Dáil Éireann debate -
Tuesday, 9 Jul 1963

Vol. 204 No. 4

Committee on Finance. - Finance Bill, 1963—Money Resolution.

Minister for Finance (Dr. Ryan)

I move:

That for the purpose of any Act of the present session to charge and impose certain duties of customs and inland revenue (including excise) to amend the law relating to customs and inland revenue (including excise) and to make further provisions in connection with finance, it is expedient to authorise as follows:—

(a) to redeem borrowings, and interest thereon, in respect of capital services, there shall be charged annually on the Central Fund or the growing produce thereof a sum of £1,309,854 in the twenty-nine successive financial years and a sum of £1,431,786 in the thirty successive financial years commencing in each case with the financial year ending on the 31st day of March, 1964;

(b) relief may be given by way of repayment, or otherwise, in relation to any section of the said Act which provides for the granting of exemption from income tax and corporation profits tax in respect of profits from any lottery to which a licence under Part IV of the Gaming and Lotteries Act, 1956 applies; and

(c) the making to the Road Fund out of moneys provided by the Oireachtas of grants not exceeding in the aggregate nine hundred thousand pounds during the period of five years beginning on the 1st day of April, 1961.

Mr. Sweetman

The necessity for this Money Resolution in its enormity is an indictment of the Minister for Finance. The reason he must look for the additional taxes included in this Bill arises in the main from the policies of the Government which have failed completely to provide that buoyancy of revenue which should normally arise from the implementation of a proper economic policy.

In terms of money, the Minister now requires for expenditure on Government services in the current year some £63 million more than he required in the year in which he first took office. The fact that he does so require it could be justified only if he had succeeded in that period in expanding the economy to such a degree that the expansion was providing, with buoyancy of revenue, the funds necessary to meet increased expenditure. The fact is that he has not succeeded and his policies have been so misdirected and misguided, that instead of buoyancy to meet the increased expenditure that comes naturally in the course of payments such as increased charges on capital moneys expended, and so forth, he has to come to the House for the purpose of imposing additional taxation and imposing it in a way and in a manner that will not improve our economic stature, that will not improve economic growth, but, on the contrary, will retard it.

At a later stage on this Bill we shall have an opportunity of considering the individual taxes he has suggested and suggests now for the first time, but over and above that consideration, it is as well that everyone in this House and in the country should realise that the reason for this Money Resolution being of the size brought in today and the reason for these increased taxes is that the Minister for Finance has failed miserably in his policy, has failed to generate adequate economic activity so that with such generation there would be the normal buoyancy of revenue. It is as a direct consequence, and solely as a direct consequence, of the policy he has implemented in the past six years that we find ourselves today with protests such as we witnessed here last week and such as have not been witnessed since this State was founded, that we find the country in a maze of turmoil, that we find on everybody's lips the fact that this Government cannot last, that no Government existing precariously on a majority of one —and such a one at that—can possibly create for our people the confidence necessary for economic progress.

As I say, we shall have the opportunity of considering the individual taxes as we go through the various sections of the Finance Bill but the fundamental fact is that a bill of this size is necessary because the Minister has failed to provide in the past six years an economic policy that, with its buoyancy, would provide the funds for necessary Government expenditure without the additions which he proposes today.

Mr. Dillon

I want to add a word to what Deputy Sweetman has said, with special reference to two aspects of it. This provision is made for the redemption of borrowings, and interest thereon, in respect of capital services which are to be charged annually on the Central Fund or the growing produce thereof.

This is an annual adjustment of the redemption and interest provisions in respect of borrowing for capital items of a supply character but I want to direct the attention of the House to two things. During our period of office from 1948 to 1951, we established a system, in the face of violent opposition by the present Government, who were then in Opposition, whereby certain charges in respect of housing would be met by annual borrowings to be treated as supply services suitable for capital treatment. Our capital programme thereupon made very abundant provision for the housing of our people and involved a substantial annual charge on the Supply Services Estimates for the redemption of borrowings and the interest charges there-on. The present Minister for Transport and Power described these payments as slush money.

I want to direct the attention of the House to the fact—and it is a very grievous fact—that since Fianna Fáil came to office in 1957, the provision for housing, especially in the city of Dublin, has steadily dwindled, with the result that we are today face to face with the deplorable situation in which houses have actually collapsed in the city of Dublin, occasioning the death of citizens of this city because they were living in condemned houses from which there was no refuge. There were no houses available in which to put the people. I want to compare that with the situation obtaining in 1957 when under our capital programme we created a situation in the city of Dublin in which it was stated that we had too many houses and that there were vacant houses with no tenants to go into them.

Mr. Booth

Because they had emigrated.

Mr. Dillon

Since that day 300,000 young people, between the ages of 18 and 30, have emigrated from this country.

Mr. Booth

Oh, no. Not since then.

Mr. Sweetman

Ten per cent of our population.

Mr. Dillon

There are today more Irish emigrants in the city of London than there are Irish people living in the entire province of Connacht. That is the position in 1963 after six or seven years of Fianna Fáil Administration. Now, whatever situation obtained in 1957, there were 300,000 more people in this country; they are now in Birmingham, Manchester, Glasgow, and anywhere else they could go to find an honest day's work. The fact remains that for whatever population was here in 1957 there was not only a house for every family, but houses over, and we were challenged by the Minister for Transport and Power that, in building these houses, we were using slush money. We gloried in the fact that we conceived it to be a first charge on the resources of this country that our people should have a roof over their heads, and we achieved that purpose. Fianna Fáil took a different view and so we have been concerned to bury the dead that were salvaged from the houses that fell down on them in this capital city of Dublin. I put these two records in comparison so that the House and the country may judge between them.

That is one aspect of the matter to which I wish to refer. The other aspect of this matter to which I wish to direct the attention of the House on the occasion of this Money Resolution is to my mind a very grave matter and one which the Government seek to persuade the people to overlook. Our national debt stands now at the highest figure ever recorded since the State was founded.

Mr. Booth

So does everybody else's.

Mr. Dillon

Our adverse balance of trade stands at the highest figure ever recorded since the State was founded.

General MacEoin

So does everybody else's !

Mr. Dillon

In the past 12 months over £105,000,000. Now that fact is attended by an interesting phenomenon. One would ordinarily expect that with so large a trade deficit there would emerge a growing deficit in the balance of payments. It is not always easy to determine the balance of payments with precision, but it is substantially true to say that there is no dramatic deficit in the balance of payments. That can only be explained by measuring our invisible exports and, if we determine them to be in the order of £65 million per annum, or even more, it leaves us with a deficit in the balance of payments of anything between £30 million and £40 million per annum. The interesting fact is that the external assets do not reflect that deficit and we are, therefore, driven to the conclusion that substantial sums of capital are moving into this country from abroad.

Now these capital sums can fall under a variety of heads and it is extremely difficult to distinguish which head comprises most. They represent cash paid for the purchase of land. They represent cash paid for the purchase of property in our towns and cities. They represent cash invested in this country in industrial activity; and they represent deposits of "hot money" temporarily lodged in our banks. There are two aspects to that. It is not surprising that Deputy Booth considers it to be a matter for laughter that we should see the time of day arrive when, in order to meet our external commitments, or balance of payments, we are selling to the foreigner the land which we purchased with blood.

Mr. Booth

That is not a fact. That is what makes me laugh. It is the Deputy's imagination.

Mr. Dillon

We are selling to the foreigner the land which we purchased with blood. Sooner or later this proceeding must come to an end or a social problem will arise in rural Ireland, with utterly appalling over-tones, which may present us with grave social problems of a character that no one living in this House today can fully understand for no one has lived through the consequences of a similar situation 50 and 60 years ago.

I want to direct the attention of the House to the substantial sums of money that are at present being invested by persons concerned to purchase property in the cities of Dublin, Cork, Limerick and elsewhere. It is now becoming a pretty regular practice for foreign finance companies to buy up valuable property in Dublin, and elsewhere, exploit it, and set it to the people who use it in this city and elsewhere. I welcome, and I think most Deputies do, the foreign capital which comes in here for investment in industry to provide employment for our own people under our own law. I regard the presence of "hot money" deposited in our banks as a danger, as a danger not yet of such dimensions as to cause us unnecessary concern, but we should not forget its presence there and we should not forget the readiness with which it can emigrate if any difficulty hereafter arises.

What the people of this country are forgetting, and what this Government are forgetting, is that the capital invested here is reckoned by those who invest it to yield on an average an annual return of seven per cent. Let us assume that the bulk of the capital coming in is of that character, that the bulk of it is coming in for investment in this country, the fact remains that, while it operates to obscure the balance of payments at the present time, every £10 million so invested here begets an annual charge in perpetuity of £700,000 per annum on our balance of payments. If £50 million sterling has come in in the past two or three years, that represents a permanent charge of £3,500,000 on our balance of payments hereafter.

Now the great danger attendant on this course is that we can finance an adverse balance of trade by selling our land, by selling our property up to the point when our people cry "Halt" to that proceduure, which must sooner or later come, but it leaves after it the existence of that annual charge which hereafter must be met out of our balance of trade because, when the influx of capital ceases, the balance of trade must carry the burden of our balance of payments, subject to what contribution is made to it by our invisible exports. I want to suggest that unless this Government have viable proposals to place before this House, calculated to reassure us that the gap in the balance of payments can be effectively bridged when we have ceased to sell our land and property into foreign ownership and are dependent on our invisible and our visible exports for the funds necessary to meet this charge, then this Government are leading this country into an extremely dangerous adventure. I have found no evidence in all the Minister and his colleagues have said which carries to my mind any reassurance whatever that we are generating a volume of exports calculated effectively to bridge this gap which is growing, and will continue to grow.

I should like to hear from the Minister if he can give to the House any indication at this moment of what proportion of the balance of payments— as distinct from the balance of trade —is at present being met by the sale of land and the sale of property in this country. I imagine the Government have deliberately blinded themselves to the extent to which we are selling land and property to bridge this gap. I shall be interested to hear from the Minister what his present estimate of it is. I recall to his memory that not so long ago the Minister for Lands gave his estimate as £500,000, and within a fortnight, the Minister for Finance mentioned a figure of £1 million, that is, in reference to land. I suspect the figure is very much greater.

No one has yet furnished an estimate of the figure appropriate to the sale of property in Dublin and in the other cities and towns. I expect it is running at a very high rate now. I want the Minister to give his estimate of that source of capital payments which are obscuring the balance of payments at the present time, how long he expects that source of money to endure, and how he envisages that the existing balance of payments, plus the charge that will come in course of payment in respect of capital now moving into the country, will be met, when we are at present carrying an adverse trade balance of £105 million per annum, and on the monthly returns, all the evidence points towards a widening in the gap in our balance of trade. These are grave and serious matters to which I think the Minister should turn his mind and on which he should inform the House.

Dr. Ryan

I do not think the two speeches we have heard were justified on this Money Resolution. This Money Resolution was brought in because there would be a charge on public funds for certain repayments. The first is the capital services redemption account which has been amortised at a certain rate within the past few years. I would invite Deputy Sweetman or Deputy Dillon to put down a question asking how much is being amortised now, as compared with 1956, and at what rate. If they do, they will find that we are attending to the capital debt very much more satisfactorily than they did, when in office.

Mr. Sweetman

Of course that is not true. There is no change.

Dr. Ryan

Put down a question.

Mr. Sweetman

We will put it down for next week. The fact is that the rate has not been changed by one penny.

Dr. Ryan

Put down a question.

Mr. Sweetman

The Minister should not make statements which he ought to know are not true.

Dr. Ryan

I am asking the Deputy to put down a question.

Mr. Sweetman

I am talking about what the Minister is saying now. He comes here regularly and says things which are not true, and which he ought to know are not true.

Dr. Ryan

I come here regularly and ask the Deputy to put questions, but he never does.

Mr. Sweetman

I always put them down.

Dr. Ryan

The Deputy never does.

Mr. Sweetman

Last week the Minister did not know about fuel being subject to the turnover tax.

Dr. Ryan

The Deputy never puts down these questions. As regards the second point, although, by law, income tax is payable on profits from lotteries run by charitable organisations, at the moment large sums are due from some charitable organisations. In this Bill, we are remitting those amounts and removing the liability for income tax in the future on such lotteries. Therefore, the second point in this Money Resolution is to repay those amounts out of public funds. The third point is to permit the Minister for Finance to pay money over to the Road Fund, not money he owes, but money he undertook to give. That is a very different position from the position in 1956-57, when the Minister for Finance took money out of the Road Fund instead of making a present to it as I am doing here.

Deputy Sweetman went on to give his opinion about this Government and said we are depending on one—"and what a one", he said. That was a most offensive observation from Deputy Sweetman, and it was in keeping with his general conduct in this House.

Mr. Sweetman

Hear, hear; it was intended to be.

Dr. Ryan

I should like to say this much. I would much rather have the record of that one, than the record of Deputy Sweetman.

Mr. Sweetman

The Minister is welcome to his opinion. The country thinks differently.

Dr. Ryan

Very few think differently; very few with unbiassed opinions think differently.

Mr. Sweetman

Ten thousand thought differently recently.

Dr. Ryan

Deputy Dillon went on to quote the Fine Gael figure of 300,000 which has no foundation, as I have often pointed out, but he goes on quoting it. He says there were houses standing in 1957 and no people to go into them, and that there are now thousands of people looking for houses. What is the explanation?

Mr. Dillon

Houses have fallen down.

Dr. Ryan

Do not be silly. Have a bit of sense.

Mr. Dillon

Is that not what is happening?

Dr. Ryan

It is true that people left Dublin in 1956. They were looking for work, but they have come back since.

Mr. Dillon

Rubbish.

Dr. Ryan

It is not rubbish.

Mr. Dillon

Houses are falling down, and the Minister knows it.

Dr. Ryan

That is Deputy Dillon's rubbish. He also said that the national debt is at the highest figure ever. It always will be, and Deputy Dillon knows that. There is no use in quoting a truism of that kind. If you take any date over the past 40 years, you will find that that was true. The national debt was never reduced at any time. He also said the adverse trade balance is also the highest ever. That may be true. I am not sure, but it may be true.

Mr. Dillon

The Minister ought to know if he is the Minister.

Dr. Ryan

I did not search for the figure.

Mr. Sweetman

The Minister should have it at his fingertips.

Mr. Colley

It is not important in that context.

Mr. Sweetman

That is the perfect answer. Now we know where we are.

Dr. Ryan

Deputy Dillon said that it is an interesting fact that the external assets of the country do not reflect the deficit in the balance of payments. He went on to give an explanation but the explanation he gave was just boloney. That is the Fine Gael way of looking at things while they are in Opposition, and I shall not waste my time, or the time of the House, in refuting what he said in that regard.

Mr. Dillon

Because you cannot.

Dr. Ryan

It is an interesting fact that since 1957 exports have increased very substantially—I am sure the Deputy can get the figures if he wants to—and are still expanding. Towards the end of last year, Deputy Dillon made the point that exports were going down or were at a standstill. But the figures for the first three or four months of the year show that exports went up considerably and that they are still expanding. He also said, as he did on many occasions, that the Minister for Lands and I gave different figures for the amount of land that came into the hands of foreigners. We were asked different questions. One of us was asked about the amount of land that came into the hands of foreigners and the other was asked the amount of land on which the full 25 per cent duty was payable. For that reason, the figures were different. If Deputy Dillon had looked at this, he would have seen the point and would not have made this absurd accusation which he has made several times in this House.

Mr. Dillon

The Minister says——

An Ceann Comhairle

I called on the Minister to conclude.

Mr. Sweetman

It is the Committee Stage.

Mr. Dillon

I am asking a question, which is a customary procedure. The Minister said that there was a discrepancy between his estimate and that of the Minister for Lands, that the Minister for Lands understood himself to be giving the amount of land on which the 25 per cent duty had been paid, whereas the Minister for Finance was dealing with the actual acreage of land which had passed into foreign possession. I should like the Minister to tell us how did land pass into foreign possession without the payment of the 25 per cent duty?

Dr. Ryan

The Deputy knows that it is possible.

Mr. Dillon

If the Minister gave a special exemption. The Minister can exempt, can he not? But I do not believe that the Minister exempted half of all the land purchased by foreigners from the impact of that duty. The Minister has an exceptional power by which he can, if it is in the interests of the State, remit, but I am sure he did not do it in respect of half the land purchased by foreigners. I suggest to the Minister that the real fact is that as yet there is no satisfactory machinery for determining the extent to which land is passing into foreign possession and the country requires, not only statistically but socially, that such machinery should be established so that the people will have a true picture of how much land is passing into foreign ownership.

Mr. Sweetman

Might I ask the Minister how he reconciles what he has just said with Table XXIV of the Financial Accounts, 1956-57, when the amount of the total public debt was £322,526,000, and Table XIII when the amount put to sinking fund was £6,866,057, equivalent to 4½ per cent, and with the Financial Accounts 1961-62, the last such accounts, when the total public debt was £463,971,000 in Table XXIV and the sinking fund was £10,016,000 in Table XIII, exactly the same, 4½ per cent; the same rate exactly and it has not been changed. There would have to be a change by law and there has been no amendment to the statute since 1956-57. The Minister ought, as Minister for Finance, to know that.

Question put and declared carried.

Resolution reported and agreed to.