Committee on Finance. - Resolution No. 11—General (Resumed). – Dáil Éireann (17th Dáil) – Wednesday, 15 Apr 1964

Committee on Finance. - Resolution No. 11—General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.—(Minister for Finance).

Mr. Dillon

It has, for some considerable time, been apparent that this is a gambler's Government, but now it appears to me that this Government have pretty well taken leave of their senses and this Budget is symptomatic of the madness that has overtaken them. When Budget proposals of this kind are brought before the House, we would do well to ask ourselves what does the country really need. We need plans to expand industrial exports by stabilising prices and costs. That is a theme at present being urged in every country on the continent of Europe and they are at present in conference to evolve a means of ensuring that will be done. It is more urgently necessary for us than for almost any other country in Europe, if not in the world, for we have considerable obstacles to overcome over and above the ordinary problems of export trade.

Secondly, what we need is a plan to expand agricultural exports and production and provide efficient marketing to dispose of that increased production. Thirdly, we need to plan for the maintenance and expansion of the permanent employment of our own people at home. Fourthly, if this third objective is to be attained, it seems to me clear as crystal that one of the most urgent needs of this country at this time is a comprehensive and effective programme for education that will provide adequate facilities in the primary, secondary, technological and university spheres for all our people. Last, but by no means least, one of the urgent needs of this country at present is to have a sufficiency of houses to provide our people with homes and to put an end to the horrible scandal of houses falling down in our capital city on the people who live in them and families being removed from houses no longer safe and put into institutions because there is no place else to house them.

If it is true these are the things we most urgently need, it is legitimate to ask ourselves what have we got. We have got this year a Budget which levies on our people the highest rate of taxation ever recorded in this country. We were told last year that the introduction of the turnover tax was made inevitable by the failure of all other sources of taxation to provide a reliable source of revenue. Nevertheless, in addition to the £14 million the turnover tax is designed to collect from our people this year, we have imposed £7 million additional taxation on petrol, spirits, beer and the other commodities against which taxation is being levied. All the time there is creeping up upon us, and all our people, a growing burden of costs, to which I shall refer very shortly.

I want to ask this question of the Minister for Finance. In the national income and expenditure publication, in Table 8, there is set out total taxation as a percentage of national income and further on we get the current expenditure of public authorities as a percentage of the gross national product at market prices. In the Minister's speech, we have a reference to the current expenditure as a percentage of the gross national product at market prices. I would be glad to have from him a figure which would tell us what the taxation he now proposes represents as a percentage of the national income of this country. I think it will provide a startling comparison with the standards that have obtained in this country over the past ten years and with the standards that have been internationally accepted as consonant with sound progress.

We have in these Budget proposals the highest rate of taxation that has ever been levied on our people; but, over and above that, there is being levied this year on our people rates at an unprecedented scale on property throughout the country. I am glad that the Government have awakened to a sense of responsibility and have undertaken to bear the burden of extra rates in respect of agricultural rates this year. But has everybody forgotten the circumstances of every small businessman in every rural town in Ireland? Has everybody forgotten the circumstances of every individual householder in rural Ireland? There are many rural towns in which small traditional businesses are striving to remain solvent in competition with the invasion of self-service stores and who are called on year after year to pay not only a steadily increasing burden of rates but to face the continual and intensified programme of revaluation being carried out up and down the country to the grave detriment of country people.

In addition to that burden of rates they are now going to be asked to make their contribution, as we all are, to the second Budget which the Post Office are about to introduce in which the cost of posting a letter in this country will be raised to 5d, in which the cost of a telephone call will be increased by 50 per cent from 2d to 3d on your own telephone and to fourpence from a kiosk, and in which the cost of sending a telegram is to be raised to 5/- for 12 words. That burden, however, is merely the second of the Budgets for which this Government are responsible. How many Deputies realise that over and above these charges, which have to be carried by business and industry and the individual, over the past few years the increase in the contribution made by employers and employees, through stamps, to the Social Insurance Fund has been from £5.5 million to £13 million per annum. Now on top of that we have a new tax on cigarettes, a new tax on beer, a new tax on petrol and diesel oil, all of which, certainly that on petrol and diesel oil, will bear heavily by way of increased costs on business and industry in this country.

Every year borrowing by this Government has increased. We have borrowed £261 million net since 1957 and we will borrow £82 million this year. What have we got for it? If we had houses to house our people, as we had in 1957, we might claim that the burden was worth bearing. If we had schools and educational institutions adequate to the inevitable requirements of our people over the next ten years, we might say that the outlay would one day bring its return. But we find ourselves today with this unprecedented burden of taxation, with this immense capital expenditure undertaken, and we are without the schools, without the houses and without many other essentials the country so badly needs.

There has been some talk and rejoicing about the buoyancy of revenue. The buoyancy of revenue, of course, can expand indefinitely if the Government borrow sufficient money and spend it quickly enough. Buoyancy of revenue is a poor return for borrowing money and expending it unless the borrowed money and its expenditure leave the nation the richer in things that are really vital to the nation's welfare.

Side by side—and one grows weary of reciting the catalogue — with the taxes and rates to which I have just referred, the cost of living continues to climb. In the past three or four months, the price of bread has gone up; the price of flour has gone up; the price of bus fares has gone up; the price of sugar has gone up; the price of cigarettes and the price of the pint are going up; and, as I have said, postage, telephones, petrol, and electricity charges are all going up. Not least of all but only too easily forgotten, not only are the actual rates on property rising to the great disadvantage of everybody who owns his home, but, as a consequence of the increased cost of local government and the increased rate demand of the local authority, the rents payable by people living in corporation property are rising steeply. Reference was made in this House only recently to the fact that the maximum differential rate in Ballyfermot which had been 36/6 for the largest type of house has gone up by 3/9 to £2 0s. 3d., and in the case of the smaller house, from 33/- to 36/3 per week.

When we consider the impact of all these steady increases on the cost of living of our people, should we not ask ourselves how far this programme conforms to the desired end of stabilising prices and costs and how it is consistant with that picture to aspire either to the stabilisation of prices or of costs? And if we fail in that, how can we hope economically to survive?

As I read of bread, flour, sugar, rents, the pint and postage rising. I think of the circumstances of the old age pensioner or any social welfare beneficiary, the widow, the blind, the unemployed. We are now going to give them 2/6d. extra and for that they must wait until next August, and not all of them will get it. I want to ask this House: what is the purchasing power of 37/6d. next August compared with the purchasing power 20 years ago of 10/-? I suggest that the purchasing power of that 37/6d., when those people get it, will be approximately 12/- in terms of money 20 years ago when the old age pensioner was getting 10/-. Perhaps then we can persuade ourselves we have made the old age pensioners effectively 2/- better off than they were 20 years ago. Surely that is a performance on which we have no reason to congratulate ourselves, and that is not the performance which we had in mind in expanding the national income if the poor and the most defenceless sections of the community were to benefit from any development which took place.

I want to suggest to the House that much of this expansion of the national income is illusory. We are expanding it in terms of money but in terms of purchasing power, those who have to depend on fixed incomes, such as the old age pensioners, are finding themselves steadily being forced lower and lower in comparison with their neighbours. The same is true of all the small farmers who are self-employed. They are sharing that burden, too. If we were all sharing burdens, heavy burdens, and had dramatic results to show for them, that would be some consolation.

Have Deputies considered what the results of the past seven years of Fianna Fáil's policy have been in terms of human welfare amongst our own people? There are 70,000 fewer people employed today than there were in 1956. Anyone who wants to check that figure can look at Table 15 of Economic Statistics. There are approximately 60,000 unemployed persons, though, by the introduction of the first employment period, that number has been reduced to 57,976 as at 4th April. Remarkably enough, that figure of 57,976 is 200 higher than it was a year ago and 3,000 higher than it was two years ago, More than 250,000 of our people, almost all of them between the ages of 18 and 30, have emigrated in the past seven years. It is costing us just twice as much to run this country today as it cost seven years ago, more than £100 million more today than it cost seven years ago.

The adverse trade balance today stands at £110 million. The adverse balance of payments last year amounted to £22 million. It is perfectly true that that adverse balance of payments has been substantially reduced by the influx of a considerable volume of foreign capital. We have consistently advocated the desirability of the investment of foreign capital here for the establishment of new industry, for the provision of employment and the creation of additional export potential. How is this country's advantage served by the influx of foreign capital which either goes to find a temporary abode in our banks, hot money, or for the purpose of buying land in rural Ireland to the exclusion of our people who need land to make their existing holdings economic or indeed to the exclusion of young landless men who want to settle and stay in their own country, to farm in their own country and who will not be given land but who watch it being sold to foreigners for cash? How does it advantage this economy to see old, established businesses being bought out by foreign interests for the profit that can be made out of them?

I feel that in the import of foreign capital, which is at present in a very large degree covering up the true adverse balance of payments on current account, we must differentiate very clearly between that kind of capital investment which will inure ultimately to the long term advantage of our economy and that kind of capital investment which socially, politically and economically, constitutes a very grave danger to the country and the community for which we are responsible.

I want to warn the Government of this, and I think I know whereof I speak: the purchase of agricultural land by foreigners will be tolerated by our people up to a point but a time will certainly come when our people will revolt from the procedure of selling for gold what was purchased with blood. There is not the slightest doubt that our people have a right to the land and that that right ought be acknowledged and protected by their own Government. It is an intolerable strain to place on their patience to be told that there is no land for them, or for their sons, because it has been purchased by strangers either to operate for their own profit or as a safe repository for money they want to stash away.

I note with amazement as a further result of the past seven years of Fianna Fáil that the net output of agriculture stands in 1963 at almost precisely the same figure at which it stood in 1957. The net output of the agricultural industry in 1957, to a base of 190 in 1953, was 106.6 and 107 in 1963. I am glad to see that the income of those on the land, the farmers' income, which was estimated to be £107.8 millions in 1963, which represented a decline of £1 million since 1962, is now to be augmented in some measure by a very conservative concession of twopence a gallon on creamery milk. When you bear in mind that by legislation we levied on all creamery milk 1.3 pence to subsidise exports; when we realise the burden of the Exchequer to meet that has declined by nearly 50 per cent in the last 12 months as a result of an increase in butter on the British market, I do not think we broke our hearts when we gave farmers back twopence in exchange for the 1.6 pence we are taking from them in the levy to pay for exports costing the Exchequer just 50 per cent of what they cost 12 months ago. We are to give them an increase of 8/- a cwt. in Grade A pigs. That represents about 10/- a pig. When you bear in mind that we have already increased the price of barley by 1/- a cwt., 2/- a barrel, which represents on the old calculation an increased cost of about 7/- per pig in the cost of feeding stuffs, the effective increase in the profit to the farmer raising a pig is about 3/-a pig, and none of them will get fat on that.

I see nothing in this Budget beyond a few patches and splints for the haphazard arrangements that existed. What I look for and fail to find is any provision whatever for what is now universally agreed to be urgently necessary, that is, a radical reform of the health services. When you bear in mind that this year we plan to raise by taxation £215 million; when you realise the extent to which we have expanded the contribution made through the stamps of employer-employee; when you realise the various increased costs which we have called upon our people to bear, surely we have a grave duty to ask ourselves where are the resources to be found to meet the essential charges that most people in this House are agreed must ultimately come in course of payment. If we are going effectively to reform the health services, they will cost more. Whether or not they are paid through an insurance scheme such as we advocate, both the State and the beneficiaries will have to contribute their share to the increased cost.

When we come to consider the essential needs of education not only to provide sufficient schools but to give the children reasonable facilities in their classrooms in the national schools; when we come to think of the virtual non-existence of adequate technological educational facilities outside the limited resources available in Dublin and Cork; when we realise that to date no contribution by way of capital assistance has ever been given in this country to secondary education, and that it is now accepted by Fianna Fáil from our policy that such grants will have to be made; when you contemplate the necessary expansion in higher education and what that will mean in expanding facilities at University College Dublin, and presumably in Cork, and Galway and Trinity as well, and ask yourself where we are going to find the means to do that if we are already taxing our people virtually to the limit of their capacity, I think we realise the gravity of the problem with which this country is confronted.

When one reads that what this Budget contemplates doing for agriculture is to increase the price of a pig by 10/- and to increase the price of milk by 2d., when one reads in that context the submission made by the National Farmers Association to the Government of what is necessary by way of capital investment and development in order to expand agriculture to its full capacity in the years that lie ahead, one cannot help wondering if the Taoiseach was not, perhaps, speaking for all his colleagues when he contemptuously said that if that programme were to be implemented you would want all the gold in the Bog of Allen.

I have read that programme pretty closely and certainly as to 90 per cent of it I think it is sound and reasonable and not extravagant. If we are to get from the land of Ireland the kind of output requisite to sustain the economic future of this country, investment of that kind is urgently necessary and any responsible Government should bring forward a plan, or the prospect of a plan, for giving effect to the recommendations contained in that report.

The Government must be awake to the fact of the urgent need for additional educational facilities and the Government have an obligation to state their programme over the next period for realising that end.

I look back with satisfaction on the fact that when we were in office we anticipated the necessity for expanding university facilities in this country and enabled the National University of Ireland to acquire the ground at Belfield on which building has now begun of the science buildings and the complex of building that will ultimately find its place there. It is that kind of long-term planning that is urgently needed now and a very essential and important part of that long-term planning is to envisage the sources of revenue that will be available to finance it.

The Minister for Finance, in the course of his Financial Statement, referred to the Government's intention of re-opening its discussions with GATT. I want to ask the Minister a specific question. One of the generally accepted conditions of GATT is that any member of it will extend to its fellow members the most favoured nation treatment, that is to say, that any facility we provide in a trade agreement with any country must be made available to all countries associated with us in GATT. How can that condition be reconciled with the special trade relations obtaining between ourselves and Great Britain? The Minister should be more explicit in his explanation of the Government's policy in regard to this matter before this debate is finally concluded.

I urge on the Government that their present policy of raising the cost of living and watching that rising cost of living drive the costs of production steadily up should be urgently reviewed. We maintained, when we were responsible for the government of this country, that it was a matter of vital urgency to keep the cost of living down and we substantially succeeded in achieving that end. I suggest to this House that as the value of salaries and incomes declines our costs of production will rise and our exports will be less and less able to compete in the extremely competitive conditions that obtain in the world at the present time. I say that much of this Budget which we are at present considering will add to the burden that business and industry will have to carry and notably the charge which it is proposed to levy on petrol and diesel oil, which will constitute a very grave burden on every firm in this country that has to transport goods, together with the steep increase in the postal charges which every business in this country will have to bear.

If the adverse trade balance of this country and its adverse balance of payments continues to rise, the influx of foreign capital sooner or later will cease to be sufficient to cover it, that is, unless we sell out the whole country, lock, stock and barrel.

I say to the present Government that the fundamental needs for enduring prosperity are being ignored by the Government, both in education, housing, and in marketing organisation to deal with the increased production which we must have if the country is to survive. I believe that the increases in taxation and the increased cost of living are reducing our competitive position every day of every year. Unless this tendency can be brought under control and corrected, I believe the danger to this country is very formidable. I see no evidence whatever in the speeches, statements or the actions of this Government that they have any conception of the dangers that attend the road they are at present travelling. I believe them to be gamblers hoping for something to turn up. I believe that constitutes a very grievous danger to us all. Unless we can plan, not only for today and tomorrow, but for the long-term view, to get for our people permanent and enduring employment in their own country and a revenue sufficient to meet the long-term requirements of our people in the competitive world in which we live, the very independence of this nation will be put in peril. If that should come to pass, this Government will have to bear their full responsibility for such a crisis. I believe the only way to avoid that is to get rid of the present Government and I believe until we do we will have no effective change in the gambler's road they are at present travelling. It is urgently necessary for this country that we should have, and I hope our people will take an early opportunity of displacing the present Government and substituting for it one which will have some regard, not only to the problems of the present, but to the hopes and prospects of the long future.

Mr. Tully

It is on record that on more than one occasion a Government here and Governments in other countries introduced two Budgets in one year. This is the first time that two Budgets have been introduced in one day. The Minister for Finance, yesterday afternoon, introduced his Budget and during the course of his Financial Statement he made reference, in an offhand way, to the fact that the Minister for Posts and Telegraphs would be looking for a couple of millions, the details of which he would explain at a later date. None of us imagined that later date would be some six or seven hours after the Minister for Finance had finished his Budget statement. Perhaps the Government considered it was a rather clever way of dissociating the very serious increases in the postal charges from the actual Budget but if the idea was to fool the country in that way, the people are far too intelligent to swallow it. Having listened to some of the comments late last night and today, I am satisfied the Government did not get away with it and that everybody recognises what has happened as a cheap confidence trick reflecting no credit on those responsible for it.

When the turnover tax was introduced last year, the Minister for Finance said categorically that the main reason for it was that the traditional method of taxation had reached saturation point. While most of us opposed the turnover tax as applied to foodstuffs and essential clothing, we felt if those items had been excluded, possibly the Minister, if he meant what he said, might be on to something which was quite correct. Strangely enough, this year he has returned to the attack on the traditional method of taxation and if it had reached saturation point last year, I do not know what the position will be in a few weeks when the new taxes bear on the items concerned because the price increases which are proposed are not only big increases but have been described in the newspapers and by individuals to whom I spoke as "savage" increases.

I do not know if the Minister was serious when he said saturation point had been reached but this year the country is deadly serious when they find that items which they felt sure could not be touched again are now asked to bear not a penny or twopence but three or four pence. The Minister is well aware that the increased prices will reflect in the turnover tax with the result that the income will all the time be growing.

Deputy Corish yesterday commented that the Government had a vested interest in prices. How true that statement was. The higher prices go, the more the Government will get in taxation. It appears as if the Minister is backing two horses and flogging them for all he is worth, hoping that one of them will come home a winner or that possibly they will dead-heat. Whether the price the Minister is prepared to pay on his horses will compensate the country when the odds are counted is something we shall wait with interest to discover.

The Minister began as usual with a survey of the economy in the past year. According to what he said, he was satisfied with it, but the extraordinary thing is that of the five pages of his survey, between two and three are devoted to gloomy forebodings of what would happen as a result of the ninth round of wage increases. Again we find the Minister and his Government attempting to have a foot in both camps. They are attempting to take full credit, where they think it will suit, for the recent increase in wages and seem to forget that the Taoiseach had stated very definitely that the increase which the economy could carry was between seven and eight per cent.

The Taoiseach

Eight to nine per cent. The Deputy is one point below.

Mr. Tully

I accept the Taoiseach's word for it but the documents which I examined said a maximum of eight per cent. He gave this advice to the body negotiating the wage increase, representing the Irish Congress of Trade Unions, after that body had turned down ten per cent from the employers. I do not know if he expected them to go back and say: "we were looking for too much; we will back down and take eight per cent." They made it plain they would not do so. Having agreed, apparently, that they were entitled to negotiate for the highest figure they could get— as they were—and that figure having been achieved, the Government are now attempting to blame the ninth round for certain things that have happened since. Worse than that, they have come up in his Budget with increases in social welfare assistance. I want to stress the word "assistance" because social welfare benefits are mentioned in certain newspapers today and these benefits are not affected. By a strange coincidence, the increase in social assistance represents something more than seven per cent. I do not know if the Taoiseach, having failed to impose a standstill on the trade union movement with the seven or eight per cent, decided they would impose it on those on whom he could impose it, recipients of social assistance. The previous speaker referred to the fact that it was payable from 1st June. In fact it is payable from 1st August. I suppose that was a slip of the tongue.

We in the Labour Party consider that not alone is the half-crown offered to the social assistance class not sufficient but it is nothing short of an insult. Worse still, the Minister has apparently succeeded in persuading himself that the people who will be fortunate or unfortunate enough— depending on how you look at it—to draw social welfare benefits are not entitled to any increase. I do not want the Minister to come back and say they got 5/- in January. They did, and the other people got 2/6 in November but that was supposed to be compensation for the 2½ per cent turnover tax. The Taoiseach is on record as saying here that if the assistance classes got 2/6, the benefit classes were entitled to double that. That was last year. Apparently it does not apply this year because the assistance classes get 2/6 and the benefit classes get nothing at all.

Unfortunately, costs have gone up on people in receipt of those benefits just as much as on those who have benefited by the ninth round of wage increases. I am sure both the Minister and the Taoiseach are well aware that the increase in the cost of goods, which was shown as merely 3½ per cent in mid-February now seems to be reaching a 12/15 per cent level. Everyone will be shocked when the next cost of living index is produced by the tremendous increase which has taken place since the figures were last checked.

The blame for that does not rest with the trade unionists, as so many people wish to make out. The blame rests fairly and squarely on the back of the Government Minister who took no steps, except soft talk in this House, to try to tie prices when he found they were going out of hand. Even yet, the only thing we have from the Minister for Industry and Commerce in regard to prices is that some type of private inquiry is being carried on behind closed doors to find out if some people have been charging too much for commodities for the past couple of months.

Surely the sensible thing would have been for the Minister to make an order that before prices were raised, the people who wished to raise them must bring their case before the Prices Advisory Body. That was not done. At first the Minister talked about the Fair Trade Commission and said they would be investigating the price of soap. I do not think that codded many people, but it gave him a breathing space, and it gave the people who wanted to raise prices a breathing space. He then reconstituted the Prices Advisory Body and, so far as I am aware, there has been no public inquiry, and judging by some of the answers the Minister has given, none is contemplated in the near future. If any blame is to be passed around for the inflationary trends we hear so much about, it must rest on the Government, and not on the trade unionists.

I do not know if the Minister for Finance really appreciates what he has done by increasing the price of petrol. He says the increase is less than 3d. per gallon, and with the turnover tax, it will be 3d. per gallon. He should appreciate that while CIE will be exempt, every other form of transport will cost more. People who haul goods from one end of the country to the other, people who deliver goods, people who take supplies of raw materials to factories and who bring the finished articles from factories, farmers, and everyone will pay extra. I am sure the effects of that 3d. will be felt right down the line. Even the unfortunate— and I think unfortunate is the correct description—builders' labourers, hundreds of whom travel from as far afield as 40 miles into the city by car in the early hours of the morning, and return in the evening, because there is no other employment available to them, will find it will cost them more to travel, on top of the punishment which they have already to face.

The Minister in his Budget Statement made the rather vague remark that unemployment and emigration continue to be much lower than a few years ago. In 1963-64, unemployment was consistently some thousands higher than it was in 1961. Page 37 of Economic Statistics proves that. It was an average of 6.1 per cent in 1963. In Britain unemployment is now two per cent. I cannot understand why the Minister seems to be so happy about that position. Surely he appreciates it is not a position to be happy about, and that something dynamic must be done, apart from expressing generalities that things are not so bad.

It is true that emigration figures are lower than they were a few years ago. Last year the Minister was very anxious to give us the exact figure for emigration. He told us, and I believe it was correct, that for the 12 months ending February, 1963, emigration had declined to the figure of 12,200, which was a relatively small figure. Even though it was still far too high, it was lower than in previous years. The Taoiseach has admitted that the 12 months ending February of each year is the fairest period for judging emigration figures. The Minister did not quote the figure this year. It was very noticeable that he did not make any reference to it. Maybe he assumed people would think the downward trend had continued, but it is a fact that the emigration figure is more than double that of last year. In fact, to the end of February of this year, the figure is 25,060. I am sure the Minister cannot be too happy about that figure, and I cannot blame him for not being terribly anxious to mention it yesterday.

I come now to jobs. The Minister and all Government speakers for some time have been trying to give the impression that there are more jobs available, and that the number of people in employment is higher than it was. That is all cod. I suppose it is all right to fool us if we accept these statements and do not check them. I have checked them. I want to make this clear, and put it on record, that while it is true that the number of jobs increased by 1,000 in the two years 1962 and 1963—and that is rather far from the 100,000 jobs we heard about a few years ago—in the ten years since 1953, the number of jobs has decreased by 114,000. Since Fianna Fáil came into office in 1957, when the 100,000 jobs were just around the corner, the number of jobs has decreased by 32,000. In fact while in 1957 the number of people in employment was 1,084,000, it has now dropped to 1,052,000.

If those figures are not correct, perhaps the Minister for Finance would state what are the correct figures when he is replying. I challenge contradiction that they are the correct figures. It is utter nonsense for Government speakers to try to give the impression that thousands of new jobs are appearing every year, and that unemployment is rapidly disappearing. The facts are that there are not thousands of new jobs appearing every year, and that emigration is continuing and climbing again.

On Saturday 4th April, the unemployment figure was 57,976 and the previous week, 26th March, it was 57,338. In other words, there were over 600 more unemployed on 4th April than in the previous week. That is entirely different from the normal trend because in the previous year the trend was in the opposite direction and there were almost 800 fewer unemployed in April than there were on the last Saturday in March. When we talk about employment and unemployment, let us have facts and figures and not deal in generalities. When a Minister says employment is growing and emigration is dropping, we do not have to accept that as fact, because I have proved conclusively that it is not so.

I do not know whether the Minister for Posts and Telegraphs really understands that he has added tremendously to costs by the increases which he is now demanding. It is now 5d. for an ordinary closed letter. Across the Border it is 3d. We are paying 2d. more than they are paying a few miles away in Northern Ireland; yet we are told costs are much higher in Northern Ireland. It is another example of muddling. In order to try to deal with the queue waiting for telephones, there is now a £10 charge to have a telephone installed. That means a man who wants to start a small business will have to find £10 extra.

Some of the charges for parcels are out of this world. It is absolutely astonishing that there is as much as 9d. extra of a charge for small parcels.

The telephone service was not doing so badly. In addition to those who will have to pay an extra charge for the use of the telephone, there will now be an extra 1d. for each local call and a pro rata charge for other calls.

The cost of a telegram is going up to 5/- and 5d. per word. Surely the Minister is doing either of two things. Either he is determined that he will cut down the use of the telephone very considerably—maybe that is his object and if it is, he looks like achieving it— or, if that is not his object, somebody is trying to build up a nice nest-egg for next year. Perhaps that might be the real kernel of the whole thing.

We are told about the wonderful assistance being given to farmers—2d. per gallon for milk at creameries. We only hope that that will not result in 3d. or 4d. extra on butter. Then there are 8/- and 5/- for Grade A pigs. The question arises of the Grade A pigs coming out of the factory. The extraordinary thing is that they do not seem to come in, according to what the farmers tell me. They find extreme difficulty in getting Grade A for pigs going in. If what Deputy Dillon says is correct, that there is 7/- extra on one commodity alone for feeding pigs and there is a profit of only 3/- for the farmer, then there is not very much being given there.

I would refer particularly to this question of rates relief. It is true that it is rates relief for agricultural land. I am one of those people who for quite a long time have been pointing out that the unfortunate householder has to pay very much more in rates than quite a lot of people who have fairly sizeable farms. While it may be said that the householder has in many cases some way of making money much better than the farmer has, at the same time when the last increase in the subsidy to rates was given by the Government, I know hundreds of small farmers who found that they got a rates remission of anything between 9d. and 1/3d. per week while their neighbours with very big farms were able to boast that they had got anything up to £5 and £6 a week of a remission. Again, it appears to me as if the small farmer will get very little here and the big farmer will, as usual, come out with the lion's share of this particular gift.

It is rather interesting that when the Minister was allowing his heart to bleed for those engaged in agriculture, he did not pause for a minute to think of what was happening to the agricultural worker. Did it never strike the Minister that we have long since reached the stage where the only way to keep agricultural workers on the land is by a direct Government subsidy to the agricultural worker? We have a board dealing with agricultural workers' wages. That board met in January and recommended an increase of 15/- per week. Though it is now the middle of April, they still have not met to decide when or if they will give it. Yet those people are paying the increased prices the same as the industrial and other workers who have their ninth round of wage increases in their pockets.

When the Minister is again thinking of agriculture, I would ask him to remember that there are two sides to it. There is the man who has a farm, for whom the management of the farm is his job, and who makes his money in it. Then there is the man who is employed on the farm. I think in many cases he is the important partner. It is too bad that he should be treated now not as a second-class citizen but as a ninth- or tenth-class citizen, as if he were a slave, as if he did not count. The only difference is that they are not being sold. The Minister should bear that in mind when looking at this problem again. While I am quite well aware that the agricultural industry does need a boost, at the same time I feel the benefit will be distributed—we have not details of it yet—as those things are always distributed: those who have plenty will get more and those with little will get less. That seems to be the pattern all along and I do not think it will be changed this time.

I come now to the increase of public service pensions by five per cent for those who retired prior to 1961. In this case, I think the Minister might possibly have been a little more generous. Is there any reason why the gap could not be bridged? Why did the Minister not bring it up to 1963, and remove this long-standing grievance of those pensioners that they are being left behind in the race, because they too, have to pay? In relation to the last increase given by this House to pensioners, I had a letter the other day from somebody whose pension was increased by 7d. per week as a result of the increase given here. I am sure the Minister will agree that 7d. per week will not compensate for the increase in the cost of living which has been occurring.

The question of the increase in the price of cigarettes is one on which we may have different views. I do not smoke and therefore I suppose I am not a fit person to judge whether or not it is right to increase the cost of cigarettes and cigarette tobacco. Perhaps the Minister might tell us if it was because of the fact that there is at present a scare about lung cancer that he availed of the opportunity to put on an extra 3d.? Possibly, for the same reason, he could have decided to do something about the diesel fumes when he put the 3d. on the petrol and diesel oil. I am sure we could accuse him of the same thing.

When the Minister referred to the fact that pipe tobacco was not included, did he mean all pipe tobacco or hard tobacco?

Dr. Ryan

All pipe tobacco.

Mr. Coughlan

And snuff?

Mr. Tully

I am glad. Having seen the Taoiseach smoke a pipe afterwards, I was sure all pipe tobacco would be excluded. As far as the taxation reliefs are concerned, it is rather a pity that when the Minister was considering these, he did not do something about the question of the income tax paid by the wage earner. I do not have to tell the Minister and it is hardly necessary to repeat it in this House that the amount of money which is allowed to a wage earner before tax is collected is far too small. Not alone that, but the amount of money allowed for a dependent relative is far too small. Consider the father of a family who is attempting to educate his children and the ridiculous tax allowance which he gets. The Minister must not be au fait with present-day costs. If he were, I am sure he would have included in his tax reliefs something to help the unfortunate person who is in that position.

The Minister, I think, is aware that quite a number of old people are maintained, and rightly so, by their children down through the country. Working people have their aged fathers and mothers, or other relatives, living with them, as well as their own immediate family. If they are able to keep these relatives, that means that local authorities, and the country generally, are saved a considerable amount because the expense of keeping these people in the county homes can be very considerable. The tax concession given by the Minister is not very much encouragement to these people to make the extra sacrifice called for in providing a home for their aged relatives. This is a matter in which the Minister could be a great deal more generous.

In addition, there are the people— I mentioned them a few minutes ago— who must of necessity use vehicles to travel long distances to work. At present they are ruled out completely unless they are using the vehicles in the course of their employment. They are not allowed to claim a remission of income tax. Surely, if a man drives from Kells, or Trim, 40 miles to Dublin, and back again, it is more reasonable that he should get a tax remission than the man who drives five miles between jobs, five miles again, and five miles home. He can claim a remission. This is a matter the Minister should have another look at because it causes hardship. It is in cases such as I have mentioned that tax should be remitted.

I am sorry to see the £200,000 Exchequer Grant to the Road Fund withdrawn because, at the present time, the volume of traffic on the roads is so great that I feel the more money that can be found for making the roads safer, the better it will be for everyone concerned. I believe a great many road accidents can be explained very easily if they are related to the increased volume of traffic finding its way on to the roads following the closing of the railways.

We believe that the Budget is not just a calculation of income and expenditure. We believe that it should be an instrument for moulding the economy in order to ensure a just distribution of both the country's resources and the total tax imposition. We believe this Budget fails utterly to do either.

The Taoiseach

I think it is fair enough to conclude from the boring character of the two speeches to which we have just listened and the very inadequate attendance of Opposition Deputies in the House to-day that the fighting on this Budget is over. However, I suppose we have to go through the motions of debating it, but it is clear that, so far as the Government are concerned, we have not got any very great problem on our hands.

Every Deputy in this House knew from the information which the Government supplied him with, in advance of the introduction of the Budget, in relation to the estimated tax yield and the estimated expenditure for the year, that this year's Budget could have been balanced with some comparatively minor adjustments, and without additional taxation of any significance, if we were willing to make no additional provision for agriculture or for social welfare payments, that is to say, provision over and above that set out in the Book of Estimates. We decided that this course would not be justifiable, that the obligation to render further support to farmers' incomes and to make further increases in social welfare payments was paramount, and that it had to be fulfilled even if it meant further tax changes. We should have liked indeed to have done a great deal more than we propose and we hope that this may be possible in future years.

The examination of the estimated yield of existing taxation this year made it clear that, if the Budget were to be balanced, and the Minister for Finance in his Statement yesterday emphasised the overriding economic necessity of achieving a balance, that additional taxation was inevitable. We devised the taxes, therefore, which press least onerously on the public. It is quite true, as Deputy Tully said, that last year we did not consider that cigarettes and drink could bear any additional taxation. It seemed to us that, if we had attempted to tax these commodities last year, the yield in revenue would be disproportionate to the tax increases put on. This year, however, when we came to examine the situation, knowing the trend of consumption of both tobacco and beer during the year, and taking into account the fact that wages and salaries are being increased generally throughout the country, we decided that additional taxation on these commodities was feasible. Deputies will have noted, with interest, that the British Chancellor of the Exchequer reached the same decision.

Dr. Ryan

Independently.

The Taoiseach

Independently, as the Minister for Finance reminds me.

Mr. Dillon

But without a turnover tax.

The Taoiseach

The general view of the public on this Budget is, I think, that it is both a confident and a levelheaded Budget. Listening to Deputy Dillon today, I could not make up my mind whether he was criticising the Government for taxing the people too heavily, as he appeared at one time to suggest, or for not providing for vastly increased expenditures on various Government services, expenditures which would have necessitated still heavier taxation. Unfortunately, in this regard, he gave a very bad example to the Labour Party because Deputy Tully followed suit.

These Parties must make up their minds whether they want lower taxation and, therefore, lower expenditure by the Government, or higher expenditure and, therefore, higher taxes. They cannot, it seems to me, with any appearance of consistency attack the Government simultaneously for imposing tax increases and for not providing for more farm price supports, higher social welfare payments, increased expenditure on health services, on education, or anything else. People will respect them, as Parties, when they make up their minds which road they wish to travel. At present they are not even consistent in their criticism.

Mr. Dillon

——must be based upon facts and not upon wishful thinking. This is what the Government have always tried to ensure and this was the consideration which determined the characteristics of the Budget which the Minister for Finance presented here yesterday.

Taxation is not only an instrument of economic policy, it is also an instrument of social policy. Tax revenue, the money coming into the Exchequer as a result of the taxes imposed, is not money taken out of circulation. It is paid out again and it is paid out for precise and explainable purposes, economic and social purposes, which would not otherwise be achieved if the Government did not organise them. There may not be in this House between the Parties now represented in it full agreement as to the role of Government in economic and social development. But the old conception that Governments should stand aside and allow economic and social forces to have free play and to work themselves out is not now, as far as I understand it, held seriously by anybody. It is not likely to be contested— and having regard to the vagueness of the policies of the Opposition Parties, I will not put it stronger than that— that there is an overall responsibility on the Government for the general regulation of the national economy, preferably by knowledge and consent rather than by direction.

It may be that that principle is not yet fully accepted in respect of the all-important sphere of incomes policy. We have never sought to exaggerate the job of the Government in economic and social matters. As far as economic development is concerned, we have tried to maintain a logical separation between the functions of the State and the role of private enterprise and have kept clear in our own minds what must be the subject of State supervision or State control and what can best and safely be left to the free play of market forces. In our political philosophy, we accept that education, the relief of poverty, including better housing, the care of the sick and the reduction of undue and unjust inequalities within the community are matters in which the Government, acting for the community, must make provision. This may be common ground between the Parties.

It is not likely either to be contested that the redistribution of the benefits of economic progress, so that all the elements of our national community can share in them, involve in present circumstances exceptional provision for the support of agriculture and of agricultured incomes; and that the Government should have special care for the problems arising in localities where economic development possibilities are less obvious than they are elsewhere.

All Deputies now accept, or have been forced by the facts to recognise, that economic progress is not something that will happen of its own accord and that the direction of national resources, the elimination of impediments to expansion, and the programming of development possibilities are rightly the concern of the Government and have an important bearing on the nation's rate of progress. Neither will social justice happen of its own accord. Here the role of the Government is to mobilise community resources to whatever extent they deem it to be just and practicable to ensure that social aims are realised and that undesirable inequalities are minimised if they cannot be eliminated altogether.

I do not think, as Deputy Dillon tried to suggest, that the Irish people have any undue grievance over the taxation measures in operation here. By and large, our tax rates are lower than in other western Europen countries—indeed, lower than any other country in the world with comparable living standards. Taxation represents a smaller proportion of our national income than it does in other countries. This is not altogether attributable to restraint on the part of the Government but to the fact that we do not have to meet exceptional burdens for national defence which other Governments undertake.

Mr. Dillon

What proportion of national income does taxation represent?

The Taoiseach

About 20 per cent. That was the calculation before this Budget.

Mr. Dillon

Is it not nearer 30 per cent?

The Taoiseach

No, somewhere around 20 per cent.

The prospects for this year of achieving a growth rate between four per cent and five per cent are reasonably good, assuming stability in international conditions and normal circumstances, including the weather, at home. All the economic forecasters whom the Government have consulted in preparing their estimates for the year have predicted a reasonably favourable trend. The point I am trying to get into the heads of the Deputies opposite is that this has been made possible by maintaining the volume of Government spending. The maintenance of the projected growth rate will require a further expansion of investment in national development possibilities which will certainly involve the utilisation of all available capital resources within the country and a continuation of the capital inflow about which Deputy Dillon is so perturbed.

While saying that, and indeed emphasising the favourable character of the economic indicators, I do not want to suggest, nor will I say, that there are not difficulties ahead and some dangers of which we have to take note. We know that the conditions prevailing in international markets for agricultural products are still a serious impediment to the realisation of the full potential of our agricultural industry. A real improvement in agricultural incomes by reason of increased sales of agricultural products at economic prices can be realised only when international trading conditions in respect of agricultural products have been reorganised. It certainly will not be until that happens—if it ever does happen—that the exceptional measures now being taken by the Government to support agricultural prices and farmers' incomes can be given up and the money now required for these purposes transferred to production aids and other useful purposes.

There is a danger this year that the total level of consumption by our people, our total spending on consumption goods, may have adverse consequences on our imports, may, by increasing the volume of imports, widen our external payments gap.

The further development of our industrial production, upon which depends the realisation of the overall targets for the national economy, will require very careful consideration of the structural changes required in industry, on the expansion of our training programmes for workers and matters of that kind, including the maintenance of the grants and inducements now offered to facilitate both expansion and change.

Industrial expansion is the first aim of our policy because the realisation of all the targets of the Second Programme depends on it, and here at least we can look at the existing position with some optimism and confidence. Industrial production was up by seven per cent in 1963 and, as the Minister for Finance pointed out yesterday, that was one of the highest rates of expansion achieved by any European country in the past year. That expansion took place over the whole range of industries, in old industries as well as new industries. A more encouraging feature was that the rate of increase accelerated as the year went on and was particularly noticeable in the second half of 1963, especially in the metal, engineering and textile industries.

Deputy Dillon is always pretending to be worried about our balance of external payments. I suppose he will not take my word for it that there is as yet no great reason for concern. There is a widening gap in our visible trade and a deficit on our current payments of some size but there is no reason up to now why we should be showing any undue concern in respect of our external payments position. The total deficit on current account in the past year was £22 million but there was no loss of reserves, due, as Deputy Dillon appreciated, to the continuing inflow of capital. In fact our external reserves increased during the year.

Irish development is, in the main, financed out of Irish resources. The bulk of the capital invested in development projects here last year was Irish capital but the capital inflow which has been a remarkable feature of recent years is a very important element affecting our rate of economic growth. That capital coming in is, in the main, invested in productive enterprises, in new industries and in the expansion of existing concerns, and has gone for the purchase of plant and equipment. Strong investment outlays are essential for the maintenance of our rate of economic growth. The argument that this inflow represents the sale of Irish assets to foreigners is just nonsense.

Mr. Dillon

It is mentioned here in your own book.

The Taoiseach

It will not bear up one moment to examination. I am sorry to have to destroy a political illusion of the Fine Gael Party. Even if that has happened in some instances, even if in a few commercial or other concerns shares have been allocated to external interests, the Irish capital thus released is reinvested in Irish development.

The transfer of agricultural land to foreigners, the constant bugbear of the Fine Gael Party, even if it were decided to count as foreigners some persons of Irish birth or parentage who have returned here and acquired land in the counties from which they or their parents came, is of no great significance whatever. The total acreage of land transferred to foreigners —and it is now measured precisely— is not much greater in recent years than it was in previous years, and Deputies who are familiar with this matter know that the figures are swollen by the fact that very frequently the same farm or the same area of land changes hands more than once.

However, if this inflow of capital for productive purposes should cease or become curtailed, then the financing of the deficit on our external payments might present grave difficulties, and certainly our rate of development would slow down. There is a danger, particularly during this present year, that the expansion of purchasing power amongst the community by reason of income increases will expand imports more rapidly than exports and in certain circumstances, if this trend should go too far, it might require corrective measures which might represent a very serious setback to our development plans.

As the Minister for Finance emphasised in his speech here yesterday, the surest remedy for that situation is an expansion of savings. In 1963 small savings, by and large, did not expand. If, as the Minister for Finance urged, those in our community who have got increases in their wages or their salaries would decide to save some part, if not the whole, of the increases by any of the means which are open to them, then it would not only benefit themselves but help the country over a difficult patch. We expect with some confidence an expansion of savings in this year.

In time of economic expansion such as this country is now happily enjoying, it is not a matter for concern that some reasonable deficit on external payments should appear. We have in fact programmed for this. There are substantial external reserves in our banking system and external investments in the ownership of Irish residents. There is no national purpose to be served by increasing these reserves. There is no danger that this country cannot meet its external obligations and payments, and corrective action, if required, can be taken in time to prevent any serious difficulty.

The work of preparing the detailed plans and measures to achieve the production targets set out in the Second Programme is proceeding. Most of the material has been collected. The detailed investigations and examinations are being completed and the work of analysing the results and tabulating the targets for individual sectors, for particular industries and occupations, is now in progress. It is still a prospect that this second volume relating to the programme will be completed by June. This is rather later than we had anticipated but consultation with various organisations and consideration of their submissions has been a fairly heavy task. Nothing has emerged which suggests that the targets outlined are not realisable or that the resources required for the fulfilment of the programme are not available. The National Industrial Economic Council has produced an important report upon the targets set in the industrial sector which confirms these targets and which I hope Deputies have studied. Discussions are taking place with farmers' organisations regarding production possibilities for agriculture and prospects of realising them.

The purpose of the Second Programme is to determine the highest rate of growth that can be maintained in the period until 1970, in the light of policy considerations, the probable development of trading conditions in the external markets that concern us, and the resources of men, money and ability available to us. In reaching a conclusion as to growth possibilities, our past experiences and the experiences of other countries were relied upon. Many judgments and assumptions, not all of them economic, had also to be made. Precisely accurate forecasts from all sectors of activity are not to be expected but the over-all calculation of growth possibilities reflects the results of very careful study. The decision that a four per cent growth rate is feasible was based upon realistic assumptions as to internal and external factors and resources. What is involved is a programme of probabilities, not of promises that these things will happen nor a rigid plan for doing them. This is still predominantly a private enterprise economy and our progress depends on a multitude of individual decisions, supplemented and stimulated by State activities. The purpose of our policy is to encourage the making of the right decisions.

The role of State activity and particularly of State investment in the fulfilment of our targets will be considerable. Our economic progress is predominantly a matter of spending money in the right directions, in directions which add to the productive capacity of the country. Only the very wealthy countries can afford to ignore economic tests of public expenditure and not for very long. We cannot afford to ignore them at all. We must ensure that we get full value for all the money we spend. That necessitates checking and double-checking the purposes of all expenditure and making sure to avoid all waste. It may involve, and it has involved, as Deputies may be aware, decisions to postpone expenditure on many desirable developments which we would like to undertake, which are not directly related to production, until we can better afford them.

Mr. Aiken

But you did not pay for it. You left the bills for us to pay.

The Taoiseach

The Deputy suffers from some illusions. The rapid rate of growth of the national economy requires that the capital outlay on essential services should rise in line with national requirements, and for this reason, because of the growth of activity within our economy, we have this year to undertake additional capital investment to the extent of £12.4 million for the generation and distribution of electricity. Turf production will involve a further capital outlay of £1.8 million and transport by land, sea, and air including ports, harbours and airports, will involve an investment totalling £14.47 million. Capital expenditure on telephone development will reach £6 million this year. Industrial development of all kinds, including food processing, will call for a total of £9 million of State capital investment, apart from private investment which is expected to be considerable. The Agricultural Credit Corporation requires £3 million and voted capital services for Agriculture will absorb £11.3 million.

These are impressive figures and reflect the policy of the Government to maintain the level of State capital expenditure at the highest possible point. Deputy Sweetman appeared to regard it as a criticism of the Government that this level of capital expenditure by the Government is, as he said, double what it was in 1956. That is one of the reasons the people are now twice as well off as they were in 1956 but the maintenance of this high level of investment which is essential if our rate of economic growth is to be maintained will present some difficulties. The total capital programme this year is £96.11 million, of which £70.77 million must come from the Exchequer. Normal sources will produce, as set out in the booklet, an estimated £31.2 million, leaving £40.46 million to be found by national loan or other borrowing.

Deputy Dillon exhorts us to spend more money on education and this is something I am very glad to hear because it reflects a remarkable change in Fine Gael's point of view. I am going to remind him of how the Fine Gael view was expressed in action when he was over here on this side of the House as part of the Government of the country. Deputy Sweetman said yesterday that there is nothing in this Budget for education. He was one time Minister for Finance and he should know the elementary procedures of presenting the Budget. The most important factor in determining the size of the Budget is the total of the Book of Estimates and I suggest that Deputy Sweetman should have taken the trouble to read the Book of Estimates before commenting on the Budget.

The fact is that the considerably increased provision for education on which the Government decided is set out in the Book of Estimates and it was not considered necessary to make any further arrangements in regard to education in the Budget. That is the sole reason why there was no specific reference to the allocation of funds for education in the statement by the Minister for Finance. Last year, the Government, as a deliberate act of policy, decided to raise the status of all groups of teachers by giving them salary increases in advance of the ninth round. The 12 per cent increase of the ninth round which applied to all categories of public servants was applied to teachers over their salaries as already increased by the status awards made during the year. The annual cost of this deliberate act of policy on the part of the Government, decided upon for the express purpose of raising the status of our teachers, will this year amount to £2.210 million.

As compared with the amounts budgeted last year, the amount provided in the Book of Estimates for the building of national schools is up by over £500,000. The provision for heating and cleaning grants for national schools is being increased by £100,000 which enables very substantial increases to be made in the rate of grants. Deputy Dillon is particularly concerned now about secondary education. One of the last acts of the Government of which he was a member was to cut the capitation grants to secondary schools by ten per cent. Has he forgotten that? They were not very much concerned about the development of secondary education when they had the power to do something about it. This year the capitation grants to secondary schools are being increased by 20 per cent on top of the ten per cent already restored to them to make good the cut by the Coalition Government.

For the first time in our history— as the Deputy pointed out for the purpose of trying to gain credit for himself with the spurious allegation that the idea was his—a scheme of capital grants for the construction and development of secondary schools is being introduced by this Government. Deputy Dillon may have thought about it when he was in Government but he did nothing about it. Arising out of the operation of the Scholarship Act which the Government passed in 1961, a further £69,000 is being provided for scholarships in this year. The provision for vocational education, apart from teachers' salaries, is being increased by £74,000. An additional £615,730 is being provided for university education, including an added amount of £443,000 in respect of capital expenditure.

The total increased expenditure for education this year, as compared with last year, and apart from any sums of money that may be attributable to the ninth round of wage and salary increases, is £2,167,000, and to mark the contrast between our performance in office and Fine Gael's hypocrisy out of office, I will mention one startling fact: since 1957, since Deputy Dillon ceased to be a Minister, the total expenditure on education has increased by no less than £12 million. That is a fairly substantial contribution.

Mr. Dillon

And taxation by £108 million.

The Taoiseach

Where does the Deputy think we get the money?

Mr. Dillon

It did not take £108 million to produce £12 million.

Mr. Aiken

We did not reduce the capitation grants.

The Taoiseach

Deputies in both Fine Gael and Labour appear to be perturbed about the announced increase in Post Office charges. I want to take them back to reality in this. These increases are required solely to meet the cost of higher wages and salaries in the Post Office service.

Mr. Dillon

It does not make the 5d. stamp any cheaper.

The Taoiseach

The full amount which it is anticipated the higher charges will yield this year will not be sufficient to meet the full cost of these wage and salary increases. That is because, first of all, there is a retrospective element in the wages and salaries paid this year, and secondly, because the increases will not be in operation for the whole of the financial year. When the Government examined the position in the Post Office, we found that salaries had fallen behind comparable classes in other branches of the public service and we decided that it was just and right to make an adjustment in these salaries to bring up the clerical salaries and operative wages in the Post Office to the comparable standards applying to similar work in other sectors of the public service. We did that knowing that, because of the very large numbers involved, this would necessitate a revision in the Post Office charges.

Am I to interpret Deputy Tully's statement denouncing these increases to mean that he and his Party are against the upward revision of the salaries and wages of Post Office workers? Or are they merely against providing the money to pay the increases? The principle that the Post Office should pay for itself and not be subsidised from taxation is not merely sound but as far as I know, has never heretofore been questioned in the Dáil. There is, I agree, an obligation on the Government to ensure that the cost of these services is not unduly inflated and the Minister for Posts and Telegraphs is now about to initiate a drive for economies in the Post Office by the adjustment of the services to the reasonable needs of the people and by changes in procedures which will, it is hoped, increase individual productivity.

Mr. Dillon

So that we are going to get less for more.

The Taoiseach

I wish the Deputy would make a sensible remark some time. It is not possible yet to say what scope for economies may exist. Postal and telephone charges, however, are still very reasonable by comparison with other European countries and we could not continue to keep them lower than the charges obtaining elsewhere at the expense of denying to our Post Office workers rates of remuneration related to the quality of their work.

I suppose in the future this year's Budget will be known as the farmers' Budget.

Mr. S. Dunne

You may bet your life on that.

The Taoiseach

The most disturbing feature of our national situation is that incomes per head of persons engaged in agricultural occupations is rising less rapidly than in non-agricultural occupations. This disparity, which has been a cause of concern for many years past, is tending to widen rather than to narrow. That is the main justification for further substantial measures of agricultural price supports and subsidisation. Farmers cannot get regulated and uniform increases in their incomes like wage earners. We think it reasonable to ask the rest of the community to accept some burden of taxation to enable farmers to acquire a better share in the improving national circumstances, even if full equality of incomes is not yet possible.

In the circumstances of this country the gap between farm and urban incomes cannot be closed by Government action or Government subventions alone. The proportion of our population engaged in agriculture is too great and the resources of the rest of the community too limited to permit of it. In other European countries the industrial sector is relatively much stronger and the agricultural sector much smaller, which enables them to adopt policies of agricultural income support which are not feasible here.

As our industrial sector grows in strength, the possibility of giving a greater measure of assistance to agriculture will grow with it, if it should continue to be needed. The improvement of agricultural incomes must come, in the main, from market prices. Because higher agricultural output must almost entirely be exported, this improvement must depend on better international regulation of trade in agricultural products. The prospect of this happening under the forthcoming GATT negotiations, or by our participation in the European Economic Community, are still uncertain. The Minister for Finance yesterday made known our decision to revive our application for GATT membership. What the outcome of these negotiations will be is still not known. The conflict between the GATT and the existing trade agreements which we have with Great Britain is obvious. The GATT restrictions do not apply to existing preferences but they would apply to any new preferences. These are the matters we are going to negotiate about.

There may be possibilities of improving the net incomes of farmers through the development of co-operation and the initiation of better marketing systems for agricultural goods, and all these are being examined.

In programming a 2.7 per cent annual increase in agricultural output the Government were setting forth a view as to what was practicable and probable rather than what is desirable. There is no doubt that Irish agricultural potential would permit of a much more rapid rate of expansion, if market openings could be assured for the higher output. There is, of course, no thought of limiting the growth of agricultural output to this figure, if further possibilities for its extension should present themselves. The assumption underlying the recent document published by the Irish Creamery Milk Suppliers' Association that the rate of growth of agricultural output can be determined by our own decision, regardless of external market conditions, is unrealistic in the extreme. In respect of international trade in agricultural products, most predictions have the habit of proving very inaccurate. In respect of milk products, of meats and of sugar, there have been recent changes which were not foreseen, affecting both the volume of demand and the prevailing level of prices.

There is no reason for pessimism regarding world needs for the kinds of foodstuffs that are produced in this country. In recent months we have had many discussions with the British at ministerial and official levels in respect of agricultural markets and agricultural marketing arrangements in that country, both arising out of the new British policy of market regulation and sharing and the wider prospects of a more fundamental change in our trade relations. These discussions have on the whole been fruitful, although their outcome was not uniformly satisfactory from our point of view. In respect of the wider proposals for a new trading relationship, the imminence of the general election in Great Britain and the political circumstances prevailing there seem to be impeding our desire to bring the discussions to early finality.

The Budget also makes provision for increased social welfare payments. It is our boast that some improvement in the social welfare benefits in force has been effected by this Government in each year in which it was in office since 1957. These increases were individually not spectacular in any year but they have amounted in the aggregate to a substantial improvement. Most people would wish to see greater improvements in these payments than it is possible to effect— even Deputies opposite who yesterday voted against the provision of money to enable any increase to be achieved.

Again, it is, perhaps, necessary to remind Deputy Dillon that his newfound interest in the wellbeing of the social welfare classes does not seem very convincing against the light of the record of his Government. During the whole of the three years of the Coalition Government when he was an important Minister in it and Deputy Corish was Minister for Social Welfare, there was one increase, one single increase.

Mr. Dillon

Nonsense. There were three.

One halfcrown in their time and one halfcrown in 1964 are two different things.

Mr. S. Dunne

You have given the farmers twice what you have given the old age pensioners.

The Taoiseach

I know Deputies do not like to be reminded of these things but they are going to be reminded often enough.

(Interruptions.)

An Leas-Cheann Comhairle

Order.

Mr. Dillon

Fianna Fáil put £9 million on the people's food.

The Taoiseach

The consistent increase, year by year, in the level of our social welfare provisions, including the increase this year, is to be contrasted and stands contrasted with the very meagre performance of the Coalition Government when they were in power.

Mr. Dillon

Examine it—£9 million on food.

The Taoiseach

Deputy Dillon spoke about social insurance arrangements. The range and magnitude of our social insurance benefits are determined mainly by the size of the contributions paid by workers and their employers, although in this country the Government pay a much larger proportion of the benefits than is the case in other European countries and more than double the proportion paid in Great Britain. The rates of contribution and of benefits were increased in January last. As Deputies are aware, aspects of our social insurance arrangements which may result in an expansion of their scope and their cost, are under consideration.

Mr. Dillon

"And their cost."

The Taoiseach

I do not know how you can expand them otherwise than by increasing the cost. The Deputy ought to have a bit of sense once in a while. In these matters the Minister for Social Welfare consults with the representatives of employers and of workers and generally tries to proceed by agreement while maintaining the contribution principle, which is the outstanding characteristic of these social insurance arrangements. While fresh legislation is not contemplated in this year, we must envisage further changes in the future and the progressive improvement of these services and the progressive expansion of the individual contributions.

Deputies profess to be worried about prices. I do not know if any of them thought it would be possible to bring about an all-round increase of 12 per cent in wages and salaries without some upward movement of prices. If they thought that, they were the only people in the country who did.

Mr. S. Dunne

It is a case of giving with one hand and taking it with the other.

The Taoiseach

Not quite that. If the Deputy would listen for a few minutes, he would be a little wiser. Between the first quarter of last year and the first quarter of this year, the general price level here increased by three per cent, as revealed by the Consumer Price Index Number. Deputies who pretend to be perturbed about the rise in food prices might have studied these figures a little more closely and they would have found that between these two periods there was little change in the overall level of food prices. The index for the food group changed from 126.1 in January 1963, to 126.7 in January, 1964. As I have said, the likelihood is that the impact of higher wages and salaries on prices in this year must cause prices to rise in some degree. It may be that there will be a rise in prices by 4 per cent or thereabouts. An increase of that dimension may be expected—due to higher internal costs. I expect that adjustment of prices, where necessary through higher costs, to the extent that it has not already been done will be completed within a couple of months. Then we can expect a period of price stability for, perhaps, two years or even longer if import prices remain stable.

Once again it appears necessary to re-state some elementary principles in this matter. When national production is rising at an average annual rate of 4 per cent this is the maximum rate at which incomes can increase in real terms. If nominal incomes rise faster than that prices will certainly move up to confine the real gain in incomes to what higher national production can support. This is a mathematical certainty. When this national wage agreement was being negotiated I expressed the view of which Labour Party Deputies have since reminded me that an increase of 8 per cent or 9 per cent over a two-year period was the increase that in my opinion, and in the opinion of the expert advisers of the Government, was possible without adverse effect on the cost of living or national development prospects. The argument I am now making is that if that national agreement had provided for increases of that size the workers would be as well off as they are now.

It is not possible for us by any arrangement of wages or salaries to make ourselves better off than we are and if we push nominal wages and salaries above the level that national production can support, prices will rise to defeat that possibility. In our circumstances and under our democratic methods sound national policy depends upon an understanding of economic realities by all workers and by all managers and on the determination of the Government to let economic realities guide their decisions. A function of the Government is to give advice on these matters whether the advice is taken or not. We have also another function, which I am now exercising, of spelling out the consequences of the actions taken.

There was an agreement for 12 per cent and I said here at the time that it would be worth while paying some premium, over and above the average increase which the expansion of national production could support without adverse consequences, in order to initiate a new and better system of wage adjustment which we hoped would be retained in the future. Because of the undertaking which I gave in the communication which I addressed to the Federated Union of employers and to the Irish Congress of Trade Unions the Government honoured that 12 per cent national agreement in respect of all the people in its own employment. The point, however, is that we must as a nation recognise, whatever political people may want to suggest, that these higher wages are being paid out in advance of the increase in national production and the improvement in national productivity which should make them possible.

The gap which we referred to in the White Paper published in January, 1963, has reappeared although it should close again before the agreement recently negotiated has expired. There may be difficulties to be overcome before that can be achieved. It is important to get it understood that the 12 per cent increase in wages on this occasion was exceptional and that if the rate of national economic growth averages 4 per cent per year further wage increases must be related to it. If our economic progress proceeds, as we expect, with an average increase in total production of 4 per cent per annum, then the average increase in national wage agreements must be in line with that development and these further improvements in wages and salaries should be paid preferably after, rather than before, the production gains have been recorded.

In the excitement of our progress we must not let our prices and costs move out of line. If we do, our progress will stop. I have urged all our business leaders, business concerns and managements to consider and apply every possible alternative for meeting higher costs rather than price rises. Some have already found it possible to absorb higher costs without price changes; others can do so, perhaps at the expense of employment. Some cannot do it at all. All can try to minimise the effect of higher costs by measures to improve productivity, that is to say, keeping unit labour costs at the lowest practicable level.

In all countries and at all times the most potent force working on industrial managements to strive for maximum efficiency and productivity has been the upward pressure of wages. I expect our trade union leaders will act wisely. Some concerns cannot afford to carry any higher costs now and stay in business. They must be given a chance of reorganising before new burdens are placed on them. The preservation of their employment is of greater importance to most workers than the upward movement of their wages. The main danger of rising prices is that the country's export capacity may be reduced.

Mr. Dillon

Hear, hear.

The Taoiseach

This country cannot develop without expanding exports.

Mr. Dillon

Hear, hear.

The Taoiseach

For instance, the Second Programme envisages an increase of 150 per cent in industrial exports in this decade and this can be achieved only if we produce quality for quality goods which will be competitive in price.

It is true that inflationary forces are operating elsewhere also and this may enable us to maintain relative competitiveness even in marginal industries on this occasion. So far, at any rate, there has been no sign of any loss of confidence among our manufacturers in their ability to maintain or to expand their exports in this year. Everywhere, in this country as in all countries, the union leaders are now understanding that the only sure and permanent basis for higher wages is higher productivity and are actively co-operating in plans to propagate this doctrine.

In the era of freer trade into which this country is moving whether we like it or not, we must achieve a steady improvement in productivity, that is to say, in the output of goods per person employed, higher than in the countries with which we expect to trade until equality has been accomplished. This means an annual improvement in productivity of at least 3 per cent per annum. The output of goods must grow more rapidly than employment to this degree.

The policy of the Government can have no more effectiveness than the public understanding and support it receives. I have tried in this speech to deal with the main aspect of the policy of the Government arising in connection with the Budget. Economic recovery has been achieved and the continuation of the country's progress can be forecast with confidence. Levels of output are unprecedentedly high and still rising. We have not done all we would have wished, and certainly not all we hope in due course to accomplish. The foundation and framework for future development have been built.

The advances of recent years are sometimes taken so much for granted that their importance is under-rated. Nothing is so secure that it cannot be lost again. The world's economic environment is constantly changing, and we must always be prepared to adapt our policies to it, and to ride the winds of change, no matter whence they may blow. Failure to do so would involve heavy economic penalties. The prosperity of a small nation is never a static situation but the outcome of a continuous struggle. We must always be prepared to try out new ideas, to seek new roads on which to advance, to accept no setback as final and no victory as adequate. Our knowledge of our national problems is continually increasing, and also our understanding of the means of minimising or overcoming them. The most futile person is he who asks the petulant question: "Why was this not done long ago?" Many things are possible for us to-day which were never possible before, and there are many ideas, born of our own experience or the experience of others, which were not known before.

The practice of consultation with the organisations which are representative of important economic interests has been a most fruitful source of good and new ideas, whether or not agreement on all possibilities, or even complete harmony of viewpoints, was found. We have found that consultation most fruitful when focussed on specific problems, less so when general aims are being defined, because no sectional organisation can look at national problems objectively and comprehensively. Only the Government can achieve a balance between national resources and the often conflicting desires of every section, and take the decisions which determine the rate of economic or social progress and keep the country moving in line on a common front. As President Kennedy said: "A rising tide lifts all the boats."

While our aims are fixed and constant, we intend to go towards their realisation pragmatically and flexibly, trying so far as possible to bring all sectional organisations and sectional interests along with us but, in the last resort, taking full and final responsibility for our own decisions. We have tried to keep to a realistic and down-to-earth interpretation of national policy and, when decisions are taken and announced, to apply them vigorously and completely. That is our conception of good government. That is what, in all modesty, we claim we are now giving to the country.

General MacEoin

I certainly have some admiration for the Taoiseach's audacity when he tries to convince us as well as his own backbenchers, who clapped so much, that he means what he says. It is amazing. I am not surprised that the country is in the condition in which we find it. The Taoiseach has given expression to several principles to which we can all subscribe. In Gormanston, he made a speech on christian social teaching that St. Thomas Aquinas could have made, but when it comes to practice, it is a very different thing.

When the Taoiseach says we must adapt our policies to the changing circumstances of national and world trends, does he mean to assert that no one has the right to change his mind or his policy except Fianna Fáil? Is that the prerogative of Fianna Fáil? If we suggest changing a policy from yesterday to today because of changed circumstances, we are immediately pilloried and told: "That is not what you said last week; that is not what you said six months ago." We are reminded of some point that suits the Fianna Fáil political trend at the time. Of course there is neither sense nor reason in that. We might as well challenge Fianna Fáil for changing their policy from time to time. Of course they change their policy. If they did not, they would be static and there is no place for that type of person in any country. We must adapt ourselves to the circumstances in which we find ourselves.

What is the position in which we find ourselves today? The greatest burden of taxation that has ever been imposed in the history of the country is being imposed in a most hypocritical and dishonest way. When the Minister got up yesterday to introduce his Budget, we expected that it would be the national Budget of an Irish Government dealing with all the moneys coming into the Exchequer for the coming year. Out of a clear blue sky, he said he would not deal with the Department of Posts and Telegraphs, as if they were an extern body. From the manner in which these two Budgets were introduced, one would think the revenue of the Department of Posts and Telegraphs does not come into the Exchequer and is not taken into account. Of course it is part of the national Exchequer receipts and expenditure. When the Government introduce two Budgets on the one day, I think it is the lowest trick possible.

Mr. O'Malley

The Coalition introduced three supplementary Budgets.

Mr. T. Lynch

Not on the one day.

General MacEoin

We introduced levies to bring in £3 million for capital expenditure, not for Supply Services, and we have never been allowed to forget it from that day to this, but Fianna Fáil can bring in taxation of £24 million without any question at all for Supply Services, not capital expenditure. I shall deal with their capital Budget in a moment. I am now talking of their day-to-day expenditure.

When the Taoiseach blandly said that in three years the inter-Party Government did not give any increase to social welfare recipients, he did so with his tongue in his cheek. We did give the increases. But we did more than that. We kept the £9 million worth of food subsidies in operation. When Fianna Fáil took those off, they could have given the old age pensioners and all the social welfare recipients a rise of 22/6d. a week if they had wanted to because that is what they took from them. They could have increased the whole social welfare payments then by no less than 22/6d. a week but they did not. They gave them 2/6d. again. They are great with halfcrowns. They seem to have a sort of affection for the halfcrown. They did not like the crown, I suppose, and the halfcrown does: we shall leave it at that.

The thing that strikes me about this Budget is its similarity to the British Budget. The British Chancellor of the Exchequer set out to reduce spending. He set out to stop the spending spree. He set out to reduce the spending power of the people by imposing the £100 million additional taxation and he had the courage to say that that was what he was doing. It may not be good politics for him to say it—I do not know whether it is or not—but at least he told the people what he was doing. Fianna Fáil increased taxation with the same objective—remember, it is to reduce the purchasing power of the people—but they have not the courage to say it. They will take it in and the reason I assert that is this. There is no doubt about it any Government with a Budget today of over £200 million estimated expenditure for the ensuing year could not say that there would be over-estimation by at least 5 per cent—and 5 per cent on £200 million, 1/- in the £, means £10 million.

There is no over-estimation this year. There is no £2 million or £3 million, even. It was £2 million or £3 million in the last Budget but, this year, there is none. What does that mean, exactly? It means, as far as Supply Services are concerned, that the Minister for Finance has abdicated. He is saying to every Government Department: "Spend, boys, as much as you like. There is no restriction. You may spend everything in that Book of Estimates and you can fire away. I shall not control you." Thereby, he is failing to carry out the duties which are assigned to the Minister for Finance.

It is part of the duties of the Minister for Finance of any Government, and here, in particular, because of our peculiar circumstances, to carry out the financing of the country in the very same way as a first-class mother of a household would do in the running of the household. She is not to give all the children the right to say: "We shall spend what we like" because, if she does, there is trouble. There is no point in labouring the matter further but they will take that £10 million from the people which, in my opinion, they do not want. At least, if it is not £10 million, it is £3 million. On £160 million the year before last, it was £3½ million for over-estimation. Last year it was £3 million. This year, there is not a shilling. There is the most accurate calculation ever done by Departments——

Mr. O'Malley

The Minister should be congratulated.

General MacEoin

There is not a word of truth in it. I will bet a halfpenny to a hayseed that if there is a single Department that could not and would not save more than a half per cent of their Estimate, they could not spend it: it could not be done. Therefore, the implication is clear that the Government are not satisfied and are not happy with the expenditure that has taken place.

The Taoiseach waved aside the balance of payments problem. Then, in a suave way, he said that Deputy Dillon had a figment in his mind as to where the inflow of capital was coming from. Take your own book—Economic Statistics—page 4. You say:

There was a net inflow in 1963 of about £0.7 million in respect of the sale of securities by private holders. Share capital from abroad received by companies amounted to £3.2 million. Payments in respect of life insurance are estimated at £2.0 million and withdrawals from the British Post Office Savings Bank and British Saving Certificates amounted to about £0.6 million. The net inflow in respect of other capital transactions amounted to £24.2 million. This item contains a number of constituents, the principal being extern subscriptions to issues of the central government and public corporations—

—in other words people thinking it is safe to invest money here from outside the State—

—direct investments by extern companies in their branches and subsidiaries in the State, net changes in bank deposits within the State of extern customers, net change in Irish bank acceptances discounted in London, changes in external indebtedness and loan capital, stock exchange transactions through external brokers, purchases of buildings and land by externs and revaluation of external securities held by the banking system.

They are the sale of the land and buildings. It is alleged it is only a figment in our mind. What is this figment, then? Are we again paying for the production of figments?

Are we to take it that these statistics are to be read only provided they suit the Fianna Fáil argument? Are we to take it that they have no value whatever if they are utilised to show that what Fianna Fáil and the Government are asserting is wrong? I recall the truculent way in which the Taoiseach said across the floor of the House to Deputy Dillon, the Leader of the Opposition, that he had this phobia, that he did not know what he was talking about. There is no doubt about it, everybody knows that, notwithstanding the number who have left it, the Irish people still love the land of Ireland. When large tracts are bought up by some people who are not citizens of the State, it can create situations which I should not like even to mention. The Government should take very careful note of that matter.

With regard to the Capital Budget, may I comment again on the way the Taoiseach asked: "Are you opposed to capital expenditure on housing?" Of course, we are not. What we complain of is that the Government have failed in their housing programme over the past six years. Housing is always a sound capital expenditure.

He asked if we were opposed to capital expenditure on schools. Of course, we are not. Are not the rural schools a public scandal? They are outdated and outmoded. Half the rural schools have no proper sanitary arrangements, no proper heating, or anything like that. No matter what money is required, this Party, and I am sure the Labour Party, and, indeed the Fianna Fáil Party, too, are prepared to go ahead with the programme. Nobody is opposed to it. From the way the Taoiseach spoke and from the way he propounded his questions, one would think we were opposed to all this.

We are not opposed to arterial drainage. The only complaint we have is that it is not going fast enough. We initiated the Land Project and the only complaint we have about that is that it is not going fast enough. It is held up because of two factors: arterial drainage is not being done quickly enough to take the water off when it is let go under the Farm Improvements Scheme and the Land Project; the other is the elimination of that part of the Land Project under which the State did the work and the farmer repaid his share of the cost through the medium of his land annuity. That has actually held up the reclamation of land. It is a pity.

The Government say they want to increase agricultural production by at least 2½ per cent per annum. They would like a bigger increase. The increase would come if only they would make the land available to the people. Reclaimed land brought into production is stated to be 1,500,000 acres since the introduction of the Land Project in 1948. It could be 2,000,000 acres if Section B were continued.

The Taoiseach said that the proportion of our taxation to public expenditure was around 20 per cent. The figures show that for the Supply Services and other services national taxation is in the region of something over 27 per cent. The Taoiseach brushes that aside and quite blandly states that this Budget will be described as a farmers' Budget.

Out of the huge amount of increased taxation, agriculture will get approximately £5 millions. There will be 2d. on the gallon of milk and a reduction in rates on agricultural land; the astonishing thing is that the Minister for Finance stated yesterday that it was a reduction to the 1957 level. Again, that is only half the truth. What he really meant was that the rates will be brought back to the 1957 level. He forgot that there is no reduction of rates on farmhouses and out-offices. The full rates have to be paid on these.

In 1933, a small farmer in Longford paid 4/6 in the £ on his valuation of £5 on his house. To-day the rate is 60/9; on the £5 valuation, he has to pay £15 now in rates. Because of the relief of rates, he has to pay a much lower rate on his ten-acre or 15-acre holding. No matter what anyone says, the increase in rates is still an intolerable burden on the small farmer. No reduction in rates on agricultural land is of any benefit to him whatever. The average valuation in north Longford is under £5 and the greatest incidence of that £5 valuation falls on the house. There is no reduction there.

Yet the Minister blandly says that rates are being brought back to the 1957 level. That will probably be true of any scheme he introduces but there will be no compensation for the increased valuation on the house. Many houses have been reconstructed through the medium of grants by the Department of Local Government and by the county councils. No sooner is a house reconstructed than the valuation is increased. The valuation of a small cottage to which one small room was added was increased by the colossal figure of £6. The owner appealed and the Commissioners brought it down to £3. That means that man must pay £9 extra in rates merely because he added a small room to his house seven or eight years ago. There is no reason in that.

The Taoiseach went on to say that we had a sound economic position. I cannot see how he can convince himself and his Party of that when the policy of the Government over the past five or six years has resulted in 70,000 fewer people in employment. There are 70,000 potential heads of families who should be producers of wealth here producing wealth elsewhere. The smaller number in employment at home are forced to bear the burden of increased taxation.

The Taoiseach said that an extra £5 million was being spent on education. With taxation running at over £200 million, on what would we spend it if we did not spend it on education? The sum spent on education is out of all proportion to the total amount levied in taxation. With taxation increased to such an extent this year, education should have received a much higher amount. Much of the increase for education is in respect of teachers' salaries. That will not be of any great assistance to the pupils. It may mean that the teachers will not be so cross with them. It may get the teachers out of financial difficulties and, therefore, allow them devote more time to their pupils. But there is no great increase for improving the facilities for the pupils.

I was never happy about the figure for unemployment. I believe it has been fallacious from the beginning. In my opinion, a large number of people are registered as unemployed who are not employable. However, the standard has been set. Today, although 70,000 fewer people are in employment and are gone out of the country, we have a figure of 60,000 unemployed. That makes the Taoiseach's assertion that industrial production has increased by four per cent a very doubtful one.

I agree with the Taoiseach that this country is not like Britain and some continental countries where industry is the big end and agriculture the small end of the economy. In this country agriculture is the big end. Therefore, it is important that those engaged in agriculture should have an opportunity of increasing their production and, above all, an opportunity of marketing what they produce. I have heard complaints from farmers that the marketing boards for the sale of agricultural produce here are not similar to those in other countries which are constituted mainly of the farmers themselves. I know that the NFA have asked that these marketing boards be manned by members of the agricultural community. If they want that, why not give it to them? I do not care how good the civil servant or politician may be who is put on these boards, when his livelihood does not depend on agriculture he has not the same interest in it. The agriculturalists have not confidence in these boards, and when there is a lack of confidence you do not get the co-operation that should be got.

Dr. Ryan

To every farmer.

General MacEoin

To every farmer who requires it, with the condition that every farmer who requires it will comply with the advice and the instructions of the agricultural adviser. That is bound to increase the national debt but we are prepared to do that in the belief that it is a good thing for the land of Ireland to keep the farmers on their holdings rather than to have the land turned into a wilderness. We say that our plan for the relief of rates was such that we could reduce the rates substantially and we also say that if the rates are increased by Government action, the Government should accept responsibility for that increase.

Mr. J. Lynch

Who is going to pay for it?

Mr. T. Lynch

Why put it on the local authorities? I have been a member of a local authority for 25 years and I have experience of it.

General MacEoin

If the Minister for Industry and Commerce got our plan as to what we propose to do and if he put it into action next week, would he give us any credit for it?

Mr. J. Lynch

We would be delighted to.

General MacEoin

Not even decent Jack Lynch, the Minister for Industry and Commerce, would do that. It would be put across as a purely Fianna Fáil idea and we would not get any credit for it. They got the people of Ireland to reject our proposals several times but the reason so many people in Kildare rejected our relief of rates plan beats me. Perhaps I should complain that our publicity was not successful and that, like Fianna Fáil, we should appoint a publicity agent to get it across, although they have three papers with which to do it. We have that plan; we know we can do it. The Government asks how, but let them find out. We will do it and that is not a half-promise.

I will be able to give some indication of the progress being made in that plan of increasing employment by 100,000.

This Budget, even taken by itself, is a good one. It can stand on its own as a solid contribution to our economic progress but in order to appreciate any Budget, it is necessary to take it in conjunction with preceding Budgets by the same Government and, in this case, with both Programmes for Economic Expansion.... The First Programme was introduced at a time when there was a grave recession in the economic position. That recession started in 1956, in the middle of the second term of the last Coalition Government. The production rate was not fast enough. The increase in economic progress was only one per cent and in many respects we were losing ground. There was large scale emigration which, as Deputies opposite know, ran at something like 40,000 a year and that was accompanied by a very high level of unemployment. In fact, the unemployment figures reached some 95,000 to 96,000 in the winter weeks of 1956 and 1957, that is, at the end of 1956 and the beginning of 1957.

It was little wonder then that there was despondency throughout the country and that doubts prevailed as to the capacity of the country to make any solid or regular progress at all. Public confidence was at such a low ebb that it was obviously necessary for somebody, and particularly for the Government, to re-define the national objectives. This was done in a very realistic way through the medium of the First Programme for Economic Expansion. That programme, as we all know, set out a number of attainable targets, some of which were surpassed. In the main, however, the programme involved the elimination of wasteful capital expenditure and it was laid down, and has since been strictly adhered to as a principle, that henceforth any capital moneys raised must be for true capital expenditure and must be capable of creating new wealth in the country. The capital expenditure since then has fulfilled the obligations of that principle. Then, there was the necessity for a sound budgeting policy to ensure that rather than budget deliberately for a deficit that in future in order to curb inflationary trends, we should budget at least to balance the account, if not for a surplus. In many years in the intervening period, that has been achieved as well. In short, what the people wanted was an overall financial and capital programme in which they could have confidence.

The success of the First Programme for Economic Expansion evoked the confidence of the people and that was mainly responsible for its success. The annual growth rate of two per cent envisaged in the first programme was more than doubled from two per cent to four and a half per cent, which represented almost five times as great a growth rate as existed in the period before the programme was undertaken. In the four years up to 1962 the gross national product had increased by 18½ per cent and in every individual sector of our economic activity there was significant, and in many cases spectacular, progress.

The Taoiseach has dealt, as far as I listened to him, with the main features of the Budget and dealt in some detail with some aspects of it and the economic advantages that are expected to flow from it. I propose to deal in the main with the effects of the Budget and of the Government's policy on the creation of industrial employment. It is accepted that in the Second Programme for Economic Expansion the achievement of the growth rates involved will depend to a considerable extent on the attainment of the industrial targets set out, the attainment of new industrial jobs and the Government's policies designed to achieve that purpose. The volume of production in manufacturing industries has increased by about 50 per cent during the tenure of office of this Government. In 1956 the volume index stood at 103.6. It dropped to 102.5 in 1957, an indication of the downhill trend that had started in the middle of the period of the Coalition Government. That has since increased substantially to an estimated 151.9 in 1963. There is the 50 per cent increase to which I have just referred.

The average number of persons engaged in industry has risen from 141,000 in 1957 to 167,000 in 1963. It can be said, therefore, that some 26,000 new jobs have been created in industry since 1957. The rate of increase in the numbers at work in industry has, through the greater productivity, been exceeded by the rate of expansion of output so that it has been possible, apart from the increase in the number of those at work, for those at work to achieve higher earnings in real terms in these years. In 1963 the rate of industrial expansion was 6½ per cent over 1962. That varied as between the first and second half of the year. It was about five per cent in the first half and eight per cent in the second but there was an overall increase of 6½ per cent.

This achievement reflects the increased efficiency of all our firms and in particular some of the older firms. In the six years 1958 to 1963, there were 226 new industrial enterprises. These enterprises were those in which the capital involved exceeded in each case £10,000 and were either new enterprises or expansions of existing ones. The estimated capital in these industries is about £50 million and the employment is estimated to range from 14,000 initially to 28,000 when these new industries are in full production. There was, of course, the usual complement of industries established, amongst the number of 226, with either whole or partial foreign investment. These foreign investments in our industries have, of course, been attracted by the generous incentives provided by the State together with— and this is important—the favourable conditions for development which prudent Government policies have brought about.

These results, which are on a scale that has not been experienced before this in the country, have merited favourable comment from abroad and in particular from such an objective and responsible source as the Organisation for Economic Co-operation and Development. I do not think anybody will deny that the progress made in the development of new or extended industries has been made possible, in a large part at any rate, by the practical aids which the Government have been able to give industry in the past seven years or so.

I am not confining it to these seven years because Government aids had started as far back as 1952 when the first Undeveloped Areas Act was passed, but as a result of the Undeveloped Areas Act and the Industrial Grants Act, by 31st March 1964, the total amount of grants approved by An Foras Tionscal was £17.9 millions, say, £18 million, of which a total of £8.7 million were paid. Increased funds have been made available to the Industrial Development Authority to stimulate its campaign for the attraction of industry from abroad. Nevertheless, the Government are paying particular attention to the need to equip our native industries, our traditional industries, our long-established industries, for conditions of freer trade. For example, the increase of £1,715,000 in the Estimates provision for An Foras Tionscal for 1964-65 over the provision for the previous year arises from the need to make payment of grants which have been approved for the enlargement and adaptation of existing industrial undertakings to meet conditions of freer trade.

As well as these, the technical assistance grants which are administered by the Department of Industry and Commerce have been substantially increased both in scope, that is, the scope of the undertakings that can benefit from it, and in size of grants. This scheme now provides for the giving of grants of some 50 per cent of the cost of various schemes designed to promote efficiency in industry.

On the industrial side these achievements reflect the success of the Government's policy for industrial expansion. Exports of industrial goods have more than doubled in this period of seven years and, in case some people would like to believe otherwise, I can quote from the official statistics that the value of the overall exports increased from £131 million in 1957 to £196 million in 1963 and the volume of exports, apart from the value, increased by some 40 per cent in the same period.

Latterly we have been hearing complaints about the difficulty that some people have in maintaining their standard of living and complaints about a falling off in retail business. The figures give the lie to these complaints and prove that the contrary is the case. The average index of weekly retail sales has increased by some ten per cent between February, 1963 and February, 1964.

Mr. Corish

By ten per cent?

Mr. J. Lynch

Of course, the competition between the companies is keeping the price down. We shall never get to the bottom of it.

Sir Anthony Esmonde

What is the price of petrol in England?

Mr. J. Lynch

I was using a publication of the British for British people and unfortunately I did not get that figure. I think it is somewhat less than 5s. a gallon.

Sir Anthony Esmonde

Oh!

Mr. J. Lynch

Not much less.

Sir Anthony Esmonde

Most European countries have a special tourist ration.

Mr. J. Lynch

Most countries have abolished it. There is a rate in Italy which I suspect is a tourist rate.

In the notes I have had prepared, I intended dealing with Deputy Dillon's criticism of the improvement in social welfare benefits, but the Taoiseach has dealt adequately with it. He pointed out that in the last period of Coalition Government, between 1954 and 1957, there was an increase of only one 2/6d. given to each of two groups—noncontributory old age pensioners, the only category existing then, and non-contributory widows—whereas every year since this Government came into office, there have been modest increases. Taken over all, these increases represent a reasonably significant sum to those less well off sections of the community.

I should like to go back to what Deputy MacEoin said about this Government's failure in certain capital undertakings. In particular, he mentions schools. I happen to know a little of the performance of his Government on that matter, since I succeeded a Fine Gael Minister for Education in that Department. Within two years of my going to the Department, the rate of building of national schools had more than doubled. I should like to remind Deputies opposite that it fell to me to restore the ten per cent cut in capitation grants for secondary schools for which the Coalition Government were responsible. It is therefore difficult to reconcile their actions in the field of education with their criticism now of the rate of growth.

I touched on a few aspects of our economic endeavour in recent years, with special reference to the advance in our industrial sector. Deputy Dillon has described this Government as a gambler's Government. My only comment on that is I would far prefer to be a member of a gambler's Government, with their solid record of achievement behind them, than of the Government of which he was a member between 1954 and 1957, a Government which were so reactionary that our economy, instead of advancing as it should have done in those years, was steadily going downhill.

Mr. Coughlan

When we come to speak on a Budget and of budgeting for any particular section, be it on a national or local basis, it is the duty of the Minister introducing the Budget to give us an economic survey of the whole situation. When the Minister for Finance introduced the Budget yesterday, the survey he gave was confined to two or three miserable pages, reminding us of the old song: "How can I sing when my land is in danger." The Minister failed completely to give us a survey of the country's economy during the past 12 months, at the moment and the prospects for the coming 12 months.

We have been given some figures by the Minister for Industry and Commerce in relation to industrial expansion, but there is one glaring omission. He has not told us whether the employment was male or female, whether it was juvenile or adult. From what I know of the Government's industrial expansion policy, there are two aspects neglected—adult employment and male employment. In the city where I come from, young girls leave their homes at 5 o'clock in the morning to be carried out to an industrial estate, there to work for miserable pittances. If they form part of the employment figures the Minister has given us, if that is his idea of economic and industrial expansion, it is not ours. He has not referred at all to the important things; he has not told us about male and adult employment.

This brings me to the matter of increases generally. The Taoiseach said he had recommended to the employers and to the workers' organisations an increase of seven per cent in salaries and wages. He said that if these increases were to be given, they would be followed by increased commodity prices. Reading between the lines of his speech, it now transpires that the Taoiseach intends to allow the level of increased prices to coincide with the 12 per cent increase in incomes which, to my mind, is a further drag on the workers, particularly since they are bound to a two-year agreement. I forecast that that agreement will very soon be broken and higher demands made because of the indolence and inefficiency of the Department of Industry and Commerce in investigating the increased prices being charged for goods.

I shall talk about the twopence a gallon and may even know as much about it as the Deputy. I know what the farmers will get when the Government have finished with them. The Taoiseach recommended that there should be a floor of £1 a week increase. Where does it apply to those people, or to the temporary postmen who get up at seven or eight o'clock in the morning and cycle 15 or 20 miles in hail, rain or snow for 50/-or £3 a week? What will they get?

Mr. Coogan

Pneumonia.

Mr. Coughlan

They will not be able to cure it because they will not have the price of a "half-one". If we are going to be fair, let us treat all our people alike. We all know this is a farmers' Budget and that we had the ranchers' sons up after it. It was a hard task; they paraded every town and city looking for it. They came out like men and fought for it, and more credit to them. But when the "dishing out" was to be done, consideration should have been given to the working man and the small family shopkeeper trying to exist and face an extra 4/-to 7/- in the £ on his rates. No consideration was given to him. We were told that we would get it all in social welfare.

A decisive vote was taken here not so many months ago and a Deputy made a statement that he was promised these great social welfare increases and because of that, he was going to vote with the Government. Where has his 2/6d. gone. In 1938 terms, 2/6d. a week is worth 1½d. today Bearing in mind the devaluation of money, who is going to cry "Alleluia" or "Hosanna" for an increase of 1½d. a day. This is what this Budget has done. The quicker we bring these things out into the open the better. Imagine saying to any Christian today, in the country we live in, in 1964: "There is an increase of 1½d. to you and thank God we are in power to give it to you."

Now we shall move on to the 2d. a gallon. The 2d. a gallon was got after a hard battle. While the 2d. a gallon may mean a little to some it means very little to others The Minister for Industry and Commerce has told us that this will not affect the price of butter. We all know what is happening the butter in the country. The figures are there. The consumption of butter is falling and the consumption of margarine is rapidly rising because the people cannot afford to buy butter.

The amount of money per capita to the secondary schools increased to ten per cent. That question, which is very near to the mind and the heart of the Labour Party, has been completely neglected over all the years. Something should be done but no provision is made. They will tell you they will give a per capita grant but where does the secondary per capita grant go? If the Minister wants to know I shall tell him. It does not go where it should go, anyway.

I come now to the marketing boards. These are being set up. I am sure more boards have been set up by the present Government than you would get in the Jetland Ballroom. There is a board for this and a board for that and nobody knows what they are doing. They come in at 10 o'clock in the morning. They go away at 12.45 p.m., come back again and away at 5 p.m. That is what I see these people doing. If the individuals were left to themselves to poke out their own markets it would be better. They did it in the past. They marketed well. They worried about it. They went to the trouble of doing what these boards we have set up will not bother their heads about—and I am referring in particular to Bord na gCon but I shall leave that for another day.

I come now to the matter of the increase on spirits. I should like the Minister to throw his memory back to 20th June, 1963, when, on the debate on the Finance Bill, during the course of what I had to say then, I reminded him as follows, as reported at column 1422 of volume 203, No. 10, of the Official Report:

We are the only country in Europe to my knowledge that allows in beer or spirits without carrying a duty or tax. Our beers are exported to other countries. In France, they carry a 40 per cent import duty. In Germany, it is 27.2 per cent; in Italy, it is 39 per cent. In Switzerland, it is 4/- to the gallon, which is a fair percentage. In Belgium it is approximately 40 per cent and in the Netherlands it is 40 per cent. Here are we in Ireland allowing in foreign beers and spirits without a farthing tax and allowing them to compete against the products we can manufacture here in the country creating direct and indirect employment as a result.

That was in June, 1963. Yet what does the Minister do? Every other foreign-manufactured beer, spirit and wine should have got the same hammering as the Scotch whisky got. They are buying your barley and a lot more of it.

Dáil Éireann debate - Wednesday, 15 Apr 1964

Committee on Finance. - Resolution No. 11—General (Resumed).

Dáil Éireann debate -
Wednesday, 15 Apr 1964