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Dáil Éireann debate -
Wednesday, 1 Dec 1965

Vol. 219 No. 5

Central Fund (Permanent Provisions) Bill, 1965: Second Stage.

I move that the Bill be now read a Second Time.

The principal object of this Bill is to secure a more rational and effective use of the time devoted to parliamentary financial business.

It will, perhaps, be as well if, at the outset, I deal briefly with the present procedure for the consideration of financial business in this House. The annual parliamentary financial cycle begins in February or early March with the debate on the Vote on Account which takes place in advance of the publication of the Estimates Volume and covers many aspects of Government financial policy. This Vote provides approximately one-third of the amount required to run the public services during the succeeding financial year and thus enables these services to be maintained while the individual Estimates are being considered by the Dail. The annual Central Fund Bill is passed in March. That Bill authorises the Minister for Finance to issue from the Central Fund the amount granted under the Vote on Account. With the introduction of the Budget in April or May a further debate on Government financial policy takes place in which a great deal of the ground covered in the Vote on Account debate is again traversed. The Budget is followed by the Finance Bill which gives statutory authority to the taxation proposals announced in the Budget and affords a further opportunity to discuss financial policy. Meanwhile the individual Estimates are considered by the Dail and, as the amount provided in the Vote on Account is only sufficient to cover expenditure for the first four months of the financial year, the Dail must deal with all the Estimates by the end of July at which time the Appropriation Bill, which provides statutory authority for the Estimates, is introduced and passed.

The present arrangements which I have just outlined may be criticised on two grounds. First is the fact that there are, in effect, three major discussions of Government financial policy within a space of about four months— namely on the Vote on Account, the Budget and the Finance Bill. This inevitably produces a certain amount of overlapping between the debates. Of the three, the Vote on Account discussion is the least effective. It takes place, as I have said, in February or early March before all the information required for a comprehensive and informed debate is available. This information, comprising details of Government expenditure and taxation proposals together with the general statistics regarding the state of the economy, is contained in the Estimates Volume, the Budget proposals and the various publications issued at Budget time. It is clear, therefore, that a fully effective debate on Government financial policy cannot take place before the Budget is presented.

The second disadvantage of the present system is that the Dail must dispose of all the Estimates by the end of July. This can cause acute pressure of financial business in the summer session, because the Finance Bill must be enacted by the beginning of August; there have been complaints that the time available for discussing that Bill is unduly restricted. In practice, there is usually a great rush to clear the Estimates in time. This is clearly an undesirable state of affairs and the position is, of course, aggravated if major non-financial legislation is before the House at the same time.

The present Bill is designed to improve that situation. In the first place, it will no longer be necessary to introduce a Vote on Account in February or March. This will mean that more parliamentary time can be devoted to the discussion of other business, including Estimates if so desired. Furthermore, by increasing the amount which may be issued from the Central Fund before the passing of Estimates by the Dail, the Bill will provide sufficient funds to enable the supply services to be maintained until about December. Thus, the consideration of Estimates can be extended into the autumn session; the pressure of business in the summer session will be eased and more time will be available for discussion of the Estimates. The Appropriation Bill will be introduced, as hitherto, after all the Estimates have been considered by the Dáil.

In lieu of the annual Vote on Account and Central Fund Bill, it is now proposed in section 2 of the present Bill that the Minister for Finance be authorised to issue from the Central Fund, in any year from 1966/67 onwards, an amount not exceeding four-fifths of the amount appropriated for each particular service in the preceding financial year. Section 3 of the Bill provides for the adjustment of this four-fifths provision according as individual Estimates are passed by the Dail. Thus, if the amount of an Estimate exceeds four-fifths of the amount appropriated for the same service in the preceding year, the amount authorised to be issued under section 2 of the Bill will be increased by the amount of the excess when the particular Estimate is passed by the Dail. Similarly, if an Estimate is less than four-fifths of the previous year's appropriation, the issues authorised under section 2 will be reduced.

Section 4 is designed to cover issues in respect of new services which were not included in the Appropriation Act of the preceding year, together with existing services for which the Estimates were passed by the Dail before the commencement of the financial year to which they relate. These latter would be Estimates which were passed by the Dail in accordance with the revised procedure introduced in 1964, whereby selected Estimates may be taken before the Estimates Volume is published.

Section 5 of the Bill provides that, in March of each year, the Minister for Finance will lay before the Dail a statement of the amounts he will be authorised to issue in the following financial year under Sections 2 and 4 of the Bill. This statement will be in substitution for the present Vote on Account White Paper.

Section 6 gives the Minister the borrowing powers hitherto granted each year in the annual Central Fund Act. Section 7 provides that, for the purpose of determining the amount the Minister is authorised to borrow under any Act, amounts which have been repaid within 12 months after the date on which they were borrowed shall be disregarded. The need for this arises from the fact that some short-term borrowing takes the form of Exchequer Bills which are repaid and renewed every three months. At present such borrowings are regarded as cumulative and the statutory limit could be reached merely because they are renewed.

This Bill is designed to facilitate the Dail in dealing with financial business. It will not involve any lessening of Parliamentary control over public expenditure. Dail approval of Estimates will still be required under section 2 of the Bill which stipulates that issues are subject to the proviso that, during the year, the Minister for Finance will ask Dail Eireann to grant supply for that service in respect of the year. Furthermore, the Bill will preserve the existing rule that expenditure on a new service cannot be incurred until the Dail has approved that service.

I commend this Bill to the House as a worthwhile attempt to secure more informed and effective discussion of Government financial policy.

The Minister, in recommending this Bill to the House, has stated that it will not involve any lessening of Parliamentary control over public expenditure. It must be our concern to be satisfied fully in that regard. It is of the utmost importance that the procedure, with regard to the examination and control of public expenditure, which often appears cumbersome and devious, should not in the interests of speed lead to a relaxing of control. I am satisfied that the Minister can justly say that what is proposed in this Bill will not involve any lessening of the necessary control this House should exercise.

The Minister did not underline the point, but I should like to make it, that Deputies will, as a result of recent experience, appreciate that at times under our existing procedure we may create a situation in which time does not permit of the exercise of proper control in relation to expenditure and financial matters generally. Only in this financial year we had for discussion here a Finance Bill containing many provisions of such a nature as to arouse justified anxiety amongst many Deputies. The House was put in the position, however, that the details of the Bill had at times to be discussed against the clock. I know that to some extent procedures were complicated this year by the dissolution of the last Dail and the election of this one, but, even so, it can happen under existing procedures that towards the end of the summer session, time may run out and it may not be possible to discuss properly important legislative provisions. For that reason, I believe there is need for reform in our procedures and I think the proposal in this Bill is a step in the right direction.

It follows from what the Minister has said—I should like to clarify it—that under the new procedure envisaged the Minister will, before the end of March in each year, indicate the existing services in respect of which he proposes money will be supplied and that, in effect, will take the place to some extent of the list hitherto contained in the Vote on Account. Is it envisaged that at the same time the Minister will indicate the nature of new services or will that await a later stage in the new financial year? Will it be possible under the new procedure for this House fully to debate general Government policy? I want to ensure that that right will be in no way restricted. It does not appear that it will but it does seem that complications may arise in the other House in this regard.

At the moment in Seanad Éireann there is only one annual debate in which general Government policy can be discussed, that is, the debate on the Central Fund Bill. The debates on the Finance Bill and the Appropriation Bill in the Seanad are confined purely to taxation matters and it does appear that the Seanad may now be deprived of an opportunity of having a general review of Government policy. It is of the utmost importance if Parliament is to function properly, that the right of members of Parliament to review Government policy should not be in any way restricted. I am satisfied that what is proposed here is necessary and that it will not impinge on the rights of Deputies to control and investigate Government policy but it does appear as if some steps may have to be taken in relation to the procedure proposed in this Bill as it applies to the Seanad.

The Labour Party approves of the proposals contained in this Bill. We have felt that the discussions on many matters relating to finance seem to be duplicated and triplicated in the present procedure. We have had the Vote on Account, the Budget and the Finance Bill. These have given occasion for the debates on general Government policy but Parties in opposition have also sought adjournment debates on which to debate Government policy. These have taken place at the end of the autumn session and the end of the summer session.

It has been true that when we come to speak to the Vote on Account in March or February, we have not had full information before us and it might be a good thing for the House if the main financial debate of the year were to take place on the Budget. We would then be considering not alone Estimates and expenditure but also the national income, as well as the methods by which we were going to finance our expenditure. As far as we of the Labour Party are concerned, we believe that all this duplication and triplication should be done away with and that we should have one main debate on the Budget proposals. At that time all the facts are known and, apart from the information given by the Minister for Finance in his Budget speech, we also have that very valuable document "Pre-Budget Statistics". All that information is lacking in February or March.

We were concerned, when we first saw the proposal, that four-fifths of the preceding year's appropriation should be allowed to the Minister for the services. We thought this was a pretty big sum. It is indeed a pretty big sum but we decided that if this measure is to be effective, it has to be four-fifths. One-third would take us to July but, bearing in mind that August, September and a good part of October are the recess months, it would have to be four-fifths to bring us up to December. If we are to postpone Estimates to the autumn session the time allotted would probably have to be a week or two in October and possibly all of November, so that four-fifths of the appropriation is a good precautionary amount.

In years gone by when we came to July and August, we found that a good many important Estimates had not been debated. The practice adopted was that the Estimate was passed on the Minister concerned giving an undertaking to bring in a token Estimate for £10 or so in the autumn. In that way time was taken up discussing Estimates in the autumn session which should have been devoted to legislation and the practice of deferring discussion on these Estimates was not effective. The Government must take a lot of responsibility for the need for this change in the procedure. In May, June and July, the pressure by the Government to get legislation through is very heavy and now we find that we have time to spare. The Government have tried on occasion to browbeat the Opposition into passing legislation in a rapid fashion in order to enable the House to recess late in July or early in August.

It appears to me that in recent years the Government have not planned their programme of legislation wisely. There should be some effort by them to introduce legislative measures early in the year so that there will be no need to try to stampede the House into passing these measures in June, July and August. We agree with these proposals but we trust that as far as a programme of legislation is concerned, the Government will give ample time for its discussion and see that time is not wasted as it is being wasted at the moment. We sat here yesterday; we seem to be stringing out the business today; and we are not sitting tomorrow. Next week we have a Church holiday and it is not our practice to sit on Church holidays but if we have a lot of business to do, I could see no objection to sitting on Thursday and Friday of next week.

I have only one criticism to make, that is, that the Minister seems to be unduly modest in this matter. He states that he believes the Bill will not involve any lessening of Parliamentary control over Government expenditure. I feel with Deputy O'Higgins, particularly with the memory of the last Finance Bill in mind, that the Minister has met us fairly. A number of us expressed ourselves in a particular way in regard to that Finance Bill and about the way it had to be dealt with by speaking against the clock. I am absolutely convinced that the debate which will now be abolished gave a completely illusory feeling of Parliamentary control over financial expenditure. In actual fact, it merely gave opportunities to backbenchers such as myself to air their own grievances, to ride their own hobby horses, and so on. There really was no element of Parliamentary control on finance.

I believe, therefore, that this new procedure will give us all a far better opportunity of examining Government financial policy. Whether we avail of that or not is a matter which is our responsibility, but I think it would be wrong of me, having criticised the Minister in the past, not to acknowledge now that he has met us very fairly, and it is a good augury for the future. If we use this new procedure properly and can debate the Finance Bill and all the Estimates quietly and with full deliberation, I think we can fulfil our Parliamentary responsibility far better. I am absolutely convinced that not only will this not involve any lessening of Parliamentary control but it will increase it. If that can be achieved, a very definite step forward will have been made, and I will be the first to welcome it. I am very grateful to the Minister for meeting the criticisms that have been made and meeting them so quickly.

If Deputy Booth believes what he has just said, then he would believe anything.

But I do believe it. I would not have said it otherwise.

Deputy Booth is simply rambling. The history of this procedure is that the Taoiseach. Deputy Lemass, Dr. Ryan, Deputy Brendan Corish. Deputy James Tully, Deputy Gerard Sweetman and myself met two years ago and said: "Let us streamline our procedure". This Bill is the fruits of that discussion. It gives us no more control over Government expenditure than we ever had. All it does is streamline the procedure of the House. If anything, it gives somewhat less control over Government expenditure than we have ever had but it leaves very adequate control. If Deputy Booth does not understand that, he ought to take a little lesson with the Minister for Finance who will tell him what the Bill really means.

I think Deputy O'Higgins and I agree.

I drafted the Bill. The Taoiseach, Dr. Ryan, Deputy Tully, Deputy Corish, Deputy Sweetman and I drafted this Bill two years ago, and I know what it means. What it means is that it streamlines procedure at some slight cost to the effective control by Dáil Éireann of public expenditure but it preserves fully adequate control.

I want to deal with very much more important problems. This Bill deals with the Central Fund Act. There is proceeding in this country at the present moment the most extraordinary conspiracy of silence to keep from our own people vital facts well known in every financial centre of the world but apparently utterly unrealised by the vast majority of Deputies here and by about 90 per cent of our people, that is, the magnitude and the gravity of the financial crisis in which this country is at present seized, with special reference to section 6 of this Bill which deals with the authority of the Minister for Finance to borrow.

Might I point out to Deputy Dillon that this Bill does not open up a debate on financial policy or Government expenditure.

My observation relate strictly to the powers conferred upon the Minister under section 6 of this Bill, nothing else. I do not propose to deal with any other aspect of the great financial crisis with which we are confronted, except in so far as it is related to the Minister for Finance's power to borrow. I want to say in that context that nobody seems to realise that all the storm signals on our economic frontiers are flying.

The Minister recently, under the powers to borrow, issued a National Loan at the rate of 6¾ per cent, the highest rate of interest ever attached to an Irish National Loan. It was represented to our people that the loan was oversubscribed. That loan has stood at a discount on the Irish Stock Exchange every day since it was quoted, although the Government stockbroker has authority to purchase £20,000 worth per diem in order to maintain its value. That in itself would be a very grave situation but we are then blandly informed that the loan which the Minister for Finance, under the powers which we conferred upon him and which we confer upon him in this Bill, intends to raise abroad and which was to be issued in this month of December, has now been postponed.

That is certainly widening the debate.

It is not. There is an advertisement in a current paper of a loan issued by the Commonwealth of Australia of 5¾ per cent Bonds which is subscribed by 42 underwriters. I now allege that the Government financial agents employed under the powers enjoyed by the Minister under section 6 of this Bill sent out their underwriting letters in respect of the Irish loan and that not one single one of them was returned.

How does this arise?

It arises under the general powers which we propose to confer upon the Minister. I knew the Deputy would not like to hear it but he is going to hear it.

This is an abuse of the privileges of the House.

It is not abuse. The Minister has a right to answer, if he is fit, but we are going to expose here and now this country as being dragged step by step from one degree of catastrophe to another.

On a point of order, is the Deputy in order in discussing this matter on this Bill at this Stage? I suggest he is not.

I have already pointed out to Deputy Dillon that this is a machinery Bill to change the present procedure for the consideration of financial business in the House and that it does not open up a debate on financial policy.

I am not dealing with financial policy; I am dealing with section 6, the marginal note of which is "power to borrow".

The marginal note is not part of the Bill.

The Lord protect me from making rude replies to Deputy Booth. What the Deputy is trying to say is the marginal note is not part of the Act. It is, of course, part of the Bill. Can the Deputy not read? What is it there for?

I am trying to get the Deputy to get to the point.

The Deputy should not be so silly.

I would not take Deputy Dillon on in regard to Parliamentary procedure. He knows a little about it.

What astonishes me is this strange passion on the part of our own Government to conceal from our own people the facts which are endorsed the world over and this insane desire on the part of Government supporters to create in the minds of our people a euphoria which the present economic circumstances of this country do not allow. We are being exposed to economic affront in the world at the present time unrivalled in the history of this country.

Is the Deputy criticising his own child which he bore himself according to his own ideals?

I have lost contact with the Deputy's mind altogether.

I was trying to talk about the Bill.

I want to ask the Minister for Finance will he tell us now why he cannot borrow, under the powers he has, the modest sum of seven million pounds sterling in the international money markets. Is that not a legitimate question?

I can answer it, and I shall answer it, even if it is not relevant to the debate.

I say it is. I cherish the responsibility for recommending to the House the adjustment of financial control which is now in contemplation.

I thought I had thought of it myself but I give the Deputy credit for it. It is not an issue here.

Deputy James Tully can tell the Minister that Deputy Sweetman, Deputy Corish, Deputy Tully, the Taoiseach, Dr. Ryan and I discussed this matter and agreed on the proposal now before the House.

Let us pass it, then.

I do not like making derogatory remarks about those who deserve them.

The Deputy has never been so reticent before.

I direct the attention of the House to the context of the report on the economic situation of this country by the National Industrial Economic Council.

That does not arise on the Bill. The Deputy may not review the entire national position on this Bill.

What I am concerned to direct the attention of this House to is that for the first time since this State was founded an Irish National Loan issue by the Minister for Finance of this country, at 6¾ per cent, has been at a discount from the date of issue——

It is very cold outside, too. That is about equally relevant.

——and that the Commonwealth of Australia can secure underwriting for a loan of 25 million dollars at 5¾ per cent at a time when we are constrained publicly to announce that our intention to launch a loan at 6 per cent is not acceptable to those to whom it was offered.

The matter does not arise.

I warned them last July that we were coming to a point at which we would be hawking the credit of this country around the world and finding no takers. That time has come and it has come as a result of the activities of the Fianna Fáil Party and Government.

The Deputy may not embark on that line. It does not arise on the section. The Deputy is opening up a debate on financial policy.

Section 6 has strict relevance to the powers to borrow and I have directed the attention of the House to certain grave facts arising therefrom. Let no Deputy be under the illusion that we are maintaining the same control over public expenditure when we pass this Bill as we had before. There may be some silly billys in the House who do not understand that and I want them to realise that, with our eyes wide open, we did agree that there should be some streamlining of our financial procedure at the expense of a degree of control which this House hitherto enjoyed. I think this relinquishing is wise for the sake of the greater expedition with which financial business can hereafter be effectively dealt with in this House. It is true, as Deputy Corish has said, that if the Government will regulate their business reasonably, the extra time made available by this procedure ought to enable legislation to be appropriately discussed and the financial business adequately examined.

It is also true, as Deputy Corish has said, that if the Government will not produce the legislation which they want to have examined during the session between October and Christmas, we will run into precisely the same congestion at the end of the legislative year as we have always done before. I do not want the Minister to feel that I have prevented him from replying at sufficient length. I commend this measure not on the ground that it extends our control of finance but on the ground that while it knowingly reduces our direct control, it in fact leaves us adequate control and time whereby to expeditiously discharge the business of the Dáil.

I am sorry that Deputy Dillon took advantage of this debate deliberately to put himself out of order, and I still assert he has done so. Four minutes would hardly be sufficient time——

The Minister can resume after Private Members' Time.

——to deal with his specific point and also with the other constructive observations made by other Members. I wish to deny categorically that the fact that the National Loan recently floated may now be quoted at a discount is in any way unusual. On the contrary, if the loan were being sold at a premium, we could be charged with having issued it at too high a price. As far as the international loan is concerned—the borrowing of dollar bonds—the fact remains that there is extreme pressure on the dollar bond market at the present time. A lot of international corporations put their eyes in that direction and many of the international corporations, because of the pressure on that dollar market, withdrew their applications or postponed them as we have done. There is a clear feeling in the United States of America that the President and the Government are seeking to withdraw this dollar pool as a means of borrowing by people outside the United States and that was very much a contributory factor to this pressure on that market at the present time. As I announced last week, our application has been postponed on the advice of the American and British managers of the loan.

I shall not quarrel with Deputy Dillon as to who thought of the Bill. I was under the impression that I had the idea.

Ask the Taoiseach, and if he contradicts me, I will apologise in public.

Will the Deputy allow me credit that I thought some streamlining of the procedure ought to be effected, and that it should be done in this manner, after my first experience as Minister for Finance in this House and in the Seanad?

How many times in the House?

I found that not only were we denying ourselves sufficient opportunity to debate Financial Resolutions and the provisions of the Finance Bill in full, but by reason of the pressure on our own time, we found ourselves adjourning after the Finance Bill and all the financial business had been completed in this House, but the Seanad in their discussion and examination of the Finance provisions had no opportunity to make recommendations. If they had an opportunity or could make recommendations, it would mean the Dáil would have had to be recalled, and that was impossible.

There was just one other point Deputy O'Higgins raised, that is, the possible denial to the Seanad of the opportunity of a debate on Government policy. It is true they will be denied one opportunity by the withdrawal of the annual Central Fund Bill and its replacement by a permanent Central Fund Bill, but the Taoiseach, in outlining the terms of this Bill to the Leaders of the Opposition Parties, suggested that, in order to make this up, the scope of the debate on the Finance Bill in the Seanad might be widened to cover not only the tax policy and provisions of the Finance Bill but Government policy in general. I think that may be acceptable to the Seanad, and when I go to the Seanad, I shall suggest that, but I shall also listen to any observations the Seanad may have to make on this.

Because of the general acceptance of the Bill, I do not think it necessary to say more, and whether the Bill is a creature of Deputy Dillon or of mine. I think it will make for better regulation of financial business.

Question put and agreed to.
Committee Stage ordered for Tuesday, December 14th, 1965.