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.