Kildare Street were filled with taxi-men from all over the country who, it was alleged, would find themselves on the bread-line as a result of Deputy Smith's proposals. We all remember that. It happened only three or four years ago. But there is not even a salt tear being shed now by Deputy O'Leary and his colleagues.

Mr. O'Leary

Deputy Allen is doing all the crying.

Mr. Allen

The price of their petrol has increased. Prices of motor car accessories have gone up. The road tax has gone up. Nevertheless that increased taxation will not go towards improving road surfaces to save tyres and springs. Some consideration should be shown to the people. We were wrong three years ago, according to the then Opposition, when we proposed to increase the tax on the huge lorries drawing petrol and oil. Some of them are to-day paying not £40 but £400, and the Minister has the advantage of that increase. There has been no suggestion that taxation in that regard will be reduced although that was one of the promises made by the present Government two years ago. I am sure they got many votes on that promise alone, that Road Fund taxation would be brought back to the level at which it was under the previous Coalition. That was another of the promises made. I am sure Deputy O'Leary promised the people many a time at the crossroads in County Wexford that, if he had any say in government, he would use his influence to reduce the road tax. The road tax has brought in another £4,000,000 or £5,000,000. There has been a considerable increase in the number of vehicles using the roads and a considerable increase in tax.

In all fairness, the Minister should have continued the policy of the predecessor to the Minister for Local Government and made that money available to the county councils and local authorities all over the country. No matter how much we can raise from the ratepayers, it will be another hundred years, at least, before all the roads in this country are brought up to a decent standard. Many millions of pounds must be spent before that is done. The Minister ought to be quite satisfied with what he is getting from the vehicle duties and the petrol duties. It is held by very many people that the petrol duties should be spent on improving the roads and in thus giving much needed rural employment. The big proportion of money spent on road making is spent on the labour content of making a road. Most of the raw materials are cheap and that type of work has a large labour content.

If something is not done, we will find ourselves without any rural employment at all taking into account the increased wages. I do not know how the Minister is going to justify the provision of sums from another fund—I forget the name of it—next winter. The usual amount is £1,500,000.

Mr. O'Donovan

The Father Christmas fund.

Mr. Allen

It is money usually spent to supplement the Road Fund. Will that £1,500,000 be continued this year?

Mr. Coogan

Spend it on the bogs.

Mr. Allen

The Deputy comes from the bogs and I hope he will get the bog roads in Connemara improved. Any amount of money could be spent on them.

Mr. Coogan

There was not much spent in your time.

Mr. Allen

I should like the Minister to tell the country and the local authorities whether they are to get a grant from the National Development Fund in the coming winter to continue employment in the slack period of the year. I think he has already announced that they will not. That means that, in addition to this £500,000, there will be £1,500,000 less for road employment in the coming year, and the last three months of this financial year will be lean ones for the local authorities. Usually all the money is spent by October or November, and if we are to have a further cut under this benevolent Government, things will be very blue, indeed.

I am sure that we will hear the Labour Party defending this before the debate is over and that they will justify the robbing of that fund and the taking of it over so that the Minister for Finance can spend it on goodness knows what.

Mr. O'Donovan

The Party opposite has played a number of different tunes on this subject, but one tune is running all through their speeches, that is, with regard to the extent of rural employment arising out of the proposal of the Minister for Finance to take £500,000 out of the Road Fund this year. Deputy Allen opened his speech by stating that there was now a larger amount of rural unemployment than there has been for the past 30 years. Every Deputy got, in his usual post this morning, a statement showing the number of unemployed.

Mr. Hilliard

What about emigration?

Mr. O'Donovan

Employment means employment here in this country.

Mr. P.J. Burke

What about the 200,000 who left the country since 1950?

Mr. O'Donovan

Since 1951. I am afraid it would be irrelevant to discuss that subject. To get back to the figures—the number of people unemployed in relation to road work at the moment is 200 less than it was this time 12 months ago and it is 1,500 less than it was a couple of months ago. Deputies opposite can have it any way they like but they cannot have it both ways.

Mr. Blaney

There has been a drop of 8,000 in two years.

Mr. O'Donovan

It has been suggested that everybody is trying to defend this. It does not require any defence. It is right to secure that the burden of taxation should be borne equally throughout the community. This represents 10 per cent. of the old Road Fund. It is £500,000 out of £5,500,000. The case was made by Deputy Lemass that the trunk roads are good enough. That is a discovery made by Fianna Fáil Deputies since they went to that side of the House. We have been preaching that for years. There is no doubt about it.

On the other hand, Deputy Lemass said that the minor roads are in an appalling state. They are not too good, to put it bluntly. Which Government did anything in relation to these roads? In the present year, more money will be spent on the county roads than on the main roads.

Mr. MacCarthy

And the rates are going to pay for it.

Mr. O'Donovan

Last year, the Minister for Local Government transferred £500,000 from the main roads to the county roads and this year a further £250,000 is being transferred. That is £750,000 more spent on the county roads when the Party opposite was in office.

Mr. MacCarthy

The main roads are done.

Mr. O'Donovan

Of course the main roads are done. Deputy Lemass said that the trunk roads are good enough. The trunk roads and the main roads are the same. There are no such separate categories as main roads and trunk roads. I recollect a proposal, when the other Party was in office, to spend £1,500,000 on the road from Newlands Cross to Naas—15 miles of road at £100,000 a mile. The county roads cost about £15,000 a mile and for that sum of £1,500,000 1,000 miles of county roads could be done. A large part of that sum was spent before the present Government came into office and there were various other schemes, some of which had to be finished.

Deputy Kennedy spoke of the number of miles of county roads done in County Westmeath, one of the worst counties in the country. The Midland counties are the counties in which the county roads were worst.

Mr. Blaney

It is daft.

Mr. O'Donovan

It is a matter of opinion. The Deputy is quite as entitled to his opinion as anybody else.

An Leas-Cheann Comhairle

Deputy Blaney and other Deputies will get an opportunity of making a statement later, they should not interrupt the Parliamentary Secretary.

Mr. O'Donovan

Nine hundred miles roughly in 1954; 825 miles in 1955. He said that is a decrease. He did not give us the figures for 1953. There is a good reason why he did not give us the figures. The figure for 1954 is 891 miles, and in 1955, 825 miles—much the same amount of road—but I take it in 1953 it was something like 600 or 650 miles. There is no use in the Party opposite maintaining that the only method of providing rural employment in this country is on the roads. There are other methods of providing rural employment in this country than on the roads. If there are not, both sides of the House might as well pack up and go home——

Mr. Killilea

That is information for the Labour Party now.

Mr. O'Donovan

There is a considerable tax on petrol. But I see no reason why the person who has a car and who uses comparatively little petrol should not also make some contribution to the Road Fund.

Mr. P.J. Burke

And should have a good road, too.

Mr. O'Donovan

I do not see why some part of it should not be taken over for the purpose of central Government expenditure. I think it is an easy way, particularly at a time when the amount of money going into the Road Fund has gone up considerably in recent years.

Mr. MacCarthy

And 5d. on the gallon of petrol as well. You want it both ways.

Mr. O'Donovan

The Deputy for South Cork is entitled to his opinion just as well as anybody else. I am inclined to think that this method of getting revenue to the tune of £500,000 is a method that will not be felt unduly by anybody. It certainly is a much better method than some of the methods adopted by the Party opposite in the past.

Deputy Childers talked about the process of farming at the ends of boreens, the quick transportation of agricultural produce and used a large number of other expressions of that sort. This Government took the first step when they transferred funds from the main roads to the county roads. Then the Party opposite came along and thought it a bright idea to go one further and to talk about the boreens——

Mr. Blaney

That was the second step.

Mr. O'Donovan

I agree with Deputy Lemass that, on the whole, the main roads in this country are in fairly good order. Personally, I would suggest that the Minister for Local Government would transfer more of the funds according as the main road schemes are completed. I see no reason for these big schemes, which are costing immense sums of money and are taking in agricultural land. I would far rather see the county roads—the roads you meet when you come off the main roads—put into a proper state of repair. That is being progressively done and I hope it will continue to be done to a greater extent by the Minister for Local Government.

Mr. Beegan

I suppose it was natural to expect that the first member of the Coalition jazz-band to respond to the baton of the bandmaster would be the drummer-boy— the Parliamentary Secretary to the Government—who——

An Leas-Cheann Comhairle

The Parliamentary Secretary should not be referred to as a "drummer-boy".

Mr. Beegan

I withdraw. He is defending the action of the Minister for Finance in taking £500,000 from the Road Fund. I was very interested listening to the Minister for Finance making his statement on the Budget, and on the Resolutions that followed his Budget statement, concerning the precarious position of the country. I thought it was an advance warning of the bad state in which we might find ourselves and that perhaps the present position was really not as bad as that altogether, but when I found that £500,000 was being taken from the Road Fund and that that was permitted by the Minister for Local Government, I came to the conclusion—as thousands of people in this country have come to the conclusion—that this country is apt to find itself in bankruptcy.

I could not understand why the Minister for Local Government, who comes from the congested areas of Donegal, should permit £500,000 to be taken away, thus creating unemployment and fostering emigration in a county which, according to the recent census, was the highest on the graph as far as emigration figures are concerned. It is all very well to smile and to have jokes about this, but after all it is not an insignificant matter to keep 2,000 people in employment for 52 weeks of the year at the modest sum of £5 per week. Yet that is the position.

What is to happen now? After all, if you are to throw a further 2,000 people on the unemployment register, what alternative employment is to be offered to them? Where are they to be absorbed? What about the small uneconomic holders and the people in the congested areas and the Gaeltacht districts to whom so much lip sympathy has been paid and to help whom a new Ministry has been created? Is this the first instalment of the manner in which they are to be helped—by putting at least 1,000 of them on the unemployment register and taking the work away from them?

It is all very well to talk of £500,000. What about the National Development Fund, a considerable slice of which was made available to local authorities for expending on the improvement of roads? It is immaterial——

An Leas-Cheann Comhairle

The question of the National Development Fund does not arise on this section.

Mr. Beegan

It relates to roads, A Leas-Cheann Comhairle.

An Leas-Cheann Comhairle

It may not be debated on this section.

Mr. Beegan

I do not wish to debate it on this section, and I will accept your ruling. Nevertheless, £500,000 is being taken away, and it is immaterial to the person depending on employment on the roads, and for whom this £500,000 has been provided, whether we spend five minutes or five hours debating whether it is on the main roads or county roads or cul-de-sac roads that the money is to be expended. All they are anxious to secure is the employment to enable themselves and their families to live in very frugal comfort indeed.

It is all right to say that the main roads are good enough. The main roads are pretty good, and no one need be thanked for having brought them to the standard to which they have been brought save Fianna Fáil. But when we see this year the amount of traffic being diverted from the railways to the main roads, when we see the huge amount of traffic on them and when we also realise the number of accidents occurring, I do not think there was anything wrong in improving the main roads in this country.

Progress reported; Committee to sit again.

The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 20th June, 1956.