Dáil Éireann debate -
Tuesday, 26 Mar 1957

Vol. 161 No. 2

Committee on Finance. - Motion by Minister for Finance.

Minister for Finance (Dr. Ryan)

I move:—

That a sum not exceeding £37,300,000 be granted on account for or towards defraying the Charges that will come in course of payment during the year ending on the 31st day of March, 1958, for certain public services, namely:—

		£
1	President's Establishment	2,800
2	Houses of the Oireachtas	77,500
3	Department of the Taoiseach	9,700
4	Central Statistics Office	48,600
5	Comptroller and Auditor General	11,840
6	Office of the Minister for Finance	55,860
7	Office of the Revenue Commissioners	650,200
8	Office of Public Works	176,000
9	Public Works and Buildings	1,250,000
10	Employment and Emergency Schemes	219,500
11	Management of Government Stocks	51,170
12	State Laboratory	8,000
13	Civil Service Commission	20,000
14	An Comhairle Ealaíon	6,500
15	Commissions and Special Inquiries	4,000
16	Superannuation and Retired Allowances	326,000
17	Rates on Government Property	10,000
18	Secret Service	2,300
19	Expenses under the Electoral Act and the Juries Act	—
20	Supplementary Agricultural Grants	1,290,000
21	Law Charges	39,600
22	Universities and Colleges	328,000
23	Miscellaneous Expenses	5,500
24	Stationery Office	172,600
25	Valuation and Boundary Survey	26,000
26	Ordnance Survey	24,600
27	Agriculture	2,795,000
28	Fisheries	44,000
29	Office of the Minister for Justice	30,570
30	Garda Síochána	1,555,360
31	Prisons	58,310
32	District Court	30,260
33	Circuit Court	40,150
34	Supreme Court and High Court of Justice	34,220
35	Land Registry and Registry of Deeds	36,550
36	Public Record Office	3,100
37	Charitable Donations and Bequests	1,980
38	Local Government	1,865,000
39	Office of the Minister for Education	122,000
40	Primary Education	3,150,000
41	Secondary Education	330,000
42	Technical Instruction	520,000
43	Science and Art	45,000
44	Reformatory and Industrial Schools	90,000
45	Dublin Institute for Advanced Studies	26,000
46	National Gallery	3,670
47	Lands	865,640
48	Forestry	611,600
49	Roinn na Gaeltachta	227,000
50	Industry and Commerce	2,752,000
51	Transport and Marine Services	1,273,000
52	Aviation and Meteorological Services	106,000
53	Industrial and Commercial Property Registration Office	9,000
54	Posts and Telegraphs	3,150,000
55	Wireless Broadcasting	143,500
56	Defence	2,057,000
57	Army Pensions	552,400
58	External Affairs	166,470
59	International Co-operation	23,850
60	Office of the Minister for Social Welfare	158,200
61	Social Insurance	1,218,300
62	Social Assistance	6,179,600
63	Health	2,050,000
64	Dundrum Asylum	16,000
65	Tourism	133,000
	TOTAL	£37,300,000
		,,

A Vote on Account is roughly a four months' provision for expenditure on the Supply Services in the new financial year. This four months' period is normally adequate for the Dáil to consider the individual Estimates and to pass the Appropriation Act.

In order that there may be finance available to carry on the public services generally after the 31st March it is necessary to have this Vote on Account passed and the Central Fund Bill confirming it enacted before Monday, the 1st April. This gives less than a week to have the Vote on Account considered in Committee and on Report by Dáil Éireann and to have the consequential Central Fund Bill passed through all stages in Dáil Éireann and Seanad Éireann and signed by the President.

Whatever balance may be available in the Exchequer on the 1st April and whatever further moneys might accrue to the Exchequer in the new financial year could not, as Deputies are aware, be applied to the Supply Services without the authority of the Oireachtas as expressed by Dáil approval of the Vote on Account and the enactment of the Central Fund Bill. The Central Fund and Appropriation Acts of 1956 apply only to the financial year ending on the 31st of this month.

The Volume of Estimates for the Supply Services on which the Vote on Account is based and the Vote on Account itself were already printed when the present Government took office. The Estimates were released for publication on the day on which I first saw them—the 21st March. Needless to say, the Government have not had an adequate opportunity of examining the Estimates. Owing to the time factor, the Government, indeed, had no alternative but to circulate immediately, as they found them, both the Estimates Volume and the Vote on Account so that authority to issue money for the Supply Services in the opening months of the new year might be obtained by the 31st March.

In the circumstances, I cannot be expected to analyse the contents of the Volume of Estimates. The individual Estimates themselves show what is included for the various services and how it compares with the provision for 1956-57. I have already begun my detailed examination of these Estimates and of the financial position as a whole. The results of this examination will be made clear either before or at the time that I present my Budget. At this point I would prefer not to make any further comment.

Mr. Sweetman

Knowing Deputy Dr. Ryan of old, I was not surprised that he gave us the briefest possible explanation of the Vote on Account and the Estimates. I might just give a few of the details in relation to the Book of Estimates which he has omitted. The Book of Estimates shows an increase of £3,444,000 over the figure for last year. That includes £2,053,000 in the Transport Estimate—Estimate No. 51—which occurs because of a difference in the form of the provision of capital moneys for C.I.E.

We discussed this matter a few minutes ago in the House. It was not possible in 1956, nor would it be likely to be feasible in 1957, that C.I.E. would find by stock issues the funds they would require for their capital purposes. Accordingly, during the year that is now drawing to a close, the funds required by that company were made good by voted moneys. Similar arrangements have been included in the figures for next year.

When deduction is taken for that amount when comparing the Book of Estimates for the coming year with that for this year, it will be seen that the difference is only £1,393,000. The Estimates show that there are decreases in 38 out of the 65 Estimates that are in the Book, and of these decreases some of the most notable are those which have been achieved while, at the same time, giving as good or better services.

The decrease in the Estimate for the Garda Síochána of £75,000 arises because of modernisation of methods in that force. I believe there are further improvements to come as a result of the industrial consultant's advice as to whether the force could be more efficiently run. The Forestry Estimate shows that there will be provision for a larger plantable area while at the same time the annual cost will be less because of improved methods of working and because of the manner in which the former Minister for Lands, Deputy Blowick, arranged the sales of standing timber.

The decrease in the Estimate for the Department of Defence also arises because, as a Government, we were not prepared to spend the people's money in some of the ways in which it was spent previously by our predecessors. In the Department of Defence, it is quite obvious that expenditure takes a very substantial time to mature. The contracts for such things as the jet planes and the laying down of concrete runways for them at Baldonnell, entered into by our predecessors, concluded only last year. Last year we were able to get some supplies of the ordinary type of equipment that would be necessary for an army of the size of ours, and it is in consequence of that that we were able to make the substantial decrease on that Estimate this year.

On the other side, there are some increases, notably for the building of new schools, for which is included this year in the Book of Estimates the highest figure in the history of the State. I think all Parties will agree it is vital in the national economy that bovine tuberculosis should be eradicated. Accordingly, increased provision was necessary in order to bring about such eradication. There is an increase of £466,000 for the butter subsidy. A reduction in Appropriations-in-Aid in the Vote for the Department of Agriculture arises because we are coming to the end of the Grant Counterpart Fund from Marshall Aid. Offhand I would say that the Estimate for Agriculture is up by £1,000,000.

In the Estimate for the Department of Local Government there is an increased demand of £170,000 for loan charges of housing authorities and of £80,000 towards reducing sanitary service loan charges. The Estimate for the Department of Industry and Commerce shows a substantial increase; £616,000 extra is being provided for the bread and food subsidy and I notice that £150,000 is included for grants to new factories. We were twitted during the general election campaign by our opponents that we were winding up An Fóras Tionscal. You will note that the Estimate for An Fóras Tionscal is up by £100,000 on last year. I referred earlier to the £2,053,000 included for transport which arises because of the different nature of financing C.I.E.

I do not propose to discuss the Estimates as such at any great length. My successor will no doubt discover, and my predecessor who sits beside him will appreciate, that when it comes to the framing of Estimates at the beginning of any financial year the work must be done in three different stages. There is first of all the detailed examination of the Estimates by the Department of Finance in consultation with the outside Departments; there is secondly the discussions that must take place between the Minister for Finance and the outside Ministers; and thirdly there is the wider type of discussion on policy that must take place among the Government of the day. In relation to these Estimates, circumstances which precipitated the general election meant that it was impossible to have all these examinations of the Estimates as they came in from the outside Department. Because all concerned were engaged with the general election, it was not possible to have a discussion between outside Ministers and the Minister for Finance, nor was it possible that the Government would be in a position to sit down and consider those Estimates in the calm and unflurried atmosphere in which Estimates must be considered normally.

I do not want in any way to decry the work done by the officers of the Department of Finance in their detailed examination of the Estimates. Far be it from me to do that. I would like to put on record, on this the first opportunity on leaving the Department of Finance, that I could not have received more loyal service or greater co-operation than I did receive and I can certainly say that my successor is lucky in the staff he has in the Department of Finance to aid him in his labours.

However, detailed examination by departmental officials can never be the same as the examination in relation to wider policy, perhaps, and in wider spheres, by the Ministers concerned. The Government of which I had the honour to be a member had taken a certain decision in relation to this Book of Estimates. The present Taoiseach will find that on 2nd November last, the Government decided that, in relation to the non-capital services which were to be included in the Book of Estimates, the provision was to be framed on the basis that they should not exceed a total sum of £94,500,000. The general election prevented us continuing and completing our examination of those Estimates on the second and third bases I mentioned. It was quite obvious to me as Minister for Finance when the election became imminent that it would be impossible to make such an examination and accordingly I gave a direction that the Estimates were to be printed, and I approved the Estimates for printing as and when they came after the departmental examination, without examination by the Government or by the Ministers. We, however, have nailed our colours to the mast. We took that decision, which is there on the records, that the Estimates for Publec Services for the year ending 31st March, 1958, should be on the basis that the provision of non-capital services should not exceed a sum of £94,500,000.

If we had not been prevented by the election, we would have been in a position, by means of the second and third methods I have indicated, to reduce those Estimates in accordance with that decision. I want, however, to be perfectly fair by saying that that figure of £94,500,000 should have added to it the £2,053,000 for the Transport Services to which I have referred, as it is again a question of comparing like with like. There is ample scope now for the new Minister to implement that policy, if he so wishes. We are giving him this Vote on Account now to spend a sum not exceeding so much. It is not a mandatory instruction on him to spend the amount that is included in the Vote on Account. He is at liberty to spend a sum, if he so desires, which is roughly, as he says himself, one third of the amount for four months on the basis of that book. He has the whole of that period of four months to settle himself in and decide exactly what policy he wants to implement, to decide exactly how he proposes to bring down the expenditure to whatever amount he considers may be necessary or may be desirable for the coming year.

Let me be perfectly clear, therefore, that in so far as we are concerned, we are giving him this Vote on the basis that it is a sum which he may not exceed, that it is a sum within the framework of which he has his own policy which he can implement with the power that is now vested in him. As regards the general financial policy of the Minister, this is not the time, as he says, to discuss it. We shall have that opportunity on the Budget. I think when the out-turn of the current year comes to be made he will find the estimate I made in the Budget of the amount which it would be necessary to borrow, £37,100,000, will not be required and that the total borrowings will not reach that order.

It is, however, proper to-day that I should indicate some other parts of the more general picture into which this estimated expenditure fits. The most important matter of all for our economic position is in relation to the balance of payments. There can be no hope of real progress unless our balance of payments is in order and particularly unless we are not imposing an undue strain on our balance of payments for consumption purposes. Repatriation of external assets for the purpose of creating new productive capital assets is an entirely different situation. The Minister can start now in his first week of office with the knowledge that he has not got to face any serious difficulties on the immediate balance of payments front. The 11 months to the end of last February show a reduction of £34,500,000 on our external trade. Exports show an increase of £8,500,000 in that period of which £6,200,000 are in this year.

We knew full well the dire results that continued and prolonged deficits in our balance of payments would have on the whole national economy, on our whole standard of living and particularly on our ability to purchase abroad the raw materials we required for industry. The measures we have taken in that respect have had their results. They have enabled the present Minister to take office with the knowledge that he has, as we had in the last month of our time, the assurance that we are not going to run into the balance of payments difficulties which obtruded themselves before.

The Minister can take office now with the assurance that for the first time, contemporaneously with the capital programme, he is not going to have those problems. I say deliberately "contemporaneously with the capital programme" because it is obvious that any capital programme, however productive it may be, will create an immediate draw on our external reserves for payments which will not be met until such time as the works for which these capital moneys were necessary have come into profitable production.

The basis has been laid on which he can now plan for the future. Indeed, if he does nothing but allow the plan which we have laid in that respect to ride along, he will find the plums falling into his lap one after the other. He will find the rise in exports will not merely move on, but will be accentuated, unless he does anything to stop them. He will find the disastrous change in the terms of trade which occurred between 1953 and 1956, is gradually moving in the other direction. I hope sincerely it will continue so to move, but I want to say that the terms of trade are something that not one of us, on either side of the House, can alter to any degree. If those terms disimprove, I will not lay the blame for that disimprovement at the feet of the present Minister.

I believe we are facing a position in which the terms of trade are at least going to flatten out and we are not going to find the position with which we were faced in 1956. Between 1953 and 1956, import prices rose by 5 per cent. and export prices fell by 3 per cent.—an 8 per cent. difference adversely on the terms of trade was what we had to face in 1956. If there had been no price changes between those two years, the import excess in 1956 would have been £6,500,000 less even than it was. In fact, because of the change, it was £5,000,000 more. We were, therefore, in the situation in 1956, in which we had to face £11,500,000 of a deficit in the balance of payments problem because of price changes alone. There is some evidence that the turn of the tide may be coming now. I hope it is, for the sake of the country, but the Minister will find, having regard to the equilibrium we established on that front, with adverse terms of trade, a considerably easier problem now if he does not change the plans which have been laid down by us.

If he turns to the monetary situation, he will find that since 30th June, 1956, bank deposits increased by £11,900,000 and that they increased still further in January. In the ten months to January 31st, he will find in small savings an increase which I agree was not much, but which showed the trend was in the right direction. He will also find that, for the first two months this year, the external reserves of the commercial banks have risen and that if he does not unduly draw for the public sector on those reserves, there will be an adequate expansion available for private enterprise. I would particularly urge on him that he should make sure that his policy in relation to the public sector of our finances will not involve such a squeeze on those reserves that there will not be adequate funds for private enterprise.

He will find, too, that it was part of my belief that, in our present circumstances, we should have the largest capital Budget for productive purposes that the public would support, that it would be obviously desirable in our present times that that step should be taken. If the Minister for Finance and the Government turn to the question of prices, they will find that between mid-August, 1947, and mid-November, 1956, prices rose by only 34 per cent., while, in Britain, between mid-June, 1947, and mid-November, 1956, prices here rose by 58 per cent.—only one-third rise here; over 50 per cent. rise there. No matter to what part of the economy he turns, he will find that the basis was laid by us during 1956, upon which a Government, carrying out our policy, will be able to obtain adequate resourses. He can even turn to unemployment in which every year the peak has always been reached in the week of the 4th February. From that week in 1954 to the 16th March last—the latest date for which figures are available—and I have deliberately chosen that year as Fianna Fáil's last year in office—unemployment dropped from the peak by 5,159. This year, it has dropped 9,452 from the peak of the 4th February and it has dropped because the plans that we had laid were coming into operation and were beginning to be effective.

I will not pretend that it is not perhaps somewhat galling for us to see the Deputies over there, as Ministers, reaping the reward of the measure that we took. Regardless of that, it is not what Deputies on one side of the House or the other may feel but what will affect the country that matters. The Government has got the right basis on which the economy can now be run and on which there can be future plans, with a solid balance of payments situation, with the monetary situation in hand, production on the increase and unemployment on the decrease. Do not change that and we will give you any help, but if you stray away from the policies which we put into effect, somebody else will have to come in and do the job.

Mr. Allen

The greatest talk since Moses struck the rock.

Mr. McQuillan

One point to which I should like to draw attention is one mentioned by the former Minister for Finance in connection with the Estimate for Defence. Deputy Sweetman suggests that the former Fianna Fáil Government was responsible for the purchase of jet planes and for the money spent on the construction of the runways. The point I want to bring home is that a certain saving can be made even at this stage in so far as those jet planes are concerned. It is admitted by all experts that the jet planes which we have are now completely obsolete.

An Leas-Cheann Comhairle

I feel that this would be a matter for the Estimates and not for the Vote on Account.

Mr. McQuillan

I suggest to the Minister that perhaps he could achieve a certain amount of saving in that regard, and, at the same time, take steps that the general public are now waiting to see taken in connection with our Air Force. It has been noticed in recent months that a number of tragic deaths have taken place in our Air Force and the public are perturbed at this loss of lives. It has come to my notice that this loss of life is due in great measure to the lack of a proper communications system between the planes and the ground control.

An Leas-Cheann Comhairle

The Deputy will get ample opportunities for raising these matters on the Estimate.

Mr. McQuillan

I want that situation remedied before next month.

An Leas-Cheann Comhairle

The Deputy is not in order in raising it on the Vote on Account.

Mr. McQuillan

May I suggest that the money now being spent on the utilisation of these jet planes should be devoted to purchasing a proper communications system, so that no further accidents will take place?

Minister for Health (Mr. MacEntee)

I should not have intervened in this debate were it not for the speech made by Deputy Sweetman, the Minister for Finance in the inter-Party Government. I rise to say that I regret very much that I cannot take the same rosy view of the future as he does. The problem to which he has referred has not been solved, the balance of payments as a danger to our economy still remains. The Deputy must know that a very large part of the immediate balance which has been achieved has been achieved by the running down of stocks. The Deputy must know also what is likely to be the out-turn of the Budget for the coming year and the problems which have to be faced next year. I was listening to the Minister for Industry and Commerce speaking about the position of C.I.E. where there has been built up a deficit in revenue on the cash side of almost £1,000,000 which will have to be liquidated at some stage or another, just as we had in the Budget of 1952 to provide for the liquidation of the fuel stocks which had been carried forward until the cash deficit amounted to between £2,000,000 and £3,000,000.

I listened with amazement to Deputy Sweetman when he referred to the year 1956. It was a grave and serious position, all right. We had a balance of payments deficit of the sum of £35,000,000. What, however, was the position in 1951 when the balance of payments deficit was running at the rate of £62,000,000 and that in a year which had been immediately preceded by another year in which the balance of payments deficit—if my recollection is correct—was running at the order of £31.5 million? So that in two years the deficit on our balance of payments amounted to almost £94,000,000. That was a grave and serious situation with which we had to deal in 1951 and 1952. And to complicate the position we found that, when the Budget for 1951 had been introduced, there were several items for which provision ought to have been made, but for which provision was not made; so that the Budget of that year closed with a deficit of between £6,000,000 and £7,000,000. I am speaking from recollection and without having resort to any written figures.

One of the major causes of that deficit was the fact that my predecessor—Deputy McGilligan, who had been Minister for Finance in the year 1951 —had received a Civil Service Arbitration award covering almost £3,500,000 —I am speaking from recollection—for which no provision was made in the Budget and for which we had to provide during that year out of borrowing.

Similarly, when we came to the Budget of 1952, a Budget in which effect was given to the common acceptance on both sides of the House of the principles of the social welfare scheme and to which continuing effect had to be given to the proposals to increase the rates of the old age pension, we found that there was a gap between revenue and expenditure of over £15,000,000 which had to be faced. We faced that in the 1952 Budget. I want to concede all the credit that is due to Deputy Sweetman, for whom I had a great deal of admiration, when he was Minister for Finance, but I do not want the country to believe for a moment that because there is a temporary balance secured on our external payments and because there has been evidence of a favourable change, which the Minister knows may be temporary or of long duration, in the terms of trade our problems have been by any means solved and that we are not going to require from our people a great deal more effort and, I am afraid, a measure of self sacrifice which we hope will be forthcoming, such as we were able to count upon during the economic war and during the last war. It is only when we get that measure of co-operation from the people and from all Parties in the House that we shall be able to place the economy of this nation again on a sound basis.

Dr. Ryan

I do not think I have very much to say because my colleague has dealt with some of the points raised by Deputy Sweetman. I should like to say that for the three or four days I have been in the Department of Finance, I have been very curious delving into the situation with regard to the balance of payments, the capital Budget and the non-capital Budget. For these three or four days, the first ray of hope I got was from Deputy Sweetman's speech. It was encouraging and I sincerely hope there was something in it. I hope that when I go back and delve into those figures again, I may look upon them in a different light.

Question put and agreed to.

Vote reported and agreed to.