No amount of skirting around issues and no amount of recapitulation of allegations of successes in the past will alter the fact that this is, plainly and simply, a bad Budget. No matter what effort is made to cloud the issues, the fact is inescapable that this Budget will have a direct impact on every section of the community and its heaviest impact will be on the section of the community least equipped to bear it.
I take it that the concept of a Budget is the indication of Government policy and that it is to act as the directive and the stimulant towards development, local and national. When considering this Budget, one has to analyse it in the light of a suggested pay pause to the worker, the catastrophic failure to get into the European Economic Community and present economic trends.
One has to ask oneself simply what contribution, other than the expression of pious and pietistic hopes, does this Budget make to the economy in a period when the Government are saying that we must have reorganisation and improvement of productive methods, a gearing and a stimulation of effort in industry if we are to meet free competition in a widening market. Can one find any answer that will be encouraging to the industrialists, that will stimulate agriculture? Despite Fianna Fáil thinking and, I am beginning to suspect, Civil Service thinking, agriculture still remains the basis on which any real expansion of production can be hoped for. We have to analyse this Budget in the light of the answers to these questions.
This Budget is typical of the inept, ageing Government, a Government bankrupt of new thinking. We can certainly say that the dead hand of Fianna Fáil is now stretched into every possible facet of economic life. If the Government had used this new taxation to alleviate substantially the lot of the people who need alleviation, and if in their approach to a breakdown of this iniquitous taxation, they had shown any forward thinking, then one could properly say that there was a new idea abroad, but what Fianna Fáil have achieved in this Budget is another milestone in their capacity to plunder the taxpayer.
This Budget may well be described, as it was described by Deputy Norton in an interjection, as a Dick Turpin Budget, a highwayman's budget, because in this piece of financial wizardry, the Minister is stretching his hand further and further into the wider field of economic endeavour. He is endeavouring to create a wide and far-flung voluntary type of tax collector. I did not expect that we would get anything startling or revolutionary from this Government, but in the light of the preaching about the necessity for expansion, the necessity for replacement and improvement of equipment, and the necessity for the worker having to face a time lag between the gearing up of production and getting a more remunerative reward for his labour, I thought we would get a forward thinking Budget. This Budget can be described only as a further atrophying of the economy and a further stultification of initiative.
The Government have the gross cheek to suggest to the worker that he should accept a pay pause in circumstances in which they are stretching out their hungry paw to grab more and more of the people's money and, as I hope to demonstrate before I finish, give less and less for it. I have always subscribed to the belief that the worker must inevitably, each time there is a direct impact on his cost of living, have recourse to a demand for a wage increase to compensate for it. There is no doubt—and no amount of shilly-shallying or loose thinking will alter the fact—that this Budget will have a direct and crippling impact on the cost of living of the worker, because no essential to human life is excluded from the Minister's hatchet this time. The Minister may try to suggest, in every way he likes, that he is not putting a tax on certain commodities, but the facts remain—and I hope they will be repeated not only in this House but everywhere people gather—that when this new turnover tax comes into operation, every item in the household budget will be hit. I am prepared to subscribe fully to the suggestion made by Deputy Norton that the impact on the worker, and on his wife buying small-priced commodities, will inevitably be in excess of the suggested 6d. in the £.
This Budget—the instrument which is meant to be the economic green light for the stimulation and encouragement of effort—starts off by saying to the worker: "We want you to accept a pay pause and, at the same time, accept a body blow to every home in the country." The more one considers the realities of the situation, the more one can find fault with the Budget. It is not only the new taxation, but also the direction of Government thinking that appals me. They have found a new and more ready manner of plundering the people. The Minister quite candidly boasted that it will be a most inexpensive tax to collect. That causes me to have the grave misgivings which I shall mention during the course of my speech.
This is only the start of a new pattern in which Fianna Fáil will preserve the full impact of the old taxes, and use the ever-increasing spiral of this tax to plunder more and more of the people's money. Quite candidly, I do not believe the Minister was as frank with the House as he might have been when dealing with the likely returns of this tax. I suggest to him—to put it no further—that he has given us a gross underestimation of what it will yield for four months. I can see him coming in here like a fairy godmother, having found the buoyancy of that taxation such that he will be able to plunder the people's money more and more and give less and less in real benefits to anyone.
This Budget cannot be described as anything but a retrograde Budget. The Chancellor of the Exchequer of our much criticised neighbour brought in a Budget which gave certain tax remissions and concessions to stimulate industry into greater effort, and which gave relief and very substantial help in areas where unemployment was developing and where there was a serious danger of depression spreading. What have we in this Budget to encourage anyone to greater effort or greater hope for the future? What have we in this Budget that will stimulate the effort which everyone seems to agree is necessary to modernise, expand and improve the production methods of our industry?
We are told by the Taoiseach that we have a further breathing space in which to overhaul our industry, to improve our methods and re-equip our industry. Can the Minister tell me in plain language what stimulus this Budget gives that effort, remembering that he is hitting them with what he euphemistically calls a "turnover tax" and, at the same time, condemning the worker, irrespective of the incidence of taxation on him, to some kind of wage restraint. Call it a "pay pause"—call it anything you like—it is merely another apparition of the spectre we saw here before, the spectre which played a mighty part before in putting Fianna Fáil out of office.
We are told we are to continue to gear ourselves for the wider market of the European Community. I remember when the Taoiseach came in here and, with assertive truculence, told us we were in and that, even if Britain did not get in, we would go it alone. I remember when some of us here sincerely and honestly questioned that, we were castigated as people who had not the national interest at heart. We were cool and deliberate enough to examine the background of the European Community, to analyse and assess Britain's position at the time of the Rome Treaty, to know a little bit about the continental temperament to realise that, in the light of the difficulties that arose at the initiation of the European Economic Community, there could be no question that the most stringent and rigid terms would apply to Britain's entry, terms so rigid that, as the rational thinking person appreciated, they would be unacceptable to both the group and Britain.
We are still being told it did not happen in 1962 and now the target is apparently 1970. We are getting, as the Minister for Health described it today, a breathing space in which to reorganise, to improve standards, to develop techniques and sales. To me, that is all so much hooev. We are refusing to face the realities. Our industry has not got the type of raw material intake that will enable it to become a competitor in a free market. The proposition is crystal-clear. If you have to import raw materials from a competitor country, process them here, and re-distribute them, how can you ever get yourself into the economic situation to compete with the manufacturer in the country of origin with the raw material at hand? I am getting absolutely sick and tired of spurious experts and economists who indulge in high-falutin language and esoteric statistics in order to keep away from the basic step of breaking down the cost of the raw material and the cost of production and then explaining how they hope that industry here can compete with industry in the countries of origin of the raw material our industry uses.
For too long have we refrained from considering industry here realistically in relation to our general economy. It is patently clear that the only successful industry here is industry based on the raw materials we ourselves have. It must inevitably be based on our agriculture. The so-called assembly industry is not real from the point of view of a free and competitive market. Too many industries here have been built behind protective tariff walls. I think it is now generally accepted that many of those who benefited behind the tariff wall may have succeeded in making money for themselves but have never succeeded in making any real contribution to our economy because they were never able to bring their industry to the level of efficiency and production which would constitute a real asset. With quantitative restrictions and protection, they were able to get away with a far from top-class article at a top-class price.
Rational thinkers appreciate now that it is virtually inevitable that in freer trading conditions, that type of industry must go to the wall. Fortunately for us, the employment content in such industry can be re-distributed with a reasonable effort. What I am anxious to see is industry developing on the raw materials available to us. With our forests now maturing, I want to see industry so geared here that the figures for immense quantities of imported timber and timber products that appear every year in the financial returns will be eliminated. I want to see the so-called industries which re-assemble goods here based in future on the raw materials to hand, improving their productive methods, improving quality, improving to the extent of making the cost of production competitive in the wider markets of the future. For some strange reason, while help can be got from the Government in quantitative restrictions or in tariff protection in relation to a mass of these assembly industries, no effort seems to be made to nurse along into a healthy condition the type of industry that can get its raw materials at home.
I have heard year after year the bleat about difficulties in relation to milk. When one surveys the economy of the world and looks at the shortage of milk and milk production in vast parts of the world, it is obvious that a processing industry in relation to dried milk and the by-products of milk, if it had been developed, would not only have found a big but a lucrative market in many parts of the world.
There are in this country very considerable by-products of our dairying industry. Milk, with certain chemical additives, could have become in powder form most readily saleable and valuable products for underdeveloped areas, for areas where there is a chronic shortage of milk and its by-products. However, all the emphasis has been on separating industry from agriculture instead of entwining the two as brothers in the economy. Undoubtedly, industry must always remain the smaller child of the economy because no matter how exports may twist reality, any break down of the export figures will show that it is agriculture that carries the real burden of our economy.
As I said in opening, the Budget is meant to be the instrument of economic thinking and on that basis this Budget is negative. What encouragement is there in this Budget for the person who wants to expand or develop his business? Not only is he running himself into the position of having to pay this iniquitous tax but of having to collect it and pay it over and he will not be able to write it off even as a deductible charge against the earning capacity of his business. To my mind, this is the very antithesis of stimulation but it is wider than that. This turnover tax goes into the fastnesses and farflung recesses of the retail trade and everybody from the huckster shop to the multiple store will face the impact.
One of the problems to be faced in the case of many of the smaller retail outlets is book-keeping. Any process other than the cash payment for goods and the general use of the till for the purposes of the living of the family and for the replenishment of stock does not exist. These people will be faced with the task of trying to collect a tax they do not understand and to do it by non-existent methods of assessing the turnover.
It goes further than that. It shows a new trend of thought, a new method of grinding. I listened on former occasions to the previous Taoiseach telling us that we had reached saturation point in regard to taxation. I heard the present Taoiseach assert that the burden of taxation had reached its zenith. When they get themselves into that cleft stick, the Government impose a turnover tax and suggest it is not taxation at all, even though it is an imposition not only on essential goods and other types of goods but also on services.
It must be remembered that this idea adopted by the Government was based on the recommendation of the Income Taxation Commission, but that Commission recommended the alleviation of certain iniquitous types of tax, as they considered them, by putting on a purchase tax on a wide range of goods other than the essentials. But no; the backroom boys got to work. They felt this was a good idea, but, they said: "Let us go further. Let us make it all embracing. Let it cover everything."
What administrative difficulties would have arisen from excluding essential goods from this tax? I do not believe any would have existed. I do not believe the Minister would have had any shortfall in his estimation of revenue, if he had excluded the essential items of living: tea, bread, butter, sugar, milk and fuel, from this iniquitous turnover tax.
I hear talk about increases in social welfare benefits. I have never, since the day I entered this House, ceased to press on all Governments that this section of the community, above all other sections, the old age pensioner, the widow, the orphan, the unemployed, are the people to whom the State must give as much as possible as quickly as possible. The current rate of payment to any of these people in the circumstances of the present cost of living is unreal. I would not have cavilled if the Minister had brought in this type of purchase tax that gave him considerably more revenue and imposed it immediately, if it were to mean greater benefits for the social welfare classes.
I feel that the Minister, instead of postponing his taxation to next November, could have been infinitely more honest with the people of Ireland. He could have carried out the principle embodied in the tax suggested by the Income Tax Commission. He could have excluded essential goods from the range of impost. He could even have an increased rate of tax, commencing immediately, on the other wide range of goods that may be described as luxury or semi-luxury in type.
The 2/6d.—delayed until the beginning of the year—and the increase in children's allowances will in no way offset the simple impact in the home on the cost of the essentials—tea, bread, butter, sugar and milk. It is certainly a ridiculous optimism to expect the worker who has to meet these charges to sit down and not to seek some way of compensating himself for that loss.
I approach this Budget completely impersonally and dispassionately on its merits. I say quite openly to the Minister that I am not the type of person who gets scared by increasing national debt or by glib talk of balance of payments. I feel that whatever our national debt may rise to, there have been substantial developments under all Governments in this State that have improved our national assets to the extent that while we may keep our eye on the rising figure of national debt we cannot rush into any sense of panic over it.
It is a fact that a dead hand, woolly thinking and lack of cohesion and progress underline this Budget. That appals me. There is no doubt but that in the modern type of democracy there is a growing tendency for more and more State direction and more and more State help and more and more State investment in the development of our economy. However, one wants to see that type of effort directed towards an ever-increasing build-up of progress.
I feel quite sincerely that this is a most retrograde Budget. I never have subscribed and I never shall subscribe to the belief that Fianna Fáil did not do in the course of their administration a lot of worthwhile things in this country no more than I shall fail to praise the Cumann na nGaedheal Government for their initiative in sugar factories and electricity. Can we fail to give credit for very large projects that have had a favourable employment and economic impact on our general economy which were initiated and ultimately brought to fruition under Fianna Fáil Government? However, it is in the light of exhortation to improvement, the light of exhortation to everybody to try to get that little bit of extra know how, to try to make that little bit of extra effort, that one has to judge the present Budget.
What encouragement is in this Budget for the person who may be prepared to give fully and generously of the effort asked? In what way will this arouse enthusiasm for expansion in employment, for the widening of marketing, or for the deepening of research—and that is taking the philosophy behind the Budget without, as I shall have to cover, its direct deterrent effects on many aspects of our national life?
No amount of talk, no amount of economic claptrap, no amount of statistical codology will alter the fact that it is now established that the cream of our young people have left this country in their hundreds of thousands in the past 10 years. Possibly I am naive in my economic thinking when I consider that the loss of young Irish boys and girls in their late teens and early 20's is an irreplaceable facet in economic development, if we have to have it.
It does seem amazing that these young people leaving this country can readily find themselves in the finest of industrial employment and in a very short period of time find themselves among the very highly paid, efficient, skilled operatives of industry in Britain. It does seem amazing that, with all the vast amounts of money that have been spent, with all the vast conglomeration of organisations that were meant to be stimulating to the development of industry, we have not been able to keep these people at home or to find the type of employment at home in industry that would encourage them to stay.
Sometimes I laugh heartily when I hear boasts about efforts to get markets for Irish goods in some far-flung part of the world. I realise, and everybody is beginning to realise, that there never has been proper market research in the immediate vicinity of our shores in relation to agricultural produce. There never has been a proper expansion in that industry to take up the lacuna in British agricultural imports. I often wondered why, with all this alleged progressive thinking, money has not been spent and research carried out in relation to many of the by-products of agriculture causing difficulty in our economy.
We have farmers pressing for an increase in the price of milk. We have the problem of a surplus of butter and, apparently, an inability to dispose of it. Anybody who analyses the costings cannot gainsay the fact that the farmer is entitled to a better price for his milk at the creamery. I am convinced that if any real effort had been made over the past 10 or 15 years—I am not putting the blame entirely on the present Government—a ready outlet could have been found for either fresh milk, powdered milk or cream to offset the subsidy we have to pay to get Britain to eat our butter.
It appals me that we do not see in this economic instrument any realistic approach to ensuring increased production in agriculture in an expanding market, where the farmer is assured of a reasonable profit return for his labour on the land. I can assure the Minister—and I do not think anybody will disagree with me—that if the Irish farmer has a reasonable profit incentive, a reasonable scope for markets and the assurance that his produce, properly processed, would be readily saleable, that is the only stimulus he would want to give you, as he has always done in the past, the increased production to bridge the gap.
This is an unpleasant Budget. It is iniquitous because of the method it uses to collect its revenue and because it creates more and more voluntary unpaid tax collectors. It is iniquitous in so far as anybody buying the necessities of life cannot escape its impact. Furthermore, the iniquity goes to the extent that the impact will be felt by the various institutions ministering to the sick and less fortunate brethren in the community because of the increased cost that will have to be borne by these institutions. I want to urge on the Minister to take another look at the picture and use his right of exemption to ameliorate the impact on those institutions.
The impact of rates is already alarming. This turnover tax in relation to all these institutions is nothing less than a further direct impact on the rates. The money to pay the increased cost of food, fuel and other essentials will have to be found somewhere. The only place the local authorities can find it is in the pockets of the ratepayers. Outside the cut and thrust of politics, I feel the Minister should have another look at the impact of this turnover tax on these institutions. I feel his natural inclination would be to preserve that section of the community from this impact.
I was amused on the evening after the Budget by the incredible stupidity of the Irish journalists reflected in the flamboyant inaccuracies and stupid streamer headlines of the national press. They announced in glaring headlines that A, B and C had escaped. It was incredible that people who hitherto had shown such a critical analysis of all the Government's financial efforts should be misled by the easy way in which the Minister makes his Financial Statement into missing the import of this turnover tax. If the caption had been "Nobody Escapes", it would have been more realistic because that is the reaction of the people to the Budget. The farflung tentacles of the octopus of Finance have stretched into every nook and cranny to find heretofore undiscovered gold. I wonder has the Minister, or have his advisers, considered the immediate reaction that took place in relation to large deposits all over the country? Is the Minister aware of the withdrawals of deposits that have been set off by this Budget?
