Committee on Finance. - Resolution No. 5—General (Resumed). – Dáil Éireann (16th Dáil) – Tuesday, 14 May 1957

Committee on Finance. - Resolution No. 5—General (Resumed).

Debate resumed on the following motion:—

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provisions in connection with finance.—(Minister for Finance.)

Mr. J. A. Costello

Contrary to what might appear to be a very generally held view, politicians are human and, consequently, being human, we find it difficult to avoid speculating upon what would have been the reception which we would have got had we, when we were in Government, introduced the Budget proposals introduced by the present Minister for Finance. We have very painful recollections of the efforts we made last year to grapple and deal with the very great difficulties that confronted the country economically and financially at that time and the lack of help we got from the present Government who were then in opposition. But human or not, we have got to realise now that all of us have a job to do—to co-operate to see that the country gets back as quickly as possible to the highest measure of economic activity attainable. We shall have Budgets of this kind imposing heavy imposts year after year until we are able to get increased and increasing economic activity particularly in the export market.

The first comment I wish to make upon the Minister's Budget is to emphasise the fact that the Budget is not concerned in any detail or to a penny piece with any debt that we of the inter-Party Government left behind us. We left them a clean sheet after a very difficult year. Everybody knows what the country went through last year. Everybody knows that the revenue did not come up to expectations and that expenditure had to be increased beyond what was thought possible 12 months before. Everybody knows that in addition to the difficulties caused by our own internal affairs here we had difficulties over which nobody here could have any control impacting upon us from abroad.

Towards the end of last year, when things looked not so dark, even if not brighter than they had been some months before, we could see some light ahead, but we were met with the impact of the Suez operations. The Minister did not—perhaps he could not cover every subject or every topic in his speech—advert to the difficulties caused towards the end of that period by the operations in and around the Suez Canal.

There was the dislocation of trade, the increase in the freight charges, the lack of petrol, the difficulties of getting essential oil, the increases of prices accordingly and consequent unemployment. We lost revenue through forced rationing of petrol and oil. Unemployment was created and we lost what is not, perhaps, realised, £1,000,000 on the motor vehicle duties, as appears from the accounts now, in the proceeds of the Road Fund. Notwithstanding all that, notwithstanding that revenue did not come up to expectations because of those matters and others as well, we were able to leave office towards the close of the financial year with all debts paid or provided for and leave in addition a very substantial sum available from the Prize Bonds issue. That issue would have been completed in our time and before the end of March had it not been for the General Election. The Minister was gracious enough to acknowledge the debt in that regard to his predecessor, the Minister for Finance in the last Government.

At all events, that is the clear position. We had provided for all the debts that had accrued. We had cleared all the deficiency. We had given the Prize Bonds issue and left a very considerable amount of money available for the carrying on of the essential services for the next financial year. That was not a bad piece of work in all the circumstances and having regard to all the difficulties. It is gratifying—I paid tribute to the Minister on the radio talk he had the other night—that the Minister did not seek, as some of his colleagues did seek before the Budget speech, to suggest in any way that our present difficulties were caused, occasioned or were in any way traceable to the action of the last Government.

We had a very difficult job to do and at least we have some satisfaction in knowing that we did it well. We left our successors the money from the Prize Bonds issue and, in addition, we left the position that the balance of payments difficulties which had so exacerbated our economic and financial difficulties last year were solved and solved to a very considerable extent on a permanent basis. The figures produced this morning give further evidence of the success of the efforts we made. That is not a bad position for the present Government to have inherited. All debts were paid, nothing was left behind us and there was an issue of prize bonds that was not merely a success but gave promise of further success in future issues of that character. The position of the adverse balance of payments was rectified and the economy was placed on a sound, financial basis.

We had made every effort last year to stimulate small savings and encourage investment in Irish enterprise. We had set up a Savings Committee and had made propaganda efforts through radio talks and in other ways. All our energies were directed to securing an increase in small savings. The Minister for Finance in his Budget speech recognises the vital importance to our economy, and to our Capital Budget of an increasing flow of small savings. I regret that in his speech he made no reference to the efforts his predecessor made to stimulate those small savings and that he made no reference to the efforts of the Savings Committee who voluntarily gave their services to the furtherance of a vital national campaign. They did not in all the circumstances do too badly.

Everybody knows that the maintenance of an expanding capital Budget for the purposes of increased productive employment depends essentially upon our own savings. We knew that and we were fully alive to it. For that reason, we endeavoured in and out of season to stimulate the savings of our people. The record, in spite of the facts that the year was so bleak, that there was so much unemployment and so much financial and economic dislocation, is not at all bad.

The records that have been disclosed in the papers circulated with the Budget show that in the year just ended-a bleak year, one of the hardest years ever experienced by the country, a year which followed a year when our small savings had been dissipated in a most unexpected and even up to the present inexplicable fashion —small savings and prize bonds up to the end of the financial year amounted to £5.26 million. That included £1.65 million in savings bank deposits, £2.36 million in savings certificates and £1.52 million in prize bonds. That was not a bad effort. It is not the whole of the story. Having endeavoured to stimulate small savings in those black times and very adverse circumstances, our successors have the benefit of our efforts, and they are welcome to it because it is in the interests of the country. The success that followed those efforts is demonstrated in a most striking fashion by the fact that in the space of just one month-since the beginning of the financial year—the present Government have entered into possession of nearly half the amount of the small savings which they estimate they will secure in the following 12 months.

In Table 4 of the Tables in connection with the Financial Statement dealing with the Capital Budget, it is estimated that small savings and prize bonds will realise £8,500,000 during the coming 12 months. Having recognised the vital necessity for an increase in small savings, the Minister said he thought there would be some increase in small savings. The estimate is £8,500,000. It is gratifying to learn that and we take some pride in our part in securing the result that, in accordance with the particulars published in Iris Oifigiúil of 7th May last, the amount of money received between 1st April and 4th May in savings certificates and prize bonds—leaving out deposits in the savings banks— amounted to £4,515,000. That means that over £4,500,000 of the small savings the Minister has estimated at £8,500,000 have been gained in the first month of this financial year—I suggest as a result of our policy. We are gratified and personally I am gratified that the Minister finds himself in that position. It is essential for the development of the country that that movement should be encouraged and brought to greater activity than even at the present time.

It may have been an oversight that the Minister did not put more emphasis on the necessity for small savings and did not, particularly, indicate to the people the steps he intends to take to stimulate such savings. I hope no significance is to be drawn from the fact that he paid no tribute to the voluntary work of the Savings Committee. I hope it was merely an oversight or that, due to the pressure of all the things he had to say, he overlooked it. It is vital, in the interests of the country and in general, that every effort should be made to increase small savings.

I hope the proposals of the present Budget will not prevent the acceleration or the increased pace of small savings. I fear that some of the proposals will militate against the success of the campaign to get people to put aside a little more than they did before. The increase in the cost of living that will result because of the inevitable increases in the costs of various essential commodities will undoubtedly, I am afraid, have an impact on small savings which are so vitally necessary for our development.

There is another matter which I think I should draw to the attention of the Minister and the House because it is of some significance. The Minister did not, I think, give a true picture of the financial affairs of the country, when we handed over the reins of office, in what may not, perhaps, be a very important respect but which still is a respect that ought to be recognised as having some significance. In the opening paragraph of his Budget speech, he referred to a deficit on current account of £5.95 million and indicated that, of that deficit, £4,500,000 arose because revenue failed to come up to expectations. It is of some significance that the actual proceeds of the import levies over the period during which they were in operation amount to £4.275 million—in other words, the short-fall in the revenue expectations almost equals the proceeds of the import levy.

It is obvious that, by imposing the import levies, ordinary taxation was affected, but, at all events, the one practically balanced the other. If, instead of having the £4.275 million, the proceeds of the import levies, put into the capital account, we had taken that into revenue, there would have been very much less of a deficit in the financial operations of that very difficult year. For good and sufficient reasons, we decided to put that sum into capital account.

I have some observations to make in dealing with the proposals of the present Budget and the suggestion by the Minister for Finance over the radio that those who criticise the Budget or the Budget proposals would have a greater value attached to their criticism or comments, if they made alternative suggestions. The main proposals of the present Budget, so far as public discussion and public impact are concerned, are in connection with the total abolition of the food subsidies. I fully realise from my own experience in Government that the existence of that £9,000,000 or £10,000,000, the proceeds of taxation that went towards the subsidisation of food, was a standing and permanent temptation to any Minister for Finance to lay his hands on it. In a sense, it was easy money; in a sense, the total abolition of those food subsidies proposed in the present Budget is an easy method of solving a fiscal problem.

It may be that, in solving that fiscal problem of balancing the Budget, the Minister and his colleagues may run into political difficulties. Nevertheless, the grasping of that £9,000,000 or £10,000,000, the proceeds of taxation which went towards the subsidisation of food, was the easiest method of balancing the Budget. It did not presuppose the deep and anguished consideration that would have to be given to cutting the various supply services and perhaps even the Capital Budget of the forthcoming year in order to balance things out.

As has already been pointed out by Deputy Sweetman, the former Minister for Finance, on 2nd of last November, we took and recorded a Government decision to the effect that the total sum for supply services for the forthcoming financial year should not be estimated in the Book of Estimates for more than £94,500,000. To that sum, as Deputy Sweetman said, must be added £2,053,000 for transport services which arose subsequently. That was how we intended to approach the problem last year. It does not fall to me or to any of my colleagues on this side of the House now to indulge in retrospective conjecture as to what we would have done had we remained in office after the last general election. I do not know what we would have done, but we did not get the chance of taking the steps we had proposed as far back as last November. At all events, whatever might or might not have been done, it is not true to say, as has been said, that the Government could do nothing but indulge in total abolition of the food subsidies.

There were many other possibilities open to them. Those possibilities might have been difficult. I admit they might not merely have involved political sacrifices for the Government-and they can well bear them now, having regard to the size of their majority and the possible length of their term as a Government—but they might have had repercussions upon, say, unemployment or development, but these sacrifices might have had to be made in present circumstances. The point I am making is that this was not the only method open to them. There were many other methods, and the Government has on its own responsibility taken the step of balancing the Budget—and this Budget is the sole responsibility of the present Government-by means of the total abolition of food subsidies.

The Minister for Finance said—and I think the Taoiseach repeated it—that it was not for any reason of economics or of economic theories that this method was adopted, but because the method was necessary in order that the Budget should balance. I may remark in passing that all of us, as the Minister himself said, agree upon the principle of balancing the Budget, whether the current or capital Budget, but a Government must do something more than merely balance the Budget. The Budget is an instrument of economic force and economic policy and it is somewhat difficult to see—and I think it is a fair comment to make upon the proposal to abolish totally the food subsidies—what economic consequences of a beneficial character other than merely balancing the current Budget can emerge from the total abolition of the food subsidies. I agree that no Government can hope to borrow money from the public, from banking institutions or from anywhere else, unless they adhere rigidly to the principle of balancing the Budget.

There were three courses open to the present Government in connection with this matter of the food subsidies: they could have abolished them, as they have done; they could have partially abolished them, or they could have declined to touch them, as we did. They grasped the nettle, and there are many unthinking people who said that it was a good thing that the food subsidies were gone, that they were out of the way now and that no Government would again have to be bothered with them, or to go through the troubles and trials the previous Government went through, or perhaps even the Government previous to that went through, in connection with those food subsidies, I think, when it is pondered upon and the consequences that may flow from the total abolition of food subsidies are fully considered, the social and economic dislocation that may result from their abolition will far outweigh any advantages that may be secured. I doubt, having thought about the matter, and looking at the best side of these proposals, that the Government and therefore the taxpayers, will gain by the way of net advantage through the abolition of these food subsidies any sum greater than £2,000,000, and the consequences, to which I shall very shortly advert, may be such as to make very dear the purchase of that £2,000,000.

The Government could have abolished these subsidies in stages. The food subsidies were imposed by the Fianna Fáil Government in 1947; they were reduced by the Fianna Fáil Government in 1952, somewhat increased in 1953 and 1954, and have now been totally abolished by the same Government. That is roughly the history of these subsidies. The Taoiseach is reputed to have had at least perhaps a slight fondness for the teachings of a gentleman named Machiavelli——

Mr. Dillon

He knows them by heart.

Mr. J. A. Costello

A quotation that I shall give from an utterance, or a piece of advice, that Machiavelli gave to his Prince, covers the present situation——

Mr. Dillon

And if you miss a word, the Taoiseach will correct it from memory.

Mr. J. A. Costello

This is one piece of advice which Machiavelli gave to his Prince:—

"Injuries ought to be done all at one time; benefits ought to be given little by little so that the flavour of them may last the longer."

Mr. Dillon

You see the glance of recognition?

Mr. J. A. Costello

Certainly, by the total abolition of the food subsidies, the present Government is taking the advice of doing the injuries all at one time, in the hope that, with their long period ahead they will be able to give, little by little, some slight benefits, the flavour of which may last the longer.

There is no doubt that the total abolition of the food subsidies came— and must come at any time that they are totally abolished—as a shock to the economy. We were, as I have already pointed out, fully conscious of the burden which those food subsidies constituted on the taxpayer: we were fully alive to the fact that they were supposed to be temporary and that it looked as if they were becoming a permanent feature of our economy. When we first came into office, in order to try to ease the burden on the tax-payer in connection with these food subsidies and at the same time not interfere with those who were necessarily in receipt of them, we adopted the dual price system. We were told by our opponents then—now the present Government—that we were indulging in blackmarketing because we made the cake pay for the bread and the jam and sweets pay for more essential commodities.

I am merely pointing that out for the purpose of emphasising the fact that we have no doctrinaire approach to those food subsidies. We felt at some time they would have to go, but in the meantime and as time went on they became worked into the fabric of our economic structure and we felt that to take them away, unless in very favourable circumstances, would be a shock to that economic structure, and that greater damage might be done than good might accrue from their removal. We felt—and it was impressed upon us to the point that we never at any time removed those food subsidies or any of them—that these subsidies had really ceased long since to be mere subsidies to food, that they had entered into the fabric of our system, that not merely did they do something towards stabilising the cost of living but that they were also, in a sense, a subsidy to wages and incomes and, in addition to that, they were in the nature of a subsidy to agricultural production.

We have had the unfortunate experience in political matters of seeing the growing of wheat thrown into the political arena. "Grow more wheat and you will get more money from Fianna Fáil"—that was the cry that persisted and lasted right down to the last general election campaign. The more you vote for Fianna Fáil, the more money you will get for wheat and the more money the farmer gets for his wheat, the more the taxpayer or consumer has to pay. The butter subsidy was similar. Whether it was intended or not, it became something in the nature of a subsidy to the producer of butter.

There we had the three elements in these food subsidies: stabilising the cost of living and to some extent stabilising prices; stabilising to some extent wage demands and, therefore, in a sense, a subsidy to wages and incomes; and thirdly, a subsidy to production.

We were impressed so much with the vital necessity in the national interest to secure social stability, and that includes price stability and cost stability, that we felt that to remove those food subsidies would cause such a shock to the economy that the benefit that would accrue would not be worth the risk that would have to be taken. We are entitled to say that all during our terms of office, whether the first term or the second term, our entire efforts were directed day in and day out to keeping down the cost of essential commodities. Some of our efforts in that direction were sneered at at the time and were derided and laughed at, but, at all events, the last Government did not at any stage increase by deliberate action the cost of any essential foodstuffs, but we kept them down. It was not by any sleight of hand but by hard work and hard effort that we were able to maintain that position. We did that, not for political reasons but because we felt that, with the condition of the country at the time, following the fifth or sixth round— whatever it was—of wages, with our savings dissipated, with our balance of international payments in jeopardy, with unemployment increasing, we must at all costs maintain social stability.

We are entitled to say, and I am entitled on behalf of all my colleagues in the recent inter-Party Government to assert, that we did secure that social stability and that we had secured from civil servants and from teachers, if not an undertaking, at least an understanding that there would not be, during the hard times at all events, any demands for other increases. I think also, if we had not an understanding, at least the labour movement knew the difficulties and the dangers. At all events we are entitled to assert, and I assert it here most emphatically, that all our efforts, in connection with this matter of food subsidies and the cost of living, were directed to securing social stability. It is an understatement to say that the total abolition of the food subsidies puts that in serious jeopardy.

The Minister for Finance in his Budget speech referred to the Report of the Capital Advisory Committee set up by his predecessor and paid tribute to that Report and to the rapidity with which the Committee gave it. I want to point out—it may be inadvertence—that it seemed on the Minister's speech that he was suggesting to the House and to the country that he was adopting the recommendations of the Capital Advisory Committee. He was doing nothing of the sort. We got these recommendations from the Capital Advisory Committee very shortly before we were faced with the situation which ultimately brought about the general election. It was never considered properly by us, but in that report there are a number of recommendations and three of the recommendations are the only ones that I need refer to.

The first is that grants to local authorities in relief of rates on agricultural land should be discontinued; the second one is that the subsidy on butter should be abolished and the full amount made available for the capital programme; and the third recommendation is that the subsidy on flour and wheaten meal should be abolished. There are three recommendations, not separate and independent recommendations but joint and several recommendations, each one dependent on the other. All three or none must be carried out and, above all, as is pointed out in the paragraph to which I have referred on the flour and butter subsidy, "this is not a proposal for the relief of the Exchequer". The aim was to maintain the capital programme at a higher level than would otherwise be possible.

The abolition of the subsidy on butter and flour and bread was advised by the Capital Advisory Committee to be applied towards the sustenance and maintenance at a higher level than might otherwise be possible of the capital programme. The saving of the taxes for food subsidies is not being devoted in accordance with these recommendations and that is an essential matter which should be understood by the House and by the country.

I agree that those proposals put the present Government in serious difficulties, as they put my Government in serious difficulties, because—and it is as clear as noonday—all these proposals had to be carried out or none of them. That is number one. You had to start fighting town and country. You had to fight the farmers and you had to fight the people who got the bread and butter subsidies. To leave that aside, their proposals were for the purpose of providing money for the Capital Budget which was to provide productive employment and to provide means for the development of the country and it was not to be done, most specifically, as is now being done, for the relief of the Exchequer.

In other words, we were to take off the food subsidies, take away the relief on rates given to farmers in respect of agricultural land and, in reference to the farmers' relief of rates grants, to provide them for the purpose of increased production on the land. There is a lot to be said for that. Their object in that recommendation was to provide increased production on the land. Their object in taking away the food subsidies was to provide money for the Capital Budget in order that the Government should have money to develop the country and its resources and to provide more and increasing employment, not in relief of the Exchequer.

The Capital Advisory Committee presented my Government and presented the present Government with the recommendations involving diverting the utilisation of the grants formerly used in relief of rates on agricultural land to productive purposes and the utilisation of the proceeds of the food subsidies for capital purposes and not for revenue purposes. The Government therefore were still left to face and provide for the deficit in the Supply Services of whatever number of millions it was. The present Government say £8,000,000. I do not know what the figure is. They had to divert the grants for relief of rates to other purposes and the food subsidies to capital purposes and at the same time raise taxation to the extent of £8,000,000. That is a job that I did not fancy. I do not think it is a job that the present Government fancy and they certainly did not carry it out. What they have done is not what the Capital Advisory Committee said they were to do—utilise the food subsidies for capital purposes because capital was so scarce—but they have done what the Capital Advisory Committee said that they were not to do at all— used them as current revenue. It is well that the House should understand and appreciate the significance of that because it is of the utmost significance in the present context.

We have to consider now what gain is to be got, not in merely balancing the Budget—that is a fiscal problem— but for the country as a whole. Experience has unfortunately taught that this policy has not succeeded wherever it was tried to operate it. The Minister asks that people will undertake sacrifices in order that his Budget may be balanced. He asks the people whose food prices are being increased willingly to undertake sacrifices in the national interest. I do not think they will be undertaken in the spirit in which, perhaps, the Minister thinks they should be taken and for which the Minister asks. No other country in the world has done anything similar to this, taken off food subsidies to balance the Budget and left the people to put up with increased prices for food. May I remark, in this context, that it might possibly have been more acceptable to the country had the Government received a mandate in the last general election to do what they have done, or not having got a mandate and finding themselves in the position of having to adopt this very serious course, at least they ought to have seen that the sacrifices were equally shared?

I always understood that one of the objections to food subsidies was that all classes of the community benefited from them indiscriminately—the unemployed man, the old age pensioner, the middle-class man, the man with the big family, the man with the small family and the man with the big income, all got the benefit of the food subsidies. What is happening in this Budget? Everybody, rich or poor, will get the benefit of children's allowances. How is that defensible, if it is indefensible to give food subsidies to all classes of the community? Of course, it is essential to give some compensatory benefits to those classes of the community who are being deprived of the benefits that accrued to them through the food subsidies. What is the point in giving rich people the same family allowance as the unemployed man or the person on unemployment assistance? Is that not a fundamental objection to the present proposals?

The working man and the unemployed person will have their difficulties in meeting this situation and making sacrifices. They will not be able to do that in the same way as wealthier people will be able to do it. Even people of moderate means will be hit by this Budget. Everybody knows that the poor and the afflicted and the old age pensioners will be hit hard and the middle classes will be hit even harder. People who are living on fixed incomes and those living on incomes from investments cannot get any cushion against the increases. Those who have not got any organisation to defend them cannot get any compensation. If it is not right to give relief to the rich or the middle classes in connection with food subsidies, it is certainly not right to give them the same amount for children's allowances as those given to the poorer people. The less wealthy people will be able, at a pinch, to get away from bread and butter, which are the essential foods for the less well off, and eat meat or other foodstuffs. Indeed I can visualise that some of these people may even make money from the indiscriminate granting of children's allowances to all classes.

Those are the considerations that have to be weighed up. We weighed up all those considerations and decided against the abolition of food subsidies, not because of any doctrinaire theories at all, but because we felt that the social stability which we had secured was worth purchasing at the price of the maintenance of the food subsidies. The abolition of the food subsidies, desirable though they may be in the interests of financial necessity to balance the Budget, may be dearly bought in the social instability which may accrue. We took that line and that was our policy—certainly it was my policy—that in the circumstances that existed last year, and which continue to exist, we were not going to jeopardise the social stability we had secured and which we certainly did not want to jeopardise.

I think I have demonstrated sufficiently the arguments against the total abolition of the food subsidies. I am then asked: "What were you going to do?" I repudiate the suggestion that I am called upon to say what we would have done as a Government, but I will give a suggestion to the present Government and then I will have discharged my duty. If it was desirable to balance this Budget, and we all admit that it was, and if it was, as the Taoiseach and the Minister for Finance assert, essential for them totally to abolish the food subsidies, why did they throw away £1,750,000 from the levies?

Mr. Dillon

Motor cars and radio sets.

Mr. J. A. Costello

They are expected this coming year to bring in £2,500,000. Last year, the import levies were placed primarily and as far as we could on consumer and luxury articles and they realised £4,235,000. Deliberately the present Government has dropped £1,750,000. I want to suggest that one method of balancing this Budget would have been to have left those import levies as they were and the same proceeds amounting to £4,235,000 which we got last year could have been put into revenue instead of capital. It was put by us into capital account for economic purposes.

Let us assume for the moment that we are passing through a very difficult year and that any Minister for Finance would have found it difficult to balance his Budget and in doing so would be faced with a formidable task. We are facing a period not of emergency but a period of temporary necessity. We met the emergency last year and faced the difficulties and we went a considerable way towards solving them. Now we are in the transition period when we hope times will improve. We are in a transition period and let us take these levies and put them into the current account and use them for current purposes this year as a temporary measure. Then there is £4,500,000 available at once for budgetary purposes.

I know, and the Minister has stated in his Budget speech, how difficult it is to get capital. I have every reason to know how difficult it was for us. Possibly the Minister may be able to get it more easily than we did last year. I have recollections of the denunciations levelled at us from this side of the House by the people who now compose the Government about our efforts to keep down unemployment and to get money for capital. I fully realise the difficulties of getting capital and that this £4,235,000 which we received last year was doing a particular job of bringing about a balance of our international payments and at the same time forming the source of much needed capital.

Perhaps it would be difficult to replace that. The Minister for Industry and Commerce has repeatedly stated, in times like these, in circumstances such as are confronting us: "Let us take a chance on the capital account." If that is the advice he gave before the general election, can he not do it now? I stated here, when we put on the additional import levies in July, that they were temporary imposts and that we would take them off as soon as ever we could. That was my belief and conviction then, and it still is now, that the sooner they come off the better. However, they must remain on so long as they have a job to do. There may have been a difficulty in getting capital. If we had not put on those import levies, they would not have been there as a source of capital. You would have to go to the banks and elsewhere for it. Therefore, the argument, that because there is a difficulty in getting capital, you could not take that money and put it into current revenue, does not hold water.

I want to direct attention to what appears to be an improving position in the matter of small savings, if one is to judge from looking at these tables. I want, again, to draw the attention of the House to the records which show that, within the first months of the financial year, the present Government has got at least half of their expected estimated revenue from small savings. The Minister for Finance stated in his Budget speech that he was expecting an increase in these small savings. With an additional push, with an appeal to the people to make more savings, surely that £4.235 million could be got as additional savings? Perhaps it will not fill the whole gap, but it will go very near it.

Other taxes could be considered. Let me suggest one. I am not balancing a Budget but making suggestions. The figures show that there was something like £2,000,000 spent in speculation in British securities last year— £2,000,000 added to the total of the holdings of Irish citizens in capital gains on investments in British securities during the past year. Why not put a capital gains tax on those people who made a capital gain on investment in foreign securities? It was part of our policy announced on 5th October last that we ought to encourage more investment in Irish industries. We seem to be at one on that on every side of the House. If you want to encourage investment of Irish capital and at the same time discourage investment and speculation in foreign securities, there is a source of revenue for you.

Let me give a few more sources of revenue without trying to balance a Budget. The Minister for Finance in the course of his speech gave the deficit he had to meet and, in all conscience, it was big enough. It was £8,000,000 or something of that kind. It went up to £10,000,000 but was reduced to £8,000,000 by anticipating there would be a buoyancy in the revenue. He then proceeds to add to that deficiency by putting in a number of additional items of expenditure. There is social assistance, £1.95 million. Let that pass. I would have thought that, with the policy the Government promised to put into operation to secure additional economic activity and therefore increase employment in the country, there would be less need for social assistance.

Leave aside the secondary teachers' pay award, which would have been paid in any event. We have then employment and emergency schemes, £250,000. What is the necessity for that? Is not the whole purpose and scope of all our objects and policies, including those of the present Government as stated by the Minister for Finance, not to spend money on unproductive projects? Again and again, the Minister for Finance stated in the course of his Budget speech that it was not his policy or the policy of his colleagues in the Government to spend money on unproductive projects. Could there be anything more unproductive than employment and emergency schemes? There is £250,000 that could give productive employment instead of emergency employment.

Leave that aside. Consider the concession to the bakers of £230,000. Deputy Norton, on the first occasion he spoke on the Budget, already repudiated the suggestion that any public faith was involved in the money to the bakers. Let us assume, as I am prepared to assume, that the bakers had some sort of good and just claim because of increased wages to get some concession. They did get some concession, but they got it only for a particular thing. Let us assume they were entitled to it. What will happen now? This Budget has increased butter from 3/9 to 4/4, which I believe is being charged for it in Dublin. It should only be increased to 4/2. Actually, in certain places I believe it has been increased to 4/4——

Mr. Kyne

All over.

Mr. J. A. Costello

The loaf of bread is going up 3d. or 3½d. Supposing a halfpenny had been put on the price of the loaf instead of the 3½d. That would not merely pay the £230,000 but it would give something like £200,000 for the relief of the Exchequer. There is money just in that alone.

Again, take the price of butter. I have said here, year after year, that the timing of the abolition of food subsidies is important. When prices are falling, if they ever do fall, then is the time to reduce or take them off. Some months ago, and for some months previous to the Government coming into office, the price of butter here was at a point where it was actually below the controlled price. In many shops in the city I am told—I do not know—that, while the controlled price was 3/9, you could have got butter for 3/7.

Mr. Dillon

3/6.

Mr. J. A. Costello

My colleague here tells me that it was 3/6. Take 1d. or 2d. off butter. Make them sell it at 3/7 and you have got a pretty substantial sum to balance the Budget.

I do not know what the £50,000 for fisheries is. If it is proposed to develop inland fisheries, why not put it into the capital account instead of the current account and thus save £50,000? I do not know what it is there for. I got a long letter in my post from a gentleman protesting against this. I cannot criticise it because I do not know enough about it. However, there is criticism of it of some sort or another. Why not put it into the capital account? Is it not development? Is that not a proper purpose for capital? There is £50,000 you can save.

Let us pass bovine tuberculosis eradication, £100,000, although I do not know what it means. We have agricultural marketing, £250,000. Everybody is anxious to improve marketing methods. Our policy, announced on 5th October last, contained proposals in reference to that matter, under Deputy Dillon. I do not know on what that £250,000 will be spent in the forthcoming year.

When food subsidies are being abolished and the sacrifices therein entailed being imposed, it is our duty as an Opposition, carefully and with a great deal of detail, to examine every proposal of the Government to see that the money is not being expended on matters which are not productive, as distinct from mere expenditure. There is a general allowance for Supplementary Estimates of £950,000, an increase of £200,000. That £200,000 could be saved. We set ourselves the task of giving notice at the very beginning of last year to every Department that it would have no supplementary claim during the year.

Mr. S. Lemass

And how many had you?

Mr. J. A. Costello

We were doing a fairly good job on it. Here we are, in general conditions of emergency requiring the abolition of the food subsidies, giving what amounts to an invitation to the Departments to submit Supplementary Estimates during the year. There is an additional £200,000 provided for that purpose. Let us assume that experience has shown it is impossible to prevent a Department from having a Supplementary Estimate no matter what you do or say. The Minister for Finance has indicated that he and his Government intend to make more economies on the Book of Estimates as it stands. Why not cover any Supplementary Estimates that may come by economies? If you add up, you may have between £750,000 and £1,000,000, plus £4,000,000 on levies. It is an alternative without objection economically, from the fact that savings are going up, from the fact that the Government could make a greater push to increase savings and provide the necessary money for the Capital Budget and from the fact that we left sufficient money to give the Government half the amount they estimate on small savings. If there is another prize bond issue this year as successful as the last prize bond issue, very many of the budgetary difficulties of the present Government are solved.

I want to conclude by repeating what I said in my Radio Éireann broadcast on the Budget—that there are certain items in the Budget of which we approve, particularly in connection with the incentive given to export which we started and the incentive given to investment in Irish industry. I have been always convinced that there is no way of getting down taxation unless we get economic activity and buoyancy of revenue so that by less taxation you will get an increase in revenue. I greatly fear that the present proposals, coming as a shock to the economy, will produce social instability, and that if demands are made of the type made following the Budget proposals of 1952, the saving to the taxpayer of the amount of money indicated under these proposals will be very little compared with the cost that may arise from the social and economic difficulties involved in these proposals.

Minister for Industry and Commerce (Mr. S. Lemass)

When I went last night to Radio Éireann to speak in the series of broadcast talks arranged in connection with the Budget I began by urging that the main consideration to keep in mind when discussing the Budget proposals was that the principal aim of national policy now is to increase employment and to secure for the country by an expansion of production the resources which will enable it to maintain a high and rising level of employment. I want to begin my remarks now in the same way.

Whatever views Deputies may have about the proposals in the Budget, they must relate them to that central purpose of getting the country out of its present difficulties, of getting employment expanded so that the opportunity of earning a livelihood in this country will be available to those who have not got it now, and to the tens of thousands of men and women who will in after years emerge from our schools seeking it.

Deputy Costello referred to the mandate of the Government. I do not know if there is any purpose to be served by discussing what our mandate was, but I and my colleagues have no doubt in our minds that we became the Government because the people expected us to work determinedly and intelligently to bring about a situation in which employment would expand, in which the twin problems of unemployment and emigration would be vigorously tackled. I do not know if it is generally accepted by all Parties and Deputies in the House that the expansion of employment requires a raising of the level of investment expenditure—that the kernel of our economic problem is the level of new capital investment which, each year, has been consistently below the point at which we could make sufficient progress.

Everybody will, of course, agree that a higher level of investment by private enterprise in productive activity of one kind or another, is the permanent solution, but while that is being organised—and I hope we will be able to get it organised—State capital investment activity must make a substantial contribution to the effort to get employment increased. The National Executive of the Provisional Trade Union Organisation, in its Full Employment Programme, expressed that view. It is one in which we concur.

The extent to which it may be possible for the Government to organise a higher level of public investment, either through its own Departments or through statutory corporations and local public bodies is, of course, a question that has not yet been answered. Indeed a large part of the work of the Government at the present time is concentrated on finding an answer to that question. It is clear that whatever funds can be procured by the Government by public loans, by small savings, by recourse to any of the methods open to a Government, to provide funds for investment purposes must be availed of to the extent that it is possible to do so.

Is there any member of a local authority in the House who does not know it to be so?

Mr. Allen

£6,000,000 of borrowed money went to pay the current expenses of the Government last year.

Mr. Dillon

You know as much about finance as——

Mr. S. Lemass

There are many responsible trade union leaders who will be the very first to admit that decisions taken by individual unions or branches of unions in the past in the short-term interest of their members have frequently worked out to the long-term disadvantage of the working class as a whole by limiting the opportunities of employment, or preventing developments taking place which would have created employment. As I have said, the aim of policy at the present time is to increase employment and to that end to secure an expansion of production, particularly production for export. That aim must govern not merely the decision of the Government but the decision of every branch of the trade union movement and of every trade organisation. The Government itself cannot make the realisation of that aim a practical possibility unless all those who can influence the course of events in every trade and industry conform to the same general policy and seek the same objective.

I want, therefore, to urge that when this conference takes place, or in the meantime in the councils of all trade unions, that aim should predominate, the aim of increasing the number of jobs in the country, the employment opportunities available to those who need work now and to all those who in the years ahead will come along seeking the chance of earning their living here. There should be a recognition also that the ability of this country to provide work for all those people and particularly to cut down upon this appalling drain of emigration by increasing the scope of employment here, depends entirely upon the success of the effort which is being made to expand our exports.

I do not intend to criticise the previous Government for the action it took in relation to the balance of payments difficulties that arose last year. We have had our debates upon that in the past and it was the subject of much discussion during the course of the election campaign which brought this Dáil into being. Nobody denies that a problem had arisen there which was critical for the country and one with which the Government in office had to deal. It was dealt with by the Government of the day. I did not think they were dealing with it the right way but we certainly recognised their obligation to do something about it and as a result of the measures they took that balance of payments problem was solved for the time being.

It is true that the external trade of the country was brought into balance at a low level but that is not the problem which is facing us now. The problem now is to get the economy expanding while keeping that position in relation to our balance of payments in mind and ensuring, in so far as we can ensure it, that there will be no reappearance of the critical problem which arose last year. Our margin of safety is small—there is a margin of safety—but because it is small we must recognise that we cannot just go ahead with plans for development even for the sake of giving employment which involve outlay for purposes which are not productive in the direct sense, until we have the means of doing so through the expansion of our exports and a surplus created in that way which can be utilised for these other purposes. That is the aim of the Government, but the Government cannot do that unless trade organisations, manufacturers, farmers and particularly trade unions agree that these are desirable aims and that they will, on their part, endeavour to make their policies such as to help towards their realisation.

I am far from suggesting—and certainly this Government never attempted to leave anybody in the country under the impression—that it will be easy to get out of our present economic difficulties. It is perhaps to be expected that the proposals which the Government has made in the Budget or other proposals that it may bring forward in the future, will cause some trouble, that people affected by them will not like them, and that some of those will have it in their power to create difficulties with which the Government will have to cope. It would be far too much to expect that we can get out of this very serious situation without having some troubles to deal with. That is what Governments are for, but it will be well worth while if at the end of it all we can feel we have put the freedom of the country upon an economic foundation which is sound and have the certain prospect that employment will increase and that emigration will begin to decrease, the prospect that the living standards of our people will be made more secure than they have been in the recent past.

We are not going to tell the trade unions what they should do. We do not feel that is the way this situation should be tackled. We believe that there are in the leadership of the unions men who are concerned about the welfare of the country as we are, men who are as capable of foreseeing the long-term consequences of any decisions they may make as we are. We hope they will be able to secure that the decisions made at their conference will be such as to help towards a higher level of employment.

We know there are different circumstances in different occupations. This idea of a general round of wage increases covering all classes of workers is entirely a post-war development. The idea did not exist before the war. At that time the activities of trade unions were directed towards securing better conditions for their members as opportunity offered, as the level of activity and prosperity of individual trades made it possible. They adjusted their efforts in that connection to the circumstances in individual trades. The idea of a general round of wage increases which has no regard whatever for the circumstances in individual occupations does not appear very sensible, and it has, as our experience has shown, helped to increase problems and increase unemployment in some occupations. It may be true that in some occupations it is possible, right now, to effect an improvement in wages and working conditions without any increase in costs and with, perhaps, even a reduction in costs. As the Minister for Finance said in his Budget Statement, if those who are concerned, as trade unions are concerned, with the interests of workers, relate their efforts towards improving their earnings by increasing their productivity, it is possible for them to get better conditions established without detriment to any more general national interest.

There is one difference between this Government and the Government that left office in March: so far as we are concerned, we do not have to regard trade unions as exempt from criticism. The Provisional United Trade Union Movement, to which I have referred, represents an attempt which has not yet been fulfilled to heal the major split which occurred within that movement. We all feel that the Irish trade union movement is excessively fragmented and is, therefore, less efficient than it should be in serving the interests of its members. I will give second place to nobody in my conviction that an efficient, well-organised trade union movement can be a powerful instrument of national advancement and it is because I hold that view that I hope the efforts which may be made in the future to improve the organisation, and therefore the efficiency of the trade union movement, will be successful.

All that is preliminary to an observation which I want to make, an observation which I think should be made in relation to the very problem to which Deputy Costello referred. Before the election, during the years when we were in Opposition, we were engaged in examining, as best we could with the information available to us, the national problems, both the old problems and the new ones that appeared to be emerging, and considering what was possible in relation to them. On occasions, we put forward ideas for debate which seemed to us to be sound, based upon the information available to us. We found that those ideas were producing echoes from various quarters. Of particular interest was the fact that they produced echoes within the trade union movement and, ultimately, there emanated from the Provisional United Trade Union Organisation a document setting out proposals for a full employment policy.

Those who framed that document had, of course, to take into account the effect of any measures adopted to increase employment and, going on from there to full employment, upon the annual Budget. Rather courageously, I thought, the spokesman of the Trade Union Movement faced up to that difficulty. I want now to quote from a publication of theirs. They said:—

"It is clear that the ordinary machinery for securing money for investment by way of Government loans and the savings movement is likely to prove incapable of providing the amounts required each year."

They go on later to say:—

"Nevertheless, the Government must continue to find capital for investment, if national economic development is to continue, and unemployment and emigration reduced. This problem is not one for debate as to the contrasting merits of different principles or policies but rather is it a life and death problem for the country."

Because they held that view, they recommended that the Government should impose taxation sufficient to produce a Budget surplus. They said the trade union movement would accept the principle of a Budget surplus for the purpose of carrying out the capital programme.

We did not find it possible to budget for a surplus in the circumstances of this year. Indeed, as I said, we did not even find it possible to devise a system of taxation which would give us enough revenue to balance the Budget, much less produce a surplus. The problem that the national executive of the trade union movement was facing up to there was also facing us and we could not go further in solving that problem this year than to decide that the amount required to meet the ordinary outgoings of the Exchequer would have to be found by increasing taxation to the extent that was possible, by cutting out the food subsidies, replacing them by a cash payment to social welfare recipients and increasing children's allowances.

If we could have devised a system of taxation which would have obviated the necessity for abolishing the food subsidies and produced a surplus for capital investment purposes and which would not, at the same time, have put workers out of their employment, then we would certainly have considered it; but that choice was not open to us. The difficulties of this day and of the Government in relation to the Budget cannot be solved by wishful thinking. We had to deal with realities as we found them, keeping in mind when we came to make decisions what the main aims are, namely, not to take any steps which would tend to aggravate the unemployment situation, but, on the contrary, to make available to the maximum possible extent the funds which would enable investment expenditure to be increased, with a consequential increase in employment.

We have in this matter precisely the same viewpoint as that expressed by the trade union movement in this document, though we do not accept all their recommendations. We do not think some of the institutions they propose would be helpful; but our aims are certainly the same and it is because the Government is trying to proceed in circumstances of great difficulty, to the fulfilment of these aims and working along the same general lines as those recommended by the movement as necessary, that we can hope that in the fulfilment of our programme, we will have their intelligent co-operation. So far as I am concerned, I am always available to meet the representatives of that committee to discuss any aspect of this problem with them and I hope to find that we will be able to reach agreement as to what is desirable, what can be done, what will secure, not merely that the benefits of national progress will be secured by the ordinary employed members of trade unions but that the line followed to that end will not contribute anything to national difficulties and certainly not have the consequence, which none of us would desire, of increasing unemployment.

We faced up to the decision that the food subsidies should end and that we should try to replace the subsidies to the extent we found possible by increasing cash payments to social welfare recipients and increasing children's allowances.

Dr. Browne

Does the Minister agree with the second part of the paragraph: "It is clear that the ordinary machinery for securing money for investment by way of Government loans and the savings movement is likely to prove incapable of providing the amounts required each year"?

Mr. S. Lemass

I read that quotation.

Dr. Browne

Does the Minister agree with it?

Mr. S. Lemass

That is a difficult question to answer. I do not know that any of us is yet in a position in which we can make a reliable forecast of the amount likely to become available this year by an expansion of savings or by public subscription to a Government loan. I should hope that, as a consequence of the Budget and as trade improves—as I expect it will improve—the prospect of procuring the amount contemplated or required will be enhanced.

Deputy Costello, of course, put his finger without difficulty upon the main objection to the food subsidies, that is, that the benefit of these subsidies went to everybody. The very richest man got the same benefit at the same cost to the taxpayer from these subsidies as the very poorest. I submit that in our circumstances, in a year in which the Government had to face a revenue deficit of £9,000,000 in the Budget, it was preposterous to think of continuing an arrangement under which the ordinary taxpayer was contributing to reduce the price of the loaf, or the lb. of butter to people who certainly had no claim because of their personal circumstances to any such help from State resources.

Nobody in this House would disagree for one moment with the proposition that the benefit of food subsidies of this kind, if they are to be maintained, should, as far as possible, be confined to people who are in need of help. That idea would present very practical difficulties if the attempt were made to apply it on a basis which would involve a continuation of price subsidies in any form. The Government decided that the nearest we could go to applying that principle was to withdraw the food subsidies and give cash payments instead to those classes who need help and to whom the Government is in a position to make these cash payments, the people who are receiving income-support payments through the social welfare schemes, or through the children's allowances.

We fully appreciate all that was involved in that decision but I think it is perhaps necessary at this point to make it clear that food subsidies are not paid and never were paid by the Government. They were paid by the taxpayers of the country and the position of the State at the moment is that the taxpayers have to find £9,000,000 in order to maintain the existing level of Government services. It does not make a great deal of difference whether they find that in one way or another. It has got to be found.

The Government also took the levy off materials used for a process of manufacture or equipment required for a factory. It was madness ever to have put import levies upon industrial materials or equipment. The effect of taking them off is that trade is beginning to revive in many instances all over the country. I think there is now no longer any likelihood that the factors which were causing a depression in trade will persist. The benefit in employment of that decision by the Government will be realised in a growing degree throughout the whole year.

Now I come to expensive motor cars. Last week Deputy Sweetman said that while we were taking the subsidy off flour and butter and increasing the tax on beer and tobacco we were allowing expensive motor cars to come in free of duty. That is not true. Motor cars exceeding £1,300 are not imported free of duty. There is quite a substantial duty on these cars. The special levy was put upon these cars by mistake. When the Government of the day were preparing that special levy they did not realise they were making a mistake. They did not realise they were contravening a trade agreement which they had made with the British Government. Here is what the relevant portion of the trade agreement says:

"The Government of Ireland undertake that completely assembled private motor cars of a c.i.f. value of £1,300 or more manufactured in the United Kingdom shall enjoy entry into Ireland free of quantitative restrictions and that the rate of customs duty to be charged on such vehicles shall not exceed 22 2/9 per cent.

Signed: Clement Richard Attlee,

John A. Costello.

General Mulcahy

"Customs duty."

Mr. Dillon

That was taken from the 1938 agreement which was signed by Eamon de Valera and Neville Chamberlain.

Dr. Ryan

You signed it, anyway. You were trying to run away.

Mr. S. Lemass

All parties in this House are responsible for the existence of that agreement. I am sure nobody will say here that the Government should break an agreement of that kind. It would be the height of folly for us to prejudice the trade prospects of the country, and to take the risk of throwing away the advantages which Irish farmers and Irish manufacturers secured under these trade agreements, for the purpose of keeping a special import levy of 40 per cent. on motor cars over that value. Nobody intended to break that agreement. The then Government put that levy on those cars by mistake. Their mistake was very soon brought to their notice by the representative of the British Minister for Trade who very quickly knocked on their doors and talked about the provisions of the trade agreement.

I realise the problems that faced the then Government. From the day they made the order imposing the special levies until they left office they did not amend them in any single respect. They made a multitude of mistakes in preparing those levies but they were not willing to amend a single mistake. Certainly, they could not see themselves coming in with one amendment—and that to take motor cars of £1,300 out of the Order. Therefore, they kept putting off the British Government's representative with the explanation that these levies were intended to be temporary and that when the Order was being amended this mistake would be rectified. We amended the Order in that respect when we decided to make the change regarding aggregates imported for assembly. Thus, by remedying the mistake made by the last Government we are bringing the provisions of the trade agreement back into operation again. The undertaking was that cars of that value would not be subject to any higher duty value than 22 2/9 per cent.

Mr. Dillon

These were levies. There was a distinction. Under the O.E.E.C. agreement we were entitled to do that when we could not put on duties.

Mr. S. Lemass

You did not succeed in convincing the British Government.

Mr. Norton

Will the Minister attempt to deny that the question of the imposition of these levies on articles which were caught by the 1938 and 1948 trade agreements was the subject of correspondence with the British and that the British themselves said that they were prepared to agree to a levy on the articles caught under the trade agreement for a limited period subject to prior discussion?

Mr. S. Lemass

Had you the prior discussion?

Mr. Dillon

Do you deny that?

I suppose they will believe that, too. God help them, they will believe anything.

Mr. Davern

Many of them are in Timbuctoo since.

Mr. S. Lemass

These tax proposals were not, of course, the only proposals in the Budget. We considered what could be done in the circumstances of this year to start the process of increasing expansion of production and exports and we brought in certain proposals in that regard. Because of my office as Minister for Industry and Commerce, I am more directly concerned with those relating to manufacturing industries and I hope that all those who are engaged in the management of manufacturing undertakings in this country will take notice of the inducements which are now available to them to expand their production for export.

The inducements are considerable. I ask them to recognise that the country needs from them sustained effort to bring about not merely their initial entry into the export market but to expand the scope of their activities in these markets as time goes on. We have decided to work to that end through the instruments of tax inducements. We have not thought of, and I hope there will be no need to think of, sanctions in that regard, but we all know that this country may be faced in a very short time with the problem of taking a decision upon the proposal for the establishment of a free trade area in Europe and therefore we must put upon every manufacturer in the country the obligation of getting his industry organised on a basis which will ensure for it a prospect of continued operation in the event of these free trade area plans being adopted and our deciding to join the area, and to show his capacity to do so, and to justify the protection given to him by the State, by demonstrating his capacity to enter into export business.

I think the time has passed when we can tolerate without concern the manufacturer who is content to go along supplying the home market behind a quota or tariff protection, and making no effort to do more than that. I know that the exploitation of tariffs to the detriment of Irish consumers can be attempted and has been attempted by workers employed in industry just as much as by those who employ them, and I am urging that both parties in industry should realise that the time has come when we must think in terms of a new approach to the whole question of industrial expansion.

I have already asked elsewhere that manufacturers and workers' representatives in every industry should get together to see what they can do together to plan the development of external trade, to bring about in the industries that they represent the conditions that will make external trade possible. We are considering the measures that might be taken to improve the facilities available to manufacturers for securing new capital for extensions. Possibly we may propose amendments to the Control of Manufactures Act so as to facilitate the entry of external capital into investment in export possibilities, as well as to amend defects in the Act.

I want to make it clear that we will welcome external participation in industrial development for export purposes. I am sure everybody in this House recognises that the expansion of employment depends mainly upon the increase in industrial activity. In the circumstances which now exist and particularly in view of the circumstances that may arise in the not-very-distant future we want to see the problem considered on the basis of a new approach by all those who are directly concerned, not merely by the Government but by the industrialists and workers as well.

Deputy Costello suggested that one method of helping to find revenue to balance the Budget which might have been considered was the introduction of a capital gains tax on private investment overseas. I think I can honestly claim to be the first to have put forward that idea and I may say that examination has been given by the Minister for Finance to the possibility of applying it, or of devising other tax measures which would operate as a deterrent to external investment of Irish resources, but in the time available to us, we could not work out any practicable arrangement, but it may be assumed that consideration of the possibilities in that regard will be continued.

The Budget provides, as Deputy Costello pointed out, £250,000 to assist the development of improved methods of agricultural marketing. I do not think it is possible to give the Dáil at present any more information concerning the intentions of the Government in that regard than has been given already. The Government has accepted the view that one of the main problems affecting the expansion of agricultural production is the survival of inefficient and obsolete marketing methods. We believe that to realise the aim of expanding agricultural production the first step must be the improvement of marketing arrangements. What form these improvements would take, what type of organisation should be responsible for bringing them about, is a matter to be discussed with the representatives of the farming organisations.

As an indication of the Government's intention to give practical help to development on that line, that £250,000 was set aside in the Budget. I do not think it is in any way contradictory to the principles I have already expressed to have made that provision in the Budget and to have accepted the increased impost involved for our people, to achieve an expansion of both agricultural and industrial production. The long-term solution of the country's economic problems must be found in that way, and the introduction of these provisions in the Budget this year is in complete accord with the policy we have been advocating.

I want to deal briefly—and only briefly—with the statement made by Deputy Norton that in providing for certain retrospective payment of subsidy to the bakers we were not meeting an obligation which had arisen under our predecessors. If there is no such obligation we certainly would not wish to pay them money, but I think anybody who studies the record and examines what happened will have no doubt about the justification there was for the recommendation from the committee of inquiry into flour and bread prices that this payment should be made and that it was due.

It will be remembered that, in September, 1955, the workers' union representing the bakery trade operatives sought an increase in wages. They went to the Labour Court and they got from the Labour Court a recommendation that wages should be increased by 10 per cent. as from the 9th September, 1955. The bakers came, in the circumstances which I have already dealt with, to the Department of Industry and Commerce and said that they could not pay that increase in wages without either an adjustment in the price of bread or an adjustment in the price of flour through an extension of the subsidy.

On 10th November, 1955, the then Minister for Industry and Commerce, Deputy Norton, referred the question to the Prices Advisory Body which decided to examine the matter and to hold public hearings regarding it on 2nd December. The award of the Labour Court had, as I have mentioned, been made on September 9th. That was rather slow procedure and a strike notice was served by the union to expire on November 26th.

The Prices Advisory Body reported on December 30th, that is, almost three months after the Labour Court award and a month after the employers had started to pay the increased wages, that the bakers were entitled because of the increased wages to relief either in the form of an increased price of bread or a reduced price of flour through subsidy to the extent of 2/9 per sack and that they were entitled to get that retrospectively to the date in November on which they had started paying the higher wages. No action was taken on that.

Mr. Norton

Would the Minister also quote this, from me——

Mr. S. Lemass

I am not quoting from any document.

Mr. Norton

——that the Prices Advisory Body also said in their report that the master bakers refused to furnish evidence of their costs and that it was impossible to ascertain what they were entitled to?

Mr. S. Lemass

All right. Nevertheless, the Prices Advisory Body, notwithstanding the fact that it was so handicapped as Deputy Norton said, made a recommendation that they should get this adjustment in the price of bread or flour retrospectively to the date of the higher wages, the adjustment being 2/9 per sack of flour. But nothing happened. The report of the Prices Advisory Body lay on the desk of the then Minister for Industry and Commerce who did nothing about it.

By the 19th January, the bakers were getting restive and came to the Department. They did not see the Minister but they saw officials. They came to say that they had been, as they understood it, persuaded to pay the increased wages first and to seek the relief afterwards. They claimed that they had approached the Prices Advisory Body in good faith and expecting that the recommendation of the Prices Advisory Body would be carried into effect. Again, nothing happened.

The bakers waited for another month and this time, apparently, they got tired of going to the then Minister and went to the then Taoiseach. They saw the then Taoiseach, Deputy Costello, on February 9th and they told their tale of woe to him and pressed for a decision and got from Deputy Costello a promise of a decision by the end of the following week but they did not get a decision. What they got was a new committee of inquiry set up by the Government at that time. That seemed to put the matter safely on the long finger again but the bakers then came to Deputy Norton, as Minister for Industry and Commerce, to find out what their position was going to be. He explained that this committee was examining the matter and that they could make a recommendation and, of course, that they were at liberty to recommend retrospective application of any relief that they thought necessary.

The committee looked into the matter and, having examined it, decided that they could not wait in view of the circumstances as revealed to them, until they had completed their inquiry and so they sent an interim report on May 31st to the then Minister, an interim report which recommended that immediate relief should be given to the bakers in the form of an increase in the allowance per sack, whether it came in the form of an increased price of bread or a reduced price of flour did not matter, an increase of 3/2 per sack, in contrast with the 2/9 which they thought would have settled the problem a couple of months earlier, and that the 3/2 a sack relief should be made retrospective to the date on which the higher wages began to be paid.

That was on May 31st and nothing was done about that either. It was not until July 30th, two months later, that the bakers got the increase in the price of bread by the Order of the then Minister and without retrospective effect.

If the Deputy likes, I will use the precise words that were quoted to me by the representative of the bakers' union. I gave a very much edited version here. However, that is the position as I want to put it to the House. We have got this problem of balancing the Budget and we do not think it could be done by an increase in taxation. It can be done this year only by trimming down expenditure to the limit of the revenue that will be brought in. We have got to balance the Budget because we must make available for employment the maximum amount of money and we cannot allow any part of our resources to be diverted. We believe that going along these lines we hold out the prospect to the country that the difficulties and hardships involved by the Budget will result in better prospects of employment and greater security for the country's economy and for the people living in it. I hope that by this time next year we will be able to show that the policy on which the Budget is based was a sound one and that we are getting that employment and those conditions which undoubtedly all Deputies desire to see.

Mr. Lindsay

Anybody finding himself, in spite of his large majority, in the political and economic whirlwind in which the Minister now finds himself, must of necessity be specious in his arguments. Indeed, I have rarely listened to a speech more restrained and more in the nature of a moderate apologia than the one to which we have just listened. There are of course certain aspects of that speech which must be commended from a national basis but the commendations might be offered for vastly different reasons to those put forward in the course of the speech. Budgetary proposals, affecting the country as they do, must be approached from, I would suggest, a strictly national viewpoint, moving only into their local implications when such local implications are necessary and when they are necessary to point out the discrepancy between promise and performance. The discrepancies between promise and performance are much more apparent when the promise and performance have a very limited time in between. This Budget, following as it does hard on the heels of a general election and a change of Government, affords us in this House and the people of the country as a whole an excellent opportunity of judging promise and performance.

Notice taken that 20 Deputies were not present; House counted, and 20 Deputies being present,

Mr. Lindsay

In the word "promise" there is always, of course, the connotation of implied promise, that is, either the promise that is made by insinuation or by implication. In the course of the last general election we had various examples of both the promise and the implied promise. I must say in case anything might be said to the contrary, either here or outside, that I had personal experience of listening both to the promise and the implied promise, from every member of the Fianna Fáil Party from the present Taoiseach down to the various satellite speakers that one inevitably has in the course of a general election. I even heard them from the much hated lawyers who were poured into my constituency by Fianna Fáil.

I do not think in any election of which I have had experience, either as a candidate or as a speaker on behalf of candidates, that I have ever listened, both expressly and by implication, to greater efforts on the part of the Fianna Fáil Party to purchase the franchise of this country. They purchased it successfully, but they purchased it by a pretence that was false.

I remember, on 24th February, 1957, addressing a meeting in my constituency immediately prior to a speech delivered by a successful Fianna Fáil candidate in that constituency, Deputy Doherty. I appealed to him, before the people listening to the two of us, quite specifically. I said that at that stage of the election campaign he should be in a position to tell the people straight, if he knew it, what the intention of the Fianna Fáil Party was with regard to the subsidies on flour, bread and butter. There were no Press representatives present. It was in a remote district in County Mayo. Naturally, Deputy Doherty found himself free to pledge his leader and his leader's name as a guarantee that the things I was alleging would not and could not happen. His reply, in the best and fairest paraphrase I can give of it, was: "You can trust Eamon de Valera not to do any of the things Mr. Lindsay says he is going to do."

I told the people of Glenamoy in the constituency of North Mayo on that Sunday morning that, if Fianna Fáil got a majority as a result of the general election, they would pay dearer for their flour, dearer for their bread and dearer for their butter. That was my simple statement to the people. However, Deputy Doherty, coming after me, said: "No, do not believe him: it cannot happen. Why? Because you can trust Eamon de Valera not to do any of the things Deputy Lindsay says he is going to do."

It was hard to blame Deputy Doherty in the light of after events. That was on Sunday, 24th February, 1957. On the following Thursday night, with all the panoply associated with the propaganda of the near successful, with torches and banners and two horsemen——

Mr. Davern

The only two in the country.

Mr. Lindsay

——Mr. de Valera, as he then was, the present Taoiseach, strode into the town of Belmullet to address a meeting on behalf of Deputy Doherty and Deputy Calleary. There was a great crowd there. Even a large number of Fine Gael people came to see and hear. There were people from all around that area, small business people, small farming people, unemployed people or, to put it on its correctly factual basis, under-employed people. They saw the complete performance of Lincoln but they were not able to see the limitations of Jefferson Davis. I can still see the torches blazing; I can see the upturned faces listening to the words of wisdom and advice, listening for the truth, listening for further enunciations about honesty in public life. This, as reported in the Irish Press of 1st March, is what they heard from the great enunciator of the truth in public life in relation to bread. In case there might be any doubt as to the authenticity of the source of the script in brackets is “Irish Press reporter”.

"You know the record of Fianna Fáil in the past," said Mr. de Valera. "You know that we have never done the things they said we would do. They have also told you that you would be paying more for your bread."

It is possible, even probable, that young Deputy Doherty, having regard to his experience on the Sunday before and having regard to the fact that he had pledged his leader's name as a basis of trust for the people of the country, asked him to say something about it.

The present Taoiseach was not slow to lend support to the view expressed by Deputy Doherty locally, without a Press, in a newspaper with a nationwide circulation. "They have also told you that you would be paying more for your bread." Then he goes on to deal with what happened in 1951 in relation to bread prices and in relation to the subsidies at that time, and continues:—

"We did not cut them all because we did not want the price of bread, so important an article of diet for the poor, to be increased."

There is both promise and implied promise. I can well understand, as can Deputies on all sides of the House, the effects that that would have on a family living in a small holding supplemented by social assistance benefits in various shapes and forms—the effect that that had in the area in which the Taoiseach was speaking that night. I can well understand that, to some mother of a family, hearing those words meant unequivocally bread will not be dearer. I can understand her saying to herself: "I will not need to give any more to the lorry man who delivers the bread to my door or to the member of my family who goes to the shop to collect it."

At that time such people, not blessed with all the wealth of the world and whose existence is a struggle from birth to the grave, paid 40/– for the ten-stone sack of flour. It must be a matter of signal and great amusement for the rural Deputies of Fianna Fáil sitting opposite me now, with smiles on their faces, that people in that position now have to pay 72/– for the ten-stone sack of flour. Is it possible that public representatives, who no doubt secured votes from people similarly circumstanced as the people in my constituency, can laugh at those statements with a ruthlessness that ill befits a public man? If the Taoiseach went back to Belmullet now——

Notice taken that 20 Deputies were not present; House counted, and 20 Deputies being present,

Mr. Lindsay

In the smaller holdings in the more remote areas of rural Ireland, where will they find the money necessary to buy these commodities at increased prices? There is only one way that I can see, at any rate as far as my constituency is concerned, in which they can find that money, that is, to send one person more than they are now sending to England, to Scotland or to America. I am as convinced of that proposition—that these proposals will result in more emigration from the smaller holdings of rural Ireland—as I am standing here this evening.

However, there is an aspect of these proposals that causes me and, I feel sure, other thinking people, great concern. All too frequently over the years do we find in daily newspapers a criticism of public men, a criticism of their methods, of their motives, of their efforts to gain control of the franchise. When people come before the electorate seeking their support, they must come and should come as people fully informed of the economic position as it was and of the economic position as it obtained at the very time they were seeking the confidence of the electorate. We have been reading speeches over the past three or four weeks from different Government Ministers, pointing out that they did not know how bad things were until they assumed office.

Mr. O'Malley

The rot was finished.

Mr. O'Sullivan

We had a quotation of Deputy O'Malley's. There were some interesting remarks.

Mr. O'Malley

You can quote me all right.

Mr. Lindsay

Deputy O'Malley will have a full opportunity—and no doubt he will take it, as he has always done —to take part in this debate.

Mr. Corish

He trotted in Cromwell last year.

Mr. Mooney

What about the cheap tea you promised him? It was 8/– a lb. when you went out.

Mr. Lindsay

We did not make any such promises. This is a matter which should cause the greatest concern. When people lose faith in public representatives, both men and women, there is bound to set in a loss of faith generally in the public institutions to which they are elected. Once public institutions and the members of them fall into disrepute and lose the confidence of the people, there is an end to democratic government as we know it and there is a beginning of a move either to the left or the right, whichever way you chose to call it.

As I said at the beginning, the Tánaiste made a restrained speech, a moderate speech, a speech calculated to win the trade unions and to try to get them to desist from applying for a further wage increase. In the political and economic whirlwind in which he finds himself, it is an appeal calculated to help him out of his difficulty and to help the Government Party generally out of their difficulties.

Mr. O'Malley

And the nation as a whole.

Mr. Corish

You did not think so this time last year.

Mr. Lindsay

I have sufficient faith in our colleagues in the Labour Party to exert their influence with the trade union movement in this country to see that no act or acts of theirs will be directed towards national sabotage and national instability with the same ruthlessness as these budgetary proposals have been directed and are being directed to that sabotage and that instability.

We in the Fine Gael Party have at all times sought in the public life of this country to steer a middle of the road course, where there will be that necessary element of fair play for all sections of our people. It is with that principle in mind that I intend to conclude my speech here this evening. We oppose these proposals, first, because they emerge from a dishonest purchase of the franchise and bring into disrepute members of public institutions and the institutions themselves and, secondly, because they have made such a savage inroad and will make more savage inroads on the people who are least likely to be able to endure them.

That being so, I assert again that, while subsidies on foodstuffs must of necessity be a temporary feature of the economy, my view is that their abolition should be a matter of timing and degree, that they should be taken away only gradually, so as to render the impact less severe upon the people who made no provision for such a vast attack upon their small resources.

Mr. Blowick

Unlike 1951, when the present Government took office after the inter-Party Government, they do not claim this time that there was any debt left to them. They did so then, until that myth was exploded when it was revealed that, instead of leaving a debt, we left £26,000,000 of the Marshall Aid money unspent at the time. This time they are approaching it, for some peculiar reason, in a more decent fashion, if it could be called a more decent fashion-they are admitting openly that they found no debt left by the inter-Party Government and they are not claiming that.

The Parliamentary Secretary to the Minister for Social Welfare said in a speech on Sunday, which I see reported in yesterday's paper, that it is just the trend of the times which has been the cause of all this and which forced the Government to put on the harsh imposition they have put on in the Budget. The cunning approach to-day is that all the Ministers, including the Taoiseach, are throwing bouquets at the members of the outgoing Government, the ex-Ministers for Finance and Agriculture and the ex-Taoiseach.

I believe this is done to try to convey to the people that the Opposition are at least in secret agreement with the terms of the Budget.

We do not want any bouquets from the present Government. I am sure I speak for all my colleagues in the last Government when I say we do not want praise for the good things we did. It was our duty to do what we could while we were in office for the benefit of the people and for their advancement. When any group of elected Deputies take office as a Government, they take it on the definite understanding that they will do their best for the nation. It was on that basis that we took office and we never sought praise or thanks for doing our duty.

The Budget which the Minister for Finance introduced last Wednesday has shaken the country to its very foundations. It has shaken the people, particularly the poorer sections, and all the more so because there was no hint given during the election campaign by the present Taoiseach, the then leader of the Opposition, and by his first lieutenant, Deputy Lemass, now Tánaiste and Minister for Industry and Commerce, that such a sweeping change would be made as the withholding of £9,000,000 for food subsidies which kept the price of bread, flour and butter at the low level they were at up to this. The removal of these subsidies was surely a matter to put before the people and, therefore, this is the second occasion within the space of a few years that Fianna Fáil has got into office by a trick. Deputy Killilea should not find cause for laughter in that. When I say a trick, I mean the words of the present Taoiseach in Ballina and Belmullet in trying to ridicule the forecasts that the members of the outgoing Government made.

I told the people myself in Castlebar and many other places throughout the country that we could find plenty of money by withdrawing the food subsidies, by cutting workers' wages, by increasing the price of tobacco, and by increasing what has come to be known in Galway as the working man's pint. Did Deputy Killilea not say in Headford, in my own hearing, that he would not support the Government that would attempt to increase the price of food, tobacco or drink?

It is very strange that the people of rural Ireland seem to get the most attention from the present Government in the matter of blows, with no prospect of any relief being held out to them. Let us take the agricultural grant.

An Ceann Comhairle

The agricultural grant is not in the Budget.

Mr. Blowick

I think I am entitled to quote what the Minister for Finance said on the subject.

An Ceann Comhairle

There is nothing about it in the Budget.

Mr. Blowick

Notice taken that 20 Deputies were not present; House counted, and 20 Deputies being present,

Mr. Blowick

It is nothing short of scandalous that men, like the Taoiseach and the Tánaiste, in public positions should deliberately make promises during an election campaign and flagrantly disregard those promises once they get what they ask for, namely, a strong Government. The abolition of the food subsidies is of serious import particularly to the poorer sections of our community. The subsidies should never have been abolished without prior consultation with the people. Butter to-day is 4/4 per lb. as a result of the removal of the subsidies. Flour has gone up by 2/9 a stone. My constituents, who do their own baking, find that the eight-stone bag has gone up from £1 11s. 6d. to £2 14s. in one fell swoop. The loaf has gone from 9d. to 1/0½ or, in some cases, to 1/1. I shall say nothing about the 2d. on tobacco or the penny on the pint because these come into the category of luxuries, but it is very strange that food should have been hit so hard as compared with the small increases on tobacco and drink.

Fianna Fáil seem to think they are still living away back 70 or 80 years ago when it was possible to fool the people; one could steal 10/– from a man then, give him back a shilling and leave him under the impression that one was conferring a favour on him. That is the outlook of Fianna Fáil on the present Budget. To offset the abolition of the subsidies they offer 1/– per week to those in receipt of unemployment assistance. How could 1/– compensate the man with four or five children whose principal subsistence is bread and butter? That is a calculated insult to the intelligence of the ordinary man.

The people on the Government Benches to-day won the election on the strength of false promises. They were not tied to this Budget. They had their remedy. They could have refused to vote for it. Yet every single Deputy on the Fianna Fáil Benches trooped into the Lobby to support the Budget. I wonder how Deputy Killilea, Deputy Collins and the Parliamentary Secretary, Deputy Beegan, can justify to their constituents trooping into the Lobby to support this savage Budget? Fianna Fáil Deputies could not have prevented the Minister bringing in his Budget. On the other hand, the Minister could not force the Fianna Fáil Deputies to walk into the Lobby behind him. Like little sheep, they willingly trotted in behind him because they had to answer to the Whip.

That is one of the faults of democracy. One finds men going around tub-thumping during elections, promising the electors the sun, the moon and the stars. They are now 50 to 80 miles away from the people they fooled and it is only a matter of climbing the stairs, passing through the barrier and giving one's name to the Tellers. That is not so much the fault of democracy. It is the fault of those who masquerade under the name of democrats.

[Interruptions.]

An Leas-Cheann Comhairle

Deputy Blowick is entitled to speak without interruption.

Mr. Blowick

The Land Commission received special mention.

Mr. Killilea

When the increase went on the tea some time ago we saw the side the Deputy voted on.

Mr. Blowick

I did not vote for an increase. Tea went up because of the Suez Canal crisis. So did petrol. They came down again when the crisis was over. This House did not vote on any of those issues since they did not arise here. But Deputy Killilea and Deputy Collins have voted for these increases, despite their vocal protestations of innocence. If we have to buy a certain proportion of foreign hard wheat to provide a proper grist, then we must buy it. If that wheat goes up in price on the world market because of world conditions, then we must pay that increased price and no one can blame the Government because it is a matter outside their control. It would be very unfair to do so, but what I am blaming them and pinning them down for is that, by an act of their own free-will, they imposed this burden on the people, having promised to do the very opposite.

Mr. O'Malley

But he is not passing. That is the unfortunate thing.

Mr. Blowick

Mr. Killilea

There was not a shilling in it when you went out.

Mr. Blowick

The inter-Party Government had not the benefit of that Fund. I suppose Deputy Killilea is a bit peeved at the fact that both the Minister for Industry and Commerce and the Minister for Finance have admitted there was no debt to meet. What will they do with the £13,000,000 extra? It is proposed to take off £9,000,000 in food subsidies and £4,000,000 approximately will be provided by the extra tax on petrol, tobacco and drink.

Mr. Booth

To give employment.

Mr. Blowick

We shall wait until we see it come. I hope the employment will materialise; I hope the £250,000 set aside to establish a proper marketing system for agricultural produce will not turn out like the proposed subsidisation of fertilisers in bygone days when there were no fertilisers to be had. All we can do is wait and see, and it certainly will be very interesting and amusing to listen to the speeches of Deputies on the other side trying to explain that, without any debt being left by the inter-Party Government, the Government have decided to impose extra and needless burdens on the people.

Mr. O'Malley

What about the £9,000,000 deficit?

Mr. Blowick

Where is it?

Mr. Haughey

From the statement of the Minister for Finance and the ensuing debate, one thing emerges clearly, that is, that this Budget was in fact inevitable. So far, there has not been any serious attempt during this debate to challenge the analysis of the situation which the Minister has put forward. There is no escape from the figures which he presented. The Opposition speakers cannot deny that last year the affairs of the nation operated at a deficit of £6,000,000. If, without any change whatever, the situation had continued as it was last year, the affairs of the country would operate in the coming year on a deficit of £9,000,000. These are the facts of the situation and they cannot be contradicted.

The deficit of £9,000,000 had to be made good. Deputy Costello stated that we had been left with a clean sheet. Admittedly, the deficit of £6,000,000 in last year's account was made good by borrowing by the previous Government. However, when Deputy Costello says we were left with a clean sheet, I say that we were left with a trend which, if it had continued to operate, would have resulted in a further deficit this year of another £9,000,000.

Mr. O'Malley

So we sent the sheet to the laundry.

Mr. Haughey

The Opposition cannot therefore maintain that all was well with the nation when they handed it over to us. Such a state of affairs could not be permitted to continue. The Minister has courageously tackled the situation. To my knowledge, no Budget has ever been met by the general public with so much understanding nor the measures the Minister was forced to take so clearly understood by the people. Public interest in this Budget has been directed more to discussing whether or not the measures will be successful than to an actual discussion of the measures themselves.

This Budget creates a climate in which recovery will be possible. It is intended to bring about a condition where we can have the necessary expansion of investment and employment. The first and fundamental requirement for that expansion of investment is a balanced Budget. We could not continue for another year with the unbalance which there was in last year's affairs. It is precisely because the Minister's proposals are so safely grounded on those stark economic facts that the Opposition have not been able to attack them in any real way or to elicit any real public support in their attacks on this Budget.

One aspect of those attacks was that which was made on the day the Minister introduced his proposals. An attempt was made to stir up resentment at the idea that the Minister was going to hand over profits gratuitously to our industrialists. Lest that should happen again in this debate, I should like to put forward the proposition that the trouble with this country is that too many people are making insufficient profits. Too many people are actually making losses. The trouble is not that our bloated industrialists make too much profit but that too few of our industrialists are able to carry on at all.

The economies of Britain and the United States have expanded and prospered because their industrial concerns were able to draw on the fund of profits they made to finance their further expansion and development. It would be well for this country from every point of view and particularly from the point of view of the weaker sections of the community if our industrialists were put in a position where they could make adequate profits which would ensure their continuation in business and their being able to finance further expansion.

The proposals to increase the wear and tear allowances are welcome. They are a concession by the Minister from the scarce resources available to him to a quarter where it will do most good. We must look to our industrialists for an expansion of activity, particularly in the export fields, if we are to overcome our problems. This concession will be of considerable help to our industrialists in achieving development and expansion.

Actually, it is a pity that the circumstances of the Exchequer do not permit of a greater concession in this regard. Generally, the prevailing wear and tear allowances are very low. Although a figure of 25 per cent. may sound a big increase, the fact is that when you relate it to the fact that the average rate would be about 10 per cent. it represents an increase of from 10 per cent. to 12½ per cent. Therefore, I want to reject the idea that this is a gratuitous gift of extra profits to our industrialists and to point out that it is a very wise concession which will be very useful in the expansion which we hope will come. Indeed, it is a pity the Minister was not able to give further concessions in this field.

The decision of the Minister to join the International Monetary Fund and the World Bank is to be welcomed.

Mr. O'Sullivan

Whose decision?

Mr. Haughey

It is about time that decision was taken. We could not have postponed it any longer. We could not afford not to be members of these institutions. We are not alone in the world in having a balance of payments problem. The International Monetary Fund is concerned with countries all over the world who have such problems. Its business is to give them advice and assistance and encouragement in the solution of their problems. The new managing director of the fund is not unfamiliar with our problems as he served on the Banking Commission. From that point of view, it is very desirable and the decision of the Minister to join these institutions must be welcomed. We can hope that considerable benefits will accrue to us from that decision.

A tremendous contribution can be made to the solution of our difficulties by a particular section of the community which has not played any great part in that regard up to the present. I refer to our civil servants and to the officials of various State bodies. In our Civil Service, we have a reservoir of tremendous talent and ability. As a rule, our best people go into the Civil Service. I feel that, so far, they have inherited a tradition which says they shall aloofly and remotely dispense regulations, the purposes of which are no concern of theirs. If we are to achieve national recovery, it will involve a tremendous national crusade. It must be made clear to our civil servants that they also must take part in that crusade. Leadership and initiative are required at all levels. They can make a considerable contribution and one which they have not made so far.

Recently, I was concerned with the promotion of a new industry. In the course of negotiations, an official of the E.S.B. said to me that it was neither his function nor his responsibility to encourage the formation of new Irish industries, as his only concern was to ensure that the E.S.B. would operate at a profit. That type of mentality must go. On all levels of officialdom, there must be a realisation that national recovery is the responsibility of all and that every person must play his part. None of us can work in a watertight compartment. A crusading spirit must develop among our civil servants and the officials of our State bodies.

I am very pleased the Minister made clear that those economies which he hopes to achieve in public administration will be in the direction of reducing the number of officials and not in the direction of reducing the status of those officials who remain. A discontented official is of no use. I hope that, when he does achieve the substantial economies he has in mind, it will be in overall numbers and not in any reduction of the positions or the prospects of the civil servants who remain. I am glad he has made that point clear and, if that is adhered to, I think that a tremendous contribution can be made by the civil servants and officials generally, if the right incentives are given to them.

In present circumstances, I think the provisions of the capital Budget, where the Minister proposes to raise £40,000,000 and spend it, represent a wise disposition of our resources, although it is certainly a long way from the dynamic programme of investment which we must ultimately envisage, if we are to solve our problems. I calculate that of the £40,000,000, £20,000,000 is expenditure of a nature that is directly productive and I believe that any commercial firm would be perfectly justified in raising capital to spend it for these purposes. The remaining £20,000,000, while it is definitely capital expenditure, contains a greater social content. I think it is a very welcome development that out of the £40,000,000, £20,000,000 is clearly and definitely productive in the narrow sense. That position has not prevailed in our capital Budgets for some time and in that respect, the present capital Budget shows a welcome trend.

It is to be hoped that when the balance that the Minister has brought into our current Budget this year, has worked out over the whole year, our financial position next year will be such that he will be in a position to plan a capital Budget with much greater freedom and get nearer to the target of investment which is necessary if all our people are to be put to work in their own country.

One suggestion I would like to make to the Minister in regard to capital expenditure is that he should consider the erection of factories for subsequent letting to private firms. This experiment has been very successful in the North of Ireland and I think it would serve two purposes in our present circumstances. First of all, it would do a lot to take up the slack in the building industry which probably will not be fully taken up in the near future, at any rate by house building. In that way, it will provide much needed employment in a very productive way. It would give a tremendous impetus to our industrial development.

When you start to set up a new industry, you come across many complications and problems, and possibly one of the biggest of these, if a foreign investor comes over here or if a group of Irish people are approached to start an industry, is the securing of suitable premises. They must secure a site, get plans passed, get tenders and eventually get the buildings erected. As anybody who has attempted that knows, the whole process is full of problems and frustrations, and it would be a great boon to industrial development if factories were available ready to hand, factories which the Government would have erected in times of unemployment. These buildings could be let to industrialists, thereby getting the industries going much more quickly and smoothly. There may be objections to that course, but it seems to me that in our present circumstances it would serve the two purposes I have suggested.

I will conclude by saying again that the Budget, as framed, is not as easy on all sections of the community as we would desire—it will bring some hardship, I suppose, to practically every section. The Minister has not introduced it for fun; he has not introduced it because he is sadistic or because he prefers to see people having a lower standard of living. He has introduced it because he was forced to do so by the inescapable logic of facts and figures.

He was faced with a situation which could not continue and no amount of arguing, smoke-screening or bandying about of figures by the Opposition can disguise the fact that last year there was a deficit on current account of £6,000,000, which was met by borrowing. That situation could not be allowed to continue. We could not hope to get our people back to work or even to carry on, unless we brought the Budget into a state of balance. The Opposition has not suggested any other way in which the Minister could do that. Deputy Blowick seemed to give the impression that the outgoing Government left their successors £5,000,000 in prize bonds, a sum which was not available to his Government, and which they had more or less handed over as a present to this Government. Of course, that is completely unreal.

Last year, the former Government found itself obliged to borrow £35,000,000, £29,000,000 of which was for capital purposes, and the Minister used the prize bonds, in so far as they came in during the last financial year, to meet the deficit on current account, and in so far as they come in during this financial year our Government is in a position to use them. There is no question of their having conjured up from somewhere £5,000,000 under the prize bond scheme and handed it over as a gift to the new Government. They used in the financial year what had come in in that period and this Government is in a position to use what comes in in this financial year. Of course, they cannot claim that the prize bond scheme was some financial wizardry which they thought up. As far as my knowledge goes, it was introduced in Britain before it was put into operation here.

Mr. Sweetman

On the contrary, the British copied us.

Mr. Kyne

Having heard the Budget proposals, I am more than ever inclined to agree that the people get the Government they deserve. Labour Deputies and Ministers went around the country during the general election campaign telling the people that if the number of Labour Deputies returned to the Dáil was not sufficient to have an effect on whatever Government got into power, certain things would happen, for instance, that food subsidies would disappear and that extra taxation would be imposed on the ordinary luxuries of the poor and middle-income groups.

Having listened to Deputies from all Parties in the House to-day, I am surprised that it was the Labour Party alone that made it a point and a definite promise in their election policy that they would not take part in a Government that would remove the food subsidies. One would think that that was the interest of all Parties and that they would be the custodians of the workers' interests and that it was on that basis that their guarantees were given.

Certainly, it is clear that Fianna Fáil so implied, either by not denying, or by describing as a falsehood the accusations of the Labour Party. Certainly the Tánaiste in my constituency of Waterford, denied that the Fianna Fáil Party, if elected to power, intended to remove the food subsidies. He branded it as a falsehood and accused those who were making that charge of knowing that it was a falsehood.

Not only is the Budget a sickener to the poor and to the middle-class groups, but the Minister felt compelled to add a threat of worse to come. In case the Budget and the threat of worse to come were not sufficient punishment for the workers for having put out the Fianna Fáil Party for a number of years, he felt it necessary to indicate that they would take steps to see that civil servants, particularly the lower paid civil servants, mainly those employed by the Post Office and the £600 and under groups, would be reduced in number. Perhaps that was the reason for that threat, but certainly it seems strange to me that all the impositions and all the threats and all the requests to tighten one's belt should appear to be aimed at the one group. In case that was not enough, the Minister made an appeal or a threat, according to the way one looks at it, that the workers who would have to make these sacrifices and who would have to go without should not dare to seek compensation even through their trade union organisations.

On reading the Budget speech in an effort to decide what way I would work out my speech, I came to the conclusion that it was a very simple matter. It occurred to me that if one had two sheets of paper and headed one: "The poor and the middle-income groups," one would find that all the taxation and all the privations could be entered under that heading, and that if one headed the other sheet of paper: "Employers, merchants, higher income groups," any concessions granted in the Budget could be entered under that heading. That may appear to be a very simple or foolish way of summarising the Budget, but I find that one could enter on the sheet headed: "Employers and others", £230,000 granted to the master bakers to compensate them for something which they had already received.

Deputy Norton indicated in his speech immediately after the Budget statement that the Minister for Finance was wrong when he implied that any promise was made by him to the master bakers that they would receive any compensation whatever for any wage settlement they made. It is well known to us in the trade union movement that the master bakers had never any intention of granting an increase to their employees, but that the trade unions, through the power of their organisation and under threat of industrial action, compelled the master bakers to concede that right, and even then a certain concession was given when the master bakers were permitted to reduce the slight overweight in the loaf that previously they were compelled to allow.

The second item on the sheet headed "Employers and others" could be £100,000 for the eradication of bovine T.B. or £250,000 for improved marketing of agricultural produce. It may be said that that is by way of a production drive, with a view to increasing agricultural output, but let me suggest that increased output also means increased profits and this money is being deliberately provided by the Minister at a time when he claims that the country is in dire need. Let me direct the Minister's attention to the fact that there was £5,500,000 of the agricultural grant, as indicated to him by the Advisory Committee, that he could have used for that very purpose and in the interests of the farmers or those whom he is inducing to produce more. But no. This has to be met out of the worker's little share, out of the poverty and sacrifice of the widow and orphan, of the man who is sick and the man who is disabled and the man who is unemployed.

The next item on that sheet would be reliefs on profits to exporters at a cost of £125,000, which will take effect next year, plus a depreciation allowance that will take effect in two years' time, of £400,000. The workers do not appear to have received any corresponding concessions.

There is also a provision affording tax relief for scientific research. That will be useful in increasing the profits of the industrialists for whose benefit the research is carried out. A reduction of special import duties amounting to £1,750,000 was also a concession mainly to certain importers of luxury goods. Entertainment tax, the profits of which go to the employing class solely, was not interfered with; rather did the Minister say that he regretted he could not give some concession but he indicated that some changes and some adjustments would be made. I suppose we can expect that the cheaper seats will be made dearer, while the dearer seats will be made cheaper in the very near future. That would follow the pattern that has been followed up to this.

What have the workers got? Let us take the workers' side of the programme. First, there is an increase in their hospital charges from 6/– to 10/– per day, with a promise that if they have to secure the services of a specialist and if they require an X-ray, that the charges will again be increased by an indefinite and undisclosed sum. That is a help to the working class; that is a decided advantage to compare with what we have given to our industrialists by way of rebate. Secondly, there is the removal of subsidies on bread and butter. I think it was the present Minister for Industry and Commerce who mentioned the nutritional survey and said that the removal of the subsidies and the compensatory amounts were based on that survey. I well remember reading that bread and butter are the main ingredients of food for the poor and middle-income group of workers.

Is it not strange that it is with these two very things that the Minister chose to close that gap in the Budget, to which the last Fianna Fáil speaker referred? Why is it that all the sacrifices have to be made by the one group? We are quite aware that we are told that it is not in our interests that it should be otherwise, that no matter how much one starves, one will get work if one lives long enough. We are funny people because, even while waiting for work, we like to live at least at the level that will enable us to work when we can get the opportunity to work.

I would ask the Minister one question: If the removal of the butter subsidy amounts to 5d. in the lb., how is it that throughout the country to-day, just a few days after the removal of the subsidy, butter is costing 4/4 a lb.? That is 2d. above the 5d., because 5d. added to the 3/9 would make 4/2. At the present moment throughout small country towns in the South of Ireland, at some of the biggest creameries, butter is retailing at 4/2 a lb. Is it not clear that not only have the food subsidies been removed, but the control of prices has been removed also, so that the workers can be further exploited? I have paid 4/4 a lb. for butter and I have seen it paid in every town in my constituency. It is amazing what the workers are expected to accept—that it is done in their own interests. It is galling to listen to appeals being made and to be told: "Nobody knows how much we are doing for you only ourselves."

It is true that the workers got certain compensations. It is quite true that 1?d. increase has been granted to certain groups of non-workers, because it is quite obvious that the old age pensioner, the non-contributory widows and orphans and those on unemployment assistance are certainly not workers, but they have got this magnificent help to compensate them for the slashing of the food subsidies and for the increase in the price of tobacco and drink. I am not too worried about the increases on tobacco and drink because I consider them luxuries, even if they are the only luxuries which the workers have an opportunity of having. If it came to a choice between an increase in the price of tobacco and the price of drink and keeping the subsidies, I would know exactly where I stood and where my vote would be cast. It is quite clear that the most defenceless groups, the unemployed, the sick and those receiving disability pensions are not getting anything to compensate them, even though they are on the lowest amount payable under the social welfare benefits.

As has been indicated, children's allowances go just as much to the rich as to the poor. It must be quite clear that the large racehorse owner in Ireland or the most important employer and the most important draper in the City of Dublin if he has a qualifying child or children will receive just as much by way of these allowances as any ordinary worker in the city, however humble his circumstances may be? Was that not the very objection to the food subsidies? It is strange that we are now repeating it. One would have thought that if the object was to avoid the giving of food subsidies to the rich and to those who did not need them the total amount saved in removing subsidies would have been added to all groups of social welfare recipients, the unemployed, the sick, the widows and orphans and the old age pensioners. Instead of that, a miserable pittance has been added to the benefits which they receive and they are told that that is all that can be afforded.

On the radio this morning, I heard that one of the representatives of the unemployed has started a hunger strike in protest against the removal of the food subsidies. I would use this opportunity to make an appeal to that probably very honest man not to be foolish in his efforts. He should come into this House and do what the Labour Party Deputies are doing. We are not trying to change the position because we are unable to do that, Fianna Fáil being here with an overall majority given to them by the people and, as I say, people get the Government they deserve, but he should use his voice and his health and strength to point out the fallacies of the promises of the Fianna Fáil Government. He should endeavour to use his position here to see that at least in five years' time the people will make a stronger effort and a better attempt to return to Dáil Éireann an increased number of Labour Deputies.

Lest Deputy Murphy should have any doubts about the honesty of the present Minister for Finance in regard to employment, I will quote what the Minister said in Volume 161, column 939 of last Wednesday's debates. He said:

"I do not wish to be taken as advocating the maintenance of State expenditure at a high level simply to provide employment. On the contrary, the aim must constantly be to ensure to the utmost extent that the employment given is both necessary and productive."

He goes on to say that it is true there are certain circumstances in which it may be necessary even to provide unproductive employment, but the whole aim, whatever the cost, should be to provide productive employment. That is the policy.

Again, in the same volume, at column 960, the Minister says:—

"The remedy for the related problems of emigration and unemployment is through the provision of productive occupations. To absorb the unemployed on public works is to treat the symptoms without regard to the cause. When capital resources are scarce it would be fatal not to concentrate particularly on productive development. Higher taxation becomes inevitable to finance the net debt charges on public works and so the real income at the disposal of a wide section of the community is diminished."

I would suggest that promises such as that are very well covered by the saying: "Live horse and you will get grass."

There was a time in this country when it was said-I think by the Sinn Féin leaders-that when the Irish Independent and Irish Times praised you, you had to examine your conscience. On last Thursday, I saw a leading article in the Independent which acclaimed the Minister as the man with the right solution. I understand also-although I did not read it, not being a regular reader-that the Irish Times was no further back in hailing him as the saviour of the nation. I would suggest to the Minister that if these two Tory papers acclaim him, it is very good reason for him to examine his conscience.

Dr. Ryan

Mr. Faulkner

I am referring to people, tradesmen and workers, who were out of work for the past two and a half years. They got employment on this scheme, which was passed since this Government took office and which is now providing these people with the wherewithal to buy foodstuffs.

A similar situation would arise with regard to the prices of foodstuffs for the rural population. Some time ago, immediately following the disastrous harvest of 1954, the price of wheat was reduced and this left the small farmer in my constituency at a loss of about £50 per year, roughly £1 per week. In effect, this raised the price of foodstuffs for the people concerned.

When I canvassed in my constituency before the last election and discovered the terrible extent of the unemployment problem and the misery and hardship connected with it, I made up my mind that my main object, while a member of the House, would be to get these people back in employment, that no matter what the difficulties were, I would strive with all my might towards that end.

When I voted for the Financial Resolutions in the Budget I did so in the belief that it was the quickest road, though a hard one, to full employment. If I had not held that belief I could not, in conscience, support the Financial Resolutions. I do believe it and while I dislike the imposition of further burdens on the people I want to place the blame fairly and squarely on the shoulders of those responsible— the shoulders of the incompetent Government that preceded this Government. I voted for a policy that in time will end the twin problems of unemployment and emigration.

Mr. O'Sullivan

I shall commence my contribution by a quotation. On the 15th March of last year we had a contribution from no less a person than the present Minister for Industry and Commerce. At column 622, of Volume 155 of the Official Report he is reported as follows:—

"Ministers are pleading with the people to save, and exhortations have been addressed to all classes of people that they should save money. Saving committees have been set up. Exhortations of that kind do little good in the absence of prospects of price stability. Nobody in his right senses will exert himself to save when the outlook is one of continually rising prices. He faces the probability that the money he saves will buy less one year or two years hence than it will buy now."

At that time, I may remind the House, the country was facing a very difficult problem in the imbalance of trade which it was then experiencing. Facing that problem and trying to find a solution for it, the Minister for Lands made the calm, deliberate statement that in his opinion-it was the opinion of the Government then as it is of the Opposition now-savings should be a paramount consideration. But he went further, qualifying the statement by saying that it was no good asking the people to save unless there was price stability.

During the past 18 months, the Government then in office realised that and it was in that realisation that every action of that Government was designed towards ensuring that, for the period this country had to meet the challenge put up to it by our imbalance of external trade, there should be price stability. Consequently, it was some achievement by that Government over 18 months that they were able to ensure that the price of essential commodities would be maintained at a steady level.

Deputy Lindsay and other speakers from this side have referred to the fact that this Government have no mandate to remove the food subsidies. Of course they have not. More than that, when the last Government had to face that extraordinary situation early last year, there was no proposal made by Deputy Lemass that a solution could be found by cutting the food subsidies. During that debate, the then Minister for Health, Deputy T. F. O'Higgins, also spoke. At column 630 of the same volume, Deputy O'Higgins is reported as saying:—

"And Deputy Lemass describes these measures as ineffective and inadequate. I suggest that, holding that view, if he were in office now the rest of Deputy MacEntee's threat would be carried out; all food subsidies would be abolished. Does Deputy Lemass deny that?

Mr. Lemass: Certainly."

Certainly he denies it. We had the present Tánaiste standing up in the House, putting it on record, denying the allegation of the then Minister for Health that if Deputy MacEntee were back as Minister for Finance—he need not necessarily be Minister for Finance —the food subsidies would be withdrawn. Certainly Deputy Lemass denies it was their intention to do it. He did not have to wait for the hustings. The present Taoiseach went to Mayo and Deputy Lemass repaired to Waterford to make the statement that it was not their intention to withdraw the food subsidies.

I am not going back into the dim and distant past. This denial was made by Deputy Lemass at a time when the country was facing difficulties analogous to those which faced it in 1952. At that time every Fianna Fáil Deputy who spoke on the Budget commented on the fact that the country was in a serious state of imbalance in its external trade. Why, last year, did Deputy Lemass not pursue the policy that the only solution of the problem was to mop up more of the money that was loose in the people's pockets by making them pay more for the necessities of life?

We do not accept that subsidies on food should be an integral and permanent part of our economy. However, it is incumbent on the Government in office, and on the Minister charged with the finances of that Government, to see that the removal of the subsidies should be effected with the least possible impact on the community, in particular on the sections of the community least able to bear it. We hear of the compensation. What is it? One shilling a week for certain people, but nothing for the T.B. sufferer, nothing for many other sections of the community who will be hard hit by the withdrawal of the food subsidies in their entirely. Not a word, not a penny for those. Compensation by way of increased children's allowances is offered to all classes at all levels, to classes which could very well stand this impact.

One notices that none of the old hardened warriors of the Fianna Fáil Party has anything to say; it is all left to the new Deputies to make their maiden speeches in support of the Minister. None of them has pointed out that the effects of the withdrawal of the subsidies must be borne equally by the various sections of our people. Is it not true that the higher income groups, who have meat for three meals a day, are not too perturbed about the price of bread or butter? They do not feel the brunt as does the person in rural Ireland who must take out lunch to work on the roads, to work in the bogs or in the fields. Those people now know the impact of the complete withdrawal of the subsidies, done in the savage way in which this Budget does it and approved by the Party opposite who were elected on the understanding that food prices would be maintained.

I am not saying anything about Limerick or Dublin; it is possible that candidates there did not promise to support the maintenance of the food subsidies. However, one of the Deputies who voted with the Government on this proposal. Deputy Wycherley, had absolutely no mandate to support the withdrawal of the subsidies. I am sorry he is not in the House because I should like to tell him that his constituents are very interested in finding out what prompted him to support this proposal. On the roads of West Cork when he meets a small farmer's wife with a 10 st. sack of flour she will stop him and explain how she has paid 24/– extra for that flour because of the withdrawal of the subsidies.

The price stability which obtained for 18 months is at an end. The withdrawal of the subsidies has meant that there is not a family in the country which is not affected, some more seriously than others. One must go down the line of income to see who are hit the hardest. It is the people who work hardest, who are engaged in physical labour, who must find the extra money that will be necessary because of the abolition of the subsidies.

It may well be said that the Government had no mandate. That is true. However, we are taking them up, not on that but on the effects this withdrawal will have in the homes of our people. It will be interesting now to know how the Government will face up to the task of maintaining the improvement in savings brought about during the past year. The Minister was complimentary to his predecessor for initiating that drive. It is regrettable that he did not see fit to pay a tribute to the voluntary committee——

Dr. Ryan

It was purely an oversight. I wrote to them and thanked them. Do not put me in the position of ignoring them.

Mr. O'Sullivan

I am glad to know that the Minister appreciates the good work that committee did and that he acknowledged it to them. In his Budget statement, he felt somewhat comfortable in consequence of the improvement in small savings.

Deputy Haughey spoke here a few minutes ago and referred to the prize bonds scheme. I think Deputy Haughey was mistaken in saying the idea was borrowed from Britain. Actually, the first time the prize bonds scheme was mooted in public in these islands was by the previous Taoiseach, Deputy Costello, in Killarney, in the autumn of 1948. There were local elections in Dublin County and in Kerry at that time. From a platform in Killarney on that occasion, he advanced this idea. It was operated later in Britain and then instituted here by Deputy Sweetman, when Minister for Finance.

I would say to the present Minister that in the prize bonds he has something which is very advantageous and which can be developed still further. It was a first venture. It was one which was successful, but which would have been far more successful if there were not so many "Doubting Thomases". We had a number of people who, for political and other reasons, went around saying that we were merely copying Britain and who could see no advantage in the Prize Bond scheme. That could, unfortunately, have affected the intake this year. It is true—particularly when we note the last-minute rush to participate—that nothing succeeds like success. The Minister will no doubt be very happy to have the £5,500,000 he has got this year. I would also say that the future looks bright in relation to further savings being effected in that manner.

In regard to the withdrawal of the subsidy on butter, I wonder if the Government realises the effect it is having, particularly on heads of young families throughout the country. After the Budget of 1952, when the Government which introduced that Budget was forced to a general election, it did not matter where one went in the course of that campaign, whether it was into a farmhouse or into a working man's home, wherever we went we were met with the one cry: "Will you do something about the price of butter?" They found it high, at the price then. What will they think now of paying 4/4 for it?

The Minister, of course, was aware, as the Government were aware, that an agitation for an increased price for milk had been waged over some period and that it was coming to finality. I do not see Deputy O'Malley so keen or so enthusiastic now in ensuring that an increase will be provided to the people supplying milk to the creameries. There is no doubt that, by removing the buffer which existed between the cost of production and the price which the consumer had to pay, the Government have ensured that when the producers make their demand, they can point to the furore which will occur amongst the consuming public. By ensuring that the buffer would be taken away and that the consumer would pay a high price, the Government got out of the demands which so many of its candidates made, particularly in the dairying counties, in the recent general election.

Has the Government taken into consideration what effects will arise on the expenses of local authorities in maintaining public institutions, by the complete withdrawal of the food subsidies? Have they given any opportunity to those people to frame their estimates, allowing for the additional cost now involved? I can recall a meeting of a voluntary hospital, of the governing body of which I am a member. Consequent on the 1952 Budget, a pretty heavy impost had to be placed on the finances there in order to meet the cost. I shudder to think what the charge will be now.

In addition to the withdrawal of the food subsidies, the Minister has seen fit to impose a levy yet again on the motoring public. We must now be one of the most expensive motoring countries in the whole world. The additional 6d. a gallon on petrol will have to be met. Those who can pass it on will do so and eventually people far removed from motoring may have to pay some of the cost. There is no doubt that it will increase our production costs, both in industry and in agriculture.

The Minister has not been over-zealous, in preparing his statement, to protect various sections of the community engaged in important work of national production, from the impact of these increases. In agriculture, many milking machines are still operated on petrol, as well as some tractors. It would have been a simple thing and would not have cost much to the Exchequer, if he had provided clauses which would save those people from the heavy impact which those taxes now have on them.

Mr. Corish

They might as well take it, the same as everyone else.

Mr. O'Sullivan

They can pass it on, or look for further increases to meet this increased charge. The Minister has also seen fit in this Budget to deal a blow to the people, in increasing the charges which will be made in hospitals. He, of course, is the same individual responsible in the first case for the introduction of the Health Act and setting the charge at 42/– per week. He now has seen fit to increase this to 70/–. That is a pretty serious bill for people to have to meet, particularly low valuation farmers and people on low incomes. I wonder whether it would not have been possible to discover some other way of effecting economy. Nowadays, one must have indeed a very low income to qualify for a medical card. Many people are only barely able to meet the charges incurred in hospitals and are dismayed at the prospect of having now to meet a charge of £3 10s. a week, in addition to the various other charges which families will have to meet in their homes.

It was implied from time to time by many Deputies now sitting behind the Minister that economies could readily be effected which would save the people from the results which they now have to face. Some bright lights in the Fianna Fáil Party have come up from time to time with some suggestions, among them Deputy O'Malley. Last year, Deputy O'Malley, speaking here, said:—

"The only solution of a constructive nature, as far as I can see, is that the Government should give the example."

Fair enough. He continued:—

"How could the Government do that? In my humble opinion the Government should give the example at the top. Take one example—the Department of Justice. Does everybody not know that the Department of Justice, instead of costing the taxpayers some £100,000 could be equally competently carried on by the Minister for Defence?"

If he had stopped there, he might even have been prophetic, but he went on:—

"Everyone knows that the Minister for Defence could be Minister for Justice as well and carry on both Departments."

An Ceann Comhairle

Would the Deputy please give the reference?

Mr. O'Sullivan

It is from column 536 of Volume 155 of the Dáil Debates, No. 4, for the 14th March, 1956. So far, neither Deputy O'Malley nor any of the others who were up and coming in those times with constructive suggestions, have presented their own Government with any of those bright ideas which animated them at the time when the inter-Party Government was in office.

At that time, the Lord Mayor of Dublin, among others, held forth on these benches for hours on end, on the dire effects which the import levies would have on the ordinary people of the City of Dublin and the country as a whole. He took up practically an entire column in the Dáil Report, in relating the devastating effect which the increased cost of spices would have on the homes of the housewives of Dublin. I wonder how many columns of the Dáil Reports he would have to occupy if he were to do justice to the impact which this Budget will have on the homes of the housewives of Dublin and all over the country.

Notice taken that 20 Deputies were not present; House counted, and 20 Deputies being present,

Mr. O'Sullivan

In his Budget statement, the Minister referred to the sum of £250,000 to help farmers to dispose of the larger output at an economic price. He did not go any further and I wonder whether, in reply to this debate, he could indicate to the House just what it is proposed to do with that £250,000. Is that £250,000 regarded as being sufficient to support the price of any commodities which the agricultural community may have to dispose of abroad this year? If it is, then it is entirely insufficient.

Last year, there was a surplus of butter. This year, we are informed that the intake of butter to the creameries is as much as 12 per cent. greater than last year. Is the industry to bear the cost of the increased exports which will flow not alone from that increased production but also from the fact that there will be a lower intake of milk for the production of chocolate crumb, in addition to reduced consumption of butter by our own people? We would be evading the issue if we did not realise that there are people, mothers of young families, people of limited income, of the middle and lower income groups, whose every intention must be to cut down on the consumption of butter and bread, if they are to meet these charges. If the consumption of butter is reduced in consequence of the impact of the increased price, our butter industry will be affected.

Later on in his financial statement, the Minister looked to further progress in the industrial field and made rather an interesting comment when he said lower transport costs would be very helpful. We cannot see any encouragement to reduce transport costs in this Budget, but we see that the transport industry, already shuddering under the impact of the increase in insurance rates, is now charged with an additional sixpence per gallon on petrol.

As I said at the outset, the Tánaiste was vociferous in opposition in declaring that price stability was of paramount importance if we were to overcome the difficulties we had to encounter last year. It is very hard to relate that statement to his action as a prominent member of this Government in support of jettisoning stable prices by the withdrawal of the food subsidies.

In conclusion, may I remind the House that on the 15th March last year, when Deputy O'Higgins said that if the Fianna Fáil Party were returned to office, they would remove the remainder of the food subsidies, Deputy Lemass, with all the firmness of which he is capable, when he was challenged as to whether he would deny that fact, stated, "Certainly". There is no doubt, arising from that and from the campaign which ensued before the general election, that the Government now in office is in office because they failed to indicate to the electorate that it was their intention in their very first Budget to remove the remainder of the food subsidies.

Mr. Booth

I have been greatly disappointed by listening to the criticisms of this Budget. I had hoped that from the opposite benches, from those who had been giving close and detailed attention to the finances of the country during the past year, we might have received something more constructive in the way of criticism.

It is always very difficult for the Party or Parties in Opposition to have access to all the detailed information, even through the medium of parliamentary questions, but it does appear that very shortly before the general election the members of the last Government were aware of the recommendation made by their own commission, that food subsidies should be abolished. That would explain why we of Fianna Fáil were constantly bombarded with questions throughout the election campaign as to what our view would be on the abolition of food subsidies. We stated quite clearly that the abolition of food subsidies was not an integral part of Fianna Fáil policy, but we were very careful always to state that full information as to the financial situation was not before us and consequently we could not commit ourselves on that point. There seems to be some confusion on the Opposition Benches as to whether we promised or did not promise that we would maintain food subsidies.

Mr. M. J. O'Higgins

Is it the position that the abolition of food subsidies is not an integral part of Fianna Fáil policy? I want to get that clear.

Mr. Booth

Perhaps I can make it clear. The point I am trying to make is that, according to the Fine Gael speakers, Fianna Fáil promised they would maintain food subsidies. According to Labour, that was their prerogative and they claim they alone promised to maintain them. They back us on that point by saying we did not promise to maintain food subsidies. Let us get our minds clear on that. We did not give any promise. That was one of the criticisms hurled at our heads throughout the election: we were asking the electorate to sign a blank cheque. That was said frequently particularly by the leaders of the then Government. To-day, they have changed their tune; they say we promised the electorate the sun, the moon and the stars. I am really sorry that they cannot be a little bit more consistent.

Deputy Costello commented on the economic stability which, he said, was so noticeable under his Administration. It is somewhat astonishing that that stability was not in the least noticeable to me. Possibly I may mix in the wrong circles, but I have not met anybody else either who noticed any stability under Deputy Costello's Government.

Opposition speakers have commented on the levies and stated that they remedied an awkward balance of payments position. That, in my estimation, was sheer panic legislation. It is the type of legislation that the present Minister has sedulously avoided. The levies did have a certain effect. Indeed the most noticeable effect was the closing down of business, the putting of men out of employment and the resultant damage caused, damage that it is now very hard to remedy. I know that from personal experience. The import levies certainly eased the balance of payments position by making it impossible for us to import any more raw material. When raw material was running low then, we had to dispense with employees; we had to reduce staff. Yet, the Deputies now in Opposition seem to take pride in those levies. That is not the policy adumbrated by the Minister in his Budget. The Minister is planning on a productive basis and not on a panic basis.

I must criticise now the imposition of the additional tax on petrol and diesel oil. If I could think of any possible alternative to this increased taxation, it is obvious that I would be only too glad to put forward such an alternative. If I could think of any alternative. I would condemn the Minister for Finance utterly. Unfortunately I cannot think of any. I hope that everyone will appreciate that I have every good reason for thinking of an alternative at all costs.

I should like to suggest to the Minister that this imposition should be regarded as temporary and should be remitted at the earliest possible opportunity. There was a time when motoring was regarded as a luxury. To-day it is an absolute necessity for a very high percentage of road users. It is not just a matter to-day of the private motorist going out for picnics, for week-ends, to dances or to parties. A large number of licensed hauliers are dependent for their living on the economic operation of commercial vehicles. There is, too, the business community which depends to a very large extent on road transport. I can see that this taxation was unfortunately necessary but I hope that it will be temporary in its nature and that it will be remitted as soon as conceivably possible.

I hope this extra taxation will not affect the consumption of petrol during the summer and that the income from tourist traffic and holiday traffic generally will be satisfactory, so satisfactory that the Minister may see his way to remitting the extra taxation in the Autumn. I would, however, like to draw the Minister's attention to the very difficult situation which has arisen in the motor trade because of the imposition of this extra taxation. A motor trader selling petrol now finds the business entirely uneconomic. He is working at a loss. The price of No. 1 premium grade petrol is 5/1½ per gallon. Of that amount, 2/9½ is duty. The amount payable to the petrol companies for their own use is 2/–. The dealer gets 4d. On the No. 3, standard grade, the figure for duty is 2/9; the petrol companies get 1/9 and the dealer gets 3½d. The gross profit on No. 1 premium grade petrol in Dublin is 6.5 per cent and, in the provinces, 6.4 per cent. The gross profit on No. 3, standard grade, is 6 per cent. in Dublin and 5.9 per cent. in the provinces.

An Ceann Comhairle

That matter could be more appropriately raised on the relevant section of the Finance Bill.

Mr. Booth

In the Budget statement, when imposing the additional taxation on tobacco and beer, the Minister made reference to making adequate provision for the trade.

An Ceann Comhairle

The Deputy would probably get a more comprehensive answer on all that on the Finance Bill.

Mr. Booth

Possibly I would, but there is a discrepancy to which I would like to direct the Minister's attention now. Out of the additional duties on tobacco and beer he made adequate provision for the trade. No provision whatsoever was made in the case of petrol.

There has been some comment on the suggestion that the Minister is boosting profits instead of looking after the interests of the working man. On this, as an employer, I speak in defence of profits. I am quite blatant about that because any responsible employer looks upon himself as responsible for his staff, for their welfare and for the maintenance of their employment in good conditions. He has to make provision, too, for carrying his employees over bad times. Now, he can only do that if he makes profits. Therefore, wherever the Minister has made any provision whereunder there is even a possibility of greater profits being made, that does not mean that the Minister is entirely unaware of the needs of the working man. He sees quite clearly that, unless profits are made by industry and agriculture, there can be no stability and no security of employment for the working man.

This Budget shows a realistic approach. Right through the Minister has stressed the fact that, where employment is concerned, the work done must be necessary and the results must be productive. That, to my mind, is an interesting and distinctive characteristic of this Budget. The whole situation from a financial point of view is critical and, instead of panic, we find the Minister taking a long-term view in planning for the future.

He stated, too, that he is keen on economies, especially in the Civil Service. I would suggest that possibly later this year a review might be undertaken on the actual profitability of the taxation in view of the fact that, in answer to a parliamentary question recently, it appeared that the yield of surtax on incomes between £1,500 and £2,000 is remarkably low. I should imagine that a similar review of the profitability of taxation might yield startling and beneficial results.

It obviously was not possible in the short time at his disposal for the Minister to be very adventurous on the taxation level, but I should hope that these matters will be gone into and that possibly he will consider during the year doing something really adventurous, such as the complete abolition of death duties. Very many people find it very difficult to meet the cost of living, but meeting the cost of dying is also a problem.

Mr. McQuillan

This Budget has seen to that.

Mr. Booth

I do not think it has, with all due respect to the Deputy, but I would suggest that the abolition of death duties would result in an inflow of badly needed capital which could be used for industrial investment. It was unfortunate that the Minister had to make some supplementary provision, but that appears to me to be something which we should ]almost have expected in view of the past record of our predecessors. It appears that facts were not being faced. When the Liston Award for secondary teachers was accepted, it seems to me amazing that no provision was made for the implementation of that award.

The whole question of unemployment assumed such alarming proportions that, again, it seems almost incredible that any Government, including a Labour Party which claims, quite wrongly, in my view, to represent the working class, could have failed to make adequate provision for employment and emergency schemes. In actual fact, this Budget shows quite clearly that it is Fianna Fáil which has genuinely the interests of the working man at heart and which is able and willing to do something which will really help him. That evokes some smiles because people appear to think it difficult to reconcile that statement with the abolition of the food subsidies.

You can, I am perfectly sure, keep food subsidies going for a limited period by increasing taxation, resulting in an even greater increase in unemployment and emigration. What we are trying to do, and what I think the Minister will succeed in doing, is to restore stability in the country to such an extent that business people will be prepared to invest more in their business, expand their business and take more back into constructive employment again. That, to my mind, is the right way of dealing with it. The Minister has shown that quite clearly when he states that we have got to deal with the cause of the trouble and not the symptoms.

There again that also applies to the question of the procedure for dealing with the accumulation of Irish grain which has now to be turned into animal feeding stuffs. That surely could and should have been foreseen by our predecessors. The impression seems to be given by the speakers from the Opposition that when they left office everything was more or less on an even keel, but that is completely without foundation, as shown by the fact that during last year revenue fell short of the budgetary estimates under virtually every head. That shows quite clearly that taxation has already yielded practically the maximum which it can yield.

That was the position in which the Minister found himself when framing his Budget. In actual fact, taxation had already proved too high to be profitable and any increase in taxation would result in a loss of revenue rather than a gain. That position must have been clearly foreseen by those who are now in Opposition. In view of that, I am not at all surprised that they were not unduly disappointed when they were not left the responsibility of framing the Budget themselves.

Great play has been made about the increase in children's allowances going to the wealthy as well as to the poorer classes. How that can be avoided, I cannot imagine. I was not a member of the House before and I do not know whether any member of the Parties now in Opposition ever made this criticism before, but I certainly saw no report of it. Children's allowances could be made subject to a means test possibly, but to think of the enormous administrative cost of such an operation simply appals me. It is not denied by anyone that people are drawing children's allowances at the moment who do not actually need them, but you would need hundreds of civil servants and inspectors if every claim for children's allowance were to be subject to a means test. It would not be profitable to do it. Consequently, while it does seem rather odd that people who do not need this assistance are actually getting it, there is no way of getting over that difficulty in any simple and workable way.

The Minister in his Budget has been constantly looking to the future. He has made provision for increased allowances for wear and tear on equipment in factories. He has made a long-term provision in respect of shipping and in respect of investment allowance there. In all these cases, we are looking very far ahead which I think is the right way to deal with this whole problem. If we regard it purely from the viewpoint of the immediate effect, we will undoubtedly be taking the wrong action, but at every stage of this Budget we see the Minister looking to next year and the year after.

There is one particularly interesting remark in his Budget speech which referred to its being preferable to have a tax on expenditure rather than on income. I hope this will eventually lead to a further adventurous decision to have a purchase tax altogether insted of income-tax. It was interesting to note, too, that there is a very clear realisation of the fact that the reason for the fall in our national income is mainly the fall in the farmers' income. I know that, from a businessman's point of view, if you find the farmer not in an expansive mood so far as expenditure is concerned you will find that the city man will be infected with the same feeling of slump approximately three months later.

In this Budget we are striking at the very root of the whole problem. Priority is given, very properly, to the exploitation of our agricultural products. Exception has been taken to the fact that the Vote of £250,000 for the improvement of the marketability of our agricultural products has not been given in great detail. I am sorry that those who made this criticism were not here when the Minister for Industry and Commerce dealt with that particular point. Let me repeat it now. Money is being made available and, as soon as possible, the House will be informed of the details under which that money will be spent. There is no use in discussing the details first if you have not got the money. We are setting aside £250,000. My forecast is that this will largely be spent on market research—on which we have been singularly bad up to now.

The difficulty experienced in marketing our stuff abroad is linked up with many factors, particularly the standardisation of our products so that a foreign buyer giving an order for produce of a certain grade may know that the produce he will receive will be exactly up to that standard. There is the question of standardisation and there is also the question of packaging, which needs a lot of research. At least we are making a start into research along those lines. I would hope, too, that some at least of this money will be spent in having specialist attachés in our legations and embassies abroad who would concentrate entirely on seeking out markets for our agricultural and our industrial exports.

The present position as regards our balance of payments is admittedly slightly better—unfortunately, however, in a way that can only be temporary. Here again I can give the instance of my own business where we contributed to the improvement in the balance of payments by ceasing ordering altogether. The trade is now opening up again and we are now engaged as rapidly as we can in increasing the deficit in the balance of payments. As business of our type does increase it is essential that our agricultural exports increase at the same time or we shall find ourselves in another crisis.

There has been no long-term solution of our balance of payments problem and, in his Budget, the Minister has shown what our long-term view must be if we are to deal with it. I think he dealt with it more than adequately. Therefore, as the Minister says, it is to agriculture we must look for our main exports and our prosperity.

I feel that this Budget, while admittedly severe, is not as severe as many people feared. It makes an honest effort to spread the load equally. As one of those who has been hit hardest in many ways in business by the petrol duties, I will admit that it is a Budget which it is hard to be enormously enthusiastic about from a selfish point of view but we must all bear some share of the load and, as far as possible, the Minister has spread the load most heavily on those who can bear it best. There can be no question that people can pass the load on to others. I hope the public will realise that and that the business community will try and bear their share of it as far as possible. Everybody must bear his share and I think that those who can bear it least are being as well provided for as the finances of the country allow.

In conclusion, I should like to give the lie to the accusation, frequently made, that Fianna Fáil have a passionate desire to put up prices just for the fun of it. Why people should believe we would do that when we have to pay the same prices ourselves, I cannot imagine. I want to state categorically that we are not trying to increase prices and that we are not trying to reduce the standard of living. We are trying to increase the standard of living by proper and efficient methods of production both in agriculture and in industry and we are trying to do so on a sound basis. If we can do that we can make progress but if we rely on the hope which Deputy Costello expressed here earlier this afternoon that things may become better, then we are almost bound to face disaster sooner or later.

That has always been a failing of Fine Gael, in particular. They have always hoped that things will get better, if given a chance. Surely human experience is exactly the reverse. It needs much more than pious hopes to get over economic facts. If this Budget is in any way more severe than has been thought necessary —I do not believe it is—I am absolutely confident that the Minister will make reductions wherever and as soon as he can. So far as employees are concerned, whether in industry or in agriculture, we are still very proud of the fact that in our Party we have more union members than there are in all the other Parties combined.

Mr. M. J. O'Higgins

If ever there was a classic understatement in this House, I think it was probably that of Deputy Booth's when he said it was hard to be enormously enthusiastic about this Budget. I am sure the members of the Fianna Fáil Party sitting around Deputy Booth also noticed his euphemistic description of the Fianna Fáil attitude towards the food subsidies. I tried to get the matter clear in my mind when Deputy Booth was speaking but the Parliamentary Secretary to the Taoiseach intervened. I want to be quite fair to Deputy Booth. At the moment, I am not quite sure whether I correctly understood his enunciation of Fianna Fáil policy with regard to food subsidies. As I understood him, Deputy Booth proclaimed that the abolition of food subsidies was not an integral part of Fianna Fáil policy and that he thought some confusion may have arisen in the minds of Deputies, or of the electorate—I am not quite sure— in thinking that Fianna Fáil policy was that they would maintain food subsidies. I wonder will Deputy Booth agree with me that I have summarised his analysis of the subject accurately?

Mr. Booth

Yes.

Mr. M. J. O'Higgins

Deputy O'Sullivan gave some quotations which I think started off Deputy Booth's proclamation of Fianna Fáil policy on this subject, and in case there should be any misunderstanding I should like to give a few more quotations which, possibly, have not been given already in this debate and which, possibly, Deputy Booth may not be aware of.

I have here a quotation from the Irish Press of Wednesday, 14th March, 1956, and this issue of the Irish Press published at some very considerable length a statement made by the Tánaiste, then Deputy Lemass, speaking at Mallow on the previous night. This report of Deputy Lemass's speech starts off:—

"When Fianna Fáil again takes over responsibility for Government it will have to deal with a number of serious difficulties which Coalition indecision and inactivity has allowed to develop, if, indeed, the position has not deteriorated further by then."

In that context, "When Fianna Fáil again takes over responsibility for Government," Deputy Lemass went on to express certain views. This is what he had to say about food subsidies on that occasion. This was just about a year ago when Deputy Lemass was apparently planning what Fianna Fáil would do if they again became the Government of this country. The sub-heading given by the Irish Press to this speech was “What Budget proposals should aim at.” What Deputy Lemass had to say last year about food subsidies was:—

"Fianna Fáil has given a great deal of consideration to the possibility of introducing changes in administrative methods directed to securing a full return of work from public officials.

"Food subsidies must be accepted as likely to remain a permanent feature in the Estimates unless a very steep fall in the cost of living should take place, and that is not very likely—to put it mildly."

That was Deputy Lemass speaking at Mallow in March, 1956, speaking according to the Irish Press on what Budget proposals should aim at. I do not think there was any confusion or any room for doubt there that the Tánaiste, as one of the principal speakers—if not the principal speaker —on behalf of the Fianna Fáil Party, was pinning the Party's colour to the masthead in relation to food subsidies. He said on that occasion that food subsidies must be accepted as likely to remain a permanent feature of the Estimates unless a very steep fall in the cost of living should take place.

Deputy Lemass did not finish his reference to food subsidies there. He continued:—

"I would like to express a personal viewpoint——"

I acquit Deputy Booth of having any responsibility for this, for Deputy Lemass stipulates that it is his personal viewpoint.

"——which I hold strongly, that the maximum advantage can be obtained by concentrating all the money which can be voted for food subsidies on flour and bread prices alone."

That was Deputy Lemass in March, 1956. Deputy Booth no doubt is familiar with the publication issued by the Party—monthly, I think—and which someone was kind enough to send me. It is called Gléas, which, I understand, can be roughly translated as “ammunition”, and from my reading of this document it seems to me it is complied for the purpose of supplying ammunition to the members of the Fianna Fáil organisation.

In this issue which came out in May, 1955, there is an article headed "The Price of Bread", in the course of which we find the following:—

"The Coalition's attitude to the flour and bread subsidies is in striking contrast to that of Fianna Fáil. In his last Budget, in April, 1954, Mr. MacEntee provided almost £1,000,000 for the purpose of bringing down the price of the loaf by a halfpenny. In addition——"

this is in brackets,

"——he was able to grant considerable remissions in respect of income-tax. Mr. Sweetman, with money saved at the expense of the wheat-grower, could have reduced the loaf by a further halfpenny but instead he has cut the subsidy still further.

Fianna Fáil believes that any money available for food subsidies would be best used in lowering flour and bread prices as poorer people spend more on these than on any other commodity. A butter subsidy benefits them little. But the Coalition, after reintroducing a subsidy on butter have now cut the bread and flour subsidy by almost an equivalent amount."

We had Deputy Lemass at Mallow in March, 1956, telling us what Fianna Fáil policy was on the food subsidies, and here we have the Fianna Fáil ammunition pamphlet of May, 1955, pointing out the difference they see existing between Fianna Fáil and the inter-Party Government in regard to these subsidies.

I think the public generally have received this Budget in a rather fatalistic manner. They seem to blame themselves and to say: "Well, it is good enough for us; we put them there. How could we expect anything else?" It might be very easy for the people on these benches—in fact there was an interjection here on Budget Day—to sit back and say: "We told you so. We told you if you allowed Fianna Fáil in as Government again you would get a Budget such as you have got," but I do not think it would be entirely fair for us to do that.

I have sympathy with the people who now feel that they have got possibly a bit more than they bargained for and who are regretting either the manner in which they voted or the fact that they neglected to vote in the general election and thereby enabled Fianna Fáil not only to become Government but to have an overall majority so that they can impose this or any other Budget they like on the people. I think now that the people of whom I am speaking will really appreciate the essential worth of the work which the inter-Party Government did when they were in office.

They will appreciate now, in a way in which we could not get them to appreciate by election speeches or anything else, that when there was an inter-Party Government occupying the benches opposite there was in office a Government which was genuinely concerned—I do not care whether you say it was concerned for political motives or not—to try to keep down the cost of living, to try to cushion the people against rising prices. That will be accepted now by the people. We were taunted that the steps the inter-Party Government took were too little and too late. At least, it cannot be contested that the efforts which the inter-Party Government made were designed to keep down the cost of living, to keep down the cost of essential foodstuffs, to cushion the people as much as possible against the impact of rising prices.

It may be that the inter-Party Government did not succeed to the extent that they desired in that object but at least it will now be conceded—and I do not think any Deputy opposite will question it—that the inter-Party Government made a genuine effort to assist the people and to keep prices from reaching a level at which they would bear too heavily on them.

When the inter-Party Government was in office some prices rose. Fianna Fáil propagandists made the best they could out of that. I happened to come across the front page of the Irish Press for Thursday, 5th May, 1955, a very ornamental sheet. That was the day after the Budget of 1955 was introduced. We were told in the Irish Press that it was an “as you were Budget”. The front page of the Irish Press of that date bore six little illustrations. The people would like to see that front page tomorrow. The illustrations were: the loaf of bread— no change; tea—no change; sugar— no change; cigarettes—no change; beer—no change; petrol—no change. This was the inter-Party Budget of 1955. The people would dearly love to see back in office a Government that would introduce a Budget which could be illustrated in that way, a Budget showing no change in the price of these essential items.

During the period of office of the inter-Party Government Fianna Fáil propagandists made the best they could out of any price increases that took place. Fianna Fáil were successful in a series of by-elections. They invited the people of the City of Cork to galvanise the country and, to assist the people to galvanise the country, they produced a pamphlet. There was an invitation at the top and bottom of this pamphlet to "Vote No. 1 Galvin". It was headed: "50 broken promises". A number of sketches of various commodities were included in the pamphlet. I should like the people who galvanised Cork some months ago, if they have preserved the Fianna Fáil election literature, to look at it again tomorrow and to consider what happened.

Mr. M. J. O'Higgins

Do you accept that?

(Interruptions.)

An Leas-Cheann Comhairle

The Deputy should address the Chair. It might eliminate interruptions.

Mr. M. J. O'Higgins

Through the Chair, may I say to Deputy Booth that people did not expect that Fianna Fáil once again, in their very first Budget, would "get cracking" on the food subsidies. However, that is what they have done.

The Minister for Finance in reply to a parliamentary question to-day told us that it was estimated that the effect on the consumer price index of the withdrawal of the food subsidies and of the taxation imposed by the Budget would be approximately 4½ points. There will be many consequential increases as a result of the Government's budgetary proposals. I think it is quite fair to assume that rates are going to be affected and are bound to be increased. I do not know, whether Deputy Corry or any other Fianna Fáil Deputy would dispute that statement, that it is extremely probable that an increase in rates will ensue from the measures which the Government have taken in not merely allowing the cost of living to rise but in forcing up the cost of living by deliberate positive action as they did in 1952.

In that connection, I should like to refer some of the Deputies on the opposite side of the House to another election campaign pamphlet which was produced by the Fianna Fáil Party, this time exhorting the people of Laois-Offaly to "Vote No. 1—‘Egan'". The first page is headed "Facts for Voters" and it goes on:—

"Government puts higher burden on the rates. Ratepayers in Laois and Offaly have been faced this year with greatly increased rate demands. Much of this increased demand is due to the policies being carried out by the present Government. One of the main causes of the higher rates has been the great increase in the cost of living, which has made essential the granting of increased wages to local authority employees."

I think it is fair to assume, even if one were to disregard the question of an increase in wages to local authority employees, that consequent on the measures taken by the Government in this Budget there must be an increase in rates. Taking the case of Dublin, it seems to me that the estimate for the Dublin Board of Assistance, for instance, must increase. It seems to me that wherever a local authority is responsible for the hospitalisation of any persons or responsible for the operations of any institution the cost of maintenance for every individual passing through that institution in the course of the year must be increased. Consequently, at the end of the year, there must be an increase in the estimates for those institutions.

I think it is very likely that there must be an increase in the cost of the supply of school meals. It is also very probable that there will be increases in such things as hotel charges. Whether that will militate against the tourist drive or not I do not know. So far as students coming to Dublin from Deputy Corry's constituency, or any other constituency, to attend a university here are concerned they will probably find themselves faced with an increase in the cost of their lodgings as a result of the increase in food prices which will follow the abolition of the subsidies.

Having mentioned this question of food subsidies again, it reminds me of another point which I should be loath to allow Deputies on the opposite side of the House to overlook. Deputies will remember, and I have no doubt that the public at large will remember, somewhat similar Budget proposals introduced by a Fianna Fáil Government in 1952 when the price of a loaf of bread was increased by 3d. from 6½d. to 9½d. or thereabouts. In that very Budget, when Fianna Fáil were increasing the price of bread, Deputy Ryan's predecessor, as the financial leader in the Fianna Fáil Party, Deputy MacEntee, now Minister for Health, came in and made his Budget speech. In that Budget statement of 1952, when he was interfering with subsidies and forcing up the price of essential foodstuffs, Deputy MacEntee was able to come in and announce a concession for the dance-hall proprietors. I think it was about £100,000 in that year and £240,000 in a full year. I may be out in my figures but it does seem to be extraordinary that the same pattern should be followed now. It seems extraordinary that in this Budget the Minister for Finance comes in here and tells us that Fianna Fáil has "got cracking" on the rest of the subsidies, that the food subsidies are going and that, at column 951, Volume 161 of the Official Reports, he should also deal with this question of entertainments duty. Deputy Dr. Ryan, the Minister for Finance, has this to say:—

"I have had representations from cinema proprietors——"

it was dance hall proprietors in 1952, it is cinema proprietors now—

"generally both for relief from the weight of entertainments duty and for revision of the structure of the existing scale of duty. In present circumstances I am unable to agree to any concessions which would involve loss to the Exchequer. I propose, however, to include in the Finance Bill a new scale of duty which, although unlikely to have any effect on the yield of revenue, will remove some unnecessarily burdensome features of the present scale. The new scale will operate from the 1st August next."

What I want to pinpoint in the paragraph I quoted is that the Minister for Finance, while he is able to tell the House that he is removing the food subsidies, is also able to tell the House that he is making certain adjustments, certain provisions in respect of entertainments duty. He is perfectly open about it. He says he is not in a position to give and would not in present circumstances give, any concessions which would involve loss to the Exchequer. But then he goes on and says: "I propose, however, to include in the Finance Bill a new scale of duty which, although unlikely to have any effect on the yield of revenue..." and so on. I want to get some explanation for that remark of the Minister that it is only "unlikely" to have any effect on the yield of revenue.

I gather it is the Minister's case— and I do not disagree violently with it —that he finds himself in a situation of some difficulty and that he will not allow anything whatever which may cause a loss to the Exchequer. But the provision he is going to make in respect of entertainments duty is apparently only "unlikely" to have any effect on the yield of revenue. I think the Minister should tell the House precisely what the effect is likely to be and what are the figures concerned. When he talks about it being unlikely to have any effect on the yield of revenue, is he thinking in terms of hundreds of pounds, thousands of pounds or hundreds of thousands of pounds, as in the case of dance hall proprietors in 1952 in the other Budget when Fianna Fáil increased the price of the loaf?

I was saying that, in addition to the direct increases which are being occasioned by this Budget in the cost-of-living index figure, in addition to the deliberate, positive action of the Government in increasing prices by the abolition of food subsidies, there are likely to be a number of consequent increases. I mentioned the question of rates, hotel charges, boarding house charges, school meals and so on. I think it is probable enough that boarding schools will find it necessary, as the cost of maintenance of the pupils attending their schools increases, to increase also the school fees. I see the Minister for Defence is here. I think that, notwithstanding whatever efforts he may make to keep down the Estimate for his Department, he will be faced, as a result of this Budget, with an increase for the supply, for example, of petrol to the Army. I have no idea what the Defence Forces consumption of petrol is each year: but whatever it is, the Minister for Defence must face an increase of 6d. per gallon in the price.

Again, I do not know what is the cost of maintenance, in respect of foodstuffs, per head of the serving personnel in the Defence Forces, but whatever it is, the Minister for Defence will also face an increase in the cost there. The Minister for Justice likewise, in so far as the Garda Síochána are concerned, in his Estimate next year will face an increase in the price of petrol for every gallon of petrol consumed by the Garda. He will also face an increase in respect of the maintenance cost per head. Again I am referring to the cost of foodstuffs in relation to members of his force who are dealt with on a maintenance basis.

Deputy Booth said it is hard to be enormously enthusiastic about this Budget. Is it any wonder? When Fianna Fáil were in opposition over the past few years and when the inter-Party Government was in office, Fianna Fáil did not, I think, mince their words with regard to price increases which took place. I am again referring to the Fianna Fáil pamphlet Gléas, published by Fianna Fáil for the month of January, 1956. On the second page, we have a heading in large, black type “The Cost of Living Goes Sky-High.” The opening sentence of this paragraph is: “The cost-of-living index figure recently issued by the Government has confirmed the opinion generally held throughout the country that the price situation has got completely out of hand.” The difference, so far as the country is concerned, between last week and this week, is that the cost-of-living index figure, as a result of the Fianna Fáil Budget, is jumping up by 4½ points. Here we have Gléas in January, 1956, talking about the cost of living going sky-high. Gléas for the same month gave a list of articles which had increased in price.

Mr. Haughey

I never thought the Deputy was such a keen follower.

Mr. M. J. O'Higgins

This is sent to me month by month and I study it carefully. Not alone that, but, as Deputy Haughey will appreciate, I preserve it. There are times when it is a refreshing mental exercise to glance back over the past numbers of Gléas.

Mr. Loughman

Continue that study and there is hope for you.

Mr. M. J. O'Higgins

I shall. Not merely that, but I shall ensure that the Deputies opposite know what is in it, too. Possibly Deputy Loughman may have missed this issue. I do not know whether it is published on a subscriber basis or not; I am getting mine for nothing. It is sent out to me month by month. But let me carry on with Gléas. We have here a column headed “You pay more.”“Latest Government statistics,” it says, “show that the following items have all gone up in price since the Coalition went into office.” Then there are two columns of articles which are said to have gone up in price. I have not studied it very carefully this evening but I do not find bread mentioned there. It was down then.

Mr. Cunningham

It was down in size.

Mr. M. J. O'Higgins

Perhaps Deputy Cunningham will convey my best regards to the editor and ask him in his next issue to include the price of bread. Let us see what is in this anyway. I am sure Deputy Cunningham, though I have no doubt he has a very retentive mind, would let us remind him of some of the matters which Fianna Fáil were complaining the bold inter-Party Government had put up in price. One of the things my eye falls on is interior-spring mattresses.

Apparently Fianna Fáil, when they were in Opposition, felt themselves obliged to issue ammunition to their organisation throughout the country and they thought it was worth while mentioning that under the inter-Party Government the price of interior-spring mattresses had increased. There is many a poor soul in the City of Dublin to-night who is not going to cry her eyes out because she will not be sleeping on an interior-spring mattress, but who would be very glad if the inter-Party Government were back so that she would have her loaf of bread at the old price.

Mr. K. Boland

Would she?

Mr. M. J. O'Higgins

Bread is not mentioned in Gléas but interior-spring mattresses are. Bread is not mentioned but Fianna Fáil complained then because the price of scouring powder was increased. Com plaint was made because the admission fees to cinemas, games and dances had been increased. While bread was not mentioned, they even complained about the price of hair-cuts having been increased when the inter-Party Government were in office.

There are many other items mentioned here but I do not know whether Deputy Cunningham would seriously like me to go through them. One other item is cod steak. It was apparently increased in price when the inter-Party Government were in office. But remember, the price of bread was not increased. In the same month in which Fianna Fáil issued this number of Gléas, Deputy Lemass, who apparently had been taking his Gléas very seriously, went down to Deputy Corry's county, to East Cork. According to the Sunday Press of January 15th, Deputy Lemass had a few words to say about the cost of living. In that issue of the Sunday Press he is reported as having said at the East Cork Fianna Fáil Convention:

"Since the last election, which had been fought mainly on the issue of prices, the cost of living has never ceased rising. Every three months since the Coalition came into power, a new increase was recorded and the cost of living was now an all-time record."

An all-time record! The price of bread was down considerably compared with what it was under the Fianna Fáil Budget proposals; the price of butter was considerably lower than it is now under Fianna Fáil's Budget proposals.

Deputy Lemass, having studied his Gléas, talked about the cost of living being an all-time record. But he did not end there. In case the people might think there was any hope of the cost of living coming down, he is reported as saying:—

"There is no prospect that any reduction will ever be made as the result of action by the present Government. Various increases in prices seem to be inevitable. As far as the attitude of the Government is known, they do not intend to do anything about them."

Fianna Fáil "got cracking" and they did something about them. But instead of prices coming down, once Fianna Fáil "got cracking", prices went up. Fianna Fáil "got cracking" in 1952 and in 1957 and each time up and up and up went prices. Deputy Lemass, as I say, is apparently a keen reader of Gléas.

Even before January, 1956, in May, 1955, the Fianna Fáil machine was being supplied with ammunition about the cost of living. We are told in the May, 1955, issue of Gléas, under the heading “Trade Unions and the Cost of Living”:—

And plenty of pledges.

An Leas-Cheann Comharile

Order! Deputy O'Higgins.

Mr. M. J. O'Higgins

That was Gléas of May, 1955. It was in the same issue that the article which I have quoted previously for Deputy Booth's benefit appeared. I shall not quote it again. Just for Deputy Cunningham's information it was an article on the price of bread, pointing out that the Coalition's attitude—there is another rub here—to the flour and bread subsidy was in striking contrast to that of Fianna Fáil; that in his Budget of April, 1954, the Fianna Fáil Minister for Finance, Deputy MacEntee—now Minister for Health— had provided almost £1,000,000 for the purpose of bringing down the price of the loaf by a halfpenny. That article also included the statement:

"Fianna Fáil believes that any money available for food subsidies would be best used in lowering flour and bread prices, as the poorer people spend more on these than on any other commodity."

There was the rub for the inter-Party Government. They were told in no uncertain terms by Gléas that the poorer sections of the people spend more on bread and flour than on any other commodity. That was the rub. It is the same rub now.

However, that was in May of 1955. The Fianna Fáil ammunition was passed round and, as Deputy Cunningham says, it contained the rub. In December, 1955, the ammunition was passed round again. There was another issue of Gléas and we find in this issue that the authors of the ammunition pamphlet for the Fianna Fáil Party felt that this question of the cost of living might well do with another canter, and that in case members of the Fianna Fáil Party and organisation might be getting a little bit slack in their supply of ammunition, their memories should be refreshed. We have in this issue of December, 1955, the headline: “The Rising Tide of Protest.” The article starts:

"During the past month there has been a rising tide of indignation in face of the ever increasing cost of living. Public protests have come from many sources, including a number of organisations which would normally be well disposed towards the present Government."

Then they set out various quotations from newspapers dealing with speeches and resolutions and that kind of thing. There we were, with the rising tide of protest in December, 1955.

I hope that whoever has been kind enough to send me Gléas for the last 12 months or so will not forget to let me have the next issue. I would love to see what is to be said about this question of the cost of living. I wonder if the author of Gléas will spend the month going methodically through the Dublin and provincial newspapers to find out whether the tide is rising or receding in connection with the protests against the cost of living. I do not think he will have to search very hard. In fact, if Deputy Haughey doubts his ability to obtain any appropriate cuttings, if he refers the gentleman to me I will undertake to supply him—and I do not think I shall have to search very assiduously through the Dublin or provincial newspapers to do that.

There we were in December, 1955; we were talking about the rising tide of protest. This was an interesting issue, because in the front page we find described the action of the inter-Party Government, when tea had increased in price, in allowing a concession to old age pensioners and those in receipt of widows' and orphans' pensions. As far as I can see, that is the measure which is being referred to, in any event. I have not had time to read it very carefully, but it is referred to as "a mean and niggardly act".

If Deputy Haughey wants to save the author of Gléas a bit of trouble, he might just keep up that headline for a bit, until we test the people's feelings with regard to the compensation which the Minister for Finance now has given to old age pensioners and others, when it is not only a question of one commodity rising but when all the remaining food subsidies are being abolished. Once more under a Fianna Fáil Government, by positive action of that Government, the cost of living is being forced up, as the Minister for Finance disclosed to-day, by some 4½ points.

In the previous month, in November, 1955, Gléas was issued as usual. This was quite an attractive issue. The Fianna Fáil cartoonist—I shall not hazard a guess as to who it might be —had been at work since the previous month and he had been engaged to supply a sketch for page 1 of Gléas of November, 1955. Through the Chair, I give Deputies on the opposite benches just one guess as to what the cartoonist was told to deal with.

Mr. S. Browne

The Coalition.

Mr. M. J. O'Higgins

The Deputy is not far off the mark; I give him four marks out of the six for that. He was told to deal with the Coalition in relation to the cost of living. Here is what he did. He got his nice little sketch on page 1. Various personalities of the inter-Party Government are depicted in this, carrying banners.

Mr. Cunningham

Is the former Minister for Agriculture there?

Mr. M. J. O'Higgins

He is, cigarette holder and all. They are carrying banners and here is what we have on the banners: "Tea up", "Fares up", "Tobacco up", "Beer up", "Wheat down", "Milk down". The heading is: "They may know where they are going, but who is going with them?" To-day we have bread up, tobacco up, beer up, cigarettes up, petrol up, and up, up, up, much higher than they were in November of 1955. I wonder, if the cartoonist of Gléas in November, 1955 felt that the members of the inter-Party Government did not know who was going with them in relation to some of the price increase will be have as big a blank in his mind now? He will know that Fianna Fáil were not alone going with them but would far outstrip them, that Fianna Fáil were going “to get cracking”, that food subsidies were to go, that the price of petrol was to go up, that the cost of the provision of health services was to go up, that beer was to go up, that tobacco was to go up and that cigarettes were to go up.

That was on page 1 of Gléas in November, 1955. There was also an article on that page, starting:

"The Coalition Government's complete collapse with respect to prices and the cost of living is the most astonishing event which has occurred for many years in Irish politics."

I wonder will the poor editor of Gléas find himself so very astonished tomorrow. I would invite Deputies to look back down the corridors of time and compare the prices of November, 1955, for bread, petrol, beer, tobacco and these other items, with the prices obtaining in May, 1957 after the Fianna Fáil Minister for Finance had introduced his Budget.

Would the editor of Gléas find in the action of the Fianna Fáil Party anything to equal his astonishment in November, 1955, when he spoke of the Coalition Government's complete collapse with respect to prices and the cost of living as being the most astonishing event which has occurred for many years in Irish politics? Remember again, this is the Fianna Fáil ammunition. This is what is being ladled out to the boys to make sure they do not go stale, to make sure that the ammunition is effectively used.

Mr. Dillon

This is Izvestia as distinct from Pravda.

(Interruptions.)

Mr. M. J. O'Higgins

I have referred to a number of issues in which this theme of the cost of living was being used. March, 1956, is the month that Deputy Lemass went down to Mallow to talk about, amongst other things, food subsidies and to make the statement which I quoted earlier for Deputy Booth's benefit: "Food subsidies must be accepted as likely to remain a permanent feature in the Estimates, unless a very steep fall in the cost of living should take place, and that is not very likely, to put it mildly."

Again, Deputy Lemass must have been paying careful attention to the ammunition when it was ladled around to him because in March, 1956, Gléas splashes in large type on the front page: “Mr. Norton says prices cannot be controlled,” and we have on the inside page: “Government puts higher burdens on the rates”, and this article starts:

"At present local authorities throughout the country are preparing their estimates for the coming year. Already it is clear that almost every ratepayer in the country will be faced with an increased demand."

I wonder if Deputy Booth is anyway puzzled as to why the ratepayers were, in the opinion of the editor of Gléas, to be faced with an increased demand? The reason, according to this article in Gléas, was this:

"One of the main causes of these higher rates has been the great increase in the cost of living which has made essential the granting of increased wages and salaries to local authority employees."

According to this publication, that was one of the main causes of these higher rates which apparently were in existence. Notwithstanding that through the present Budget, the Government, supported by Deputy Haughey, Deputy Booth, Deputy Corry and the rest, by positive action forced up the cost of living by 4½ points, we have the Minister for Finance and the Tánaiste, as I understood them, anyhow, appealing for very great restraint in connection with this question of wage increases; but in 1956 the ammunition that was passed to the boys was telling them that rates were being increased and that one of the main causes of these higher rates was "the great increase in the cost of living which has made essential the granting of increased wages and salaries to local authority employees."

Deputy Booth, as I commented before, finds it hard to be enormously enthusiastic about this Budget. I am not one bit surprised. I believe the people as a whole will now really begin to appreciate the work which was done by Deputy John A. Costello, Deputy Norton and their colleagues in the inter-Party Government. They will really appreciate the fact that during the period from 1954 until the last general election they had in office a Government which was seriously concerned to govern in such a way as to keep down the cost of living, if at all possible, and if that was not possible, to cushion the people as best as they could against the impact of rising prices.

I do not know if it is necessary—I do not even know whether it would be in order—to compare in detail the measures which the inter-Party Government took and the measures which the Minister for Finance is taking in his Budget proposals. Deputy Costello, when he was speaking to-day, made certain constructive suggestions. I think it was Deputy Booth who pleaded for constructive suggestions in regard to this Budget and he has put himself on record as saying that he himself would condemn the Government in connection with the increase in the price of petrol if he were able to think of any alternative which would secure the same revenue. If the levies were to be retained for any great length, I see no objection whatever, in the present financial position, to channelling the proceeds of those levies to current account rather than capital.

Progress reported; Committee to sit again.

The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 15th May, 1957.

Dáil Éireann debate - Tuesday, 14 May 1957

Committee on Finance. - Resolution No. 5—General (Resumed).

Dáil Éireann debate -
Tuesday, 14 May 1957