I invite the attention of the House to the fact that economic theses are seldom written by bus workers, building trade operatives or farm labourers, which is not to say that the people by whom they are written are any the less worthy by reason of that fact. It is also true that when these strictures issue at banquets from Government Ministers and people of that sector of society, adjuring the workers to put more into their efforts for the national good, what comes across to the ordinary worker who has to meet with the harsh realities of life and has to work with hand or brain for a certain number of hours per week, is the audible, small but still very audible, voice which says: "Do not do as I do but do as I tell you." This is inherent in a lot of these lectures which we have been getting in this House and which we get regularly from the banqueting tables, not to mention the institute to which I referred before the adjournment. It would be correct to say that the body of society seems to be afflicted by these institutes as by a rash. I fail to see what contribution the self-glorification of these pompous little bodies makes towards the enlargement of the gross national product. They do make a very definite contribution towards the enlargement of their own gross craniums—or whatever the plural of that word may be.
Private Members' Business. - Economic Situation.
Crania.
Surely gross in manner, if not also a little lacking in the externals of culture, except in so far as culture relates to the ingestion of quantities of food.
And drink.
We in the Labour Party stand on the fundamental principle that before we start to talk about how we are going to divide the anticipated three per cent which the economists guess—and I emphasise the word "guess"—will be the total of the increase in our production for the coming year—and it might very well be much more than three per cent in the event—we want to talk about the distribution of the national product which is there now and the manner in which it is distributed, particularly in regard to the most needy sections.
I mentioned what I thought were the priorities and it will be no harm to repeat them. First of all, there are the aged and the lonely. There are 32,000 old people living alone, in many cases perhaps living on the non-contributory old age pension. What more pathetic picture can one visualise than that? Loneliness in itself is not an economic factor but it is a very human one. The economists do not refer to that at all. The economists with their computer minds have no concern about this kind of thing but it is something with which the Government should concern themselves. It is something with which we as human beings representing the people should concern ourselves. It is part of the problem of government to see in what way these people should be treated and what steps should be taken to make their lives more tolerable when they are thrown, as it were, on the waves of the world with very little to live on.
There is a suggestion in the Report which was brought to my attention by one of the small coterie in the Dáil who read this Report from cover to cover, that the Government might find it necessary to restrict expenditure in the area of social activity. That would seem to imply that if economies are to be effected, they might possibly be made at the expense of people of the kind about whom I have been speaking, the aged and the most helpless. If by any accident of circumstances, or if by any misguided wish to follow too closely on the heels of the economists, the Government should find themselves in the position of not being able to afford more money for the relief of such people, if money stands between the provision of a domiciliary service of the kind operated by one very laudable order of nuns in Ballyfermot—for nursing the sick and looking after the old, the lonely and the poor—then it would be socially disastrous and in my view, much worse than even the threat of economic disaster. The threat of economic disaster has been magnified out of all proportion and it has been the habit of our politicians to raise up menaces when they find themselves at a loss. A menace is always within reach if the Fianna Fáil Party are in difficulties. Menaces are always a useful political ploy and there is no greater producer of menaces than the present Taoiseach.
We have had the proposition put here by members of the Government and, to some extent, by the principal Opposition that the unions should concern themselves primarily with the distribution levels of future production. Unions are expected to exercise a restraint upon the workers in the matter of wage increases. What is forgotten in this matter and what must be emphasised and cannot be repeated too often in order to impress it on the people who do not like trade unions anyway, and we have them in this House—they do not like the idea of workers being organised; they would much prefer them to be unorganised —is that a union's function is not, as has been pictured here, to act as a brake on the activity of its members. That is not the function of any trade union executive or leader and we reject the idea that such is their function. A union's function is not to persuade workers to be content with what they have and thank God for it.
Do not let anybody run away with the idea that everybody in Dublin is earning £25 or £30 a week. There are many workers whose take-home pay packet is little more than £10 or £11 per week and they are doing their best to rear families on that amount. The lot of these people is debt and worry. As one who is in constant contact with them, as are most of the members of this Party, I know that debt and worry are the constant companions of the average Dublin worker today. To ask the unions to say to those workers that they will have to put up with an increase of 6/- or 7/- a week because the gross national product is not sufficient to meet any further increase shows that those who think that are completely out of touch with reality. It does seem to me that there are members of the Government who suffer from delusions of grandeur which are the result of a misspent political life. These are symptoms of a time not too well spent.
I have referred to Deputy Corry and his wit in support of the farmers and I might advert to the particular type of farmer he represents. He epitomises them in every way, in their appearance, in their approach and in their general attitude to the farming community as a whole. I do not think I can pay him any greater compliment than that. He talked about prices being inadequate as far as the farmer is concerned and he spoke of the farm labourer but apparently there is doubt in his mind as to who should pay the farm labourer. The farmer, to Deputy Corry's mind, has no function in that regard. Apparently it is some kind of mystical body, obviously not the Government whom Deputy Corry supports, and certainly not the farmer. It seems that there is some kind of invisible force responsible for the present bad conditions of the agricultural labourer.
Deputy Corry went on to say that there should be justice for the farm workers but he failed to identify the people who are not giving that justice to the agricultural labourer. I suggest that that responsibility rests primarily on the farmer. Deputy Corry, in the same breath, told us about the farmers making money and growing peas on contract and getting £60 a owt for them. I suppose that would be the net return. Then he complains about a wage rate of £7 a week. Yet he supports a Government who say that a three per cent increase is as much as the traffic will allow. What is three per cent of £7 a week? It is about 4/8d. That will not get the farm worker very far.
I regret we did not have any contribution to this debate from a Minister whom I regard as having a particular responsibility in the matter of assessing the economy of the country, that is, the Minister for Transport and Power without responsibility. We know he has been away but let us hope that he will intervene in the debate. CIE recently caused grave worry to many people. I read somewhere that the Minister made a speech at a function at which CIE officials were present in which he said that CIE was broke. He then went on to say that the people to whom he was speaking had done a great job. If CIE is to be kept going, if Kingsbridge is to be kept open at all, it will need the injection of a couple of million pounds. We in the Labour Party never burked that issue. We always felt that the idea of making a national transport undertaking a profitable business, a business that would meet its own costs, was far-fetched and impossible. From what we read, there does not appear to be any railway concern in the world that can make profits. Very many of them have been losing for years. We have had thrust down our throats time and time again by the Minister for Transport and Power without responsibility that this must be done and everything judged according to what he calls efficiency, but the profit motive comes into it.
We always regarded CIE as a social service, something that should be treated as such and paid for from the Exchequer. It was unreasonable to think it could be made to pay. Now we are left in the situation where this Report calls for increased production and it would appear the public transport system is going to come to a full stop. They say they require £2 million of an injection to keep them going. Where is the money to come from? The Government have not got £2 million. Therefore, it looks as if CIE will stop altogether.
I should like the Minister for Finance to say something on that when he has an opportunity to reply to this debate. It is probably too optimistic to expect the Minister for Transport and Power without responsibility to come in. Perhaps I should repeat Lord Baldwin's great definition of power without responsibility. Anybody who has put down a question to the Minister for Transport and Power in connection with CIE has invariably got the reply that the Minister has no responsibility. Therefore, he is the Minister for Transport and Power without responsibility. Lord Baldwin defined people of that kind. He was referring, I think, to anonymous newspaper editors who were attacking the Government. He said the exercise of power without responsibility was the prerogative of the harlot through the ages. I do not want to draw the analogy too far. I leave it to Deputies to judge whether it is justified or not. Certainly, the title is unjustified and should be changed.
I do not want to anticipate the reply of the Minister for Finance, but I think in the course of his introductory speech on this motion, he might have said something on the subject of incentives to workers to produce more. We had no mention of that during the whole debate. If you are going to get Irish workers to produce more, incentives are essential. The best incentive is the promise of greater reward, of better pay. Since the appeal to produce more must necessarily apply to all kinds of people, I would suggest to the Minister for Finance that there rests upon him an obligation to provide an incentive to that vast and respectable body of people we call ratepayers and that the burden they carry should be relieved at least to the extent of their not having to pay income tax on moneys which they have to pay in rates. That seems to me to be unjust. It is really double taxation.
It is symptomatic of the whole trend of Government today that in this year, the 50th anniversary of the 1916 Insurrection, we are going to have a revolt about the revolt all over the country. The latest occurrence does not help towards the creation of an atmosphere in which everybody unites in the effort to produce more. The latest piece of ignorant impertinence I observed in the newspapers was the denial of the right of the citizens of Dublin to see O'Casey during Easter Week—as if there was something wrong with him. These moryah respectable elements have taken over again. Poor Pearse, Connolly and all the rest! If they had the opportunity today to contemplate our activities, the activities of those exploiting them in various ways, particularly the kind of people who want to decry the memory of one of our greatest theatrical geniuses, O'Casey, I wonder what thoughts would pass through their minds? I wonder what Pearse thinks of the British Royal Mint minting his head? That is something I cannot swallow. We live in a time when we are going back into the Empire with our heads up.
Finally, this Government remind me, because of their profligacy in one sense and their meanness in another, their lack of real capacity to plan properly, of a scene which comes to my mind when we mention O'Casey of two characters going into a tenement room maudlin. There is not a stick of furniture in it. Everything is in the pawn. The woman of the house has left; she could not take it any more. The daughter is in trouble. These two characters come in. One of them puts his hand in his pocket, takes out a coin and looks at it. It seems to sum up for me the despair which this Government are trying to generate, and have succeeded in generating to a great extent, among certain sections of the population. He looks at the coin and declares: "Only a solitary tanner out of all the money I borrowed. The blinds is down, Joxer; the blinds is down."
The manner in which this motion by the Minister for Finance came to be discussed in the House is one worthy of a little comment. In the late fall of last year, when in the ordinary way this Party were putting down motions for consideration in Private Members' Time, we put down the motion now being discussed with the motion by the Minister for Finance. It lay on the Order Paper over the month before Christmas and over the early part of last month. Then, I think four or five days before the Dáil was going to sit last Tuesday for this session, we suddenly got a message from the Government Whips Office that the Government proposed to give time for our motion on last Tuesday and that it would not have to be taken in Private Members' time.
When we got that message, without having asked for it specifically at that time, I must confess I immediately began to look to see what cunning was at the back of it. You do not have to be versed in Virgil to know that Fianna Fáil never give anything away for nothing. It transpired afterwards, if you look down the Order Paper, that the real reason they did it was to hide their own nakedness, to hide the fact that they had been so inefficient in relation to legislation and business that the Government had virtually no business for last week and very little for this week. So, in order to cover up that gap and to prevent themselves from being shown up for the incompetents they are, they thought they would give time for the discussion of our motion. They are men wobbling, not able to make up their minds from day to day, as we have seen them all through the last year. The next day, we got a message that they would not give time for our motion as the Minister for Finance was putting down a motion of his own and that motion eventually came to the Order Paper, the motion that we approve of the Report of the NIEC, a Report of which everybody must approve, signed, as it is, by the representatives of every section in the community other than agriculture, to the omission of which I shall refer later.
I was inclined to think that it must be something like the earlier legislation we had last year when I saw that the motion was down in the name of the Minister for Finance. I was inclined to think that it must be rather like the Finance Bill which he brought into this House and which, quite clearly, at the time and during the course of its passage, he never really understood at all and that he must be doing the same thing with the motion of approval of this Report.
The Report itself is the most ferocious indictment that has ever been written of the policies put into force by the Minister for Finance and it is the most damning condemnation of the views the Taoiseach uttered during the course of last spring. I cannot understand Deputy J. Lynch, as Minister for Finance, putting down a motion of approval of a Report that condemns as utterly inadequate and as utterly inefficient his own handling of the situation, that condemns the views his own Leader adumbrated with such vigour, force and bravado in the spring of last year.
I wonder if the Minister for Finance was codded by the Minister for Agriculture into doing it so that there would be, in the words of Deputy Dunne, another Minister to be discussed; so that the attention might be taken off the manner in which the Minister for Agriculture had lost, through his inefficiency, £1 million of our markets that we had already there and about which we got the details today at Question Time. Or was it, I wonder, the fact that the Minister for Finance really did not appreciate that this was such an indictment of the failure of his own policy? I am talking about him politically now: he really did not appreciate a Finance Bill when he came into this House.
The story that is going the rounds of the town about him in that respect and about the NIEC Report is an apt one, a little unkind perhaps but I am afraid an apt one, politically. A bride came home from her honeymoon and, on the first day after they got home, she was doing her best to make dinner for her husband. She was not very good at the culinary art and therefore she was working hard with one hand near the range and the other hand flicking over the pages of the cookery book. The instructions for the dish she had decided upon were at the bottom of the page. She wanted to make sure she was following the instructions accurately. She set the dish before her husband in due course and it was not very good. He cavilled somewhat at it and she said: "I am sorry but I took it exactly out of the book". He got the book and they checked. He found that she knew so little about cooking that she had turned over two pages together and put the bottom of one dish into the top of another. I think, in relation to some of these things like the Finance Bill and like this Report, that the Minister for Finance appreciates so little what goes between the first page and the last page that he has been easy meat for some of his colleagues who wanted to get over something on him that would be fairly unpopular.
I shall explain in detail later what I mean when I say that this NIEC Report is the most ferocious indictment of the failure of any Minister for Finance we have had in our 40 years of self-government. Before I do that, may I make some reference to the manner in which an incomes policy came to be discussed in this House on this motion and in the make-up of the NIEC Report? The Report itself makes it clear that the background for these discussions on an incomes policy started in 1964 and were being brought to ultimate fruition so that, in the early summer, the Council submitted a report on an incomes policy and then, in the late autumn, submitted this Report. I am sure that in the spring of last year, the Taoiseach must have known that the Council were considering the desirability of issuing a Report on an incomes policy. I am certain that the civil servants who sit on that Council keep him properly briefed and properly apprised. I am certain that they send minutes and memoranda to him. Nobody except the Taoiseach himself could know whether in fact he actually read them. Not only that, on many occasions down through the years, OECD made it clear that they felt that an incomes policy was an essential part of any orderly development of growth; an essential part to ensure that we could have growth and, at the same time, reasonably full employment.
On many occasions, the Taoiseach has referred here to reports from OECD. In those circumstances, I can only say that the speech made by the Taoiseach at Mullingar was either grossly dishonest, because of what he knew was being considered behind the scenes at that time and what should be considered, or else he had not bothered to read the briefs that had been sent up to him. When he spoke at Mullingar, and I quote from the Irish Press— Pravda, the Truth in the News—of 6th April, 1965, he made it clear, in absolutely unambiguous terms, that he would be against an incomes policy:
We of Fianna Fáil do not believe that any system of this kind is workable. It has never been successfully operated in any country except a communist country.
Of course, it would not be worthy of Deputy Lemass as Taoiseach unless he could throw in a slur of that kind.
Let us consider that quotation I have given from his speech in the spring of the general election when he was merely trying to denigrate the policies that had been put forward by this Party and which not merely contained in relation to an incomes policy the basis upon which the NIEC now admit an incomes policy should be built up but contained also a provision in relation to credit which Deputy MacEntee, particularly, then Tánaiste, tried to suggest was an escheatment and a method of stealing people's money. Yet, the Council now suggest, and the Central Bank has already in the past six months, exactly the powers we suggested then were more appropriate to ensure that there would be orderly growth.
Speaking at the annual dinner of the Dublin Chamber of Commerce on 26th October, 1965, the Taoiseach said—a conversion in the six months between April and October—
An incomes policy is a fundamental requirement of continuing economic growth and it is also the foundation of a just social policy—
He went pretty near "a just society" when he said "a just social policy" but, of course, he had to change the wording slightly—
which must involve a degree of income redistribution.
Then he came on with a sentence to show that he was aware how vulnerable he was because of his previous speech:
In a totalitarian regime it is imposed by government order. In a free democracy it has to be worked out by consultation and agreement.
That is exactly what we said six months before but which the Taoiseach then said could be carried out only in a communist country.
I should add that it was not only in a general election that we indicated from this side of the House that we believed an incomes policy was a proper way of providing for orderly growth. The present Minister for Finance may not then have been interested in speeches made on financial matters but I can recollect in the last two years before that several occasions on which, speaking on behalf of this Party, I made it clear that we believed that an incomes policy was needed, and badly needed at that.
But it is always in a time of expansion and in a time when things are going well that one would have the best chance of getting anyone fully to understand the benefits of such a policy and that is why we were particularly keen that it would be done in the early part of last year and were working on it then, before any cloud appeared on the horizon. Fianna Fáil, on the other hand, through the document, Closing the Gap, of 1963, and by their insistence now on it, seem to regard it more as restrictive rather than as the proper means of orderly growth.
I said that this was the most damning indictment there could be of the policy of any Minister for Finance, because the Report itself makes it clear that there are certain things that must exaggerate demand, exaggerate inflation, and these are things for which the Minister for Finance is entirely responsible.
On the figures the Minister for Finance has given us already—and he knows whether these figures are genuine or whether they are not—we are going to have this year the greatest deficit in our current Budget that we have ever had in the history of the State. We have at the present time increased expenditure over the corresponding period of last year to the tune of £22 million. We have increased revenue of £16 million. We have, therefore, an increased deficit of £6 million on the Supply Services, current and capital.
Last year we ended up with a deficit of £4 million on the current Budget and, as far as one can judge, the position in relation to capital supply services is more or less the same as last year.
The below-the-line expenditure this year is £6 million more than last year. The deficit on repayments of capital is about £1½ million more than it was last year. We have, therefore, even allowing for the increased taxation of £16 million, a situation which is worse by £13½ million in the same ten month period as compared to last year and, to that extent, increasing and making worse the demand and, therefore, the inflationary tendencies that are at work in the community.
The deficit in the balance of payments in 1962 was £13½ million. Capital inflow in that year was £23 million, which more than took account of it. In 1963, the deficit was £22 million and capital inflow was £25 million. The deficit in 1964 was £31½ million and capital inflow, which everybody acknowledges and which the Central Bank itself says in this Report contained obviously some short-term funds from England, was some £36 million. Yet, though we were, in fact, living on money brought in from abroad entirely in that way, the Minister for Finance did nothing whatever in his Budget to meet the situation or to face the difficulties that might arise from it if the inflow was exceptional, as he had been advised at the time it was.
That is not the whole story. He came into the House with the Budget. A few days before he published the capital programme for the current year. The programme that was envisaged for public capital expenditure in the Second Programme for Economic Expansion was £95½ million. The Budget estimate the Minister brought in was £8 million more than that— £103¾ million—again £8 million more than the Second Programme estimate. One of the things about this Report which we are now asked to adopt and which the Minister asks us to adopt is that it is stringent in its criticism on the necessity to avoid exceeding the capital estimate of an economic programme.
We had then, in July, the Taoiseach coming in in relation to that public capital programme and saying then, a matter of three months after his Minister for Finance—his new Minister for Finance—had introduced his Budget and had introduced his capital programme—that it was wrong and that it would have to be cut back to the £95½ million. The Dáil rose and when we came back after the Recess we got another White Paper published in October, 1965. Even in that White Paper, what the Taoiseach had said in July was again contradicted. Instead of going back to the £95½ million he spoke of in July, they went to a figure of £100 million. Is it not clear and obvious why, in those circumstances, nobody can understand what the Government are going to do next? They are running around like a punch-drunk boxer, jabbing quickly in this direction and that, but quite unable to work out coolly, calmly and coherently any plan for the future.
I said a moment ago that it must have been obvious to the Minister, or should have been obvious to him and to the members of the Government, if they knew their job, that capital inflow was likely to be less in 1965. To underline and prove what I am saying, and to show I am not merely being wise after the event, I want to take the quotations from the OECD issue published in March, 1965, six weeks before the Minister introduced his Budget. On page 14:
The net capital inflow in 1964 was exceptionally high and may have included some short-term funds from the United Kingdom.
On page 23:
But the increase in the net capital inflow was exceptional last year and the inflow may not be as great in 1965.
Page 24 relates to incomes policy as such and not to capital inflow, but I shall deal with it later when I come to deal with incomes policy as such. These two quotations on pages 14 and 23 make it clear that the OECD economists who examined the position, and examined it not in isolation but with the experts of the Department of Finance and the special sector in relation to economic forecasting, and so forth, made it clear that there was likely to be this drop in capital inflow. I suspect what happened was that the Government did not take any of the advice they were given. They rode roughshod over the Minister for Finance and the Minister himself did not have the courage to stand up to his colleagues and ensure that the position of difficulty he ought to have known would arise would not be worsened and would not be heightened. He budgeted for a higher capital inflow to save the situation whereas, in fact, everybody knew it was likely to be lower.
In consequence of that decision by the Minister for Finance in his Budget, and of no other decision, we had in the first seven months of this year one of the biggest runs on our external assets reserve since the beginning of the State. It is part of that, and it follows from that, that we find in the White Paper on the capital programme published last October that the Minister had to revise his estimate of savings for the current year, from small savings and prize bonds, from £10 million down to £6 million, a revision downwards of almost 50 per cent. He went across to New York to a meeting of the world bank and he came back and told us he was going to get £6 million—that was the exact figure—in a loan floated publicly in the United States.
Everyone, including the Minister, went his own sweet way. There was no effort and no hurry. Nobody was exerting himself. Suddenly, in November, they found they had missed the boat; they were not going to be able to get any loan on the New York market and they took a decision—a right decision at that time—that they would not float a loan, which they knew would be a failure, because they did know that, and the underwriters told them that. They knew the Minister was not going to get the money. That was the right decision to take then. But it was known to everybody in financial circles in New York, Toronto and elsewhere in the United States that this situation was bound to arise at the end of the year and, even if the Minister was not prepared to take the advice he could get from the financial people at that time, he had it before him in the evidence that was given to him last Autumn by me in another capacity, when it was made clear that we knew it was absolutely vital, if there was to be a foreign loan obtained for development in Ireland, that that loan would have to be put through before the end of November; if it was not put through before the end of November there would be no chance of getting the necessary money.
We got a move on. Let me pay generous tribute to certain members of the Government who assisted us to get a move on. But the Minister did not get a move on and the result was that, when he came to the point of looking for this money at the end of November, he found it was not there and he had perforce to cancel the issue or else have a failure. It was right for him to cancel it in those circumstances, but it was a shocking dereliction of duty that the proper steps were not taken earlier in the year to ensure he would get in before others in the queue, about whom everybody else seemed to have adequate knowledge except the Minister for Finance. Possibly he felt that by not pushing that foreign loan he would be able to damp down the demand for public spending. That could be a reason for it. It would, I think, be a wrong reason, but it is well known that one of the methods in the past was for the Department of Finance to put things off in the hope that by putting them off the necessity to expend money would not arise.
Now, because of that failure, instead of getting funds in the public market, as he could have done easily if he had disturbed himself and the Government at the time, he has to draw on our share of the World Bank. We are told that he is going to draw to the extent of £8 million. I do not know where that figure of £8 million comes from or why we have got to change from the £6 million he had previously in mind for a public issue. Perhaps, again in that respect, he would like to advise us of the reasons for that change when he comes to conclude this debate.
One of the reasons may be that there is a lack of saving incentive and savings in other respects are falling back in exactly the same way as savings fell from the point of view of small savings and prize bonds in the period to which I have already referred. We know, of course, that the Minister for Finance had to make a special draw of £20 million on the Central Bank for the purpose of funding different standing Exchequer Bills because there was, amongst other things, a dis-saving in the public subscription for such Bills. The public were not subscribing to Exchequer Bills in the same way in 1965 as they had been earlier.
We have got to realise that, if we are going to have any proper development, we have got to increase the incentives for saving. There ought to be some new thinking in that respect. One of the ways in which it could be done, as I indicated on an earlier occasion, is by following the advice given in the Royal Commission Report to the Swedish Government, a Commission which examined exhaustively the possibility of having what they called index loans and which examined the position that arose for people who lend money today to the Swedish Government and found that £100 converted into their currency would buy a certain quantum of goods today, and yet when that £100 was to be repaid 20 years hence by the Swedish Government, because of the natural and growing inflation that exists, instead of buying the same quantum of goods, it would only buy, perhaps, two-thirds of what it could buy at the time the loan was made.
It has been precisely that diminution in the value of money and the diminution, in consequence, in the worth of gilt-edged securities that has made people so very uneasy and unanxious to invest in gilt-edged securities; therefore the dis-saving incentive has been greater than the saving incentive, the saving incentive we must have if we are to implement a proper programme of modernisation on every front, agricultural as well as industrial.
The Swedish system which was advocated at length in the Swedish Royal Commission Report was a system which would be linked to what we call our consumer index cost of living. We have never had any evidence of any thought being given by anyone in the Government to that obvious incentive that there would be for saving. It is not necessary for the Minister for Finance or his Parliamentary Secretary to know Swedish to read that Report, because the Swedes have been obliging enough to give a translation in English to those who want it.
Another incentive there might be is in relation to something about which people grumble, and grumble justly. In the Daltonian era just after the war when interest rates were forcibly kept low by the late Dr. Dalton as Chancellor of the British Exchequer. Government funds were issued at very low rates and here the Governments of the day, too, got the benefit of the low rates of interest beyond, and Exchequer Bonds were issued at three per cent or three and a half per cent. Not merely has the value of those Exchequer Bonds, to which money was subscribed, say, 15 years ago, been almost halved but, in addition to that, the effect of the increase in interest rates has meant that even the nominal value of the bonds has gone back from the £100 they subscribed to 82, 84, 85 or 86. I accept that no Minister for Finance could bring that up by giving additional interest. That would not be appropriate or proper, but there are ways in which that glaring advertisement for dis-saving which is there all the time could be counteracted to some degree. One way is that all those stocks would be accepted at par value for death duty purposes; then at least there would always be a market in them that would tend to get them up from the low level at which they are today. If that were done, it would also have the effect of ensuring that people who had been paid in land bonds of earlier vintage would not see the price they had got for their land whittled away through the land bonds decreasing in value day after day as they do at present.
There is an obligation on the Government, in honesty to the people whose lands were acquired and who were paid for that land in land bonds, to do something to ensure that the price the people got for their land will not be depreciated in that way. One way in which that could be done would be to increase their value somewhat by excepting them from death duties in the way I have mentioned. Another way would be by ensuring that the interest would be paid without deduction of tax, that there would be no deduction of income tax at source. That does not mean that the person who has land bonds would not be liable to pay income tax if he was otherwise liable, but deducting tax at source is undoubtedly a method which knocks several pounds off the value of land bonds.
The point of that in relation to this debate is that unless some saving incentives are developed and unless we ensure that the obvious incentives to dis-saving are not there before the community all the time, then we are not going to get the capital we need and which the NIEC accepts we need for the development of our economy.
We depend substantially on a capital inflow, and yet we had two Fianna Fáil Ministers, the then Deputy Dr. Ryan and Deputy Lynch, by the atmosphere they created in the Finance Acts of 1963 and 1965, doing their damnedest to drive capital out of Ireland instead of trying to entice it in. I have heard Ministers of the present Government saying in a grandiose way that they did not want capital. Many of the people who are waiting to be paid grants and loans which are so much in arrear throughout the country would be very glad if the members of the Government took a different line and realised, as members of Governments in other sensible countries realise, that the economy cannot possibly develop, particularly in this modern technological age, unless there is ample capital to do the job that has to be done.
There is another effect which the wanton disregard of the Minister for Finance in the Budget has had on the private sector of our economy. There has been, and had to be, a limitation on the extension of bank credit provided by the Central Bank. I want to make it perfectly clear that I do not challenge in any way the necessity for the Central Bank to issue that directive, but once they have issued that directive that there was only to be a certain amount of credit available for the community this year, then every pound the Minister for Finance avariciously took out of that pool for the public sector meant that the ordinary businessman, the ordinary farmer, had less to get from the banking pool. That is accepted and acknowledged in the report we are now discussing. It is not put, naturally enough, in the same brutal way about the Minister for Finance as I have put it, but here is what it says on page 14, and it means exactly the same thing:
If the Central Bank's advice to the commercial banks regarding the growth of total bank lending had been strictly complied with and had taken immediate effect, loans and advances to the private sector and/or lending to the Government would have been reduced.
But Government lending expanded substantially and in consequence of that decision by the Government, private lending had to be contracted. The cause for every decision in relation to the withholding of credit for the development of something worthwhile goes back to the decision taken by the Minister for Finance when introducing his Budget last year. Of course that Budget had other effects referred to in the annual report of the Central Bank last spring and in which it is stated on page 12:
The consequent rise in public expenditure, over and above increases planned in the economic programme, necessitates higher taxation and borrowing which tend to exert a further upward pressure on costs and prices. Inflation thus tends to develop a momentum of its own as the effects on costs and prices of excessive increases in monetary incomes operate against the intended increase in real consumption while rising Government expenditure, designed to eliminate inequalities brought about by price inflation, contributes to the inflationary pressures.
"Contributes to the inflationary pressures" which this Report states exist and in respect of which this Report suggests certain measures to contain them and to contain what has been caused by the inefficiency and unwise decisions of the Minister for Finance.
It is of course fairly evident that in relation to an incomes policy, you are not going to get anywhere unless you are going to be able to get a climate of opinion in relation to such a policy which will have it accepted voluntarily. I did not agree with much of what Deputy Dunne said earlier but one thing is quite clear, that is, that you cannot get success in this way merely by legislation and forcing people to do something. You have got to encourage them; you have got to educate them and show them that it is better for them to do it.
We come from that naturally enough to industrial relations. The main secret of successful industrial relations is what could be called communications and by that I mean consultation in the fullest sense of the term: talking to the employees and to the workers as though they were partners in a business rather than talking down to them, bringing them into the picture, asking their advice and taking that advice seriously and doing so at every level. That is the type of labour management I suggest which would help to avoid inflation and help to create a proper atmosphere for a real incomes policy, which would mean that everyone could grow in his income with national production and assist national productivity.
We have obviously no cause for complacency about our industrial relations but at the same time it does not do any good to exaggerate what has been lost through a breakdown in industrial relations. I do not think it is untrue to say that we have probably lost more man days in the past three months through the common cold than from a breakdown in industrial relations, as such. We must, however, try to remember that the days in which wages settlements affecting any important industry could be dealt with in isolation, away and apart from the welfare of the nation as a whole, are gone altogether and that those settlements in relation to an important industry, if they are in conflict with the basic needs of the economy, will not remain long in the interests of those who are concerned in that industry because they will be swallowed in general economic troubles.
The other day I came across a few quotations in relation to this question of industrial relations which I think are worth putting on the record. Here is one:
Therefore I should say that enlightened management is probably the greatest contributory factor to industrial peace that I know.
"Enlightened management." Another quotation, and I will give the sources when I am finished, is:
If managements are to make it clear that they regard relations with their employees as being as important as their other duties, there is no place for what I would describe as the old, authoritarian approach. People on the shop floor are now much better informed.
Another quotation says:
. . . the most successful methods of formulating ideas of co-partnership are joint consultations sincerely, widely and wholeheartedly applied.
And a final quotation says:
The trade unions are passing through a difficult period. We are as conservative as anybody else. They are perhaps as conservative as churches.
The criticism of the trade unions comes from Mr. Ray Gunter, the present Minister of Labour in the English Labour Government in a little pamphlet published by him called "The Human Approach to Change in Industry". The quotation dealing with enlightened management is from Lord Robins, the Chairman of the British Coal Board. The criticism of the old authoritarian approach is made by a former Conservative Minister of Labour, Mr. O'Hare, and the advocacy of joint consultations, sincerely, widely and wholeheartedly applied, is made by the past Chairman of Imperial Chemical Industries, perhaps the biggest business in the world.
It is at least apposite that in considering this problem, we should consider what leaders across the water are saying in relation to industrial relations there. In relation to our manpower policy, in relation to what the National Industrial and Economic Council says, we have to get across to everyone, from the top to the bottom and from the bottom to the top, that what we desire is a rational system of growth in incomes for all sections of the community and that it should be a system that will be fair for each section of the community.
I wonder whether we are going to get that by the method which exists at the present time and by virtue of which a small section can hold the community as a whole up to ransom. I am not going to go into the rights or wrongs of the dock strike going on at the moment. I do not know the answer. I do not know who is right or who is wrong. Mr. Brittain, of Brittains Motors, says that the employers are wrong; others say the union is wrong. I am not competent to make an assessment on that subject but I say it is entirely unfair to the rest of the community that there should be a dispute in one sector that will cause great hardship to a number of sectors not directly concerned.
Personally I believe that we will have to have some method—call it a court or arbitration or what you will— some authoritative method, some authoritative arbitrator who will sit and hear the views of both sides and when he makes a decision, that the employers will be prevented by law from employing people on any basis except under the terms that such an arbitrator has laid down. One cannot force an employer to keep his business open but if he does open it, he must abide by the arbitrator's decision.
On the other hand, it is unthinkable, in my view, to suggest that the arbitrator could determine that people must or must not work. That must be a free decision for the individual to take but it must follow as well that if an arbitrator makes a decision with regard to the terms on which people may be employed, while these people will have the right themselves to decide whether they will be employed on those terms, they should not have the right to prevent other people from carrying on with their work and earning their living. They should not have the power to upset the economy of the country. What is sauce for the one must be sauce for the other.
A proper policy in relation to redundancy is necessary. We will not get the technological improvements in industry that are essential unless there is going to be confidence that if anybody is disemployed as a result of technological advances, there will be redundancy payment for that person. It would be utterly impossible to get any acceptance by the employer side of the need for such a redundancy payment if, when such a redundancy fund is created, that fund is to be diverted from the use for which it is intended into a strike fund.
It has been reported in the news-papers that this has happened in relation to the dock strike. I have no knowledge as to whether that is true or not. I hope it is not true and if it is not true, that it will be strongly contradicted because it is bound to prevent any proper development of a redundancy fund. So long as the possibility exists that a redundancy fund could be used for another purpose, there is no chance of the vital necessity for such redundancy funds being accepted.
People sometimes wonder why there is more talk about one type of national income than about another. The statistical reports included in the appendices to the NIEC Report and the National Income and Expenditure Green Paper of 1963 make the situation clear. In passing, I might remind the Minister for Finance that it seems strange that the last of these was for 1963. Here we are at the beginning of 1966 and we have got nothing more up to date than that. I know that in relation to certain tables, particularly Table 4, the Report gives us more up to date information and the information it does give makes it clear why there is this discussion to some extent concentrated on the form of income. I accept that for an incomes policy to be successful it must cover all forms of income.
Employees' earnings provide about 52 per cent of the national income and the earnings of agricultural workers about 2½ per cent. Agriculture itself provides about 18 per cent. The significant things in relation to the redistribution of incomes in recent years have been the fall in the proportion of the earnings of the agricultural community and the fall in those of the middle-class white collar workers. The agricultural community have only 18 per cent of the national income and I leave it to anybody to calculate where we would be in relation to our whole national income if it were not for those who are employed in agricultural production.
Trading profits of corporate bodies amount to ten per cent of the national income. It is impossible to make an accurate computation of the amount paid out in dividends but it is generally assessed at about one-quarter and the remaining threequarters is ploughed back for future capital uses. At the present time when we have a shortage of capital resources, that plough-back should be increased and there should be further incentives in that regard by way of taxation reliefs. Other profits are about 11 per cent of the national income and I agree with the suggestion in the Report that there should be more stringent rules in relation to the assessment of professional earnings.
The body to which I have the honour to belong has made it clear that here must be an audit of a solicitor's books before he can practice as a solicitor. That is for the purpose of seeing that the returns made are correct. Page 77 of the Report quotes workers' earnings at 55 per cent, industrial profits at eight per cent, farmers' profits at 23 per cent and some others. Whether these are justifiable or not depends on where the divergent line is to be found but it does not matter very much what the exact percentages are. The general picture is one that all of us can see. It is inevitable with the increase in industry and with the increase in the industrial production that we will all see in the future that we are going to have a need for other methods of making up our national income.
The Minister would also be well advised to examine the pattern for which he is responsible and which is set out in the Irish Times of 20th January, 1966:
Ireland was one of the four countries in which workers' purchasing power fell last year, the International Labour Organisation reported yesterday. In the Spring of 1965 real wages were about .2 per cent below the purchasing power of the previous year. The other three countries were Britain.
—with whom we have now gone into complete linkage—
Hungary and South Korea.
It seems to me they are an interesting association.
I do not think there has been any real realisation, either, in the programme of the Government that, while automation may free men from routine work, it is not going to cut out the human element but rather is going to require that the human element should operate at a more sophisticated and educated level. Therefore, we should and we must provide more for the education of those who are going to operate automation if they are not going to fall behind in the race.
I agree with the NIEC Report. I think it unfortunate that when NIEC was being constituted, it was not constituted as representative of the entire community that it was constituted a National Industrial and Economic Council instead of a National Economic Council. It was unfortunate it did not include the representatives of our greatest industry, agriculture. It was unfortunate it was not, accordingly, in a pattern in which it could speak for the community as a whole. I agree with this Report and I said before it ever came out that the measures taken by the Minister for Finance this year were wrong. I wholeheartedly support the motion the Minister has put down in which, in a spirit of hara-kiri, he asks the House to endorse his failure. The Minister in his person and in his professional life is an honourable man. If he is an honourable politician, after this motion is passed, after the way this Report condemns him and his Leader, he will resign from that Ministry and let someone else take over after the mess this Report truthfully says he made of the economy in 1965.
May I apologise to the Minister for having to leave for a press conference? He will read about it in the morning.
I am sorry the Deputy is leaving because I had a few things to say to him.
I shall read them very carefully. It would be desirable, since the Minister had to listen to me, that I should listen to him, but I am not yet able to emulate Boyle Roche's bird.
I hope you picked the right candidate, anyway.
We have a good young candidate who is going to put the skids under you.
Perhaps I might get the reasons for this debate into proper perspective for the benefit of Deputy Sweetman and other members of his Party who suggested there was something nefarious about the manner in which the motion was put down. The NIEC Report was published in November, very shortly before the Christmas recess. It was immediately referred to by the Government in general commendatory terms. That was published, as was also an intimation that the Government proposed to have the Report examined closely in the various Departments and commented upon in due course. I suggest the examination of that Report in the various Departments was impressively expeditious. The Report having been examined, the comments of the Departments were co-ordinated and the Government met shortly before the Dáil resumed and decided that their comments on the Report should be published. That, I think, was the usual practice. It was easy for Fine Gael, not having any responsibility in the matter, as soon as the Report was published to put down a motion in the terms in which they did.
The Government, having decided to make their public comment on it, next thought in what fashion would it be best that that comment be got across to the public. Having intimated to Fine Gael that the motion they had put down in connection with the Report could be debated in Government time, the Government themselves, as they were perfectly entitled to do, decided to put down a substantive motion which could be discussed as the main motion and in connection with which the Fine Gael motion could be discussed. I do not think there was anything wrong with that. There was certainly no intention whatever of keeping Fine Gael out of the debate. On the contrary, there was no limit put to the extent of the debate, even though Fine Gael themselves were desirous of concluding it on last Thursday evening.
I think the Government were right in making that decision and ensuring, first, that the Report would have the widest possible comment from Deputies representing all Parties who have an interest in it and, secondly, ensuring that not only would the public get a full resumé of the Report but a reasonable breakdown of its recommendations, as interpreted not only by the Government but by the Opposition Parties as well. I suggest there is no cause for complaint whatever on the part of Fine Gael in respect of the Government motion put down in conjunction with their own. They were given every opportunity to debate the Report and comment upon it.
The debate has lasted quite a while. Therefore, it is not my intention to traverse again the ground that has been covered. It is at this point I am sorry that Deputy Sweetman's press conference, at which he is going to announce this young Presidential candidate, has taken him away from the House, because I have a few things to say to him. He comes in here with his usual brash arrogance and alleges incompetency all around, incompetency amongst every member of the Government, and preens himself like the peacock who knew everything. I forget what bird has his plumes in his tail, but that is what Deputy Sweetman reminds me of.
He said that I, as Minister for Finance, and the Government generally, had mishandled the situation and that this Report is a condemnation of the Government in their handling of the current economic situation. Deputy Sweetman was Minister for Finance for roughly four times as long as I have been Minister for Finance. He was Minister for Finance during the years 1954 to 1957 when the national economy ground slowly to stagnation, when our capital commitments in respect of expenditure on hospitals and housing were incapable of being met out of Government resources or out of resources within the procurement of the Government. He was Minister for Finance when our unemployment and emigration figures reached an all-time high.
Not an all time.
I remember that, in the closing months of 1956 and early 1957 of the inter-Party Government régime, the weekly unemployment figures were quoted in the returns at 94,000, 95,000, 96,000. Whether there was incompetency or mishandling of the situation at that time, I shall leave it to the country to judge. Inept steps were taken by the inter-Party Government at the time, steps not only inept but taken too late to correct that situation. Instead of staying in power and facing up to the situation, that Government disintegrated and they ran out of office. Much the same thing has happened now. Our capital commitments have outrun our capital resources and other ills have affected the economy but we, as a Government, are facing up to the situation. We believe we have tackled the problem in time. We are staying in office to ensure that the situation will be corrected, and corrected by us, and, to the extent that we have responsibility for it, we are facing up to it—unlike Deputy Sweetman and his colleagues in the spring of 1957.
Deputy Sweetman feels that if he comes in here and shouts loudly enough about his own ability and capacity in financial matters, and about the ineptness of others, he will get people to believe him but the proof of any pudding is in the eating. The proof of policies is in performance and the proof of the extent to which a situation has been mishandled is the extent to which those against whom allegations of mishandling have been made will stand up to the situation and correct it. That is what we are doing and that is what Deputy Sweetman and his colleagues not only neglected to do but were fearful of doing and ran out of office.
There was sabotage.
There was no vote of no confidence on which they might have been defeated. There was no single issue before this House that caused that inter-Party Government to leave office, but they ran out of it.
They were sabotaged in the House.
I do not know what sabotage was involved. We never got the opportunity of debating the economic situation to the fullest extent as is the case not only now but as was the case on the debate on the Free Trade Area Agreement and on several occasions since the Dáil resumed after last summer. Some of the Fine Gael speakers seemed to be more intent on establishing who first thought of an incomes policy than on facing up to the difficulties of the present situation.
(Cavan): We never said we would not implement it.
Deputy Sweetman claimed a few minutes ago that a couple of times two or three years ago he mentioned the need for an incomes policy. Deputy Sweetman is usually fairly well documented when he makes claims like that but he did not refer us to any communication or any statement or make any reference to a statement by him to that effect. Fine Gael suggest that, in their statement of policy, which they described as "A Just Society", they first adumbrated an incomes policy and that it was never heard of in this country before then.
(Cavan): The Taoiseach said he would not adopt it.
The Minister is entitled to make his statement without interruptions.
I have been listening to the brash arrogance of Deputy Sweetman for about one and a half hours and Deputy Fitzpatrick was here for some of the time. I sat down and took my medicine. I hope Deputy Fitzpatrick is able to do so too but if he wants to interrupt me, then, so long as they are interruptions ad rem, I shall pick him up. Fine Gael ignored the extent to which there was international comment on an incomes policy for the past four or five years. They ignored, too, that in the Second Programme for Economic Expansion there was specific reference to an incomes policy. I will refer them to Part I of the Second Programme issued in August, 1963, which, I think, was even earlier than Deputy Sweetman claimed for himself his ideas about an incomes policy. The following statement appears in Chapter I, Paragraph 12, of the Second Programme.
A sound relationship between rising production and incomes is of central importance in maintaining and improving competitiveness and in ensuring that economic growth proceeds steadily.
In Chapter III, Paragraph 105, it goes on to state:
It is essential that there should be widespread public acceptance of the need for a sound incomes policy, and full co-operation between the Government and sectional interests in carrying it out. Such a policy requires that the increase in all types of income—wages, salaries, profits and rents—should not exceed the realised increase in national production.
It is not obvious, therefore, that it is easy for this Government, who were responsible for the publication of the Second Programme and for everything that appeared in it, to accept what was advocated by the NIEC in their Report about an incomes policy? I am not suggesting that an incomes policy is something that is easy of evolution. Everybody knows well the difficulties — indeed, Deputy Dunne referred to them here an hour or so ago—of evolving an incomes policy that will embrace all types of income including that of farmers and of professional people. It will take time and everybody realises it must take time. It will be difficult to set down hard and fast rules about an incomes policy in relation to profits as well as to these other things.
Some of the Deputies, including Deputy Dillon, made reference to increases in profits in industrial firms and by the banks. I hold no brief for the banks——
And increased distribution of dividend.
I do not want to debate this now because it would take a long time and there will be an early opportunity to debate this in more detail but I should like to remind the House that the NIEC, this tripartite body, had something to say about profits. It said, and I quote from Paragraph 58-59 of the Report:
Profits earned depend on a wide range of factors such as the amount of capital employed, the volume of sales, the efficiency of management in anticipating changes in market trends, and so on. Because profit is the residual that emerges when total costs are deducted from sales proceeds, the level of profits cannot be predetermined . . .
This is the important point to remember about it.
. . . Even if control of profits were desirable—and this is not the case where they are earned competitively, for example, from exporting—such control could not be operated in advance but only in arrears, after the profits had been earned.
I made it quite clear in my opening remarks in this debate that the Government recognise the undesirability of increases in profits and other non-wage incomes which are not justified by increased output, by enterprise or investment and, therefore, not being so represented, do not show a real contribution to national production. I went on to say how excessive profits could be prevented, mentioning, first, effective competition which would be intensified by the reduction of tariffs as envisaged in the Free Trade Area Agreement and also by the enlargement of quotas. I then went on to mention the powers of price surveillance and control exercised by the Free Trade Commission, and, finally, expressing acceptance of the NIEC recommendation that if excessive profits still appeared in spite of competition and controls the Government would consider other measures to offset them. These other measures would, of course, include taxation.
The suggestion has been made, and perhaps very rightly so, both inside and outside the House, that an incomes policy is not possible of being evolved without a manpower policy. An orderly approach to the development of wages and salaries should be seen in the context of the Government policy in relation to workers generally. I do not think that there will be any question about the Government's desire and efforts to improve the status of workers. The record of successive Fianna Fáil Governments in this respect ever since the Conditions of Employment Act in the early thirties, the first of its kind in Europe, is standing proof of that desire.
To come to more recent times, in 1965, last year, a major step towards this end of improving the lot of the workers was taken in the establishment of the National Manpower Agency and of the Manpower Advisory Committee to assist the Agency in its work. The Industrial Training Bill, 1965, which proposes to establish this new authority, with wide powers in regard to industrial training and retraining, was introduced recently in Dáil Éireann and will be circulated early during this session. A draft scheme for redundancy payments and resettlement allowances has been prepared and discussions on this scheme commenced with the employers' and workers' organisations earlier this year.
These are only some of the measures which have been and are being taken by the Government for the benefit of workers. The planned development of incomes must be seen alongside them. It involves no attempt whatever to deprive workers of what is due to them. Rather, it is an essential factor in securing their wellbeing and their prosperity.
From some of the comments that have been made in the debate and, indeed, by some Opposition Deputies outside the House in recent days, one would think that the Government were joining in some kind of bargaining about the rate of wage and other income increases in 1966. The Irish Congress of Trade Unions, in their statement which was published last Saturday, stated that they rejected outright as completely unrealistic any suggestion that increases for their members during the present year should be limited to three per cent. I want to make it quite clear that I made no offer in this respect that could be either accepted or rejected. I stated the simple but highly relevant fact that wage, salary and other income increases in 1966 cannot go beyond the expected rate of increase in national output without very damaging consequences. This, I think, is realism and it would be most irresponsible for me or for anybody else to pretend or to act otherwise. I gave it as the Government's expectation in the light of provisional assessments that the rate of increase in national output in 1966 would be about three per cent. If this is not accepted as a realistic assessment, then let us all wait for the next report of the NIEC, on which Council, I should like to remind the House again, employers and trade unions are represented as well as the Government. The NIEC will examine the prospects fully and will in the next few weeks be pronouncing on these prospects.
It is possible that the figure of three per cent growth in national production which I mentioned will be revised upwards or downwards. We can be absolutely sure, however, that, whatever the final forecast is, it will not be significantly above three per cent. It may even reach four per cent. I think a forecast of five per cent would be completely out of the question.
I do not want to engage in a dialogue with trade union leaders about what the rate of increase should be but the General President of the Irish Transport and General Workers' Union yesterday, as reported in today's newspapers, made a statement that I find it very difficult to reconcile with what I said. I quote from the Irish Independent, front page, for Wednesday, 2nd February. The General President of the ITGWU is reported here as having said:
The proposal of the Minister for Finance of wage adjustments based on an increase of six-tenths of a penny would not improve the position of low paid workers, was unjust and would not be accepted, he said.
I do not know where this figure of six-tenths of a penny came from. I am trying to work out in my own mind as to how it emerged. Of course, six-tenths of a penny has no relevance to the three per cent possible growth that I referred to. I can only conclude that this six-tenths of a penny was worked out on the basis that it was three per cent of the suggested £1 increase, which is the wrong premise. But, three per cent of £1 is much more than six-tenths of a penny. Three per cent of 20 pennies happens to be six-tenths of a penny. So that, to make this six-tenths of a penny relevant one would have to contemplate a weekly wage packet of 20 pennies, or 1/8d. I thought it only right to mention that —I may have misunderstood what was intended—in case it got abroad that I was suggesting an increase of six-tenths of a penny on the ordinary workers' incomes, which would be completely unfounded.
Mr. O'Leary
What would the Minister's three per cent amount to on £8 per week?
It would work out at 5/- a week. So much for that. That is possibly either a printer's error or some other mistake. Probably, the report was taken out of context in some accidental way.
Mr. O'Leary
I think the General President's objection there was that the three per cent figure was unacceptable to low-paid workers.
I should not like it to get abroad that I in some way suggested an increase on the basis of six-tenths of a penny, which is clearly stated in the report of what the General President said.
Far from sanctioning a general increase of three per cent in incomes, I made the point, and I was well aware that it would be unpalatable and unpopular, that expansion of exports, expansion of employment, stability of prices and a safer balance of payments would be more certain to come if there were little or no general increase in incomes this year. Even if it is unpalatable, even if it is unpopular, it is nonetheless true. I recognise, however, that the lower-paid employees deserve special consideration.
£1?
I suggested that within an overall increase in incomes of not more than three per cent, or whatever higher percentage the NIEC would suggest is the likely increase in national production, a higher than average increase could be paid to the lower paid, offset by a lower than average increase for the higher paid, provided there was a general agreement to this course on the part of trade unions and employers.
I am afraid there are two heads on that penny.
It seems to me a perfectly reasonable proposition. I think it is justifiable and I hope it will receive the earnest consideration of those involved.
I mentioned in my opening speech that over the years 1964 and 1965 money incomes in general had gone up by 20 per cent whereas national production had gone up by only 6½ per cent and I suggested then, and I think it is not to be gainsaid, that this was one of the main causes of our economic difficulties. Many employees had, of course, a greater increase than the 12 per cent ninth round. I think it is only fair to say that I am referring not alone to public servants but to other employees as well. In this connection, too, I should like to say that the increases given to public servants were granted as a result of arbitration awards or were based on arbitration awards. Other groups of employees, as I have said, did just as well.
Many companies also seem to have enjoyed a rise in profits greater than is easily attributable to any of the legitimate factors I mentioned last week, such as greater investment, higher sales or increased managerial efficiency. For a sizeable sector of the economy, therefore, it would seem to involve no great sacrifice if people were to rest content with the present rates of income during 1966. I do not think it would be asking too much on the part of those who have enjoyed these considerable increases to accept this degree of restraint for the country's benefit particularly—I say particularly advisedly—because prices have been nearly static since last May. Indeed there are cases in which the members of the community generally could be given, without serious impairment of profit-earning capacity, the relief of a reduction in prices, or some other form of better value for their money. This is why I refer particularly to the position of lower-paid workers. In this context, when I referred to the Irish Congress of Trade Unions recommendation, I said, and this is true, that, if their suggested £1 per week ceiling were to become the general rate of increase for all employees, it would represent an aggregate increase in the wage and salary mill of about 7½ per cent.
Would the Minister agree that it should be a reasonable increase for lower-paid employees.
I suggest that, if the Congress of Irish Trade Unions and the employers could work out a formula whereby a higher increase could be given to lower-paid employees, as high as is sustainable within the increased growth in national production as will appear from the NIEC Report in some weeks time——
The Minister would not fasten on the £1, would he? It is reasonable.
Fortunately the process of wage fixing is by free negotiation.
Except that the Minister said the other day that the negotiations would have to be three per cent.
I am repeating what the NIEC Report advises in this respect.
I know, but the Taoiseach said, if it was not agreed, he would fix it up.
The Report states specifically that wage and salary increases should be within the expected rate of increase in national production. This Report was signed by eminent trade unionists. I am repeating the advice they have given to the Government as the means whereby the state of the economy can be improved. I said that, if £1 became the standard all round, that would mean in effect an increase of 7½ per cent which, as I said last week, would be about double what the economy could afford as far as present indications show. There have been some criticisms of this 7½ per cent estimate, that this percentage overstates the increase in money incomes which would result in the adoption of the recommendation of the Irish Congress of Trade Unions.
I should like to give the House an indication as to how I arrive at the 7½ per cent. The calculation is really very simple. There are at present about 660,000 wage and salary earners and they are paid about £460,000,000 in all. One pound per week for everyone would cost an extra £34 million or 7½ per cent of this £460 million gross wage bill. I realise, of course, that the Irish Congress of Trade Unions recommendation does not call for £1 increase for everybody. I made that very clear last week, but I am concerned to draw attention to the limitations which any such indefinite recommendation must run up against in its practical application. There are already some suggestions that claims now being formulated will seek the full £1 a week increase. The cost to the economy of implementing the Congress's recommendation would, of course, be much less than 7½ per cent if the increase were limited to trade unionists represented in the various unions. I think they, in fact, represent about half of all employees. I am sure that Congress did not have in mind that the increase should be limited in this way.
The actual increase which should be given in particular cases would, of course, depend on the extent to which the special position of lower paid workers was recognised by giving them a higher than average increase. Since the total increase in money incomes would have to be kept within this limit of three per cent, and if price stability and competitiveness were to be ensured, this recognition of the special position of lower paid workers would have to be accompanied by a lower than average increase for other workers. The question arises then as to who are the lower paid workers. This and other questions would have to be clarified by the Irish Congress of Trade Unions before any assessment could be made of the possibilities which could be considered within the overall national growth rate this year.
I hope that there can be negotiations on all these between unions and employers. The Government, as the Taoiseach said last week, are willing to participate, if this would help. Already an invitation has been sent to the Federated Union of Employers who promptly answered the invitation to come and meet the Taoiseach on Friday. I understand that a similar invitation is being sent to the Irish Congress of Trade Unions to come, I think, on Monday next. I hope it will be possible to get the employers and trade unionists together again to see if, first, they can work out a reasonable increase and, secondly, to see if some other arrangement can be come to that would have regard to the lower paid workers.
However, the restraint on income increases this year, no matter how important, is not of itself enough. The NIEC Report rightly referred to the over-rapid increase which had occurred in credit and in public expenditure. The restraint on credit expansion, which was introduced last year by the Central Bank, must of course be continued. Indeed spending on credit in relation to the intended use of internal and external resources must henceforth be an integral part of our national policy. Bringing public expenditure more closely into line with the trend in national production is my special responsibility as Minister for Finance and one I intend to face up to.
Over the past few months, I have devoted much of my time to ensuring that public expenditure will be kept within the limits of what we can afford on both current and capital accounts. In the Budget which I hope to introduce within the next few weeks, probably early in March, there will be no need to go into any great detail about our financial and economic situation. The NIEC Report and other reports and the long discussions we have had in the Dáil have made the position reasonably clear. It will be my responsibility to slow down current expenditure. The main idea is that current expenditure will be paid out of current revenue even if that means increasing taxation to cover the existing deficit and therefore it may mean a postponement of new commitments.
I also have to hold down capital expenditure to a level that can continue to be met out of domestic savings supplemented by external capital. I must take some of the inflationary tendency out of public expenditure in order to reduce the balance of payments deficit to a tolerable size. This will be neither easy nor popular but Government policy must be aimed at the long-term national interest.
It is a pity you did not think of that 12 months ago.
As far as I can judge, the resources available to us from national sources, from national loans, small savings and other means will amount to about £75 million. That will mean seeking about £25 million from external resources, making it up to £100 million. We cannot allow our capital commitments to go beyond this figure which is reasonably realisable and at which it would be prudent to hold down capital expenditure.
I might say in connection with Deputy Sweetman's suggestion about encouraging increased savings that in so far as he has put forward some new ideas and, perhaps, some old ideas, they are all welcome. He mentioned the index tied loans which he said were a means whereby interest rates could fluctuate with the cost-of-living index. That has been tried in other countries. It originated, I think, in Sweden and was adopted in other countries like France, Switzerland and Israel but I do not know if they are now too happy with it.
Deputy Cosgrave mentioned a decline in building activities. I would like to give the House some figures to indicate whether or not there has been such a decline. Building and construction accounted for more than one-third of our total capital expenditure for this year, last year and for recent years. It has increased spectacularly in the past six or seven years, from the figure of £13.22 million in 1960-61 to £33.40 million in the current year. That is a very close estimate of what our public capital programme on building and construction will cost in the current year.
Can the Minister tell us whether building and construction comprise the building of houses?
I will give the Deputy the breakdown of that. Of course it takes account of hospitals and schools. In the forecast for next year, that figure will be still further increased by about £1 million. So far as it has relation to housing and sanitary services, I cannot give the breakdown between these two heads but the expenditure on them rose from £10.87 million in 1960-61 to £23.70 million in 1965-66. That figure will be further increased in the coming year by upwards of £1 million. It will be clear to the House that building activities on the basis of last year and on the basis of expenditure will be maintained at least at that level.
Deputy Cosgrave and one other Fine Gael Deputy had some trenchant things to say about the Building Advisory Council. He suggested that they were not representative of the building industry and that they were hand-picked. I was to some extent responsible for the setting-up of this Council and I tried to ensure that it would be truly representative of the building industry. It comprised a quantity surveyor, and others representing the building professions, a number of builders who were familiar with the whole building industry, four or five trade union officials who had particular knowledge of the building trade, most of them officials of trade unions attached to the building industry, and four or five civil servants whose duties made them peculiarly suitable for this particular task.
There were representatives from the Department of Local Government, the Department of Industry and Commerce, the Department of Finance, and representatives of the vocational schools in Dublin who are well known for their knowledge of the building trade.
So much for the suggestions that the Council was not representative of the building industry. I suggest it was and that it was as widely representative as a working council could reasonably be. I want to emphasise also that this Council had very many meetings, that the directors of it—they were called directors—were all very busy men and gave of their time and experience without any remuneration whatever. Since their terms of reference included the assessment of what building activity was going on, what skills and man-power were available, they sought to make a full appraisal of building starts and levels of activity. They found that the Central Statistics Office did not have sufficient information available to enable them to do their job thoroughly and they immediately sought to establish their own intelligence unit for the purpose of getting information. Unfortunately they did not have sufficient staff, and have not yet succeeded in getting sufficient staff, to enable them to carry out a thorough appraisal. I might say that there has been operating a number of organisations and bodies within the public service generally under the aegis of a number of departments engaged on somewhat similar tasks. In order to ensure the avoidance of overlapping and the maximum return for the efforts of these bodies it has now been decided to bring the Building Advisory Council within the purview of the Minister for Local Government so that the various other agencies he employs within his Department will co-ordinate their work with the Building Advisory Council and so ensure maximum return for their work and the minimum of overlapping.
That was by way of diversion because of Deputy Cosgrave's reference to the Building Advisory Council and the suggestions that expenditure on building activities was falling off. I think I have demonstrated that, on the contrary, it is being increased. The present economic and financial situation, to return to it again, is one which shows signs of overstrain. All efforts must be directed towards relieving this strain to whatever extent is possible. Temporarily at least until production catches up, any income or expenditure increase will have the effect of adding to this strain. To put on undue pressure through excessive increases in personal incomes or in public expenditure would be very serious, if not disastrous, in present circumstances.
Last week when I was discussing the effect of a too big increase in incomes this year I referred, as did the NIEC Report, to the need for the Government in such circumstances to do everything possible to control these ill-effects by fiscal and monetary measures. I do not think, however, that we ought to mislead ourselves. What fiscal and monetary measures mean is putting on taxes to try to absorb the extra purchasing power and to have tighter credit restrictions. Again, this is not my own creation. I should like to remind the House that this is what the NIEC Report recommended. How far you can carry this out—proceed with higher fiscal and monetary controls and tighter credit restrictions— without causing incalculable harm to new investment, to production or to employment is something we can easily answer, and we want to avoid this if at all possible. Nobody should think of these as remedies. At best they can only be drastic remedies and things that would have to be done and done most regrettably to prevent worse befalling us. They are therefore things which should be avoided by avoiding the occasions for their introduction. I think we can do that by taking sensible decisions now and sticking to them.
I do not think it is necessary to spend any further time analysing the current economic situation. It has been done very exhaustively and objectively in this debate although some members of the Opposition were having regard to their own briefs. It was done most admirably by the NIEC. We should now cease raking over the coals of past dissensions, giving expression to resentments, frustrations and jealousies and do the things necessary to get the economy moving forward again, moving forward at a brisk and steady rate. Only in this way can we be seen to manage our affairs well and, having been seen to manage our affairs well, to continue to enjoy the confidence of our people and of our investors whether they come from home or abroad.