The day after this Budget was made public, a friend of mine commented on the very harsh proposals in it and wound up his observations by saying: "And the worst of it is that there is no sign of a break in the clouds." That appears to me to be a most apt comment on the proposals contained in the Budget now before us. There is no sign of a break in the clouds. I think it can fairly be said that the Budget came not merely as a surprise but as a great shock to the people as a whole when it was made public some few weeks ago. There was no indication whatever of the appalling conditions from the financial and economic points of view that were disclosed by the Minister in his Budget speech. There had been some gloomy references in the newspapers for a short time before that, and there were references in speeches by Ministers forecasting a harsh Budget, but, having regard to the optimism of the previous two or three years, no one other than the Minister and his advisers knew that there was a deficit in last year's public finances of the order of £8 million and that the country was faced with the necessity of meeting a further deficit in the next financial year amounting to £12 million. That was a complete jolt to the public.
Towards the end of his speech, the Minister said:
... we are moving back to a strong economic position and this Budget is designed to help that progress.
There is not one single thing in this Budget which gives any evidence in support of that statement. That statement is quite untenable. There is nothing in this Budget to bring the country back to whatever prosperity it had in the past few years. It is quite apparent that there has been a recession in trade and industry in the past 12 months. There is no doubt that we have had very severe financial restrictions which prevented a return of this prosperity. We have had banking controls and credit restrictions. This Budget in no way brings about a situation that is designed towards moving back to a strong economic position and helping progress. That is quite untenable.
I should like, in a very brief fashion, I hope, to go over the statements made in the Budgets of 1964 and 1965 to show the position they are facing at the present time and to demonstrate the fact that the Government failed in their public duty to control the finances of the country. On the Budget of 1964 which was brought in by Dr. Ryan, as reported at Volume 208, column 1560 of the Official Report, he wound up his speech by saying:
Government policy has been effective both in promoting a high rate of growth of the economy and in ensuring that all share in the increasing national prosperity.
That means that in his view on 14th April, 1964, there was in progress in this country a high rate of growth of the economy and increasing national prosperity. I should add to that that the Taoiseach who, while beating his breast and saying that he is the most honest of men, never fails to produce some utterly hyperbolic statement, described that Budget as a confident and level-headed Budget. Therefore in 1964 we had a confident and level-headed Budget, a high rate of growth of the economy and increasing national prosperity.
We come then to 1965 when the present Minister for Finance introduced his first Budget. Giving expression to the so-called growth of the economy, as reported at column 988, Volume 215 of the Official Report, the Minister said:
... everyone in the community should benefit from the steady upward trend in national prosperity.
According to the present Minister, we have gone further than the prosperity about which we were told by Dr. Ryan. He said:
... we must ensure the continued expansion of exports in order to sustain the improvement of the economy characteristic of recent years.
"Improvement of the economy and a steady upward trend towards national prosperity." That is still on 11th May, 1965, just shortly after the result of the general election had been secured when we had the extraordinary position here in this House of the Government Party and their spokesmen going around advocating and trumpeting to the country how strong the economy was, what great prosperity had been brought about by a Fianna Fáil Government, and how, if they were only returned to office, that prosperity would continue. I suppose, to use the famous phrase of the Fianna Fáil Party in 1932: "Why should it ever stop?" We were told "Let Lemass Lead On". That is the experience this country had, shortly after the Fianna Fáil Government had sponsored and passed through this House a Bill taking away all control of political expenditure during a general election. We had the extraordinary case of the expenditure of the Fianna Fáil Party in all sorts of methods of propaganda and everything else in order to ensure their return in that general election.
They had promised, without equivocation, there was going to be the greatest prosperity. When the present Minister for Finance introduced his first Budget, the country was then informed they were still benefiting from this improvement of the economy, which was characteristic of recent years of the upward trend of prosperity. Then they produced a Budget which the Minister tried to call a social security Budget. They raised more money by increasing taxation than had ever been raised in this country before. That was 1965.
We now come to 1966 and to the position in which the Minister for Finance, inside the first dozen phrases of his Budget speech, the second opening paragraph, is forced to ask himself this question and to put it to the Dáil and the country: "What went wrong with the Budget introduced last May?" So far as we and the country were concerned, we knew there were difficult circumstances but nobody, I am prepared to assert, had any information that anything had really gone wrong with the Budget in the previous 12 months until this position was disclosed, startling the public, during this Budget speech. The Minister asked himself this question, and like Pontius Pilate, did not wait for an answer, nor did he give an answer himself
I want to spend some little time in exposing the fact to the public and to the Dáil here that the Minister came into this House, some weeks ago, with his Budget Statement, and the first question he asked himself was: "What went wrong with my Budget of last year?" He never answered it. In the following 12 lines, he purported to deal with that very crucial question but he dealt with it inadequately, ineffectively and to the point that he left the House and the country entirely without any explanation as to why he, the Government, and particularly the Department of Finance, permitted the state of affairs to go on through that 12 months which resulted in a deficit of £8 million.
No explanation has been given of that. I want to go back to a statement made by the Minister, in his first Budget in the previous year, when he spoke about what he conceived to be the role of his new Department. He spoke about the Department of Finance at column 987, volume 215, No. 8 of the Official Report. He said that the Department of Finance, of which he has now become the head:
has been traditionally regarded both as the holder and as the watchdog of the public purse.
I want the Minister to say here, before this debate is over, how did his Department, during that crucial 12 months period, fulfil that role which he says was their traditional role, the holder and the watchdog of the public purse. He then went on to say:
It will continue in this necessary role. It is essential that a central agency of Government should see both that no unnecessary expenditure of public moneys is incurred and that whatever is spent is spent to good purpose. The Department has also been regarded within and outside the public service as a negative and even reactionary part of the State machine.
I am tempted to pause here, at this stage, and refer the Minister back to the extraordinary statement made by the present Taoiseach, then Deputy Lemass, who was on this side of the House, in 1948, when we were discussing the Vote on Account at that time, which came before the Dáil after the formation of the first inter-Party Government and when he certainly said a few unkind things about the Department of Finance. He said then that all you had to do was to send in any worthwhile proposal to the Department of Finance and it was lost forever. The present Minister proposed to change that when he said:
The Department has also been regarded within and outside the public service as a negative and even reactionary part of the State machine. Whatever truth there may have been in this in the past, it is certainly not true today, nor has it been true for many years. It is my intention that the modern, progressive role of the Department will become more pronounced. The work of economic programming, both for the year ahead, as exemplified in this Budget, and for a period of years, as exemplified in the Second Programme, will continue to be co-ordinated and developed by the expert staff of the Department. New techniques of economic, financial and personnel management will be studied and brought into operation. I want to banish forever the idea that the Department of Finance is the enemy of other Departments of State. I will encourage my Department to take initiatives in spheres that it might hitherto not have entered, to adopt an even more active promotional role, to associate with other Departments in the promotion and examination of new ideas for our further social and economic development, to be a Department of whose existence a wider public will be conscious throughout the whole year and not only at budget time.
Is the wider public conscious of what was being done by the Minister's Department and those experts, about whom he made such a wonderful speech, what they were doing and going to do? What were they doing during the last year to allow this £8 million deficit to occur? The Minister has not told us a single thing about that.
The Minister gave his view of what the role of his Department would be. If they were watchdogs, as they are supposed to be, of the public purse, should they not have been watching the day by day receipts of taxation, the results of the taxation which had been estimated and the receipts which were expected in accordance with that estimate, to find out what was going wrong? Will the Minister tell the country now, after two weeks of debate in this House — it has not been done by any Minister or anybody else so far — what were the Department of Finance, their experts and officials doing all the time during the 12 months to allow that situation to arise in which the public did not know that the whole finances of the State were rocking to such an extent that our financial structure was jeopardised? We were not told that. At least we are entitled to know now and I do not think this House should allow the Minister to wind up this debate without giving the fullest possible information in detail in answer to that question: "What went wrong with the Budget introduced last May?"
As I have said already he purported to answer that question in 12 lines of the Official Report. May I read it for the benefit of anybody who is interested? He says in column 1286:
The most obvious thing is that instead of a balanced Budget being achieved, a deficit of as much as £8 million is now in sight....
It is no use for a Minister to say the Budget is unbalanced, that he does not know why it is unbalanced, and then pass on. That is what he did. He proceeded to say that you could account for this deficit in various ways:
revenue under certain heads failing to come up to expectations....
Again, I ask why did his experts in the Department of Finance not see that sooner than they did, if they ever saw it until just before this Budget, and take the necessary steps, even though these might be drastic, to meet that situation before it went too far, to the position it has now reached? We do not know what they did or whether they knew it at all. The country is entitled to ask and get an answer to that question. So far they have not got it.
The Minister went on:
expenditure on certain services being greater than was provided for....
In other words, they did not estimate a figure high enough. Who was responsible for that? The Departments make their estimates very carefully and these are or ought to be, very carefully scrutinised in the Department of Finance. Everybody who is interested in the matter will know that it is the natural thing that every Department, knowing the scrutiny that will be imposed on its estimate by the Department of Finance, always puts forward an estimate for much more money than they expect to spend. There is no doubt about that. Did they not estimate for their full requirements or to what extent did they fall short? The country is entitled to know what Department or Departments this referred to and how much, in each case, did they fall short of the Estimate and why.
The Minister goes on to say this:
The allowance for "errors of estimation" not being realised.
In his Budget Speech in 1965 the Minister referred to the allowance he was going to make for errors of estimation and, mark you, he had a very big sum of money coming into him at that time when expenditure for the year ended 31st March, 1966 on Supply Services other than Capital Services was estimated to be £186,859,852. I do not think there is anybody with any experience of estimation by public Departments in the discharge of their annual duties but would have thought that out of a huge sum of that kind, it was almost certain that there would be over-estimation or that the Departments would not be able to expend what they proposed to spend during the year, to the order of £4 million. But this is what the Minister said at column 974 of 11th May, 1965:
... we would be justified, bearing in mind the growth and development of revenue and expenditure, in adopting a figure of £4 million as the deduction to be made this year for errors of estimation.
He said that they were quite justified, I suppose, in view of the buoyancy of the revenue and the amount of expenditure, in taking into account that £4 million. Now he says that was not realised. To what extent was it not realised? He did not answer that; he said you could give an account of the £8 million deficit by the allowance for errors of estimation not being realised. He is bound to tell the Dáil and the country, and he should not be allowed to complete this debate until he does so, how much of that £4 million that he estimated for on such a confident basis of national prosperity was not realised. He does not tell us the amount. We are entitled to ask and get that figure but we have not got it yet.
In his Budget speech, he said:
But one cannot justify it on financial or economic grounds and that is why early correction is necessary.
That is the only account, the only justification the Minister has given the country of the position, the only justification of this extraordinary position of facing up to the fact that whereas we had been informed before the general election how prosperous we were, that the previous year was a period of higher national prosperity and greater growth in development and that there had been careful estimation of the necessary amount of money required to increase benefits to social welfare classes, we found an unbalanced Budget.
"What went wrong?" the Minister asked himself. We ask him now to give the country some notion of what did go wrong. Up to date we have not got that. The Minister just cannot come into this House — he should not be allowed to do it — and merely say in 12 lines of his Budget speech that we are faced with a situation that nobody expected, that has jolted the country in a way never done before since the establishment of the State and all he can say in three lines is that it might be caused by revenue not coming up to expectations or greater expenditure being made than was considered necessary or because the £4 million over-estimation was not realised. These three things he said "might have been" responsible. We do not know in fact the cause and to what extent was each heading or reason for this extraordinary situation responsible.
Again, having regard to what the Minister said about his officials, that they would be watching day by day and that the country would be more aware of the existence of this group of trained officials than ever they had been before, not only at Budget time or even during the financial period but all the year round, I want to know from the Minister why did they not find this out during the year and stop it? The only way the country can be satisfied is by having the greatest possible detail given in the House of what went wrong with the Budget under each heading, whatever it is, so that the country may see who was responsible and why it was that in the course of the slithering down of the economy, steps were not taken to stop it or to put a brake on the deterioration that was apparently coming in the finances of the country.
It is not good enough for the Minister to come to the Dáil and say casually after the first 12 lines of his opening speech: "What went wrong with the Budget of last May? There is an £8 million deficit," as if he were not responsible, as if having an unbalanced Budget to that extraordinary extent were like contracting measles. The Government cannot shrug off their responsibilities for bringing about that situation which they must have known about during the course of the year. They must accept all the blame. I have already mentioned the groundless optimism with which they faced the country at the general election a short time ago. They got the benefit of that, unfortunately for the country. They now must accept the blame for the mess they have brought the country into. That is the first and, I think, the most important consideration that must be faced by the Dáil and the Minister.
I do also submit that there are three main matters which are essential if this country is to get back again to any sort of prosperity. There is nothing, as I have said, in this Budget except taxation. The only thing that can bring about, according to the Minister, any sort of stability in the country is to raise £12 million of the oppressive taxations proposed in this Budget. There is no other proposal in the Budget to meet the situation. There is no stimulant provided in this Budget. There is no incentive provided. There are no incentives for export, no proper incentives for saving and there is, perhaps worse of all, the impression that has been created since this Budget, of lack of confidence in the future, made all the worse by reason of the fact that the Minister, perhaps to bluff the Labour Party or the trade unions — I do not know — has intimated that there may be an autumn Budget. I will deal with the question of no confidence later in the course of the remarks I have to make.
There are, as I have said, three things necessary. One is an increase in our export trade, the second is an increase in our savings and the third is the creation and maintenance of confidence in the country. There is no use in making the facile observation that the country's economy and finance are basically sound. That is merely a trite observation. It reminds me of the position where a person is sick, as this country is sick at the present time, and the physician who is brought in to try to do something about the disease from which the person is suffering tries to bring himself confidence in what he is going to do to try to cure the person or to calm the relatives by saying that the patient has a good strong constitution and that it is hoped he will get out of his sickness.
It used to be almost the universal method of curing diseases of all kinds in the last century to bleed people. A person ought to have a very strong constitution to stand that. That is what the Minister is doing at the present time and the only thing he is doing. He is performing the operation that was performed incompetently by doctors during the 19th century of bleeding people, whatever they were suffering from, even though they had great constitutions and were physically sound. That is what the Minister is doing. He is bleeding the country and its people and therefore eroding the strong constitution we are supposed to have financially and economically.
From the point of view of any incentives, there is nothing at all. From the point of view of seeing how the disease from which this country certainly is suffering in its finances and economically can be remedied, there is nothing at all. It is not sufficient to say that the country is financially basically sound. We are suffering from some disease and we do not know what cure is being given by the Minister. There is none in this Budget.
The Minister said, at column 1312 of his Financial Statement, that realism was the keynote of this Budget and then he spoke of his honesty—realism and honesty. Honesty is the best policy, he said, for everybody. Deliberately, he has given the plain facts, convinced that honesty is not only the best policy but also the policy that calls forth the best from our people.
Realism and honesty are all very fine when you are found out in any event and it is no use to say you are dealing with the country honestly by giving the facts in a realistic and honest way, when you are caught out in flagrante delicto. There is no honesty in saying that there is an £8 million deficit here now and leaving it at that. Nor is it realistic to pass off in 12 lines the fact that you have got the country in such a mess that, whereas over the period of the previous 12 months everything was ready for at least a balanced Budget or a slight surplus, the country is presented with an £8 million deficit and not explain why that is brought about. It is not honesty and it is not realism.
It is not honesty for the Taoiseach, as he did, when broadcasting on this Budget, to erect a false structure here in order to make the people think what a good person he was, what an honest person he was. He was asked by the journalist interviewing him and I put "journalist" in inverted commas —in fact he is a practising barrister— was there any hope of taxation ever coming down. He said there was not, no hope at all. The Minister says in his speech that this Budget is going to cure the disease from which the country is suffering financially and economically. We have no hope of decreased taxation, the Taoiseach said, and he then went on to say this, to create this false situation out of his own imagination: that he was not like those Members of the Opposition, the Labour Party and Fine Gael, who made speeches saying that it was possible to have further expenditure of public moneys in the way of good social services and, at the same time, do without taxation. Nobody on this side of the House, either in the Labour Party or in Fine Gael, ever made such a proposition but the Taoiseach, having created this false impression, then went on to say: "I will not stand for that. I would not do that". It was not merely nauseating but really very illuminating about the Taoiseach.
The Minister for Finance is honest and realistic but he will not tell the country how he got the country into this mess and, in order to make a point, the Taoiseach has to make a false case and then, like the pharisee, beat his breast and say: "I am not like Labour and Fine Gael. I would not think of making such a false case," when no person in this House ever made such a case. The case we made, and it is the case we still make, is that the only possible way either to decrease taxation or to get more benefits from the existing rates of taxation is to produce the conditions in this country, by means of expansion in industry and commerce and general trade; by an expansionist policy to produce wealth in the country from which, by the same or even lower rates of taxation, more money can be made available for social security and other worthwhile purposes.
That is the case we made and not the case the Taoiseach falsely tried to pretend to the public, through the medium of television, was the case made either by the Labour Party or Fine Gael. I challenge him to produce any statement by any person on this side of the House, in Fine Gael or in Labour, to justify the statement he made. At all events, that is honesty and that is the method of dealing with the matter in a realistic way, according to the Minister for Finance.
The Minister, shortly after his famous 12 lines dismissing his responsibility for bringing about the conditions I have just referred to whereby a deficit of £8 million was incurred, goes on to say that the deficit facing us in 1965-66 would grow to £12 million in 1966-67, if nothing were done about it. He said:
This would occur despite the measures of economy in current expenditure and the stabilisation of capital expenditure decided upon by the Government.
I have been unable to find anywhere what are the measures of economy in current expenditure referred to by the Minister there. Certainly, he gave no account of them at all. He gave no details of these measures of economy and I want to examine that in a few moments to see how honest and realistic this statement of the Minister is. He gave no details at all of these measures of economy. He did give details in connection with his limitations of capital expenditure but no indication was given to the country or to the Dáil of what these measures of economy were.
In the financial year, 1966-67, the country is faced with a demand for the Supply Services—leaving out all capital expenditure—amounting to the extraordinary and unprecedented total of £239,265,720. That is a pretty big sum for a small country. The Minister said that measures of economy had been taken. I would have thought that it would have been possible, out of this huge sum of over £239¼ million, to have saved at least £1 million. If it could not be done on paper at least the Minister and the Government should have ordered every Department to cut their Estimates, no matter how they did it, by at least £1 million to save taxation to that amount. I do not know what the measures of economy were. I know that in the year 1964, as perhaps Deputies will recollect, the post office charges were put up to a very high degree by a sort of second budget, and I want to refer to a speech by the Taoiseach on the Budget proposals of that year. We criticised these increases in post office charges and referred to what the Minister said. We also pointed out that the Minister said he would do something about it and wanted to know why he had not done something about it before. He said that there would be a huge drive in the post office. I ask people to test the assertion by the Minister for Finance that any economies have been brought about before this huge total for Supply Services was reached. At column 1781, of volume 208, the Taoiseach said:
The principle that the Post Office should pay for itself and not be subsidised from taxation is not merely sound but as far as I know, has never heretofore been questioned in the Dáil.
This is the passage I wish to emphasise and underline:
There is, I agree, an obligation on the Government to ensure that the cost of these services is not unduly inflated and the Minister for Posts and Telegraphs is now about to initiate a drive for economies in the Post Office.
That really has the ring of the Taoiseach—a drive for economies in the Post Office—
by the adjustment of the services to the reasonable needs of the people and by changes in procedure which will, it is hoped, increase individual productivity.
Let us see how that drive was brought about and what it effected. The amount required for the Post Office in that year is contained in the Book of Estimates at page 232. The Estimate for the Post Office for that year was £15,066,000. The Taoiseach, in his usual flat-footed and emphatic way, promised that there would be an immediate drive for economies in the Post Office. In the next year, 1965, the results of that drive can be seen from the fact that the Estimates for the Post Office, instead of showing any decline, increased by 30 per cent. The Estimate was for £18,747,000 and that was after the Taoiseach's drive. In the Book of Estimates for the coming year, at page 144, you will find that the Estimate is for £19,606,000, so that after the Taoiseach's very emphatic promise and undertaking to the House that he would have an immediate drive, the result of that drive, if it ever took place, was to increase charges by over £4½ million.
I mention these figures for the purpose of emphasing how little faith or trust can be reposed in the Government, the Taoiseach, the Minister for Finance, or anybody else when they say that there were economies and that they have reduced this figure to the minimum. I do believe that with a little further effort the figure in the Book of Estimates of over £239 million for Supply Services could have been reduced by at least £1 million, and that would be very moderate. I do not believe the Minister's statement that economies were effected and I will test it by the figures for the Post Office, following the Taoiseach's undertaking. Did he have a drive? Could somebody answer that? If so, what did he drive or where did he drive? He very nearly drove the country into the sea as far as I can understand things by increasing the Post Office charges to the figure I have mentioned—£4½ million. That is a test of the Government's capacity —to put it no further—to find economies, to reduce this huge total at least by a little. In my view and in my submission it is also a measure of their boasted honesty and realism.
We all know, but it is always very hard to pinpoint, that there is a gross waste of public money. You have only to look at the things on which money is spent by the Government month after month to realise the waste. It is even worse than people think. I want to give a few examples. They are not very many but they will emphasise that there is gross waste of public money that should be stopped. Apparently all these high-class officials, these skilled financiers and economists in the Department of Finance, were not able to stop it during the last year and permitted a situation to arise, notwithstanding the tribute paid by the Minister last year, whereby the Minister is faced unexpectedly and without warning with a financial situation of the character that we have been discussing for the past few weeks.
Could the Minister inform the House what rents are being paid by the Government or his Department for the expensive blocks of offices being erected throughout the city? What is the justification for it? We all know they are expensive offices which cost a lot to build. The rents are very high indeed and would probably shock some people, if disclosed. The Minister should give these when replying in order that the people may understand how their money is being spent. That is some indication of how the deficit was brought about.
There is one premises within my own knowledge, the Leinster Nursing Home. Those premises were put up for sale by public auction, and there was a representative of the Minister for Finance present at the auction. I have forgotten what the premises fetched at the auction, but they were sold in the presence of a representative of the Department of Finance. Very shortly afterwards they were sold to the Department of Finance at a profit by the person who bought them in the presence of a representative of the same Department. Would the Minister explain that? It may be a small thing, but it is indicative.
I suppose I could make a point about the cost of the expensive Christmas cards the Minister for Agriculture sent broadcast last year, but we will pass on to something more pertinent and of greater import. Again, it is no harm to repeat what the public are asking outside—although the Fianna Fáil Party and certainly the Ministers do not like it—what is the policy in holding two elections this year? How is that to be justified in the face of the stringent financial conditions affecting the country at this time and the oppressive measures of taxation the country is expected to put up with? I suppose what I am about to say now might be said to be a trifling matter in a bill of £239¼ million, but what did it cost the Army to pull down the residue of Nelson's Pillar, which had been blown up, apparently by an organisation which the Government are unable to control? We see here in the city of Dublin the destinations on the buses in the Irish language, or in a sort of Gaelicised English language. What did that cost out of public funds and what was the necessity for it?
We are told quite casually that there has been an increase in Civil Service personnel. The Minister referred to it and I think "a few thousand" was the phrase he used. At all events, in the past few years there has been an increase in the public service of a few thousand. What is the justification for that? Anybody acquainted with the method of administering housing grants knows the appalling mess being made. It is wasteful. Inspectors are sent around to inspect these houses supposed to have qualified for the grant. Their sole purpose is— and we believe their sole instructions are—to try to make points so as to postpone the giving of the grant to people who should get it. I suppose many others know as well as I do that quite a number of rich people who are not of Irish nationality have come over here in recent years and have built themselves houses or farm dwellings. They have got grants for nothing. They have been presented with the Irish taxpayers' money without any return, even though they are wealthy and do not need the grants. We have the position where there is a means test for old age pensioners and for widows. What then is the justification for giving to rich people coming here free grants to enable them to build houses or farm dwellings? That is another way in which public money is being wastefully spent. We all know there are numbers of rich people—Irish citizens, citizens of Dublin—who have their country residences in Wicklow or some other adjoining county. They go there at weekends and other times to these premises, which are built partly at the expense of the Irish taxpayers, although the persons who build those houses are entirely capable of doing so themselves.
The Board of Works is always regarded as a joke. The waste that goes on there passes belief. You have plans drawn, scrapped and re-drawn—all at public expense—very frequently for buildings never erected and engineering schemes never even commenced. If you look at the work of the Department of Local Government, how much public money is being spent on inspectors and other public officials checking and re-checking, at public expense, the various expenditure and activities of local authorities? We have all sorts of filing and duplicate filing going on in every Government Department.
Let us give one example of what happens in connection with the Department of Industry and Commerce. Prospecting licences have become fashionable and, I am bound to say, useful in recent times. Getting these licences is an elaborate procedure and, when that is done, they are sent over to the Revenue Commissioners for stamping. At every interview or practically every interview, a Minister has to have at least a couple of civil servants present. No private business could be carried on on that basis. I am speaking subject to correction in this—perhaps the Minister will tell me—but I think the Revenue Commissioners are the only Department with modern equipment. They say they have computers and all that sort of thing. What modern steps have been taken in other Government Departments to cut down public expenditure?
These are only one or two examples. I will conclude with two more. I have mentioned in this House criticism from my own personal point of view of the amount of money spent on the roads of this country. Nobody knows the millions that have been spent. If the Minister or I have to go to Cork on professional business, it is very convenient to be able to get down much more rapidly than was previously possible because of the dual carriageway and the various other improvements made on the road between here and Cork. But that is not the point. What has been gained for the country as a whole by the expenditure of these millions? I suppose I will be told it is a grand thing for the tourists to have these fine roads. Certainly, it is not minimising traffic accidents. It may be good for the tourists to bring their cars over here, but the roads were good enough before.
I was rather struck—I will not say "appalled"—when I saw a news item on television last night about the final section of the dual carriageway between Dublin and Naas. It was referred to as if it were a matter of great public concern, and the announcer went on to say it was going to cost £600,000 and that equipment worth £250,000 was employed on it. He went on to make the sad comment that the people in some of the villages being by-passed were facing the ruin of their businesses, but—and this was the climax—it would cut off one quarter of an hour in the time it would take a motor-car to go from Dublin to Naas. In this time of financial stringency, when you cannot get a penny to buy a house, when you cannot get a penny from the banks for even worthwhile schemes, it is regarded as of sufficient importance to be announced publicly over Telefís Éireann that the last section—I do not know the length of it except from looking at it when I am going up and down—is going to cost £600,000, and that as a result of all the expenditure, the glorious feat will be achieved that one quarter of an hour has been taken off the time in getting from here to Naas.
That is bad enough, but there is another item I read—I have not got the reference here—in the Irish Independent a few weeks ago relating to the county council of Limerick. There was reference to the cost of improvements to a road between Limerick and Lisnagry, and it was publicly announced by the local authority concerned that they were going to cost £26 a yard. This is happening at a time when there is no money available for housing in the city of Dublin. The Garda Band had to be disbanded because there is no money. The bottom of the barrel has been scraped and re-scraped; yet there is expenditure of the kind to which I have referred. Does that bear out the Minister's statement to which I referred in the earlier part of my observations, that we are moving back to a strong economic position?
The provisions of this Budget—they are certainly open to this construction —bear the marks of the Government being advised to toe the line laid down by international bankers into whose grips they have brought this country for the first time. The very stringent measures in the Budget, coupled again with the threat that should never have been made, even though it may become necessary, of an autumn or a second Budget, bear all the marks of the international banker saying to the Minister: "Budget for a surplus or you will get no money from us."
Again let me see if there is any hope in this Budget. We had a loan at an unprecedented rate of seven per cent quite recently. You can now purchase that loan on the Dublin Stock Exchange at a rate which will give a return of 7¼ or 7¾ per cent. At least there is this much to be said, that if that loan is purchased on the Stock Exchange and produces that income, the Government gets a whack out of it in income tax on the dividends, and at present income tax rates it costs the Government only 13/-. However, if the Government get a loan from a foreign source, the cost to the Government of this foreign borrowing is equivalent to an internal borrowing rate of 11 per cent: you get back no income tax.
There is no incentive in this Budget and there is no stimulus to restore the economy or to try to remedy the illness from which the economy is suffering. I notice that in his Budget speech the Minister gave a passing thought to deliberately arranged deficits at column 1287, volume 221, of the Official Report of 9th March, 1966:
A deliberately arranged deficit in the current budget can in times of serious economic depression be justified as a means of reactivating the economy.
This is a well-known economic principle. As far as I know it was never put into operation in this country.
No such justification for what is called "deficit financing" exists in this country today. On the contrary, the one thing that all the recent economic commentaries emphasise is that we are suffering, not from economic depression, but from inflation—from such pressure of spending by Government and people that we have outrun our resources and are incurring too big a deficit in our balance of payments.
I suppose that is justified, but how are we to get out of that situation? Although I am not an economist, I do not think it can be controverted that we will not get out of it by increasing taxation, particularly by unnecessarily increasing income tax. The only gleam of hope for a revival of the economy is by providing a stimulus, but there is no such thing in this Budget.
It might be interesting for Deputies, as a comment upon the Minister's statement about deficit financing, to refer to a short statement in pages 271 and 272 of the book Kennedy by Theodore Sorensen. Mr. Sorensen, who was Mr. Kennedy's Secretary of State for the Treasury, was a Republican, and everybody knows the late President was a Democrat, but he was a good financier and a good economist and he gave his services to his country under the late President Kennedy. This is what Mr. Sorensen says:
In contrast with his party's traditional policies Dillon supported deficits to ease a recession, tax cuts, at a time of deficit, the closing of tax loopholes, an expansion of foreign aid and greater economic growth to finance greater budgets.
I wonder did the Minister examine those propositions. All he has said is: "I am going to give you now a £12 million deficit which must be paid for. I do not know what is going to come after that. You had an £8 million deficit last year and you will have a £12 million deficit this year." Then the Taoiseach in his broadcast said there was no possible chance of taxation being decreased. There is no break in the clouds.
I want to say a few words about the tax proposals. The outstanding tax is income tax. We hear the cliché repeated again and again that income tax is the fairest tax. I think it is an unjust tax, an oppressive tax. It is very plausible to say that the better the income, the better is the ability to stand taxation. However, unless income tax impacts upon a rich person who does not earn his money, then it is not a fair tax. In this country, in the circumstances at the present time, there are people who are suffering great misery owing to the burden of income tax upon them. Small people, people of the middle-income group, although they may get certain allowances for children, are certainly suffering from the high cost of living. They have to meet increased expenditure on their children, one way or another, because of education and so forth.
This is an unjust tax. Leaving that aside for the moment, in the conditions of our economy at the present time, income tax is the last tax that should have been increased because it depresses initiative and puts a brake on expansion. I suppose it would have been contrary to all the economic laws for the Minister to come in here and reduce taxation, but such a reduction would at least have given some hope of recovery from the disease from which the country is suffering. That should have tried every other means am putting the case as reasonably as possible when I assert that the Minister should have tried every other means before he adopted some of the taxation measures he has put forward here, and particularly that in relation to income tax.
I suppose I will be asked what I would have done. I do not know what I would have done but I suggest there were other avenues that could have been explored and the least the Minister should do now is to give us some indication that he did explore all other avenues before he imposed this oppressive taxation. I know it can be asked: Where would you get the money? An increase of 8d in the rate of income tax will bring in some £4 million. Could the Minister not have got at least £1 million of that sum by telling every Civil Service Department that the country was in a bad way, that people were heavily taxed, that business was in the doldrums and "you must reduce your expenditure to such an extent that, when every Department has done its best, £1 million of that £239¼ million will be saved in each Department." There is a way in which several millions could be saved.
That is not a matter of overestimation. The Minister says he is not making any allowance for that but we all know that in that figure of £239 million, there is some element of overestimation. The watchdogs of the Department of Finance appear to have been asleep last year; if they wake up this year and watch expenditure, they will be able to force each Department to save at least £1 million in order to save the country as a whole the burden of additional taxation and to enable that saving to be employed in the resuscitation of business and industry. That is No. 1.
I shall mention a number of items now which could, I am sure, if it were properly thought out, produce a good deal of revenue. The Minister, through the machinery of the turnover tax, has taxed dancehalls. Double or treble that taxation would get my entire approval. Why did he not do that? Everybody knows that dancehalls are making any amount of money. There are bingo halls all over the place. Why should they not be taxed? Why should gambling not be taxed? Has the Minister considered a matter upon which I spoke at length last year? I refer to the people engaged in business and industry with their prestige cars and their expense allowances. I spoke at length about these last year. I gave facts and figures which would appal any right thinking person. I gave the cost of a luncheon for some of these business people in some of the hotels in this city. Could the Minister not get some revenue from some of these items? Doubtless I shall be told it would not be worth while. It would at least produce some revenue and it would produce, I believe, sufficient revenue to alleviate a situation which requires alleviation.
I am informed that there is an allowance of £120 for income tax purposes for dependent relatives up to 16 years of age. In that category are included mentally handicapped and mentally retarded children. When such children reach the age of 16, the allowance is reduced by half, to £60. I mention mentally retarded children specifically because I received a letter from a gentleman asking me to raise the matter in this House. Such a child will remain a dependent relative all its life and surely that allowance of £120 should continue after the child reaches 16 years of age? It seems unpardonable to reduce that allowance in that way when one remembers the allowances made for income tax purposes in the case of business people and industrialists, with their prestige cars and their expense accounts.
Could the Minister not review in the light of experience the various items that are subject to turnover tax? We objected to that tax. We still very properly object to it because it applies to everything. It applies to the necessaries of life as well as to luxuries. Would it not be possible to use the machinery of the turnover tax to increase the tax on luxuries? That should produce some revenue. Would it not be possible to increase the tax on long-playing records, transistors, cosmetics, jewellery, furs, and so on? Would it not be possible to tax these items? Oh, no. I know the answer that will be given by the Revenue Commissioners. I had experience of it in the first Government of this State. They will say it is administratively impossible or difficult, and let them not be asked to do it. That gives the key. Deputy Corish referred to this. Instead of exercising some imagination and doing a little extra work, the Revenue Commissioners take what are called the traditional taxes and put them up to the Minister.
Taking the traditional taxes is the traditional method of producing revenue. Taking the traditional taxes is taking the line of least resistance and it was through taking the line of least resistance last year that they rocked the economy of the country through the proposals embodied in last year's Budget and Finance Act. I refer to estate duty and the measures taken to prevent people giving their children their savings two or three years before death. I have given my view as to how some of this taxation could be raised in another way. I mention it to show that there are methods other than the traditional methods of raising taxation.
We have had no indication that anything other than the line of least resistance was adopted. Income tax is the easiest tax in the world to collect but it is not very easy for those who have to work hard and whose earned income allowance is so small and so insignificant and upon whom the burden is so oppressive as to constitute an injustice. If there were proper allowances for children and for earned income, then there might be some case for an increase in income tax. However, the outstanding consideration at the moment ought to be that an increase in income tax will have the effect of further depressing the economy this year.
If the rate of income tax were reduced, or if it were not increased, there would be an incentive to business people, to industry, to work harder, to get some sort of push to remedy the depressed conditions obtaining at the moment. Increased taxation at this time will mean only increased depression. We on this side held the view, and it was a sound one which we put into practice, that a Budget should be an instrument of economic policy. In present circumstances, by the method introduced by the Minister for Finance, the Budget is merely a machine to collect taxes and all it will do is enable the Minister to say: "We closed the gap; we filled the hole." There will not be any deficit but equally there will not be any benefit to the country or the economy.
I made some suggestions about taxes on luxuries and indicated the kind of things that would produce revenue. I think the Minister could very properly consider putting a tax on travellers' cheques. I am all for Irish people going abroad. It is good for their education; it broadens their view and makes them more content with their own country to see all the things we have and others have not. However, if the people wish to go abroad and take their money away with them, they should be taxed on it and this tax would contribute to an economic situation in which there would not be so much need to increase income tax.
A further suggestion I make for expanding the economy is saving. Before touching on that subject, however, I should like to consider exports. When the Resolution dealing with the tax on spirits was going through, I made a comment for the consideration of the Taoiseach who was taking the place of the Minister for Finance at the time. I suggested that whiskey was the heaviest commodity from the point of view of tax imposition and I suggested to the Taoiseach that instead of putting that tax on whiskey, he ought at least to consider the position of the whiskey manufacturers and the job they are doing for our exports. We all agree that our export trade is vital; yet the Budget does not do anything for exports.
In so far as whiskey exporters are concerned, I suggest there should be at least some incentive by way of reduced taxation for that portion of their profits which results from exports. The Taoiseach amazed me when he appeared to ask what was wrong with putting 4/6d a gallon on whiskey for home markets. I was taken aback by that statement. The Taoiseach must at some time have heard that you cannot have an export trade unless you have a sound, prosperous, progressive home trade. If you do not allow the whiskey manufacturers a concession, what you are doing is increasing their taxation on a commodity already overburdened by tax and preventing them from increasing their export trade. There is a market in America and elsewhere for Irish whiskey. It will require a lot of getting at, but unless we get more exports, we will go down in the same way as any other country without exports.
That is an essential overlooked by the Taoiseach: you must have a good home trade or you will not have a good export trade, and you will not have a good home trade if you depress it by too much taxation. That is what this Budget will do. Instead of providing many more incentives and reliefs for those who engage in the export trade, this Budget will depress the economy. The reform that produced the more enduring and concrete results was the export tax relief introduced during the time when we as an Inter-Party Government were suffering from one of the worst economic blizzards that ever hit the country. Not only that, but at the time the terms of trade were against us and the Suez Canal incident also disrupted our industry, not only through the unrest it created but because petrol was in short supply. That tax was introduced by us and it brought about a great increase in the export trade to the benefit of the country.
I do not mention that merely to take any credit for it but to point out that we did it because we thought it was a good thing. In doing it, we were subjected to the derision of Deputy Lemass, as he then was, and other members of Fianna Fáil. In spite of them, it produced wonderful results from the point of view of the prosperity of the country. We also introduced the Prize Bonds. At the time, 1956, there was in existence a system of grants for undeveloped areas. Through the late Deputy Norton, we introduced the Industrial Grants Act for the purpose of establishing an efficient industrial arm. The results can be shown to have been beneficial. In that year we introduced important reforms in taxation on mining. The results are now apparent because pretty well the whole of the country has been subjected by experts from abroad to tests as to its mining capacity and potentiality. Some of the major mining companies in the world have prospected here and four major mineral discoveries have been made.
In this Budget there is no incentive to help the export trade without which we will go down still further in the economic drift. None of the things we introduced is continued in this Budget. I do not wish to boast about them, only to show the effects they could have if the Minister saw fit to follow up the headlines we set. It was mentioned recently, I think, by Deputy T. F. O'Higgins, that one of the necessities for economic survival is proper skilled management. It was pointed out by Deputy O'Higgins that the tax rates for executives in that capacity and of those skills in Ireland are far greater than in socialist Britain. Such skilled management executives could easily be attracted over here by giving them additional relief in the form of earned income allowances. There should be export tax reliefs enjoyed by all those people engaged in the export business, and not only by the firms but by the individuals engaged in the export business who have helped us to succeed in increasing our exports. In so far as an industry or a business succeeds in creating additional foreign markets, there should be additional earned income allowances, giving £1 for £1 what they helped to create in foreign markets.
There is a policy in this matter of helping exports that might be copied from the Australians who are trying to get new markets in Great Britain. Apart from the technique necessarily employed by people who want to increase exports, they use the BBC. That is a costly piece of necessary expenditure. The people who successfully work to get increased markets in Great Britain should be allowed, against their income tax, a double rebate of some kind to meet this expenditure on television.
I repeat that we have nothing in this Budget to deal with the necessity for increasing our exports or encouraging them by way of incentives or otherwise. We should have employed here —and the Minister should do it as soon as he can—a strategy of optimistic and long-term encouragement practically given by practical incentives. I saw a letter in the newspaper recently where a man contended that if you are rich enough, you were in a position to employ sufficient expert help—accountants, solicitors or anyone you like—to advise and put into practice a variety of methods by which you can deprive yourself of the privilege of having to pay income tax up to a certain amount.
Let me give an example. If a rich man enters into a covenant to pay £300 a year for seven years or more to a poorer relation, the £300 is taken off his income tax and is regarded as the income of the poorer relation. Therefore if he is in the highest bracket from the point of view of income tax, that would cost him only 5/6 in the £ or £82. 10.0. a year. But supposing he is desirous of helping a charity and enters into a covenant with a charity concerned with the rehabilitation of people suffering from incapacity of one kind or another, he will not get any allowance at all.
If the Minister could see his way— I do not see any indication of his having even considered the question of entering into covenants with the people I have mentioned—to relieve them of paying income tax, as exists in other countries, great benefits would accrue to the country. There would be a great increase in the incomes of voluntary bodies and there would be less likelihood of waste than there would be in the case of bodies run by Government. Moneys which are at present given out in subsidies could be saved and, of course, it is beyond doubt that if moneys were given direct to charities it would be very much more beneficial to the charities than if they were collected by the taxpayer, handed over to another set of officials and, perhaps, a third set of officials distributing the charity.
The third matter to which I referred as being necessary for economic recovery was confidence. That is beyond all doubt. There must be confidence in the country or no loans will be forthcoming. There will not be any possible chance of expansion in industry or business unless that confidence exists and it does not exist at the present time. There is no doubt that there is serious unrest in the country at the present time. Deputy Norton spoke about people criticising the trade unions. I am not blaming the trade unions but there is no doubt that there is serious industrial unrest. It is more than mere industrial unrest. In my view young people at the present time have no particular confidence in the future of this country. They have nothing, so to speak, to rouse their enthusiasm. They go to dances and purchase the commodities I referred to earlier which could be taxed. They earn fairly good money and they spend it on dances, long-playing records, pop shows etc. but they have no particular interest in giving their youth or enthusiasm to the country.
I think one of the reasons for that is the way the Government are carrying on at the present time. In my view, the Government carry on for the benefit of the Fianna Fáil Party and not for the benefit of the people in general. The younger people are wondering what Party they should join. Most of them are playing around with this consideration which, in my view, is very bad from the point of view of the public interest. They see that no man or woman can get a job unless he or she belongs to a Fianna Fáil cumann. That is causing very serious trouble in the country.