I think that the immediate reaction of the people in general to the Minister's Budget proposals of yesterday was one of a certain sense of relief that at least they had been spared any more of the austerities and harshness so characteristic of Budgets introduced by the present Government. It is significant but none-the-less deplorable that that should be the immediate reaction; that the best the people of the country can say in existing circumstances by way of ease to themselves is that there is nothing in the Budget and that it does not impose new and further harsh restrictions. The country had looked forward, I think, with a certain degree of expectancy but not, I think, with very much hope, that, in the circumstances existing at present, there would be some positive proposals emanating through the medium of the Budget for the advance of the nation that had been so promiscuously promised by the Government and their adherents some 15 months ago during the general election campaign.
Further thought and examination of the Budget proposals will show that, far from there being nothing in the Budget, in fact, the Budget contains additional taxation and its description as a Budget containing nothing is the greatest condemnation that this or any other Budget could have in present circumstances.
The Minister for Finance, in the course of his Budget speech yesterday, took a certain amount of satisfaction in stating to the House that the Government had held the line against increased taxation. They have not held that line. This was no time for a Budget of negative character, and it was certainly no time for a Budget increasing taxation. It is a commonplace that the Budget resolutions containing the annual proposals of the Minister for Finance, are no longer merely accountancy matters, that the Budget is or ought to be an instrument of economic policy. At a time when the circumstances of the country clamantly demanded positive action, an incentive Budget to clear away the unfortunate diseases of pessimism and disillusionment that are so widespread throughout the country, the fact that nothing but a negative Budget is proposed is certainly something of a disastrous disappointment.
No positive policy appears in this Budget. The same taxes, the harsh, austerity taxes imposed last year are continued and in addition a whole series of new taxes are imposed as part of the tax structure of the country. I shall have occasion before I finish to deal with the Minister's proposal to transfer from capital account to current account the levies which were put on as a temporary expedient to meet a very dangerous situation and to turn those levies into permanent taxes of the State. That in itself is increasing taxation; once those taxes go on, they will never come off. As I say, I shall have occasion to animadvert on these proposals in a more detailed way later: my point at the moment is that this is not a Budget which does nothing; it does in fact increase taxation.
The very fact that it does nothing is the very greatest condemnation that can be given to this Budget at a time when positive proposals were needed to give incentives to industry, agriculture and commerce and we find no hint whatever in this Budget of any proposals except vague talk about much constructive thought going on to deal with the future of the country.
It is, of course, pretty well known that there are two—I hesitate to call them schools of thought—factions within the Government, one of which is represented by the lethargic approach of the Minister for Finance, and the other perhaps might be summed up by the hopping about of the Minister for Industry and Commerce. We have had many plans from the Minister for Industry and Commerce; we have had many turgid orations from him about the proposals, the many hundreds of proposals that are in his Department and are being examined. We have had hints of new industries and a whole mirage of hope built up by the Minister for Industry and Commerce in his speeches throughout the country over many years past.
We have had, of course, his famous £100,000,000 proposal. This sum was to be secured from somewhere unknown but certainly not from either the savings of the people or through taxation. In a recent publication called Development, he said that is still there and although all his colleagues took care to say in recent times it was no part of Fianna Fáil policy, we have the Minister for Industry and Commerce dangling this mirage before the people of the country, hopping from one topic to another.
Apparently the country had the choice—and certainly the Minister for Finance had the choice—between sleeping sickness and St. Vitus's dance. The sleeping sickness won in this Budget. It is a safe Budget; I suppose many economists would so describe it. But it is as safe as the grave, and there is no place more safe from accidents than the grave. We are reminded of the difficulty that faced the Chancellor of the Exchequer in Great Britain. He had problems to face different from the problems which the Minister has to face. He had problems based probably on surplus employment and certainly grave danger of inflation. The problems we have to face are underemployment, emigration and deflation, and this is a deflationary Budget. But even when the Chancellor of the Exchequer in England had those problems to face in the circumstances existing in the country at that time, no less than two of the leading economic journals in Great Britain, The Economist and the Financial Times, counselled that it was no time for caution but time for courage.
Surely that advice is very much more relevant and much more urgently required to be put into operation here in the circumstances of the present time than in Great Britain. What is required here at present is not caution but courage, and however much caution there may be in this Budget—and I give the Minister for Finance full marks for the caution and safety of his Budget—there certainly is not the slightest sign or indication of any of the courage that is so urgently required to meet the exigencies of the present urgent task.
I have frequently spoken in recent years—not to-day or yesterday—about the lack of confidence that exists in our country and I have tried to stem the tide of pessimism—so far as one man could—and the lack of patriotism and confidence in our conditions that arose because of this wave of pessimism that has gone through the country like an infectious disease. On this occasion the Government had not merely the opportunity but the duty of taking effective steps to deal with that wave of pessimism, and I am sorry to say that this Budget makes no contribution whatever to the restoration of the confidence that is so urgently required or to the curing of this infectious disease from which the country is now suffering. That they had the duty of meeting this is beyond all question, and that they had the opportunity is what I should like to show.
I should like first to paint a contrasting picture of the situation which faced the Government and particularly the Minister when he proceeded to frame his Budget proposals. On the election of the present Government, the occasion of the first meeting of the Dáil after the General Election, I said at column 31, Volume 161 of the Official Report:—
"...we sought eagerly for some clue as to what I might call the most jealously-guarded political secret of modern times here in Ireland—the policy of the Fianna Fáil Government."
We failed to find it at that time. We failed to find it although we challenged them throughout the length and breadth of the country during the election. We failed to find it in this Budget. This Budget contains no policy and no hint of a policy to meet the urgent problems of the difficult times existing at present in Ireland.
I would up what I had to say on that occasion by stating at column 34:—
"The country sees and knows that not merely is the country on trial, but, equally, that our institutions are on trial."
I have expressed, and I repeat here again, my confidence in the future of the country. The Minister and his Government had an opportunity of giving full effect to that confidence and they have failed in their duty in the proposals they put forward in this Budget. There are people—and people in high places—saying that this Government and every other Government in this country since 1922 have failed. I do not subscribe to that doctrine, but I do say that this Government has failed at the present time to make an adequate contribution to putting an end to that class of gloomy pessimism which is, in my view, as I have already said, at the root of many of our evils, and particularly of our emigration.
It is significant that in the whole course of the Minister's speech he never referred to the word "emigration" or the problem of emigration. He never referred to unemployment or the problem of unemployment and he never gave any hope or indication whatever of a policy for production in regard to the agricultural industry. These are remarkable characteristics of the Budget in present circumstances. It is for this reason, amongst others, that the Government have failed in their duty and lost the hope of producing a real policy and putting an end to the lack of confidence which the people have in their Government and institutions.
I subscribe to what the Minister said in his Budget speech that the two successful issues of the Prize Bonds— I would add the successful flotation of the national loan—show that inherently the country is sound financially and economically, but people as a whole have got the impression that there is no hope. We on every side of the House, no matter what Party we belong to, have got to come together to put an end to that, or there will be no hope for Ireland. I think the gravest indictment that can be made in regard to this do-nothing Budget is the fact that they have lost the opportunity and failed in their duty.
I take a few of the characteristics of the present time and I do so with hope. It is something that should inspire courage in our people and help to dissipate this feeling of gloom and pessimism which is rotting and corroding the country, particularly the young people, bringing them into the mood where they see no hope for the future for themselves and, therefore, they emigrate, that there is some indication of buoyancy in revenue. Whatever measures may be taken by certain of the Ministers and Deputies on the opposite side to suggest the contrary to the people, we had a hard and arduous task in bringing about a situation in which a balance on external account was achieved last year. We are entitled to realise and rejoice in the fact that there has been for the first time for many years, although the result was achieved in very great agony, indeed, on our part, a balance in our external payments account. That, as the Minister and his predecessors said—it was said at the Fine Gael Ard Fheis in 1957—is a solid foundation upon which to build some policy for progress and production in the country.
It is a favourable situation that this Government has for the first time a surplus and an adequate surplus on our balance of payments accounts. Although the Minister said, and, perhaps, rightly said, that that situation in our external payments account must be carefully watched, the situation is now safe. I think there is no danger imminent in regard to that situation. Therefore, that is something which should give not merely the Minister but the country confidence. It should have enabled the Government to plan a forward positive economic and financial policy to meet the situation that exists at the present time. They have failed to do so.
The Minister also drew attention to the fact that the deposits of the commercial banks have greatly increased during the past 12 months. We heard the weeping and wailing of the commercial banks and others during our time about deposits falling. We had a credit squeeze and an increase in the bank rate and all the rest. The present Government have the position where the Minister for Finance is able to boast that the deposits in the commercial banks are greatly increased this year. He did not add that the dividends of the commercial banks have increased. He could have said that the holdings of the commercial banks and the holdings by other persons of our sterling balances have also greatly increased.
It is pleasing also to hear the Minister say that there has been a gratifying increase in the total savings of our people. We had to meet a situation where the savings of the country had gone down almost to vanishing point. We set ourselves positively and constructively to persuade the people of the necessity for saving in their interests. It is certainly pleasing to us at all events to know that the measures which we set in operation are meeting with such success. It does not matter whether we get the credit or not. The fact is that the savings of our people according to the Minister for Finance have greatly increased, or have gratifyingly increased, during the last 12 months; and that is something the country should know and should appreciate.
We then have what I have already mentioned—the two Prize Bond issues were subscribed and adequately subscribed; the national loan was a success, the loan by the E.S.B. was a success. Then we have the situation, as I understand it to be, that our exports of all kinds have increased. We have had a dramatic, if not spectacular, increase in our agricultural exports and we have had an even more gratifying increase in our industrial and other exports.
There is no capital shortage now. The Minister did not complain of shortage of capital, of the necessity for a credit squeeze. The only restriction he mentioned was a half-hearted appeal for restraint in income increases. There is one side of the picture—and it is a good side of the picture. It is not the sort of thing with which we had to deal. That is the picture on which the Minister for Finance ought to have had his eyes when he was framing this Budget —a solid basis on which a forward positive policy could have been devised and put into operation, instead of the "nothing in it" Budget that we had presented to us yesterday.
Of course, we have the reverse side of the picture. We have the undoubted fact that there is this corrosive disease prevalent in the country, of gloom, pessimism and disillusionment with our institutions and with our Governments, wherever they come from. That is a disease which will be very difficult of eradication. It is one of the heavy items on the debit side of the account —if I may mix metaphors; one of the gloomiest shadows in the picture—if I may resort to the original metaphor I used.
Then we have the greatly increased emigration. We have, as Deputy Norton pointed out yesterday, a situation where there has been really no definite increase in employment and very little, if any, decrease in unemployment. The figures, unfortunately, bear that out. On the 12th April of this year, the total on the live register was 77,319. For the previous year, 1957, the blackest year in the history of this country economically, it was 81,937. I need not go over the causes for that— the drop in the price of our agricultural exports, the adverse terms of trade, the Suez crisis, the credit squeeze, the situation in England and all the other factors we had to meet, which caused the economic blizzard which afflicted the country during that year. The figure for unemployment was 81,937. In the previous year, 1956, when the start of the troubles set in, it was 68,256. I shall not go behind that figure but I shall take 1956, the middle of that year, when the troubles really showed themselves at their inception. It was 68,256 at that time. The position we are in now, 12 months after this "strong Government" with an overall majority came in, is that the unemployment figure is 9,000 higher than the 1956 figure.
Even those figures are illusory. I understand that a better gauge to the employment figure is the number of persons who are actually in employment in industries producing transportable goods. From that you find how many are in work, rather than how many are out of work. The latest figure available, that for the December quarter of 1957, taken from page 38 of the Irish Trade Journal, shows the total then employed as 151,209. For the corresponding quarter of the previous year, 1956, it was 150,632—that is something fewer than 600 were put into employment in that 12 months. For the December quarter of 1955 the figure was 159,650, so that in 1955, before the economic blizzard started, about 8,000 people more were in employment than there were at the end of 12 or 15 months of the present “strong Government”. That is another bad side of this gloomy picture.
We have then the fact that the cost of living has increased to a very significant extent, bearing its effects and bringing its consequences right through the economic life of the country. It has resulted not merely in increased wages of a very moderate character; it has increased rates, increased expenses and it has brought us certainly into a higher cost economy than before. We have the farmers depressed, perplexed and their agricultural industry in almost a state of chaos. Even the Minister for Industry and Commerce pays at least lip service now to the fact that agriculture is our principal industry. From these benches over the years, we have preached that there is no necessary antagonism between the development of Irish industry on proper lines and the development, the necessary and essential development, of the agricultural industry as the first and primary object of economic policy.
We have business activity restricted. Every business person will tell you that business is bad. In the towns and villages, the shopkeepers are experiencing financial difficulties of the acutest character. We have an apparent rise in industrial production which, to the extent it goes, is satisfactory; still it is not anything like it was when we were in office, before the economic blizzard afflicted the country. The latest available figure for industrial production for the December quarter of 1957 stood at 108.8. In the same quarter of 1956 it was 100; but in the same quarter of 1955, before the economic troubles came, it was 113.5. Therefore, it is well below—given such increases as have been indicated in the last few months—the figure at the end of 1955.
We have not got—as everybody knows, and as has been reiterated so frequently—any completely accurate indication of the number of emigrants; but from the figures available in reference to this matter we can ascertain the trend of emigration. The net passenger movement by sea out of the country last year was 46,712, an increase of over 11,000 on the year before and the highest figure in the last ten years; indeed, the figure is nearly three times what it was some ten years ago. Those are figures which cannot be overlooked. In considering whether or not there has been an increase in employment or a decrease in unemployment, those figures for emigration must be taken into account.
From this side of the House, in our time, we heard denunciation, loud and long, of ourselves and of our policy and of the figures we produced showing that we had put more people into employment and that there was less unemployment. We were told the figures were faked because we did not take account of emigration. I do not propose to indulge in that sort of thing. The fact must be faced and taken into account that there has been greatly increased emigration in the last 12 months. There cannot be any doubt about that.
That is only a bare outline of the gloomy side of the picture; but it is of such a character that it required urgently that the Government should take note of it and should make use of the favourable side in order to dissipate the gloom and take away the darkness from that dark side of the picture. There is not the slightest indication in this Budget of any incentive to production. There is not the slightest hope held out to the agricultural community. There is hardly any hope of additional employment being created and there is very little hope of an end of unemployment.
The Minister for Finance said that there was constructive thought of the best method of dealing with our economic and financial problems. I do not understand why it is that the Capital Investment Advisory Committee's Report on that aspect has not been given urgent priority.
The Minister said there was a report on housing. It has not yet been published. I suppose it has been there for a long time—for some time anyway —and we can forecast what is in it. I have not the remotest touch with that committee at the moment but, from what I saw when I was in office, I have a very shrewd idea as to the kind of recommendations made about housing. It would not surprise me in the least if the recommendation was that there should gradually, if not immediately, be decontrol of housing and, indeed, a cessation of house building altogether. That will not bring about any increase in employment or help to solve our problems.
I should really like to know why it is we have been waiting for so long for the really important report of that committee, the report to which the Minister referred, as to the best method of dealing with our present economic and financial situation. It is of some significance that it is something like 18 months since another report other than that on housing— and in my view the report on housing is of no significance whatever—has emanated from that capital advisory committee. I should have thought that in the circumstances existing at the present time, circumstances which call for incentives and for a positive policy, that advisory committee would be asked to give an urgent report to form and inform the Minister's mind in relation to the problems he has to face and the country has to meet. Again, at the risk of repetition, I insist that, search as we may, we find no positive policy in this Budget and we find no incentive whatsoever.
The Budget has been precariously balanced. It has been balanced by taking the levies from capital account and putting them into current account, making them part of the permanent tax structure of the State, probably for all time, and by taking a net figure for overestimation. That figure can be put completely out of balance at any moment by some unexpected turn during the course of the year, involving additional and Supplementary Estimates. We heard the Minister last year swear by all the financial gods that there would be few Supplementary Estimates during the course of the year. He took away the food subsidies. We warned him of the effect that that would have. We warned him of what would happen in so far as the consumption of butter was concerned. One result of that was that a greatly increased amount of butter had to be exported because of the drop in consumption at home due to the increase in price. That was something that should have been foreseen.
Are we to acquiesce now in the Minister's suggestion that there will be no Supplementary Estimates this year beyond about £1,000,000? I think that was the figure he estimated in his Budget statement. Of course, there will be Supplementary Estimates. If there are, what then? A precarious balance has been achieved now by these two devices to which I have referred. The boasted point of principle on which the Government allege they are standing is the principle of the balanced Budget. We have heard that throughout the length and breadth of the country over the years. We have heard the taunts flung at me and my colleagues because of our so-called deficit budgeting. This Government set itself up as a headline for financial rectitude and for balanced Budgets. It has not balanced its Budget this year. It did not balance its Budget last year. The policy of securing a balanced Budget at all costs has failed, and failed signally.
Last year the Government had a deficit. They blamed us for that. This year they cannot blame us. They have had control of the finances of the country, with an overall majority and a so-called strong Government for the past 15 months. Whatever false propaganda they may have been able to throw around, by suggestion or otherwise, but never openly in this House, that there was something wrong in our handling of the finances of the State, they have not got that alibi this year. Nevertheless, they had a deficit of £5.8 million in the Budget for the year which has just ended. This is the Government that boasted of their great principle of balanced Budgets at all costs.
Goodness knows, the country has paid heavily from 1952 to 1957 under a Fianna Fáil Government. In practically every Budget of which they had control from 1932 onwards they have increased taxation. Despite their harsh measures and the austerities imposed on the people last year, in the name of a balanced Budget and the maintenance of this principle, the Government ended the financial year with a deficit of £5.8 million. What hope have they of fulfilling their promises and adhering to their principle of balanced Budgets when they can achieve only the precarious balance to which I have referred by the methods to which I have adverted?
Food subsidies were taken away last year because at all costs, and however great the pain inflicted upon the people, the Budget had to be balanced; £9,000,000 was taken away by the removal of the food subsidies. Part of that £9,000,000 went by way of compensatory payments but there was over £6,000,000 available from the saving effected by the removal of those food subsidies and nobody yet knows the secret of where that £6,000,000 has gone. Certainly the people and the country generally have not got any benefit. Where has it gone? Wherever it has gone, they have certainly not balanced their Budget, and they will not balance the present Budget. They have not balanced their present Budget.
I do not know whether some fortuitous inflow of revenue will enable them to meet their contingencies during the year. I hope they will balance their Budget. They said last year they would balance at all costs—at the cost of increased taxation, an increased cost of living and widespread suffering. But, despite all that, they were not able to maintain their principle of balancing the Budget. The year 1956-57 was a harsh, tough year. We ended with a deficit of £6,000,000. That was upcast to us. We were the rakes on a rake's progress, to use the phrase that came so trippingly from the tongue of the former Minister for Finance, now Minister for Health.
If we had done what the present Government has done, if we had taken the levies and put them into current account and not into capital account, if we had made them a permanent part of our tax structure and not, as we said they were and intended them to be, merely temporary expedients to meet a crisis of a grave character, we would have ended that year 1956-57 with a deficit of only £1,500,000. There was something over £4,000,000 from these import levies at that time. If we had utilised those for current revenue, we would have had a deficit of only £1,500,000 and we would have maintained the £9,000,000 for the food subsidies.
What has happened? The present Minister has taken the £9,000,000 from the food subsidies. As far as we know, nobody has got any advantage from that. They have taken them away and brought them into revenue. They have also brought into revenue the remaining proceeds of the import levies. Yet they have ended after all that with a deficit of £5.8 million. We would have kept the food subsidies if we had adopted their device and we would be down only £1,500,000. They have taken £9,000,000 from the food subsidies and they have taken the import levies; yet they have ended last year—their first financial year—with a deficit of £5.8 million. This Government, whose only known point of policy, economic or financial, was the principle of the balanced Budget, have ended this year when they have full control, when they are a strong Government with a clear majority, with a deficit of £5.8 million.
Everybody subscribes to the principle of the balanced Budget. I suppose I shall be told, as we have been frequently told before, that that is merely lip service, that we were on the rake's progress and that we had deficit budgeting all the time. At the risk of having that taunt flung at me, I repeat that it is not the beginning and end of all economic policy that our national accounts should be balanced or even that we should secure an equilibrium in our balance of international payments. The securing of a balanced Budget is a necessity. In normal circumstances the securing of an equilibrium in our balance of payments is an even more urgent necessity. But both are only a beginning.
A balanced Budget does not secure any employment, does not give any incentive to industry, does not give any hope to emigrants or any chance for increased employment. The principle of a balanced Budget and the principle of balance in our international trade are only things which mark the beginning of economic policy, something that should not be aimed at exclusively or even directly. But it should be something to be achieved as a by-product of a proper forward policy for economic progress and industrial and agricultural productivity.
Have your principle of a balanced Budget if you like, but do not stop at that. The Minister for Finance in this safe Budget—safe as the grave—has stopped at the recognition of that principle and has not made it at all a basis on which to build a proper economic and financial structure. We have no policy and no incentive in this Budget. Starting on that solid foundation I have mentioned, building up on a growing confidence, a growing realisation of what we have always said—that this country is sound economically and financially—and also starting on the basis that we have had for the first time a surplus in our balance of international payments, a forward, positive, dynamic economic policy ought to have been created and certainly the economic circumstances of the country urgently demand that it should have been put into effect by means of this Budget.
But we have not any indication of any such policy. All that has happened is a safe Budget in which all the heavy taxation, all the harshness and all the austerities are consolidated and continued and, in addition, further taxation put on by way of the switch of the import levies from capital account of a temporary character of permanent taxation. That is all that has happened in this Budget. There is no policy for incentives, and every aspect of our national life at the moment requires those incentives.
Why has the bank rate not been reduced? It was increased at the time of the bank rate increase by the British to meet their special circumstances. It was not increased to the same extent as the British bank rate; nevertheless it was increased but it has not been reduced to the point at which it was before the British increased their bank rate. In conditions where deposits have increased, where the sterling assets of the commercial banks have increased, where people have subscribed their money to the E.S.B. and the Government through the national loan, where the Prize Bond issues and the Exchequer borrowings sought by the Government have met with success, why is the bank rate not reduced? Is that not something that requires to be done in order to give some hope to the country and to business and industry?
We have nothing in this Budget to deal with agricultural policy or the problem of agricultural credit. We have nothing at all to give hope to the farmers that they will get out of their condition of perplexity or to give hope to their industry which, by the action of the Government, and particularly the action of the Minister for Agriculture in the last 12 months, has been reduced to the status of a depressed industry.
I should like, before I go into further suggestions about what ought to have been done, to deal with this question of the levies. I want to register, with all the force at my command and all the emphasis I can muster, my protest against this performance of switching the levies from the category of a temporary expedient to meet an economic crisis of a passing nature to one in which they will be permanent taxes and will become part of the tax structure of this State probably for all time. I want to emphasise that and make my protest as strongly as I can. I assert here, as I said when in office as Head of the Government, and as that Government said through their Minister for Finance, Deputy Sweetman, that these levies were temporary. We put them into a special account under the Central Fund Act, 1956, to be utilised only for capital purposes in order to emphasise that they were to be temporary.
When the then Minister for Finance told me that was the expedient, I approved of it. I felt it was important and vital that the public should realise that these levies, which were causing so much distress, unemployment, restriction of credit, restriction of grants and restriction of capacity to get capital, should be removed at the earliest possible time. I felt that strongly as a matter of principle. I still feel, and I assert, that it is a breach of faith with the people to take those levies, which were of a temporary character to meet an urgent temporary crisis afflicting the country, and make them part of the tax structure of the State permanently in order to enable the Minister to balance the Budget.
That is breaking faith with the people. It is certainly breaking my faith with the people. I do not think it proper for a Government that succeeds another Government to make it a party to breaking faith with the people in that way. I do not suppose it will affect me or my colleagues in our reputation or anything else. It was our intention to take these levies off as soon as we could. I watched them week after week and month after month, seeing if there was any possibility of taking them off because I knew the effect they were having on the people. I knew the effect they were having in creating unemployment and it was a source of suffering to all of us. I am not saying that dramatically or histrionically but merely as a fact.
My aim, the aim of all my colleagues, was to get these levies off as quickly as ever we could. We had difficulties in getting capital, of course, and it may be said that that was the reason we put them into that account. It was not. It was the fact that these levies were something different from taxation, and not revenue, that we put them into that special statutory account. I can realise what Deputies on the opposite side of the House would have said now if they were in these benches, in opposition, had we, as we might very well in our extreme difficulties at that time, taken these levies as revenue to tide us over the difficulties of that time. We would have been denounced throughout the length and breadth of the country with all the vituperative force at the command of people such as the Minister for Health and some of his back benchers, like Deputy Corry.
