Last night I was dealing with the position of chocolate crumb under this Bill and the financial advantages to be gained under this Bill by the chocolate crumb manufacturers and the Irish Sugar Company. I suggest that the representatives of the agricultural community are entitled to be told now by the Minister what those financial advantages will be so that we can get to work and endeavour to help the Minister in another way, by the elimination of the £1,800,000 paid for foreign sugar cane imported into this country this year.
Finance (Miscellaneous Provisions), Bill, 1956—Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
The Deputy is going into the question of detailed administration of the companies and, as such, that cannot arise relevantly on this measure.
I am putting forward the case that we are entitled to the information.
The matter of the detailed organisation of everything is clearly not the object of the provisions of this measure.
The object of the provisions of the Bill is to give certain financial advantages to companies in this country exporting manufactured goods. I hold that chocolate crumb comes within manufactured goods.
We cannot go into detail in respect of every one of these concerns. The Deputy may in a general way refer to the slowness or any defects he may think exist in general but he cannot go in for a detailed examination in the manner he is doing.
I hold that the agricultural community should be given information on that particular line and on the advantages to be gained by the export of beer and spirits. I am glad to see that the value of beer and spirits exports went up by something like £500,000 in the past 12 months. Unfortunately, in connection with that last matter we are faced with another aspect. We are informed by those companies that they have to sell in competition with outside breweries. The producers of the raw materials for those outside breweries have a double advantage over the brewers of malting barley in this country. If we are to get any benefit from this Bill by way of increased exports, some steps will have to be taken side by side with the measure to enable the farmers to produce the raw materials essential to any increase in exports.
The British farmer has the advantage of a subsidy of £6 a ton on artificial manures which is not available to our farmers. Up to a few years ago, the actual position of the Irish and British farmers was recognised by Messrs. Guinness, inasmuch as they laid down a definite sum which, in their opinion, would compensate the Irish farmer for the disadvantage under which he suffered in the production of barley. That sum was 2/6 per barrel for malting barley. I suggest to the Minister that it is his duty to see that this disadvantage which the Irish farmer has to face is overcome. It will have to be met if the Minister is to get any benefit by way of increased exports as a result of the reliefs being given in this Bill. If we farmers could learn the amount of the relief we are likely to get, it would enable us to meet our competitors, and it would give an advantage to Messrs. Guinness over their competitors. In that way, the Irish farmers would know exactly where they stood. We do not know that now.
In the matter of manufactured goods referred to in Part III of the Bill, are we to take it that dead and plucked turkeys are manufactured goods within the terms of the Bill? After all, the producer is the man in charge of that factory, and he gets the eggs to produce the turkey chicks, rear them, and feed them up to the stage when they are ready for sale. The turkey is then killed and exported. I would suggest that that then puts the producer in the position of a manufacturer under the Bill, and he is entitled, as an exporter, to some relief. In that way, turkey producers could get something towards paying for the extra £8 a ton which the Minister's colleague, the Minister for Industry and Commerce, put on the wheat offals that are fed to these turkeys, and the producer would get something to help him in the present situation in which turkeys are selling at less than would have been paid per lb. for rabbits a few years ago. I think we should know that we will get some relief.
I would like the Minister to tell us in that regard whether, in the first instance, a turkey is a manufactured article, or comes under the heading of manufactured goods under Part III of the Bill, and, if so, what is the amount of bonus that would be justified by way of relief afforded to the exporter. It would be a relief to the people to know that at this time when the Minister for Agriculture is giving us no relief in the matter of turkeys.
On that basis, I do not know whether the Minister is considering putting in a special section in the Bill dealing with the white swans or turkeys which the Minister for Agriculture is going to have next year. I think we are to have white turkeys next year, but it is questionable whether we will have any turkeys at all.
The Deputy should not wander around in that way.
I am making a suggestion to the Minister as to what should be in the Bill.
The Deputy is not. He is introducing extraneous matters.
Up to the present, the turkey was brown, but last night the Minister for Agriculture was talking about white turkeys.
The colour of turkeys does not arise on this measure.
The Minister said in the House——
The Deputy will come to the measure, or cease speaking.
The next thing I wish to deal with is the position of exporters of canned beef and of meat generally, both beef and mutton. Is the man who sells a fat animal to be regarded as a producer of manufactured goods under this Bill? He gets his raw material in the calf which he feeds for three years, and he has to put some of that mixture of the Minister for Industry and Commerce into the calf to produce beef. I hold that under Section 10 in Part III of this Bill that beef or the fat animal now comes within the definition of manufactured goods. We would like to know, considering the position of agriculture generally, how far the producer of that fat animal is entitled to relief under the Bill and whether he will get some relief, either when he sells the animal on hoof, in a can, or as dressed beef. Has the Minister considered the difference in those three things, and the amount of employment given in that trade? Will he enlarge the Bill so as to make some differentiation between the three?
Those are a few of the matters I wanted to deal with, but I would suggest to the Minister, since the object of this Bill is apparently to reduce the £35,000,000 differential in the trade balance, that he would be far better advised if, instead of proceeding with this measure, he restored the cuts that have been imposed on the agricultural community in regard to the production of grain, for which he is now paying the foreigner. I suggest to the Minister that that would be a far wiser step. The Minister is aware that, due to the malicious action—and I can describe it in no other way—of the reduction of £5 per ton on wheat, the wheat acreage has fallen some 140,000 acres. At present we have to buy on "tick" from the foreigners the wheat to produce the bread we eat——
This surely does not arise on this measure and the Deputy knows it. The Deputy should not pretend he does not know it.
I am suggesting——
The Deputy may suggest that on another occasion when it is relevant, but not on this.
Am I in order in suggesting to the Minister other means by which he can——
Within the scope of this measure.
As against this measure?
What the Deputy is suggesting now does not come within the scope of this measure and, therefore, he may not make that suggestion now. I am sure the Deputy is well enough acquainted with the proceedings in the House to find an occasion on which to raise this matter again.
Frankly, I thought up to now that I was entitled to suggest to the Minister ways and means by which our adverse trade balance can be reduced, other than the way the Minister is proceeding.
That is not relevant to this measure.
Very well, Sir. Might I suggest to the Minister that if he is to help out by means of a subsidy on exports—apparently this is all we can discuss on this?
The Deputy may make any suggestion that comes within the scope of the measure.
Might I suggest to the Minister that if he ceased taking advantage of the pig producer in this country in the manner in which he has taken advantage of him by paying the flour subsidy out of a tax——
The Deputy knows perfectly well that is not relevant to this measure.
I am suggesting means by which the Minister can help us.
The Deputy will find an opportunity of doing that on another occasion when it is relevant. It is not relevant on this occasion.
Is it not relevant to suggest——
The Deputy may not suggest it by asking me is it relevant to do so.
I am making the case that we could have had a pretty large export of bacon from this country if there had not been a reduction of 200,000 pigs because of the Minister's action in putting on that penal tariff. It would be a great help to the exporters if the Minister would now do away with that tariff and give the farmers an opportunity of producing those pigs for export. I suggest that is something the Minister should turn his mind to. We have the tragedy— I can call it nothing else—of the turkeys and now we have the tragedy of the pigs. If we are to consider ways and means of increasing our export trade and of giving reliefs to those who have the means at hand of increasing that export trade by increasing production, surely it would be far better to go on the lines I am suggesting than on those the Minister is taking here.
The Minister is suggesting that if we produce more and export it, he is prepared to give certain reliefs. I am suggesting the first thing that should be done is to remove the penal tariff on production. It would be far easier to do that than to promise reliefs from income-tax, as the Minister is doing. I am suggesting to the Minister that a tax on home produced offals of £8 10s. per ton has resulted in an absolute stoppage of the export of bacon from this country and that the Minister should take immediate steps to deal with that. I can guarantee him a far better result if he takes those steps rather than the blind drive to encourage exports which he is making under sections of this Bill.
The same applies to other articles of farm production. The Minister knows that the gain of roughly £1,000,000, contributed towards the flour subsidy by the pig feeders, does not compensate for a reduction of some 300,000 cwts. of bacon which could have been exported, but which was not exported because of this penal tax on the producer. The Minister would be better advised to deal with that matter instead of endeavouring to induce some foreigner to come in here and export goods. The Minister is relieving him of taxation, taxation which will fall back on us. I suggest the Minister should now take steps to give to the producer of malting barley his artificial manures at the same price as his competitor in Britain pays for them——
Surely that is administration?
——in order, Sir, to give the exporter of beer and spirits an opportunity to have the raw material for the production of the manufactured article for export. These are the things to which the Minister should turn his mind. Pious resolutions are heard from all sides of this House every day about increasing production. If we are to increase production for export, the first thing that will have to be done is to remove all the restrictions on production that at present exist to a glaring degree and which put us out of the market in competition with farmers in other countries.
I make these suggestions in good faith to the Minister, in the belief that any person in his boots would examine them and would act upon them, instead of introducing this kind of a Bill guaranteeing relief to exporters. We, too, want reliefs so that we may produce for export and I suggest to the Minister that the reliefs we are seeking are not in this Bill and should be in it, if we are to continue.
I have put the case as I see it and as it applies to practically every finished article produced on the land at the present day. We are driven out of the market. The Minister for Agriculture admitted here some time ago that we are driven out of the market in respect of finished products such as eggs, butter and other commodities. The deliberate action of the Minister for Industry and Commerce, ably supported, I think, by the Minister for Finance, has driven us out of the market and has deprived this country of the benefit of some 300,000 or 400,000 cwts. of bacon that otherwise we would export. The deliberate action, again, of the Minister has deprived the unfortunate breeder of turkeys of production and has driven him out of the market.
The Deputy dealt with turkeys and pigs. I hope he will not repeat that argument.
I am summing up the commodities in respect of which the Minister should take steps. The same position obtains with regard to the production of malting barley and the production of beef. In respect of the production of the finished article from all these items, we have been driven out of the market by the action of the Minister, his advisers and his Cabinet. I suggest, in connection with this Bill, that it is high time for the Minister to take a couple of hours to examine the suggestions I have made with a view to bringing in remedies.
The Bill which is before the House is, to my mind, supplemental to the Government's economic policy as it has been put into operation over the past nine months or so. It seems to me that this Bill gives concrete expression to the Government's desire and intention to increase production, particularly industrial production, in the State. We must examine these proposals in the light of the experience of the past nine months. It is important for us to appreciate that the measures which the Government has perforce taken have, in fact, brought undoubted improvements to the economic situation of our country. The deficit in the balance of payments, which developed into such serious proportions last year, was one which nobody has suggested was the fault of the Government, was one which nobody has suggested could have been foreseen.
Oh, oh!
Deputy MacEntee seems to enter a caveat when I make these remarks, but I would ask him to point to any one speech which he or any of his colleagues made last year pointing out the deficit which in fact developed in the last quarter of the year. The position was that the deficit last year developed suddenly and it took on serious and grave proportions and the Government had to take certain measures to deal with the situation. I want to point out to the House the effect of those measures, because the Opposition did not vote against them; the Opposition made no concrete proposals as to what was to be done. The Opposition stated that the situation was of crisis proportions and that the Government was incapable of dealing with it. I want to reiterate some of the facts which recent figures demonstrate, showing that, in fact, in the six months or so since the Government's measures have come into force, very remarkable improvement in our balance of payments situation has developed.
As Deputies are aware, the deficit last year was a serious one and, in the first two months of this year, it was running at an even greater level than in the similar period in the previous year. In spite of the fact that our trade balance in the early parts of this year was worse than it was last year, the position in the first nine months of this year is that the trade balance has been improved by £10.2 million. That improvement is all the more remarkable when we examine the rate of improvement, for, in the first quarter of the year, the import excess was over £28,000,000 and, in the third quarter, the import excess was reduced to £11.2 million and the import excess for the third quarter of this year was down by £9,000,000 on last year. I think the Government are entitled to take credit.
What was the emigration excess over that period?
I am dealing with one specific problem. If the Deputy does not think it is a problem, let him say so.
Is the Deputy dealing with the Bill?
Order!
Of course, I am dealing with the Bill in the manner in which the debate has been conducted so far. The Deputy did not interrupt his colleague, Deputy Corry, when he was talking about turkeys and pigs.
He was talking about realities, you see.
Is the trade deficit a reality? Deputy McQuillan does not think that we should discuss the trade deficit in this House. I think we must discuss the trade deficit.
I think there is an obsession with it.
I do not think it is an obsession. I think it is a grave problem which we must face and which we must discuss and my remarks on this Bill are related to the results that the Government have had in dealing with it. The facts illustrate that we, the Government have brought this now very close to a solution. On the improvement that has been brought about it is possible to expand our economy in order to bring about the full employment and the reduction in emigration which Deputy McQuillan is not alone in wanting. I do not think there is a Deputy on this side of the House and I do not think there is a Deputy on the other side who does not want to stop emigration and who does not want to give full employment at home to all our people.
There is no use speaking about stopping emigration and the giving of full employment, if one has not got a policy. Let the Opposition tell us what their policy is. The Government have stated that the serious economic situation which developed last year had to be dealt with. I say that the Government have dealt with that situation and dealt with it successfully. We are now dealing with a Bill designed to encourage exports. The remarks I have been making have been related to the fact that it is now possible for us to expand our economy on the basis of the success of the Government in dealing with a very real emergency.
I would like now to refer to some other figures which have been made available recently to show the improvement which has taken place here in our banking operations. The commercial banks complained of the dangers they were facing if the decline in deposits continued. It is interesting to note that deposits have, in fact, increased in the past few months. The general economic situation is, of course, largely dependent on a healthy banking situation. To my mind, the trend that had developed last year has been arrested and we have had in the last few months an increase of no less than £10,000,000 in the deposits of the commercial banks between July and October of this year. The drop in deposits which occurred last year and which continued for the first six months of this year has been arrested and deposits have increased by £10.7 million as between the middle of July and the middle of October of this year.
During that time, too, there has been an increase in gross external assets. I am using the gross external assets and not the net external assets to indicate the external holdings position of the commercial banks. Their gross assets declined last year. They declined in the beginning of this year, due to the serious and continuing deficit in the trade balance. Due to the improvement that took place since, their gross external assets increased from July to October by over £30,000,000.
The Government has by its measures averted a dangerous situation. It has brought the balance of payments situation almost to a position of normalcy, as can be seen from the fact that the drop in the deposits in the commercial banks has been arrested and their gross external assets have started to increase. In addition, the savings campaign has proved to be remarkably successful. The figures demonstrate that small savings have increased. We had, too, the experience of the undoubtedly remarkable success of the recent National Loan. Deputy MacEntee coughs in a sarcastic manner indicating presumably—possibly he will put it in more forceful terms when he comes to speak—that the National Loan has not been a success. I take for my authority the chairman of the Central Bank, and I refer to the statements made last Saturday night at the bankers' dinner. It does seem to me that with the improvement on the financial side, which the figures indicate, it is now possible for us to plan a general economic policy on the basis of an expanding economy.
The Bill before the House is one of the methods by which that expansion can be brought about. This Bill is by no means comprehensive Government proposals. It is only one of them. This Bill demonstrates an agreed Government policy with regard to the principle of industrial production. I challenge the Opposition not to run away from the realities of the political situation. I challenge them to state what their policy is, if they disagree with what we are doing. Can Deputy MacEntee or any Front Bench speaker tell us what Fianna Fáil policy is in current circumstances? It is their aim, they say, to increase agricultural and industrial production by 20 per cent. That is our aim, too. Indeed, it is our aim to go better, if we can. But there is no good saying what the ends of our policy are. It is the means that count. Tell us how the Opposition will do it. Tell us what the Opposition will do if they get back into power. Will they bring in a measure such as this? Will they do what Deputy Corry suggests for the agricultural producers? Let us know what they will do and then we can discuss it with them.
The Opposition have been curiously silent. I venture to prophesy that when Deputy MacEntee comes to speak we will not hear one concrete suggestion in relation to policy, one concrete suggestion as to how we should deal with the economic situation. I believe I am as concerned as Deputy McQuillan is with the unemployment situation and with the emigration situation, but I do not think these problems can be solved merely by stating that they exist and demanding that something be done about them. It is necessary to take certain steps. This Government in this measure is taking some steps—not complete steps —to remedy the situation. This Bill will not end emigration overnight, but the Government is taking some measures, measures we are confident will increase production and give more employment.
From the long-term point of view, this economy of ours must be considerably expanded. There is a lot of slack in the economy. There are a lot of resources left lying idle. There is a lot of labour for which there is no employment. There is consequently the high level of emigration which we all deplore. In the long run the only way that can be remedied is by an expansion in capital formation. Although the rate of capital formation has been improved in the past seven or eight years it is still very much below what it is in other countries, for example, in Denmark. We must increase our rate of capital formation and the main agency through which that can be increased will have to be by raising the economic stability of the country. That will have to be done by the Government.
The Government will have to maintain and, to my mind, increase its capital investment programme. The great task of increasing production, agricultural and industrial, will, I think, devolve to a large extent on the Government. It will have to see that the framework of the State is such that the increased agricultural and industrial production which we want is made possible. The Government will have to stimulate it by means of its capital investment programme.
The difficulty which this Government, or any Government, has to face with regard to maintaining its capital investment programme is the means of financing it and the great problem which is with us at the present time is to find the money for the desirable schemes which we all want to continue and expand. That is one of the reasons why the increase in savings is so welcome—because savings represent a direct means by which we make possible an increase in the Government's capital investment programme.
I think we must face realities and one of the realities is that savings, certainly in the foreseeable future, will not be sufficient to meet the full requirements of the capital investment programme. I think the Government will have to find other means in order to keep the capital investment programme at its present level and, if possible, expand it. To my mind it would be desirable and practicable, and, I think, good economics in the circumstances, to request the commercial banks to lend directly to the Government in order to increase the funds available for the capital investment programme. I can see no objection, in our present circumstances, to the savings of our people being augmented by the commercial banks assisting directly, as they do in other countries, in the capital investment programme before us.
I feel that this country has been going through a very difficult period but I also feel that it is very nearly through it and that the hesitancy of the commercial banks in lending money at the present time can no longer be justified in view of the improvement in our trade balance which is so obvious, and when, in fact, the deposits are increased and gross external assets also. I believe that the period for expansion has come, and that this measure along with other measures that the Government has proposed or has already acted on, or will in future act on, will bring about, or help to bring about, a greater improvement in our unemployment situation and will also assist in bringing about a reduction in emigration.
As I said before, it is useless for us to talk about ending emigration and ending unemployment. We all want these things ended; what we have to discuss in a practical and realistic way are the measures needed to end them and I will welcome suggestions from any part of the House as to how that can be done. This debate would certainly be worth while if we get some concrete suggestions. The difficulties which this Government has had to face have largely been overcome, I think, and on that basis I think we can look forward to a much greater expansion of our economy and a higher level of employment generally.
There is a well-established saying that there are none so deaf as those who will not hear. Deputy Declan Costello must not have been in this House, or if he were in this House in the autumn of 1955, he must not have been listening, because on that occasion a motion was put down calling the attention of the Government to the grave situation which was then developing. To that motion the Government put down an amendment and the amendment was discussed as the main motion. It was an amendment which outlined the policy of the Government for dealing with the situation which was admitted by both sides of the House to exist.
Every Deputy on this side, every Opposition Deputy, stressed that the policy outlined by the Government would inevitably lead to inflation and that such inflation would dislocate our whole economy by leading to an increase in imports and by further depleting the last of our external reserves. In the light of that debate, how can Deputy Declan Costello have the hardihood to state, as he has done, that the Government was not warned of what would happen if the Coalition policy, as set out in formal terms in that amendment, were persisted in? Of course, we know the Deputy is trading on the fact that the public have short memories and that debates in this House are not reported in extenso. But the records are there.
In the course of his speech Deputy Costello referred several times to the improvement in our trade balance. One of the main reasons for that improvement is that stocks are being allowed to run down. We have already consumed a large part of our external resources; we are now engaged in consuming a large part of our internal capital. That consumption is represented by the depletion which has taken place in stocks.
Deputy Declan Costello also suggested that the commercial banks were not doing enough to help the Government in this emergency and that they should contribute more directly to the financing of the Government. I should like the Deputy to refer to a written answer which was given in this House on November 14th setting out particulars of national loans and showing the extent to which the commercial banks had directly participated in the financing of what the Deputy is pleased to call "the Government's capital programme."
I see that in September, 1950, when a 3½ per cent. issue of Exchequer Bonds was made amounting to £15,000,000 the public took up virtually only two-thirds of that amount, to the extent of £10,096,000, but the commercial banks took up £3,269,000 and departmental funds took up £1,634,000. In the case of the 5 per cent. National Loan of 1952, the loan which was decried by Deputy Declan Costello and his colleagues, the commercial banks of course were not called upon to participate because that loan was over-subscribed by the public.
And no wonder.
Let me say here that in contrast to the 1950 loan and subsequent loans which have since been floated by the Government, that loan did not inject any element of inflation into our economy because that loan absorbed the real savings of the public, which had previously been lying dormant, and put them to work on behalf of the State. Then again there were other loans. In deference to the views of the Opposition that the rate of interest on the 1952 loan was too high, I find that a 4½ per cent. National Loan was issued in October, 1953, for the sum of £25,000,000. The public subscribed £16,290,000 of that loan, which carried interest at 4½ per cent. and was issued at 97; the commercial banks took £5,000,000 of it and subscriptions from departmental funds amounted to £3,450,000. In 1954 a 4¼ per cent. loan was issued at 96. The amount of the issue was £20,000,000. The public took up £15,197,000, the commercial banks £4,202,000 and subscriptions from departmental funds amounted to £600,000. In February of 1956—that is this year—a 5 per cent. issue of national savings bonds was made at a price of £98½ per cent. The amount asked for was £20,000,000. The general public subscribed to that £20,000,000 issue the sum of £8,701,000. The commercial banks, whom Deputy Declan Costello has attacked in this House, alleging they have not been of direct assistance to the Government——
I have not made any attack on the banks; I have made a concrete suggestion.
I am showing the hollowness of the prepared speech the Deputy has made. The Deputy is trying to establish himself in public life in this country as the protector of the Government and the people against the commercial banks.
If the Deputy wants to put a twist in it, he can do so.
A speech he made in this House some time ago did more to damage the credit of the country than any other speech ever made here.
The Deputy flatters me.
Because the Deputy is supposed to be a spokesman for a more august person, a member of the Government——
I am a spokesman for myself.
I know. I am not suggesting——
The Deputy must try to keep to the measure before the House.
The Deputy, suggested I am flattering him. I am very far from flattering him.
Let it rest at that.
The Deputy attacked the commercial banks for not contributing to the capital programme of the Government. I was referring to the 1956 issue of 5 per cent. savings bonds, and was pointing out that the public had subscribed £8,701,000 and that the commercial banks, whom Deputy Costello has attacked, were called upon to take up £5,000,000 of that issue. I now come to the 5½ per cent. National Loan, issued in October last for £12,000,000. Of that loan the public took up £9,166,000 and the commercial banks £1,316,000. Having regard to the fact that the commercial banks have been established mainly for the purpose of financing trade and commerce in this country, mainly for the purposes—perhaps one should put first things first—of providing a safe deposit for the savings of the people of this country, and of channelling those deposits into our economy for the use of those who are engaged in trade and enterprise, I think they have done remarkably well in financing the capital programmes of successive Governments.
They have done it so well that we are now faced with the situation in which they have not got the resources which the private producer and the private trader require to enable them to carry on their business, to expand and develop. Because of the work of successive Governments—I do not single out any Government—we have reached a stage in which industry is finding it impossible to get the credit resources and the capital resources which would enable it to expand.
I think, having regard to the position of the Irish banks at the present moment, that they may not be able to participate to any great extent in Government financing and at the same time meet the requirements of private trade and industry. Deputy Declan Costello says they ought to provide more money for the Government. Where will they get more money; does he suggest they should create a paper credit for the purpose? When he next speaks would Deputy D. Costello be good enough to dilate upon that theme?
It is very difficult to talk about these matters openly and freely in public because if one does one is quite likely to be accused of damaging the credit and reputation of certain institutions. But would Deputy Declan Costello just tell the House how he expects the commercial banks to give any further assistance to the Government of this State? I am not now referring exclusively or particularly to the Coalition Government. Would Deputy Costello say how he thinks the commercial banks could, in their present circumstances, do more than they have been doing over recent years to enable the Government to carry out the programmes of alleged capital development which have been put before them?
Does the Deputy not know the present liquidity ratio of our banks? Does he not know how hard-pressed they are to try and maintain their present banking reserves? Does he suggest that they should deliberately create credit and intensify the inflationary spiral which has brought the country to its present condition? If he has that in mind, the Deputy ought to say it out and not come in here, as a member of the Government Party, pretending to have a magical panacea which will get the people of this country out of these difficulties without imposing any hardship or any deprivation upon them. Having dealt with what Deputy Declan Costello had to say on this matter, perhaps I can get back more directly to the Bill.
I think the first thing that will occur to the general direct taxpayer, when he reads this Bill—if he ever reads it —or when he learns about it, will be to ask himself why the incentive of a reduction in the taxation of profits is extended only to mine-owners and not to him. Surely he will ask himself why should one category of producers be singled out for this favoured treatment as against all other sections —why should one section of earners be given concessions which are not extended to all? These are all relevant questions. They are questions of great importance to the 200,000 odd individual payers of income-tax who will receive no benefit whatsoever under this Bill. Why should concessions be confined solely to a small class of producers and not extended to those who render the essential service of distributing goods? I want to make that point. The people who distribute goods in this country render indispensable service to the economy. Why should distribution of goods not receive the same ra of concession as those who produce them? Finally, why should tax concessions be confined to a class of owners only and withheld from wage-earners and other employees?
I have said that these are all relevant questions to the 200,000 odd individual payers of income-tax who will receive no benefit under this Bill. They are questions of particular personal interest because, as Deputy Corry pointed out in the course of his speech, not only will the 200,000 odd payers of income-tax receive no concession or direct benefit under this Bill but they will be placed under an additional disability by reason of the fact that they will ultimately be called upon to bear the costs of the concessions when they become effective.
I mention these aspects of the Minister's proposal not to raise vexatious questions or in any spirit of factious opposition but to underline the fundamental defect of our tax structure which has made a Bill of this sort, limited as it is, essential if we are to pursue the policy of developing our resources. The fact which this Bill spotlights is that our present system of taxation bears too heavily on producers of all classes—not merely, remember, on those to whom this Bill will grant some relief, not merely on mine-owners or owners of industrial buildings or exporters but also on every direct taxpayer who is engaged in trade and industry—on the managers, on the salaried personnel and on the wage-earners alike. The very fact that the Minister has brought in this Bill is an admission that the burden of direct taxation on production and on producers is so heavy that it has killed all initiative and spancelled enterprise.
In that connection, let us consider the class of enterprises which the Minister has singled out in the Bill for preferential treatment. When we do, I think we will realise that they give startling proof of the argument which I make. I want to be quite clear on this matter. I am not criticising the Minister for what he is proposing to do in Parts II, III and IV of the Bill because even the little that the Bill does is better than nothing and, for that reason, we welcome it. But let us consider the measure in relation to the undeniable fact that taxation on trade and industry, on enterprise and labour is too heavy.
Let us consider, as I said before, the principal beneficiaries of the Bill-those who work and develop our mineral deposits in general and those who engage in mining coal for domestic consumption. In relation to the first of these classes, the general mining interests, the Minister has mentioned that never in our history have foreigners manifested so much interest in the mineral resources of this country. We should ask ourselves in that connection what is the urge behind these interests. It will be found in the world situation as it has developed, and as it is likely to continue to develop with increasing tension in the near future. In these conditions, the mining companies are feverishly prospecting for new mineral resources and are speculating at great odds in doing so. Because, I think, of the success which attended the long and hazardous efforts of the Fianna Fáil Government to prove the existence of a large body of ore in Wicklow which could be economically worked, the attention of mining experts has been directed to this country. Normally, that attention would be followed by investment and prospecting and working. Apparently, however, these concerns, even with all their large resources, have come to the conclusion that investment would not be worth while and even in present circumstances would not be justified because of the heavy tax burden their efforts would have to carry. The Minister—and, I take it, this Bill is proof of it—apparently has been convinced that this is indeed the position and, as I have said, has brought in this Bill to ease the burden so far as this special class of enterprise and investment is concerned.
Let us draw the moral from the Minister's action in this regard. At a time when there is an abnormal and rapidly increasing demand for minerals, when, one might say, the four corners of the earth are being scoured for workable deposits, when the several Governments behind these great mining corporations are clamouring for them to find greater and greater mineral resources, the Minister admits in a very practical and undeniable way that, even in the unique circumstances of to-day, taxation in this country is so high that unless it is reduced by 50 per cent. our mineral resources will never be developed.
What I have said in relation to the general mining operations applies in like manner to our coal-mining deposits. We are confronted with a probable fuel famine, with a possibility that for a long time this country will be grievously short of fuel and that, therefore, for years to come there will be a ready sale for any coal which may be made available here. In such conditions, it would be normal to expect that there would be intense interest in our coal deposits and intense activity in working them. In fact, the interest and the activity appear to be nonexistent. Again, we should ask ourselves what is the reason for this entirely abnormal lack of interest. The Minister's Bill gives the answer. It expresses his emphatic opinion that in this country taxation of production and the profits which arise therefrom is at least twice as high as it should be in the public interest.
It would be dishonest to conceal that I share that view. I have, time and time again, said in this Dáil and elsewhere, not merely this year or last year, but when in office and out of office, over the whole period since 1927, that the rate of direct taxation on industry and producers is too high. The present Minister has expressed that same view—at least while in office. It can be alleged against him, as it could also be charged against me, that we have failed to make our views effective and that we have not reduced the direct taxation which is crippling our industries. But let us bear in mind that when huge expenditures are demanded from the State, the Minister for Finance has got to get the money where he finds it. In view of the public attitude towards these expenditures, the strong demand for them, heightened and stimulated by speeches not only of the Tánaiste and his colleagues of the Labour Party but by members of the other Parties also when the Coalition was in Opposition, it was practically impossible to exert such control as would enable taxation to be reduced. The best one could do in the circumstances of the time was to try and make ends meet and no matter how excessive the expenditures were to try and make the State pay its way as it went.
The consequence of following even that limited policy was evidenced by the result of the 1954 election. The country is now reaping the result of that and I wish that Deputy Declan Costello was present to hear me because he is one of the persons who was largely responsible for reducing the State to its present depressed condition. The country is now reaping the whirlwind from the seeds which were sown by an irresponsible Opposition in 1947 and 1948 and from 1951 to 1954. It is now reaping that whirlwind in the shape of shortage of capital; in the restriction of credit for the legitimate needs of trade and industry; in the deprivations to which the community as a whole is being subjected; in the growing unemployment; in the headlong emigration; in the debased public credit; in our depleted capital resources and in an empty Exchequer. Our local authorities, having incurred obligations at the instance of the Central Government, are also reaping it for they, too, are now finding it impossible to get the Central Government to honour its obligations to them. All of these evils stem from the success of the Opposition in defeating the Fianna Fáil Government in its endeavour in 1952 to restore order in the public finances and put the national economy on a sound foundation. However, Sir, that is water under the bridge, it is past history, and I refer to it—even if. I have referred to it somewhat emphatically—only to reinforce the argument that if we want the State to survive there must be a new approach to these matters on both sides of the House, no matter who may be in office as Minister for Finance.
On that basis I approach this Bill. It gives some relief but not enough relief. It does not give that widespread easement which is the crying need of all those who are engaged in productive employment. The Minister may well say that he cannot do more. Perhaps it is for that reason that the long Title of the Bill is so narrowly drawn. If it were not so narrowly drawn perhaps useful amendments could be put down, not, indeed, with the expectation that the Minister in present circumstances could accept them but with a view to discussing closely the disabilities under which our producers labour.
We could even have the Tánaiste in on that discussion. He might then learn enough about our industrial problems to convince him that Irish industrialists are not blood-sucking profiteers whose proper place is behind jail walls. He might even be convinced that barnstorming speeches will not lead to the establishment of new ventures. The provisions of this Bill are proof that industrialists cannot be solicited to invest their capital in this country by the verbal blandishments of the Tánaiste. The newspapers this morning lend point to that with the announcement that an American corporation of the highest standing has arrived in Derry to establish a huge works there to manufacture a product of ever-increasing importance in life and industry, and for this purpose has acquired a site of almost 400 acres.
As an Ulsterman I am glad that the industry is at least to be located in Ireland and not elsewhere. But I ask myself, and I think we all ought to ask ourselves, why is it not coming to this part of Ireland? The provisions of this Bill suggest the answer. The Tánaiste has been tireless in his travels seeking to interest foreign capitalists in our industrial possibilities. I have no doubt that he painted these in glowing terms and I have no doubt that he established contact with the Du Pont concern in America and employed all his powers of persuasion to induce the management of that firm to consider the advantages of establishing their new neoprene works in this part of Ireland. Apparently he was not successful, not only in this but, judging by recent replies which the Tánaiste gave in this House, in every other instance too. Apparently, the American businessmen all came down to brass tacks saying: "Now, Mr. Norton, tell us how is industry taxed in your part of Ireland?" No doubt when that question was put to him, the Minister acted like a parish priest whom I heard of who had been to Rome. The parish priest was able to answer satisfactorily every question which the Holy Father had put to him until the very end when the Holy Father said: "Well, now, Fr. O'Donoghue, could you tell me how do the people pay their dues?" and the priest, recounting this to his parishioners at a later stage, said: "And that, my dear brethren, is when I had to hang my head."
I suppose when this question was put the Tánaiste had to hang his head and if he did not he should have. Only a few years ago the Tánaiste's Party was crying out for penal taxation to prevent private enterprise from making profits. I have referred to this topical instance to show how our industrial development is being hampered by excessive taxation and in order to drive my point home and that point is that the Bill does not go far enough. Even to the limited extent to which it gives any reliefs those reliefs are too restricted in point of time. Several of the operative sections of this Bill and in particular those in Part IV of the Bill relating to industrial building allowances, only make the allowances applicable in respect of expenditure incurred on or after the 30th day of September 1956. Having regard to the terms of the Minister's Budget speech many people assumed, particularly when the clauses of the Finance Bill relating to initial allowances were read by him, that any concession in respect of industrial building would run as from the 30th June 1956. It would be well if the Minister could see his way to amend the Bill in that regard.
I know it would be futile having regard to the state of the Budget, to ask him to widen the scope of the measure, but this measure in itself is an indictment of the tax structure which has been built up here over the years and which weighs much too heavily upon production. We cannot hope to develop an export trade. We cannot hope even to cater for our home needs unless some relief is given to industrial enterprise and indeed to agricultural enterprise because do not forget that that is over-laden in another way. However, that would be outside the scope of this measure and I do not want to touch upon it. Unless we can find some way of allowing a greater share of the profits derived from industry to remain with the industrialist to fructify by being reemployed in the development and expansion of his business, I cannot see that we shall ever again be able to affect the fringe of the unemployment problem which will grow as the years go by.
I have not so far referred to Part V of the Bill which enhances the moral of what I have said when I was referring to the remarks which were made by Deputy Costello. It is a sad thing to think that this State, after being over 30 years in existence, having survived, if you like, the vicissitudes of a civil war, having survived the economic war and the last World War, having come out of the last World War one of the strongest and most creditworthy States in the world, should be reduced to the poor devices to which the Minister was reduced when he was floating his last loan.
I mentioned already the amount of that loan. Deputy Declan Costello thought the loan was a great success. I think it was a great humiliation to everybody in this House and to all those who are concerned for the reputation and prestige of our country abroad that we should have to offer 5½ per cent. for an issue which, by preceding issues, was a relatively modest one for what is virtually a five-year loan, because that is what it means. The terms of this loan, according to the prospectus, are, that it can be tendered at its issue price for any loan which the Government may make within the next five years. It is said in justification, of course, that this is a device to safeguard the subscriber against depreciation. The loans of this State should not depreciate. We are a young State and we had a modest national debt. The whole tendency of our loans was to appreciate until the time came when we could no longer raise the money, when, because of the manner in which previous moneys had been expended, we could no longer raise money upon reasonable terms, and when, because we could not allow a construction programme, once embarked upon, to collapse for want of finance, we had to offer those terms which would attract the moneys we required.
Perhaps I am being a little bit diffuse in this matter but the point I am making is that for the next five years whatever Party is in office, whoever happens to be Minister for Finance, whenever a new loan is issued and the Minister wants £10,000,000 or £12,000,000 and he is compelled because of the state of the market to offer, say, 5¾ per cent. or 6 per cent. every penny of the £12,000,000 raised in last October, except to the limited extent to which people may avail of the option to exchange into Exchequer Bonds, can be tendered to the Minister's successor in subscription for the loan. That certainly is a case of making certain that whoever comes after you will have to honour, to his detriment, the obligations that you incurred. I could characterise it in very strong language, except for the fact that being a former Minister for Finance I recognise the difficulties of my successor. I do not want to offend him or do anything which would reflect upon him. However, I do say that all of us in this House should take note of this matter and see whither we are tending. We are tending towards positive bankruptcy and it is a matter of such grave public importance that I do not want to talk too much. I try to refrain from talking about it, except when it is necessary to do so because of the issues which are raised in the House.
There are a few other things one could say about the premium bond issue. There we have another instance where within six months a person can secure capital appreciation to the extent of a fraction over 2 per cent. free of tax. The Minister will, perhaps, be in office when he issues the bonds but if he is not, think of what his successor will be up against. One could jeer and sneer at these things. One could talk about the Minister and the Government running a pool-room or making a book. One could say that the Taoiseach would be going around the fairground, with a band around his hat saying: "Costello cannot cheat" or perhaps that the Minister for Agriculture might have another band around his, saying: "Dillon does not diddle".
We can make jokes about it but it is a serious problem not merely for the Minister for Finance but for everyone in this House and for the people outside this House who think that all the Government has got to do is to spend and borrow in order to keep the appearance of an unreal prosperity in the community.
I do not want to say any more about this situation. I think it is a bad thing and a poor thing that this State, which was founded not merely on the sacrifices of our generation but on those of previous generations, should, after a little over 30 years of self-government, be reduced to raising money on these terms.
Introducing this Bill, the Minister has done something unique. I commend his spirit of enterprise and I congratulate him on his constructive and prompt proposals in this measure. It is obvious that he is a person who can cut across the conventional precedents in his Department and that is something upon which I, in particular, commend him. For a very long time we have been far too conservative in dealing with our tax code.
In Part III of this Bill we have certain rather unorthodox, perhaps, revolutionary, provisions which I welcome very much. In granting in Part IV the industrial building allowance the Minister is implementing the second major recommendation of the Committee on Industrial Taxation. That, too, is something which will serve as a valuable incentive to our industrialists to modernise their industrial buildings. The American experts who produced a report here on industrial activities recommended, I think, an amendment of our tax code of this nature.
Too many of our industrialists are endeavouring to carry on in antiquated buildings and competing against heavy odds. This 10 per cent. allowance is quite generous. Certainly, we can say that the Minister would have been quite chary in introducing it because there is no doubt that in many cases it will have the effect of completely exempting from tax an industrial firm which carries out capital development during a particular year of assessment. To that extent, it will, of course, affect the Minister's revenue.
I think the last speaker referred to the fact that the proposal in Part III, the export concession, was restricted as to time. I may have misunderstood him but, in any event, that view could be expressed. I welcome the five-year restriction on this export concession. I think we should be very slow to introduce discriminatory provisions into our tax code and I believe it is only because of the particular circumstances of the time and the grave urgency of coping with the balance of payments problem that justifies us in bringing in this particular concession for exporters. It may be decided, after the determination of the five years, to carry it on, but in any event I believe that for the moment the Minister is doing a wise thing in restricting it somewhat.
Having said that, I should like to see Part III of the Act mechanically less unwieldy and perhaps somewhat broader in its scope. I do not wish to go into detail in regard to it, but there are three or four points to which I should like to refer. It appears to me —I hope I am wrong, but I am afraid I am not—that the export concession is confined to corporate bodies. I cannot see why that should be the case. There are many firms exporting which are sole proprietorships or partnerships and not registered in the form of a registered company. Why should they be discriminated against to that extent?
Last night Deputy Lemass queried the definition of the word "goods" which are defined in this section as goods manufactured within the State. I am rather afraid that when an inspector of taxes or the Special Commissioners come to interpret that it is possible that there may be a precedent for the exclusion of goods assembled within the State, perhaps components imported and assembled for re-export. There is not enough of that type of the export trade carried on here. To some extent I think it is possible to argue that we do not sufficiently avail of the imperial preference concession in respect of assembled goods provided they are of 50 per cent. Irish content. I should like some clarification on that point by the Minister.
In connection with this part of the Bill, I should like to ask the Minister what is wrong with earning profits and having earned them what is wrong with distributing them? Surely the aim of this Part should be to provide the maximum possible incentive to enterprising industrialists to export their goods? Is it reasonable to debar them purely from increasing their personal incomes as a result of their initiative and enterprise?
Section 12 sets out how the tax concession is obtainable. Again, in connection with the word "development" used in the section I suggest that is a very vague and broad term and individual inspectors could very well query certain expenditure. There is a further difficulty which I see as an accountant in connection with a firm which is engaged in the export and home market and has a mixed profit. Who is to say which particular portion of the profit has been utilised for development purposes? Again, surely it is out of accord with the aim and spirit of the Bill to confine that development expenditure to expenditure incurred within the State?
I will not go into too much detail on that section, but I want to suggest that there is an obvious form of development of the export market which might not qualify under the section. For example there could be the case of an exporter selling in a foreign market who would set up a sales department in a foreign country. A firm of sufficient enterprise to carry out that step could find itself debarred from these concessions because it was development on a foreign market and not on the home market. Again, there is the case of people solely engaged in the export trade and they could similarly find themselves debarred. These are points I should like the Minister to clarify in his reply or at some later stage.
There is also the point that the standard period referred to in the Act is taken as the year ended September 30th and here I can see problems arising in which I have a particular technical interest. Is the Minister in a position to tell us that, for the purposes of this section, a declaration of these export sales will satisfy the Revenue Commissioners? If the Revenue Commissioners are going to require full manufacturing trading accounts for the purpose of this section very considerable expense will be incurred both in the office of the Inspector of Taxes, because of the extra work involved, and by the industrialists because they will have to have a separate accounting and it would be questionable whether the expense involved would justify the concession obtained.
If it is necessary to prepare full accounts for this purpose I can well see individual inspectors, who would apparently have discretion in the matter, insisting on full details of trading. If that is necessary the Minister will understand that it will require taxpayers to furnish annual accounts for the usual accounting period and then come along again and furnish further accounts for the year ended September 30th in the basic period. That could provide a very considerable administrative difficulty. I would like the Minister to deal with that matter and to consider the question of using as the standard period the ordinary accounting year which the individual taxpayer avails of.
I congratulate the Minister on this Bill. I think that the last speaker was unnecessarily concerned about the ethics or the morality of Part V. I can see nothing wrong with it. There is a lot of money spent on schemes of this nature. Again I commend the Minister for the spirit of enterprise and initiative which he has shown in producing these attractive proposals.
This Bill, as I see it, is an implementation of the Government's policy as recently announced. It is definitely related not only to that policy by which we seek to get out of our present difficulties but it also has a direct relation to the policy of the past and the set-up politically and economically in this country over the last few years. It has a direct relation to the shortage of capital that exists and which, whether we like it or not, is with us. It has also a direct relation to the underdevelopment of this country. It is a definite step forward and is a very realistic measure which will help us to come through our present difficulties. It is a measure which undoubtedly will give great and material assistance to the efforts of our industrialists by helping them to enter the export markets and in helping us to cure our balance of payment difficulties.
I was listening to Deputy MacEntee and, while I agree with quite a lot of what he says, I think he did go a bit too far in trying to condemn some of the things contained in this measure. It is hard to reconcile his case with some of his statements in the past. It is hard to reconcile his statement that indirect industrial taxation is too high with the statements that we know to have been made by Deputy MacEntee in the past when, as Minister for Finance, he said that it was better for the people that he should spend more of their money for them and that they should spend less. I cannot give his exact words on that occasion, but it is very prominently in the minds of everybody, politically or economically interested in the welfare of this country.
I do not want to spend most of my time in dealing with the statements made in the past by Deputy MacEntee but I would say that I think he should have approached this Bill in a fairer manner. This Bill, as I have said, has a direct relation to the political policy over the last few years and also to the political policy of the Government of this country at the moment.
We can compare the action of the Government of 1952 in rather similar circumstances—with the one very definite difference that we had not got at that time a great shortage of capital —with the steps now being taken and with the other steps that have been taken. We find that, taking the long term view, it is obvious that the steps taken in 1952 failed. The steam-roller Budget imposed then was dealing with an exactly similar position, with the reservation that there was then no shortage of capital and in 1955 we have reversed right back to a situation similar to that in which we found ourselves in 1952. That is not a political statement by me but a statement of fact. The present approach to our difficulties is in my view the right one and I am inclined to think that Deputy MacEntee also believes it to be the right one and believes that an increase in direct or indirect taxation is the wrong line to follow. I think he, too, believes as I do that any approach to the problem should be the approach that has now been taken, namely, that any impost that must be put on goods or commodities to discourage people from using those commodities should be placed on the specific commodities that are the cause of our difficulties.
There is also the point that credit should be restricted. It was restricted by the commercial banks and I think they approached the problem very wisely. It was necessary that there should be credit restriction in order to preserve our dwindling external assets. However, they did not restrict credit for agriculture and I do not think they restricted credit for industry either. They restricted credit for other purposes. They restricted credit in cases of spending by people who should not have spent money on themselves, in cases where there was wastage. But I think their general attitude was the correct one and they made a very real contribution towards effecting relief from our difficulties.
The Bill proper seems to me to be one in which we seek to overcome specific difficulties. It is not wide in its scope. It could not be because any upheaval in our present economic setup would be totally unwise at this stage. But it does provide for relief from taxation in respect of capital expenditure on mining. This morning Deputy MacEntee took the same line as he did in relation to the Avoca Mines when they were being discussed. That line was that mine-owners should not get this concession. He began his remarks on the Bill proper by saying it was not wide enough, and his second remark was that coal-mine proprietors should not have got this concession at all.
I believe they should. If we want miners to seek to bring to the surface the valuable assets buried under the land of this country, we must give them the opportunity of doing so without having to pay tax on capital expenditure in relation to their new shafts and openings. It is all right to say the mining countries do not do that. Of course they do not, because there has been mining there for years. They probably know, in fact, when they sink their shafts and spend their money that they will get a return. Ireland, however, is an absolutely new venture. While I know nothing about the technical side of it, I may assume that, no matter what tests you have to make sure that, if you spend, say, £500,000 on a mining project, you would get an asset worth that amount, in the case of Ireland you might still be bitterly disappointed and get something not worth a penny. This concession must be given to miners. Mining here is different from anywhere else in the world and when we ask people to risk their capital here we should be prepared to give miners that concession.
I entirely agree with the provisions for temporary relief from income-tax and corporation profits tax in respect of exports. The specific problem here is our balance of payments. If we give this specific temporary relief from taxation, we will be directing our efforts towards solving that specific problem. We will not have the necessity of placing huge increases in taxation on the shoulders of all our people. If we have a specific problem why not address ourselves to it? In 1952 the general approach to this problem failed. Why should we make the same mistake in 1956?
Deputy MacEntee may ask why should not the industrialists who are producing for the home market get a concession which will allow them increase the output of their factories? If we gave that concession we might have to increase taxation generally. I believe it is fair to cure a specific problem by attacking it specifically. I think the Minister has done very well in giving this temporary relief from taxation and I hope it will be successful.
The allowance for industrial buildings is again an approach on the same lines. If we build up our factories we import less and export more. We are giving there a very valuable concession and I believe the Opposition think that is so also.
Finally, I would like to say that this is just another of the measures which the Government has taken to deal with our problems. It appears now as if there is a chink in the dark cloud to be seen on the horizon. I do not think for a moment, however, that it is any more than a chink, any more than the merest suspicion of a silver lining. Every person in this country who addresses himself to the problem must know that the measures taken by the Government have brought about this situation. While it has been a weary wait for this improvement to come about, I believe it was better to have it brought about in this manner rather than the way Fianna Fáil attempted to do it in 1952. I have the utmost confidence in the Minister. This Bill has a definite approach to our specific problem and I look forward to its successful results in the economy of the country.
Sitting in this House reminds me of the situation where a man stays out in the sun all day. By his over-indulgence, he is inclined to get a touch of the sun. If a Deputy stays here all day listening to the speeches, both good and bad, he is inclined to get into a fog in regard to his own contribution. To be quite frank, that is the position I find myself in now with regard to this measure. Listening to Deputy MacEntee I felt that if we were to take him seriously we should all have the creeps about the future of this country. He gave the impression that, after surviving the Civil War, the Economic War, the last war and the various other crises that arose, it appeared now that we were at the end of our tether. I agree with him that the situation is very bad but I also maintain that this country will go on in spite of the Deputies in this House and irrespective of whatever Deputies are in it. This country in each generation is prepared to throw up suitable material to help the country out of its difficulties whatever those difficulties may be. I would suggest that the right to guide the destiny of this country does not lie in the hands of a few individuals in this House who because of the past feel entitled to hold on forever to the reins of office.
In the course of Deputy MacEntee's contribution one point struck me. It was the fact he admitted that since 1927 he has felt that the burden of taxation has lain too heavily on the State. He pointed out that Deputy Sweetman, the present Minister for Finance, agreed with him on this, especially while Deputy Sweetman was Minister for Finance. Both these men had the responsibility of being in control of our financial situation. Is that not an admission that neither of them was in a position to take any worthwhile practical measures in regard to that matter?
Would it be unfair to suggest that, if they put their heads together and sat together, for a change, they might get practical results, instead of playing petty Party politics opposite each other in the House? I can see no fundamental difference of approach on this matter here to-day, no cleavage, no real difference of opinion as to how to tackle the problems that face the country. Every Deputy who spoke from the Fine Gael and Fianna Fáil Benches admitted the seriousness of the situation and all the contributions to the debate so far can be summed up by "What is your plan?", hurled from one side of the House to the other. As far as I can see, no plan has emerged from either side of the House. Where we have unification is in the lack of concrete proposals to deal with the situation.
The Minister for Finance introducing this measure, stated that it was of paramount necessity to stimulate production and thereby increase exports. The measure he introduced was, I presume, intended to give the necessary fillip to industrialists within the State to export. In so far as this measure will give the necessary encouragement to exporters, I welcome it, but I think the Bill is nothing to get excited about. No great benefits will accrue to the country in the form of dynamic increases in exports from it. The tragedy is that the Taoiseach, in his efforts to come to grips with the situation, instead of going to the root of the trouble and tackling it there, is prepared to snipe at the problem and deal with minor issues.
This measure has been introduced in order to try to solve the balance of payments problem. Reference has been made to that problem in every contribution to the debate to-day as if it were the most serious matter that could exist or the most important matter to be tackled to-day. It is only in so far as it has reference to this Bill that I propose to deal with that problem. Whether we increase exports to-morrow morning or not, we will still have a balance of payments problem. If exports are doubled tomorrow morning, we will still have a balance of payments problem because the very fact that we create more wealth by producing more will stimulate a demand for more goods that must be imported and for every £ worth of goods imported, the people will demand luxuries and the more luxuries we are forced to import as a result of increased expansion here, the greater the balance of payments problem will become. It is sheer lunacy to harp continually on the balance of payments problem. That problem has been with us always and will be always with us, while we are tied as we are to the pound sterling.
I do not propose to go into that aspect of the matter, but as long as we are in the sterling group and have not control over our credit or currency, a balance of payments problem will exist—whether big or small is another matter. The tragedy is that so much time and attention is devoted to that problem, that there is more concern at the present time about that problem than there is in regard to the figures for emigration and unemployment, that there is more respect for the £1 note than there is for the family that have to leave the country. That is what this measure proves.
For the nine year period ending 1955, we imported £1,500,000,000 worth of goods and exported £745,000,000 worth of goods. During the same period, our income from pensions, remittances, tourism, and so forth, was £548,000,000, leaving a deficit over that nine year period of £207,000,000. The average was £23,000,000 per year in that period. In one year, it was £61,000,000. Is it not a fact that that lack of balance has existed for the nine years for which I have given figures and that, no matter what we may say or do, it will remain?
Going back to 1947, we find Fianna Fáil were beginning to realise that the first signs of danger were appearing. They took steps at that particular stage to cut down on spending. Every three or four years this problem arises and it is extraordinary that Deputy MacEntee maintains that it arises only when the inter-Party Government are in office or are about to leave office. To be fair, I say that this balance of payments problem has existed irrespective of whether a Fianna Fáil Government or an inter-Party Government were in office. If we could get an honest admission that the balance of payments problem does not arise because there is an inter-Party Government in office or a Fianna Fáil Government in office, but arises irrespective of which outfit is in office, something would be achieved.
Instead of being obsessed as to whether we owe £10,000,000 or have £10,000,000 too much outstanding in our balance of payments, would it not be advisable to produce at home the goods we are now importing? Instead of having a restriction on credit and having very worthwhile capital development programmes held up, postponed or deferred on the basis that money is not available, would it not be better to allow the money that is available to go into circulation and thereby increase employment and afford an opportunity to the industrialists in Ireland to have their products or portion of them sold within the State? Is it not a fact that, if the present rate of emigration continues, our industrialists will in future be planning on the basis of an export market only? There will be no reasonably proportionate home market available to absorb production. That stage has already been reached in many spheres. It is no longer a paying proposition for a man to go into industry on the basis that he will have a home market for the consumption of his goods. At the rate at which we are losing people through emigration the majority of our industrialists will in future have to depend more and more on the export market.
Deputy Corry was quite right in emphasising the things that are not brought within the scope of this Bill. I challenge contradiction now of the fact that we import in foodstuffs, processed and unprocessed, at the rate of £2 per family per week. That is the import figure for foodstuffs over the years. Those foodstuffs could be and should be produced here. Would not that be a more practical way in which to deal with our balance of payments problem? Would it not be better to offer the essential attractive terms to the producer here to induce him to produce those foodstuffs for our own people instead of trying to generate enthusiasm for an export market amongst a limited number of industrialists? That is what this Bill is seeking to do.
I say there is nothing in this Bill about which to get excited. It does not reach the fundamentals. The land is there. The people, to a limited number, are still there. Instead of bringing these palliatives, which will only have a limited effect, the Minister for Finance, the Taoiseach and the Government should get down to the serious problem of producing within the State the goods that are at present imported. We know that the restrictions which the Minister had to impose earlier this year have caused a certain amount of hardship. They have caused hardship in the distributive trades. Many have lost their work in the distributive trades because of the import restrictions and because we felt that the balance of payments problem was a serious one. We could have avoided all that hardship had we said: "Instead of hitting at all these semi-luxuries, we will block our ports in so far as the admission of foodstuffs is concerned and give the necessary guarantees to the primary producer here to enable him to produce the articles here." Is it not a better proposition to give a guaranteed price to the man who is prepared to grow malting barley rather than pay three times as much to a man 3,000 miles away to send that food here? The same applies to wheat and all the other foodstuffs that are imported now.
Frankly, I can see no new approach on the part of this Government. I can see no difference between the approach of this Government and the approach of Fianna Fáil in the past on this question of external assets and the balance of payments. To give them their due, Fianna Fáil have always worshipped at the sacred altar of external assets. When the inter-Party Government came into office, having listened to their keymen, I thought there would be a change of mentality and a change of approach on this question of external assets.
What do we find? They have bowed down even lower in worship before the sacred altar of external assets than Fianna Fáil ever did. That leaves the public in general very depressed. Fianna Fáil have made their policy very clear. We know where they stand, and we can take it or leave it. But, with regard to the inter-Party Government, we do not know what exactly is the guiding influence and the controlling principle as far as finance is concerned. Is it the old orthodox policy that has been pursued for the last 30 years? Is that still controlling our destiny?
Deputy MacEntee has enumerated the various stages of crises through which we have gone, which we have managed to surmount or from which we have succeeded in protecting ourselves. It cannot be denied that our finances are in a perilous state. It cannot be denied that the volume of emigration is suicidal from a national point of view. It cannot be denied that the unemployment problem is very, very grave. It cannot be denied that taken all round our country is in a bad way. All that is admitted. Yet, have we changed one single iota from the financial policy pursued over the last 34 years?
Have we not pursued down along the years the same orthodox financial policy all the time? Where has it got us to-day? Is it fair that we should blindly follow the same financial policy over the next 30 years, the policy that has brought us to the present impasse? A change of mentality is essential if we are to bring the country out of the state in which it is to-day. We want a new approach.
Deputy Declan Costello said to-day that he is as interested in solving emigration and unemployment as I or any other Deputy. I never suggested that he was not interested. But I suggest now that the path that Deputy Costello is travelling is the path that has been trod for the past 30 years without any success in remedying unemployment and emigration. I think I am entitled to emphasise that at every possible opportunity. The solutions that have been adopted in the past have proved a failure. It is time new solutions were found and a new outlook adopted.
Our balance of payments position can be affected by devaluation. In reply to a question, the Minister told me that we have full control over our credit and currency. I could hardly beheve my ears when he gave that reply. He did not even blink. Would the Minister agree that when devaluation took place in 1949 we lost 30 per cent. of our external assets? Had we any control then? Had we any say when import prices, about which we have heard so much under this Bill, went up in the following two years by 47 per cent? Had we any control then? Is it not a fact that we are at the mercy of outside influences in all these things? It is unfair to penalise the public. It is unfair to say to the public: "If you tighten your belts this week things will improve next week." Is it not unfair to suggest that the position can be remedied in that way when outside influences may completely alter the position in two years' time?
I should like the Minister to give me some information about these coal-mining concessions. In my constituency there is a good deal of coal-mining. The difficulty confronting the people in Roscommon over the years has been the difficulty of getting a market. I have seen the coal lying outside with no market for it. In the last 12 months practically all the mines in Roscommon and Leitrim closed down because there was no market for their commodity. Many of the workers had years of training and the majority of them went to England and Wales and are working there at present. How does the Minister hope that the incentive in this Bill will provide employment for these men who have now left? Is it felt that the concessions offered in this measure will be attractive to the mine-owners and, if so, how can they get a market if they go into further production?
The position is that there is no market available at the moment and I would like the Minister to explain how the incentive in this measure is going to provide a market. I know we all want to see our minerals exploited and developed, and that applies of course to our coal deposits equally. I feel we should, as the saying is, leave no stone unturned to get maximum production but I think there are other ways of going about it apart from offering very attractive terms. If British coal is available, or American coal secured through British sources or any other sources, there is a certain element in this country who will buy the imported commodity in preference to the home-produced and I believe we should not have this foreign coal made available. The simplest way out of it is that if you have no foreign coal available there will be a market for the home-produced coal. Only for the fact that foreign coal is available in such liberal quantities, the miners in Arigna would be working to-day because there would be a market for the home-produced commodity.
I have even seen a big State company utilising foreign fuel in preference to excellent fuel available to them at Arigna, and they were allowed to get away with that. The Minister will not discuss, of course, what is at the back of all this. I have often asked in this House why it is we are allowing in so much coal. Would it not be a simple matter to put on an embargo to prevent the coal coming in? Would that not be simpler than trying to do it indirectly through this measure by giving an incentive to colliery owners to increase their production?
Of course that cannot be done, we know, because of the 1938 Agreement. We are bound hand and foot by that to import whatever coal Britain wants us to take and we cannot get out of that agreement, as far as I can judge. At any rate we have made no move to get out of it. We have the extraordinary situation in which Britain cannot produce enough coal for herself. At times she has to import coal from America. Yet, we insist on keeping up our end of the 1938 agreement by importing coal from her. I think we should get that position clarified, and as far as Britain is concerned let us make it clear that we will not be tied to any agreement regarding the purchase of coal and that we will utilise our home-produced fuel, peat, water and coal, so far as it is available, to replace this foreign fuel. If the Minister took that line of approach it would not be so necessary to give these further incentives to mine-owners.
There is another section on which I would like some information, Section 16. It is a matter of clarification. I feel there may be a clash there with the Undeveloped Areas Act. There are certain provisions at the moment by which facility or at least priority, is given to industrialists in undeveloped areas. I wonder if there will now be a clash of interests so far as the development of new industries is concerned, whether further attractive concessions will be made in the undeveloped areas as a result of this measure, or whether the concessions now being made available generally will detract in any way from the attractions already in existence for undeveloped areas. Will there be a reduction, so far as these areas are concerned, in the attractions available up to now? If you like it could be put this way: Will the increased attractions now offered to industrialists to set up in Dublin or Kildare or anywhere else react unfavourably on the undeveloped areas?
There is another aspect of this question and I would ask the Minister to refer to it if he has time. What bearing has this Bill on our distilling industry? I do not want to delay the House but I have here a copy of distillers' report over a number of years. They made this report available to the Minister—it was last year, actually—in which they put up a case for certain reductions in taxation and so on in order to give them a chance to get into the export market. I would like the Minister to let us know, if he can do so briefly, are there attractions in this measure that facilitate any of the distillers who are anxious to expand their trade to the Canadian and American markets in particular, for the sale of whiskey?
In any efforts that are being made by the Minister or by the Government to expand industry preference should be given, I maintain, to those industries which are based on the land. It may be that a certain amount of benefit can be got through assembling industries which give employment, but the industry that is depending on the land for its raw material should in my opinion, get preference over any industry that has to import its raw materials. The industry to which I referred a few moments ago, whiskey, depends on the land for the barley and everything in connection with it. These raw materials are produced within the State and if, as the position has been up to the present, that the distillers maintain that the home market has not been available to them, or in other words, that the cost of commodities has been driven up in recent years with the result that there is no demand on the home market for their output, will the Minister not tell me now whether he thinks the case made by the distillers that the home market is not able to absorb their product or even two-thirds of it, will still stand? Will they, under this measure, be still in the position in which they will be putting up excuses that incentives and attractions are necessary for them to go into the export market in a big way?
This debate has ranged over a very wide field. It has ranged over a field dealing not merely with this Bill and its provisions in their true application and implications, but also in relation somewhat to our entire economic position. It would therefore perhaps be better that I should, at the outset, deal with some of the economic implications on the economy in general before I come to consider and discuss some of the points that were raised in regard to the Bill itself.
Deputy Lemass, when he opened the debate for the Opposition, raised, too, some of these general matters. This morning Deputy Declan Costello did the same, perhaps in a wider sphere. Deputy MacEntee followed on that sphere and Deputy McQuillan also did the same. Deputy Declan Costello is a young man who has come into public life and who, by his speeches here, makes it clear that he is endeavouring to the best of his ability to analyse in a serious way our economic problems and the methods which are, in his view, best to meet those problems and difficulties. It is a very good thing that young people would make a serious appraisal in that way.
I am afraid, however, that I must say I disagree entirely with the remedy suggested by Deputy Declan Costello this morning. I think the remedy suggested by him was based on an insufficient appraisal of certain facts with which I must deal. Whatever about Deputy Declan Costello, it is relevant in that connection to consider the proposals that were put forward by Deputy Lemass some 12 months ago— proposals published on the 12th October, 1955, having been outlined by Deputy Lemass, not in this House but at a meeting of his Party in Clery's Restaurant.
The proposals that were made by Deputy Lemass at that time, to a degree even greater than they were touched on by Deputy Declan Costello this morning, were aimed at the creation of credit with all its inflationary effects. I must say one thing now in relation to Deputy MacEntee's speech. He said Deputy Declan Costello attacked the banks. I do not think that was a fair criticism of Deputy Declan Costello because I do not think Deputy Declan Costello meant his speech as an attack an anyone, much less on the banks.
It is vital that, in our present economic circumstances particularly, Deputies and the public outside this House should realise as far as possible the economic implications of any further trend towards inflation. We have here an economy which is, perhaps, more open than any economy anywhere else, and as soon as one has in an open economy inflation of the type suggested by Deputy Lemass 12 months ago, the result is bound to be that it has the effect, not of driving up internal prices but of bringing in imports from outside to meet the inflation so created.
The effect of the remedies that were suggested by Deputy Lemass 12 months ago would be to make our balance of payments situation infinitely worse and far more precarious in regard to our economy as a whole. We must accept that one of the difficulties with which we are faced is that there are many things here that require to be done—things it is desirable to do but which, if people try to do too much all at once, will result in complete failure, or worse, in the collapse of their efforts.
The proposals that were adumbrated by Deputy Lemass then were clearly based on Keynesian economics, relevant perhaps in the circumstances of the 1930's but entirely irrelevant to-day. In the 1930's when Deputy Lemass was in Government, the difficulty throughout the world was rather one of excessive saving. It was not one of excessive spending. It was to meet those difficulties that theories were put forward by Keynes at that time.
It has taken Deputy Lemass some 20 years to realise what was then meant, and he is trying to suggest now that the remedies that might have been applicable to an entirely different set of circumstances in the 1930's, are suitable in 1956 when our difficulty is, far from excessive saving, excessive spending and too little saving. We have got to realise in relation to programmes by public authorities that such programmes must be financed in a way that they will not impose an undue strain on the economy as a whole.
If a programme by a public authority is so financed that it will cause a long drain on our balance of payments, the ultimate result will be that the country will not have sufficient external reserves to purchase the raw materials that are required for industry—the raw materials and other things we cannot produce at home— and we shall be faced with an economic situation involving a collapse of employment such as any of us would shudder to contemplate. It is because I see that possibility at the end of the policy that was adumbrated 12 months ago by Deputy Lemass that I want to-day to make clear exactly where lies the difference between his line and the line that I believe should be pursued in relation to our financial problems at the present time.
We have had, over the past eight years, a programme of capital expenditure which was financed, in addition to savings, partly by the Marshall Aid funds, partly by departmental reserves and partly by the external assets of the commercial banks. It was a programme which included both productive and unproductive expenditure. One of the things of which I am most proud is the fact that, in the past couple of years, I have been able to achieve a change in the trend of capital expenditure so that now far more emphasis is given to productive expenditure. Talking very roughly only some two-fifths of our capital expenditure used to be utilised for productive purposes. We have in the past couple of years been able to increase that percentage by 50 per cent. and we have now been able to bring the productive proportion of that programme up to some 60 per cent.
I hope that, in the time ahead, we will be able to increase still more the emphasis on productive development and, with that productive development, we will get the real increase in our economic conditions that all of us desire and that every Party in this House would wish to see. That capital expenditure of all public authorities has, as I said, been financed over the past six years or so by three different methods. It is only right, having regard to what was said here this morning, that the share in that development that was undertaken by the commercial banks should be stated clearly and without reserve. In the past six years, from 1950-51 up to the current financial year, the amount of the share which the commercial banks have taken towards financing that capital expenditure is some £33,000,000 or roughly one-fifth of the amount involved. I think it is only right that that should be understood when we are discussing their contribution, as we were discussing it this morning.
In relation to the policy, so far as I am concerned, of capital development, I want to make myself quite clear in quite a simple sentence. I believe that what we need here is the largest possible productive capital development that the public will sustain and that, in relation to that, the emphasis must be on two things—on "productive" and on "sustain". If we dissipate our resources on non-productive expenditure, then we will find at the end of the time that that expenditure has made not a healthier economy but a less healthy economy. It is for that reason that I have endeavoured to switch from unproductive to productive work. If we fix that programme above the level which the people will sustain, then, inevitably, as surely as day follows night, we will be met with balance of payments difficulties and problems, and, if they were to be allowed to continue over any protracted period, the result would be the type of collapse to which I referred earlier. I am determined, in so far as I can, to prevent that.
Any form of credit creation over and above the capital programme that the public will sustain, whether voluntarily through savings given to small savings, to national loans, or by reason of taxation being utilised to finance capital works, can be met only by drawing on external reserves in the open economy which we have. As I said recently outside this House, we no longer have the props towards that which we had before.
The external reserves of the commercial banks are lower and, in relation to that, I am not going to discuss gross reserves or net reserves. The only thing I think is relevant in that context is the available external resources. We have not got the Marshall Aid Counterpart Funds, in reference to which I will be answering two questions on to-day's Order Paper. We have not got the reserves of departmental funds to the extent to which they were available in the past. We are, therefore, in the position that it is vital to our economy, if we wish to have capital development, to pay for that development by doing without, now, some of the things that might be pleasant but that are not so essential for us.
One cannot have a sound, healthy, economic, progressive development except at the expense of foregoing some pleasure of the moment in order to achieve the ultimate result of a progressively higher standard of living. Deputies will remember that, when I introduced the special import levies last March, one of the provisions I made in respect to the moneys that would be obtained by these levies was that the amount would be paid not to revenue but to capital account.
The levies, in order to deal with our balance of payments situation then evident, were intended to have a twofold effect. They were intended, in the first instance, to operate as a deterrent from purchases of those imports; a deterrent because the imports themselves would be deterred on the one hand, and in addition, because of the psychological effect, as the deterrent over other spheres of unnecessary imports that their imposition would undoubtedly provide. But that is not the only basis upon which their efficacy can or should be judged. The second part of the effect of their imposition was that they eliminated, to the amount that was collected by those levies, deficit financing in an inflationary way.
The moneys that were obtained by the levies, and transferred into the capital fund, eliminated to that extent the need to inject any further inflationary force into the economy. When one considers the effect of the levies on our balance of payments problems, it is vital to do so, not merely in the deterrent context, but also in the context of the amount that was thereby made available for financing capital expenditure and made available in a way that was not inflationary. We must try to ensure by every means in our power that we do not do anything at this juncture which would have the effect of undoing the improvement in our balance of trade and with it, our balance of payments, that has resulted from the measures taken by me on behalf of the Government in the past eight months.
There has been an improvement in the balance of trade. It is an improvement which is evident in the figures, and I am talking about a time before any question of the Middle East arose. It is an improvement which was there to see, but it was an improvement that arose because of the measures taken by the Government. If those measures were relaxed, or if we were to revise them completely, as Deputy Declan Costello suggested at the end of his speech, by a policy of credit expansion in an inflationary manner, then we would be merely undoing everything that was done since the Government, with a proper and due sense of responsibility, went out to rectify the situation last March. They succeeded in bringing about a much bigger change than people at the time expected.
Deputy Lemass suggested that the sole improvement in these months arose because of a drawing down of stocks. Some of the improvement is undoubtedly due to that, but the figures he quoted are not, in my view, the accurate figures upon which to base a judgment. If one turns to the 1955 Statistical Survey, one will find there that the volume of stocks, excluding the value of the change in the numbers of live stock on farms, increased by £5,000,000. That compares with an increase of £400,000 in 1954. The change in the volume of non-agricultural stocks between 1954 and 1955 was thus about £4,500,000.
On the basis, therefore, of the estimates now available to us, stock changes accounted for less than £5,000,000 of the deficit of £35,500,000 in the balance of payments in 1955. Perhaps when Deputy Lemass was speaking he did not advert to certain revisions that were made in estimates published earlier and, in addition, I think he took a figure for commercial stocks, extracted from a Central Bank bulletin, without adverting to other compensatory figures in other respects or over the economy as a whole. It is an undeniable fact, as I said yesterday when I was introducing this Bill, that a great part of our difficulty in relation to our international account arises from factors completely beyond our control. It arises because we in this country cannot under any circumstances control the price of things we have to buy from abroad, nor can we control the price we can get for the things that we want to sell abroad.
The terms of trade in the past four years, since 1953, have consistently worsened for the economy of our country. There has been a consistent rise in the things we want to buy and a consistent fall in what we are able to obtain abroad for the things we have to sell. In the third quarter of this year, the terms of trade were no leas than 12 per cent. worse than they were in the same quarter of 1953. In the first nine months of this year, that deterioration in terms of trade was responsible for our having no less than £10,000,000 of the trade deficit which accrued during that period. The fact that we have no control over those terms of trade; the fact that they are moving against us and may move against us even more in the future— I do not mean at an accelerated rate but they may increase against us in the future—make it far more essential that, in respect of the matters over which we have control within our own economy, we should take the appropriate steps in order to remedy and overcome them.
Debate adjourned.