Economic Situation.

I move:

That Dáil Éireann approves of the measures taken by the Government to deal with the economic situation.

At the outset of this debate, I want to make one general point which is important in the national interest. I have no objection to the cut and thrust of argument and no fear of being unable to answer effectively any charges brought against the Government for their handling of the economic situation. What I want to stress is this: it is the Government's conviction, a conviction shared. I am certain, by all the Parties here, that the national economy is sound in both its basic condition and its prospects. The external value of our currency is in no danger whatsoever and there is no risk of any major upset to the continuity of national development. It is necessary for me to say this both because this debate is taking place while a National Loan is open for subscription, and because I heard today that an article in the latest issue of an Irish periodical Hibernia has raised a rumour in London about a possible devaluation of the Irish £. With all the emphasis at my command, I state that there is no foundation whatever for such a rumour. The devaluation of the Irish £ would be detrimental to the national interest and there will be no such devaluation. The rumour is ridiculous, considering both the strength of our resources, which stand at well over £200 millions, and the Government's determination, already shown by the measures we have taken, to remedy quickly the imbalance in our external payments.

Deputies are, of course, aware of the general nature of the present economic situation which, in the view of the Government, has necessitated, in addition to the other measures which were announced by me here in July last, the recent imposition of temporary import levies. This situation was defined in the White Paper on our Capital Programme which was recently circulated to Deputies, who also received a copy of the statement which accompanied the announcement of the Government Order imposing the levies.

A most significant factor in this situation is the increase this year in the deficit on the country's external payments. To many people, perhaps including some Deputies, this balance of payments may be a difficult and even mysterious conception, but it is basically simple enough. The deficit is the measure of the gap which has emerged between the total effective demand arising in this country for goods and services of all kinds and for all purposes and the total resources available to the country to pay for them. It means that because of the rising level of our total spending for ordinary day-to-day consumption, for Government and local authority services and for investment, we are importing a considerably greater volume of goods than we can afford at this time or can pay for by means of our current production. It is now estimated that this gap in our external transactions, this gap between what we as a nation will spend and will earn in this year, may be as much as £50 million. A balance of payments deficit of that size must be seen as a symbol of trouble in the national economy.

We have had deficits in each year since 1962, on a rising scale in each succeeding year. Deputies will recollect that in the Second Programme for Economic Expansion we allowed for the emergence of deficits on current transactions in these years as national economic development proceeded and we estimated that taking one year with another they might average about £16 million per year, calculated at 1960 prices. Up to the present year these earlier deficits have been fully offset by strong capital inflow, so that no loss of reserves was experienced, and indeed, up to last year there was even a strengthening of the reserve position. This year while the deficit has increased the capital inflow has contracted somewhat and is expected to turn out at about £25 million, so that the other half of the net deficit, the second £25 million, required to pay for this year's higher import excess, is being met from the country's external financial reserve.

It can be said that the purpose of having reserves of this character is to enable the country to meet a temporary situation of this kind without undue difficulty. The question is: how temporary are the difficulties which have now arisen and how deep-rooted are their causes? If we could believe that the external payments gap was certain to contract, that internal difficulties were also rectifying themselves of their own accord, and that the pressure on the reserves has now ended, we would not have any need to take exceptional measures and we could face the coming year without any undue anxiety on this account. It is because the signs are that the pressure has not yet eased and that the situation could get worse, and because a continuation of the present trends could, apart from a further contraction of reserves, seriously impair the prospects of maintaining the country's economic growth, that the Government have considered it necessary to take exceptional action in this year.

The September trade figures were the signal for this. We had hoped that these figures would show not only a rise in exports but a contraction of imports. In the event, the rise in exports in September, compared with September, 1964, took place but the rise in imports proved to be even higher still so that the trade gap widened instead of narrowing. This country is by no means unique in having balance of payments troubles at this time. We are, of course, primarily concerned with our own position and its rectification, but we realise the measures which have been taken by other countries, notably Britain and the United States of America, to rectify their own situations have had an impact on ours also. The problem of the wider trade gap and payments deficit in this year arose from a variety of causes and I will mention first the fall in the value of our exports. This may not be first in importance as a cause but it moves into first place when we consider the way out.

In the 12 month period to the end of September, 1965 this fall in the total value of our exports was not considerable as compared with the 12 month period which ended in September, 1964. It was, indeed, less than £1 million but the situation has not been improving and for the first nine months this year, to the end of September, compared with the same period in 1964, the contraction was more considerable, total exports being down by £4.3 million. The year 1964 was, of course, a very good export year in which the value of our exports rose by £26½ million over 1963. The main decrease in exports in this year was in respect of live cattle which were down by £9.3 million. There were also some comparatively small declines in respect of sugar, textile yarns, fabrics and clothing, which were offset by increased exports of other industrial products, notably medicinal preparations, meat and metallic products.

The factors operating to bring about this fall in exports seem mainly to be temporary although there is cause for anxiety about the continuing competitiveness of Irish products in some sectors. The British import charge has not caused a reduction in the total value of industrial exports, lower shipments to Britain being offset by higher shipments to other markets. Total industrial exports may, indeed, prove to be marginally higher in the aggregate than they were in 1964 but the British levy had the effect of curtailing our rate of expansion and preventing them from expanding at the rate we had estimated in the Programme for Economic Expansion and which we required to enable us to pay for the rising flood of imports. The numbers of live cattle exported contracted by reason of the build-up of cattle stocks which it is our policy to bring about. In June when the annual enumeration was made the cattle numbers in the country were 372,000, or 7½ per cent higher than in 1964, but it now seems that the inevitable recovery of cattle exports is not likely to be considerable in the remaining months of this year and that the benefit of the higher stocks in increased exports will not take place until next year.

In this regard I want to stress again that there is a most urgent need to get Irish producers, and particularly our industrial producers, interested in markets for their products outside Britain. There are enormous markets available to them which even when tariffs apply producers in other countries are developing and where Irish producers can also find opportunities for trade.

I mentioned in a recent speech that the six countries who are in the European Economic Community import goods amounting in value to no less than £28,000 million in each year. It is a constant retort by other Governments when our existing trade disparities are discussed with them that the country could reduce these disparities by expanding our exports if we tried harder, and Irish diplomatic and trade missions abroad have frequently commented unfavourably on the reluctance of Irish manufacturers to visit these countries personally to explore the opportunities at first hand and to make the personal contacts that are necessary for the building up of new trade. Córas Tráchtála Teoranta, our export promotion organisation, offer substantial assistance of a very practical kind to firms willing to explore these market possibilities outside Britain and every Irish firm which is interested in expansion should be urged to contact them to discuss with them the measures that could be taken to get information regarding designs and prices in available export markets and to be put in touch with reliable agents. If it should appear at any time to any firm willing to undertake this form of enterprise that the existing services provided by Córas Tráchtála are insufficient, the Government are always prepared to examine proposals for their extension.

The negotiations now in progress with the British Government have very little relevance to the present position. It is not yet certain that an agreement acceptable to the Government will emerge from the negotiations, although some progress has been made. If there is an agreement, it is very likely that it will be expressed to begin to operate some time in the middle of next year rather than earlier. The country's present economic troubles must be thought of in terms of months, rather than years. A new trade agreement with Britain will bring long-term rather than short-term benefits. We have now been informed by the British Government that they will be ready to resume negotiations at Ministerial level next month.

The second feature of this national economic situation presenting itself in this year is the rise in imports. In the 12 months to the end of September, 1965 the total value of our imports went up by £21.5 million as compared with the 12 months ended September, 1964. For the nine months to the end of September of the present year the increase over the corresponding period of 1964 was approximately the same, £21.2 million. The major factors which brought about this increase in imports were increased imports of equipment and machinery and of materials for use in industry and agriculture and these are all desirable imports and the fact that they have been flowing in in increasing quantities to this country betokens a further rise in production and exports in the future. Indeed, this rise in production and exports would not be possible without these imports. The more our production expands the higher will grow our imports of this kind and our hope is to maintain, and even to increase, imports of this kind. We welcome the promise of higher economic activity which they imply so long as we are able to pay for them with current exports or by means which involve no threat to our continued solvency.

The third factor and, perhaps, the most influential one in this situation and certainly the factor which is hardest to bring under control is the increase in internal spending power by reason of increased spending by the Government, local authorities and higher personal incomes of all kinds which have been rising faster than the national production and have forced prices upwards and have contributed to higher imports of consumer goods. This situation need only be temporary provided that production is raised up as quickly as possible, and higher production in this context means higher exports, to bring total production into line with the current level of money incomes and provided the level of incomes is not raised further until total national production has moved ahead again, we do not think it need take very long to bring about the situation in which we can feel that the likelihood of a further deterioration has been averted but our purpose, of course, is not only to reverse the present adverse trend but to make sure this situation will not come about again.

The Minister for Finance has expressed the view that this stage may be reached about this time next year. We do not want a stop-go kind of development but a steady, continuing process of growth. We are endeavouring to apply the corrective measures as gently as possible so as to avoid any serious disturbance of trade or employment and in such a way as to encourage and assist rather than discourage and hinder the rise of national production. Given the degree of public co-operation which will be required it is our intention to persist in this course.

The only permanent answer to our problem is to bring about a substantial increase of national production and exports on the basis of competitive costs while holding the present level of spending until this has been done. The situation must, of course, be put right whatever may be involved because the consequences of allowing it to deteriorate would be far too serious to contemplate. These consequences would include bringing national economic growth to a halt for some period of time, the loss of employment for many workers, a weakening of public confidence in the soundness of the national economy and a consequent falling off of private investment in productive activities. For these reasons the Government intend to keep the situation under control. It may be necessary to emphasise that none of these things has happened yet and need not happen at all if our corrective measures are sensible and adequate.

The growth of national output in this year may be less than we programmed and less than last year but there is still growth. The rise this year in industrial employment was lower than we hoped but there has been an increase. During most weeks this year the numbers registered as unemployed have been below those of the corresponding weeks of last year and the available figures indicate that this is not attributable to any rise in emigration. There has been no noticeable falling-off in the number of new industrial proposals coming forward and to the extent that the formulation of new industrial proposals has been affected at all it seems more clearly attributable to the uncertainty regarding our future trade arrangements with Britain and with the other countries of Europe than to any decline of interest in Irish industrial possibilities. New industrial proposals which came to maturity and got under way in this year are not less in number and in importance than in any previous year. The measures we are taking, therefore, are directed not so much to putting right a situation which has already gone wrong but to prevent a situation arising which could mean that things had gone wrong or were going wrong. Our purpose is to eliminate the adverse trends and to strengthen the favourable one so that our programmed rate of national economic growth can be resumed as soon as possible.

Deputies will remember the statement I made in the Dáil in last July when it had become clear that the situation was not going to right itself and that specific measures to improve it were called for. These are set out again in the White Paper on Public Capital Expenditure recently circulated. The principal measures which I then outlined were, first, the adjustment of Government expenditure, particularly on capital account; secondly, the curtailment of bank credit for non-essential imports and its diversion as far as possible to mainly productive purposes; thirdly, the introduction of price control; and, fourthly, the avoidance until national production has increased of a further general increase in personal incomes. It has now been decided to supplement these measures by temporary import levies.

As far as the Government's capital programme is concerned, we found when we examined the position in detail that the overall reductions which could be made in this year were not so very substantial, having regard to the contracts and commitments already made and the need, in accordance with our purpose of trying to accelerate expansion in total national production, to increase the provision of money for the Agricultural Credit Corporation and the Industrial Credit Company. The overall reduction of £3½ million in a total capital budget of £103.7 million could not be accurately described as considerable.

While the total of Government spending on both capital and current accounts has always to be related to the general economic situation and while this is likely to become an increasingly important aspect of the management of the nation's business in future years, the policy of the Government is to maintain the Government's capital programme at the limit of the capital resources which can be made available for it and, within this limit, to divert as much of our capital spending as possible into truly productive purposes.

The change in our situation in this regard may not yet be fully appreciated. Heretofore, and indeed for so long as I have been in Government, our task, as we saw it, was to build up a volume of sound investment projects to an extent that would absorb the capital resources which were available. Now, for the first time, we have to select from the multitude of sound ideas which have been developed by Government Departments, by State boards and by public authorities those which are entitled to receive priority within the limitation of the available resources which can be diverted to public investment.

Very few will dispute that those projects which are truly productive, which will have the result of expanding the output of wealth within the country, are entitled to first priority. The probability is that the level of the State's capital programme cannot be greatly increased, if at all, in next year, which makes it all the more necessary that a system of priorities should be set up and maintained for the most productive, most urgent and most important purposes and that there should be every encouragement given to the expansion of private investment in productive activity.

Deputies will naturally be concerned about the effect which any limitation in the Government's capital programme may have on the building and construction industries, where the level of Government spending represents a very large part of the total amount of work available at any time. It was pointed out in the White Paper on the capital programme that the Government's capital spending on building and construction in this year is at a higher level than in any previous year and represents a higher proportion of total capital expenditure than ever before. We may not be able to finance all the constructive activities which local authorities, state boards and Government Departments may wish to embark on at this time; but we have been able, and hope to continue to be able, to finance them on a higher scale than in earlier years. We think it will be possible to maintain Government capital outlay on building and construction in next year at about this year's level, but we have not yet been able to make a firm estimate of the total capital availability for next year. It is our intention when this estimate can be prepared with confidence to publicise the capital allocations for the coming year as early as possible so that those concerned can know where they stand.

The Minister for Finance when speaking in this debate will deal more fully with this question of the availability of capital resources and their allocation. In respect of next year it is now fairly clear that any substantial increase in Government spending on the expansion of services which are financed from taxation must be considered to be ruled out. This means that expensive improvements of these services, including Education and Health, must be in the main put back until later on the understanding it is only when the national economic situation has been made more secure that permanent and substantial expansions of these services can be undertaken. It would be unwise to embark on extensions which could not be maintained or when a worsening of the economic situation might force a curtailment of these facilities later.

As regards the limitation of bank credit, this does not seem to have had much effect yet on either the level of imports or the level of internal spending. It may be that its effects will be slower in appearing. Total bank loans and advances within the State at the end of September of this year were £282.2 million as compared with £262.3 million at the end of September, 1964, but the rate of their increase has contracted sharply. In the period from mid-January, 1964, to the end of September, 1964, the total of these bank loans and advances increased by £20.7 million and in the same period of this year increased by only £1.4 million.

When speaking recently to the Dublin Chamber of Commerce, I expressed the view that it was only elementary commonsense, in circumstances where unrestricted credit facilities are not feasible, to set up a system of priorities for different expenditures. This is not a credit squeeze of any indiscriminate kind, but the intelligent use of credit to support defined national objectives.

The Minister for Industry and Commerce will speak later in this debate and will deal with the Government's policy in respect of price control. The weekly publication, Business and Finance, in its issue last week described price control as an unsatisfactory and clumsy weapon. We would not quarrel with that description. A rigid enforcement of price control must have some economic consequences, and not all of them will be advantageous or welcome. But our decision is that, in the circumstances now operating, and to avoid greater difficulties, the disadvantages of maintaining controls are less than the advantages.

It is important to stress that this policy is seen by us as a temporary measure and the powers now exercisable by the Minister for Industry and Commerce will be terminated as soon as possible.

The need to avoid any further general rise in the level of money incomes is now, I think, fairly widely understood, at least by Deputies. It is essential if price stability is to be maintained and adverse effects upon the level of employment are to be avoided, as we would all wish they should be. In the circumstances in which the total of all expenditure by Government, by public authorities and by people generally is running ahead of total resources and where temporary price controls have to be maintained, income increases of any kind—wages or salaries, or profits or rents—which push up costs, can only result in reduced employment, if not always of the workers primarily concerned, in some parts of the country's economic organisation.

It will, I am sure, be the general desire of all Deputies that we should, in dealing with this situation, try to avoid any course which would cause the level of employment to fall and this desire must be of particular concern to trade union leadership. One of the main internal factors in the present situation is what has been loosely described as the "Revolution of Rising Expectations," the desire of everyone to become better off too rapidly in terms of money income, and the building up of a high level of internal spending in other ways, much of it financed by bank credit and hire purchase facilities. This is one of the main factors which have caused prices to rise and imports to increase more rapidly than we can afford. In this regard the ninth round 12 per cent wage and salary increase has come in for an amount of unjustifiable and irresponsible criticism.

Hear, hear.

Deputies who suggest that there should have been no increase in wages in 1964 seem to me to be living in an unreal world. In the light of rising national production in that year and the steady improvement in productivity an increase in wages and salaries was not merely inevitable but justifiable. The pressure for the ninth round was already evident when the Government suggested the meeting between the Federated Union of Employers and the Irish Congress of Trade Unions, which eventually produced the agreement. Our purpose was to ensure, if possible, that the wages and salaries increase, which was about to take place in any case, would be arranged on a rational basis and in an orderly way rather than in the old, unco-ordinated and disorderly way. It is true, as we said at the time, that if the national agreement had provided for a general increase of eight or nine per cent, instead of 12 per cent, wage and salary earners as a whole would probably have been as well off because the resulting price rise, in so far as it was due to these higher wages and salary costs, would have been minimised or avoided.

Would the Taoiseach repeat the percentage again? He said nine or ten and then he said eight or nine.

Eight or nine is what I said. I was quoting. Nevertheless, as I contended when speaking here in the debate on my Estimate in July of last year, the 12 per cent increase for a 2½ years agreement could have been carried without very serious effects if other adverse factors had not intervened and especially if the national agreement had been generally kept throughout the whole of the country's economic organisation, and if everybody's efforts had been concentrated on offsetting, by improving productivity, the effect on costs of the higher wage rates. In fact, since 1963, the rise in the overall index of industrial earnings was about 15 per cent, and not 12 per cent, due to the successful efforts of some groups in securing greater increases and to other development. There was also the situation, which the Dáil debated here last week, of a variety of awards by arbitration tribunals to civil servants, employees of State boards and in other parts of the public service.

It is in the sphere of personal incomes that the greatest element of uncertainty and, consequently, the greatest element of risk arises. Most of the other forces which are contributing to the present inflation, including bank credit, hire purchase facilities and Government and local authority spending have been or are capable of being controlled. In regard to personal incomes we have to rely upon the explanations of the dangers and the growth of understanding of the serious effects upon the levels of prices and employment of further pressure.

The Minister for Finance stressed in a recent speech the concern of the Government, a concern which must be shared by all, that our efforts should for the time being be directed towards preventing this situation from getting worse to an extent that could cause permanent damage to the country's economic prospects or seriously disturb the level of employment. Also, this is why the nation's future progress needs to be planned with very great care until the adverse factors in this situation have been removed and our aim of raising up living standards and pushing ahead with social developments of all kinds can again be given full effect.

The temporary import levies, the latest of the devices adopted by the Government to rectify this situation, will apply for the period until the end of March, and apply to non-essential goods mainly of a luxury kind and to goods which can be supplied in adequate quantities from Irish sources. Although the levies have been imposed at a low rate, it is not intended that they should apply to any equipment or materials required in a process of production, agricultural or industrial, and, so far as goods of this nature are caught by the levies, duty free licences for their importation will be readily granted.

The aim of the levies is to discourage the importation of these non-essential goods for the period in which the levies remain in force. A few countries with which we have some trade have commented critically on the imposition of these levies upon their products. We can only express our regret that they have been found to be necessary and our intention to remove them as soon as possible.

In the operation of these levies, even in their application to non-essential goods, it will be our desire also to avoid, if possible, any adverse effects on employment. We have given very considerable thought to the question whether or not importers of these goods should be allowed to charge the levy in their prices. We decided, as the main purpose of the levies was to discourage the purchase of these goods at this time by members of the public, this purpose would be better served by permitting the goods to become dearer in the shops rather than force importers to carry the levy in their margins, which would mean no discouragement of the purchase of their goods by the public, or, alternatively, would force these importers to discontinue business for its duration, which would have been an unfair impost on them and would probably have upset the employment of some number of persons, that this was the better course. It is our hope, however, that there will be a general decision to avoid or minimise the importation of these goods and a running down of stocks, if need be, for the duration of the levies and that the public generally will co-operate with traders by not asking for imported products caught by the levies.

The intention is that these levies will operate until the end of March, 1966. They will not be removed before that date. While it would not be sensible to commit ourselves absolutely against their continuation for a longer period when the circumstances that may prevail at that time are still unknown, it is our hope that there will have been by then sufficient improvement in the general situation to permit of their being allowed to lapse.

The levies will have only a peripheral effect. They do not get to the kernel of our troubles at all. Their ending will not mean that our troubles are all over and that a new free-for-all in regard to bank credits or Government spending or personal increases can then get under way. One of the problems of ending the levies will be in avoiding fostering any such wrong ideas. Further increases in national production must go towards closing the payments gap and not be directed to any other purpose.

The Fine Gael Party have tabled an amendment to this motion in which they are not asking the Dáil to disapprove of the Government's measures but which expresses two complaints : (1) that the Government did not inform the public of the development of these adverse trends and (2) that we did not act to correct them in time. There is also an amendment by the Labour Party. Both of these amendments were, no doubt, tabled for tactical considerations and are to be regarded as run-of-the-mill political productions intended to make it plain that while either Party has nothing much to suggest itself different from what the Government are, in fact, doing, they are still in opposition and still complaining.

As regards the first complaint expressed in the Fine Gael motion, I reject it absolutely. I do not know to what extent Opposition Deputies, much less members of the general public, pay attention to speeches made by Ministers, whether in the Dáil or outside it, but it has been the constant policy of the Government to place all the facts relating to the national economic situation clearly, frequently and objectively before the Dáil and the people. Never in our history and rarely in other countries has there been such a deliberate policy consistently executed of making available objective information regarding the state of the national economy and for carrying out investigations in depth to enable all the circumstances and all the operations of the nation to be fully understood. Everybody outside the Government, every Deputy in Opposition, every member of the public, who chose to avail of the sources open to him has, and continues to have, as much information about this situation as members of the Government have.

For myself, I have been expressing my own anxieties about the economic progress possible in this year ever since the British import charge was imposed. In the Dáil debate upon that charge which took place almost exactly a year ago, on 11th November, 1964, I said that the deficit on our external payments on current account in that year—1964—might perhaps amount to £40 million—in fact, it amounted to something less—but that if our position should deterioriate and particularly if unexpected difficulties anywhere should slow down the growth of our export trade, we would have to do something about it.

In my first public speech of this year outside the House, which I made at a Party convention in mid-Cork in January, and in my first speech of the year in the House, which I made on the Vote on Account on 17th February, I expressed my personal judgment that 1965 was going to prove to be a difficult year, as difficult as it has proved to be. In the Dáil, on 17th January, I said:

This is going to be a difficult year. I think the difficulties will arise from a variety of causes but as of now the Government are mainly concerned with those they are likely to encounter in the field of public finance.

I repeated this view when speaking on the Budget on 13th May. My words then were:

It is clear that this is likely to be a difficult as well as a crucial year in the matter of maintaining the State's rate of economic growth.

Then, on 13th July, I gave a very full statement to the Dáil on the economic situation, a statement which, I concede, did not get nation-wide publication because of the newspaper strike in progress at the time. I outlined the economic situation as it had developed and announced the Government decisions regarding the corrective measures which in our judgment were called for and explained the nature of these measures and why we had decided on them.

Members of the public who take note of Government announcements and speeches by Ministers could have no misunderstanding of how we viewed the situation as it was developing. Those members of the public who confine their reading to Opposition speeches, with their constant dire forebodings, could have only a very exaggerated conception of the seriousness of the situation.

As regards the second complaint of Fine Gael, that we have not acted in time, this raises a different question and I want to make it clear that the Government decided to seek to put the situation right on the basis of two principles, which were, first, to do the minimum necessary to put it right, and no more than the minimum and, secondly, to act only when the necessity for action was clearly established.

This is still our policy. The similarities between the present situation and that of 1956 are mainly superficial. It would, however, be correct to say that in deciding upon measures to deal with them the Government have been influenced by what we regard as the mistakes made in 1956. If the measures now in force should prove to be insufficient, they will have to be supplemented but this we will consider only when the need for it is clear beyond argument and even then we will seek to achieve methods of rectification which will cause the minimum disturbance of trade and of employment.

The Opposition Parties' qualifications to the Government motion are in the main irrelevant, except perhaps in a political Party context. The Government were elected to carry out the business of the nation in all circumstances and in the circumstances now prevailing, we have taken appropriate measures of which I am now asking the Dáil to approve.

I move amendment No. 1:

After the word "situation" to add the following:

"but regrets that the Government failed in time to inform Dáil Éireann and the country of the situation and neglected to take adequate steps to prevent the economy reaching its present position."

I should like at the outset to endorse the remarks which the Taoiseach made at the beginning in reference to the basic soundness of the economy and to re-emphasise the support which Deputy O'Higgins expressed last week on behalf of this Party for the National Loan. We regard the National Loan as a sound national investment, either for investors in this country or those outside who wish to invest in it. I have not seen the article to which the Taoiseach referred but we certainly deplore any suggestion that there is any doubt about the financial integrity of this State.

However, having said that, I wish to pinpoint responsibility for the present situation where it belongs. Deputies who have listened to the Taoiseach's speech will have drawn the conclusion that though he assigned a variety of reasons, analysed a number of causes, attributed responsibility in different directions, not once did he or the Government admit they had made mistakes and that they had misled the country. The present serious situation has largely arisen through Government mismanagement and incompetence, through failure to diagnose the economic ills in advance and through a refusal to accept the indications disclosed in economic trends because of possible political embarrassment.

The history of our present economic difficulties did not start in this year. The cause of these difficulties, of the problems which have arisen from them, goes further back. In fact, some of these problems go back to the remarks which the Government made and the criticism expressed by the Government as far back as the seventh round of wage and salary increases in 1960, to a subsequent reference in the White Paper, Closing the Gap, in February, 1963, and in particular they arise from and are directly attributable to the introduction of the turnover tax and the action taken by the Government subsequent to that tax in order to ensure victory in two by-elections. When that tax was brought in was the appropriate time, the correct time, to apply price control but the Government refused to do it, and the Minister for Finance at the time expressed the view, in repeated discussions in the House, that the margin which traders were entitled to put on was a matter for themselves, that they were not confined to a particular margin, that that was left to the discretion of individual traders or to trade as a whole.

Deputies will recall that that tax was eventually passed in this House by a single vote. Shortly after, two by-elections were pending and though negotiations were in progress and discussions proceeding between the Federated Union of Employers and the Irish Congress of Trade Unions, the Taoiseach intervened, as far as I know contributing the first case of haphazard intervention of this sort on the part of a Government in wage discussions. Instead of the ordinary bargaining which would have taken place to decide on what the appropriate increase would be, the Taoiseach, in the light of the situation that had developed, not merely intervened but went in the latter part of 1963 to the Drogheda Chamber of Commerce—less than nine months after the Government had published a White Paper deploring not merely a gap that no one had said had been closed, deploring the fact that wage increases were excessive and that the gap between wages and production was too great—and said, as reported in the Irish Press of 3rd December, 1963, that with the contraction of the gap between total national resources and total incomes which attached to the eighth round, it was now possible to envisage another all round improvement in living standards. This, he said, included a further upward adjustment of wages and salaries without serious risk to the continuation of the country's development or the growth of our export trade. Wages and salaries could be brought into line with the improved national circumstances without risk, at the same time, of unemployment or other adverse effects.

During the course of his remarks here this evening, the Taoiseach said one of the three factors which caused the problems now facing the country was increased internal spending power. That spending power was injected into the economy as a result of that speech by the Taoiseach who, as head of the Government, not only gave an invitation to wage and salary earners but to every section of the community to come and get it, and naturally the invitation was readily accepted. The country then experienced a substantial rise in prices and wages. In a short time—this is now generally accepted by the workers and the trade unions—the recipients of wage and salary increases found that these increases were illusory in practice because they were offset by a rise in prices of food, clothing, shoes, bus fares, train fares, medicines and all services.

The situation developed to such an extent that in a short time applications began to pour in for a revision in one form or another of the National Wage Agreement. A stage had been reached in less than one year after that agreement, which was to last two and a half years, when consumer prices had increased, though the terms of trade were in the country's favour. It it true there was a slight increase in import prices but this was more than offset by an increase in export prices. The price rise on this occasion, in sharp contrast to two previous balance of payments problems, was due to internal causes and not to external factors such as operated during the outbreak of the Korean war or the conditions which followed the Suez crisis.

The situation was allowed to continue and Government speakers during the period painted a picture of improved economic conditions, while at the same time they laboured under the illusion that the Programme for Economic Expansion, printed in the Blue Book, would automatically work. The great defect in that approach—we have repeatedly emphasised this—is that the Programme was prepared by civil servants, that it was prepared in a detached way, remote from the actual realities. An economic plan, in order to work properly and effectively, must be prepared not by civil servants but by the united efforts of agriculturists, industrialists, trade unions and the Government. It is no reflection on the principal author of that Programme, a most distinguished and dedicated public servant, or on any of those associated with him, that this plan has not worked and is regarded by many as being remote from reality.

Fine Gael have consistently advocated the need for a proper economic plan not for the purpose of dictating to or restricting private or individual enterprise but in order to ensure that the resources of the nation will be marshalled in proper order and that the combined efforts of all sections will be harnessed to use these resources for the national advantage, To do this, we are prepared, in consultation with representatives of agricultural interests, industrialists, business people, workers and expert economists, to produce an economic plan designed to utilise to the fullest extent the resources of the nation and to ensure that, in using these resources, a correct order of priority is established and adhered to.

It is some satisfaction to find that in a short time we have made some unexpected converts. Earlier this year, in the course of a debate here, and even as recently as the Fine Gael Árd Fheis, attention was drawn to the urgent need for a proper order of priority. We now gather from the Taoiseach that although a great deal of work and effort was supposed to have been dedicated to the preparation of the plan, until now, there was no proper or correct order of priorities for the capital programme.

Our plan was designed on the basis that meaningful targets for agriculture and industry must be established; that, to achieve these targets, grant and tax reliefs must be provided; that a planning board should be established on a proper basis within the framework of the National Industrial and Economic Council from which, at present, agricultural interests are excluded. This exclusion is impossible to understand and cannot be justified. It is obvious, in the light of the economic trends in the country, and particularly the rapid flight from the depressed areas of the west and other congested districts, that such a plan can be worked only if regional committees are set up to cater for the underdeveloped areas and, above all, that the public and private sectors of the economy are properly co-ordinated.

For many years, State projects and private schemes have competed with each other for the available capital and for the available skilled workers. Money was available without restriction for different types of capital work, irrespective of whether it was essential and irrespective of whether it was for urgent socially desirable projects such as housing or hospitals in the same order of priority as it was available for warehouses, offices and other less essential construction work. Is it any wonder that the present pressure on the capital situation has got out of hand when there was no order of priority and when we had local authority housing schemes, schemes under the Small Dwellings (Acquisition) Act, hospitals, schools, drainage and other essential work all competing without any order of priority and without any preference for one type of scheme or another.

In any proper plan, realising the limits of our resources and the availability of capital, the situation has to be looked at realistically. This country has a vast and increasing need for new houses and a pressing need for new schools and for new and improved hospital accommodation. It is worth nothing that what many people regard as possibly the key to future development and expansion and the general economic prospects of this country, education, is to be relegated to a lower place in the queue as a result of what the Taoiseach remarked here this evening not to mention the fact that the health services, about which we hear so much and see so little action, are also to be deferred for further allocation of fund. It is obvious that an arrangement which allows that situation to continue is inviting serious trouble and possible disaster. Any sound plan would have allocated an order of priority, marking out the priority for agriculture, industry, housing, hospitals, schools and allowing, on a restricted basis, other work of a less essential kind to take a lower place in the queue.

It is true that the immediate cure for the present crisis is a reduction in the proposed capital expenditure but this reduction—a rapid reduction in expenditure and a blanket restriction of credit without warning—is hurting and will hurt numerous individuals whose private and business arrangements were made on the assumption that the economy was sound, with the express encouragement of the Government that commitments could be entered into. This sudden cut-back will hit not merely these people but particularly people in a small way of business who may not be able to ride out the economic storm.

This situation has developed primarily because of the optimistic prospects held out by the Government and the Taoiseach over a long period, particularly in the early months of this year. But, leaving aside entirely the present defects, is it not time to examine radically the Government's approach to the availability of capital, the measures taken to attract capital to this country and to ensure that those who have capital in it will not be influenced or forced by Government legislation or Government decisions to move capital out of it?

Despite the reference in the White Paper on Capital Expenditure to incentives, on page 5, it is said it is hoped that, in response to the increasing tax incentives, though these are not defined, and higher interest rates—the other day the Minister for Finance refused to increase the interest rates in respect of small deposits—saving will revive so as to divert finance from consumption to capital projects.

Two measures were passed in the last two Finance Acts, or two sections, which have acted as an absolute deterrent to attracting capital and, in fact, in one case has certainly resulted in a flight of capital from this country. The Finance Act of this year which aggregated insurance policies with other property for death duties has been condemned by every person who has experience in this matter, by people entirely outside politics and by people who recognise that, instead of acting as an attraction, it will act as a deterrent. Indeed, in that regard, it is well to remember that not all persons of wealth have the benevolent attitude— in fact on an immense scale—Sir Alfred Chester Beatty has, and do not all appreciate, as he does, that a shroud has no pockets.

In addition to that, in the Finance Act of 1963, there was a requirement that deposits must be disclosed. That was passed into the Finance Act on some theoretical basis that it was possible to secure from it large sums of hidden resources. The only effect of it has been to move deposits from this country and the banks have expressed concern privately, if not publicly, at the extent to which deposits have moved out. People who have resources here have moved them elsewhere. If we want to attract capital to this country, we ought to make it attractive for people to do so. We ought to show by our legislation that not merely do we believe our economy is sound but that we will guarantee the rights of people to invest their money and to leave their money secure in the knowledge that no legislation will be passed which will have the absolutely damaging effects which the proposal in this year's Finance Act is bound to have where it aggregates insurance policies for death duty purposes which, in the past, were used by many business people and farmers as a means of ensuring that when the present owner of the homestead or business passed on, those who came after him would have adequate capital available without resort to a mortgage or the need to dispose of some of the property to ensure the maintenance of the business at the same level and to provide the necessary capital and resources for expansion.

These two measures, coupled possibly with certain sections in the Land Act, all indicate that the Government have no conception of what is necessary to attract capital to this country. Instead of providing encouragement and incentives, these measures operate as deterrents.

So far as the small saver is concerned, how can the ordinary wage and salary earner save with present costs? What additional incentives are provided for him with prices rising, with the increase in the cost of living, with the increase in the price of every service and the fact that no additional interest has been provided? It is no wonder in the short space of six months—and there is a most significant figure in Appendix 3 of the Public Capital Expenditure Programme—the estimated sum which it is now anticipated will be derived from small savings and prize bonds this year will be £6 million, compared with an estimated £10 million at the time of the Budget. If anybody has miscalculated in this situation, it is obvious the Government are in the front of the class. The Government did not heed the warning figures which were published and available so far as the drop in the inflow of external capital was concerned. During the first four months of this year external assets showed a drop of £17.5 million and the Central Bank has expressed concern at the possibility that for 1965, as a whole, the balance of payments deficit on current account may no longer be matched by net capital inflow.

It is, of course, obvious that there is fierce pressure on the available resources of the country and that this pressure has now developed into an acute economic crisis. It is true, as the Taoiseach said today, that every section is looking to get more out of the national pool than is at present available for distribution. Why blame the people when they were repeatedly told by the Taoiseach and by Ministers that all they had to do was to vote Fianna Fáil and they would have an economic millennium, that prosperity could be got by votes, that it had not to be worked for and had not to be planned for. While this situation was proceeding, Government expenditure, current and capital, during the past three years increased at rates of 10.2 per cent, 9.5 per cent, and 21.6 per cent. This expenditure was proceeding at a faster rate than the real growth of the economy. These figures were available to the Government, to the Department of Finance and to the Revenue Commissioners.

Last year it was obvious from the trade returns that our balance of payments position was getting out of hand, following two previous years in which deficits had occurred. While it is recognised that with an expanding economy, it is possible to maintain a sizeable deficit, the figure which was decided upon in the Second Programme was £16 million but, last year, it was substantially exceeded. High exports, particularly cattle, and returns from invisible items helped to offset the worst effects of this situation. However, for the first nine months of this year, total exports showed a drop of £5.8 million, while imports for the same period showed a rise of £21.2 million. In fact, the exports to Britain for the first nine months showed a drop of £12 million, while we imported from Britain £11.5 million more in that period than in 1964.

In the light of these figures, any Government looking ahead, with the expert information available to them, should have foreseen the obvious economic trends and stepped cautiously. The Government have available confidential information and have, in any event, available a critical analysis of these figures on a basis which no Opposition Deputy or other interest in the community has. Instead we had the Government painting a rosy and attractive picture of the economy and of the country's prospects. There was, of course, always the odd savers like those which the Taoiseach mentioned today to show that the situation might be different.

Speaking at Bandon in March of this year, the Taoiseach said:

We are confident in our capacity to maintain the country's forward movement and even to speed it up.

Speaking at Carlow, he said:

Ireland is now entering a time of great opportunity and the issue in a general election is whether this is going to be fully used in a determined, consistent way or neglected. The progress which the country can make in the years immediately ahead will far surpass all that has yet been accomplished provided we as a nation follow a consistent coherent policy under a confident united Government.

There is no indication in that speech that the economic trends were adverse. There is no indication there was recognition that the balance of payments difficulties, which had continued uninterrupted over three years, were giving rise to concern or would justify the Government in either taking action or expressing, as they should have expressed to the public and to the Dáil, concern at the trend of events.

The Taoiseach spoke later, on Saturday, March 27th, at Nenagh—this nearly beats any of the others:

Rarely before in history were all the circumstances, external and internal, so favourable to Irish economic development.

Speaking later at Mallow, on March 31st, he said:

This is a vital year with economic development now going ahead at a rate never before realised in Irish history. This is no time for a change.

During all this time imports showed a considerable rise. It is difficult to see how any responsible Government could justify the line that all was well and going to be better. In fact, the situation was so serious and the trend so obvious that there was an inescapable obligation to warn the people of the circumstances and to indicate the dangers which faced the economy.

I want, at this stage, to advert to some previous comments I made elsewhere concerning the present trade discussions. I believe it is important in this discussion and the present situation, when trade negotiations are proceeding, that this House and the country should be fully aware of the possible consequences and adequately informed on the possible repercussions, both on the economy and on the economic life of the nation, of certain steps which are envisaged. As the House is aware, we sought at an earlier stage to have this matter discussed and the Taoiseach declined to allow that discussion to take place. However, it seems all that has happened is that the discussion has been postponed and cannot be avoided.

I want to reiterate at this stage, in view of the present state of the negotiations, the attitude which this Party have adopted on the matter, in the light of the information available to us which, I believe, has recently been accepted on a much wider basis by other responsible and informed opinion in the community. We have expressed the view that a trade agreement must offer an equitable balance of advantage as between the two countries, that it must not render Ireland exclusively or irrevocably dependent upon any single market, that it must not endanger the maintenance and future expansion of employment.

I belive that is very relevant, in view of some replies given here today by the Minister for Industry and Commerce concerning the motor assembly business. Attention was directed to the fact that in somewhat similar circumstances, if member countries of the EEC were affected, the social fund might be available to enable those affected to avail of the benefits and facilities for retraining and re-employment. That brings me to the question of the manpower policy to which I want to make brief reference. I believe that in this matter again the Government have accepted uncritically the advice and the views which have been given bona fide by civil servants but which are out of line with the recommendations made by the NIEC on the manpower proposal.

I have no doubt that if the Parliamentary Secretary to the Minister for Industry and Commerce were given his head, he would take the right decision and do the right thing, but so far as the indications are on this matter, the Government have made a mistake in accepting the recommendations of the two interdepartmental committees rather than the united recommendation made by the NIEC. However, that is only by the way.

I want particularly to refer to the fact if this country is to free its trade completely vis-à-vis the United Kingdom, there must be full reciprocity on the part of Britain. This would require the removal of the present United Kingdom import levy on Irish goods, an absolute guarantee of our rights under earlier trade agreements and of exemption from such levies in future and the abolition of both tariff and quota restrictions on entry into the United Kingdom of all Irish agricultural products and all Irish industrial goods. If the British agricultural deficiency payments are to be accepted, they must be extended to all Irish meat and dairy products, without limitation as to quantity. I think it is relevant to remark in that context that the efforts of An Bord Bainne to sell Irish dairy products in Britain deserve the highest commendation. The success of the effort made is an example of what can be done by energetic and enlightened salesmanship.

Provision must be made for appropriate compensation to this country and its farmers, should the present British deficit payments be abandoned or successfully modified by any British Government. The country must be free, at any time, to take adequate measures to secure Irish industry and its workers against dumping by British firms. There is some considerable evidence that British manufactured goods, from low-cost raw materials which are available to them, have come in here, to the detriment of Irish firms and in competition with firms which are both efficient and properly run but which cannot compete with that type of unfair trading. The Irish manufacturers must have the right to use freely and without restriction, in Irish industrial exports to the United Kingdom, materials from any sources to which competing United Kingdom manufacturers have free access.

The agreement should also include provision to enable the Irish Government to modify the rigorous process of freeing trade where it threatens substantial unemployment. The country should also have the right to terminate an agreement after the lapse of a period of years, provided adequate notice is given, and reasonable provision is made, against the undue disturbance of British interests. In addition, we believe that the Irish Government should retain the right to negotiate an agreement in association with the EEC at any time, and in particular to obtain new continental outlets for our agricultural products.

Since that general indication of our views on the necessary measures and the necessary terms of any proposed trade agreement, the September Quarter of the Irish Banking Review in a comment on the trade agreement adverted to certain aspects of the trade agreement and went on to say:

The second way in which agricultural concessions might be granted to Ireland is through an increase in the import quotas for butter and satisfactory arrangements in any future extension of British import regulations through the quota system.

I think there is general satisfaction at the substantial rise in cattle numbers. I have no doubt that the fact that that is so must at times send shivers down the backs of some old-time Fianna Fáil supporters.

They went on:

As regards the industrial implications, concern must also be expressed that the UK import surcharge would apparently continue to be maintained against Irish industrial exports. This raises the central problem of ensuring that Irish exports in the future should not be subject to further disruption by any future restrictions imposed by the British Government in the interests of balance of payments stability.

The last comment I wish to quote deals with the last matter we adverted to in our comments on this matter:

It has been stated that the proposed Anglo-Irish free trade area is regarded as a logical step towards the eventual entry of Ireland to the European Economic Community. If the free trade area comes into being, it may be accepted that Irish policy towards the Community will become much more intimately geared to that of Britain and that Irish membership of EEC, should Britain not become a member, may also be ruled out.

It goes on to say:

The question must be raised whether this agreement precludes the possibility of an interim Irish trade agreement or association with the EEC in advance of full British membership. This latter course was one which seemed to offer particular benefits to the Irish economy and the question of whether such a move is now to be excluded because of the proposed Anglo-Irish free trade area should be clarified.

In order to estimate the pros and cons of the agreement if it is finalised, it would also be desirable that the Government should provide a detailed statement of the anticipated value of the concessions for Irish agricultural exports and also its estimate of the impact of tariff removal on employment and output in Irish industry.

There is also a reference to the measures necessary to ensure the possibility of anti-dumping action quickly and effectively because of the particular danger which a small scale economy is exposed to from a larger neighbour. Subsequent to that article—or more or less at the same time—the Federation of Irish Industries—a body which in the past were not noted for any antipathy to the Taoiseach—expressed this view:

The Council points out that the current proposals differ in some critical respects from the free trade proposals for membership of European Economic Community and that these differences make the Anglo-Irish free trade area idea much less attractive for industry than the concept of free trade as a member of the EEC. The main differences are:

1. The current proposals would open virtually no new export markets to Irish industry while giving away a substantial part of the present market.

2. The European Economic Community concept specifically safeguards the interests of the smaller countries by making their welfare the responsibility of the Community as a whole. The current proposals involving unrestricted competition between one large and small country provide no such safeguard for Ireland.

3. By committing ourselves to one market we would be much more subject to violent economic fluctuations than if our risk was spread over the wider range of markets envisaged in the EEC plan.

4. British industry denied free access to EEC markets is likely to compete more intensely in Ireland than would have been the case under the EEC proposal.

The FII made it clear that from the national viewpoint an agreement of the kind now proposed can be justified only if the benefits to agriculture can be shown to be overwhelming and if Irish industry is guaranteed free access to the British market now and in the future without tariff or quota restrictions or import levies. They went on to say:

Unless these conditions can be fulfilled the Federation will have to oppose these proposals for an Anglo-Irish free trade area.

In the light of those informed comments of a non-political character— and one certainly from people who are not unfriendly towards the Taoiseach —I believe there is an absolute obligation on the Government to give to the House and the country the maximum possible information commensurate with the effective discharge of the negotiations without in any way inhibiting the freedom of action of the Government.

While the situation to which I have referred was proceeding in the earlier part of this year, on the domestic front price rises continued at an alarming rate. The cumulative effect of the turnover tax, the heavy additional taxes imposed in the Budget of 1964, and the Budget of this year, on the traditional sources of revenue such as tobacco, beer and spirits, coupled with wage and salary adjustments, all produced an inflationary situation which impinged on all sections, but in particular on pensioners, on retired personnel, on the self-employed and others on fixed incomes.

Our proposals to deal with this situation, which were prepared before the general election and published in our policy, were worked out in great detail and outlined the measures necessary to deal with the problem. We recognised that in modern conditions a prices and incomes policy is a sine qua non of any sound economic plan. It is quite true that up to recent years a policy for prices and incomes was not operated, or did not exist, in any country in Europe, but circumstances changed and the economic effects of price rises and inflationary tendencies forced Governments and other interests elsewhere to introduce, or to attempt to introduce, a policy for prices and incomes. Our policy on this matter was criticised. It was described as impossible and impracticable.

It is true that there is no prices blue-print which will enable a policy of this sort to be operated so as to work smoothly and without some mistakes. On the other hand, we are convinced that if other countries, some of them small countries—countries like ourselves members of the OECD—have found it possible to operate a policy for prices and incomes this little economy can at least attempt a similar effort.

This would involve an accurate forecasting of economic trends and the establishment of machinery for consultation between trade unions and employers' organisations so that a regular basis for increases in wages and non-wage incomes could be agreed. I think I should advert here to the comment which the Taoiseach made that any Deputies who did not think wage rises were justified were living in a fool's paradise. That has never been our policy. In fact, the only Government that ever sought to control wages in this country was the Fianna Fáil Government. Our view is that this matter is more appropriately left to free negotiation between representatives of the trade unions and the employers organisation, that in the way in which present trends have developed there is a strong case for an effort being made to get some uniform system which will avoid what has been described as leap-frogging but will, at the same time, ensure—this is where I believe the present national agreement on wages has proved defective —that certain sections relatively small in number are not by-passed in the context of the wider agreement and that they will have their own particular cases adequately considered in the negotiations and adequately catered for in any agreement covering the interests concerned. This ought to be possible, recognising the general goodwill which exists between employers and trade union organisations in this country, and the generally responsible attitude adopted by the leaders of these organisations and their members in discussing matters of mutual concern.

I have always held the view that in a free and open economy such as ours, and in the absence of war-time controls, price control can only have a limited effect. There is no difference in the viewpoint on this between the Government and ourselves, but the great error which the Government made was the failure to introduced, or even measure of price control when the turnover tax was introduced, or even earlier this year when there was ample evidence that the price rises were not a temporary phenomenon and clear indications existed of a continuous and steep rise in prices. In the light of that situation the Taoiseach last January spoke to the Galway Chamber of Commerce, and I quote from the Sunday Press of 17th January:

Free competition, in conditions of full supply, is a far more effective regulator of prices than any system of official controls devised. Government action to check unjustifiable price increases has been and will be taken where appropriate, and this form of selective intervention is all that our present situation requires.

The controls which are now put into operation are too late to have any worthwhile effect, whereas if put into operation earlier they would have provided some moderation in the level of price rises. Worst of all, I believe that the measures which the Government have adopted indicate a disorganised approach to the remedies necessary and to the manner in which these remedies will be applied. There is, first of all, a Prices Control Order, then an announcement about the levies, and later a statement on behalf of the Minister for Industry and Commerce, as a kind of afterthought, that the levies may be added to the price of goods, although the Government have had the benefit of the previous experience which another Government had in much more difficult circumstances, and on which the Irish Independent in a leader commented in 1956, when this Party and our associates were facing two by-elections, that it required political courage to take the necessary action. No one will ever accuse Fianna Fáil of that. It was quite proper that the levies should be added to the price of goods, but any coherent approach to the problem would have ensured a simultaneous announcement of all these measures instead of consecutive announcements and consequent confusion.

There is great need for economic expansion both in industry and agriculture and on that economic expansion all sections of the community must depend. There is need for a sustained approach to economic problems. The great defect in our economy has been the lack of a sustained approach. There has been "sharp alteration between shouts of prosperity and rapid expansion" such as the Taoiseach and Ministers made during the earlier part of the year and the gloomy speeches urging restraint and a severe contraction of credit. After the election had taken place, the Taoiseach made the following prediction which is reported under a subheading in the Cork Examiner of 30th April:

The assumption that economic progress is certain to continue and that we can afford to give all our attention to planning the wider distribution of these benefits could be particularly damaging at this time.

Only a month earlier, on 31st March, he said that national development was going ahead at a rate never before realised in Irish history.

In order to deal with this situation and to avoid the obvious lack of a coherent policy between the Government, the Central Bank and the commercial banks, we advocated constructive proposals on banking policy. Like some of our other proposals, this proposal was derided, and the easy and false suggestion was made that we were after the people's money. This, of course, was not true. In one speech in Mullingar—I suppose the script-writers were running short—the Taoiseach compared it with what was general in Communist countries. What we wanted to ensure was that the national credit policies would be so framed and operated that the economy could expand and that a proper ratio would exist between public expenditure and expenditure in the private sector.

What has happened because of a lack of a proper policy? A recent figure published shows that bank lending to the public sector in 1964 over 1963 increased by 27 per cent compared with an increase of only 12 per cent in the private sector. In fact, borrowing by the Government and local authorities increased by 26.1 per cent between mid-July, 1965, compared with mid-July, 1964. In other words, the public sector got more than double the increased credit given to the private sector. This substantial increase in the credit needs of the public sector was criticised by the Central Bank.

Surely the present situation calls for a combined approach by the Government, the Central Bank and the commercial banks. Up to recently, bank credit was freely available for almost any type of transaction, including some that were, indeed, speculative. Now the Central Bank in consultation with the commercial banks is operating a severely restrictive approach. If that is not a stop-go policy, it is difficult to know how to describe it. We want to ensure that there will be effective co-ordination between economic and monetary policies. If such is not adopted economic growth must be impeded. The Government failed to trim the public capital programme in time and the position now is that all are being trimmed, irrespective of the particular circumstances of individual cases.

The worst feature of that is that quite a few people with perfectly good security, who in normal times would be probably looking for and getting long term credit from institutions specialising in such long term credit, cannot now get it from any institution. The bank managers have failed them not so much by putting on the credit squeeze as in not advising them before that they should not be looking to the bank for long term credit. That situation should never have been allowed develop. The figures for bank lending and the drop in capital inflow in the early part of this year were, indeed, a warning to the Government to take action in time. It is not the Government which will be hurt, not the insurance companies or the big institutions, because they will weather the storm because of their essential financial soundness and because they can make other arrangements, but it will be the small trader or small businessman, the person who has applied for a loan under the Small Dwellings (Acquisition) Acts, the individual trader who is endeavouring to build up a business for himself, or the farmer who has entered into commitments in order to provide a home and accommodation for those to whom he has an obligation who will be hurt.

It is time, in the light of the present situation, and away from the emotional atmosphere of an election, to review banking and monetary policies so that a co-ordinated approach to financial and monetary matters will be made. One knows that the mere mention of this in the past would have brought shivers to some of the elders of the bank directors who always regarded Government and public expenditure as the way to rule, but there is a more enlightened and more reasonable approach nowadays. Sometimes in the past the Central Bank comments were probably couched in somewhat strident tones but at any rate they evoked attention and secured from leader writers and other commentators, articles and comments. It would be unreasonable to expect that on high finance of this sort the average individual would have either the time, knowledge or experience to offer any great comment on it but there does appear to be a change and the comments of the Central Bank have become somewhat muted.

Whichever is the better line surely the time has now arrived when effective co-operation and co-ordination between the Government, the Central Bank and the commercial banks should be operated. It is only the banking institutions, the Government and the Revenue Commissioners who have available to them the figures and the facts that, of course, have since become available in public documents to other elements in the community, but they have these in advance and they can see the trend and assess the indices and in the light of these they can decide in what particular way the trends indicate the pattern of events. It is at that stage that the Government should take action. There is an obligation on the Government to take action no matter what the political consequences.

What forethought have the Government given to this situation, even at this late stage? There is no indication that they have any clear idea where they are going or have any definite plans for the future. It has been announced by the Taoiseach, the Minister for Industry and Commerce, and, I think, by the Minister for Finance over the week-end, that the levies are to continue until the end of March. In reply to a question today, the Minister for Industry and Commerce indicated that it was anticipated that the total sum which would be derived from these levies was something in excess of £600,000. I do not believe that anyone could seriously regard that as an effective measure or a measure which is likely to remedy the problems which affect the country.

It is, of course, true that the cumulative effect of the credit squeeze and of credit restrictions will act as a damper and by that time they will have begun to take effect and may damp down demand, but does anyone believe that these levies will be withdrawn at the end of March or, if they are, must they not be replaced by some alternative restriction? I believe that the Government have an onus and an obligation to indicate what they consider will be the likely trend of events so that traders, manufactures and others can plan ahead. Anyone who has had any business experience will appreciate that orders are placed in advance. People who have to enter into commitments for the future are likely to be placing orders now for delivery either in February or March and if the levies are going to come off then in certain circumstances people may defer, but if they are to remain, or something else is to replace them, then now is the time to tell them so that they can make plans and work to some coherent policy.

In view of the failure and incompetence of the Government to assess the changing economic situation over the past year, and the urgent need to plan accordingly, and in view of recent remarks, it does seem that the Government have not merely lost confidence in themselves but to a certain extent have no control of the situation. It is pertinent at this stage to inquire, in connection with the levies, if the British Government have yet been requested specifically either to withdraw the surcharge imposed last year or to give this country preferential treatment similar to the preferential treatment we have accorded Britain? I believe that if properly handled, if the Government take the people into their confidence, explain and admit, and accept responsibility for, their own mistakes—it may be expecting too much from human nature to admit this—and their inadequacies in dealing with the situation, accept responsibility for the blunders made and indicate clearly to the country that the effort to rescue it from the present crisis must be a combined operation in which the Government and all affected interests—whether farmer, industrialist or worker—will unite together in the common interest of the nation the response will be forthcoming.

How can these difficulties be overcome? Energetic efforts must be made to modernise Irish industry and agriculture and make them more efficient. Energetic efforts must be made to get outlets on the export markets. In that connection it is worth quoting the trend here again of our trade during the past 12 months. In Table IV of the Central Bank Quarterly Bulletin for July, there is a figure which shows exports during the latest 12 months, the total European exports of the OECD, of the EEC, of the United Kingdom, Japan, Germany, France, the USA, Italy and Ireland, and we are in the unfortunate position that of all the others referred to we are the only country which had a drop in exports. Our drop was minus nine and next to us was Britain which had an increase of four. In fact there is a comment on page 36 of the Bulletin: "This country is, in fact, the only one to show a decline in exports during the period."

I referred earlier to the efforts made by An Bord Bainne to sell butter abroad, commendable efforts against very considerable difficulties and indeed against powerful organisations, and of the Sugar Company to get outlets for processed foods in Britain and of numerous private firms, and when criticism is made of Irish exporters and manufacturers and business people, it is well to remember that while it may be true of a number and, indeed, of many, there are many Irish firms who have shown most commendable enterprise and initiative but this present situation calls for a dedicated effort inspired by single-minded determination to expand Irish exports not merely on the part of the Government but on the part of all interested parties.

That brings me to the Buy Irish campaign which has hardly got off the ground. Is it any wonder? Despite praiseworthy and sustained efforts by a great many individuals and firms, the importance of encouraging the sale of Irish manufactures in preference to all others is not widely enough appreciated. In that regard the Government and State departments are to blame for not giving full co-operation in making greater efforts to push sales of home industries. In the present situation, is it not obviously bad business for this country to buy imported baths for a scheme such as the Ballymun housing scheme in preference to Irish made baths of a superior kind, even though they are £3 or £4 per bath dearer? Is it not crazy economics and an extraordinary lack of co-ordination between one Government Department and another that the Post Office mail bags are ordered from some external supplier?

Mark you, the Victorian attitude of that department is not confined to Post Office bags. Recently we had an advertising agency employed on behalf of the Department of Agriculture, while we have numerous competent and highly successful Irish agencies capable of and prepared to do the work which we give to an outside agency. Is there not an absolute conflict in the Minister for Industry and Commerce here preaching and speaking and Deputies like myself and Deputy Corish and others going to meetings organised by people who have dedicated themselves to pushing Irish goods and who have shown most extraordinary enthusiasm and interest and three Government departments which one after the other, had replies given here last week and the Ministers showed all the embarrassment that situation warranted?

It is time for the Taoiseach either to take action against individual Ministers or to take action as a whole to ensure that the Government act together and that in a matter of this sort where the national interest is at stake, there will be a united effort to promote Irish industry and the sale of Irish goods. I believe that the attitude displayed by individual Ministers here last week and their attempts to talk themselves out of this problem indicated an extraordinary outlook towards the problem. It indicated a lack of appreciation of the fundamental steps necessary to overcome the difficulties which face them. In that connection, it is well to say that one of the difficulties in dealing with some of the matters that have been discussed here in different pieces of legislation was the fear that a Minister must not be let down, that his face must be saved. That is one thing for which I think sufficient commendation has not been given to Deputy Smith on the occasion of his episte to the Taoiseach and his followers. That enabled a face-saving operation to be performed with the minimum of embarrassment.

I do not think it is good enough that in matters of this sort a Minister's face must be saved. Anyone can make a mistake. If a Minister makes a mistake and is prepared to accept constructive comment from the opposite side, prepared to have pointed out to him, as we pointed out in the course of legislation passed this year, that certain aspects of it were deleterious from the national point of view, I believe it is not that the Minister's face should be saved but that in fact he should be commended for having the courage to accept constructive proposals offered by the other side.

Before concluding, I want to kill the illusion that prosperity and higher standards of living can be got easily or cheaply and least of all can they be got by voting Fianna Fáil. It will require tremendous effort if the challenge to the best efforts of our people, of which they showed themselves capable in the past, is to be met to surmount the present difficulties. This country and the Irish people have always responded to the challenge of difficult times but they must have proper and effective leadership. This has not been forthcoming from the Government and there is little indication either in the motion proposed here or in the attitude announced by the Taoiseach and other Ministers that they either understand the magnitude of the problem or the effort necessary to lead the whole nation, not merely a section or sections of it, out of the present crisis into a period of sustained and planned advancement.

Next year this country will celebrate the golden jubilee of the 1916 Rising. The best memorial, the only adequate expression of appreciation and gratitude that we can pay, to the sacrifices of those who took part in that Rising is to ensure that the economic and social conditions of the country measure up to their high aspirations. This can be done if all combine to serve the interests of the people. It can be done if we, in our time, return to the idealism of that period and remove from our political life, whatever the personal consequences for individuals or Parties, the taking of decisions and actions for purely political Party purposes, regardless of the good of the nation.

I formally second the motion, reserving the right to speak.

I move amendment No. 2:

After the word "situation" to add the following:

"but considers that such emergency economic measures were rendered necessary mainly by the Government's previous inadequacies and failures in economic policy, particularly in the field of price control."

All of us can share the sentiments expressed by the Taoiseach and the Leader of Fine Gael in regard to the National Loan and the efforts by every Party in the House to ensure its success. Suffice it to say that every Party in the House gave the National Loan a strong commendation last Wednesday and we have no reason to change our views. I do not think there is anything wrong in having this general economic debate this week because it must be abundantly clear to the people, particularly to those who have money, and people generally, that investment in one's country is vitally important and investment by Irish people in Irish projects is very desirable for the general advancement.

I have heard used before the phrase that we must stop the stop-go policy. I heard that from the Taoiseach three or four years ago and I wonder when we shall get to the stage of having some sort of evenness in the development of the economy and in incomes of the people. The ordinary man in the street is frustrated and bewildered by the turn of events, particularly in the past few months. If the Fianna Fáil Party could be accused of anything, it is that they have lulled the people into a false sense of security, as indeed our industrialists have been lulled for something like 30 years. I would discount the speeches the Taoiseach made during the course of the general election, those from public platforms, since I think he himself in a speech in recent months said more or less the same thing, that all public speakers can be allowed a certain measure of extravagance when speaking from a public platform.

What struck me particularly when I began to consider this debate and the measures recently taken is what the Taoiseach said in a speech in this House on 17th February last. We have all had to listen for a long time to Fianna Fáil speeches about the great progress made since the introduction of the two Programmes for Economic Expansion. Fianna Fáil banked their all on the Second Programme. Inside and outside the House Ministers boasted about its continuing success. On 17th February, admittedly prior to a by-election, the Taoiseach used phases like this:

The country's economic progress is continuing. Our national production in 1964 exceeded that of 1963 by 4.3 per cent.......

He added that national income rose by £84 million in 1964 and that this trend would continue in 1965. Then we had this extraordinary statement:

The expenditure of our people upon ordinary day-to-day consumption rose by £65 million....

That was a boast. He went on to say that the retail traders were pleased, despite what their fears for the future might have been, at the introduction of the turnover tax. He said total savings had increased by £25 million over the 1963 level and that the ratio of investment to gross national product was almost 20 per cent. He said that the rise in industrial output was 11 per cent and that there was a significant increase in external exports. That was a pretty good picture of the Irish economy as painted by Fianna Fáil. Of course, we did not believe this, nor did we feel as satisfied as the Taoiseach appeared to feel on 17th February, last.

The Taoiseach mentioned today that he warned of the difficulties, but on 17th February last, he did not spell out any of these difficulties for us. He spent about 60 seconds flat giving a warning that any Taoiseach or any Government Department would give as to prospects a year or two years ahead, that we just could not be complacent and that we would have to continue our efforts to ensure that the situation in 1964 would be maintained in 1965.

Another statement made by the Taoiseach on 17th Febraury last causes me concern. He said:

Discussions with our leading industrialists have justified forecasts of a corresponding rate of growth in industrial output and industrial exports during this year.

What reason had the Taoiseach for saying that? Despite the 15 per cent import levy imposed by the British Government, leading industrialists told the Taoiseach that there would be corresponding growth in industrial output in 1965. Again, the Taoiseach made some reservations, but these were generalisations that could be made by any Minister or any Government. Along with the ordinary man-in-the-street we asked: where have things gone wrong? Where are the planners who made the forecasts three or four years ago when the Second Programme was introduced? Did they not foresee that these things might happen? I was glad to hear the Taoiseach say today that the British import levy cannot be blamed. I thought that one would be trotted out on this occasion. It seems to me that the import levy, as some of us from the Labour Party said in October last year, would spur on some Irish industrialists and traders to try to get markets elsewhere. It is pleasing to know from the Taoiseach that they did and that they were successful to some extent.

We do not believe the country should pin its hopes on the White Paper containing the Second Programme. We did not believe it would solve all our problems, and so it has turned out. We did not believe that the target of a four per cent growth rate was sufficient. We believed it should be set higher to ensure that in no year would it be less than four per cent. The Second Programme envisaged, and was conditional on, an expansion in employment so that all our resources in manpower would be utilised for greater production and the disemployment in agriculture would be compensated for by the creation of more jobs in industry. The Second Programme, measured by the standard of providing employment, has been a dismal failure. According to the forecasts contained in it, it was to provide 78,000 new jobs between 1960 and 1970. There is no indication it has succeeded in any year or that it has succeeded over all in the last five years. In 1960, we had 1,055,000 at work and in 1964, we had 1,059,000 at work. Therefore over that period we have had an increase of 4,000 new jobs, or 1,000 new jobs per year. If the Second Programme is to achieve its objective in respect of employment, it has the colossal task of providing 15,000 new jobs from now until 1970 in order to attain the promised figure of 78,000 new jobs between 1960 and 1970.

It is true, as the Taoiseach said, there has been an increase in industrial employment since 1960 to the extent of 24,000 new jobs. But the Taoiseach never mentioned the fact of the flight from the land we have had since 1960. Over that period thousands and thousands have left the land. That has gone on this year; it will go on next year and for several years to come. It is a vain boast to talk about the number of new jobs in industry alone. We have to have regard to the Irish economy and to Irish workers as a whole, whether they live in the city, the town or the rural areas.

We have had a lot of loose talk from Ministers and others about possible extensions of employment. We have had, in particular, loose talk about the possible extension of employment to be provided by new industries. As far as I can gather, that has been greatly exaggerated. No matter what new factory is opened or proposed to be opened, we are told that in the first year it will employ, say, 20 men and then after ten years, the figure will rise to 500. But has anybody ever checked up on these claims, or are they merely exaggerated in order to ensure that the Government will give financial aid? The Minister for Industry and Commerce has a duty to come to the House and tell us in respect of, say, the past four years, what in fact has been the result of the investment by the Irish tax-payer in new industries here, particularly new industries coming from abroad.

I can also recognise complacency about the unemployment situation. Recently, I had occasion to say that we have the highest unemployment rate in Europe. That is true. In 1964, it was 5.7 per cent of the insured persons and this year there has been no improvement. In fact, the figures we got last Saturday showed the position to be worse than it was in 1964, and the 1964 position was worse than that of 1963.

The Taoiseach mentioned emigration. What we have to consider in this regard is people rather than statistics. While statistics may paint a significant and telling picture, very few people from the Government benches appear to think in terms of people; and, in any economic debate, we have to talk about those who are unemployed, about those who cannot be provided with a job in the Irish economy. There is evidence, so far as I can get figures, that we are still losing many of our people and many of our workers. In June of this year 25,400 emigrated. This was the highest figure for the last four years. Surely, if the Second Programme for Economic Expansion envisaged a decrease in the number who would emigrate we should not have this position four years after, a position in which we have a higher rate of emigration than there was at the time when the Second Programme was introduced. It seems to me that, between unemployment and emigration in the context of and related to industrial and general production, we discover that we are not using the most valuable asset we have, the human asset; we are not availing of the ability of Irish men and women to work in their own country. There is vague talk about a manpower policy. The sooner we get the details of this policy the better. We hope it will be a policy that will ensure these people can contribute to the building of the nation's economy. Maybe it will be too late to ensure that more and more will not go elsewhere for employment.

The Taoiseach, in a short reference to the amendments tabled by the Fine Gael and Labour Parties, rejected those amendments as being face savers, designed merely to demonstrate to the public that we are in opposition. As far as prices are concerned, the Labour Party can look back an the last two years and say, in simple language: "I told you so". We are not in conflict with the Fine Gael Party as far as this matter is concerned, but I do not remember getting very much support from the Fine Gael Party over the last two years when we tried to ensure there would be some sort of control as far as prices were concerned. The Government cannot say they were not warned here. The matter was raised week after week when the Dáil was sitting and there was an absolute rejection of it by those who held the portfolio of Minister for Industry and Commerce. It must have been obvious since the introduction of the turnover tax that there would be a necessity to take action, but the Government rejected that. We had various speeches from them to the effect that free competition would ensure that prices would stay at a reasonable level.

In December, 1963, approximately one month after the introduction of the turnover tax, this Party introduced a motion here asking for public investigation into prices and prices control, where necessary. Because the then Minister for Industry and Commerce was scared as to the way Deputy Sherwin and Deputy Lenehan would vote, he accepted that motion; but we knew that, in accepting it, he had no intention whatsoever of taking any action. If the Taoiseach and the members of his Government regard the authority of the Labour Party as being small vis-á-vis their own Party, if they think its influence is negligible, as they say it is, in the country, surely they should have listened to a body, which they say they respect, and whose views they say they respect. I refer to the Irish Congress of Trade Unions. In May of 1964 the Congress warned the Government and asked that some measure of price control be introduced or even that the machinery they had would be utilised. There was the usual reply once more from the Minister for Industry and Commerce to the effect that free competition would look after prices. We were told that price control would only be introduced and could only operate in times of scarcity or in times of rationing.

As I have said, it must have been obvious on the introduction of the turnover tax and on the application of the ninth round of wage increases of 12 per cent that many of those who sold goods would take advantage of those circumstances and would freely compensate themselves for the 2½ per cent turnover tax. Many of them would endeavour also to get part of the 12 per cent increase that was granted and operated from the beginning of 1964. That is exactly how things turned out. However, we got a Prices Act. There was a change of heart on the part of the Government and the Taoiseach suddenly decided that we should take extraordinary measures in order to correct a certain situation, a situation for which the Government, of course, did not take any responsibility whatsoever, and that is obvious from the speech of the Taoiseach here today.

There was no action for three months. I wonder what happened. This was an emergency measure. It was introduced and passed very quickly here with the co-operation of all Parties. But nothing happened until a few weeks ago when prices were frozen and, incidentally. I am sure the Minister for Industry and Commerce was pleased to be able to invoke a section of the Prices Act, 1965, which the Labour Party asked should be put in; I refer to the section dealing with three months' notification of an increase in prices. However, all this has come too late. I use now an expression, which was attributed to Deputy Cosgrave by the Sunday Independent, that I used earlier: this was like locking the stable door when the horse was gone. That is exactly what has happened.

How original!

Not very original at all, but very apt in the present situation. The consumer price index rose by 17 points from mid-November, 1964, to mid-August, 1965, an increase of 10½ per cent. I should like to know from the Taoiseach why no action was taken in the three months from July last up to a few weeks ago. In any case, this action seems to us to be now too late. Even if there was no price control I do not think there would be any undue increase in prices. Those who took advantage of the turnover tax and of the 12 per cent increase to wage and salary earners have skimmed off the cream. The damage had been done. But the people have become uneasy. It will be appreciated, I think, that wage and salary earners had freely agreed to a wage agreement for 2½ years on the assumption—and the Taoiseach voiced the same assumption in the Dáil about 18 months ago—that there would be price stability. Who did he think would give price stability if the Government did not take action? I believe the Taoiseach and his Ministers, particularly the Minister for Industry and Commerce, must take responsibility for the situation we have now with regard to incomes and the condition in which prices have been left after a period of approximately two years.

I accept what the Taoiseach said today in relation to the national wage agreement and the 12 per cent. I think, however, he ought to control some members of his Cabinet. There is none of them so brash as to say: "We do not think 12 per cent should have been given" but, even on Saturday night last, there was an innuendo from the Minister for Transport and Power to the effect that it should not have been given. We had that from Deputy O'Malley, Minister for Health. We had it from the Minister for Justice and from various other members of the Fianna Fáil Party, this suggestion that 12 per cent was too much. The Taoiseach said that he agreed that at the time eight or nine per cent would be sufficient, but he went on to say that, for the sake of getting agreement, it would be worthwhile to give the other three per cent. He said that on one occasion. There was another occasion when he said: "Right; give them the three per cent on the assumption that increased productivity will cover that in a relatively short time."

In any case, there are people who have the impression that this big jump in prices was caused by the application of an increase in wages and salaries of 12 per cent. People ought to think about wages and incomes generally before they talk about inflation, price control, an incomes policy or the trade union movement. From speeches made in this House and elsewhere, one would imagine that workers in industry are very well off. It is about time that people thought in terms of the actual wages and the actual earnings of industrial workers. According to recent information, the average earnings of a worker amounted to about £13 a week and that is not just his wage for his 42 or 44 hour week; that is what he receives on average, having worked overtime and as a result of incentive bonuses and such payments. When people talk about wages they should think in terms of the man who gets £8 a week. They should think about the road worker and the agricultural worker and, when talking about a national wage agreement or an incomes policy, have regard to the fact that the wages of these categories are too low and have been too low for quite a long while.

It is readily admitted, and I am sure it is admitted by the Taoiseach, that price increases have been responsible for three or four per cent of the 10½ per cent increase in the cost of living from November, 1963 up to a recent time—a long period of two years. Therefore, I do not think it can be alleged that the 12 per cent granted in the beginning of 1964 has been absolutely responsible for price increases that have occurred since then. If prices were to increase merely because wages had increased, the increase in the cost of living or the consumer price index would have been down to four per cent or five per cent as against the 10½ per cent increase that has taken place during that period.

In the case of prices, we consider that this is a field in which the Government could have acted but refused to do so. It is true that food prices increased and that they contributed to the increase in the consumer price index. We concede also that wages made their contribution but we also say that the turnover tax made a contribution, and a big contribution at that, and started off this whole spiral since 1st November, when it was introduced. At that time we advocated that it should not be applied to food and essential goods. Looking back now, I think we were sensible in making that suggestion. I know the Government wanted money and that this was the easiest way to get it, but if the tax had not been applied to foodstuffs or essential goods, we would not be in the dilemma we are now in as a result of the cost of living being at such a colossal figure.

We also advocated that if money had to be found at that time, we had no objection to a turnover tax being applied to a greater degree on luxury or semi-luxury goods or the type of goods now being caught by the levies. That suggestion, if adopted, would have served a twofold purpose. It would have kept down the cost of living in respect of food prices and it would have deterred people from buying the goods we are now trying to prevent people from buying by the introduction of the import levies. Again, the attitude of wage and salary earners at the present time is understandable, because, as has been pointed out in the debate here today, their 12 per cent has been practically eaten away by the increase in the cost of living of 10½ per cent.

Some people are under the impression that the National Wage Agreement did not work. Of course it worked. If I heard the Taoiseach properly, he said today that it worked in the vast majority of cases. People who criticise the trade union movement with regard to the National Wage Agreement should have a look at that agreement. It provided that the trade union movement could seek increases in certain circumstances, that they could seek a reduction in hours. That they did in the vast majority of cases and, as far as the trade union movement were concerned, it was observed practically 100 per cent.

The Taoiseach has told us in many speeches that industrial production has gone up in recent years. It went up, I think he said, by 11 per cent in 1964 and, in the first half of this year, by 4½ per cent. We ought to pose the question: who benefited from this increase; who benefited, for example, or who will benefit, from the increase in industrial production of 4½ per cent in the first half of this year? When we think about prices and increasing industrial production, is it any wonder why a review of the agreement is sought? The workers are uneasy because they believe they were swindled because of the rise in prices and they believe the Government have responsibility, if not to control them, to create an atmosphere as opposed to the atmosphere they did create in the beginning of 1963, that traders and shopkeepers could compensate themselves in whatever way they liked.

The Taoiseach talked about the Prices Act being a clumsy and ineffective machine. It may be all that, but if it had been introduced a little earlier, it would have been, at the very least, a threatening big stick over those who exploited not alone the turnover tax but the National Wage Agreement.

Last week we spoke here about an incomes policy. I want to say that as far as the Irish Congress of Trade Unions are concerned, they never rejected an incomes policy, but Fianna Fáil did reject it. I do not know whether Fianna Fáil are being converted to the idea of an incomes policy now but the Irish Congress of Trade Unions, representing the workers of this country, made it clear what an incomes policy should mean. There are many people who believe that an incomes policy should be merely a wages policy. The Irish Congress of Trade Unions at their conference in July of this year described an incomes policy as one embracing all sections of the community, not merely wage earners or salary earners, but those engaged in industrial management, persons in the professions and various other occupations, apart from wage and salary earning.

However, Sir, the important and the most significant indication of the state of the economy is the balance of trade, that which has given the Government reason to take certain measures. The balance of trade is the most significant sign of progress or otherwise in this or any other country. We have been informed that the import excess for the first seven months of 1965 rose by £26.2 million over the same period in 1964 and that is regarded as dangerous. Everybody will agree that that is so. But, surely the deterioration of the trade balance has been apparent for some years? In each of the years and in each of the quarters since 1960, this has been so. The deficit in visible trade between 1960 and 1964 has gradually worsened from £73.7 million in 1960 to £125.7 million in 1964 and, as valuable and as important as they are, invisible exports did not show sufficient increase to offset these deficits. They rose from £72.9 million in 1960 to £94.3 million in 1964. Therefore, our deficit on current account or balance of payments has worsened for the past five years and, as the Taoiseach said, it is expected to be £50 million this year.

However, the Taoiseach on some occasion said he was not too worried about it because, he said, the inflow of capital would offset, or did offset, the adverse balance we had in 1964 and 1963. Surely the Taoiseach, members of the Government and their advisers should have known that this capital inflow could not continue at the rate it continued between 1960 and 1964. Surely they must have been somewhat suspicious when the net capital inflow of £1 million in 1960 rose to £36 million in 1964. It was an unusual increase and should have been recognised as such. The Government should have realised it was not likely to continue at this rate, even in the circumstances of the generous treatment given to foreign investors. The Government must, therefore, have known that this capital inflow was underpinning, so to speak, the economy but that it was an underpin that could not last for any considerable period. The Taoiseach himself must have known the danger of depending on this capital inflow to solve the balance of payments problem.

I do not wish to go back too far but one is tempted in this debate to return to 1956 and quote the speeches from various members of the present Government then in opposition. Mark you, I recognise a similarity between the criticisms of the Government now being made and the speeches of Fianna Fáil members in those days. The Taoiseach spoke in the Dáil on 15th March, 1956, and is reported at column 620 of the Official Report for that day:

In relation to manufacturing industry we have the Government apparently building all its hopes upon the illusion that there will be an inflow of foreign capital to develop our industrial potentialities. That is a complete illusion. It is not going to happen. I do not say that no foreign capital will come in but there will be no substantial industrial development because of an inflow of foreign capital. I realise politicians are always unwise when they commit themselves to prophecies but that is one I will make with confidence. It is a complete illusion to think that we can sit back and wait for foreign financiers to come in and push our industrial expansion forward.

They have come here in recent years and they were welcomed because they invested money in the establishment of industry. The point I wish to make, however, is that the Government should have known or should have been advised that this would not continue for any long period of time.

The Taoiseach has given a reason this afternoon as to why this capital inflow is drying up. He spoke of the uncertainty and of the possibility that we may become members of EEC. This possibility was there during the past few years and it should have been recognised. I should like to know if the Taoiseach can give us a breakdown on this capital inflow. There is no point in assuming that in 1964 the £36 million was invested in industry or agriculture, in what one might call worthwhile productive ventures. The Parliamentary Secretary to the Taoiseach was asked a question today and he said the details of this capital inflow could not be given. Surely it is not unreasonable to suggest that an Irish Government or any Government should know the purposes for which capital coming into the country was used. Is it true to say that a lot of it was used for speculation, to buy land and property? If so, this money did not do the country any good as far as industrial or agricultural production is concerned. How much of the money went to improve industrial output; how much of it went on speculative projects? In short, how was it invested? Was it introduced into our economy and in what way?

We must remember that these injections of capital from outside are temporary, that they will not last indefinitely. The Taoiseach said they would not last very much longer. We are all aware of the fast growth of imports and the slow growth of exports. Why has there been this increase in imports of consumer goods? I am tempted to take this bound volume of the Official Report for the spring of 1956 and repeat exactly the words of the Taoiseach when he asked these very questions. I can still see him thumping the bench and asking if any member of the then Government could tell him what had happened, how it happened, why and in what volume imports of consumer goods had increased. These were questions he evaded in his opening speech today and I trust he will tell us when he replies why the situation now existing was not recognised earlier, because all the figures show there has been an increase since 1960 of imports of consumer goods.

That is understandable when one thinks of the necessity for imports of raw materials for production. These imports will always be necessary, because, apart from agriculture, we have very few raw materials ourselves. We lack the basic raw materials for industrial production, iron and coal. It is understandable, therefore, that we will always import a big proportion of productive raw materials. In fact, we hope it will be bigger if industry is to get bigger. It is understandable that there should be imports of plant and machinery and, indeed, I trust that the trend in that direction during the past five years will continue so long as it means employment for our unemployed people.

The Taoiseach should tell us why earlier action was not taken in regard to imports of finished consumer goods and why the present situation was allowed to go unhalted. The signs were there in 1963 and 1964 and were aggravated in 1965. Action could have been taken and should have been taken earlier. It is somewhat too late now because as far as I can see— I have no statistics to prove it—there has been a spate of foreign manufactured goods in this country for many years. Any shopkeeper in O'Connell Street or Grafton Street will tell you that they have a variety of stock from Italy, from France and from other countries. The manager of a big store in Dublin said on television recently that the levy will not affect him at all because he has got his entire Christmas stock. If the levies are to be taken off in March, as far as he is concerned, they do not affect him, and he is not untypical of Dublin traders. Therefore, generally the levies will not have an appreciable effect.

I agree with Deputy Cosgrave that the Buy Irish campaign does not seem to have got off the ground. A committee has been set up but is it big enough to do this vital job? Many Deputies have said in the House during the past ten or 20 years that a Buy Irish campaign was essential. After a time, however, they became complacent and forgot about it. It is doubly vital now, if we are to have a free trade agreement with Britain. What we do not appreciate generally is that the employment of our fellow workers depends on our buying Irish. We can do it parochially in our own towns. If shoes are manufactured in a particular town, the people in that town will buy those shoes and no other shoes but the people in Cavan, Donegal or Belfast do not seem to have much regard for the welfare of their fellow workers 150 miles away.

The Minister for Finance knows how well they buy Irish in Cork, particularly goods made in Cork. Very few Deputies in Dáil Éireann buy other than Ford motor cars. That is good but we must get away from parochial efforts. If we can do that, the Buy Irish campaign will get off the ground. There has been obvious lack of propaganda and activity in regard to this proposal which the Taoiseach made in July last but which up to now has not been very effective. As far as imports are concerned, an awful lot of work has to be done by those who have responsibility for it. The Taoiseach should be able to tell us if a break down of imports shows that the finished consumer goods are able to compete successfully with Irish-made goods or whether these goods are made in Ireland. We need that information (1) to see if Irish industry is efficient and (2) to see if these goods are made in Ireland.

I do not think we can leave the development of industry to private enterprise. Private enterprise has performed a very good service and has shown initiative in certain respects but Irish industry needs to be spurred. The Government prefer, as the Minister for Finance said some time ago, the private enterprise economy. That may be all right to an extent but all the signs are that Irish industry has not in many respects faced up to the job. Therefore, the Government will have to take responsibility to ensure that it does.

The Taoiseach said our exports are not rising rapidly enough. We seem to be exporting a substantial part of our production but it is confined to certain industries. It seems to me, therefore, that certain of our Irish industries can be efficient and can ensure that they will have low costs. It is difficult to understand why other industries find that they cannot compete on the home market—again, having regard to our protection—and certainly cannot compete on markets abroad.

I agree with what the Taoiseach has said but he has the responsibility of doing something about the unwillingness of Irish industry to look for new markets. As he said, and as we believed, when the import levy was introduced, they had to seek new markets and they were successful so I think it bears out what I have said about the need to be spurred on more than has been the case up to this.

Córas Tráchtála have done an excellent job but potential Irish exporters do not avail of the services of Córas Tráchtála. That is another field which the Minister for Industry and Commerce could explore to see whether it could be expanded so that many more markets can at least be investigated. I know many private firms who have availed of the assistance of Córas Tráchtála to their tremendous advantage, and not so much to their tremendous advantage as to the advantage of the economy of the country. Therefore, Córas Tráchtála should be examined, not over a long period, of course, but in a very short time, to see what further use they can be in the cause of the exportation of Irish industrial products.

It is amusing for any of us now to remember the speeches of the various Ministers when they talked about the credit squeeze in the early part of the summer and all during the summer and to some extent at the beginning of this session. It is obvious that there is a credit squeeze and that there has been one for some time. In particular, the local authorities know that there is a credit squeeze. The Minister for Local Government is obviously in trouble. I am not a member of a local authority but I can see his reactions to any question put to him by any member of the House in regard to the approval of a housing scheme. It is not good enough to say that we have £X million for housing unless the money is spent, as will be the case if the Government are in earnest. They can withhold money in various ways other than by saying: "No; we are not going to give it." The Department of Local Government have a variety of devices to ensure that work will not be done. If money is scarce, they are able to pull out new ones in order to ensure that they will not have to give permission for the advancing of money to any housing authority.

I believe also that we should have a broad credit policy. It seems to me that, as far as the present position is concerned, the banks themselves determine the projects for which they will lend money. It is true that, as a result, I think, of recent legislation or proposals, the Central Bank can advise them as to where they should lend money but it is only advice. The banks are not bound to take the advice that may be offered to them from time to time by the Central Bank. It could be that, in recent years, money on loan was squandered on speculative ventures and on property transactions. Therefore, it would be fair to say that, to some extent, we have dissipated a lot of the credit that could have been put to very useful purposes.

As far as investment and the availability of credit is concerned, there is a need for priorities and these priorities should not be determined either by wealth or by the ordinary commercial banks. They should be determined on the basis of the good of the community by which I mean that they should be prepared to advance money for good industrial ventures, for housing, particularly, for agriculture and for industry. But the signs around the various housing authorities in the country are that applications for loans by way of overdraft have been refused in many cases.

I was amazed at and understood the despondency of the Minister for Health in recent weeks when he said there would have to be a cut-back on Health and Education. I believe investment in these two aspects of life should be regarded as two of the most important investments in the country—in health and in education; I would not put one before the other. The health of the community is important and can directly be related to production, whether in agriculture or in industry. We should try to assess the number of work-hours lost through illness and the bad work or the decrease in production that results from people having to worry about hospital and doctors' bills, and so on. An investment in health in the country, no matter what the circumstances are, is justified. I also believe that education is most vital in the age in which we live and if there is to be any cut-back as far as education is concerned, the country will lose. The Taoiseach should reconsider, with his colleagues in Government, his decision to cut-back on these two very important aspects of life, health and education.

Again apropos credit and its apportionment. I believe the Government and the Dáil should take a hand in determining the priorities. This may seem a very strong step but it has to be done or otherwise we shall have money advanced for this, that and the other venture which in itself, in our present circumstances, is not particularly productive or good for the economy.

I am reluctant to speak about, though I must, the talks on free trade. I propose to make comments I made about six weeks or so ago. I must say that, to a certain extent, the country is bewildered by what has taken place in the past four or five months in regard to the negotiation of a trade agreement with Britain. At first, when it was mentioned, the country and the members of the House believed it was an ordinary trade agreement in that there was a certain amount of give and take. Then, casually, the Taoiseach—it appeared to be casually in any case—coming back and landing at Dublin Airport announced that the aims of the talks were to try to bring about free trade conditions between this country and Great Britain. This, of course, all started with the imposition of the import levy by the British Government. It was followed by visits of Ministers to London and discussions between civil servants from this country and from Great Britain.

I think it can be well said that nobody in politics in this country did, or wanted to, embarrass the Government in any way by any comments they might make but this is a very important step. It would not be right that we should, by our silence, appear to approve of something which will be presented to us as a fait accompli. If the Taoiseach in discussing the possibility of free trade means we must regard free trade only in its absolute sense, then, in its absolute sense, it means that so far as this country is concerned all forms of protection will go. We have got to decide whether or not this will be good for Ireland, for the various sections of the community, in the long run.

It is the right of the Government elected to negotiate such an agreement and I suppose it is their right, according to parliamentary procedure and according to the law or the Constitution, to make that arrangement and notify it to the Dáil rather than ask the Dáil for ratification. However, that is not good enough in respect of what may be an absolute free trade agreement. If it is an ordinary agreement the Government should be given power to negotiate, say, in the cattle industry and so on as they have done in the past. This is too serious a step to be considered, not by a Fianna Fáil Party representation of 52 members and maybe not by 13 members of a Cabinet, but by four or five Ministers. They could not assert positively that they are the representatives of all the people of Ireland——

Deputies

Hear, hear.

——because as far as the consensus of opinion is concerned, they represent, with all due respect to them, approximately half the people of this country. We represent a certain section and Fine Gael represent another section. If we are to take this vital step, the Taoiseach should, in some manner, take the rest of the House—which incidentally means the rest of the country—into his confidence to try to determine what is best in relation to an absolute free trade agreement between this country and Great Britain.

Before commitments are entered into.

Before commitments are entered into. I wonder also have important bodies, who are representative of the various economic units, been consulted. I wonder have the Federated Union of Irish Industries, the Irish Congress of Trade Unions and the National Farmers Association been consulted in any way—not maybe given details of proposals from one side or the other but given a broad view of it. I think it would be catastrophic if five people could decide for the rest of the country to take a step which would mean revolutionary changes for this country, particularly so far as industry is concerned.

We had discussions here during the time our application for membership of EEC was current and we all had an opportunity of giving our views. We did give our vews in no uncertain terms. As far as the Labour Party are concerned, we said we did not like the idea of becoming members of the EEC but fully realised that if Britain joined, we had no option but to make application to join as well. However, it must also be admitted that when Britain was refused entry by General de Gaulle and when it became obvious then that we could not pursue our application, there were many in this country who breathed sighs of relief.

It is true we have been told we will have to prepare for free trade. The Taoiseach has said that on many occasions. I think all of us in the House realise that free trade will come and must come in some form by force of circumstances to this country. Again, may I ask the Taoiseach a question I asked him at the beginning of this session: who made this proposal? Was it the British representatives or the Irish representatives who suggested we should aim towards the negotiation of a free trade agreement? Irish industry is, in my opinion, so very vulnerable because it was built and has been sustained on protection and again to use the phrase I used earlier, they seem to have been lulled into a false sense of security. They believed when protection was first put on that it would last for a certain length of time. It lasted for a long period of time, so much so that Irish industries believed we would have it forever.

We have been remiss in this country in that we did not take advantage of the provisions of the 1938 and 1948 Trade Agreements for perodic reviews. There may have been some review but certainly there has been no general review. Some items were picked out for review on the application of the British Board of Trade but never was there a serious effort to try to ensure, until recent years, that Irish industry would be required to put itself into the position where it could stand on its own. It seems to me that many Irish industries are either unwilling or unable to face free trade. Some members of the public say: "Well, if protection goes, it is their own fault." It may be their own fault to some extent, to the extent that there has been a poor response in the matter of applications for financial assistance to prepare for free trade.

I wonder if the Minister for Finance, the Taoiseach or somebody else could tell us what response there has been. I think everybody freely admitted, when Irish industry was being asked to prepare for entry into EEC, that generous offers of assistance were given for re-adaptation and generally to assist them in preparing for free trade. As far as I can gather from questions I have asked in this House, not very many of them availed of this assistance. It may be, in respect of some Irish industries, that it is their own fault that they have failed, on protection being taken from them, but this is no consolation to many of those who will suffer the loss of their jobs. They had not the absolute responsibility of making Irish industries fit for competition abroad and it is with those people we would be primarily concerned if such a situation should occur.

I appreciate that in any trade agreement there must be give and take and a trade agreement may be favourable to one sector of the economy and unfavourable to another. In any trade agreement, agriculture must benefit. It would be inconceivable to think that any Irish Government could, or would, negotiate an agreement which would bring difficulties for, or any reduction in the income of the farming community. However, it may mean that the Irish farmer will get certain advantages. We will all applaud it if he does get advantages on the British market but we have to try to balance this against the disadvantages which may arise for Irish industries.

The CIO Reports in relation to our application for membership of EEC forecast that many thousands would be rendered unemployed, even if industry were to re-adapt itself and make other changes in order to make itself fit for free trade. The net result of our joining EEC, according to the CIO Reports, would have been that some thousands of our Irish workers would be rendered unemployed.

The Taoiseach, in reply to that sort of allegation some years ago, said there would be many more employed after we became members of EEC. He said today in respect, I think, of a free trade agreement, that it might hurt in the initial stages. Mind you, I do not think it will hurt some industries in the initial stages. We are told from those who have had consultations with various departments, that protection will go over a period of ten years. Those people to whom I have spoken said: "We will not feel the effects for three or four years but after that we can close up." That is the reason why I ask whether there have been any consultations on a Ministerial level with certain of the people who feel they are going to be affected if all forms of protection go from their particular industries.

I believe, in any case, having regard to the circumstances described to us by the Taoiseach today, and the speeches made over the past few months, that it is ludicrous to be talking about a free trade agreement. I was somewhat encouraged when he said that such an agreement could not come into operation until the middle of next year. Maybe that will give us breathing space and allow us and members of the Government to sit back and decide whether the idea of absolute free trade would be good or bad for this country. The home market is now protected for the Irish manufacturers but with free trade, it will be wide open. What will happen, in those circumstances, to those engaged in industry or business? They will be competing, not alone with Britain, but in the home market and from all accounts, when one has regard to increased imports in recent years, we might not be able to do that very successfully. There is an assumption that with increased output, and employment in other industries and the creation of new industries, unemployment will be offset. Despite a number of new industries which we have established since 1958, we have fewer people at work so I do not think we can be encouraged by any promises of that nature.

The motor car assembly industry was instanced today as one of the industries which would be fighting the effect of free trade. As far as the trade itself is concerned, and with regard to discussions with the Minister for Industry and Commerce, this is so. There was no indication from the Minister that the motor car assembly industry itself was taking advantage of the assistance offered by the Government in trying to establish some other new process that would ensure that those people would be kept in employment. However, I do not intend to cite the list of industries which I believe would be absolutely vulnerable in those circumstances, but it must be obvious to every Deputy, in respect of his own constituency, that free trade will not be as good a thing as the Taoiseach or members of the Government pretend it will be.

There are some unfortunate misguided people in the country who believe that Mr. Lemass, as Taoiseach, and the Government, can be trusted to do the right thing. I do not believe they will do the wrong thing deliberately but their own judgment has not always been right. Maybe their advisers have not always been right. Their judgment has been wrong in the past and has been proved so. I do not want to mention specific instances in order not to go back too far into the past. In some cases they mended their hands and in some cases they reversed the policy to which they tenaciously clung for years against criticism by this Party and others in the House. There is no intention on my part or on the part of the Labour Party to embarrass the Government in negotiations but I do not think we should, by our silence, appear to give approval, or tacit support to the Government, in whatever agreement they may come to. In our opinion, it could be an agreement that would make us less free economically and politically than we are at the moment.

I second the amendment proposed by Deputy Corish.

Much of the two main Opposition speeches we have just heard dealt with free trade area discussions and much of that comment would seem to imply that a free trade area was thought of for the first time in the autumn of 1965. It would be no harm, at this stage, to recount shortly what the history of the free trade movement has been in Europe and how it has affected us in one way or another.

As far back as the middle 1950s, the original European Free Trade area was being discussed by the Member Countries of OECD. It was not a common market in the context of the Common Market that has since emerged but these discussions were going on almost side by side. Ireland was a party to the free trade discussions originally but they came to an end, I think, in 1958. In the meantime the Rome Treaty had been signed and the Common Market had been set up. It commenced on 1st January, 1958. Shortly after that, the EFTA Agreement was signed at Stockholm between Great Britain and the other countries. We, at that time, did not contemplate, nor have we since contemplated, becoming a member of EFTA because, like the original European Free Trade area concept, it did not take into account agricultural produce. Therefore, it did not appear to extend to our agricultural arm the benefits we thought we should get in any worthwhile trade agreement. Apart from the fact that agriculture was not taken into account in the EFTA Agreement, the partners of Great Britain in that Agreement were seeking, by and large, what we had already achieved, that is, the right of free entry for industrial goods to the British market.

When it became apparent that Britain was about to apply for membership of the European Economic Community, we, too, applied for membership in the summer of 1961, just before a general election. We presented our application formally in 1962. I want to relate my remarks to the fears expressed by Deputy Corish as regards the future of Irish industries. The efforts to equip Irish industries for free trade started in the summer of 1961 on the setting up of the Committee on Industrial Organisation. At that time, it was envisaged that free trade would be a reality by the end of the decade, that is, by the end of December, 1969. Our industries were encouraged, not only by word of mouth but by active financial support by the Government, to equip themselves in order to be competitive and able to meet free trade conditions. Therefore, I cannot understand the near-panic there seems to be engendered by Deputy Corish as if the free trade concept were something that emerged only as a result of recent negotiations between ourselves and representatives of the United Kingdom. I cannot discuss details at this stage and I do not think Opposition leaders would seriously suggest that the details of the negotiations should be discussed in the House. It is very easy for the Leader of the Opposition, Deputy Cosgrave, to set forth, as he has done not only here today, but also in a Party document, the optima he feels should be achieved.

Deputy Cosgrave appeared to leave nothing out and it seemed to me that he was proceeding from the optima. However, I cannot, as I have said, discuss the details of negotiations that are being carried on, nor do I think it would be reasonable or prudent for me to do so. The fact remains that we have been trying to gear our industry to free trade conditions which everyone acknowledges are coming. As well as that we found that as a result of the imposition of the British surcharge, and as a result of the erosion by the British Government of at least some of the advantages which our agriculture enjoyed, it was necessary to renegotiate some form of agreement with the United Kingdom. There is no point in suggesting here at this stage, as I think Deputy Cosgrave suggested—to be fair to him he was quoting from a document published by the Federation of Irish Industries — that a free trade agreement with Britain is not as good as a free trade agreement with the EEC. One must be realistic about the situation. We know that at the moment, in the present climate of political opinion in Europe, and particularly in France, the possibility of our being accepted as a member of the European Economic Community is a very remote one.

Has it been investigated?

Of course, it has been investigated. Our application still lies on the table of the Council of the EEC.

(Interruptions.)

We are off on a cross-examination again. Every other speaker had the privilege of being allowed to make his case. Apparently I seem to invite comment.

The Minister does.

I gave the reason last week.

It is the Minister's kindly nature.

I had a plethora of them last week, and I thought I had exhausted all the questions that would be asked by Deputies. The fact is that we must be realistic. We know that the free trade concept is approaching reality. We know that the EEC countries inter se and the EFTA countries inter se will have abolished tariffs by the middle of 1965 and 1966—I forget in what order. We cannot isolate ourselves in an economic island, and if we are to maintain our position in world trade we must move in that direction as well. I think it is not unreasonable that we should proceed in the best possible way in order that we may enjoy advantages in our movement towards free trade conditions that we might not enjoy if we are left completely in isolation. It is for that reason that we adopted the only means open to us of getting reciprocity by voluntarily and unilaterally reducing our tariffs. I think we are all agreed that this is a desirable exercise so long as Irish industry is given not only a period over which to prepare, but the necessary assistance, financial and otherwise by the Government, which has been readily forthcoming.

Apart from the two organisations I have mentioned, EFTA and EEC, there is GATT, the General Agreement on Trade and Tariffs, to which almost every country in the world has acceded. We are one of the very few who have not. As Deputies know, there are proceedings within the GATT which are likely to terminate in the near future, perhaps in a year or so. There is what is known as the Kennedy Round in which a genuine effort is made for a reduction of tariffs between all the countries that have acceded to GATT—a reduction of 50 per cent. At present, while we are not members of GATT we enjoy the tariff reductions that individual members of GATT arrange with other individual members. Deputies are aware that the principle is that if country A negotiates tariff reductions with country B, then that tariff reduction must be equally attainable by every other member country of GATT.

At present we cannot adhere to membership of GATT because of our obligation under existing Anglo-Irish trade agreements. That, too, is another reason why this idea of a free trade area suits us at present. We can accede to GATT only if we have such an agreement with Britain that amounts to a free trade area agreement as defined by GATT. I do not want to pursue this, but it is no harm to try to put this business into reasonable perspective so far as I can in a few short words. I want to indicate that this is no new concept, that there are good reasons why we should be and are in the process of negotiating a free trade area, and that it is only when we get worthwhile advantages that such an agreement will be arrived at with the United Kingdom.

The Taoiseach has already outlined the difficulties our economy is experiencing at the moment. I will not go into the pros and cons of who is responsible, or why. I think I should confine my remarks in so far as I have responsibility in this situation to outlining as well as I can what steps I think ought to be taken in order to overcome these difficulties. Let me say at the outset that the position we find ourselves in is not a unique one, nor is it an unprecedented one. It is not unique in the sense that many other countries in Europe—countries who are economically and industrially well advanced—have experienced and are experiencing at the present time to a degree more or less than ours, difficulties of this nature. It is not unprecedented in that only nine years ago the Government of the day faced a similar situation.

The suggestion is that the situation then was more grave than the situation we are facing now. I will not go into the degrees of severity or difficulty that were experienced then compared with now. We believe that the remedy which was applied in 1956 was too one-sided and too severe. The dose was so severe that while it did cure the immediate ills from which the patient suffered, it brought about an almost more serious disease because while the severity of the levies did cure our balance of payments problem it so shook our economy and stayed our progress that it took a very long time to recover from it.

I am not denying that our present difficulties are serious but we think we can overcome them. In saying that I am not trying to minimise them in any way. I am satisfied that we can overcome them in a reasonably short time, and without imposing any great hardship on ourselves, provided there is a will amongst the community generally to do so, and provided we adopt the restraints necessary to achieve our purpose. It is inevitable, as I said elsewhere last week, that in a situation like this we will have our Jonahs and our Jeremiahs, who will say that we are ruined and that Ireland has no future. We will always have people like that. We will always have pessimists, but from what the leaders of the two main Opposition Parties have said I think they agree that there is no ground for pessimism. All advancing countries experience upsets and setbacks at one time or another. I believe that with all the learning, all the expertise of the economists, and all the forecasts they can make, we cannot anticipate these upsets and setbacks. In our case, a small country whose economy has been developing fairly fast, there is the danger that we will try to do too much too quickly, and I suggest that is one of the causes of our present difficulties.

In the past there was never any problem about finding sufficient capital to finance the productive ideas emanating from our economy. In later years, however, these productive ideas have been forthcoming at a fast rate and have, within themselves, been gathering momentum so that our capital difficulties have come upon us and these have created inflationary tendencies. No matter what the risks of inflation are or might be, due to such a cause, they are preferable to the evils of stagnation from which our economy suffered for far too long. Nevertheless, there is a balance in this capital momentum that we must try to achieve, and that was the purpose of the capital part of the Second Programme for Economic Expansion, to achieve a rate of progress that will match the availability of capital and which in turn will match the ability of the economy to service it.

Our problem may be fairly summed up by saying that we have been spending more than we have been earning. In other words, our total spending has run ahead of the resources we can provide for ourselves out of our current production and, as well as that, out of the voluntary inflow of capital. This inflow fell off, mainly due to the restrictions imposed by the Governments of the United States and the United Kingdom in recent months on the outflow of capital from these countries. I refer to what I call the autonomous inflow of capital. Deputy Corish referred to the rate of inflow from £16 million to £22 million to £35 million or so over the past three years. That is the inflow of capital generated by the desire of people outside voluntarily to invest in our country and in our economy. Unfortunately that has dwindled because of the actions taken by these two Governments, but it is up to ourselves in so far as we can, to make up the deficiency by, for example, borrowing abroad, and this we are doing.

Some people suggest that in borrowing abroad we have not gone for enough money. In seeking foreign borrowings, we must be prudent for many reasons. In the first place, when we borrow abroad it imposes upon us the obligation to service the capital so borrowed, which involves the repayment of moneys out of taxation. To give a simple rule of thumb, for every £1 million borrowed it requires about £100,000 to service it and that £100,000 can only be made up out of the income of our people, and that £100,000 in so far as it goes out of the country for foreign borrowing must be made up in one way or another by exports. Therefore, such borrowing must be resorted to and can be safely undertaken only to help us through a difficult period and the proceeds of it must be used for the most productive purposes we can find in order sooner to get back to an independent position.

The overspending, to which I have referred, by both the Government and the private sectors, this restriction of the voluntary inflow of capital and the slowing down of industrial exports which was caused by the introduction of the British levy last October, and, added to that, the shortfall in cattle exports—all these have combined to bring us up against the deficit in our balance of payments that we now experience. This is estimated to be, on present figures, about £50 millions this year. Assuming that there is a continuing voluntary inflow of capital, assuming that we can add to it what we are likely to achieve from the dollar loan, there may be, without taking other things into consideration, a shortfall of about £25 millions. This gap has to be filled from our own reserves and though these reserves exist for this purpose, that is, to meet a contingency of this kind, we must, at the same time, ensure that the situation is corrected without unduly drawing on our reserves.

Deputies will remember that in the recent White Paper on Capital Expenditure it is pointed out that the aim must be to replenish these reserves as quickly as possible for two reasons, in the first place, so that they will be available to meet any other situation of this kind that may arise in the future and, secondly, in order to maintain confidence in the Irish economy. When foreign investors come here they do not look only at the project which they are undertaking but also at the overall strength of our economy, at the way in which we manage our affairs and also at the strength of our foreign reserves.

To correct the existing situation the first thing we must do is look at the causes which brought it about. It needs no great economic expertise or any very refined or close analysis to do this. They were well summarised in the White Paper on Capital Expenditure which referred to the fact that capital expenditure was exactly doubled between 1958 and 1964. It pointed out also that if it continued at this rate it would go well beyond what was projected and allocated in the Second Programme. I shall refer to that in a little more detail later.

As well as the increase in capital expenditure, money incomes had been rising year by year in line with the improvement in our economy, but in the past year or so they have overshot this limit. Between December, 1963, just before the ninth round commenced in July, 1965, the incomes of wage earners in manufacturing industries rose by 12.4 per cent, which was roughly the amount of the ninth round, that is, the 12 per cent increase, but real earnings rose by only 2.2 per cent because of the rise in prices in the meantime. It would have been very much in the workers' interest to settle for an increase, of, say, four or five per cent for 1964 with a further similar rise commencing in 1965.

I want to refer again to what I said here last week, that the Taoiseach, speaking for the Government at that time, said when the ninth round was being discussed that a wage increase of the order of eight per cent, if it was to cover a two-year period, would seem to be adequate. In fact a 12 per cent increase was negotiated, and Deputy Cosgrave repeated what Deputy O'Higgins said here last week, that this 12 per cent was engineered, if not negotiated, for the sake of narrow political party advantage and was the effective reason for Fianna Fáil's success in the two by-elections. Deputy Sweetman must behave himself. I see he is getting ready to get in.

No. I will not interrupt the Minister from the gangway. I will interrupt him from the seat.

I partly guessed that was why the Deputy was leaving the aisle and moving to a seat. However, I want to make these two points. This was a negotiated agreement between the FUE and associated employers' organisations on the one hand and the Irish Congress of Trade Unions on the other.

But the Minister was very careful not to say that in Cork, nor did his colleague say it in Kildare.

I said it several times during the course of——

When the election was over, but not before.

Very well; that will bring me to my second point. Deputies opposite say that this was the reason why in February, 1964, Fianna Fáil won the by-elections in Cork and Kildare. The Labour Deputies say the advantages of this agreement were eroded by the price increases that ensued after the agreement was negotiated, in the course of 12 months or so. Nevertheless, even after 12 months' experience of the 12 per cent wage agreement and whatever price increases that followed, the results of the by-elections in Cork and Kildare were repeated in the general election of the 7th April, 1965, and in fact in Cork they were enhanced as far as the Fianna Fáil margin——

Stay with success.

"Let Lemass Lead On,": "Do not return to a credit squeeze."

Let us stay with success. I will refer now to the suggestion I made that a rise of four per cent in the first year and five per cent in the second year would perhaps have met the situation better and would not have given rise to some of the price increases that followed afterwards. It would have avoided the pressure on costs which helped to whittle down the real value of the ninth round. Some of these increases in costs would, I suggest, have come anyway. The increased cost of food, for instance, was mainly caused by trying to redistribute to the farmers that increased income.

The turnover tax would not have had any effect.

I am denying that the turnover tax had an effect. I do not want to get into a prices argument. I referred to it again last week and to the fact that we had the 1958 Act which apparently was an agreed measure on all sides. The implications and the potential of that Act must have been realised in 1958 when it was going through the House. I said last week that no member of the Labour Party demurred in any way as to the effectiveness of the legislation then being put through the House. I said also that I had taken certain action under the provisions of that Act which tended to keep down prices in some respects. I want to repeat what Deputy Cosgrave said earlier today, that I think special price legislation, special action on prices, is effective only in times of very special difficulty and that by and large in times outside times of emergency the ordinary free play of competition is about the most effective means of holding down prices.

I referred also to the increased demand for capital and the increased incomes as being two factors which have contributed to our present position. Bank credit too, as Deputy Cosgrave mentioned, has expanded considerably in recent years and expanded far beyond what the bank resources were. This excess demand, in these three ways, has been responsible for increasing prices, for increasing the balance of payments beyond the figure which a voluntary capital inflow could finance. I might say here that Deputy Cosgrave in his speech referred to the effect of which two specific provisions in two successive Finance Acts had on bank credit and on bank deposits. He suggested that because of the obligation to disclose deposits earning over a certain amount in the 1954 and 1964 Acts——

The 1963 Act.

The Minister was responsible, not me.

I am not suggesting——

The Minister said 1954.

I should have said 1963. It was when Dr. Ryan was Minister for Finance.

Exactly, and it drove many out of the country.

He also suggested that the aggregation of insurance policies with free estate was another reason for driving out capital.

I do not think he said that. He said that as a result of the mentality you showed this year——

I do not know whether Deputy Sweetman either read or wrote the speech but I do not remember seeing him here when Deputy Cosgrave was speaking.

No, but you can be out there and hear all the——

It is a test of, I do not want to use the word "truth", but of the accuracy of Deputy Cosgrave's allegations that from January, 1964, to September, 1964, there was an increase in bank deposits from £418 millions to £446 millions and from January, 1965, to September, 1965, there was an increase of £451 millions to £473 millions, so that bank deposits are steadily and substantially increasing.

If the Minister will come with me to any ten bank managers in any ten towns—pick them at random—I will guarantee that nine of them will tell him that deposits were driven out by his 1963 Act.

I am giving figures for increased deposits.

(Interruptions.)

These are not lies or damn lies; these are facts and figures that cannot be disputed and which show genuine and substantial increases in bank deposits. However, I will try not to encourage interruptions if I can.

I will go and drink my tea, and then perhaps I might not be tempted.

At all events, it is necessary not to try to restrict all these elements of demand. The Government's capital expenditure has been reduced, as indicated in the White Paper. The capital Budget totalled £103.72 millions and that has been reduced to £100.28 million, a reduction of some £3.44 millions. That is more in keeping with the projection in the Second Programme for Economic Expansion of £95.57 millions in the current year. Deputy Cosgrave suggested that we ought to come to grips with priorities in this respect and he instanced housing, agriculture, and education, and said that these should have priority over office building. Now, office building as such does not figure at all in this £100 million. In so far as there is office building going on, it is being financed in the main by foreign capital. It does not matter in what way we allocate priority as between housing and everything else, it will not be influenced by any clampdown on office building. The most it will do is restrict further voluntary inflows of capital. Therefore there is no use pointing to office building as being a factor in granting priorities.

If there are priorities, it is going to be difficult to know what is going to be reduced and what is going to be increased, and at what expense. At the moment, for example, roughly £30 million or a little more is being allocated to housing out of a total Capital Budget of little more than £100 million, that is roughly 30 per cent. For agriculture there is roughly 20 per cent, about £13.8 million on the capital side and £5.5 million or so to the Agricultural Credit Corporation, making as near as makes no difference, 20 per cent of the total Capital Budget. Industry gets about 6 per cent or 7 per cent. The question I should like to pose is this: when estimating priorities which are you to cut down and which to increase and to what extent can you do it? The relationships between different headings of capital expenditure have evolved over a number of years and it seems reasonably sensible to assume that needs have been met according as we can assess demand over the past years and that there has been no sacrifice of one capital programme for a less worthy one but if we had to estimate priorities there would have to be some cutting down on some of these capital projects.

So much for the capital side. We have taken the action I have indicated. Private expenditure and consumption have also been dealt with in a number of ways of which Deputies are aware —the advice to the banks about extension of credit other than to productive schemes; the hire purchase restrictions which were imposed, and more recently the levies put on import goods.

The 125 taxes.

That goes over my head.

That is how you described them.

I see. The suggestion has been made that this action has been piecemeal but it is being taken as part of a pattern and it has been deliberately moderate in order not to cause a damaging loss of confidence in our economy and in order not to cause a series of harsh measures. Earlier in the year the Government decided to take a number of steps in succession as events required. In June and July when we imposed the first measures, the trade figures were steadily improving, imports were declining and exports were increasing but in August and September there was a reversal as far as imports were concerned in that while our exports rose about £3 million for these two months our imports rose by £6.7 million. That indicated the necessity for further action and the imposition of the levies followed.

All these measures are part of the plan to deal with the situation and another essential part is the holding back of Government expenditure, both current and capital, at least until the end of the next financial year, 31st March, 1967. Control of Government expenditure is vital and we realise it. We realise that until we set our own house in order it will be difficult for people outside to exercise restraint. There is difficulty in controlling Government expenditure in that there are so many items that cannot be cut because of existing commitments and that means, as the Taoiseach said, that virtually all new projects, many of them very desirable, must be postponed until we get through this difficult phase. We must keep current expenditure within the limits of available revenue.

I have mentioned what has been done on the capital side and I may now mention what is being done at present. Already an inter-departmental committee is sitting on Government capital expenditure to ensure that capital projects coming from different Departments will be such as can be financed out of the capital we expect to be available. Deputies opposite know what usually happens. The Departments put up capital projects and the usual battle ensues between them and the Department of Finance.

I wonder where did the Minister get that? What precedent had he?

If there was a precedent—and I did not see anything in writing about it—it is a reasonable one to adopt in the circumstances. Now I come to the current side and perhaps the Deputy will not be able to claim a precedent in this case. The Deputy is aware that every year the Departments put in their Estimates; they are pruned to some extent initially by the Department of Finance and subsequently in consultation between the Department of Finance and the relevant Department, ultimately they come to the Government and they may be further pruned. That usually gives the initiative to each Department. This year I propose to take the initiative and to examine what revenue will be available and go to each Department and tell them what we can allocate to each one having regard to their normal level of expenditure.

And estimate priorities.

Yes, but if a Department wants to introduce a new service they will have to introduce it within the limit of revenue made available. In that way we propose to ensure that there will not be any need for a big increase in taxation. That will be necessary in order to stop scarce savings being diverted from financing capital to paying current deficits.

Current expenditure is already in excess of what is available from revenue. This fact could require the imposition of extra taxation in order to meet any shortfall but any extra taxation required for this purpose must be moderate. Whether this increase in taxation is necessary or not —and it may well be—new services, although they may be desirable, must be postponed if they cannot be financed without an undue increase in taxation. I referred to the necessity for restraint on incomes but I suggest that this should be borne not by workers alone but by employers, professional classes and farmers. Unless we do this our competitiveness, both in industrial and agricultural spheres, will be impaired. We must ensure that any increase in our productivity or advance in production will go towards closing the gap between the demand and our resources. Even with an optimistic estimate of capital inflow, the immediate gap is expected to be about £25 million. However, I think we can count on some improvement in our cattle exports. By allowing for that improvement there could be, perhaps, a shortfall of about £10 million in cattle exports, and that would bring the basic uncovered gap to about £15 million. Therefore, by and large, the general body of income earners, no matter what their position, must be asked to rest content with their present incomes during this transition period. I might say in that connection that the trade unions have claimed that the great majority of workers adhered to the 12 per cent national wage agreement. The eighth round wage increase has been generally applied. Most categories of workers in industry and in State and semi-State employment have received status and other adjustments on top of the eighth round. The 12 per cent operated to increase these levels and is to be effective up to the middle of next year.

Would the Minister go back to one figure I do not understand? What figure did he give as his estimate for the gap?

About £50 million.

Is that for the current year or the forecast for next year?

I gave £50 million as the estimated trade gap.

I am sorry: I thought the Minister said £15 million.

I was dealing with our capital budget and I have dealt with our current revenue, the necessity for cutting expenditure on current account. I mentioned bank credit. This expanded too fast in 1964 and had to be brought under control. The Taoiseach has already given particulars as to the effects of this. The advice that was given earlier in the year to seek to restrain credit except for productive purposes and projects especially related to exports has been fully justified by the events. The balance of payments situation could not be corrected if uncontrolled additions to the money supply were made by way of bank credits or foregin borrowing. Therefore, if we accept a period of resting content until we have made the necessary adjustments in our economy, we can expect to be able to build up again our sound funds. The week before last I described this as a holding operation—holding back our public and private expenditure on imports; a holding of real incomes, of costs and prices, a holding of our competitive position; a holding of jobs and living standards. If we can do this, I think we can expect production to move ahead as our internal stability is restored and our competitiveness is increased.

I think we can take some comfort from the fact that much of our imbalance of payments was brought about by the import of new capital equipment. In time that must bring with it increased efficiency which will raise our output in the long run. The more restraint we accept now, the shorter the period of adjustment will be. I do not think the correction the economy needs is so grave that it could not be achieved by the end of the next financial year. Provided the necessary restraints are fully accepted, I believe we can move on to a greater rate of economic expansion. I want to repeat what I said at the outset. The measures we have taken have not hindered our economic move ahead. We have certainly been slowed down by the difficulties we have run into, but, if we accept the restraints now counselled, I do not see any reason why by the end of the next financial year we could not move ahead at at least as fast a rate, if not faster, than we have been moving in the six or seven years up to the time we met these difficulties.

Before the Minister sits down, does he really mean the next financial year or does he mean March, 1967.

March, 1967.

The Minister mentioned advice given earlier to the banks this year. Could he put a date on the time when that advice was given?

I could not now.

I think the Minister might get a little prompt.

I shall try and rely on my own memory. It was about May or June, I think.

I would have said the beginning of May. Would that be about right?

Just before the Budget.

Six weeks after the election. That is what I wanted to get in.

Maybe I can come in on that, in case it is suggested this advice was given only because we thought it politically prudent—political in the narrow sense—to give it. The banks sought the advice of the Central Bank, who came to the Government to discuss the situation.

Does the Minister really expect the public to believe that coincidence? They will not.

Listening to the Taoiseach and the Minister for Finance has been an interesting exercise. In fact, in his first few sentences the Taoiseach adverted—or should I say "reverted"—to the age-old practice of Fianna Fáil of seeking the protection of patriotism when they have a problem. He asked the Irish people to come behind them in the mood of patriotism, to get them out of the trouble caused by themselves, when he quoted from a journal, which not one per cent of our people read, in which it was suggested we might be thinking of devaluation. He says this is something that should never have been said and asks the Irish people to come behind him and see that this will not happen. Of course it could not happen. Our pound is so linked with the British pound, despite certain steps taken to change individual aspects, that I could never see a situation whereby the Irish pound would be devalued in relation to the British pound. The Taoiseach was seeking to cast a red herring across the trail, the trail along which his Party, and he and his Cabinet in particular, have led the Irish people into a difficulty, a difficulty which is of the Government's making and nobody else's.

He was dealing with a specific mis-statement in an Irish journal, which was taken up by the Financial Times.

A journal read by one per cent of our people. It is a matter of no consequence.

But the comment was taken up by the Financial Times today.

I interrupted the Minister, so I suppose he can interrupt me. It was taken up by the Financial Times. Perhaps that is a reason. The difference between any previous difficulties and the difficulties of the present day is that the terms of trade over the last few years, while not absolutely satisfactory to us, did not deteriorate to any great extent. It was a period when foreign capital was coming in, when everything was right, when the economic barometer was set fair and when this country should be, with wisdom and prudence—a phrase used by the Minister himself—moving forward without any of these setbacks. I am the first to admit that in an expanding economy there can be setbacks, but these should largely be caused by outside factors. All the outside factors from 1959 were right. Yet the Government that have produced the Second Programme, the Government that have done the planning, have planned us into a difficulty, a difficulty that may see to it there will be unemployment—I hope there will not—in the spring of 1966.

Sometimes in this House you will learn more by what is not said than what is said. The thing I noticed most about the two Government speakers so far today was the fact that they never mentioned that there are 1,000 more people employed this year as compared with last year and, therefore, 1,000 less people unemployed. These figures prove that the financial barometer was set fair in the last four years, that things were going well and that there was nothing wrong except the Government's mismanagement of the capital side of their Budget. This was of their making and nobody else's. The Minister for Finance used a phrase to the effect that we had to rest easy for a period of 18 months or two years. If our resting is not easy and if our difficulties are felt by our people through the medium of unemployment and having less money on which to live, then the blame must be laid at the door of the Government and at nobody else's door. The Programme for Economic Expansion was there. The plans were laid. The Programme has failed to produce for us the constant expansion and the constant moving forward that should have been possible in a period when everything outside the country suited us.

The Minister for Finance denied that there should be such a thing as priorities. Momentarily he reminded me of Deputy P. J. Burke who, if we vote against the Budget, says: "You are voting against the half-crown rise"—or whatever it may be—"for the old age pensioner." The Minister for Finance maintains that, if we hold there should be priorities, we want some things to be left out. He will not admit that we want some things put at the top of the scale. He alleges that, because some things must be relegated to a lower position on the scale, we want them left out altogether. Following on that, he told us he had an interdepartmental committee screening priorities. If that is not establishing priorities, putting some at the top, others at the bottom, and possibly leaving some out, then I do not know what it is. If the Minister for Finance does not want to have priorities, then he is at variance with his leader, the Taoiseach. I quote from the Irish Independent of 27th October of this year; speaking at the Dublin Chamber of Commerce dinner, under the subheading “Priorities needed in credit policy” he said:

As regards banking policy, few people will disagree that, in circumstances where unrestricted credit facilities are not feasible, a system of priorities amongst different expenditures is necessary, as well as limiting the demand for credit by public authorities in favour of private credit in so far as this is possible.

He put the little codicil in about private credit because he was speaking to those who would be availing of it. The Minister for Finance says that, when we talk about priorities, we are relegating some things to the limbo of forgotten things. He is at variance with his leader who today sent into the limbo of forgotten things both education and health. Those who were listening here today will agree with me that he said any moving forward in health and education must be postponed for the moment. That is the position of the priorities. They are accepted by the Taoiseach and denied by the Minister for Finance. Of course, five minutes later the Minister for Finance was telling us that he had set up an interdepartmental committee to screen priorities. Fianna Fáil used accuse us of speaking with many voices, but these are the facts as stated by two principal Government speakers so far.

The Taoiseach referred to the situation in relation to imports. I agree completely with the statement made in the Irish Banking Review of September, 1965. At page 12 it says:

However, the root cause of the Irish economic problem at present, if it were to be briefly summarised, is that developments on the domestic front lying within our own control have militated against this "essential condition" at a time when the external environment has also become much less favourable for our exports.

They believe we could have done something about our own domestic scene. I believe we could have done something about our own domestic scene. One of the things we could have done in the agricultural sphere was to grow more cereals. The Taoiseach—I took a note of it—said that the raw materials of the agricultural industry were desirable imports and must be taken in free of levy. Of course they must. Why, in the name of all that is high, dry and holy, should we have to take in to date in this year, 1965, £10,769,988 worth of cereals when, in the whole of 1964, we took in only £6,630,867? I quote from the Trade Statistics of Ireland, 1965. Why do we have to take in feeding stuffs for animals which we could grow here ourselves, if we had the right policy, to the value of £4,485,747 in the months of January to July, 1965, when in the whole of 1964 we imported only £2,948,344?

What is wrong with Government policy? Is not the Banking Review right when it says we could have done something about our own domestic scene? What has the Minister for Agriculture, or his ill-famed predecessor, done to ensure the growing of cereals on some of the virgin land to feed our own people, our cattle and our pigs? What have been their relations with the Irish Flourmillers Association and with the farmers? Why have so many things not been done? I point to something that could have been done on the domestic scene, something which would have ensured that we would not be here tonight discussing the unfortunate catastrophe which will apparently crucify our people economically over the next few years.

The Minister for Finance said that a good feature of this was that some of the imports causing his troubles were, in fact, capital machinery which would improve things in the future. I quite agree with him. We, on this side of the House, are wholly behind Irish Air Lines and all these other developments but, if we are establishing priorities, and if the Taoiseach has relegated education and health to a lower place, while, at the same time, the unfortunate man who wants to build a house under the Small Dwellings (Acquisition) Acts in which to rear his family cannot get the money to build, why then was it decided at this particular juncture that there should be an increase in the import of transport equipment from £17,544,177 in the whole of 1964 to £21,779,210 in the months of January to July of this year, and more to come, I understand?

I do not know how anybody else runs his business but I do know the way I run mine. If I want a machine at a certain time, and I cannot afford to buy it, then I postpone the purchase of it. This State has reached its present situation because the Government were so busy installing themselves in office after the general election. Why did the Government not do something about this six months ago? That transport equipment could have been bought this day six months ago. The farmers could have been encouraged last year to grow more cereals by being offered a slightly higher price for wheat. Various things could have been done. There could, perhaps, have been a lower standard of wheat agreed with the Irish Flourmillers Association because there was a crisis and the Government could have seen to it that we would eat more Irish bread and did not import millions of pounds worth of cereals at the present moment. These are things that we could have done and which could have saved us from the unfortunate position in which we find ourselves.

Mention has been made here, quite properly, of the amount of capital coming in from abroad. On page 13, column 1, of the same Banking Review we get the figures:

In 1964 the net inflow of foreign capital amounted to £36.6 million, which was an impressive figure of £11.6 million greater than the previous year. The figure of £36.6 million in 1964 compares with capital inflows of £0.6 million, £13.4 million, £23 million and £25 million in each of the previous years since 1960.

Does not this tell us, if we look at the various figures which are like a slightly complicated ledger, that the situation last year was just as bad but because there was a general election being held on April 7th all this was postponed until that election had been held and until Fianna Fáil had got themselves back into office?

Let us think of the effect of even by-elections. I intend to discuss at some length the 12 per cent wage increase at a later stage but let us realise that the first thing we had was a White Paper entitled Closing the Gap—a phrase used about five minutes ago by the Minister for Finance in relation to closing the gap between our legitimate demands and our supply of capital. This White Paper told us we had all to rest easy—as the Minister has said just now again, in the month of November, 1965, so long afterwards. A few months after the publication of the White Paper Closing the Gap there were two by-elections and the gap was widened by a wage agreement which, of course, the Taoiseach is right in saying had to be negotiated at that time but which in my view was negotiated quickly as a result of pressure exerted by the Taoiseach on both the trade union side and the employers' side, which resulted in a rather half-baked agreement which reacted most unfavourably on the workers themselves and is at the moment reacting most unfavourably upon them because, notwithstanding that negotiations should start on 1st January next on the new wage demand and that the end of the two and a half year period is July of next year, we are being told that restraint must be the order of the day, that we must all rest easy. A definition as to the period of our rest has been given by the Minister for Finance to Deputy Sweetman a few minutes ago, namely, that it is until the end of the financial year, 1967. That is the position in which we find ourselves. Fianna Fáil can only produce a wage freeze until the end of the financial year, 1967, as the saviour of our economy.

Was there, then, proper management of the economy? Consider the capital inflows of which I have informed the House as quoted from the Irish Banking Review. If Germans had not come and bought our beaches—which is an undesirable facet of this state of affairs —if the Dutch had not come and bought our farms, what would have been the situation? I believe the present position would have been accelerated by perhaps 12 or 18 months and that we would have had this position, willy-nilly, that length of time ago and that we would have a different Government in office today.

The Minister for Finance also glibly said that we are talking about housing priorities and people who have no houses and that this question of the office building in Dublin was largely one of foreign capital and that even if we forbade it, it would have no effect. I want him and the Taoiseach and the House to hark back to the time when the Parliamentary Secretary to the Minister for Finance, now the Minister for Health, Deputy O'Malley, went into print saying that there would have to be priorities in the matter of building and the setting up of a committee whereby there would be controls and that we would see to it that houses would be the first priority, and that sort of thing. Deputy O'Malley left the Board of Works. It is an old Spanish custom with Governments that when things become intolerable in one place they shift a person to another. Nothing has been heard of that since.

I say to the Minister for Finance and to the Government and to everybody here, whether in the public gallery or in the Dáil Chamber, and to those outside the House, that a considerable amount of the office building done in this city was done by Irish companies and by Irish insurance companies and by English companies whose revenue within this country came from premiums from Irish nationals and that, in fact, the money that was spent on these office buildings could have been available if the suggestion of Deputy O'Malley had been followed up. Things must have got a little rough for him.

National Loans could have been floated for larger amounts and the pressure that there is now on existing capital could have been obviated. I suppose I know as much about these office buildings in a general small way as the Minister for Finance does, except that he has the advantage of advice from his Department and the banks. I am certain that a very considerable amount of the money spent on these office buildings came from Irish sources and that these buildings could have been done without and the money could have been devoted to private building or to building through a national loan for housing purposes. Remember, there are people in Griffith Barracks—or are there? I do not know where they are now. Are they in tents in Mountjoy Square? They are without houses. Last night when I went into my political office an unfortunate woman who had four children came in weeping. She lives in one small room. We are pretty voluble in Drogheda. We have got a fair share of the house building that has been sanctioned but it was not sufficient. There is a housing problem still in existence in the country. If we were in office and if such a problem existed the walls of this House would be pulled down.

In 1956 and 1957 the Minister for Local Government, who was then on this side of the House, berated Deputy Sweetman and the then Taoiseach, Deputy Costello, in the most violent manner and said things which were improper almost and unparliamentary and was called to order by the Chair. He is now Minister for Local Government, without a penny to build a house. I, as a young Deputy, in my first period in the House saw these things happening to men like Deputy Costello and Deputy Sweetman. We on this side of the House cannot forget that. One of the things that made me wonder was a comment made in a paper last week. Deputy Cosgrave had adverted to the fact that something should have happened last year and the comment was that this was rather like crying over spilt milk. There is a certain stage at which you stick the cat's nose in the milk if she has spilt it. The stage has been reached when the Irish people must see the Government's nose stuck in the milk. It is for the good of the country that that should happen. The people should realise that they are being governed by a set of political adventurers, prepared to blow hot before 7th April when an election is pending and to blow cold by April 30th.

As evidence, let us look at what they say. I quote from the Irish Press of Friday, 2nd April, five days before the election. On that occasion the Taoiseach said:

Only Fianna Fáil has been and is now in a position to give the country the kind of Government that ensures stability, which can offer a full and comprehensive policy and which can hope to get a Dáil majority which will establish confidence in its fulfilment.

At that time Deputy Dillon was Leader of our Party and months before that was telling us about this financial crisis and was being told that he was a Jonah and a Jeremiah. What were the words of the Taoiseach, the political adventurer, on April 30th, when safely replaced in office? I quote from a press report:

These are all warning signals. Special measures may have to be taken to get production and exports going strongly ahead and to safeguard our progress, said the Taoiseach in a major speech in Killarney yesterday.

What happened between 2nd April and 30th April? I know what happened this evening. The Taoiseach spoke of what he said in January, what he said in February. I took very deliberate note. He never mentioned what he said after that until he came to July. I do not know whether Ireland wants this sort of political adventurer. I know I will fight it. I do not want that sort of man or that sort of Government and I will make every effort I can to get them out. We on this side of the House are ready, willing and able to provide an alternative.

That is the thing we must convince the people of, that is the thing we must convince this House and the country of. In doing it we will be attacked in every way possible by the Government. We will be obstructed in every way but it is our job to do it. The people on the other side would sell everything for power, for office, so our job is all the more necessary.

During the past 12 months the commercial banks and the Central Bank would have been ready to negotiate with the Government and to take any sensible course they were asked to take because help is always available from that source if negotiations are properly carried out. The reason negotiations were not begun is because of the forthcoming by-election in Cork and Kildare and of the general election. Any breath of trouble at that time would have meant fewer votes for the Government Party. There were no negotiations. In the quarterly review of the Irish banks and, I believe, in the report of the Central Bank, mention was made of difficulties but these were cast aside by the Government and no action taken.

In that period, was the lending policy of the commercial banks directed towards anything but the productive work of housing our people? Was any of the money lent by the commercial banks directed to these new office buildings or to other such structures which do not employ such a large number of our people? If commercial banks do not work in cohesion with the Central Bank and with the Government there is no reason why they should lend to anybody for anything except projects which will give them speedy return. Nobody has mentioned any negotiations with the commercial banks until 1st May last, when the election had been won.

How low can people sink politically? I do not know but I hope that sort of operation will never come from this side of the House. At a weekend meeting I expressed the hope that the national loan will fill. I believe it will fill and I hope it will because so much of our economy is tied up with Government capital expenditure that any great reduction in such expenditure would cause considerable unemployment. There is no escape from that clear economic fact and that is why I hope this loan fills.

Earlier national loans, I have observed, were always floated at an interest rate of a quarter or one-half per cent less than loans quoted by the City of Liverpool, by county boroughs in England or by small giltedged securities. The present loan has been floated at a rate at least as good as any of these has ever asked and, therefore, I believe the Irish people will take this national loan knowing they are keeping their own people in employment but also knowing they are getting a very good bargain. The Minister for Finance spoke of the funding of loans and said that the general rule of thumb was to say that for every £1 million floated you had to take £100,000 below the line for repayment. I wonder how much it will be this time seeing that the rate is so extraordinarily high as compared with other loans floated in other times of crisis.

This is not criticism of the Government, merely to point out that the Government have been pressed to the utmost, to such an extent that every person taking the loan will get a very good bargain while those who are not taking it will pay dearly in taxation as a consequence of the Government running out of steam through mismanagement of the capital side of the Budget. There is the inevitable result of this loan at such a high rate that rates generally will go up in this country. One of the major mistakes made by the Government in the past year was that, when the British Government in their wisdom reduced the bank rate on overdrafts, the Irish Government did not do so as well.

The sector of our community to which the commercial banks should pay most attention is that embracing employers and employed. In a free economy this is done merely by suggestion and negotiation but in times like this the attention of the commercial banks should be harnessed to the needs of employers and those whom they employ—the producers. The Government have made no move in this direction during the past 18 months. They have said the prices and incomes policy of Fine Gael is ridiculous. Now the Taoiseach says the country must have it. There is no doubt that the high interest rate attached to the national loan will be reflected in high interest rates generally and that these, in turn, will affect the price of every commodity in the country. This loan should not have been necessary but at the same time I should like to repeat my sincere call to everybody who has money to put it into the loan and get the best side of the bargain for which the Irish people must pay.

I should like to deal now with the position of the local authorities—their situation in regard to supplementary grants and loans for people who wish to build their houses. People who build their houses were given an exemption of rates for ten years, the rates becoming progressively payable by annual increases of ten per cent. In that way local authorities recoup after a few years the investment they make in people interested in building their own houses. The system adopted by local authorities to fund loans had been much the same as that adopted by the Minister for Finance in his national loan. They raised loans over periods of 15 years and created a fund out of the improved position in their rates.

Now two things have happened as a result of Government mismanagement. The first is that the commercial banks will not finance loans for the purpose of supplementary grants and loans for people anxious to build their own houses. Now people have to wait until the money comes to local authorities through the Local Loans Fund, via the Department of Local Government. The second thing is that the Government have decided, notwithstanding a statement by the Minister for Finance, that they do not like priorities and that grants will be restricted to moneys voted each year. In other words, if a certain amount of money is voted to cover 1,000 houses and if 1,500 couples wish to build houses, 500 of them will be unable to do so.

I quote from paragraph 25 of the White Paper Public Capital Expenditure, page 10:

It is intended for the future, therefore, that, on the basis of the closest possible estimation of annual outlay under these various schemes, supportable amounts of expenditure on the schemes will be settled annually in advance and will be provided for in the budget and strictly adhered to.

There is only one way in which you can get past this and that is if you can get your loans and grants passed by the local authority and if the Department of Local Government get your letters and you go into a commercial bank and float a loan to build a house. I have done that with people in the past six months. However, what reception would I get today?

In my constituency or anywhere else at the present time if one looks at the number of Small Dwellings (Acquisition) Acts houses that are at this moment no longer being built, that are sitting there like derelict sites, one will realise the depths to which this Government descended in their political effort to see to it that they suffered not the loss of one vote in the last general election. That is a very bad situation to find people in. I have on my table at the moment particulars of at least 40 houses where building is no longer proceeding. For one group of houses, a few of us actually gave money to try to keep the builder there but we are still in the same position. I was speaking to an official of the Department of Local Government today and he said that those unfortunate people building these 30 houses on the Marsh Road in Drogheda will be caught up because the Local Loans Fund will have to have a higher rate of interest now. These were decent working-people who were trying to build their houses, semi-detached houses at the lowest cost possible under the Small Dwellings (Acquisition) Acts. They will now have to pay an increased rate of interest at 6¾ per cent and may not be able to have their houses completed for some considerable time. I myself put up money to try to keep the builder there but he has gone and the whole work is at a standstill.

In 1956-57, I remember what treatment the elder Deputy Briscoe gave us on this matter. I remember what he did to us and to Deputy J. A. Costello, as Taoiseach. I remember what he said to Deputy Sweetman. I think that the approach, so far, from this side of the House has been Parliamentary, dignified and extremely easy on the Government. We shall speak of things only that will not affect employment and that will not adversely affect our people. We shall not be as hard on the Government as they were on us. At the same time, we must point to their political attitude of mind. We must point to the fact that they could not care less, so long as they were sitting over there, if the people outside were in the position of having to suffer for 18 months or two years, without finishing their houses, maybe without a job, if things go on as they might go from now until next February. They are satisfied so long as the general election has passed and they have three or four years in which to plan the particular time at which to go to the polls again. That may be politics. I would eschew the very thought of it.

The Minister for Finance had the gall to mention the Agricultural Credit Corporation and the money given to them. Let us trace the history of the Agricultural Credit Corporation. Up to a few years ago, it was a relatively small institution lending much less money than it does now. But the rate of repayment from farmers in respect of loans for capital improvements on their farms was so exceptionally good that eventually it came to the Government's mind that the best thing to do was to expand it and it was duly expanded. It was expanded from having a name for conservatism, perhaps unjustified but, nevertheless, there, in the country districts of Ireland to the stage when it had a name for being progressive in the extreme, when it was doing a job which was expanding our exports and keeping more of our people on the land even though not keeping the same number. They reached a stage at which the expansion meant they needed more money from the Government and this coincided with the results of the mismanagement of financial policy by that same Government and the Government gave them, and pride themselves on giving them, the same as they got the year before.

Did anybody ever put the brakes on a vehicle when it was travelling at 60 mph? It takes a while to slow up. If you have a projection whereby you are accelerating, before the brakes go on, and are raising yourself towards 70 mph, the shock to the brakes can be extreme. This is what happened with the Agricultural Credit Corporation. As a result of the mismanagement of this Government, the Agricultural Credit Corporation were constrained to say to decent farmers: "You have bought a farm, you have bought that 10 acres of land, you have bought that article of machinery, you have purchased these cattle. If you do not succeed in giving us the deeds of that farm, or the proof, whatever it is, before the three months stated on your agreement have expired, we shall throw you aside." On behalf of a constituent of mine, I had to go to the Department of Lands to get a document posted out to a solicitor in County Louth and to get that document posted back to Dublin and to get it out and over to the Agricultural Credit Corporation in seven days or a man who had purchased a farm for £4,500 would have been left in the position that he could not pay for it even though he had got approval from the Agricultural Credit Corporation in writing for his loan. How tough were things at this stage? Were we hard on the Government? I think we were far too soft. The fact that we were thinking of the Irish people, thinking that, perhaps, we might injure them if we did not hold our fire, was something that perhaps, in the end, might have been bad. We should have been far more pugnacious. That is what they did to the Agricultural Credit Corporation and this is a productive institution.

At the present moment, the Agricultural Credit Corporation cannot give a loan for a bank debt or to buy land. That, on paper, may seem something that, in times of credit difficulty, is reasonable but remember that any application that ever went to the Agricultural Credit Corporation, of any size at all, had a bank debt to discharge before the proposals were put into operation. Remember that what usually happened was that a man went to the bank for a loan, say, of £600 because he was short of stock or wanted to build a piggery or to increase his production. He went to his agricultural adviser who put up a plan maybe for a loan of £2,000 on a property worth £6,000, £7,000 or £8,000, and, in the middle of this, was a bank debt of £500 or probably as much as £1,000 on a property worth £6,000 or £7,000. The Government have forbidden the Agricultural Credit Corporation to give that man a loan and that stands today. The position is that that man cannot move forward, cannot increase his production.

When Deputy Fitzpatrick of Cavan and I were asking supplementary questions on this subject, the Minister for Agriculture and Fisheries looked across at me and whispered: "Second charge." Has anybody who ever went to borrow money been popular when he was given a second charge? Those of us who deal in business and in agriculture know that the charge a bank takes when they give a man an overdraft is a general charge. A man may, in fact, exceed his overdraft by a few thousand pounds or ask for an increase in his overdraft when credit is free. That means the bank is first for everything and the Agricultural Credit Corporation second. The position, then, is that that man is now hog-tied by the definition of the Minister for Finance that our financial problems will end at the end of 1967. That is the position. Everything must stay as it is. Production may not move forward.

The position is, and I know this figure to be fairly right, that 60 per cent of the business of the Agricultural Credit Corporation is affected by this instruction of the Government. I have forgotten the phrase but the Minister for Finance has indicated that our waiting period is to be in comfort, one in which we just sit and wait. Imagine sitting in your own rocking chair. In my opinion, it will be a hard seat, a cold atmosphere and one which can be properly charged against the Government. Of course the thinking in this is entirely wrong. There is something about agricultural production which must be remembered and it is this that when you create more of it than we can eat here at home, you must export it and, when you export it, 90 per cent of the price is a net export. You are not importing steel which is a very good thing. Rather, you are making it up here and exporting the work of your people in the finished product. You are exporting a product which started here from the time, perhaps, a calf was born; you are exporting a product from the time a plant started to grow. So, when you talk about export, about 90 per cent of the cost of that export can be credited towards your balance of payments. That is where the Taoiseach's solution lies and that is how he has met it. If that is policy, I do not know policy.

I should like to refer to the position in relation to the levies and the fact that they will last until next March. There is in this country at the present moment, amongst those people who have been exporting and who have been thinking about things and talking to English people, a view to which I subscribe and that is that the national loan will fail and that the 10 per cent British levy may never be removed. That may be a gloomy prospect but I am not alone in believing it. When we put our levies on in 1956-57 Fianna Fáil followed up and turned them into tariffs. They did this for an obvious reason because, when we put on the levies, we started to help certain industrialists and factories here. At the time we put levies on electrical goods. Take my own constituency where there were 500 people going in the gate of GEC in Dunleer. Everybody in this country who wanted electrical goods bought them from GEC or Philips. Help your own people for a year, help them for two years and then when you have done that decide that what you have given them you must take away. You find your civil servants will tell you that the removal of this levy will mean gross unemployment, unemployment of 200 people in Dunleer or Clonskeagh, and you decide you will not remove them but will convert them into tariffs. That is something which may not happen in the case of the British levy. I hope it will not but, at the same time, the danger is there.

With regard to the levies we are putting on, I do not have to forecast the position—it is quite clear that when 31st March is approaching, you will have industrialists in this country finding favour with the idea, coming to the Government and saying to Deputies: "Look, this levy has helped us a lot and we think you should keep it on". That is the picture you must face up to.

The question of increased internal spending power is one that was mentioned by the Taoiseach. The first thing I should like to say in that regard is that we do not believe on this side of the House—as was stated by the Minister for Transport and Power on last Saturday night and as reported in the Sunday Independent—that Irish people are eating too well, living too well and spending too much. We are working very hard in this country and I do not see very many of us going to Miami on our holidays. I find that Irish people are working as hard as any people on the face of this globe and their standard of living, whilst rising, is no higher than it should be. The proof of that is borne out by the figures I quoted in relation to imports. The imports which have brought us into trouble are not imports of brandy, or cereals which we should have grown here and various other imports that are related to productive capital. They have nothing to do with the spending of our people.

The Minister for Finance told us that the 12 per cent has now been reduced as a purchasing power to two per cent. I believe he is wrong and, what is more, the Irish people are no better off than they were when the 12 per cent wage increase was granted. I believe they are worse off and where would they get it to spend in this situation? The question of people having personal overdrafts and all that sort of thing does not arise. All the personal overdrafts in this country would not cause the banks a moment's worry. All the personal overdrafts in this country would be of no consequence in relation to the overdrafts for capital expenditure.

I do not believe Irish people are eating too much. The Taoiseach said: "We dealt with this wage increase and we are not afraid to deal with anything that seriously affects our people"— the people who said that there should have been no wage increase, because we are living up to the increase. Nobody on this side of the House said that. Deputy Cosgrave contradicted that. What we said on this side of the House was that the wage agreement which was concluded was, in fact, rushed upon the employers and the representatives of the employees by the Taoiseach at a time when political opportunity knocked in the shape of two by-elections. I want to say this, and I am certain the trade union people and employers would agree with me, that two and a half years is a stupid period and far too long. Whether it is 12 per cent or two per cent prices, naturally, will follow and the period which should exist as a period for which a wage increase should stand should be something in the order of nine to 12 months. The Minister for Finance almost implied that himself. He suggested two figures, five per cent and four per cent for two years as a better situation. Had the employers and employees been left beyond the Kildare and Cork by-elections to work out their own salvation they would have succeeded, in a most amicable way, in getting a far more balanced situation and you would not have the situation where people are now only two per cent better off than they were. According to anybody who goes out and buys things out of his own pocket we are far worse off than we were and have a period of waiting until the end of the financial year 1967. The working man has been overtaken by prices. Do you expect this man to sit and wait for this long period? I do not know whether patriotism can be employed towards this end but I know certainly if our Party were in office we would not get away with it. I honestly believe that the working man will not wait and while the economy is in difficulty you will have trouble.

Even if there are firms in this country which are, because of the bank credit squeeze or anything else, in a difficult position in relation to paying these increases they will still have to sit at the conference table and hammer out these demands. That is, again, as sure as light follows dark. If that had happened in relation to this wage increase, when a 12 per cent was added on in a hurried moment for a few months, the worker had a very much better situation. It had an immediate effect on prices and it has affected our opportunity to export. We have been in a position where the cost of our goods going abroad has been too high and we have not been in a position to increase our exports. The fact that our industrial exports did not move on in the climbing graph expected is due more or less to the fact that they were costing more.

Another factor which has militated against us is that it has affected our tourism. We have in England at the present moment, which is our main centre for attracting tourists, a name for being too dear. The only antidote we have to that is we have our car ferries and we have our proper roads. People will still come here for that reason but very many more would come if we could balance our economy. Mind you, the Labour Party have a point when they say—they intimated they did not get much help from us in regard to this but there is no harm in giving credit where credit is due—that action in relation to prices was taken far too late and that if the Taoiseach had come in earlier, it would have been better.

This is their Programme for Economic Expansion. They are the people who drew it up, the people who planned it, the people who fixed the capital spending, the people who said where it was coming from and the people who are aided far beyond our greatest expectations by an inflow of capital from abroad. They are the people who are now in the soup. The only snag is they are not in the soup; they are in office and the Irish people are in the soup instead.

I want to deal very briefly with two other points. We have here a wonderful opportunity for expansion in industry. The Industrial Grants Act, 1956 and the Finance (Miscellaneous Provisions) Act of that year were passed by us and they did a first-class job all over the country in encouraging industrialists to expand. If we had been there since, I am certain there would have been many changes. It is most unlikely that things would have been so inflexible that there would have been no change in the pattern of grants and the pattern of incentives since 1956, but there has been no change in the pattern of grants since 1956. As a result of this, in my view, there have been a few quite spectacular failures. I believe that, when an industrialist comes here, particularly one whose parent industry is based abroad, he should be given not only freedom from income tax on exports but freedom from our income tax here. I know it is valid to say he would not come here for that reason, but by whatever method we use, we have got to ensure that we will not have the sort of spectacular failures we have had in the past.

I want to talk for a moment about my own constituency. I do not think I have mentioned this in this way before but I would like to do so now. The GEC factory in Dundalk has closed down. I happen to know, although I am not supposed to know, and therefore I am not betraying any secrets by saying this, that there are negotiations going on with an American firm to get it open again. I wish the Government, and anybody else who is doing anything about this, every success in their efforts. Let us discuss the situation whereby an English company made something in the order of £8 million profit in England, took a £300,000 grant in Ireland to open an extension to the factory they had here and closed down in six months. These people were not short of capital. These people had a valid reason for coming here. Surely they assessed their market prospects and what business was there and surely we should have seen to it that we had some control on them whereby they would stay?

I am not supposed to know — I would be the last man in County Louth to know — that the Taoiseach had anything to do with the negotiations with an American firm to try to get this factory started again. Why should we have a situation whereby a company with £8 million profit in England could open a factory here and after six months close it? Does it not show the flexibility on the part of the Government in regard to those two measures since 1956? There is something wrong and something which is inhibiting the proper advance of industry.

The other thing which is wrong about the Government's industrial progress is we have been an absolute failure in attracting industrialists from Britain. It is an hour to Liverpool, or something like that. One would have thought that, with the excellent labour force, with intelligence and physique far ahead of anything they will get in the industrial cities of Britain, British industrialists would have been attracted here to promote their industries. This would have given employment to our people. It has not happened to the degree it should.

I feel there will have to be a changed approach to this matter, if we want to expand our industry and encourage British industrialists here. We would not have had this balance of payments difficulty and this capital crisis we have at the present moment, if we had been able to attract British industrialists here. The signs are not good. I do not want to be a Jonah or a Jeremiah, as we were told we were, but let us face this. Fords in Cork have let 240 people go. The Greenmount and Boyne factory in Dublin has closed down. There was an announcement this morning of the closure of a small mill in Donegal. There have been people laid off in many industries all over the country. There is grave unrest at the present moment in regard to the cut, make and trim trade not in regard to when free trade comes but on 1st January, 1966 in relation to the type of certificate that will be accepted with regard to the made up goods going to England. There is also considerable worry in regard to the cotton spinning industry.

The Taoiseach today urged Irish industrialists to make an effort. There is something wrong in relation to grants when only nine per cent of the amount paid out in grants has been paid to Irish industries. Irish industries who employ our people here are not getting the grants. I cannot understand this. The Government thinking must have been wrong and the then Minister for Industry and Commerce must not have been doing the job as he should have done it because the grants remain exactly as they were. If Deputy Sweetman and the late Deputy Norton who passed those two Acts in 1956 were not right the whole way—they were not God Almighty—the situation was that there would have been changing flexibility and redrafting probably every year since. Those two Acts have stayed there just as they were. Fianna Fáil got rid of the name of one of them by introducing an Act which was exactly the same.

Why have Irish industrialists not availed of these Acts? Is it because, politically, it is far better to point to a new industry with 100 employed than to point to an old one which has been given a grant? I do not know, but there is no doubt that people who would be so political as to act as they have been acting during the past 12 or 18 months would not stop short of that. I do not think the criticism of industrialists by the Taoiseach is in order at all. He says they have a market of £28,000 million open to them in the EEC. I disagree with him in regard to that because I do not think they have. At the present moment if you start to export to the EEC countries, you will find, as Lieut. General Costello found not so very long ago, that if there is no tariff to stop you, a new tariff will be produced very quickly.

Lieut.-General Costello went with Erin Foods to the Hamburg Food Fair. He sold plenty of goods, but everyone who read the Irish Times will know that he might as well have stayed at home, to the extent that his outing was wasted because a tariff was produced which stopped him from sending in goods. That is the position. We are not in the EEC and we are very far from it. Their purpose is not to buy goods from outside, but to create communal tariffs between outside countries and member countries, and to produce the maximum amount of goods within the community for their own people. They will soon be down to what the Minister for External Affairs said: “Burn everything except their coal, and send their boats to the bottom of the sea.”

The Taoiseach said there is a market of £28,000 million. There is that market if we ever enter the EEC, but not at the present time. Let us look at the situation from the agricultural point of view. We send £600,000 worth of lambs to Paris. Perhaps we can send another £100,000 worth for a while and then it is stopped again. The licences they issue for the import of lambs are based on the supply position within the EEC. Therefore, when the Taoiseach says there is a market of £28,000 million, I should like to see him out of office and making an effort to get some of it.

There is also the question of taste. You cannot send Irish butter to the EEC countries. They like a different type of butter. You can probably send Irish cloths but you will not get them in, unless you pay a very high tariff. There are various things you cannot send there because of this difference of taste. When the Taoiseach says that Irish industrialists are not bucking up, I want to tell him that that criticism is quite wrong.

He also mentioned the fact that in July, 1965, the commercial banks lent £282 million and in 1964 they lent £262 million. He gave that as proof that the private sector of the economy had more money. If he looks back to the Parliamentary Questions I addressed to the Minister for Finance, he will find that the Government took £14 million of that and, if we also consider what the local authorities took, we will find that the private sector had less money. We must also consider the fact that this is a rising graph as the value of money decreases, and as our industrial economy and machinery become more complex and more money is needed for greater gross national product and greater turnover. In fact, the figures present an extremely grim picture of the private sector of the Irish economy. When the Taoiseach is giving figures, he should give more details, and he should not try to present to the House and the nation a situation which in fact is not so.

The next point I want to deal with is the last and probably the most important. The Taoiseach said that expensive improvements in education and health must be postponed. Does he really mean that? I go to the West of Ireland about once a fortnight on business, and I noticed going through the country districts more boys and girls returning from secondary schools than you will see on the east coast. I asked myself why. There is better land and more business along the east coast and probably a young lad went to secondary school for one year and then went back and stayed on the farm, or went to secondary school for one year and then went back to his father's business. There are more opportunities on the east coast and there are places where boys and girls can find a niche for themselves. When you go to the west, you find that is not so. The only thing the people in the undeveloped areas have is education to help them to make their living and find their path in life. That is something absolutely fundamental and must not be forgotten.

The Taoiseach said extensive improvements in education and health must be postponed. The Late Canon McEvoy in the town of Crossmaglen was the first priest in Northern Ireland to take a comprehensive school. When I leave here, I will be home in 40 minutes, and within 20 miles of where I live, there is a comprehensive school. Boys and girls are taken to that school from their homes by bus, by minibus, or by motor car, at the expense of the Northern Ireland Government. If they want to, they can follow courses that will bring them right up to the university stage, and then if they have the capabilities, they can go on and become doctors or engineers or anything they like. At the same time, they can become craftsmen or metal workers or mechanics or fitters, if that is their bent. That is 20 miles from where I live and another 20 miles away we were going to build a technological college in the town of Dundalk to service Monaghan, Cavan, Louth and part of Meath.

Is that the expensive improvement in education that is to be postponed? If it is, I believe it is the greatest catastrophe that has been announced tonight. These are the things that matter. We have all found our paths in life. We are all in the forties or more, and whether we go up or go down will not make much difference. You cannot teach an old dog new tricks. The people who matter are the boys and girls whose fathers cannot send them to boarding schools, cannot send them to Dublin because they have not got the funds, but are eager and willing to send them to comprehensive schools or technological schools to get a better education than they got themselves and therefore better opportunities. That is what the Taoiseach says is to be postponed.

In my constituency a tiny sum is devoted every year towards dental benefits. Deputy O'Higgins asked a question about the same thing in relation to Laois. This sum is so tiny that it is reserved for expectant mothers. I know doctors who have sent patients to hospitals because the state of their teeth was so bad, and by a subterfuge they got their teeth attended to while they were in hospital. That shows how bad the health services are in my county, which is one of the most progressive in Ireland. I hope I have succeeded in proving that this is all caused by lack of capital as a result of the political duplicity of the Government who failed to set up their priorities and who preferred instead to re-instal themselves in office and leave the people in the soup.

Mr. O'Leary

Naturally, we would not agree that our amendment was introduced merely as a temporary tactical manoeuvre to raise a separate voice in the debate on behalf of the Labour Party. We honestly feel that the record of the Government has led as a natural consequence to the position we are now debating and to the situation before the country. In all honesty, we do consider that mistakes have been made by the Government in areas subject to their own control. It must be accepted that there are some external factors outside the jurisdiction of any Government in which Government policy cannot influence the outcome of those external events, and therefore it would be dishonest to charge the Government with failure to meet such external factors in matters beyond their control. There are also internal factors.

Some of these problems have been dealt with in detail and pretty exhaustively here today, and these details were within the Government's control. I think it only right that we should draw the attention of the Government to what we on this side of the House consider to be their failings in those areas and where we think the Government should have acted in a positive manner. Various speakers from the Labour Party have spelled out over the past number of weeks where we thought the National Wage Agreement came to grief and who was responsible for the disaster that that agreement has now become. We pointed out that had adequate price control come in at the proper time, at the start of that agreement, the trade unions could have held their members for the lifetime of that agreement and that the economy in several sectors would not have suffered the inflationary trend it has gone through as a result of the see-saw that has been a feature of this agreement. The unfortunate timing of the turnover tax was also referred to, the unfortunate nature of that tax and the part this measure had in breeding the domestic inflation which is part of the problem before the Government at this stage.

These are all features the blame for which we can lay quite clearly at the Government's own door, and we can say that had they a different policy or had they foreseen the problems in all their complexity at the time—as a Government they have that responsibility; they are supposed to have this knowledge—all these things to which we have referred could have been avoided. Had they, over the last year or two, seen to it that the commercial banks did not follow a course in which they appeared to be handing out credit for the most doubtful schemes, this inflation could have been mitigated. This action on the part of the banks has had its part in creating this inflation whose solution we now regard as a matter of urgency, which the Government now states is something that must be put beyond party politics and something that the country as a whole must regard as a matter of urgency.

Had the Government of the day acted in all these different instances in regard to price control, in regard to credit lending agencies in the State to see that credit was made available for productive investment, had it seen that the banks were not free to hand out money for doubtful schemes of the most temporary nature, it would have helped in no small way to make sure that we did not contribute our own bit in this country to this inflationary spiral on which we are now embarking.

The Taoiseach mentioned price control today as being a clumsy weapon; I think he was paraphrasing the wisdom of Business and Finance of last week. It may be, I accept, that in our economy, it is an interfering thing to institute price control. It interferes with free market forces, which, as we know, despite any obeisance we may make towards planning in such an economy, must dominate the economy and must, in a free enterprise economy, be the basis of its most realistic decisions.

The Taoiseach said it was a clumsy weapon, and we could get very sophisticated arguments to say that in out type of economy it is a pretty difficult thing to bring into force. We could answer, on the same argument, that it is equally clumsy to interfere in wage negotiations and look for control of wages, and we could say in an equally sophisticated manner that it is quite impossible to control wages. Yet this Government have not been loath at different times over the past five years to attempt to bring in a form of wage control. It has not been loath, under one pretext or another, to try to incubate a form of incomes policy, a blanket type of incomes policy where we might set out merely to control one form of income, that of wages. In fact, in some of our opinions only last week we saw another instalment of this attempt by the Government Party in the Civil Service tribunal. One of the reasons why this Party voted against that proposal is that we think it is a dress rehearsal for the wage control of 1966. Maybe it is a truism to remember this, but we should remember this, since many people looking back on the national agreement appear to think that the trade unions and the employees of the country did something unprecedented that set this country on the downward track or that they contributed very strongly to it. What we should bear in mind is that it was only in the eighth round wage agreement that the trade unions went back to the purchasing power they had in 1939. That should be remembered when we think that the trade unions have, for a number of years, been having it too much their own way. Only in the last round, the ninth round, did they make a real gain in their standard of living, and that has been whittled away due to price increases because the Government—and the Government said this on many occasions—did not consider it their function to interfere in the normal price mechanism.

The Government have now interfered belatedly in order to control prices and they now call it a clumsy weapon, but they have not yet got over the attraction of using this clumsy weapon to control incomes. They have not resisted the temptation to control wages as we think they have tried to do in the latest wage tribunal. Again, I think it must be said that we cannot see any prospects in the immediate future of any organised body of workers or employees in this country agreeing to any kind of formula or any arrangement that would have as its sole effect the control of their incomes and no other type of income. The sophisticated economist may say it would be an impossibility to formulate an incomes policy. Yet to get the agreement of the trade unions for any form of incomes policy consideration would have to be given to what it would mean for the different types of income in our society, and if the Government shirk that aspect they cannot expect any co-operation from the trade unions in considering the type of incomes for which they are responsible.

To say that it was only in 1960 that wages recovered their pre-war purchasing power is not a partisan statement or the result of bias on the part of the trade union side. The National Employer-Labour Conference agreed on that and it was incorporated in one of their reports. If we are looking for sacrifices, if we are looking for a section of our community that have attempted to persuade their members to contribute to the further progress of our economy, I think we can say that the trade union movement in recent years has played no small part in doing that thankless job.

We recall that after the serious economic crisis of 1956/57, the unions secured the agreement of their members to a wage ceiling of 10/- That was no easy task and the cost of living did not help the trade union leaders to get much sympathy from the rank and file in putting forward this proposal, but yet they achieved this agreement. Therefore when we are looking for culprits in the present inflationary situation, in that part of it that is under our own control, the Government must bear a great responsibility for the way in which they have allowed incomes and prices to march without any plan, in the hope that they would find their own level in an expanding economy. They found their own level all right but at considerable expense.

We feel that the Government are in some way responsible for this and should have acted more rapidly in regard to it. There are, however, external factors, but as public representatives here, what we should be concerned about are those areas under our control and those things upon which we can speak. Earlier in the session, Deputy Corish asked the Taoiseach whether the present talks on the Anglo-Irish free trade agreement had come about as a result of our initiative or that of the British Government. We have received no reply to that question and we can only assume that these talks to some extent have had their origin in our initiative. They have now reached the point where in the British House of Commons today this little Parliament of the Twenty-six Counties occupied a few words in the speech of the Queen of that most important country.

I suppose the Government Party should feel pretty pleased that this has brought them such honourable mention in such a setting but the Labour Party's attitude to these talks has been no secret. We have made no secret of the fact that we considered a free trade agreement on industrial goods between this country and Britain was an agreement which involved great danger in this country of unemployment and emigration. We did not see much advantage in the terms of the agreement, from the information available to us, and nothing we have since heard on this agreement has changed our view.

Probably what we as public representatives must feel most alarmed about is the stealthy manner in which work on this agreement has gone on during the summer months. I would appeal to the Fianna Fáil Deputies from constituencies up and down the country who may be a little distant from the corridors of power of that Party and who may not be in with the group which is pushing this free trade proposal, because there is a conviction that this proposal does not command complete support in that Party; it does not command the support of this Party and from what we can see it does not command support from the Fine Gael Party. Unlike previous discussions about our entry to the EEC, there has been no public debate on the advantages of such an agreement.

In discussions on the EEC, there may have been dishonest talk, or there may have been dishonest claims made about the advantages, but at least there were claims made and arguments advanced, but in the present talks the Government have contrived the situation in which they say not enough is known. They will not allow sufficient information out in case the hands of our negotiators would be weakened; yet they expect this House and the people to accept an agreement which may have the most dire consequences, for good or ill. The Government on this slender basis of consultation that has taken place expect this agreement to have the support of the country. Unfortunately, if the previous voting record of the Fianna Fáil Party is anything to go on, they will have a majority when there is a vote on this agreement in this House. There may be some tremendous trick pulled from the hat but free trade means free trade, and as between us and Britain, it means that some of our industries are going to be badly mangled.

It is more difficult to realise where the advantages lie in regard to agriculture. It is becoming more and more difficult to know how the extension to Ireland of the British subsidy on meat affords us right of free entry for pig-meat products. It is more and more difficult to see how we can get these advantages in the face of EFTA. Even if we get all the advantages in agriculture, it is doubtful—and the Government accept this—whether agriculture in the future can absorb much of our increased manpower, however prosperous it may become.

We accept that in seeking any arrangement to improve the prospects for agriculture, we should leave no avenue unexplored. If it means that our agriculture, which has been the main area for employment, must be injured in the process, then we should have a very close look at any agreement. The British farmers are already becoming extremely militant in demanding that Britain should import less and grow more. Denmark particularly, and EFTA, are becoming extremely suspicious of these talks and presumably will see that their farmers do not suffer as a result. If it is a fact that only subsidies on beef will be extended, surely this will not be sufficient advantage to bring us into such an agreement with Britain?

One of the most important things attending what little debate there has been on the subject is the "we have no option" type of argument. This was used no later than today by the Minister for Industry and Commerce and he used much the same argument on Telefís Éireann recently for joining GATT. He says that we have no option but to enter into such an agreement with Britain. Our existing preferences, it cannot be said too often, are not an obstacle to GATT membership. In fact, if they were, it is doubtful if the value of GATT membership would warrant altering our present arrangements with Britain.

Another argument which is used is that this new arrangement with Britain will mean that we will be better prepared for EEC, giving the impression that entry into Europe was still the major exercise and that we were really only on a warming up manoeuvre in going into Britain, which is also extremely misleading. Some commentators suggest that the exercise with Britain will be even more dangerous than any exercise with Europe which we discussed two or three years ago. Some people say that we will be called together before the end of November, or perhaps before the end of this session, to judge the way our industry will do out of this arrangement with Britain and how the country will do.

We have not the benefit or advantage of the CIO reports that go through industry by industry as to what way our expansion will proceed over the next few years, as we had in the case of entry into the European Common Market. This could have been attempted in the review of last year: we could have added another question to that survey in regard to what would be our prospects of expansion if we contemplated an Anglo-Irish free trade agreement but even up to that late date the Government hung very closely to the idea that it was entry into EEC that we were still seeking as, theoretically, we still are. The point is that we are without this body of competent knowledge to guide us in this decision. I very much fear the Government are asking the House to take a leap in the dark on this agreement but this is too serious a matter on which to take chances and if we are to take the Government seriously as regards their saying that we need all sections of the community and all Party opinion to come in on this struggle before us to maintain our growth, the Taoiseach and the Government should allow this, after a searching debate, to go to a free vote of the House. It should not be made a Party vote and no Fianna Fáil whips should be employed to see that people from their constituencies, who have not the interest to be concerned about the outcome of this particular agreement, vote in an unthinking manner. If in an election we ask our constituents to examine our programmes and demand their loyalty and support on that basis as public representatives, in such an important matter as this each and every one of us should go through the exercise of thinking this out for himself whether it would be to the benefit and in the interest of our constituents and the country generally.

From the start there has been no secret about the fact that the Labour Party has been no committed supporter of either free trade in Europe or with Britain. In the words of the late William Norton no Irish Government, no pressure group or interest group in this country ever thought it was necessary until these events cropped up on the international horizon. In his speech at that time he said that we did not have much option; if Britain decided to go into the European Market we did not have much choice but to follow. As he said at that time it would be an excruciating exercise for Irish industry, he thought, if we entered the European Community. That excruciating exercise will still be before us with this gallop into Britain.

Another reason why we are still worried about this move of Fianna Fáil is that which Deputy Corish mentioned when he said that Fianna Fáil had not been so praiseworthy in the past and asked why should it be so at present. There is something even more dangerous, the Lemass ideology which a year or two ago was leading us into Brussels and now to West-minister. The ordinary people are beginning to wonder where Lemass and the Fianna Fáil Government are leading to. It is as a result of this complete change in the policy make-up of Fianna Fáil that I and other ordinary individuals are extremely worried in these discussions. We hope our request will be met for a free vote on the discussion for the reason set out— that it is too serious to be made a plaything of any political Party or in this instance of a few individuals within that Party.

Even in the context of GATT membership we could seek a re-arrangement with Britain in regard to our preferences as they exist. There is no reason why this could not be fully explored, no reason why we could not have an agreement emerging out of discussions with this limited aim. The Taoiseach has said that we are not bartering our political independence, that this is not an economic union we are contemplating, but the fact is that after such an agreement has been operated for a period of years, can anyone honestly think that any remaining economic independence we now have will be left to us at that stage? The die will be cast; the time for debating the pros and cons will have passed and it will be too late. That is why this Government should seriously consider giving the House an honest opportunity of going into this matter fully.

The Minister for Finance referred to people who did not have any faith in our future. That is a very misleading way to present the question because if one listened to some commentators, in the words of the late William Norton, one would imagine it was an athletic international event that we were contemplating in which our producers and manufacturers would be pitted against their European counterparts and, more or less in the spirit of an all-Ireland, the best team would win. In fact, we would be up against production runs and advertising commitments in excess of ours and the factor of complete and naked competition which the CIO reports in referring to Europe try to spell out for us. None of us knows how bad it would be. This factor would be a daily item in our lives. To take one example, ITV is at present penetrating along the east coast and here is a way of pushing British goods even more than they are pushed at present in this area. It is not the excellence of our products that may secure the market in this case but merely superior advertising of a British competitor.

For all these reasons and for the sake of the opinion that one takes with a grain of salt, namely, confidence of Irish management in the face of these external competitive factors despite the CIO reports, the synthesis in the 22nd report which actually referred to the fact that management in general did not at the time of the survey appear to be taking the need for adaptation seriously enough, our Party maintains a realistic attitude towards our industrial capability. No doubt two years of debate and discussion had passed and at this period the CIO said that Irish management did not appear to be taking the measures required. We have often referred to the fact that Irish management did not use sufficiently or in great volume the adaptation grants that were available to them to improve their industries. Many of us have negotiated with management and we know just how up to date they are in their thinking and how well they are equipped to meet industrial free trade conditions and we can be forgiven if we are a bit cynical about their protestations that they are competent to deal with the extra competition. We must remember that if any mistakes are made, they will be taken on the chin or on the boat by the workers of the individual factory but merely in the dividends or golden handshakes by the directors of the factory when it has to close down.

Another question that poses itself on any suggestion of free trade with Britain is: what happens to that part of our economy where industries are based exclusively on their standing as British subsidiaries? What happens to that part of our economy that caters solely for the home market? Another question suggests itself: what external market can be got in this arrangement? Deputy Corry has left, but I will recall his immortal exclamation "Good God!" when the late Deputy Norton in this debate a few years ago said that we had enjoyed a common market with Britain for 40 years. That is true. The Minister for Industry and Commerce said today that he was chiding Deputies for remarking on the alarming way in which the negotiations with Britain had suddenly erupted this summer and he said it was no such thing. He said it was no new thing. He took us on a lecture through free trade ramifications in Europe and elsewhere. We are aware the Common Market is no new thing. In Deputy Norton's words, we had one with Britain for 40 years.

Could you tell me when I did that?

Mr. O'Leary

This afternoon. Sorry, the Minister for Finance. You are switching around so often I am confused. But I imagine the expertise the present Government have in common can easily be transferred between one Department and another. While we are not back to 1956 in this crisis—there is still some growth in the economy—it is our opinion that 1967 will see the really uncomfortable features of the present crisis. At the moment, as with the present levies, we are merely making the necessary sounds off-stage. In fact, 1967 will show the symptoms in our economy to indicate a run down will become fully evident.

We are no sectional Party. We may be small in numbers, but our appeal is to no one section. We represent the white collar worker or anybody working for his living. In our amendment to the motion we speak about policies under the Government's control, that they had not acted rapidly enough. Deputy Corish has already pointed out the areas of income in which the Government acted in a haphazard and slow fashion. Certainly, their actions were unplanned and did not live up to the so-called new look in planning Fianna Fáil have taken as their own. We pointed out these mistakes and the effects they have had on our economy and elsewhere.

If we need the support of the trade union movement in securing an ordered increase in incomes, we will have to be a bit more respectful of planning than merely referring to price control, as the Taoiseach did today when paraphrasing Business and Finance, as a clumsy weapon. If the task of framing an incomes policy proves to be arduous, the rewards at the other end in getting all sections to agree to a really planned increase in economic growth, will be well worthwhile. It is dishonest to suggest that the co-operation of the trade union movement can be had on any other basis but this. It cannot be had merely by an incomes policy concerned only with wage control. The evidence of our recent past proves that their co-operation will not be had on those terms.

The initiative for the present free trade discussions and much of the responsibility for the courses they have taken must lie squarely on the Government. Any adverse consequences that would flow from these talks, any agreement reached, which, as I have said, in present circumstances will depend only on our individual investigations, would be a leap in the dark. This would be another area of responsibility for the Government. I would not look forward to being in this House at a later stage and referring the Government to this responsibility of theirs, pointing out the deficiencies that followed as a result of that policy. In the interest of the country I would far rather, before we embark on any such agreement, if we fully consulted with all the interests involved, that we do not merely call in the Federation of Irish Industries, but that we also call in the trade union movement and other sections.

We made great play today of the new place trade unions have found for themselves in our society. I seem to think there has been an unhappy habit of drawing in the trade unions to such top-level discussions merely on the eve of wage restraint or merely when times are bad. We should call them in on this particular agreement, ask them what they think of it, tell them what we have suggested and what may come from it. I do not accept the argument that the negotiations are of a delicate character, that we must all remain silent and wait for the document that the civil servants from each side will produce at the end of the month and merely put down "yes" or "no" according to what way our Party dictates we should vote. The external factors as a result of international trends are not a concern we should waste our time discussing tonight, but rather the areas for which the Government are responsible. We have pointed to those areas. We did not set down our amendment as a tactical motion but rather to allow us as a Party to make known our distinctive voice in this debate. We consider we have a distinctive voice. We are happy to see both the main Parties now speaking the language of planning borrowed from any up-to-date capitalist country in Britain or Europe. We as a Party who have represented the workers, the ordinary people, for nearly 40 years, must make known our distinctive voice in this crisis. We have pointed out to the Government where we think their mistakes have lain and, on that basis, we produce this amendment and take part in this debate.

A number of speakers in discussing the economic situation today made it clear at the outset where they stood with regard to the present National Loan. I did not hear the very commencement of the Taoiseach's speech, but I understand he referred to that and to the necessity for not, so to speak, rocking the boat when the National Loan was open for subscription. Deputy Cosgrave and Deputy Donegan from these benches and Deputy Corish from the Labour benches made it quite clear that, as far as Opposition Deputies are concerned, they are wholeheartedly in support of the present National Loan and that they want to see it filled and fully subscribed. That also is my position. I think I can speak for all Deputies in this Party when I say that.

We believe the present economic situation has been brought about to a large extent by the policies, or lack of policies, pursued by the Government. Therefore, I regard it as most unfortunate that a debate on the economic situation should take place during the week when the National Loan is open for subscription. But that is of the Government's own choosing. It is the Government fixed the time of the National Loan and it is the Government fixed the time for this debate. While all of us here desire, and very sincerely desire, that no word should be uttered in the course of this debate which would in any way jeopardise the success of the National Loan, we must make it quite clear that we owe an obligation and a duty to those who sent us into this House. We must represent them and we must be prepared to talk out openly and bluntly the truth that is in us with regard to our views of the Government's handling of the economic situation now upon us. It is unfortunate that it should be necessary to discuss these topics during the present week, but, as I say, that is the Government's choosing. We desire to make it quite clear that whatever criticisms we direct against the Government and against Government policies, they are criticisms directed against the Government and their policies and not criticisms directed against the basic fundamental soundness of the economy. But it is not everyone hearing these criticisms who will be able to draw that distinction or see that distinction clearly and, if there is any confusion, then the fault lies at the feet of those who so arranged things that this economic debate should take place at the same time that the National Loan has opened for subscription.

The Taoiseach commented today on the fact that there are two amendments tabled to the motion he has down on the Order Paper. The Fine Gael Party asked the Dáil, while approving of the measures the Government have taken to deal with the economic situation, to record at the same time that it regrets that the Government have failed in time to inform Dáil Éireann and the country of the situation and neglected to take adequate steps to prevent the economy reaching its present position. We are not criticising the Government for the steps they have taken and the steps they are now taking to deal with the economic situation. We are criticising them because we believe they have wasted time, because we believe that, during a period when time might well have been the currency of our economic salvation, that time and that currency were wasted by the Government. We are criticising them because we say, as we are, I believe, entitled to say, that they did not fully inform either this Dáil or the country of the economic situation into which this country was either drifting or being led by the Government.

The Taoiseach and Deputies of the Fianna Fáil Party are quite entitled to ask us to produce the evidence on which we rely for making these criticisms of the Government. Any unbiassed Deputy and any unbiassed person, whether in this House or outside it, listening to the case made here today by Deputy Cosgrave, cannot but be convinced that we have every justification for moving the amendment Deputy Cosgrave moved here today. It is only a few months since we had a general election. Already today reference has been made to the slogan under which the Fianna Fáil campaigned in that election: "Let Lemass Lead On." That slogan still hangs, perhaps a bit tattered and torn now, on many a dead wall throughout the country. We are, I think, entitled to examine and to ask the Minister for Industry and Commerce to examine what was implied and what was involved in that slogan: "Let Lemass Lead On." The election took place in April last. The theme song of the Fianna Fáil Party "Let Lemass Lead On" was sung by the Taoiseach at a very early stage in the election campaign when he went on television—I think it was on 18th March last—and, according to a report in the Irish Independent of 19th March, this is what the Taoiseach had to say; this was the theme song that was being sung for the Fianna Fáil chorus boys in the general election. According to this report, the Taoiseach said:

The tide in Ireland's affairs had reached the flood and we must sail out capably to new horizons.

And, paraphrasing Shakespeare, according to this report, he continued:

There comes a tide in the affairs of every nation which must be taken at the flood. The tide is with us now. It is at the flood and we must not leave our Ship of State in the harbour to people who do not know how to operate it and who would not know where to take it.

Later, he had this to say:

The most important thing for the next Government was to maintain the momentum of national economic development. This was vital to the country's future since it was by economic development that social needs can be fulfilled in education and housing.

That word "momentum" must have appeared in every scrap of literature published by the Fianna Fáil Party during the election.

In the course of this debate, I was looking at a newspaper report containing the speeches of several Fianna Fáil spokesmen during the election and on a single page in that newspaper, I see the report of the speeches of three outgoing Government Ministers, each of whom harked back to the year 1956 and drew very gloomy pictures for the public of what would happen if the Government suffered a reverse, if there were a change of Government. It was put clearly before the people that the choice facing them was either to elect a Fianna Fáil Government that would continue the momentum of the nation's advance or, on the other hand, to defeat Fianna Fáil and to go back to what Fianna Fáil used to describe as the "Black days of 1956". That was the whole basis of the Fianna Fáil campaign during the general election. It is fair for us, I think, to ask the Government had they any knowledge of the economic situation building up at the time of the general election, an economic situation building up which, inside a few months, when the polling booths were closed, was going to necessitate the Government-inspired, because I belive that is what it is, and I believe the Government probably want to take credit for it, credit squeeze and a situation in which there would be price control legislation brought into being, a situation in which, a few months after that price control legislation, a system of levies would be imposed, a system of levies which some years ago, when they were introduced in difficult circumstances by another Government, were derided by the Fianna Fáil Party in Opposition.

In the general election I, in common with a number of other voters, in the constituency in which I was then residing, Dublin South-West, got a letter from the Taoiseach contained in the Fianna Fáil election address. This is a message which the Taoiseach sent to me as a voter in Dublin South-West. This is a message that went to every voter in the Dublin South-West constituency and this is a message in which the Taoiseach set before the voters in that constituency the reasons why he was asking them to vote for the Fianna Fáil Party in the election.

I would say the Deputy was not influenced.

Whether I was influenced or not, there were a few people in the constituency, I dare say, who were influenced. Dublin South-West is the constituency that Deputy Noel Lemass represents. I do not blame the Taoiseach for lending a helping hand to Deputy Noel Lemass. These were the reasons why the Taoiseach invited support in that constituency: he said that he sought the general election because he considered that the people were entitled to be consulted at this time. Then he went on:

The main task of the next five years is to maintain the momentum of the country's economic progress.

There we have it again—the momentum—the idea of this progressive forward movement that was going to be maintained provided Fianna Fáil were elected to office but that was going to come grinding to a halt if by any chance the people defeated Fianna Fáil in the election. Then he went on:

It is only by these means that the nation can get the additional resources it needs to fulfil its social purposes in social welfare, housing, health and education, and so on.

We have heard the Taoiseach today, a few months after the general election, solemnly telling this House that improvements in Government services would have to be postponed and could not now be undertaken, and that amongst the improvements that would have to be left aside for the time being were improvements in health and education. A few months ago I as a voter in the Dublin South-West constituency was being invited to vote for Fianna Fáil so that the momentum could be continued, so that we could have the additional resources the nation needs to fulfil social purposes in health and education.

We come to the end of the message where the Taoiseach told me and others in the Dublin South-West constituency:

Our country can now face a future that is steadily becoming brighter. All our national aims are now within our reach. This is not a time to stop or to falter much less to turn back.

In April last, that is what the Taoiseach told the voters in what, according to the Fianna Fáil Party, was one of the vital constituencies. In the front page of this publication, the electors of Dublin South-West were told:

Dublin South-West is not just an important constituency; it is a vital one, vital because if the progress of this country is going to continue Fianna Fáil must win a majority of the seats in a constituency such as this.

And Fianna Fáil did win a majority of the seats in the Dublin South-West constituency.

Are we not entitled now to ask the electors who have responded to the invitation of the Taoiseach to vote for Deputy Noel Lemass and his colleagues in the Dublin South-West constituency in order to achieve a future which was steadily becoming brighter and in which all our national aims were now within our reach, what has happened since then to bring about a situation where, instead of the future becoming brighter, instead of everything in the garden being nice and rosy, we have a credit squeeze, there is an economic crisis and there is the necessity to impose price control legislation?

I would very dearly like to rub the noses of the members of the Fianna Fáil Party in their own past. I should like to deal with the situation which developed in this country in the year 1956 and with the utterances of Fianna Fáil spokesmen, speaking from these benches in that year. I do not propose to do that at any great length because I do not think it is necessary to do it but I hope that what has occurred in the past few months and the measures which the Government have found it necessary to take in the past few months will at least ensure that Fianna Fáil spokesmen in the present and in the future will give up looking over their own shoulders to the year 1956 and will try to think of the present and to plan for the future.

I do not know whether that will be very palatable advice for the Fianna Fáil Party. They seem to think it is essential for them, whenever they face into any election contest, to hold up the year 1956 as a kind of bogey year and I suppose it will be difficult to break them of that habit. If a man likes to scratch, he will not thank you for curing the itch but I should like to cure the Fianna Fáil itch now and let them give up talking about the year 1956.

The Taoiseach more than once appealed for co-operation in dealing with this situation. I do not think the Taoiseach or any other member of the Fianna Fáil Party can complain of the co-operation which they have obtained from these benches. I can say, without taking too much on myself or being unduly boastful, that it is in the traditions of this Party to co-operate in the national interest. We have done that in connection with the economic situation. We have done what Fianna Fáil could never bring themselves to do in relation to this motion down on the Order Paper today. We have even by means of the amendment which we have tabled made it clear that we are not criticising the Government for the steps they have taken, that we are criticising them for wasting time when, as I said, time might well be the currency of our economic salvation.

The Labour Party have tabled an amendment dealing with the failure of the Government in the field of price control legislation. In July last when the measure dealing with price control came up for discussion, I voiced doubts on whether the Government would tackle the job seriously. The Taoiseach today quoted with approval the description of price control legislation as being cumbersome. I want to try to get, if I can, a clear statement from the Government as to how they see the economic situation facing the country today. The reason I want to get that statement is that just a few months before the Government introduced their price control legislation, the question of price control was discussed in the House. If my memory serves me aright, the Price Control Bill was debated and passed in July. A couple of months earlier, on 13th May, 1965, to be precise, the Taoiseach in discussing the General Budget Resolutions referred to the question of price control and said, as reported at column 1314 of the Official Report for that date:

General control of prices would be meaningless without control of costs, including wages.

Later in the same column, he said:

It would only be in abnormal circumstances such as those that prevailed here during the war or where the situation was clearly out of hand that we would think of extending Government controls in this way, even as a temporary device.

That was in May. In July, notwithstanding that the Taoiseach said it would only be when the situation was clearly out of hand price control would be thought of, the Government came in and asked the House to pass and got the full co-operation of the House in passing a Bill for the control of prices.

Either the Taoiseach meant what he said in May of this year or he did not. If he did, clearly by July of this year, the situation was, in the judgment of the Government, entirely out of hand to such an extent that price control legislation was necessary. Of course that legislation was necessary and the reason has been dealt with by speakers on this side of the House already. It originated as far back as when the Government, in the teeth of all the advice they got in this House, imposed the turnover tax and, by means of that tax, allowed prices to go up and up. Of course when the prices are going up like that in a period of sharp price instability, obviously the idea of savings becomes quite meaningless. If there are no savings, if people are not encouraged to save, that in itself becomes a factor in an economic situation which in the present instance has resulted in the situation we are discussing this evening.

The Government refused to heed the warnings they received from these benches and from the Labour Party benches regarding the effects of the turnover tax. They did not see the necessity at that time or in the next couple of years to bring in price control. Those of us on these benches who warned the Government of the consequences of their actions at the time of the turnover tax were looked on as disciples of gloom, prophets of despair. Everything in the garden was then lovely. Going into the last general election, all that was needed to continue the momentum was to let Lemass lead on.

The Taoiseach himself, three days before the general election, gave the benefit of his views to the electorate on the situation facing the country. He was quoted in the Sunday Independent of 4th April last. Mark you, the people were going to the polls in three days. If there was any economic situation on which the judgment of the people might have been obtained, then was the time to tell them. If there were any problems about which the Taoiseach or the Government had any doubts, then was the time to tell the people and to ask them for a mandate and go back to office and deal with these problems. Yet on 3rd April the Sunday Independent quotes the Taoiseach:

The only prospect now in sight of future difficulty and of a slowing down of the momentum of the nation's advance would be a temporary interruption of the Government leadership by reason of an interlude of ineffective minority Government which might survive for a few months at most, and then by doing nothing. That is a danger the people can eliminate by the manner in which they cast their votes.

The Taoiseach was solemnly assuring the people that the only prospect in sight of future difficulties was if Fianna Fáil were defeated at the general election. That summarises quite accurately the passage I have quoted. If Fianna Fáil were successful, if the people cast their votes for Fianna Fáil in the general election, the momentum would be retained. There would then be no question of credit squeezes, no question of economic difficulties. There would be no problems at all. The only prospect of future difficulties was a change of Government. We are all wiser now. In view of speeches of that sort, in view of the speeches to which Deputy Cosgrave referred here today, we in the Fine Gael benches are certainly entitled to complain that the Government failed to inform Dáil Éireann of the situation, that they neglected to take adequate steps to prevent the economy reaching its present position.

I am sorry the Government have chosen to have this debate at a time when the National Loan is open for subscription. I feel, as no doubt other Deputies feel, somewhat inhibited in the things I should like to say; but we owe a duty to those we represent to speak out here and, even if we feel that what we say may have to be modified because of the particular situation in which the Government have chosen to have this debate, nevertheless we are entitled to make the complaint we make in our amendment. I feel equally that members of the Labour Party are entitled to make the complaint they make in their amendment. I hope this debate, modified though our views may have to be in the circumstances, will have a salutary effect on the Government and that they will learn that as far as this Party are concerned, the Government will get constructive opposition but strong opposition where it is required.

I did not intend to intervene in this debate but for Deputy O'Leary——

You could not be kept out of it.

You have all the books there.

Deputy O'Higgins did not want any mention of 1956 and Deputy O'Leary is demanding that the Government come forward now and let us all in on the proposals in the British agreement. I like people who practice what they preach and, mark you, when those people were making agreements, one member of the Cabinet did not know the agreement the other fellow was making. When Deputy Norton went over in 1956 and made an agreement with the British Government for £16 a ton levy on every ton of sugar exported from this country to Britain, Deputy Dillon knew nothing about it, although he was the Minister for Agriculture. I shall give the House Deputy Dillon's statement on it. I quote from Volume 183, column 1411 of the Official Report of Tuesday, 12th July, 1960. Deputy Dillon, in the course of his speech that day, said:

I want to raise a specific matter which affects the problems of beet farmers who are supplying beet to the sugar factories, and also other products which are produced from Irish sugar, which is raw material produced in this country. In 1948, we negotiated a Trade Agreement, Article V of which reads as follows:

The Government of the United Kingdom undertake that where goods, the growth, produce or manufacture of Ireland, are dutiable at preferential rates of duty, they will not vary the existing preferential treatment of these goods in such a way as to put any class of goods, the growth, produce or manufacture of Ireland, at a disadvantage in relation to goods of that class from other sources enjoying preferential treatment.

Now, that is a pretty comprehensive Article and yet with that Article in existence, I understand that goods containing Irish sugar are being subjected to a very formidable levy, the proceeds of which are devoted to the subsidisation of goods of similar quality containing sugar derived from crown Colonies of the British Crown. I am told, I think, by some of the Minister's colleagues, that when Deputy Norton was Minister for Industry and Commerce, this matter arose and that he did not consider it desirable to press the interpretation of Article V which would give us the right to claim exemption from that levy.

Deputy Norton did not consider it desirable to press the interpretation of that Article which would relieve us of the large sum paid in levy in 1961.

Long quotations are not in order. The Deputy should make his own speech.

I am quoting a statement made in this House by a Minister for Agriculture on this matter. Deputy Dillon proceeded:

I do not know what the position is in regard to that. I have no recollection of hearing the matter discussed when I was a member of the inter-Party Government although it could have happened and passed out of my memory——

—he was Minister for Agriculture, mark you—

——but I do not remember it and I have not discussed the matter with Deputy Norton. Whatever attitude was taken up, I should like to be told now because frankly I confess that as I see it now, it appears that that Article is wide enough and comprehensive enough to cover the present procedure under which I believe that goods which are the growth, produce or manufacture of Ireland are being put at a disadvantage in relation to goods of that class from other sources enjoying preferential treatment.

There is the statement made by Deputy Dillon who was then Minister for Agriculture about an agreement made by Deputy Norton as Minister for Industry and Commerce and other Ministers of the inter-Party Government when they went over to Britain to conclude an agreement in 1956.

When was that statement made by Deputy Dillon?

On 12th July, 1960.

He was not Minister for Agriculture then.

No. He kept his mouth shut about it when he was Minister for Agriculture and nobody knew one bit about that agreement or that £16 levy until we started exporting our chocolate crumb and our sugar to Britain. Then we found the £16 a ton levy on our produce going over to England—and at that time the Opposition were not told what was happening under the agreement. We heard nothing about it. Even Deputy Dillon knew nothing about it, although he was a member of the Cabinet and he was responsible at that time to the farmers of this country: he knew nothing about it either. Then Deputy O'Leary comes along and asks, in effect: "Why not tell us all about what is in this proposed agreement with Britain?" Why were the people, and particularly our farmers who increased by thousands of acres their acreage of beet over seven years, not told about it?

You knew about it. You raised it in the Dáil.

The only time we knew it was when I extracted the information here by way of question and answer from our Minister.

That was the only time we knew about it.

You knew it in 1956.

That is not the first agreement, nor the second agreement nor the third agreement about which secrecy was maintained by those people and about which we knew nothing for year afterwards. We had the agreement made with Britain before——

Was it a free trade agreement?

Other Deputies were not interrupted when they were making their speeches. Deputy Corry must be allowed to make his speech without interruption.

A levy of £16 a ton was not a free trade agreement. The first time it was learned in this House was three years afterwards when I put a question when I found that the levy was imposed on the sugar going across. I put a question here to our Minister to ascertain if it was true—and it was then that the cat came out of the bag.

Why did you not fight the 15 per cent levies that are on now?

Deputy L'Estrange was a long time in coming to this House. He will not be here too long. It is printed in his face. Young children should be seen and not heard.

Let Lemass lead on.

No, Corry—lead on to the Cork boundary.

The difference between the troubles now and those that existed in 1956 is that, though the inter-Party Government had a full majority of this House in 1956, the moment trouble came they ran—and they ran like rats.

And Lemass did not make you Minister for Agriculture.

We are not running. We are here and we intend to continue here. That is the difference. No wonder Deputy O'Higgins did not want to hear anything about 1956. I wonder how many more patches of that agreement are left—I will have a few more of them—that we are only coming to hear about when we endeavour to export our agricultural produce to other countries. Is it only then that we shall hear about it?

What other produce?

That little job that Deputy Norton and the inter-Party Government did in 1956 with the Irish farmers' beet — it took our Government at least five years to get rid of it. You know as well as I do that it took them five years of tough work to get over that little slip they made under which £16 a ton was put on Irish sugar by the British Government, Irish sugar exported to Britain—and that £16 a ton was used to subsidise the sugar coming in from the British Colonies in opposition to ours. That is where our money went. With the admission and the welcome of the inter-Party Government, that is the kind of agreement you made when you were in office.

Why does Deputy Corry not tell us why the beet acreage is down 10,000 acres from last year? He was Chairman of the Association in the past four years.

I cannot see why Deputy Corry is not allowed to make his speech without interruption.

Deputy Corry will always do his job as far as he is concerned.

He is inviting interruption.

I have this satisfaction that, as Chairman of the Beet Growers' Association, I led the first successful farmers' strike ever led in this country——

Lead on, Corry.

——and made a success of it.

Debate adjourned.
The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 10th November, 1965.