Dáil Éireann debate -
Thursday, 26 Jul 1956

Vol. 159 No. 11

Imposition of Duties (Confirmation of Order) No. 2 Bill, 1956—Second and Subsequent Stages (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Desmond

I was trying to draw attention to one point. We all realise the importance of agriculture in relation to the problems that exist at the present time. Referring, therefore, to the points mentioned by the Minister in his statement yesterday, in relation to a 10 per cent. increase in output, the question arises: from whom is the 10 per cent. expected? First of all, is it expected from the agricultural workers? Already we know from the questions answered in this House that, even in the last 12 months, the number of agricultural workers employed in the Twenty-Six Counties has decreased. We understand, of course, full well that they have been replaced to a large extent by machinery. Therefore, I believe that the agricultural workers must be excluded from this request for 10 per cent., and if there is to be a 10 per cent. increase in agriculture, it must be brought about by the farmer through the utilisation of the machinery that he now has.

To a certain degree, that machinery —and we all agree with it—has been one of the factors in showing increased imports over the last couple of years. We understand that and we appreciate the importance of agricultural machinery in relation to agriculture. Therefore, that 10 per cent. increase in relation to agriculture at least must be pinned to those responsible in that respect.

Then what of the industrial workers? Does the Minister expect a 10 per cent. increase from them? Statistics will guide us, irrespective of the fact that Deputy de Valera this morning pooh-poohed the advantages of statistics, because apparently they did not suit him. It has been proved from statistical returns that industrial output in relation to manpower, in relation to workers in industry, since the end of the war period, since 1949, has greatly increased. Therefore, if we have these problems at the present time in relation to the financial deficit that shows itself very much, I maintain that the industrial workers are not at fault.

Then the question arises: what of the industrialists themselves? That is a matter we do not know of, whether the industrialists, as employers, are in a position to show greater output by improving their manufacturing methods in their factories and workshops. That is a matter for them. It is not a matter for me to complain about, because I am not in a position to say whether there is room for such improvement. If there is room for that 10 per cent. improvement in relation to the industrialist group, then that matter will be tackled.

There is another section, and I wonder did the Minister include them in expecting a 10 per cent increase—or should it be a decrease, perhaps? It all depends on the way we approach this point. I refer to the commercial banks. If we want a 10 per cent. increase in production—which, as we know, is so vitally important—we cannot forget the fact that the commercial banks are expected to play their part. Notwithstanding the statement so often made by many people, that, even in the past 12 months, the advances given by the banks were enormous, nevertheless there are certain views held in relation to the banking position, in relation to the deficit, and I think it is well the Minister should let us know where we stand.

He stated yesterday evening here that banks lost last year, through our adverse trade balance, £50,000,000 of their own reserves, or roughly two-thirds. Of course, we cannot forget that many of those banks have their headquarters in Britain and if they lose on one side, if they lose in a branch office as it were, I wonder how they stand in relation to their business on the other side. That is of doubtful quality— doubtful as far as we are concerned.

The Minister also stated—and he got the wholehearted support of Deputy de Valera at the time—that in case any of us may be mentioning this terrible suggestion of ours, he wants to have us understand that most or all of this money invested abroad is the property of individuals and therefore it would be heinous on our part to make any suggestions which would interfere with the rights of individuals. We have no intention of doing that.

I should like to ask a question in relation to our adverse trade balance. What are the rates allowed by the banks on deposits, what are the rates charged by the banks in respect of overdrafts and loans? What amount of the balance becomes the property of the banks and how much of that money is invested abroad? It is fantastic to tell us that that money is sacred inasmuch as it is the property of individuals. We know that there is a percentage of it that is the property of individuals. The Minister would not be in a position to give us the figures. It is no use to say that practically every penny of it is the property of individuals. We know that it is not. It is essential to draw attention to these few points so that the commercial banks may realise their responsibility to the State and their position in relation to our overall economy.

The Minister referred to the issue of a Government loan of £20,000,000. Deputy Corry, in particular, and Deputy Aiken drew attention to the fact that in respect of the last Government loan only £8,000,000 was subscribed by the public and that the rest had to be underwritten by the banks and by the Government. The Minister made it quite clear that it is intended at the most opportune moment to float a loan and that he is anxious, as we all are, that the general investing public will subscribe to the utmost to that loan rather than that we should depend on the banks or the State.

Again it is essential to draw attention to one point omitted by the Minister. Last year the banks did act as underwriters and helped to close the gap. But, for every penny that the banks invested they received interest at the same rate as that received by the private investor. They are not acting for the love of this country. They are getting the last penny out of their investment and are doing very well by it. In relation to the total amount of money invested by the various banking concerns in these loans, the banks are getting the same return for their money as the private individual who may be in a position to invest only a few hundred pounds.

I should like to say that we agree with the Minister in regard to the desirability of inaugurating a savings campaign but, again, I should like to know what is the intention in that direction. Will it be a case of advising the people to save and leaving it to themselves to invest through the banks or will they be advised as far as possible to channel their savings through State organisations? If they invest in the commercial banks they will get one per cent. or 1½ per cent. and there is no guarantee that portion of that money will not be reinvested in foreign securities whereas, people should understand that for every penny they invest in the Post Office Savings Bank or other State organisations, much more benefit accrues to them and to the State.

I know, of course, that that may not fit in with some people's ideas. It certainly does not fit in with the ideas of some people outside this House. We are told that it is dangerous and we are told by supporters of certain Deputies down the country that every time we draw attention to such a matter we are trying to rob the poor old farmer, as Deputy Corry would describe him, of every pound he has in the bank. It has been suggested that my drawing attention to this problem means that we are going to do something that will be disastrous for the country.

The Fianna Fáil Party and the Government fail to understand that while a large part of the financial problems confronting us arise in some respects from conditions outside this country, they are also caused by the problems in relation to the financial provisions of this State. The Minister did not tell us, in relation to the adverse balance and in relation to the problems confronting local authorities, that quite a large slice of our debts are debts that must be paid by us under our present system to the commercial banks in respect of the provision of money for housing, sewerage, water supplies or other important measures, national or local, that it is essential to carry out.

We of the Labour Party want to make it clear that we give full credit to this Government for trying to curb expenditure on commodities that people can do without, and we give credit to the Government in spite of the fact that the Leader of the Opposition wants to make it clear that nobody on this side of the House is honest. It is well that this House and the people outside it should understand that in the measures taken last March and at the present time this Government did not find it suitable to slash the food subsidies as the Opposition did when they were in Government.

I believe, and we of the Labour Party believe, that the Government in extending the items affected by the levies, have acted wisely and sensibly. We do not believe and never have believed that there was any need for panic, as some people outside and some people inside this House would suggest.

Deputy de Valera drew attention yesterday evening to the choice that there was many years ago. He referred to the question of labourers' cottages. Many of us know a great deal, thanks be to God, about the inside of a labourer's cottage. We know what our people are prepared to do. It is time that people who indulge in wishful thinking realised that unless sacrifices are evenly distributed the people within the four walls of the cottages will have every reason to complain as well. At least, it must be said in favour of the Government that the fact that they have not interfered with food subsidies has helped the occupants of these cottages. It is encouraging to these people to know that the Government is acting realistically in trying to solve the financial problems without interfering with their normal life.

As I tried to explain last March, in the debate on the levies that were then introduced, it is not sufficient to hope for an even balancing of our accounts at the end of the year as a result of the imposition of these levies. If we just wait and hope, another expedient will have to be adopted for the ensuing 12 months.

The Minister for Agriculture was fair in sizing up the policy of his Department in relation to agriculture. However, unless and until the majority of our agriculturists realise that it would be far more beneficial financially to them to be better agriculturists and to be more interested in agriculture and less interested in politics and unless they are prepared to divorce themselves from the coat tails of any political Party and, through their organisations, to co-operate with the Government or the Department of Agriculture in relation to the problems affecting their industry, they will not flourish as they should. However, if they are prepared to co-operate, they will have our support.

On the other hand, no matter what Deputy Corry may mention in relation to the impositions to which he has tried to draw attention here of a couple of hundred thousand pounds one way or another in relation to sugar and other items making up the agricultural problems, we are entitled to say that we in the inter-Party Government agreed unanimously to give effect to our desire for the provision of millions of pounds of money to improve agriculture. All Parties comprising this inter-Party Government were unanimous in believing that it was essential to provide money for land reclamation.

I am not taking credit from Fianna Fáil that when they were in Government they were anxious to provide money for agriculture because each Government did its utmost for agriculture within the ambit of its political programme. However, at this stage, it would be far better for us to be honest with the agriculturists and to say: "We are doing our part. The people are doing their part by indirectly having to pay back the money that has been borrowed for the improvement of the agricultural industry. That being so, will agriculture face its problems and its responsibility by co-operating with whatever Government is in power and, if possible, by producing the 10 per cent. extra the Minister has mentioned?" If that can be done and if less politics are brought into agriculture, then, please God, whatever Government may be in office will not in future be faced with this problem of imposing levies or reducing imports in order to balance an economy which, in itself, shows cracks year after year in this country of ours.

Mr. Moran

The Minister's statement yesterday on what has been described as his third Budget has come as a shock to the country. It has come as a shock not so much for what is in it as the signs of its futility to deal with the problems with which we are faced.

In addition, it has come as a shock because it has come too late. Listening to the Minister's statement and thinking over what he hopes to get from these yields—a paltry £5,000,000 adjustment in the adverse trade balance and some £3,000,000 in taxation—everybody realises that this will not go any distance towards solving the problem with which we are confronted.

Fundamentally, the cause of the problem is simple. One of the real difficulties we face is a lack of capital. That lack of capital has been particularly marked over the past 18 months and has been emphasised by the flop of the last Government loan. I assert and I know that there has been a continuous outflow of capital from this country over the past 18 months. There has been continuous investment of Irish savings in British industrial securities over the past 18 months and the outflow of capital from this State has never been higher than it has been in the past 18 months. Any city stockbroker will tell the Minister that.

What is the reason for it? The fundamental reason is lack of confidence. It is the old problem that when a man, for instance, went to a bank some few years ago, he got certain advances not on what he had but on his reputation for work, on his skill and ability to do the job he was doing and on the trust and confidence of the banker in him. The banker then gave him the money he required. In the very same way, the reason the State cannot now get the money it requires for capital development and, to a lesser extent, why Irish industry cannot get the capital it requires for further development is that the people have no confidence in the Government. They have no confidence in investing their savings either in Government loans under the present Government or in Irish industry. That is the reason there has been this drain of capital from the country in recent times.

We have a freak Government. Just as the French peasant, in the face of Coalition Governments and money losing its value, tried to collect every golden louis and put it in the sock and bury it under the hearth against inflation and the state to which their Governments brought them, so, too, our people no longer trust our Irish institutions, in view of the continuous loss in the value of money and do not trust the Coalition Government.

There is one thing about freaks: their lives are generally short. You read occasionally in papers about a chicken being hatched out with four legs or a calf being born with two heads. They do not live long. We had to listen to the greatest freak in this Coalition Government for the past hour and a half trying to convince the people that Irish agriculture is at its zenith, trying to convince the people, against the statement by the Minister for Finance, that everything in agriculture is lovely and that because Dillon is at the head nothing can go wrong. He would not concede that Irish agriculture has been in a state of stagnancy under his leadership. He will not concede what the Minister set out when introducing his latest Budget, that is, that we had an overall decline of 2 per cent. in Irish agriculture. He will not concede that in every individual branch of Irish agriculture on which his dead hand has fallen, the nation has suffered and that we are recognised by all and sundry to be in the doldrums as far as agriculture is concerned, and, in particular, as far as agricultural exports are concerned.

Let us examine some of his achievements. Let us take, in particular, the branches of agriculture that affect the small farmers in our community. The days are gone now when we were to drown the British in eggs and choke them with butter. Whether it is that when Deputy Dillon, as Minister for Agriculture, was engaged in that campaign he did in fact drown all the British consumers of eggs and choke up the British purchasers of butter, the position now is that our egg industry, which was a very valuable export industry, has virtually disappeared, as have butter exports. Breeding sows have declined from January, 1954, to January, 1955, by 15.5 per cent. The overall decline in pigs in the country during that period was 14.4 per cent. In 1956, breeding sows declined by 9.6 per cent.

Mr. O'Leary

There were no pigs when Fianna Fáil were in office.

Mr. Moran

There are a couple left in the Labour Party still. There is a decrease of 16.9 per cent. in the bacon industry and the present pig population is down to 672,000, not counting the Minister for Agriculture. That is what we are left with after Master Dillon has been in charge of the Irish agricultural industry.

Mr. Sweetman

Is it suitable for Deputies to refer to the Minister as Master Dillon?

An Ceann Comhairle

He should be addressed as the Minister for Agriculture.

Mr. A. Barry

He referred to him as a pig also.

Mr. Moran

If you had the doubtful pleasure of listening to the Minister for Agriculture here to-day——

An Ceann Comhairle

I was listening.

Mr. Moran

We discussed many matters outside the Department of Agriculture on this Bill and one of the matters he discussed, apart from what he had done as Minister for Agriculture, was a journey he paid to my local town, Castlebar, for the purpose of unveiling a plaque to Michael Davitt. It was a typical Dillon performance. He unveiled a plaque put up on the wrong wall where Michael Davitt or the Land League never met.

An Ceann Comhairle

That is scarcely relevant.

Mr. Moran

It was a typical Dillonite performance trying to collect kudos for another's man's work. He came down to Mayo to make a song and dance about the Dillon family and——

An Ceann Comhairle

The Deputy must come to the Bill.

Mr. Moran

——about the land improvement scheme. The farm improvements scheme was introduced by a Fianna Fáil Government long before Deputy Dillon became Minister for Agriculture but if the Minister for Agriculture is concerned about the position as between the Morans and the Dillons let me tell him that the Morans ran old John Dillon and ran old John Dillon's son out of Mayo.

(Interruptions.)

An Ceann Comhairle

What the Deputy is endeavouring to discuss does not arise at all. He must keep to the measure before the House. What happened in Mayo as regards the Morans and the Dillons is not relevant.

Mr. Moran

There are no Dillons left there now. I want to tell the Minister that the problem we face in regard to the outflow of capital is due to the lack of confidence in the Government. Confusion has arisen because of different members of the Government speaking with different voices as to the problems the nation has to face, some of them pretending there is no problem, others pretending we were never better off and others still pretending that this is a temporary situation that can be overcome by taking very simple steps. It can be seen, therefore, that there is no leadership for the people and the people have no chance to realise the serious situation which the Minister insists is there.

I do not know what effect the Minister thinks his levies will have on unemployment and on the cost of living. I think he concedes in his statement that it will affect both. I do not know —although the Minister and his colleagues assure us they have given a great deal of thought to this—whether they realise what the effect of these measures will be on the ordinary worker and his family.

We can ask the people to tighten their belts if they understand that this problem is as serious as the Minister for Finance assures the House and the country that it is, but can we assume that the Minister is speaking for all his colleagues when we hear the speech of Deputy Dillon, the Minister for Agriculture, here to-day who assures us that all is well and will even deny the statistics that have been produced by his colleague, the Minister for Finance, when they do not suit him?

There was reference to the tales of woe from these benches but the greatest tales of woe that have come into the House are the Minister's own speech and that of the Taoiseach last night. We are told now that we can never achieve British standards in this country. We had both the Taoiseach and the Minister for Agriculture wringing their hands about the unfortunate fate of the Irish people. We have no goal that we can ever achieve to bring our standard of living up to that of the British. The only thing we have left, according to the Taoiseach last night, is our Irish heritage and the people are supposed to come back to that from Birmingham, Liverpool and London. I suppose it is to continue the Irish heritage that the Government are importing free of tax, gentlemen like Joe Loss and Shan Wilkinson to people around the country attending dance-halls. It is a poor inducement to hold out to the people for the future to assure them that they can never achieve the standards enjoyed by their brothers and sisters who go across to work for the Birmingham Small Arms Company or to work in any of the other British slums. The only thing that is held out to them now by the Taoiseach is that we have a heritage here and we should preserve it.

If the Minister can get his own colleagues to assure their constituents that they can agree with him as to the position as he states it to be, if he can get them to assure the people as a whole that what he and the Taoiseach state is true, that this nation as a nation must make sacrifices to meet the grave situation in which we find ourselves, then he might expect to get some results, but if his colleagues are trying to have it both ways we cannot expect our people to meet the situation as it should be met.

I should like to ask the Minister what will happen to the housing programme throughout the country. He has told us that Dublin and Cork can forget about a loan for the moment to finance their housing programme, that they are out of the queue. It would appear now that the loan preserve is to be kept solely by the Government and for the Government, but I am concerned with Sections 9, 10 and 11 of the Housing Acts as they affect housing in my county. I am also concerned with the question of financing loans for housing there, and the position is that we can get no money. The Minister suggests that we should make other arrangements. Other arrangements might perhaps have been made 12 or 18 months ago before the Sweetman squeeze came on but I cannot see where a local authority like my local authority can get money that formerly came out of the Local Loans Fund for the purpose of providing our people with houses that are so necessary for them.

If the Minister can give us an indication as to where local authorities like mine will get funds to meet the situation I would be very glad. We have borrowed from our bank to the full extent of our statutory sanction. From the Minister's speech, I take it that Dublin and Cork are being thrown overboard, and when we are told that £5,000,000 will be saved in Government expenditure I should like to know how that saving will be made.

An Ceann Comhairle

I do not wish to interrupt the Deputy, but I understand there is an arrangement by which the Minister would get in at 4 o'clock or thereabouts. Is the Deputy nearly finished?

Mr. Moran

If that arrangement has been made I do not wish to keep the Minister out. I should say in conclusion that the fundamental problem here is caused by the lack of the people's confidence in the Government. I should like if the Minister would indicate if the Taoiseach could spare the time to go up to the Park. That would solve all the nation's difficulties.

Mr. Donnellan

We do not like to get rid of you so soon.

Mr. Sweetman

Since the debate opened yesterday we have had four speeches from the Opposition—from Deputy de Valera, Deputy Aiken, Deputy Corry and Deputy Moran. I do not propose to deal at all with the irresponsible statements, to which this House has become so used, of the last two Deputies, except to say this in relation to one remark made by Deputy Moran. The Irish Statistical Survey is now published, and if the Deputy looks at it he will find that the normal revision that goes on after provisional figures are issued shows that the initial estimate of the 2 per cent. change in gross agricultural output has now been revised by the Statistics Office to .2 per cent. It is only right that I would put the accurate figure on record. Members of the House will be aware that such figures are varied from time to time on recheck and that the variation which may be revealed by the recheck does not, in any way, reflect on the Central Statistics Office or its methods.

Deputy de Valera, when speaking after I had made my introductory statement yesterday, having got himself worked into a frenzy of fury, or perhaps it was an apparent frenzy of fury, about the procedure to be adopted —a frenzy or an apparent frenzy that arose because of a breakdown in what his own Whips had told him—proceeded then to make a few comments on my statement or on the measures I proposed. The only real comment he made on them at all was in relation to what I said in conclusion. Time and time again the members of the Opposition have shouted that the Government were not taking action and that the Government would not take appropriate action.

Yesterday, I indicated that, if needs be, the Government would take further action. If Deputy de Valera were sincere in suggesting in his earlier criticism that the Government did not take action in time I would have thought he would welcome wholeheartedly my suggestion yesterday. In fact his attitude yesterday was that it would be all wrong for the Government to take further action during the Dáil recess. I want to make it clear that it was solely because of my anxiety to announce the measures I did announce yesterday to the Dáil that, with the co-operation of the Opposition—let me say immediately that I am appreciative of the co-operation I received—the Dáil did not conclude its business last week.

That enabled me to make this announcement to the Dáil yesterday. If the Dáil is in session I believe the appropriate place to make any announcement of national importance is in the Dáil, but I do not say that if the Dáil is in recess announcements should await the normal resumption of the House. I made it clear that, as far as we are concerned, all we were doing was carrying out the normal functions of the Government. All I referred to was that the Government would take such further steps as they might consider necessary in pursuance of their statutory powers. I do not suggest in any way that the Government would take any steps in excess of those powers and, of course, no steps in excess of the statutory powers vested in the Government will be taken. Let me say to the Opposition, clearly and categorically, that if, in the opinion of the Government, it becomes necessary to take any further measures to safeguard our economy, then the Government will take such measures. If the Opposition wish at that stage to recall the Dáil to discuss such measures we shall be very glad to fall in with their wishes.

Mr. MacEntee

I do not wish to interrupt the Minister, but it would be well to have this matter clarified since it has been referred to. I assume the measures which the Minister refers to are measures of the type and the magnitude which he has just taken. I assume there will not be any steps taken—I do not want to suggest there is any likelihood that such steps would be taken, but we want to be quite clear about it—such as the altering of our parity without recalling the Dáil. I presume that would have to be done by legislation.

Mr. Sweetman

As far as the question of parity is concerned let me be crystal clear. That is a statutory matter and could not be amended by any Government except with the authority of the Oireachtas.

Mr. MacBride

And let me be clear. Who in this House suggested that parity should be altered?

Mr. MacEntee

You did.

Mr. MacBride

That is untrue. It is typical of the untrue statements made by the Deputy.

Mr. MacEntee

The Deputy is on record.

Mr. MacBride

The Deputy has made that untrue statement in order to try and create difficulties for the Minister.

Mr. MacEntee

It is all quite plain now. You want to get back into power. Deputy MacBride is the arch-inflationist.

Mr. MacBride

Arch-deflationist.

An Leas-Cheann Comhairle

Order! The Minister, concluding.

Mr. Sweetman

Deputy MacEntee mentioned the possibility of a change in the value of our currency. I want to make it crystal clear that the whole purpose of the measures I introduced yesterday was to maintain the value of that currency. As far as I am concerned, and as far as the Government are concerned and, I believe, as far as the House is concerned——

Mr. MacEntee

The majority of the House.

Mr. Sweetman

——we are anxious to maintain, to do our utmost to maintain, the value of our currency. I want to go further and say that so far as the Government is involved we are not concerned at any political embarrassment that may be caused in any way, by any measures that have to be taken. If ever in the future, measures have to be taken to protect that we would take them regardless of any temporary political embarrassment that might be caused. As I said last week, in reply to Deputy MacEntee, we believe in putting the nation before any Party composing the Government.

The measures that have to be taken in relation to the balance of payments are measures of the type that the Government took yesterday. I hope that the people, following the lead of the Government, will make it unnecessary to take any further measures, but I would be lacking in my duty if I did not say that if measures were necessary the Government would not fail to take them. Apart from that, Deputy de Valera yesterday had little comment, except to make it clear beyond question, what many of us thought was the case for some time, that in so far as he was concerned he was motivated more by hate of this Government than anything else.

Mr. MacEntee

We do not regard you exactly as bed-fellows.

Mr. Sweetman

He put it on record himself that hate and detestation were his motivating force. This morning, Deputy Aiken came to discuss the measures which I had introduced yesterday and, in so far as I could follow, his view was that these were the correct measures. He mentioned other alternatives and threw them aside, correctly to my mind, as being unsuitable to the needs of the moment.

Mr. Aiken

The Minister had better read my speech.

Mr. Sweetman

The Minister had the doubtful pleasure of listening to it for the whole period that it took and as far as I can remember, and as far as I could follow the Deputy, although Deputy Aiken will forgive me if I say that at times he is difficult to follow, the alternatives he suggested were that there was to be a compulsory listing of private holdings and that that would be followed by the sequestration of these holdings. He also suggested the compulsory seizure of the Central Bank legal tender note fund.

Mr. MacEntee

The Clann na Poblachta policy.

Mr. Sweetman

Deputy MacEntee at times can be most helpful. At other times, I do not know what the reason is, he comes in here determined, in an impish mood, to destroy any effort by anyone to make a serious contribution to a debate. I sometimes wonder what on earth bubbles up inside him when occasionally he stands on his feet to make a public pronouncement. There are times when he approaches reality and other times when that reality seems to have flown far away.

Let us get back to this serious problem, because it is a serious problem and should be discussed in a serious way and not with the type of levity introduced by certain——

Mr. MacEntee

By the Minister for Agriculture.

Mr. Sweetman

——other speakers we had to-day on that side of the House. Deputy Aiken mentioned those two alternatives and threw them aside, and to my view correctly, but he produced no other alternative whatever for our immediate problems. I would say this, however, that he has, as clearly as anyone could, shown that he was totally opposed to the policy that was put forward last November by Deputy Lemass. Deputy Aiken was at great pains to make it clear that he did not accept the semi-Keynesian view put forward by Deputy Lemass, speaking in Clery's Restaurant in November last.

I must confess I find myself agreeing with Deputy Aiken in that respect, but I think it is a bit thick for the Opposition, who are always prating about unity, not to make up their own minds about what financial policy they wish to put before the people. They have two fundamentally different approaches to the problem, one put forward by Deputy Lemass and the other by Deputy Aiken, and I am grateful to Deputy Aiken for making it clear that there is that schism, that split, in the Opposition on a matter of that importance.

Mr. Aiken

Nonsense!

Mr. Childers

The Minister did not read Deputy Lemass's speech.

Mr. Sweetman

The Minister read it very carefully and the two are totally irreconcilable. Let us know which is the policy of the Party opposite. The people would like to know what the policy of the Party opposite is in relation to the times of 1956. The Government has put its policy clearly on the table and it was clearly explained by me in relation to these matters yesterday. We made our policy clear and if the Opposition has a different policy the people are entitled to know what that policy is and they should not be misled by one leading member of the Opposition taking one line, and another taking another line.

There was a suggestion, and I see it was referred to in one of the newspapers this morning, that the measures which I announced yesterday were nothing like adequate. The comment made in that newspaper was that when I was confronted with a trade gap of £94,000,000 and a gap in the overall balance of £36,000,000, all I did was to introduce levies calculated to reduce imports "by the truly imperial sum of £3,500,000". That comment was repeated in a slightly different way by another speaker to-day and shows a complete misconception of the whole position. The imposition of the levies last March, and yesterday, were calculated to reduce imports in respect of the articles which were covered. The impositions that were made yesterday will have that direct effect on those articles. It must be remembered at the same time that such effect is in addition to, and on top of, the effect that the March levies will have for the remainder of the year.

There is a much greater effect than the direct effect. The indirect effect of the measures announced yesterday will be far more than the direct effect itself, the effect, for example, of ensuring that the additional proceeds of the levies imposed will be utilized for capital account and that, therefore, to that extent there will not be an inflationary credit situation created; the effect of the reduction of £5,000,000 in Government expenditure and, again, similar results flowing from that effect, and in addition, the direct effect of the reduction I indicated in newsprint imports. There are these and other things. It is quite futile to suggest that the effect would be confined to one measure, and one measure alone, when the whole purpose of my statement was to make it clear that these are a series of measures all calculated to tie in and have a composite effect rather than an individual one.

But the greatest effect of all on our balance of payments would be a revival of savings, back to previous figures. In 1955, excluding the value of the change in the number of live stock on farms, personal savings were approximately £17,000,000. In 1954, they were £38.4 million. A revival to the 1954 figure would have more direct effect than anything else on our balance of payments situation, and it is the one fundamental thing upon which we must all make sure that we pin our hopes. It is because we wish, amongst other things, to create an atmosphere in which the savings drive would continue, intensify and accelerate, and in which savings could be satisfactorily guarded, that the picture was put in that setting.

I do not want to go back to-day on what transpired in other years, but I do want to make this point very briefly. Deputy Aiken suggested that foreign loans caused inflation. Foreign loans cause inflation, if they come at a different period to or in excess of the capital goods coming in on foot of them. The basic difference between that conception and the practice of the last Government is that we are proposing a very, very limited foreign borrowing this year—very little indeed. My predecessor, Deputy MacEntee, utilized the proceeds of foreign borrowing—

Mr. MacEntee

Does the Minister want to open this debate on that basis?

Mr. Sweetman

I am closing it, not opening it.

Mr. de Valera

We will have an opportunity.

Mr. Sweetman

The difference entirely is whether the borrowing is done at the time that capital goods are brought in or whether it is not. In the present circumstances, it is entirely wrong for Deputy Aiken to suggest that the very limited foreign borrowing to which he referred could have inflationary results such as he suggested.

Deputy MacBride made some references to the banks and to external assets, as did Deputy Desmond. I did not quite follow one figure Deputy MacBride mentioned. He referred to an increase of £4,000,000 in external assets. If the Deputy examines the composite figures in relation to the increase in net external assets and gross external assets of the commercial banks in March, 1956, he will find that that increase arose solely because during that month sterling assets from departmental funds to the extent of approximately £5,750,000 were sold for the purpose of making good underwriting commitments on the National Loan. The effect of such a sale of departmental funds' sterling assets must be that they flow into the commercial banks for the moment. To assess the exact position, therefore, Deputy MacBride should have—he may not have been aware of the facts— deducted the amount to which I referred and he would have found that, far from an increase in that month, there was a further decrease.

Mr. MacBride

The figures are the figures published.

Mr. Sweetman

Quite so, but it is not the figures relevant to the commercial banks alone that must be considered. It is the figures in relation to the external assets held by the commercial banks on the one hand and by departmental funds on the other. What happened was that there was a decrease in the sterling assets held by departmental funds in that period, which was offset by a smaller rise in the commercial banks, merely because of the sale of the securities passing through the commercial banks.

I think also that Deputy MacBride omitted to mention that the British Government securities that are held by them are held not merely in respect of their liabilities here but in respect of their liabilities elsewhere as well, and that they cover their liabilities in respect of deposits in the branches in Britain of the banks. They hold also, in addition to the Irish Government securities to which the Deputy referred, £14,000,000 worth of Irish municipal stocks and, of course, I need hardly go into the question of the £150,000,000 they have advanced here.

Quite frankly, I think that a good deal of the discussion in relation to bank holdings is out-of-date discussion. At one stage, the criticism there was of the commercial banks—criticism to which the Taoiseach referred in 1952-53 —was relevant and was justified, but the ratios are entirely different now. We must relate ourselves to the facts of 1956, and in 1956 the proportion of Irish deposits invested in Ireland, whether it is as cash, Exchequer bills, other bills, advances, or investments, is approximately 70 per cent. That proportion is not sufficiently brought out. That was not the case some years ago.

Mr. MacBride

That is as a proportion of Irish investment?

Mr. Sweetman

Yes. The margin there is a very different margin from what it was some years ago. Then, the percentage was nothing like that, but when we consider this problem in the light of the suggestions made by Deputy Desmond, we must remember that there is a fundamental basis upon which the banking system must be built. We could have credit creation. I endeavoured yesterday to the best of my ability to show how such credit creation at the present moment would disorganise very much more our balance of payments problems; disorganise it very much more indeed.

We must accept, and all Parties in this House I think do accept, that we want to get far more productive capital investment in industry and agriculture. The way we have to get that is to increase the personal savings of our own people. If the personal savings of our own people are increased and are employed in Irish agriculture and industry, that will not create a balance of payments problem. That would not mean the inflationary problems that at the present moment other methods would create. That, I think, would be accepted by everyone in this House.

As I said yesterday, therefore, the policy of the Government, and of any Government in control in the future, must be to step up personal savings so that these personal savings can be employed in a productive way to increase our standard of life in the future. If we do not do that and if we utilise our external reserves for more consumption in this way, we will fall further and further behind in the race between countries for better standards of living. The more underdeveloped a country is, the more it must set aside from current consumption for further productive investment, because, if it does not do so, it will not succeed in catching up on those countries which have got a greater start.

That must be the basis upon which our economy will be built. If it is not, all we are going to do is to create further balance of payment problems in the immediate future and we will have no real solution. Our solution must be considered from two angles. I agree with Deputy MacBride that it must be considered from the immediate angle and these measures which I have introduced are merely dealing with the immediate angle alone. We must consider it from the longer angle as well. What I stated in the House yesterday and to-day is that we cannot await the outcome of a long-term plan; that we cannot await the outcome of a long-term policy. The need is immediate and if the immediate need is not met by an increase of say 10 per cent. in output in production of every form then we are merely going to go on living on our existing reserves and on our external capital and making the problem worse and worse. Nothing except an immediate grappling with that problem on that basis can assist us towards a solution in the near future. There must be consideration for the years ahead as well but the immediate need is being dealt with in this Bill and it is one that cannot brook delay.

Question put and agreed to.

Agreed to take remaining stages to-day.

Bill put through Committee and reported without amendment.

Question proposed: "That the Bill do now pass."

Mr. MacEntee

Having regard to the proceedings in the House when the Minister for Agriculture was speaking and to some of the things—not indeed very controversial—that have just been said by the Minister for Finance, but, particularly having regard to the attitude taken by the Minister for Agriculture towards the Opposition this morning, I feel that there are some matters that should be made clear. We feel that our economic stability is in danger. One hesitates to use the word crisis, and certainly one would not say that the ship was on the rocks, but we feel that the ship is at any rate drifting on a lee shore. It is, therefore, the duty, not merely of the captain and crew, but of those who might be described as passengers, to do nothing that will interfere with the Government in the measures which they are taking to deal with this situation.

That means to say that we will cooperate with the Government to the extent of our ability and to the full extent of any responsibilities we may have in this House in the measures that have been suggested; but that is not to say that we believe that these are the best that could be devised or that they will be in themselves sufficient to rectify the position. We feel it necessary to say that for this reason. When the Minister introduced his Budget in 1955 and, again when he introduced his Budget in 1956, I, at any rate, having full knowledge of the problems with which he was confronted, felt that the Minister was endeavouring to do his best. We accordingly were, shall we say, reserved in our criticisms of the measures which he was putting before the House. Unfortunately, that attitude on our part, by which we endeavoured to assist the Minister in his approach to his problems, our endeavour to discuss the economic position of the country in as an objective way as was possible, was misrepresented. The people were told that the budgetary measures had the support of Fianna Fáil and the Opposition and that we could not do better.

The measures which the Minister put before the House yesterday are being accepted by us in the belief that these, in the present circumstances, are the best that he can do—or rather that he can persuade his colleagues to do—in grappling with the situation. The Minister has, however, in the course of his statement yesterday mentioned one or two matters about which we have grave doubts. Certainly we view with great disquietude any proposal to borrow abroad. We have had one experience of that already, that is when the United States loan was raised.

I have consistently held the view that that loan was unnecessary, certainly unnecessary on the terms upon which it was raised and certainly unnecessary in regard to its currency. I, therefore, having regard to the speech of the Minister for Agriculture here this morning, view with alarm—I cannot say that I speak for everybody; I have not consulted anybody—any proposal to borrow abroad in order to enable the Government to get out of its own political difficulties. I say that because of what happened in regard to the Marshall Aid loan. We borrowed $128,000,000 from the American people. This is how that $128,000,000 was disposed of according to the Minister for Agriculture, who spoke here this morning.

I am quoting from Volume 130, columns 382 and 383 of the Official Report. The then Deputy Dillon said:—

"How often has it been repeated that Marshall Aid was spent on maize, wheat and commodities of that kind? What the heck else could you spend it on? Let the truth now be told. The Deputies of this House know what our principal problem was in the years of Marshall Aid—to get the dollars spent."

Deputy Dillon and his colleagues succeeded in getting the dollars spent. The problem of those who have succeeded Deputy Dillon is how to repay those dollars and that will be the problem confronting those who succeed him in the future too. The Marshall Aid loan, according to Deputy Dillon was spent on maize, wheat and commodities of that kind. "I spent," he declared, "$5,000,000 on wheat in one afternoon." There were $128,000,000 borrowed and dissipated in that way in a short space of two years. What has the country to show for it? Those dollars were spent as follows:— $77,000,000 on foreign wheat and corn; $35,000,000 on tobacco; $4,000,000 on motor vehicles and only $6,000,000 on a new plant and equipment. The Minister for Agriculture has described that as productive investment. We do not want any more expenditure of that kind financed by foreign borrowing.

Now I have sufficient faith, even though he is an opponent of mine, in the Minister for Finance and I believe that, as long as he is there, that kind of thing will not happen again. But there is the danger that, once some of his colleagues get the bit in their teeth, as happened in relation to the Marshall Aid loan in the middle of 1950, the Minister for Finance will have only one option—to get out, if he happens to be there. Therefore, so far as I am concerned, while I happen to be one of those who are on the ship, even though I have no responsibility for steering or directing its policy, I shall do nothing to interfere with the captain and the crew who have charge of the ship at the moment. I shall do nothing to make their task more difficult and will try to impress on the people the statement which the Minister for Finance made yesterday to the effect that this position is not a self-righting position and that the Government will have to take drastic measures to deal with it. But I do not want to be taken, on this occasion, at any rate, as endorsing any proposal to borrow abroad.

The Minister has referred to our reduction in expenditure on capital and current account. May I suggest to him that as a further measure the Government should reconsider its attitude towards what has been described as the Capital Budget? I believe that one of the reasons why we are in this grave and serious position is because we have year in and year out borrowed for purposes which should properly have been financed out of current revenue, out of current taxation. As the leader of the Opposition said yesterday we have in fact put our hand on the brake and kept our foot on the accelerator. But that simile is to my mind only half applicable: what we have done by this device of the Capital Budget has been to discard the brake altogether and keep our foot on the accelerator. We have, therefore, involved ourselves first of all in heavy commitments in regard to the moneys which we have raised by borrowing to defray expenses, that should have been met, year in and year out, out of the ordinary income of the State, met as it accrued from day to day; and not by mortgaging the future of the State and of the people as has happened in recent years.

I would suggest that, among the other measures which the Minister may have to take, he should reconsider the position in relation to the Capital Budget. I am firmly convinced that we cannot continue to meet expenses of a kind which arise year after year in the same form out of borrowed money. We can only secure financial stability if we meet these expenses out of current taxation and if we impress upon our people that very hard fact that, if they want these services and if they want these social amenities, then the cost of them must be taken out of the current incomes of the people.

I find it very difficult to talk on this occasion because I take perhaps a more pessimistic view of the situation than does the Minister for Finance. I think that the measures which he will have to take in order to correct the tendency of latter years will have to be even perhaps more drastic than those which he is now taking. I say that with no desire to overpaint the picture and with no desire to press him on more earnestly than he himself is inclined to go. He is the judge. He has the information at his disposal which is not at the disposal of those who sit on this side of the House. But I feel that this situation has got so far out of hand that it will take even stronger measures than the Minister has outlined to retrieve the situation.

Mr. Sweetman

There is no question whatever of any external borrowing to get the Government out of its difficulties. What I am contemplating will be, as I said, of strictly limited operation: approximately £2,000,000, not for the State but for one of the analogous bodies—that £2,000,000 representing approximately the amount of capital goods that that body would bring in. In effect, it is not borrowing really. Perhaps a better way to put it would be to describe it as rather external borrowing, a deferred payment for the capital goods coming in. It is not contemplated at all that it would be a State operation.

Mr. MacEntee

For long term?

Mr. Sweetman

It is purely a method of deferred long-term purchasing of capital goods that we have to import in any event. I do not think that this stage, the concluding stage of this Bill, is the right setting to have a discussion on the capital Budget—whether it was wise, or will be wise in the future, or not. My only view in respect of these things is a simple one—that anything one does, particularly in relation to economics, must be flexible, that it must be judged by the particular needs of the moment, and that it is in relation to the existing needs at any particular point of time that problems should be judged rather than by reference to fixed ideas of the past. I propose in relation to our existing economic position, and what I see of it in the future, to judge it as far as I possibly can with a flexible mind.

Mr. de Valera

Would it be fair to ask the Minister what is the associated body?

Mr. Sweetman

The E.S.B.

Question put and agreed to.

An Leas-Cheann Comhairle

This Bill is a Money Bill within the meaning of Article 22 of the Constitution.