Before I deal with the Budget proper I want to refer to a statement made in this House by the Minister for Defence. My attention was drawn to the statement by some of my colleagues and I must say it is a most amazing statement. It appears at column 1288 of the Dáil Report of the 15th May. The Minister is reported as stating:
"It is all right for Deputy Norton to speak, as he did when he was Minister for Industry and Commerce, of the advantage of having ‘the safety valve of emigration'. It is all right for him to ask, as he asked the deputation from the representatives of trade unions here in Dublin, why should they worry about unemployment in the categories they cater for, when the people were leaving the country and not remaining as a liability to them?"
At the outset I want to characterise that statement as a contemptible falsehood. Anybody who has heard me speak, in this House or outside it, knows that I regard emigration, not as a safety valve but as a national scourge, and in all my speeches I have urged Governments—whether I was a member of the Government or otherwise—to adopt a policy which I felt was calculated to stop the haemmorhage of emigration which was having such appalling consequences for the nation and the people.
When the Minister for Defence says I made a statement of that kind I say he is uttering a falsehood. I never saw a deputation from the trade unions or from anybody else to whom I made these comments about emigration, and that statement also is a contemptible falsehood.
It is an affront to the dignity and traditions of this House that a new Deputy, catapulted into the position of Minister almost overnight, should give utterance in his maiden speech to statements of that kind which cannot be justified on any ground whatever, because these statements were never made by me and an attempt even to distort a summary of my views could not possibly produce an accurate report which could represent me as saying what the Minister for Defence tried to represent me as saying. I hope that that was some kind of aberration on the part of the Minister for Defence and that the House will not be compelled to regard that untruthful statement as the standard of the Minister's veracity in this House as a Minister of State.
I want to deal now with this Budget and to say at the outset that, as the days and hours pass, this Budget is being seen more clearly by the people, particularly by the ordinary people who are separated from hardship and poverty by their ability to earn a week's wage or a month's salary, as the savage and vicious Budget that it undoubtedly is. This Budget represents a ruthless attack on the standard of living of the ordinary men and women throughout the country but it is a particularly callous and vicious Budget when one considers its impact on the weak and most helpless sections of our community, those who are living on small pensions or who have to depend, either because of economic adversity, physical or mental illness, on the small sums which they receive for sustenance under the social welfare code.
Deputy Cunningham must have some iron-clad supporters in his constituency because he said that the people were expecting higher taxes—presumably they were willing to shoulder cheerfully and gleefully a higher code of taxation than that imposed upon them in this vicious Budget.
What were the people told was the policy of the Fianna Fáil Party in respect of the food subsidies at the recent election? In the Irish Press on 1st March, the present Minister for Justice, Deputy Traynor, is reported as having described at a meeting at Doyle's Corner, as
"a bloodcurdling story a warning by Mr. Norton that a Fianna Fáil Government would withdraw the food subsidies".
The paper goes on to say that Mr. Traynor said:—
"The Coalition groups, having no further promises to make for themselves, have switched to making sinister promises on behalf of Fianna Fáil."
Was there anything bloodcurdling in what I then said when contrasted with the Budget which has been presented to this House by the Fianna Fáil Government? Is there anything sinister in the promise or the forecast which I made when we get a Budget of this kind which at one fell swoop abolishes entirely the food subsidies which in one form or another had remained part and parcel of our domestic life since 1947?
The Minister for Justice was not the only person who spoke to the people on the subsidisation of food. At Belmullet, the present Taoiseach said:—
"The Coalition Parties were changing their tactics in this election. The opponents of Fianna Fáil were wondering what new dodge they could try to prevent the people from seeing the real issue in the election."
He went on to say:—
"You know the record of Fianna Fáil in the past. 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."
That statement that the people would pay more for their bread does not seem to have been very far off the mark when, under this Budget, the people now have the privilege of paying 1/1 for a 2-lb. loaf which cost 8¾d. when that statement was made by the present Taoiseach.
Deputy Lemass put the thing in much more definite language. He said:—
"Some Coalition leaders were threatening the country with all sorts of unpleasant things if Fianna Fáil becomes the Government— compulsory tillage, wage control, cuts in civil servants' salaries, higher food prices and a lot more besides."
He went on to say:—
"The Fianna Fáil Government does not intend to do any of these things because we do not believe in them."
He added by way of clinching the argument:—
"How definite can we make our denial of these stupid allegations? They are all falsehoods."
That is a pretty definite promise to the people before they had marked their ballot papers.
Even earlier, Deputy Lemass, as he then was, speaking at Mallow, gave utterance to this view:—
"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."
He added:—
"I should like to express a 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 alone."
All the concentration of the money on subsidisation of bread and flour is an operation which has completely vanished and, instead, the subsidy on bread has gone, the subsidy on flour has gone, the subsidy on butter has gone, notwithstanding the promises which were made as late as the month of February, notwithstanding this personal preference of the present Tánaiste for concentration of subsidies on bread and flour.
That is what the people were told before the election. That is what the people were promised if they voted for the Fianna Fáil Party. That is what they were told would constitute the concept of life which Fianna Fáil had in store for them if they voted for Fianna Fáil in the recent election. They voted for Fianna Fáil and they now know the consequences.
Let us consider them for a moment. Has any Government in Europe, indeed, any Government in the world, a reputation of this kind? They have been in office only two months and in that period the price of sugar has been increased, the price of bread, flour, butter, petrol, motor car insurance, cigarettes, tobacco and beer, has been increased. Of course, a goodly number of other commodities, of which some of the items I have mentioned are the ingredients, will also take a jump upwards in due course.
Does anybody imagine that if the people had been told two months ago that a vote for Fianna Fáil would mean 7d. more on butter, 4¼d. on a 2-lb. loaf and that sugar would go up as well as cigarettes and tobacco, that they would have been so simple as to vote for the Fianna Fáil candidates in the recent election? People were deceived in that election. They had positive and emphatic denials by Fianna Fáil speakers that they did not intend to increase prices, that they did not intend to abolish the food subsidies and that the warnings that Fianna Fáil would abolish the food subsidies were only bloodcurdling statements made for the purpose of frightening old ladies of both sexes.
People now have an opportunity of judging the extent to which the Fianna Fáil Party have dishonoured the promises which they then made. I must say that the abolition of the food subsidies caused me no surprise. When I broadcast on the 27th April, about a week before the election, I said to those who were listening: "You remember the Budget of 1952 when Fianna Fáil slashed subsidies and as a result increased the prices of bread, butter, tea, sugar and flour. That crazy decision dislocated the entire economy, led understandably to demands for increased wages to meet the increased cost of living, but even the increases then secured did not provide adequate compensation for the increases in prices brought about by the Fianna Fáil Party. In 1952 Fianna Fáil said that they believed the food subsidies should be abolished entirely and that is still the aim of Fianna Fáil."
I added "I am satisfied that if by any irresponsible vote Fianna Fáil should get back to office they will abolish the food subsidies." That was my view then. That has been my view since 1952. That was my view before the election. What I said to the people has been fully justified and fully borne out by the character of the Budget which the people have been asked to shoulder by this Government.
Let us see what the effect of this is, particularly in the light of efforts being made to say that the trivial and miserable increases provided under the Social Welfare Acts will provide compensation for these savage price increases on essential foodstuffs, in the ordinary working class homes. Let us quote Deputy Beegan, now the Parliamentary Secretary to the Minister for Finance. Speaking in this House on the 15th May, 1956, as reported at column 425 of the Official Reports, Deputy Beegan referred to the fact that we had reduced the price of butter by 5d. a lb. when we were in office. He went on to say that a reduction of ½d. in the price of the 2-lb. loaf was a greater advantage to people than reducing butter by 5d. a lb. Let me give his words in order to get the statistics right and so that it will not be alleged that I went to a tainted source for my quotation. Deputy Beegan said:—
"Each member of the same family, if physically fit, and if depending on bread as many people in the cities have to, would consume a 2-lb. loaf in the day."
That is Deputy Beegan's appraisal of the situation, that every member of a physically fit family would consume a 2-lb. loaf per day so that a family of five would consume one loaf each per day. That is five loaves per day. Now they are going to have the privilege of paying 4¼d. extra for each of the loaves and the five loaves will cost five times that per day, which works out at 1/9¼ per day.
An unemployed man with a wife and three children, or a sick man with a wife and three children will get no increase whatever in the ordinary social welfare benefits. It is true that he will get 9/– per month additional children's allowances. That works out at less than 4d. per day. If we deal with bread only and forget about flour, sugar, butter, tobacco and the other commodities which have been increased and concentrate only on the compensation provided in respect of the increase in the bread prices, we find that the compensation for a man with a wife and three children is 9/–per month. Less than 4d. per day is to compensate him for an increased expenditure on bread alone of 1/9¼ per day. Yet we have been told, and I suppose we will continue to be told, that provision has been made in legislation to compensate those whose standard of living has been so viciously and so callously attacked.
So far as the social assistance recipients are concerned they are to get compensation in the form of 1/–per week. When one thinks of how trivial is the buying power of 1/– and the return one gets for it in a grocer's or a draper's shop, one gets some picture of the great inadequacy of it. That increase will apply only to people drawing unemployment assistance benefit; it will apply only to those drawing old age pensions; to those receiving non-contributory widows' pensions. The 40,000 odd people who are signing at the unemployment exchanges for unemployment insurance benefit will get no 1/– whatever. The thousands receiving sickness and disablement benefit under the Social Welfare Act will get no 1/–. The widows and orphans who are dependent on contributory widows' pensions will get no 1/– but all those have to bear the increases on all the commodities to which I have referred.
Is it any wonder this Budget can be correctly described as a lopsided Budget, the heaviest burdens being reserved for those least able to bear them, the weakest and most destitute sections of our community having the greatest burdens put on their backs? It is absurd to say that, when you abolish the subsidies on bread, everybody fares the same because the loaf is the same price to everybody now. Can anybody imagine that the loaf represents the same factor in the domestic budget of people in Merrion Square and Fitzwilliam Street as in the budget of those in Marlboro Street, in Gardiner Street or in any other working-class area in the cities and towns of this country?
Of course it does not. The consumption of increasing quantities of bread and butter denotes a lowering of the standard of living. Where there is a high standard of living, bread and butter represent diminishing factors in the budget of a consuming family. It is because bread, butter and flour represent the main elements of diet of an ordinary working-class family that this Budget imposes such severe burdens on those who consume these commodities, much more so than on those whose sources and means of income are such that they can quite easily cushion themselves against the effect of these increases in prices, even if, in fact, they cannot entirely bypass the increases by adding much more delectable articles to their diet.
However, my main complaint against this Budget is the way in which the people have been deceived by it. They were never told voting for Fianna Fáil would mean that these blisters would be raised on their backs. They were never told that voting for Fianna Fáil would mean a Budget of such crippling effects on their kitchen tables and kitchen dressers. They were allowed to believe that if they voted for Fianna Fáil they would be brought along into a much better life than they had experienced under the last inter-Party Government.
Let this be said for the last inter-Party Government: during its three years in office the price of bread had not increased, the price of sugar had not increased, the price of flour had not increased. As Minister for Industry and Commerce, I was pressed many times to allow an increase in the prices of these commodities, but these prices stood there rocklike during those years. There were no increases in the prices of bread, flour or sugar. We reduced the price of butter by 5d. a lb. No other Government in Western Europe has been able to achieve that record.
People now have an opportunity of comparing how well we served them and how steadily we helped along prices with what they have now got after only two months of Fianna Fáil Government. Somebody has said: "Experience is a hard school but fools can learn in no other". That person may not have been wrong. The people now have the opportunity of judging who served them best. They know now who protected their standard of living.
I came across a quotation the other day and in the light of developments it is a pretty prophetic one. Speaking in County Limerick at a Fianna Fáil convention in Rathkeale and reported in the Irish Times of December 10th, 1951, Deputy Childers, having spoken at usual length on the economic ills, finally came down to a prophecy: “What the country needed was 20 years of resilient Government”. The person who said that before him was Arthur Balfour. In 1952, Deputy Childers' prophecy was realised to the extent that we had the Fianna Fáil blistering Budget of 1952.
Now, apparently, we are getting another instalment of resilient Government in 1957. I say the Government has no mandate whatever for this Budget—no mandate from the people. They told the people they would not do these things as regards prices. They have done them deliberately and behind the backs of the people and against the will of the people, having a sufficient majority to fortify them for the next five years.
Speaking in this debate, the Minister for Industry and Commerce said the Government was not asking anybody to share responsibility for balancing the Budget. What is the Government doing then? The Minister takes his responsibility lightly if he does not realise that this Budget has been balanced by a raid on every kitchen table and every kitchen dresser up and down the country. They talk about not asking anybody to share the responsibility for balancing the Budget in the light of the fact that nearly £9,000,000 is being raised from the pockets of the consumers of bread and butter. I am afraid the Minister is presuming too much on the credulity of decent Deputies in this House.
The plain fact of the matter is that this Budget is imposing its worst and most vicious burdens on the weakest backs in the country. To pretend otherwise is to falsify the facts as they must be known to every Deputy. Not even the health services have escaped the marauding hands of the Government. To increase the hospital charges, to make special charges for X-ray and specialist services, is a particularly mean and shabby economy. In future hospital treatment will cost the ordinary working man 70/– per week for every week he spends in hospital instead of the 42/– a week it costs him to-day. That will be a grave hardship on ordinary working-class people who, up to a few years ago, if they were insured for three years under the Social Welfare Acts, were eligible for hospital treatment free of charge.
Under the Health Act these people were charged 42/– per week if in hospitals. That was bad enough, but to increase the charge now to 70/– per week and to charge extra for X-ray and specialist services is again making a vicious attack on a section of the community ill-equipped to bear the burden which the Government proposes to impose on their shoulders under this aspect of the Budget. Increasing the hospital charges from 42/–to 70/– per week is an increase of 66 per cent. at the first go and to pretend that this is an equitable Budget, imposing similar burdens on all, is, I think, something which will not stand comparison with realities and truth.
Everybody, except really destitute persons, will be liable to pay that 70/– per week; and the physically weakest, because they are more likely to be in need of hospitalisation more frequently than others, will pay more than the physically strong. Because these treatments in hospital and the extra fees for X-ray and specialist services will impose a heavy burden on ordinary working-class people dependent on a week's wages or a modest salary, many of them, I fear, will forgo hospital treatment and endeavour to carry on because of the impact which the new charge for hospital treatment will make on their domestic budgets.
I notice that since he spoke in this House the Minister for Industry and Commerce paid a visit to Bettystown where he engaged in a review of the present economic difficulties and foretold the methods by which Fianna Fáil were to solve them. On the occasion of his Bettystown visit, the Minister said: "No doubt there are people who are even now meeting and calculating to foment discontent for ulterior motives out of our difficulties and to weaken our will to tackle them. But they are not going to succeed."
I should like to ask the Minister for Industry and Commerce what exactly do these words mean? It is quite clear, reading the words and knowing the Minister, that they were intended to be intimidatory and they were intended to be a warning to anybody who did not like the Minister's methods of solving economic problems to beware lest they would take any line with which the Minister himself did not agree. I want to say now that, in my view, these speeches represent the jackboot mentality of the Government in relation to wages. This is a short step away, but only a short step away, from the wage-freeze policy of the last emergency. This is a close relation of the Bill which was drafted by the present Minister for Industry and Commerce away back in 1947 and which is still in the Department of Industry and Commerce, a Bill in which he proposed to freeze wages because he did not want wages to rise to compensate workers for the increase in the cost of living.
The Minister for Industry and Commerce, when he was speaking here on the Budget, made what I think was intended to be an appeal to the Provisional United Organisation of Trade Unions and, if his speech meant anything, it means that he wanted these organisations to swallow the medicine prescribed for them in this Budget and to keep quiet about it. I should like to ask the Minister for Industry and Commerce, the Government and anybody who is going to speak for it, do they pretend to believe that this Budget will not lower the standard of living of those who work for wages and modest salaries? Of course it must do that.
If prices rise higher, as they have done under this Budget, while wages and salaries remain static, then there is only one thing for the ordinary man to do and that is to buy a lesser quantity of goods than he bought heretofore, to cut down on his consumption, or, if he wants to maintain the same standard of consumption, to have the same standard, but then he must let his bills go into arrears. He must do without the many other articles which up to now he was able to buy because of the lower prices of the articles in question.
Every trader who has to pay more for goods under this Budget will sell the goods at a higher price. They have done it. They are doing it. They have no alternative but to do it. But, if they have to pay a higher price for their goods, they must sell the goods at a higher level than that at which they were previously selling them. That is an inexorable economic fact.
I should like to ask the Government: do they imagine that workers' wages provide a margin to cushion them against the steep rise in prices which this Budget has inflicted upon the ordinary people? Is it accepted by the Government that workers will sell their labour and their skill at the old price although the cost of living for the workers, with the skill and the labour to sell, has been increased substantially under this Budget? If they are expected to sell their skill and their labour at the old price, although the cost of living has substantially increased, then they can do that in only one way, and that is by tolerating a substantial decrease in their standard of living.
They were told by Fianna Fáil that there would be no decrease in their standard of living. They were not told that these burdens would be inflicted on them. What the Minister for Industry and Commerce and the Government should do is to ask the trade unions to-day, the trade union leaders and the trade union members, the kind of atmosphere that is now permeating the movement, in so far as the workers concerned feel that they are legitimately entitled to an increase in wages when an increase in prices has been forced upon them by the deliberate action of this Government.
Deputy Briscoe speaking in this House on 9th May, 1956, as reported at column 393, of Volume 157 of the Official Report said that, in his view, workers were entitled to get an increase in wages if the price of cigarettes or tobacco went up. I hope we shall have the Deputy here now telling us what recipe he has to offer the workers when not only tobacco and cigarettes go up but bread, butter, sugar, flour, beer and a variety of other commodities. Fianna Fáil apparently believed when in Opposition that, even if the price of cigarettes went up, the workers must get an increase in wages but, when all these other commodities go up under the Fianna Fáil Budget, Fianna Fáil, in office, says: "No. Everybody should be quite content to work for their old rates of pay and they should get out of these domestic economic difficulties as best they can but, at all events, they should not trouble the Government and they should not rock the boat and their own suffering is a private matter for themselves to settle between themselves and the community in which they live".
I think the most ruinous feature of this Budget is the fact that it makes war in a deliberate and obviously planned way on price stability, which offered so much hope for co-operation and understanding between all sections of the community in the matter of finding a solution for our economic problems. We endeavoured to keep prices as low as we could during our period in office in spite of inflationary pressures generated outside, in spite of international tension throughout the world, in spite of increases in freight rates and many other pressures which it was impossible for a small country such as this to resist. As I said, the measure of our success is to be found in the fact that articles like bread, butter, flour and sugar did not increase during our three years in office. The Government had everything to gain no matter what the cost in keeping prices stable, in keeping prices at a level which would not give rise to disputations about price levels and about wages. However, confronted with the difficulty which could be met in a variety of other ways the Government in 1957 completed the programme on which they embarked in 1952, that is, they made up their minds then to abolish the food subsidies. They did some of the job in 1952 and they have done the remainder of the job in 1957.
The Government's new policy—this may as well be told to the people—is complete decontrol of prices. It was bad enough to abolish the food subsidies on flour and on butter but it was worse to decontrol the prices of these commodities. Butter might have gone up by 5d. a lb. with the subsidy abolished; by decontrol butter has gone up by 7d. per lb. The members of the Government Party sit there apparently gleefully happy at the contemplation that the ordinary people who voted for them recently will now have to pay 7d. per lb. more for butter than they paid before. Deputy Cunningham says that he knows constituents who were expecting to pay still more than 7d. per lb. for butter. Well, there is still an heroic race in Deputy Cunningham's constituency if he represents their view in the Dáil, but I have a profound suspicion that he is talking through his hat in interpreting the viewpoint of his constituents in this manner.
This Budget has brought suffering on a large section of the community. It has brought frustration to many people who thought that a period of price and wage stability would create the climate for an advance towards the solution of other problems. Now people are embittered by the character of this Budget. They feel a sense of frustration, a genuine loss of faith in the conditions of life in this country. As I said when I heard the Budget first, this Budget will be an order for more railway tickets and boat tickets to England. It will do nothing whatever to deal with the problems which are facing the nation to-day.
The Tánaiste, in the course of this debate, made reference to the proposal to give the master bakers a gift of approximately £250,000 in the same Budget as the food subsidies were abolished. He gave what he regarded as his side of the story, so far as he knew it, but I want to put into juxta-position with his statement my account of the situation. In 1955 the bakery trade unions decided that they would seek an increase in wages. They made a claim on the master bakers, and the master bakers said: "We cannot pay". The trade unions and the master bakers came to me and they said: "This is a question in which we have to see you because it may be a matter of increasing the price of bread or increasing the price of the subsidy". Both sides wanted to get from me an assurance that I would consent either to increase the price of bread or that I would ask the Government to increase the subsidy by an amount which was then estimated to be about £500,000.
I refused to give them any such assurance. I told them that this was an ordinary industrial dispute between the workers, on the one hand, and the employers, on the other hand, and they could settle it any way they liked. The State had provided the Labour Court for them and, if they wanted to have it settled peacefully, maybe they would go to the Labour Court.
They went to the Labour Court and the Labour Court gave an award to the bakery workers. Then the question was: who would pay the award? The master bakers and the bakery trade unions, I think quite frankly, wanted the public to pay the award. I did not feel that the public employed the bakers. I felt the workers were employed by the master bakers and the master bakers should pay the increased wages to their workers in the same way as other employers have to pay increased wages on the basis of the Labour Court recommendations. I, therefore, took the matter to the Government and told the Government that, in my view, an increase in the price of bread was not warranted and that an increase in the subsidy was likewise not justified. I was reinforced in that view by looking at the balance sheets of some of these companies who are making very substantial profits per sack of the flour which is milled or which is baked by them. On an examination of their profits, so far as we could see their accounts, I came to the conclusion that a case for giving them an increase in the price of the loaf or an increased subsidy was not justified.
The master bakers then took the case to the Prices Advisory Body. They made their case for an increase in the price of bread or an increase in the subsidy. After the matter was considered by the Prices Advisory Body, which has six members, three members voted against an increase of the kind proposed and three members voted for. Therefore, the decision which reached me was a decision arrived at on the casting vote of the chairman. I was disturbed that a matter of this importance to the whole community should be decided on the casting vote of a chairman. It would seem to me to indicate that the merits in this case were not all on one side and that it was a bit unfair that the whole community would be expected to pay an increased price for bread merely on the casting vote of the chairman of the Prices Advisory Body.
It was not a case of the chairman exercising just one vote, a casting vote. He had voted once for a proposal to increase the price of bread to increase the subsidy, and then used his casting vote in order to influence the decision in favour of his point of view. I am not questioning his right to do that. A matter of that kind has, perhaps, to be determined in some way or another, but when, as Minister for Industry and Commerce, you have to remember that a casting vote of that kind—one person voting twice in six— may cause 2,500,000 people to pay more for the price of bread, you have to think twice as to whether the evidence is overwhelmingly convincing to justify your authorising an increase in the price of bread. I did not think it justified me in asking everybody in the country who eats bread to pay a higher price. I did not think a casting vote was enough to solve that situation.
The result was that I took the matter to the Government and the Government took the same view as I did on the matter. They subsequently decided that they would set up a body to inquire into the whole question of bread prices and the statement then issued by the Government, explaining its decision to do so, contained this statement:—
"The Advisory Body took the view that notwithstanding the lack of full information it was their duty to make a firm recommendation. They were, however, equally divided as to the recommendation they should make, all six members being present, and the chairman found it necessary with reluctance to use his casting vote."
The statement went on to say:—
"The Government have accepted the view of the Prices Advisory Body that a full-scale investigation into costs in the bakery trade would be necessary before a final conclusion could be reached regarding the investigation."
Then the Government went on to announce the appointment of a Committee to examine the whole matter. That Committee subsequently met and made a recommendation that the master bakers should be given an increase of 3/2 per sack. I considered the recommendation they made. I took counsel with the Government and, as a result, we decided that we would reduce the price of flour to the master bakers by 1/5 a sack, and by eliminating the arrangement whereby they over-weighted the bread at baking time, they would save 1/9 per sack, and the total of these gave the master bakers the 3/2 which had been recommended by the Special Committee appointed by the Government. They got the 3/2: therefore, so far as the Government was concerned, they were paid on the recommendation which was made by the Special Committee.
In fact, they got slightly more than they would have got through the Prices Advisory Body recommendation. In my view, the master bakers were fairly dealt with; anything that was due to them has been paid, and there is nothing more due to them, and I know of no set of circumstances which justifies this generous gift of nearly £250,000 which is now to be handed over to the master bakers. It is quite clear that there is plenty of money for some people even though others may have to make do with substantially less.
In all the efforts of the Government to justify the Budget, sufficient attention has not been paid to an acknowledgment of what was done during the past 12 months by the inter-Party Government. In 1955 there was a slump in cattle exports, due very largely to the fact that the Argentine had depreciated its currency and, in order to get British currency, had flooded the British market at prices which made their cattle attractive to English purchasers and consumers. Not only did that restrict the demand for our cattle on the one hand, but it forced down prices of Irish cattle at the same time. Simultaneously, the terms of trade went against us; we were paying more for what we had, of necessity, to import, and we were getting less for what we exported. There was also an excess of consumer goods imported largely because of the fact that the people whose wages had increased naturally, and I suppose normally and inevitably, looked for an improved standard of living.
The result of the joint pressure of these agencies was to give us a deficit in our balance of payments to the extent of £35,000,000 in 1955. When we saw that that was not merely a tendency but looked like being converted into a permanent trend unless action was taken, the Government without hesitation decided that that situation must be dealt with immediately and vigorously. Governments do not impose levies to make themselves popular; Governments do not do things which inevitably affect adversely the flow of trade in the country. We found however, that if we were to safeguard the economic position one of the ways in which we would have to do it would be to shut out as far as possible the luxury or unnecessary goods, the non-essential goods, for which we could not pay except at the price of running down our external assets.
We imposed levies in March, 1956, on a whole variety of goods believing that these should be kept out, that it should be a hardship on people to import them until such time as we were able to pay for them in the normal way. About June, when it seemed to us that the first levies were not yielding the results we had hoped for and that people were still paying the levies and importing the goods, we increased the levies still further. As a result of the imposition of levies in March and July of 1956, we were able to bring about equilibrium, if not in the calendar year ended December, 1956, certainly in the 12 months from March, 1956, to February, 1957.
I believe that in March, before we left office, we were again building up external assets in Britain. At all events we had closed the gap in the balance of payments; we had brought back equilibrium and we had brought it back in a definite and positive way, and when the Government came into office on 20th March they knew at that stage that our balance of payments problem had been brought under control and that there was no leakage which would involve a running down of our external assets and that they had no problem on that front except to arrange for disciplined buying in the future by Irish consumers, to get those who wanted to import luxury or non-essential goods to hold back until such time as we were able to pay for these goods in a way that would not involve a repatriation of external assets merely for the purpose of financing the consumption of luxury and embroidery goods.
Therefore I think that the Government was presented, in that respect, with an accomplishment, the significance of which it was not possible to over-emphasise. We did a good job in bringing our payments into balance; in stopping the drain on our external assets for luxury and non-essential goods, and we did a good job, also— psychologically—in putting our people through the exercise, painful though it might be, of having to pay more for the import of certain commodities if it was necessary to do that, in order to get what was most important of all —equilibrium in our balance of payments.
We got that equilibrium in our balance of payments. In fact, we could have got more. The levies were imposed only on commodities not affected by the Trade Agreement of 1938 or the Trade Agreement of 1948. We would have liked to impose levies, perhaps, on the articles controlled by the Trade Agreements of 1938 and 1948 but, knowing that those agreements were a mutually advantageous bargain between ourselves and the British Government, we said to the British: "We may find it necessary for balance of payments reasons to impose levies even on commodities which, under the 1938 and 1948 Trade Agreements, should not have any further imposition on them," and the British, understanding our position, said to us at the time: "We understand your difficulties. We know the efforts you are making to meet the problem which confronts you and, so far as we are concerned, we shall concede in principle the right to impose those levies on the list of articles which you have catalogued, for a certain period".
The Minister for Industry and Commerce, speaking here the other day, said that we had no regard to the Trade Agreements of 1938 or 1948 when we imposed the levies. Not only had we regard to them but we had a most scrupulous regard to them, such a scrupulous regard that the British Chancellor of the Exchequer was acquainted with our intentions and the Ambassador in London discussed these matters with the British Government. To pretend that we had overlooked these two Trade Agreements when imposing the levies is something that does not bear a moment's examination.
What I cannot understand is the lazy approach to this problem by members of the Government. The Tánaiste could have found all the documents dealing with that problem in his own Department. The Minister for Finance knows he has got them because the former Minister was the initiating authority for the correspondence. Yet, the Tánaiste, in the customary "chance-my-arm" fashion, came into the House the other day, thinking nobody could contradict him, and said that we had overlooked consulting the British about the 1938 and the 1948 Agreements and that we had made a mess of the whole thing.
The truth is the opposite. We did consult and the British agreed in principle that we could impose levies on articles caught by the 1938 and 1948 Trade Agreements, but we had dealt with the position so effectively by imposing the levies on the other commodities that we did not find it necessary to impose any levy on an article which was caught by the Trade Agreements, that is, we did not find it necessary to impose a levy on the long list of articles affected by the Trade Agreements, which list of articles was supplied to the British. Our effectiveness in imposing the levies at two levels rendered it unnecessary to travel further than that and, therefore, no levies were imposed on the other articles which were caught by the Trade Agreement but in respect of which the British gave consent for the imposition of a levy if that were necessary for the purpose of restoring our balance of payments.
One of the most significant features of this debate, from the Government's point of view, is the mystery which surrounds what I will describe colloquially as the Lemass millions. When Fianna Fáil were in Opposition, Deputy Lemass, as he then was, apparently went into a huddle with some folk and produced a plan under which he would find £100,000,000 and 100,000 jobs in five years and all that was needed was a Fianna Fáil Government in office to make sure that this plan would work miraculously. Now Fianna Fáil are back in office and there has not been a whisper about the £100,000,000 in the last fortnight in this House. There was not a whisper about the £100,000,000 during the election and, so far, nobody has attempted to break the graveyard silence on what has happened the Lemass £100,000,000 plan. I have no doubt that there are many financial wiseacres on the Government Benches. I have no doubt that, given the necessary hint, they would burst to explain how this plan would work. Surely this is the time to tell us how it would work, to tell us when it will work and what has become of the plan, what has become of the policy and what the Government will do about it.
In a Budget of this kind I imagine the Government could have found room for a plan under which £100,000,000 was to be raised. Bear in mind, it was to be raised, not by taxation. Although the method of raising it was not disclosed, it was to be raised, not by taxation. Anybody who can find £100,000,000 which he can raise, not by taxation, should be regarded as a pretty benevolent gentleman these days. Therefore, I cannot understand the reluctance of the Government to adopt and implement the Lemass £100,000,000 plan and to give this Budget an air of hope and happiness, which is so sadly absent from it to-day.
My complaint against this Budget is that it makes no serious plans for expanding capital development or for large-scale industrial and agricultural development or for any development of any kind likely to arrest, and ultimately to stop, the flow of emigration from this land. Under this Budget, crushing burdens are imposed on the weakest sections of the community, those whose backs are not able to bear them, and we leave all our old problems unsolved.
In fact, far from this Budget stimulating industrial and agricultural development, we may now well be on the eve of a very serious recession so far as our whole dairying industry is concerned. The catastrophic increase of 7d. a lb. in the price of butter clearly will result in a fall in the consumption of butter but, if milk is going into the creameries and being converted into butter and if butter is not being consumed at the old rate, it only remains to be seen that the Government is immediately confronted with the problem of getting rid of the surplus of unconsumed butter which will lie in cold storage. If milk yields continue to increase and if a year of the kind we are now experiencing continues, there will be more milk at the creameries, more butter made at the creameries, more butter going into cold storage, more butter that is not consumed and which must be exported and the Government will pay £10 on every 1 cwt. of butter that is exported.
The subsidy on butter for our own people has been abolished but we will pay 1/10 a lb. on butter that we sell in the Six Counties or Great Britain. We cannot subsidise butter by one penny at home but we will subsidise it by 1/10 a lb. on export to the Six Counties or to Great Britain. That will bring about a serious situation in the dairying industry for which this Budget makes no plan whatever. The farmers who were looking for 3d. a gallon for their milk some months ago and who were expecting the Costings Commission to give them a higher rate for their milk will, I am afraid, have other problems confronting them before they are many months older.
This Budget, by cutting back the consumption of butter, will mean that more butter will be left on the hands of the creameries who, in turn, may find that they are not able to pay the existing price for milk. One has only to consider the position for a few moments to realise what the reactions will be on the dairy farmers of this country.
All this could have been avoided if the Government had left the subsidy on butter, left the price stability alone and tried to weld together all sections of the community to apply their energies and talents to the solutions of the problems in those areas in which we could get agreement on what was the best course to adopt, the best policy to follow. No matter on what bench one sits in this House, or from what angle one views the economic situation, I think everybody, some perhaps after a long period in the wilderness and after many instances of frustration, will inevitably come back to the point that national development —and its concomitant, full employment—require as an absolute essential the provision of capital. There is no plan in this Budget to secure the capital so vital to the development of our national economy, so vital to industrial development, so vital to agricultural development, so vital to a building up of the whole national estate in the realm of electricity development, turf development, afforestation, shipping development and air development.
This Budget, in that respect, has a most pedestrian approach to the vital problems confronting the whole nation. While we have substantial foreign investments, we make the least advantageous use of them. Over £400,000,000 gross is held by the Government, by the banks and by the ordinary people in sterling securities overseas. Yet while we have that vast sum of money held by the Government, banks and the ordinary people, we experience here a shortage of capital to provide useful and profitable investment at home. Continued emigration must mean fewer people to produce and fewer people as well to bear the inevitable national overheads.
Large scale unemployment means unused wealth-creating possibilities and involves the nation too in the expenditure of very large sums of money to provide for unemployed citizens.
Even then the best we give them is a low standard of living. They do not want that low standard of living. They do not want the low benefits which they receive under Social Welfare Acts and which are not adequate to their needs. What they want is work. The artificial shortage of money denies them work which would create wealth at home and make for better living standards, not merely for the unemployed thus put to work but for every citizen in the community.
I want to put this question to the Government for consideration. Is it not time that we reviewed the financcial methods by which we refuse to use our own wealth and our own savings to finance national developments and fruitful investment for our people? I want, for a few moments, just to survey the position in that respect. Under the 1927 Currency Act it was mandatory on the members of the commission to invest the proceeds of the currency fund in British securities. In 1930 the law was changed to enable the Currency Commission to invest in Irish securities if the members of that body were unanimous that the funds should be invested in Ireland. But although they were given that power in 1930 for the first time, they did not avail of the power to invest our holdings in the currency fund in Irish securities. In 1942 the law was again amended to give power to the Central Bank to invest in Irish securities if a majority of the members so decided. Since 1942 that power has been invested in the Central Bank to invest in Irish securities.
While I was a member of the Government I was in a minority on this matter. I cannot understand why we decline to utilise the powers which we have, even under the limited Central Bank Act, to invest the moneys of the Central Bank in Irish securities. I have asked that question in this House. I have asked that question of Ministers for Finance and I can get no intelligent answer. I believe they can be invested in Irish securities and that the Legislature expected that they would be invested in Irish securities when they amended the Act in 1948. Yet we proceed on the assumption that, so far as the 1942 amendment is concerned, nothing in fact has been really done to ensure the investment of the Central Bank assets in Irish securities.
I know of course that one will be met with the old fluidity argument, that it is necessary that the Central Bank should have, in its portfolios as securities for the Treasury Note funds, assets which can be cashed at once. The argument proceeds on the theory that everyone holding an Irish currency note or an Irish coin might, at the same time, desire to change that note or coin into some other currency. That is a fantastic basis of assumption. It has never been necessary in any other country in the world where notes are issued by the banks. The general acceptance has been that a 10 per cent. fluidity for note issues is sufficient for the purpose of providing against the possibility that, from time to time, there might be abnormal demands by the holders of notes who would say: "Give me money in another currency as I want to carry out certain transactions with it."
A 10 per cent. fluidity which has worked elsewhere would work adequately, in my opinion, in the Central Bank. In any case there is something wrong in a situation in which, while every country in the world backs its own currency with the Government securities of that country, we, alone amongst these countries, back our securities by the currency of another Government. I wanted to ask what is there to prevent us from backing our note issue by Irish securities? Why can every country back its own note issue with the securities of its own Government while we have got to get the securities of another Government to back our note issue here?
In the first place, it seems to me that a continuance of this policy indicates a lack of national self-respect. Even apart from that, it seems to me particularly bad housekeeping at the present time, when a revision and even a revolution in our housekeeping methods would be all to the national advantage. To-day, through the Central Bank, we buy foreign securities as a backing for our note issues and refuse to take Irish securities as a backing for these issues. The money which is so used could, in many ways, be used to buy Irish securities as well, as profitably and to a much greater extent in the national interest than the procedure adopted to-day.
I am not asking the Central Bank to utilise its securities for investment in schemes of doubtful value. We have got to-day three first-class State sponsored bodies—the E.S.B., which has never defaulted on a single payment, which is a thriving, profitable business; Aer Lingus, which has never defaulted on a payment; Irish Shipping, which has an equally thriving record; and Bord na Móna, which pays what it owes, keeps its head high and is doing very valuable work for the nation as a whole in the development of its peat resources.
Is there any reason why the Central Bank, with the power given to it in 1942, should not lend money as security for a note issue to four thriving, progressive companies of this kind? Surely the guarantee of the E.S.B., which is now in existence for over 30 years, is as good a backing for a note issue as securities of another country, particularly as we have experienced three devaluations of the currency of that country? Surely nobody would suggest the securities of these companies are not first-class securities for any note issue? In any other country the money required by these bodies, which would be State guaranteed, would be accepted by the Central Bank. But we spurn the securities which these companies offer and instead go to Britain to buy British securities backed by another Government.
I have never heard any answer to that question. I ask again to-day for an answer to the suggestion that the Central Bank could make capital available to these four bodies on a repayable basis, by accepting the share certificates of these bodies as securities for note issues, instead of lending, as they do, large sums in Britain at lower rates of interest. If they did that, then the State could look forward to finding the necessary capital to develop these four first-class bodies without the annual agonising scramble to find money to satisfy the capital requirements of the E.S.B., Aer Lingus, Irish Shipping and Bord na Móna.
If these undertakings and their securities were utilised as guarantees for the note issues of the Central Bank, then much more capital would be available by public subscription, by public savings and by the repayment of old loans and accordingly, local authorities and State sponsored bodies would be able to embark on more comprehensive schemes of national development. I have had the tantalising experience of sitting with my colleagues trying to see where money could be got, from the public or the banks, to finance the excellent activities of these excellent undertakings. These undertakings endeavoured to go ahead and do this and that, but in the main they wanted to develop Ireland, to provide more employment. Their past record has been one that would inspire everybody to give them all the help they could.
There were times when we could not get money while, at the same time, the private banks, the Central Bank and the entire community have at their disposal not less than £400,000,000 of foreign assets invested outside the State. So far as this Budget takes notice—it does so only in an academic way—of the necessity for encouraging investment in this country, I want to say that any legislation towards that end will have our wholehearted support. As long as we have under-development here we will have large scale unemployment and mass emigration. Neither one nor the other will be cured by pious sentiments expressed in Budgets.
We must provide full employment, we must eliminate emigration and unemployment. That can be done only by capital investment and by our ability to find such capital for that vital investment. I see no reason why we cannot do what other countries in the world do—use our own securities to back our own development schemes instead of our tardy, miserable, halting approach to a financial policy which has given us the results we experience to-day.
I would say to the Minister that, in the situation in which he finds himself and in the still grimmer stage which must be faced by the whole nation by reason of the formation of a common market in Europe, we have time, but only a short time, in which to take stock and reappraise the entire economic situation. I think the time has come for a reappraisement of the situation, for an examination of how best we can utilise the credit of the nation, the credit-creating capabilities of our people and the foreign assets which are being used to promote development in every part of the world except the part to which these external assets properly belong.
If we fail to have that reappraisal with a view to improving our assets for our own national development, then we will continue to have under-investment, emigration, unemployment and all these frustrating features of our economic life which have been with us now for more than 30 years. Having seen the situation inside and outside, I come down firmly on the viewpoint that unless we attempt to employ all the resources of our people, to exploit all their wealth-creating capabilities and our foreign investments in the development of the Irish economy, then, 20 years hence, other Deputies in this House will be talking about the same problems we are discussing to-day.
If the Government is willing to make a bold break from the laissez-faire of the past, to face up to a recognition that capital is our most vital need and that its employment in Ireland is possible if we utilise the resources which are within the control of the State, then I believe the Government can get a very substantial volume of support, and certainly get it from this Party, for any policy which gives us greater development, full employment and the fullest utilisation of the nation's resources.