In matters relating to finance certain standards are requisite if the Budget is to mean anything for Parliament and the people. Speaking on the Budget at Volume 167, column 599, on the 23rd April, 1958 the Minister for Finance stated:—
"As Deputies are aware, there was a deficit on current account last year of £5.88 million. Table I of the Tables in connection with the Financial Statement compares the outturn with the budget estimates."
He then goes on to explain that outturn. If these are the true criteria by which a Budget is to be judged, and it was the present Minister for Finance who laid them down 12 months ago, the outturn of the past year presents a very different picture from that presented by the same Minister to the Dáil yesterday. He has taken credit this year for a yield from levies of £1.78 millions and a yield of levies converted into duties as explained in volume 167, column 19, for the 31st March, amounting to £.69 million and again in April, 1958 of a further £.6 millions giving a total sum of £3,080,000.
He has had recourse to a procedure described by his colleague, the Minister for Health, as robbing the till. It is true that on the carry forward of the previous year he drew to the tune of £323,000. He has taken credit on his current receipts for the nonrecurring settlement of moneys due by a foreign Government in respect of one transaction of approximately £500,000. These sums taken together represent £3,903,000. He has elected to borrow for subhead O4 in Vote 50 and subhead Q1 in Vote 50, both of which were financed from current revenue in the past and that represents a sum of £650,000. These various devices amount to £4,553,000 and if from that you subtract the alleged surplus which the Minister claims for last year, £159,000, judged by the criteria laid down by the Minister last year there was in fact a deficit of £4,394,000.
I think it is a matter of considerable consequence that at some stage of our history we should accept some standards by which annual expenditure would be correctly judged. I want to query specifically the permissibility of appropriating to our annual revenue for Supply Services purposes the sum of from £400,000 to £500,000 received in respect of the inter-Governmental debt which is included in certain miscellaneous items in the table of receipts. That is clearly a nonrecurrent item. It is clearly related to outlay which took place in the distant past.
What I think is immensely important, over and above the actual charge that may be brought to bear on these several subheads from year to year, is that if the Minister does choose to make changes involving £4½ million by the process of switching of this character he should direct the attention of Dáil Éireann to it and not calmly announce that in respect of one year he has a surplus of £159,000 simply by a variation of a practice which, if it had not been made, would have resulted in a deficit of £4,394,000. I think it reasonable to direct the attention of the House to this interesting fact—that if the criteria which commended themselves to the Minister this year had been applied by him to the out-turn of the Budget based on the Estimates prepared by Deputy Sweetman in 1956 instead of a deficit in that year of £5.9 million, as reported by the Minister for Finance to this House there would have been a deficit of approximately £1.3 million and that in a year where provision had to be made for all the consequences of the Suez dispute. That relates to procedure. That relates to the reliance we can place upon the Minister's reading of his own accounts. I deplore that type of procedure.
A further point arises in this connection which causes me grave concern. The Minister went to some trouble last year to explain at Col. 610 of the Official Report that he could not feel justified in suggesting to the Dáil that an allowance of more than £1½ million should be made for the net estimate for over-estimation. This year for no reason that I have been able to understand he announces that he proposes to assume an over-estimation of £2½ million and that in a financial year when we have been informed that Córas Iompair Éireann are going to receive £1½ million and no more. Our past experience of Corás Iompair Éireann gives us very little ground for hope that £1½ million will meets its requirements and, as the House well knows, if they arrive on our doorstep in October, November or December and announce they must have more money or close down the railway line we will have to provide the money notwithstanding the fact that we are told that over-estimation may be legitimately increased this year by £1 million.
But that is not my main source of anxiety regarding this Budget. While I agree with the Minister that he was right to reduce income tax, he will recall that on the Vote on Account I pointed out to him that if he wanted to give the economy of this country an effective stimulus, probably the best method he could apply would be a reduction in income tax—an inducement to our employers and producers to expand their activities with some prospect of obtaining a fair share of the profit they earn.
Is this House forgetting that in the Budget where we are now reducing income tax, relieving sur-tax, removing the tax from professional boxing, greyhound racing and dancing there is included £9 million of a tax upon bread, flour and butter that was put on two years ago and which is still being carried by all the people who eat bread, bake flour and use butter?
There has been a dramatic change in the approach of this Parliament to the whole problem of taxation if with a light heart we tax bread, flour and butter in order to remove the tax from greyhound racing, professional boxing and cinemas. I think that is something we ought to think of. It is something in respect of which we ought to examine our conscience because I see the impact of these taxes all round me every day in circumstances which I hope shortly to describe to the House.
I live in a part of Ireland where most of the farmers are smallholders who employ no labour but I go out amongst a relatively comfortable, proud, self-sustaining and self-respecting community. They had not a very high standard of living but they were comfortable. It was often a source of amazement and admiration to us all how the diligent amongst them reared their families and made priests, doctors and lawyers of their children. We all knew that part of that, perhaps, was provided by the remittances of an emigrant amongst the family but the bulk of it was provided by the hard work of the farmer-occupier-owner and by the parsimonious economy exercised by a good wife.
Those people in the past two years have been required to pay 25/- per ten stone bag on their flour. They have had 7d. per lb. put on the butter they use. If they use bakers' bread they have to pay 4d. more a loaf for it. They have been informed that they are to get less for their milk when they take it to the creamery. They have been informed that the basic price for their pigs has been reduced. Those of them who grew barley and wheat as a cash crop have been told that they must take less for them.
There is developing in that part of the country, and in many similar parts of the country, a phenomenon never seen before in my lifetime, that is, families closing the door, putting a lock on it, leaving for England and abandoning their farm. I want to warn the House that we are getting to a point, in the west of Ireland, in the south-west and in the north-west, in which the people are going to move out en masse. We have all forgotten them. When we pile on the burden on the cost of living, we can do something to meet the difficulty of the trade union member by agreeing to a national wage increase; we can do something, albeit it is inadequate, for the pensioner or the old age pensioner; we can do something by a reduction in income tax and super tax for the white collar worker and by the increase in wages he has received; we can do something for the civil servant by increasing his remuneration, to meet at least in part the increase in the cost of living. We have all forgotten that nothing has been done, and it appears nothing can be done, to meet the position of the small farmer—except to tell him that what he has to dispose of must be sold for less.
I view that with great dismay, because I believe it will destroy in this country a very valuable element in our social community. It is particularly irritating to me because it is accompanied by a continual campaign, largely conducted by the Minister for Lands, to the effect that we have experienced over the last ten years a decade of stagnation. That is simply not true. What astonishes me is the effort, and the result of the effort, which has been made by the farmers. I think the figures will show, when I come to refer to them, that there has been an element of stagnation in our industrial development, but that has been due largely to the Fianna Fáil policy of high tariffs and to the Control of Manufactures Act, the latter of which has now been in substance abandoned.
On the agricultural front, extraordinary efforts have been made by the farmers. If they had not been made, our situation to-day would be very different from what it is. If in the last 10 years the exertions of our farmers had not doubled the volume and trebled the value of our exports, where would the balance of payments be at the present time? But for that remarkable achievement, how would we have met the £200,000,000 worth of imports which were received in this country in the past 12 months?
That is not all that has been achieved from the land of Ireland. We have to-day, on the land of Ireland, a record number of cattle and a record number of sheep, having faced a situation 10 years ago when we had the lowest number of cattle and the lowest number of sheep ever seen on the land before. We had a steadily increasing pig population, until that trend was reversed by the decision to cut the minimum price for grade A pigs, taken by the Minister for Agriculture. In addition to those factors, we have one million acres of land rehabilitated over the past 10 years, much of which was rehabilitated as a result of subventions provided by the Government, but all of which involved a very substantial contribution by the farmers themselves. We have in this country a new crop, which has met practically all our entire requirements for coarse grain for livestock feeding, which did not exist in this country 10 years ago. I refer to feeding barley.
In the Seanad, when the discussion was taking place on the Central Fund Bill, covering the Vote on Account, Senator O'Brien intervened to say a word on the viability of our economy. Senator O'Brien is a great authority on the national economy of this country and his words deserve to be listened to with respect. As reported in Vol. 50 Col. 1590, he quoted from the grey book Economic Development, where it said:—
"It is apparent that we have come to a critical and decisive point in our economic affairs. The policies hitherto followed though given a fair trial, have not resulted in a viable economy. We have power, transport facilities, public services, houses, hospitals and a general 'infrastructure' on a scale which is reasonable by western European standards, yet large-scale emigration and unemployment still persist. The population is falling, the national income rising more slowly than in the rest of Europe. A great and sustained effort to increase production, employment and living standards is necessary to avert economic decadence."
Senator O'Brien commented on that paragraph by saying:—
"That is a very strong passage. There is one word in that passage with which, with respect to the author, I disagree—the word ‘viable'. I think every economic system in which people are not actually faced with starvation, death from lack of food, is viable. The question is: At what level is it viable? A country may have to reduce its standard of living in the same way as a family may have to do so. If a family has to move from a big house to a smaller house, it is still viable. It has a lower standard of living but it is not dying of starvation.
This country, on the eve of the Famine, was not perhaps viable to the extent it is to-day. I take it that what the author meant as not ‘viable' is that it is not as progressive as some European countries. I should prefer the word ‘progressive'. However, that may merely be a matter of definition."
I agree with Senator O'Brien there, but I agree to some degree with the comment of the author of the grey book. In our circumstances—certainly in the surroundings where I live in the west of Ireland—the question has arisen: "Is the economy of the people who live there viable in the sense that it is acceptable to the people who live there?" I am afraid it is ceasing to be so, and ceasing to be so very largely as a result of the cumulative imposts which we are putting upon them, because they have just simply been forgotten. We think of everybody else, but we forget them; and so, there is emerging a pattern there where the economy is scarcely viable, where people cannot live at a standard at all acceptable in the context of the present times, on what is available there on a ten to 30 acre farm in the west of Ireland. If that continues, adjustments fall to be made which I think would represent a great catastrophe for this country.
If I ask myself where are we to look for the source of that threat to the viability of the economy, as we knew it, I think it is to be found very largely in a circumstance referred to by the Minister for Finance in concluding the discussion on the Central Fund Bill in the Seanad. He quoted what Senator O'Donovan had said and accepted the undeniable fact that between 1951 and 1954 Deputy MacEntee, who was Minister for Finance for that period, was responsible for an increase of £40,000,000 in the Government expenditure of this country—£40,000,000 per annum. It is from that departure, that increased burden, that I believe the evil with which we are contending at the present time largely derives.
If I saw any evidence on the part of the Minister to correct that trend, I would have some reason for hope, but, in that situation, and at a time when we have decided for the purpose of stimulating the economy to provide taxation concessions out of a deficit— which is what is being done in this Budget and I am not at all sure that is not the right thing to do in the circumstances we are in—if that is not backed up by a firm intention to bring the Budget into balance then I think we are setting our feet on a slippery slope which could lead us to final disaster.
I am caused concern in that regard when I realise in our existing circumstances, balanced as we are on a very narrow edge, we have announced our intention to spend £6,000,000 on the provision of jet aircraft and the spare parts required to service them and we are resolved, apparently, to embark upon a scheme to spend £9,000,000 in building a factory to produce a nitrogenous fertiliser unsuitable for our agricultural requirements, and which will put a burden of at least 5/- a cwt. on the cost of nitrogenous fertiliser for any quantity of it that may be sold in our community.
In addition to that, we are going on with the building of power stations by the E.S.B. at a time when the situation is described in the book Economic Development at paragraph 4, on page 182, in the following terms:
In recent years the provision of generating capacity has run ahead of the country's requirements, and the E.S.B. has surplus capacity, over and above a reasonable reserve for contingencies, which would enable it to supply current of 400-500 million units a year in excess of the present demand of about 1,775 million units. This alone would suffice for almost four years of growth of demand at last year's rate. The period of excess capacity will be prolonged by the completion of new generating stations now under construction. The heavy excess investment in plant adds to fixed charges and represents a deadweight burden on the E.S.B.
That fact notwithstanding, the plans outlined in the White Paper for Economic Development contain a very substantial sum for future additions to the power stations of this country, set out in Appendix II to the Programme for Economic Expansion at £31.82 million over the next five years. That kind of programme seems to me to represent a very poor realisation of the real situation with which we are confronted.
When I look at Table 12 in the Economic Statistics circulated with this Budget statement, I think of two things: one, the matter to which I have referred in agriculture and I direct the attention of the House to the first statistic in Table 12, the estimated total labour force and number of persons at work in agriculture, forestry and fishing. Their numbers have fallen from 496,000 in 1951 to 429,000 to-day, and then I think of the Taoiseach's announcement that the prime purpose of this Government was to get the people back to work, and I think of the poster "Women of Ireland, vote Fianna Fáil and get jobs for your husbands".
There are 50,000 fewer people at work to-day in this country than there were in 1954. In 1954, there were 1,185,000 persons at work and to-day there are 1,131,000 persons at work. There were 10,000 fewer people at work in 1958 than there were in 1957; there were 32,000 fewer people at work in 1958 than there were in 1956, and 50,000 fewer people at work in 1958 than there were in 1954.
In that connection, I should like to refer to the Third Report of the Capital Investment Advisory Committee, page 10, paragraph 27, which states:
The rate of growth in real output and income has been lower here than in Britain and in other West European countries. Real expenditure has risen at a faster rate than real output: this was made possible by a succession of deficits in the current balance of payments. In so far as the causes of emigration are economic, balance of payments deficits have in this sense kept the rate of emigration at a level lower than it would otherwise have been.
I rejoice in a surplus on our balance of payments of £9,000,000 or a surplus of £1,000,000 in the ensuing year, but when it has been purchased at the expense of 50,000 people emigrating, I wonder on which side of the account is the true, favourable balance to be found. When I look at the Appendix to Table I regarding the balance of payments I recall that there was a deficit of £5.5 million in 1954, £35 million in 1955 and which fell to £14 million in 1956; but there were 50,000 more people profitably employed in Ireland in those days than there are to-day. Then we swopped close on 40,000 people for a favourable balance of £9.2 million in 1957. We swopped a further 10,000 people for a favourable balance of £1 million in 1958. But when we come to look at this favourable balance, for which 10,000 emigrants were paid, we find it consists in part of other capital transactions amounting to £17.7 million.
I should like the Minister to tell me when concluding on this debate, with reference to Table 1 in the Appendix in Economic Statistics, is he in a position to give us any information of what that £17.7 million is. It is one of these balancing figures which has been quoted as evidence of a variety of things, but I have never heard anybody tell me with any degree of precision what exactly it involves. The confusion is made worse confounded by the fact that in this part of the Appendix plus signs mean minus and minus signs mean plus. But it would be valuable to the House to get some information as to what that £17.7 million consists of or at least to be told, if it is true, that nobody knows. I suspect that is the explanation.
I look at Table 9 in Economic Statistics and I find that savings had declined in 1958 from £60,000,000 in 1957 to £45,000,000 in 1958. I look at the cost of living figure in table 10 and I see it has risen from 107 in 1956 to 111 in 1957 and to 116 in 1958. I think I am correct in saying that it has risen further since that statistic was made available.
I should like to remind the House, in connection with the suggestion that we have been passing through a period of stagnation, that in fact, if you take the figures for agriculture, the increase in the total output in that industry over the last ten years has been no less than 29.5 per cent. which represents an annual increase of approximately 3 per cent. This is not sensational but, sustained over such a period, is very hopeful. It has been gravely interrupted in the last year, but that was largely due, I believe, to the weather and conditions associated with the cereal crop which the Government could do nothing to remedy.
I have no doubt that we are in the presence in this Budget of the realisation of a dream that was first born in 1951. I think the plan in 1951 was that there was to be built up a substantial surplus by the Budgets of 1952 and 1953 and that there was then to be a general hand-out in the subsequent Budget for the General Election. That programme was disrupted by two events. One was the enormous increase in expenditure which the pressure of various vested interests forced upon the Minister for Finance consequent on the immense increase in the cost of living occasioned by his Budget of 1954 and the other was the unexpected General Election.
This time I think a more astute practitioner is in charge of the Department of Finance. He had his Budgets of 1957 and 1958 and now, in good time for the Referendum, the hand-out is being arranged. I think he hoped that, having collected £9 million from flour, bread and butter, he ought by this stage to have accumulated a true surplus which he would be in a position to distribute. But he has been caught without the surplus by the situation which developed in Great Britain where the British Chancellor of the Exchequer has distributed a true surplus of £250 million. That has made incumbent on our Minister for Finance —and I think he was perfectly right to face that responsibility—to make a reduction in income tax. This is good as a stimulus to our own economy but essential in order to maintain the differential in the rate of income tax obtaining in this country and that obtaining in Great Britain.
Prior to the Budget in Great Britain and the Budget here, the Grey Book pointed out, at page 23, that for a married man with two children over 11 and not over 16, the Irish rate of income tax and sur-tax resulted in higher taxation on earned income in the whole range from £2,000 to £10,000 per annum than in Great Britain, the United States, Canada and Australia. The Minister was obliged to face that and I think he was right to face it and remedy it by the steps he took. If circumstances had allowed it would have been a salutary thing to do even more than he has done; but I am prepared to concede that in a situation where these reliefs had to be provided from a deficit, he has probably gone as far as could be allowed under the circumstances.
But this year, unlike his Fianna Fáil predecessor, I think he is determined on the hand-out in good time for the equivalent of the General Election which is overhanging him. Mark you, I expect no better from Fianna Fáil. But it is not a pretty picture, after all the protestations of financial rectitude we have heard from the present Minister and his predecessor, to see them under the shadow of a referendum— which they now believe they are going to lose—first throwing the person of their own Leader, the Taoiseach, into the scales, and then, having come to the conclusion that even that gesture was not sufficient, that these concessions should be further furnished out of a deficit which they are ashamed to avow in order to purchase votes in the coming Referendum.
I do not believe they will succeed but I do believe that it puts us in the situation I have sought to outline. Remembering where this country stands at the present time, with its population moving out, with the number of persons employed steadily decreasing, with the dangerous migration from the most vulnerable part of the land where our people get their living, we ought to ask ourselves what is it our economy really wants if it is to experience a sustained and general revival and if it is to avoid the menace of economic decadence, referred to in the grey book on economic development? There is a great deal of talk suggesting that what we want is increased agricultural production. That is true, but it is not the whole truth. There is not the slightest use in generating increased agricultural production if we have no place wherein to sell it.
Mark you, I am surprised that the Government do not appear to be concerned to take any measures to that end, beyond providing £250,000 for market research, about which we have heard nothing although the money was provided two years ago. I am told that certain interim reports have been furnished to the Minister for Agriculture, but he says that he is not yet prepared to let anybody see them. I should like to recall that in 1948 the predecessors of this Government, as one of their first activities, went to Great Britain in order to secure a market for an unlimited expansion of agricultural output here, and we are still enjoying in certain phases of agricultural output the full benefit of the agreement then made. Surely the time is ripe for the Government to ask themselves the question what do they propose to do now to provide a market wherein increased production can be disposed of?
We have reached the point in regard to wheat that the more that is produced the less the farmer will get for it. There is an automatic price scale operating designed to achieve that end. What is the future of increased agricultural output then for those who produce it? Have they any guarantee they will be able to sell it? I do not want to under-estimate the magnitude of the problem. All I am asking is what are the Government doing to try to find outlets for increased production? Are we turning our eyes to Europe and making up our minds that our best interests lie in membership of the Common Market? Or are we convinced that our economic association with Great Britain is so close that our object should be to negotiate with that country for a better trade relation in the future involving, in some degree, the integration of our two economies?
I have no doubt whatever that the best interests of the agricultural community will be served by a comprehensive agreement giving us the widest possible access to the British market on terms acceptable to them and to us; and I do not believe it is impossible to secure that if efforts are made to set about it now. But I do want to urge upon the Government that we are reaching a point when any further increase in agricultural output will be materially hindered if the existing doubts as to the possibility of marketing the produce of that increased production are allowed to grow.
I hear year after year—against this, I want to protest emphatically— lamentations from the Minister for Finance, from the Minister for Agriculture and from the Minister for Lands about the terrible subsidies that have to be paid on the export of agricultural produce. Nobody refers, when talking about subsidies on exports of agricultural produce, to the immense subsidies that the farmers are paying to industrial enterprises in this country. If you want to buy a cup and saucer, if you want to buy an aluminium pot, if you want to buy a pair of boots, if you want to buy a suit of clothes, if you want to buy a pair of socks, if you want to buy a fork, or a spade, or an agricultural machine—if you want to buy any industrial commodity—in every case the farmer is paying on that the supplementary price generated by the protective tariff or quota under which the manufacturer is manufacturing here. But there is no talk about that at all because that is something that cannot be measured. The money to furnish that subsidy never comes into the Exchequer and never has to issue out from the Exchequer; it does have to issue out, however, from the pocket of the farmer who has to pay it.
I do not know how the entire marketing problem will be resolved and, God knows, I lived long enough with it when I was myself Minister for Agriculture. I look back with satisfaction on the fact that I believe I did solve it in respect of bacon and did provide the machinery whereunder we have been able to expand our exports of bacon far beyond that which anyone anticipated was possible a very few years ago. But further activity requires to be undertaken now in that sphere, and in many other spheres, and it is essential that, if new departures in horticultural development, or other branches of agriculture, are to be inaugurated, they should be preceded by effective work to ensure that, if and when they reach the stage of production, their output will be saleable at prices which will provide those who produce the output with a reasonable, albeit modest, standard of living.
I venture to say—I do not think it is any serious over-simplification of the problem—that if markets are provided our people will produce. I recall with pride to the House the fact that they demonstrated both their capacity and their ability to do that in regard to eggs. I admit freely that developments in Great Britain resulted in the gravest possible disappointment to our people because the British subsidy policy created a surplus of eggs in Great Britain and that surplus destroyed our market there. But the moment the market was provided the extent to which our people were prepared to improve stocks and increase egg production in order to avail of the market to the very limit of its capacity to absorb eggs was even more than dramatic.
I believe our people are prepared to respond in the same way in every other branch of agriculture where a reasonably secure market is provided for them. I am bound to say, however, that if our people are to be facilitated in doing all that they can do, the advisory services at present available must be extensively developed and improved. But the essential thing is to secure markets where the produce can be satisfactorily disposed of and, if that involves a national marketing organisation, I would not hesitate to embark upon it.
I confess freely that I may have made a mistake when I was Minister for Agriculture in depending too long and too heavily on the hope that the marketing of agricultural produce would be undertaken effectively by the co-operative organisation. I am sorry to say it was not. I urged the co-operative organisation to undertake the marketing of grain. I urged them to undertake the marketing of a variety of other products but, with the exception of apples, I could never get them to make any vigorous endeavour, and it was only under very great pressure in the case of apples that I persuaded them to function. If co-operative marketing, therefore, does not do the job I think we ought to face the fact that there is a lesson for us to be learned from Denmark. There, I understand, the position is that if the farmers are prepared to market their produce co-operatively, every facility and help is given to them, but there is no monopoly. If some private entrepreneur comes along and says he is prepared to do it better and more efficiently and give the producer a better return, he is allowed to compete. I think the time has come when we should face the possibility of that here.
I would add a third point. If neither private enterprise nor a co-operative society finds itself able to undertake the marketing of our produce, I would not hesitate to establish a national marketing organisation, but I am bound to say that I have no reason whatever to believe that in the majority of cases, such a national organisation would equal in efficiency the enterprise of private enterprise or of a well-run co-operative effort. But I do not doubt—and experience has taught me this—that whether there be co-operation or private enterprise, the one requires the spur of competition from the other.
Probably the best system would be one in which co-operative and private enterprise would act as a spur upon each other in that field, having in reserve the firm resolve that if neither were prepared to provide the marketing facilities requisite for stability and security of the market for our producers, the Government itself would enter the field and, ad interim, I think the Government again might learn a lesson from Denmark which in the presence of co-operative and private enterprise marketing methods in the British market provide a certain degree of Government assistance by the maintenance of a sales promotion organisation which, though it does not do the marketing itself, takes steps to encourage dealers in Britain to handle the bigger facilities and the marketing organisation to give special terms to merchants who will take 90 per cent. of their total requirements in the form of Danish bacon. They maintain in England a staff on which merchants with any complaint or inquiry can call with the certainty of getting immediate attention.
Side by side with that, I believe we require increased industrial production. That seems a simple platitudinous sort of thing to say but industrial employment—that is what matters most—is going down. That is the figure that matters, the number of people working in industry, and it is going down steadily.
