Are the clocks not yet capable of being mended?
Committee on Finance. - Vote 6—Office of the Minister for Finance.
Debate resumed on the following motion:
That the Estimate be referred back for reconsideration. —Deputy T.F. O'Higgins.
The clocks cannot be mended until tomorrow morning.
I should not like to incommode the Minister for Finance. Possibly he may not be aware of the time due to the clocks. I will give him a few minutes.
He knows what the time is all right.
It is just that time passes so quickly with Deputy Dunne.
My apologies.
I am glad to know that I am not the only person codded by the clocks. As I was saying when the debate was adjourned, I watched the Minister for Finance on television last Sunday night week and I read the various statements he has made since and the statement he made today. First of all, may I say that on television he gave a very bland, calm performance but it was as far divorced from the realities of the situation as anything could be. I shall not for a moment take the line the Minister's colleague, Deputy MacEntee, took on a previous occasion, of accusing the Minister of being a shyster debtor, of referring to devaluation by him as being a dubious transaction or suggesting that this action was taken by the Minister deliberately because he jumped at the chance of manipulating the currency. Those statements that were made by Deputy MacEntee on a previous occasion were as irresponsible and as slanderous of the country as they would have been if they were made in the rougher terms to which we are more accustomed in this House from Deputy Corry. But, at the same time, one must accept that in considering the action of the Government and the manner in which the Minister for Finance endeavoured to put it across, we did not see the approach to reality that we were entitled to look for and that should have been the keyword. The Minister, particularly on television that night, tried to give us the impression that devaluation was a good thing. Of course, that is nonsense.
No, I did not—no.
I saw the Minister. Perhaps I will put it this way—not that the Minister tried to give us the impression but that the Minister gave us the impression that he thought devaluation was a good thing. He may not have been trying to do it but it was most certainly the impression he gave — that and the impression of complacency.
Never.
There were other people in other countries—and I heard Deputy Corish refer to them earlier today—who tried to suggest that devaluation was a good thing. It was suggested that perhaps it was the panacea for all the British ills. Of course, that is nonsense. It may have been the only possible course which the British Government could have taken. It is not for us to comment on whether it was or not. That is their business and it affects us only in so far as sterling is our reserve currency. It seems clear enough that there would be a simple and a facile answer to that, that if it was this wonderful panacea for the ills of Britain, why was it not taken long ago? Of course, that was merely hindsight by certain people trying to defend the decision they had taken.
The plain fact of the matter is that the necessity to devalue for the sterling area and for us here was disastrous. It does not follow that it may not have been their only choice, our only choice; it may have been Hobson's choice, but it was a disastrous decision to have to take and it had the effect of shaking public confidence all over the world or rather, perhaps, may I put it this way? the impact of the things that led up to the decision on devaluation shook public confidence not only in Britain, not only here, but all over the world.
Indeed, the thing that worries most people at the present time is not whether it was a good thing or a panacea but whether in fact the devaluation that took place was enough to ensure that sterling, in which we have such an immense stake, would be sufficiently strong to stand in future and whether—to put it another way— devaluation of sterling at 14.3 was enough. Would it get Britain out of her problems? There is considerable doubt, to put it no stronger than that, on the part of some people as to whether it will. If it does not it will certainly have effects here which cannot be other than very hurtful.
It may well have been that in the events in which the Government found themselves the other day, par devaluation, as I may describe it, was the only course open to them. Personally, I think there was no other course available but I do feel that it is wrong to say, in the arguments that have been put publicly by the Government, that this was the only course available. There was far too much assumption and far too little frankness in the approach to it. It is no answer to say that the provision of the 1927 Act bound us to devalue in exactly the same rate. The Minister for Finance knew when he made that statement in the first couple of days that it would have been quite simple to have deferred taking a decision if he wanted to on that Saturday and to have had the necessary legislative change before a decision had to be taken if that was felt by the Government to be the right course. It would have been much better and much more honourable to make it clear that it was the right course to take and, indeed, the Minister has gone some part of the way today to correct that first impression of his.
There is a very strong argument, however, to be considered, that it is not right that we should be statutorily bound as we have been since 1927. At any other time than this for there to be any suggestion of any change in that statutory position would undoubtedly create rumours, would create, perhaps, panic, would undoubtedly create uneasiness, to put it no stronger, but at this particular point of time that would not be the position and at this particular point of time there is a very strong argument to alter the statutory position and to give the Government of the day the discretion to decide whether at any time it is desirable to devalue with sterling, to depreciate in value or to devalue even further.
That flexibility is something that I can see every Government would be anxious to have but it is very, very seldom that the opportunity arises for a Government to take the chance of getting that flexibility without bringing dangers in uneasiness in public confidence. This is the opportunity for the Government to take and to make it clear that in taking it we are not taking any decision other than the present one in the present circumstances but that freedom in relation to decisions of this sort is something that it would be desirable for a government to have. We would, perhaps, have had some other choice were it not for the economic factor in relation to our trade.
The position in relation to the reserves in the Central Bank is one that was felt some ten or 12 years ago to be something that should follow completely the 1927 Act. It was, I think, in 1955 or 1956 that, for the first time, some part of the legal tender note fund was transferred to be held in dollar securities. That was expanded by subsequent Ministers for Finance.
The initial transference was some £4 million into dollar securities of the United States of America. It was later expanded and I think the present figure is in the region of £10 million. I do not know if Ministers for Finance have in the last ten years been restricted in any attempt to diversify that legal tender note fund, the backing for our currency, or whether it has been by deliberate choice that the expansion did not go beyond the £10 million mark.
I should like to know whether it was a deliberate choice or whether it was something we had to accept as part of the unwritten rules, shall I call them, of the sterling pool. In that respect there was, I think, at one time a move towards switching by Burma which resulted in that country being no longer a member of the sterling pool. It may well be that Ministers for Finance in the last ten years, and, in particular, in the last five years, found that they were not able to get that diversification because of similar unwritten rules to those which governed the Burmese situation. I say that deliberately because the Minister for Finance today made it clear in his speech that, in his view, everybody has been thinking about devaluation for a considerable time. If he was thinking about it for a considerable time, then it is clearly one of the ways in which diversification might have been dealt with and we might thereby have avoided a situation in which we had, so to speak, all our eggs in one basket.
One of the principal things one has to remember in this discussion on devaluation is the fact that devaluation so far as Britain is concerned is only one part of the story and it is only one part particularly in so far as it affects us. Restriction on credit, high interest rates, restrictions on hire purchase, reduction in governmental expenditure are all part of the same package deal they have adopted—perhaps I should say they have had to adopt—in Britain. We should certainly consider how those other parts of the package deal will affect us and how far we can or are able to move away from them.
It is desirable to refer, I think, to a comment in the Financial Times of 20th November in so far as Ireland is concerned. The following passage appears:
It appears unlikely that in the immediate future the price advantage that Ireland will gain in respect of £105 million of its 1966 external receipts will secure a sufficient expansion of trade and it appears to me to offset the 14.3 reduction in the external purchasing power of these receipts and the increase of one-sixth in the cost of its import bill from these countries.
Further on, the article states:
These measures of themselves are unwelcome at a time when efforts are being made to reflate the Irish economy.
That was one of the early comments by a financial journal and it was in very sharp contrast, indeed, to the impact and effect the Minister for Finance sought to put over on television.
Is that the Dublin correspondent?
I do not know who it is.
It is Senator Garret FitzGerald of course.
I do not know if it is.
The Deputy is pulling himself up by his own bootstraps.
I do not know who it is, but I do know that whoever wrote it has an entirely different view from the view the Minister tried to get across on television; he is now, by way of interjection, trying to tell the House that that was not the impression he sought to put across. Maybe the Minister failed to get across the impression he wanted to get across. Maybe the impression he tried to get across was the impression that is there. Maybe it was correct for him to be criticised, as I noticed in another journal, for being concerned solely with the effect of his own bland appearance.
Tut, tut!
Only the Minister knows what impression he tried to create, but it is quite certain that the impression he created was that devaluation was not a bad thing for us, that there would be no change and that everybody could be quite complacent. Of course, nothing could be further from the truth. Let us look at the other parts of the package deal on the other side. The first thing that hits us in importance here is the high interest rates. Interest rates have, of course, world-wide implications. We would all dearly love there to be no possibility of a disease like foot and mouth spreading across the Irish Sea. I include the Minister in this; we would all dearly love a situation in which we would be the sole arbiter of our own interest rates. The effect of interest rates in New York, in Germany, in France, in London is bound to affect interest rates here, but it is possible to effect some amelioration of the position marginally to prevent the same evolution when it is desired to reflate here and to restrict and deflate further in England. It is only a marginal change. I accept that, without question, but it is a marginal change that was considered possible for the first time, again, only about 12 years ago. It is one that arises not entirely because of our geographical position but in respect of which our geographical position has a very great amount of influence.
Whatever about the rates of interest themselves, the availability of credit is something over which we are entirely our own masters. I think it is much more important that there would be adequate supplies of credit for productive purposes, adequate supplies of credit to stimulate production in agriculture and in industry, than even the rate at which such credit would be available. I know that, in all of our personal lives, the question of the rate of interest may seem of greater importance but that is human nature. However, it is the availability of credit for agriculture and for industry, for the expansion of production, that will ultimately affect our future.
I should like a categoric assurance from the Minister for Finance in this debate that, in our present circumstances, with, as he says himself, a small surplus in our balance of payments position, far from our following the British moves in this respect, all the credit that is required for productive purposes, for the expansion of production in agriculture and in industry will be made available and particularly, as I say, will be made available by the banking system. In that respect, it is something which we can govern here without interference from outside. It is something that is governed by our balance of payments position and not by any question of outflow of funds due to an attempt by us to maintain low interest rates while there are high interest rates in other parts of the world. Equally, I think, we are in a position here in which there is no necessity at all to have the same restrictions as there are on the other side.
We suffered here, in 1965, from an inflation that was imported by the Government alone. Perhaps "imported" is the wrong word: "generated" would perhaps be a better word. We suffered here, in 1965, from an inflation that was generated by the Government alone, generated because they would not accept the discipline on the lines that had been laid down and generated because they deliberately moved away from the programme that had been set out. When, as a result of that inflation, that was deliberately generated by the Government, they found themselves in the position in which they were later that year they then jumped from one extreme to the other, somewhat panicky in the end. In that respect, they were, to put it mildly, helped by the lack of statistical information and by the delay with which that statistical information came to hand.
On many occasions in this House I have made it clear that one of the difficulties there must be for anyone sitting in the seat over there which is occupied by the Minister for Finance is that we have not got anything like sufficient statistical information and that it comes much too late. As an aside to that, may I say that a statistical service —I am not in any way criticising the bona fides of those concerned—which is wrong to the extent of about 24,000 people in employment figures, an error of about 2½ per cent, as was indicated by the Minister in the earlier part of his speech at the Bankers' Dinner— which, obviously, was smothered by what happened later on—is not something of which we have any right to be proud. No matter who is sitting in the chair as Minister for Finance, he will have to face the situation that we must pay more money to expand our statistical service so as to make quite certain of a wider scope in it and, above all, a more speedy service by it for the purpose of being able to advise the Government of the day and, indeed, the public as a whole. Perhaps the computer that is being put in for the Revenue Commissioners will not only succeed, when it has found its feet and got over its teething trouble, in extracting more money more speedily for the Minister for Finance, but might be able to do something to ensure that we will get our statistical data on foot of which policies should be framed and implemented, more quickly in the future.
It is commonplace that governments, again in the old-fashioned way, merely set the pattern once a year at Budget time for the economy for the whole year ahead and sit back and wait until the next period of Budget time comes around to take whatever steps may be necessary to assist the economy in one direction or another. But they cannot do that without the appropriate information. The fixation of a date every year for the Budget has been dealt with not merely, as most people think, because of the ending of the financial year on 31st March but because it takes at least up to the begining of April to get the end of year statistical returns required for the proper thought and proper determinations for the Budget itself, most particularly when the Budget is to be utilised, as it should be utilised, as an instrument of economic policy.
As I say, at the present time I do not think it is necessary nor do I feel that the Minister would think it is necessary to take any restrictive action at all. On the contrary, I think he would feel as certainly as we feel that some shot in the arm at this time is perhaps the most desirable thing for the economy as a whole. I had two questions down today dealing with prices and the duty content. The first dealt with petrol, light hydrocarbon oil. It appears that the duty content of a gallon of petrol is roughly 3/9d, that the price of that petrol varies from the standard grade at 5/7d to the premium grade at 6/-. I am ignoring the fractions of a penny involved. In other words, the approximate average cost for the petrol itself, for distribution costs and for profits all along the line, for everything other than the grab of the Minister for Finance—and which I will say he accepted frankly enough on television—is approximately 2/-, 2/-for all the other costs involved.
It seems to me that in present circumstances it is quite vital to the economy that the cost of distribution, of the transport engaged in distribution, should not be increased. It is equally a time when the economy does need a shot in the arm to push on towards reflation with the restrictions all around us. The best way that could be done, I would suggest, as Deputy O'Higgins has already suggested, is that the Minister by a rebate in duty should make up the increase, make good the increase that there otherwise may be or will be in the price of petrol by reason of devalued costs. As far as we can gather from the returns coming in at this time in Iris Oifigiúil, returns which it was impossible for us to compare with last year up to the end of September because of last year's absence of returns in the bank stoppage, it would look as if the Minister has got that margin, or would have that margin easily enough with the flip to buoyancy that a shot in the arm at this juncture would give him.
That is a neat turn of phrase, "a flip to buoyancy that a shot in the arm at this juncture would give."
I am glad the Minister likes it. The other part of living costs which will undoubtedly be affected at a very early date by devaluation costs is in relation to tobacco. Here again it seems clear from the reply given to my question today that about 2/9d of the packet of tipped cigarettes which cost 4/3d is duty and the balance of 1/6d is in the cost of the article itself, the profit and distribution margin all along the line. In relation to the ordinary cigarette which is not tipped the duty content is about 3/6d out of the cost of 4/10d, leaving about 1/4d for the costs of the tobacco and the distributive margin. It is interesting that it is the ordinary cigarette that seems to have the smaller content in it for the price of tobacco and the retail costs down the line.
There may be differences there in relation to the effects of tobacco about which the Minister for Health has been speaking but there can be no such thoughts in relation to the price of petrol and the most injurious effects that an increase in distribution costs would have all through the economy. It seems to me that it is clear, notwithstanding what the Minister said, that there is bound to be an immediate impact on certain people. Everybody knows that the older and poorer sections of the community consume much greater quantities of tea than the average person in the community as a whole. Tea is one of the things that must be hit in the pretty near future by devaluation and for that alone a concession should be made by the Minister in that respect.
The impression that the Minister created—and in this respect I am going to make it quite clear, tried to create on television by his speeches from the very beginning—was that on our prices here the effect of devaluation would be negligible. He is wrong, of course, in that regard. He is wrong not merely from the point of view of our own costing and the direct increase in deflation in our payments in devalued sterling to those countries where there has been no devaluation, but he is wrong also because a very large part of our imports from Britain are imports that are based on raw materials that they have to buy with under-valued currencies and we are, of course, going to get the same effect as if we were buying them with devalued currency direct. Coal, other than British coal—and it seems from what one reads, that we are dependent to a large extent on coal from Poland, America and elsewhere—is going to get a knock at once. Electricity in so far as it is dependent on oil fired stations will also be affected.
I wonder how far the Minister for Finance has examined, with his colleague the Minister for Transport and Power, the possibility of providing electric power from atomic reactors. Of the present consumption in Britain about ten per cent is produced by atomic reaction, by nuclear power, call it what you will. If they are getting ten per cent of their total power, not ten per cent of their electric power, from nuclear reactors, surely there is a very strong case for our examining the immediate prospect of providing power here in that way, an examination that should take place in conjuction with the Government of Belfast because, in relation to that aspect of the provision of power, it is something that clearly should be considered for the island as a whole.
The effect of devaluation on fertilisers is something that could hurt production. I sincerely hope that we will be able to ensure that any increase that there may be through devaluation in fertiliser costs will be something that can be surmounted because of the inestimable damage that a decrease in fertiliser usage would do to our agricultural production.
All this discussion in relation to devaluation must be seen in the context of what I have described as the package deal introduced on the other side. Most people believed prior to last Saturday week that devaluation was the last shot in the British locker, the last piece of armament for the British to surmount French objections to their entry to the Common Market. It seems quite clear now from the utterances of General de Gaulle yesterday that that shot has had absolutely no effect. I was never very impressed by the case made here by the Taoiseach and the Minister for Finance in relation to the great welcome they were supposed to have got in Paris and in relation to the expansion in the mind of the Taoiseach about the reception they received in France. It seemed to me perfectly obvious even before they went there that they were going to be received on the surface with open arms. It was obvious from the pattern of our trade that without the admission of Britain to the Common Market any promises or suggestions to us were utterly meaningless. In those circumstances one of the ways they in France could get a side swipe at the British was to be more than courteous to the Taoiseach and the Minister for Finance. There was nothing more in it than that. That, if anything, appears clear from the statements made yesterday. It is now crystal clear that all the nice things said from the teeth out to our Government's delegates in Paris were merely for the sake of having a clatter as a kind of side swipe at the British.
Therefore, in present circumstances we have to consider how this package deal is going to affect the whole future of our economy. We accepted, and I think it was generally believed, that the Free Trade Agreement with Britain was going to be one step towards the Common Market for Ireland. It looks now that the prognostications, the anticipations and the timetables that have been continually produced by the Government for Common Market accession for Ireland are going to have to be lengthened very considerably. Where that is going to take us is another question. Where we are going to get the expansion and growth, both in industrial and agricultural production, without being part of a larger unit is something that has to be considered very carefully indeed.
Unemployment figures this year have risen over those of last year by some 5,000, even with the statistical correction of 24,000 in the employment figures following the preliminary analysis of the census of population of 1966. This all points to the fact that we are not going to get that increase in employment in industry and services which we must have if, in the words of the NIEC Report, emigration is to be limited to 5,000 a year. There has to be some very considerable new thinking in relation to the matter. There has to be some very considerable re-appraisal of policies which might have been sufficient if access to the Community was around the corner. But certainly in present circumstances they are far from sufficient.
We all want to see not merely an increase in employment but an improvement in living standards. Some of us sometimes on all sides of the House are inclined to forget that a reduction in hours of work can very often be exactly the same, economically speaking, as an increase in wages and earnings. A reduction in hours of work is something that may put up the costs of our products just as much as an increase in real earnings. I wonder whether in present circumstances we would not be wiser as a people and as a nation if we concentrated, not on any reduction in hours of work, but took a leaf out of the Germans' book after the end of the war when they were considering not any reduction in the hours they had to work but all the time trying to improve their living standards in terms of the consumption they were able to afford. Certainly, there has been too little consideration of the exact comparison there is between an increase in monetary incomes on the one hand, and a reduction in hours of work on the other.
It is not sufficient merely to say there must be a standstill here or there or no increase here or there without serious consideration. We must try to set our sights on the realities of the situation. This is where I think the Government have completely failed to give the lead and the frank and true expression to the country they should have given. We have to accept that in relation to devaluation there is bound to be quite a substantial increase in prices, without that increase bringing in any way any profit for employer, management or worker. We have to ensure, in order to keep our incomes worth what we want them to be worth, that we can have an improvement in real standards for all the people. We have to set that in its proper perspective and ensure in so doing that the people are frankly given the answer. It was in relation to that lack of frankness, to that impression and presumption the Minister succeeded in giving, initially on television and in all his announcements, that I think this Government have failed signally to live up to their responsibility over the events of the past ten days.
The debate so far has been kept on a very narrow basis mainly, I think, because the Minister in his opening speech set the theme to try to keep it as narrow as possible. As a result it appears that the devaluation of the £ is taking up the main part of the debate, with references to the EEC and a few other minor references being made as well. Deputy Corish for the Labour Party made most of the points which could usefully be made, and, therefore, I shall be pretty brief in dealing with those aspects of the Estimate.
The Minister has, in my opinion, understated the position, and the Opposition are, in my opinion, overstating it, and somewhere between the two the truth must lie. I quite agree that, as things are, the Government could do nothing else but devalue when Britain devalued, and there is no point in the Minister's making excuses for doing it and the Opposition saying it should not have been done, because the facts are that, tied as we are to sterling and having previously accepted a similar, even worse, position, then it would be entirely unfair to say that the Government should not have done now what they did, although when the Government were in opposition—and Deputy MacEntee's half page in the Sunday Press in 1949 has been quoted across the House—not alone Deputy MacEntee but responsible representatives of the Fianna Fáil Party did say that devaluing the £ in 1949 was a treacherous thing to do, that it was taking away the value of the £ to the people living in the country, that it was lowering the purchasing value of the £ for pensioners, workers and so on. If he had headed his article “Bunkum” instead of what he did call it, he would have been a lot nearer the truth. However, in the present case, the British £ having been devalued, we had no option but to follow suit.
We then come to the question as to whether or not the action of the British Government in devaluing the £ was the most severe action which could have been taken against this country. Anyone who knows the facts of the increase in tariffs in 1964 will agree that a tariff increase on certain goods would have been far more disastrous as far as our exports to Britain are concerned. The unfortunate position is that it is what happens following the devaluation of the £ that will cause the big trouble in this country. I am quite sure the Minister for Finance will be able to justify, for instance, the action of the banks in increasing the bank rate, although he did not seem to have thought of an increase in the Post Office interest rate, because he has not referred to it in his speech at all.
Consequential on the increase in the bank rate the cost of many things in this country must rise substantially, and this is where we shall run into trouble. Those of us who have been interested in housing over the years know the cost of money borrowed for this purpose and the effect that has on repayments on houses. I believe that this is one of the side effects that will be felt not so much now but in the next six, 12 or 18 months, and it will grow as the years go by. Goodness knows, housing is dear enough. The repayments on a £2,000 loan at the present time run pretty close to £4 per week for the average person. If the interest rates are to increase now—and they do not go down nearly as quickly as they go up —the responsibility for housing will fall back again almost entirely on local authorities, because the ordinary working class people who have been attempting to build their own houses will find it is no longer possible to do so. This is an aspect of the matter which has got very little attention in the Minister's statement. On the question of what will be increased in price as a result of the devaluation, the Minister gives a rough list. He says:
Among the principal commodities which we import from nondevaluing countries are crude and partly-refined petroleum, wheat (imports of which vary according to our own harvest experience)...
I should be interested to know in what way the increase in the cost of wheat will affect the price of bread, because if my memory serves me correctly, the difference between the cheaper foreign wheat and the cost of Irish wheat is not passed on either to the miller or to the taxpayer but is held in the Government coffers. If that is so, while it would mean a reduction in the income of the Government, it should not bring about an increase in the price of bread. Perhaps the Minister would comment on that when he is replying. The Minister's statement continues:
...coal, fertilisers, and certain animal feeding stuffs, tea, tobacco, certain fresh and dried fruits, wines and brandy and various raw materials.
As regards coal, I had a question down for the Minister for Industry and Commerce a few days ago about the items for which he had given authority recently for increased prices. He gave me a list in a tabular statement, and I asked him if coal was included. He was not sure. He had a look and said: "Yes, it is, but that is quite some time ago. Coal prices have not been increased recently." I am aware that coal prices were increased recently, and I am also aware that coal is now being increased again. The coal merchants say that because the £ was devalued and the fact that, according to themselves, they do not pay for the coal according as they receive it but get it on a credit basis and pay afterwards, at quarterly intervals, the money which they have to pay is already devalued and, therefore, they must pay a higher cost even though that coal is stockpiled with them and they have not yet sold it. That is their excuse for now increasing the price of their coal. While the increase has been mentioned as being a pretty small one to cover the cost, I am aware that already coal is being retailed to poor people who cannot afford to buy any more than a hundredweight at a time, if they can afford that, at an extra 2/- per bag.
This is something in which the Minister for Finance might be interested if he does not already know it, and this is the sort of thing we are going to have as a result of devaluation. It reminds me of the time the Suez crisis was on and I heard an old lady who was selling carrots looking for an increased price because of the Suez crisis. When one finds that sort of argument being put up, it is easy to understand how those people who want to get a few pounds pretty quickly and pretty handy, will use this argument that the £ has been devalued and, therefore, they must get an increase, and those who are selling to the poor in small amounts, feel for some extra-ordinary reason they are entitled to a higher rate of increase than those selling in big lots. This is the sort of thing to which the Minister's colleague, the Minister for Industry and Commerce, might very usefully direct the attention of his officers in order to prevent it going too far.
In regard to tobacco and oil, the Minister says that the greater part of the retail price is accounted for by taxation, the basic import cost being relatively low. I presume he means that the possibility of an increase or a substantial increase in the cost of these commodities is slight. However, I am quite sure the Minister is aware that already transport costs are going up on the argument that there is an increase in the cost of fuel. This is the sort of thing of which people are prepared to take advantage very quickly, and the result is that it gets out of control.
According to the Minister, the Minister for Industry and Commerce will require to be satisfied under existing price control arrangements that any proposed price increase is not intended to be applied until it is clear that devaluation is, in fact, affecting current costs. I wonder what evidence he got before he allowed the coal merchants to raise their prices? I wonder will he allow other people to increase their prices in the same way, without going very closely into the matter?
I find myself at variance with the Minister on his estimate of what the effect of devaluation will be on price levels. He said:
As to the overall effect of devaluation on the price level, it is reasonable to calculate that it should not be more than about two per cent.
I am not an expert but I have taken advice from a number of people who claim to be experts, and they feel that a figure of five per cent is more likely to be correct than two per cent. Perhaps when the Minister is replying, having had an extra couple of days to evaluate the situation, and having heard the comments made by Deputies, he will be prepared to comment on that situation. It was publicly stated by the President of the Congress of Professional and Services Association at their annual conference last week that five per cent——
A totally disinterested source.
Maybe not totally disinterested, but I am sure the Minister will agree that the people who advise him have a slight interest in the matter too, and that if he wants to get a totally disinterested source he will have to go somewhere else other than to the advisers to the Government or the people I have quoted. A figure of five per cent has been thrown up, and the Minister says two per cent. I should hate to think that we would have to wait for another 12 months to be able to tell the Minister on his Estimate next year that his figure was wrong. I trust and I know that we will be able to find out long before that.
The Minister made this bland statement:
In view of the moderate effect which devaluation is likely to have on prices and the spread of the increase over a period, there is no ground for suggestions that there should be immediate compensation to recipients of social welfare.
I have already said that coal will cost social welfare recipients an extra 2/- a week because particularly those people who live alone will have to burn at least a bag of coal to keep them warm as they are unable to buy the proper type of food to keep them warm with what they are getting. For those living in one room or in a small house the only way to keep reasonably warm during the winter is to buy coal, and that coal is going to cost them an extra 2/- per week. Will the Minister agree to have investigations made to ensure that this thing will not recur again and again with 2/- here and 6d there coming out of old age pensions and widows' pensions resulting in great hardship, because that can happen? There is no point in saying afterwards that it should have been foreseen.
The Minister also referred to the question of income increases and said:
On the question of demands for income increases at this juncture, whether or not they are associated with apprehensions about the effects of devaluation on living costs, I would like to explain the position as I see it.
The Government's general attitude to income increases has often been stated. The Government favour a progressive increase in workers' real incomes according as national production rises, and Government policy is directed towards raising national production—and with it individual productivity—as fast as possible.
Lovely big words, lovely phrases, but they are of little use to the man who is finding it impossible to live and rear a family on the income he is getting at present. Would the Minister not agree that even now there is a definite demand, that there was good reason for a substantial increase for lower paid workers before devaluation was ever introduced, and that there is a set of lower paid workers-who should be paid very much more at present? Many of those workers are employed by the State, by semi-State bodies, and local authorities. Their wage increase must be sanctioned by a Minister of State before they can get it, and the result is that they do not get it at all. Deputy Sweetman talked about reduced working hours and wages and what they did in Germany. This is not Germany, thank God. It ill-becomes people who work about 30 hours a week to talk about the necessity for continuing to make people who are already working a 45 hour week or a 42½ hour week——
I guarantee that I work not less than a 50 hour week and usually a 60 hour week—much more than the Deputy, if he wants to make a personal comparison.
I should like to see Deputy Sweetman's rate per hour compared with that of the people he was talking about a few minutes ago. Talking about working hours, many of those who wish to work on their own and work hard make darn sure that they are well paid, and they have the satisfaction of knowing that they are bringing home a decent wage packet. In regard to the unfortunate men employed by the State, by the local authorities, or by unscrupulous employers—and there are hundreds of them—to suggest that there should not be a reduction in their working hours is an insult to the intelligence of the House.
They would be better advised to look for more wages rather than a reduction of working hours. That is what I said and that is what I meant.
That is a personal comment. I am sure Deputy Sweetman meant what he said. I have been a trade union official for 21 years and the only time I hear increased wages mentioned is when we look for reduced working hours. When we change it to increased wages we find we cannot get that either. That is the sort of thing we have to live with and those of us who have been negotiating for a long time have come to realise and recognise the system.
I do not know whether Deputy Sweetman is aware that while we have 54,000 unemployed, there are employers in this State who are doing everything possible, and spending endless amounts of money, to reduce the volume of manpower employed in their factories. It was found in other countries where there was full employment that because of the introduction of this type of system if there was not a reduction of working hours the people concerned would be out of a job before very long.
We have reached the stage here where even though we have a big number of people unemployed there are still people who are prepared to spend £10,000 trying to see if they could do without five extra men, rather than employing those men over a long number of years by paying them a decent wage.
And trying to increase the standard of living of their employees.
That is one thing I have never found an employer in this country losing any sleep over.
Then the Deputy does not know many employers.
I know more of them than Deputy Sweetman or anybody else. There are decent employers and not-so-decent employers. One thing they will not do—and it is not their job I suppose—is worry about the standard of living of their employees.
Yes they do. I know plenty of them who do.
I can name one who does not and that is the State. The Department of Finance does not and the Minister for Finance, who is in charge of it, must take responsibility. His employees are not getting a fair deal and he knows it.
I have improved their conditions very considerably in the last year.
Improved them to £9 a week, men who are up to their necks in water and mud all day. Is that considered a Christian approach to the way these people should be treated? I think we have got our priorities wrong when we start talking about these people and it is about time somebody started looking at the other side of the coin.
So much for devaluation. I am not prepared to go the whole way with either the Minister or the people who spoke before me but I will say that it appears that the Government did what any Government who were here would have done. The position is bad. I think it is an awful mistake to try to understate it and say: "It will not be so bad." It will be bad and we might as well face up to it and make some effort to cure it or do something about it.
There is a reference in the Minister's speech to decimal currency. According to the report it appears as if a lot of people are coming down on the side of the 10/- unit. I want to give a warning to the Minister. We have had a situation in this country when the farthing was no longer being used as a unit of currency that many people, when there was a farthing increase put on in the Budget, put a half-penny on. If there is not a very small unit of currency in the decimal currency there is a grave danger that we will find ourselves in the position that the least increase that can be imposed on anything will be about 2½d because the smallest coin in our currency will be the 2½d one. This is something which I am sure the Minister's advisers must have noticed before now and must have advised on. I want to give a warning that it is not good enough to suggest that for handiness sake we should not have too small a coin. Other countries have found it necessary to have a very small unit of currency. I suggest we should be very careful before we put into the hands of anybody the right to increase by substantial amounts because of the fact that the unit of currency we have is of such a size that a small increase is not possible.
There are a number of things in the Minister's Estimate which have not been touched on. I do not propose to go over all of them but I want to refer to a few of them. One is the question of the Houses of the Oireachtas. I mentioned a number of items on another Estimate and was told they were proper to this Estimate. The first one is the question of accommodation. The Minister knows that when the new building was being erected it was arranged that there would be adequate accommodation for the Members of this House to do their business in the House. The Government made sure— and they did the right thing—that they would get adequate accommodation in two floors. Am I in order, a Cheann Comhairle?
Yes, since we are discussing all the Votes I take it the Deputy is in order.
I thought I was.
The Chair did not point out to the Deputy that he was not in order.
Somebody interrupted you to ask a question. I think the people who run this House should know what is in order and what is not.
As I understand it, we are only discussing the Vote for the Office of the Minister. I may be wrong.
The whole group is being discussed. The Labour Party have rooms on the fourth floor. May I point out as I did before, and I understand in the wrong, that we have a number of Members of both Houses with three or four in some rooms attempting to work and the rooms on the other side of the corridor being occupied by civil servants who must work in the House I know and who must be convenient to the Chamber and must do their business but should not use accommodation which was intended for Members of the House. There is a suggestion made that the older portion of the House should be renovated and that these people should be moved to it. I would like to see them get excellent and adequate accommodation but I want to protest as the Whip of my Party, not for the first time, that this thing has been long-fingered and that we can see no reason why we should be confined to one side of the corridor while empty or almost empty rooms on the other side of the corridor are either reserved for officials of the House or not being used at all except for an occasional meeting.
That is the right side of the corridor?
No, funnily enough we are on the right side of the corridor. We are usually to the left but we are on the right side of the corridor. I feel that this is something which should be attended to.
I want to refer—if I am in order and this is something I am not clear on and would like your guidance, a Cheann Comhairle—to the question of restaurant accommodation. There used to be an arrangement whereby the reporters of the Press Gallery used the same accommodation for meals as Members of the two Houses.
I have always felt that these matters were for the committee of the House.
I have a reason for raising this. I am informed on inquiry from our Member of the committee that the matter was not raised with that committee and the ruling was given by a Member of the committee which I think he had no authority to give. For that reason I feel that there is only one place to have this cleared and it is with the Minister for Finance who is responsible in the main for the accommodation. The complaint is—I shall make it very brief—that this accommodation which was always available to the Press Gallery should still be available for them if they wish to use it. Those of us who are in this House are not so naïve as to believe that we can exist without publicity, good, bad or indifferent and for a Member of this House for some reason of his own to tell members of the Press that they were not entitled to eat in the same restaurant as Members is, in my opinion, a little bit stupid. It appears that we have reached the stage where the only people who are allowed to eat there are Members and their friends and the ushers. This is a most extraordinary thing. The ushers, at one time, were given one free meal a day in the House.
Surely these are details that could be threshed out at the committee which looks after those things.
I have tried and my Party have tried to have these matters aired elsewhere and we have not succeeded. Ultimately there is only one place where they can be cleared and that is across the floor of this House. Unless I am ruled out of order I believe I am in order in putting the matter to the Minister. He will then have our side of the story and if he wishes to have it further investigated he can do so. It was a Minister for Finance I understand—I do not know to which Government he belonged— who changed by order the system whereby the ushers were entitled to a meal per day in the House free of charge. They got a substitution of 3/-per week. We now have a situation where ushers and messengers of this House who are required to be on duty sometimes from 10.30 a.m. until after 11 p.m. have to buy two meals in our restaurant at the same prices as we pay. The meals may cost them over a £1 a day out of their wages. I am quite sure they are not being paid enough to compensate them for that kind of thing.
I want to compliment the Minister. I approached him some time earlier this year on the question of the way the pensions for the members of the staff were made up. When the facts were put before him he had no hesitation in altering it to the benefit of the people concerned. On their behalf—they have already done so—and on my own behalf, as I made a personal approach to him, I should like to say "thanks". He met the matter in a very fair way.
I should now like to refer to the Office of the Revenue Commissioners and here we have a very fruitful field. The position about the Revenue Commissioners is that they must collect money, otherwise the State cannot be run. Since PAYE was introduced a very substantial volume of money is being collected under that heading. I asked the Minister earlier this year if there was a possibility of extending the income level of those who were working, particularly those who were badly paid, before PAYE deductions would be made, and the Minister said at that time he felt there was a case for increasing the allowances but if the allowances were to be increased it would be an awful lot of trouble to do what I suggested.
I should like to point out to the Minister that when the general level of wages in regard to rural labourers in Ireland was £5 10s a week income tax was not deducted until they earned £6 5s. Now that the general level is somewhere between £9 and £10 a week the income level is still £6 5s. I am sure the Minister will agree that is most unfair. In addition to that there is a situation in which many things which should be considered for income tax purposes are not considered. I refer particularly to the question of people who have to travel long distances to work and have of necessity to use motor vehicles to do so. They could stay at home and draw unemployment benefit for six months if they wanted to do so but they do not wish to do that. Most people would prefer to go to work.
It is a bit ridiculous when we find people who travel distances of 30, 35 and 40 miles to Dublin who get a week's wages and find, because they are single, even though they may have a mother housekeeping at home and younger brothers and sisters living with them they must pay tax on anything they earn over £6 5s. 0d. Such a person gets no allowance for the motor vehicle which he must use or he gets no travelling allowance. I am not going to delay on this because I feel the Minister will look into it. He may not be able to do anything about it now but when the next Budget comes along I am sure this matter will receive attention.
People who are maintaining a relative only receive a very small allowance. There is no point in saying that the allowance has been raised to £2, £2 10s or £3 a week. Those people have to pay income tax at 7/- or 5s 3d, according to the way they are being taxed. This is something which must be increased substantially. Obviously the reason why it has not been increased up to now is that most of the income tax collected is being collected from the lower paid workers and for that reason the loss to the State would be substantial. That should not be used as an argument for grinding them into the dust. That is exactly what this is doing.
Another matter which I mentioned to the Minister, which is something he should pay attention to, is the question of State employees. I do not know whether he knows that State employees are not on PAYE and they are not entitled to have deductions made weekly, the same as any other worker in the State. Some time during the year the Department of Finance check up on those people in regard to income tax and the result is that they get bills for £60, £70, £80 and even £100, which it is alleged they owe. This usually happens in mid-November and up to Christmas. They are told that all this money must be cleared by 31st March. Those people pay income tax at the rate of 7/- in the £. They cannot get the deductions which other people get. When I speak of State employees I include the Army, forestry workers and all such people. They should all be on the same PAYE system. The money should be collected weekly from those people and there would be no complaint that they were being asked to pay very substantial amounts of money when they cannot afford it.
I mentioned the question of the accommodation in the income tax offices to the Minister. He was courteous enough to write me a letter saying that he had the matter investigated and gave a reply. The matter I raised was that if anyone went into one of the income tax offices in O'Connell Street in Dublin to have a form filled up the next door neighbour could be one of the biggest gossips in the country. Such a person could be standing next door to the person filling up the form and could know all that person's business. The Minister said at that time that the accommodation was very limited and that if it was possible to improve it at some time it would be done, that if the person requested he could be taken into a private room and answer the queries which have to be put to him. It is not right that people should have to give information of a private nature while some other person can hear them. The Minister asked at that time if there was a notice on the wall. I knew the answer to that was that there was no such notice. There are two slots there, such as you would find in an old-fashioned public house. When you inquire there you are not asked how much whiskey you want.
You are asked how much you have and you are asked to hand it over. This is something which is resented by a lot of people. They do not want to tell the world what they have, and more important, what they have not got. The Minister should make every effort to try to have a little more privacy for the people who go to transact their business there. Those are all publicspirited people, who are not trying to defraud the State, but are going to make arrangements to hand over some of their hard-earned money to the State. I am not saying that those people are not treated courteously by the staff there. They are treated very courteously, but I believe they should be treated in a more private fashion than they are at the present time.
I have referred to the Civil Service Commission, of which you, a Cheann Comhairle, are now the Chairman, on a number of occasions. I am not going into detail about this now, but I want to make one point in regard to it. I cannot understand if somebody goes forward for a job, is notified that he or she has passed, and is then notified that he or she is not suitable why this has to happen. It is not fair that that system should be allowed to continue. Unless the Civil Service Commission are prepared to say why the person is not considered suitable, the person should be accepted. I had a particular case recently of a postman who had been for years a temporary postman, and is still acting in that capacity, who was an applicant for a permanent position in the same town. This man's medical record was all right. He got seventh place in the examination but yet the Civil Service Commission decided that he was not suitable for the job. His wife and himself had told everybody how lucky he was to get such a high place and they had to go back and tell those people that for some extraordinary reason he was not being accepted.
His Irish was not good enough.
It was good. He could deliver letters in Irish and he could deliver them in English just as well. This is something which should be looked into. If somebody is rejected after passing an examination and is refused appointment by the Civil Service Commission, they should tell the person why such refusal takes place. It is not good enough just simply to say that such a person is not being accepted.
Vote No. 12, Superannuation and Retired Allowances, is something which should receive attention from this Minister or from some Minister. The retirement allowances for civil servants who retired a number of years ago are scandalously low. Some adjustments have been made. The former Deputy Dr. Ryan promised that they would get parity eventually but suddenly there was a stop and they have not succeeded in getting any further. The cause of most of these problems is that employers whether in the Civil Service or anywhere else do not realise that the worker of today is the pensioner of tomorrow. If they did there would be a much greater interest in the pension rights building up to which workers will be entitled when they eventually retire. There is a story told about a trade union official who has now gone to his reward—to heaven, of course— who regulated in his own union an arrangement whereby nobody was entitled to get any higher than a certain rate of pension. He did this rather vindictively because of someone who was going out before him and he wanted to ensure that that person would not get too much. His own vindictiveness prevented him from getting a pension he normally would be entitled to.
This has happened in the Civil Service for a different reason. The Minister might think we are looking at this because the older people are gradually dying out and the older civil servants are becoming tired of the fact that they are not being treated fairly in this matter.
The Minister referred to the Secret Service generally. I do not know what amount they get but the amount is getting smaller and smaller. The story is that if you look around a parish and see a fellow drinking all day and who never works people come to the conclusion that he is paid by the Secret Service.
I do not think that he would be able to drink very much on what is provided.
I do not know how much is provided.
It might be from some other Secret Service.
You have Taca.
You got £90,000.
Sour grapes.
Do not draw me out as to where Deputy L'Estrange got his money: little tips made out in certain suburbs. We know all about that.
I hope the Minister can arrange that we get £90,000.
That would not do you any good.
Maybe he will try it and give us a chance.
On this question of the Secret Service if, as was the general idea some years ago anyway, this money was being spent on people to simply give information to the guards, the less of it there is the better. It is getting smaller but the smaller it is the better.
There are a number of other matters which come up under different headings to which I do not wish to refer. However, I should like to refer to decentralisation. There is apparently a school of thought in this country that Dublin is over-spilling, that there are too many people living in Dublin and we must do something about moving them out. While there may be a certain amount of justice in the suggestion that something like this has to be done, the statement which is made by the Minister in his opening address here and the reason why it is suggested that the civil servants will be moved to the West, which is a different thing, is hardly one which we would be prepared to consider. The third paragraph on page 15 says:
This decision was taken in the wider context of the Government's policy for regional development. The decentralisation of the administration, commerce and industry of the country to the greatest extent possible has always been an essential part of the programme of the present Government and their predecessors. The Government are determined to do whatever is feasible to redress the imbalance of population in the country. They are particularly concerned to revitalise the west of Ireland by action on a wide and imaginative scale.
There was not very much imagination in a Minister of State deciding that he would move his Department with the assistance of his colleagues down to his own town which is hundreds of miles away from where the centre of Government is. I do not think anybody would suggest that moving a Department of State to Castlebar, to take one case in point, will make up the people of Castlebar. These Civil Servants will have to be housed, offices will have to be provided and schools will have to be provided. I do not know whether the Minister realises this or not. When a big number of people move into an area there is a social problem involved because the youngsters growing up will require some type of employment. We had an example of it when the trek was the other way, when Ministers for Lands from Connaught moved hundreds of families from the West into County Meath. Every one of them I met told me they were promised that as soon as they arrived, apart from houses and farms, there was to be plenty of employment for their children. The only jobs there were those the natives of the place had and the only way the migrants could get these jobs was by the natives becoming unemployed. The same situation is bound to develop if a big number of families move to Castlebar and attempt to live there and get jobs, because they can only get the jobs there from the people who are already working there. I understand work there is not as plentiful as it might be.
The biscuit factory which Mr. Lemass was to send has not arrived yet. Perhaps he will send it down with the Department of Lands. If industry were started in the area I could see some reason in it. But, I frankly cannot see any reason why it should be decided to move so far from the centre of Government an entire Government Department. It must mean that a certain part of that Department will have to remain in Dublin and there will be numerous trekkings backwards and forwards from Dublin to the area and I can see no reason why this type of exercise should be entered into.
I cannot see why they should go because many of them have paid for their houses and many are paying in instalments, and they should not be put in the position of having to sell their houses and attempt to restart their lives again particularly among strangers. Children going to school will have to be taken from their schools and children in jobs will have to go into digs or leave their jobs.
A statement has been made by the Minister that there has been consultation. This is the point I want to get at. Consultation is, I find as a trade union official, with a representative of a Department of State, a one-sided discussion. You can go and report to an official of the Department; you will be listened to very patiently and that is it. They then make a unilateral decision and you get no opportunity of appealing. There is no system of appeal. There is nothing you can do except take what they give and this is the sort of consultation, I understand, which has been given to certain of those people who are threatened with removal to Castlebar. Others, too, including Deputy Richie Ryan, and I am not stealing his thunder on this, made reference to it in the House today when he referred to a section of the lower paid workers.
Nonsense; I told Deputy Ryan they would be fully catered for and looked after, and they will.
When the Minister says "fully catered for and looked after"——
You need not worry; I will look after them.
I have seen the Minister and his Government looking after certain poor people before. I know what will happen. We saw what happened when the Land Commission offices went on fire in the middle of the night when a couple of old ladies who were cleaners saved thousands of pounds.
They are personal friends of mine and I will look after them.
I have no doubt they are. The trouble about it is that these old ladies were offered about 50/- apiece, and they were supposed to have been offered a wonderful amount. If that was the type of consideration they got then does the Minister suggest he will bring them to Castlebar or pension them off? Perhaps they will be offered a little office somewhere else if somebody dies in the meantime. I have seen too much of this in my time and I suggest the Minister must think up a better answer than the one he has just given.
The same applies to Athlone. I know Athlone pretty well. They have got a housing problem there, too, and they have got a job problem there, also. What is it proposed to do about them? What will these people who go down do? It has been suggested that most of them are junior officers, young boys and girls. Must they stay in hotels and pay there all they get in wages? Some of them had to do it in Dublin when they first began. The whole thing would need to be looked at very carefully. Taking in a few representatives of the association, listening to them and then letting them out and taking a decision without further reference to them is not any type of consideration. It is not sufficient and it will not be accepted. I know the Minister and the Government can wave the big stick and say if they do not go they will lose their pensionable jobs. The Minister will be amazed at the numbers who will opt out of the Civil Service.
To hell or to Connacht.
Athlone is only half in Connacht.
The Deputy is trying to ride all the horses at once.
I am not. I am sticking to one. I am challenging the Ministers for Lands and Education to take the people of either town and see if they are prepared to give the wonderful welcome to the idea it has been suggested will be given. I wonder if either Minister has ever considered that there are people in every county who have got used to the idea that the centre of Government is in the capital city— that that is where they expect to find it; and that people coming to the city to call at one Department will, during their day in Dublin, call to other Departments. Is it suggested now that they should come to Dublin to call at the Department of Health, then travel to Castlebar to call at the Department of Lands and on the way stop at Athlone to visit the Department of Education? In Brazil they moved the House of Parliament to a new city which they built. They moved the banks and they arranged for planes to go out every 20 minutes from Rio de Janeiro. They found it more difficult to get quorums than we do in this House.
There are three-quarters of a million people there, all the same.
The Minister is not aware there are a quarter of a million living in the new city and half a million living in the bush in slums——
I have been there since the Deputy was there.
Then the Minister must have moved in the same circles he moves in in Dublin. I went out there and I went to see the people. I can produce evidence from people who have returned recently. Of course, Sir, this is not on the Estimate. I shall conclude by saying that the decision taken by the Government in regard to devaluation was one which in my opinion they could not have avoided taking. However, saying that devaluation will not mean a substantial increase in the cost of living, that it will not disrupt trade and commerce, is not facing facts or telling the truth, because it must be obvious to everybody that it will have very serious effects. Therefore, the Minister and the Government must make up their minds that not only will they have to alleviate the conditions of the social welfare classes but that they must also be prepared to give to their own employees, whose incomes are subject to Ministerial sanction, substantial increases.
I shall confine myself to devaluation. The Minister for Finance was accused of being bland and——
Complacent.
I thought he was very much his old self—calm, cool and confident. Of course, impressions differ, but Deputy Sweetman was of the same impression. The Government were criticised for not having rushed the debate. I take the reverse view. They waited until the facts were better known, until the effects could be appreciated fully, until they could be assimilated. I regard that as a prudent attitude. They have been accused of following the British line slavishly. This is a rather stupid attitude to take when we know that so many of the world exchanges also re-adjusted themselves with Britain.
Sterling is a reserve currency in world trade so why many of the other countries did not re-adjust beats me. Certainly this country must have taken notice, seeing that Japan and many other countries saw fit to do so. Devaluation is only one of the facts of financial life. It is what somebody in some other exchange is prepared to pay for unsupported sterling at its normal rate. It is a reflection of the competitive ability of England and ourselves to participate in world markets: it expresses our competitive efficiency.
Goods leave the factories at certain prices. They arrive in Germany or Italy at another price and the difference between the factory prices and the prices in Italy is the measure of the margin of the wholesaler and the retailer. If that price has gone up it must be devalued. That is the essence of devaluation. There has been discussion here about the rise in the cost of living but I do not think some people have got the right end of it. The average hard currency import content of the total product in England is 25 per cent. In terms of the 16.7 per cent dollar charges, it represents a rise in England of three to four per cent in prices all round. In other words, the products would be three or four per cent dearer because of the impact of the hard currency imports on the total product of the country.
I have not got the figures. Possibly the Minister has them. In a country like England which imports vast quantities from hard sterling countries the impact is far greater than it is here. I would hazard a guess that in this country where the gross national product is made up of agricultural items grown on the land the overall increase would be in the region of the two to three per cent envisaged by the Minister. By any calculation, that is all I can see in it. It is all right to take individual items where the difference might be two shillings but these do not add up to an overall rise in the cost of living. I would assess the increase in our case as being in the region of two per cent.
Is not the position that we can only guess at the moment?
We can make an intelligent guess.
What is not going to go up?
I gave a calculation.
Tell us what is not going to go up.
The Minister was frank enough to admit that we could not see the full consequences at the present stage. Is that not the position?
There is also the fact that after the last devaluation prices did not increase at all for at least 12 months.
It may be a question of a starting point.
I am reasonably satisfied from my own independent deductions, by comparisons with figures I have got, which can be read in any economic journal, of the possible increase in English consumer prices and English export prices, that in our case the figure would be two per cent. These increases, provided there is no vast cashing in on stocks, take some time to come into effect. We have been very fortunate in that our exports went up by 30 per cent in the first nine months of this year. That is extremely good in a country exporting mainly to an economy which was in certain difficulties. This 14.3 per cent devaluation will not affect our trade with England in the slightest. It will help our trade with foreign countries. We are not going to get the 14.3 per cent but will be getting two per cent or three per cent and there may be other factors. No exporters can hope to get the full amount. There is a calculation that for every one per cent decrease in the price of exports there is a two per cent increase in volume. That is the stimulus. That is the shot in the arm. Devaluation like this will have eroding effects in other quarters.
There is one warning that I could give which is contained in that Left weekly called the New Statesman. Any of the Labour front bench would know where the New Statesman stands. In the New Statesman of 24th November, 1957, it is stated:
The most important task in the next few months will be to keep the rise in prices within reasonable limits and to prevent any rises in wages from wiping out the competitive advantage that devaluation has secured for our exports.
It does not preclude increases in wages. It says "to prevent any rises in wages from wiping out the competitive advantage". To my mind that is the problem that is before us, now that devaluation is a fact of life. We have to have it like any other country.
I came in——
Where were you?
I heard Socrates was speaking. I could not resist.
Diogenes, be silent. An improvement in real wages does not necessarily mean very much higher wages. Greater productivity is the key to the matter. One statement has been made which is worth repeating, that is, that this devaluation as far as we are concerned should be accompanied by a certain measure of reflation, a certain loosening of bank credit to producers, agricultural and industrial. In that way the volume of exports can be increased so as to take full advantage of the present position.
(South Tipperary): We have to agree in general with the necessity for devaluation when Britain devalued last Saturday, for two very special reasons: first of all, the economic reason, the fact that 75 per cent of our trade is with Great Britain; and the second reason, a financial one, that 90 per cent of our external reserves are in sterling currency.
Our economic or trade dependence on Britain is something for which, I suppose, nobody can be blamed. All of us here would like to have our trading position more diversified and, indeed, efforts have been made since the State was founded to do that, to secure markets elsewhere and not to be entirely dependent on our trading position with Great Britain. In the event, that has not transpired and we are now very much in the same position as we were many years ago, not very much advanced in securing alternative markets although at one time there were people who seemed to think that if they shouted long enough and loud enough alternative markets would be found overnight. These men have become older and wiser and now realise that getting alternative markets is not as simple a process as they professed to think.
As regards having our reserves 90 per cent in sterling, the point has been made today from this side of the House that we should have diversified these sterling assets over the past few years, that we should have taken the necessary legislative power to do so.
Deputy Sweetman accumulated more dollar reserves in his period than all the other Ministers for Finance.
No.
(South Tipperary): We certainly did diversify with regard to security for our legal tender. Apparently we now find ourselves in the position that 90 per cent of our reserves are in sterling. Over the past decade Australia did diversify. Over the past decade she has reduced her assets in sterling to about 50 per cent.
We increased our dollar and gold holdings by £10 million.
What is the percentage?
It is now a total of £17 million in gold and dollars.
What is the percentage?
In the legal tender note fund—about 10 per cent. It is about 15 per cent of the Central Bank reserves.
Deputy Hogan does not seem to be far wrong.
(South Tipperary): Ninety per cent in sterling. I do admit that the position in Australia might be somewhat different from here in so far as over some years now our trade with Britain has not been altered—our exports to Britain.
Japan is now Australia's biggest customer.
(South Tipperary): She has become orientated to the orient as regards her trade over a number of years and her exports and imports with Britain have fallen. Even allowing for the fact that 75 per cent of our trade was with Britain, apparently, there has been no very substantial reason why we should not have rectified that position before now. I am not going to go as far as Deputy MacEntee went, apparently. Some years ago when he spoke of shyster debtors, describing the devaluation of 1949.
Devaluation, whatever way you look at it, is unpleasant. Any country which practises a reserve currency, and which devalues, is welshing upon those countries which placed their trust in that currency as a reserve currency. Whether or not they should be blamed for that trust is another thing. The point is these countries have been deceived and their currencies, if they did not devalue, must be written down.
I do not know what determined the rate of devaluation, the 14.3 per cent. It could have been 13 per cent, 15 per cent or 17 per cent. It was presumably based on some piece of arithmetic by some economist or some civil servant behind the scenes. I understand the International Monetary Fund had a round figure of 13 per cent and I fail to understand why the British should have decided on a figure of 14.3 per cent in this metric system age. There may be some specific reason for it.
It means the cent and the penny are now the same. There are 100 pennies to the dollar.
(South Tipperary): Is that how the 14.3 per cent was arrived at?
I am not saying that.
It is interesting to watch the one shrink to the size of the other, is it not? Hold them up and look at them.
(South Tipperary): I do not know whether our devaluation should have proceeded on lines exactly similar to those adopted by the British. I do not believe our figure should have been something under the British figure but it might have been better to devalue at slightly over the British figure. However, these are technical points. We have devalued. We had no alternative because of our economic and financial dependency on Britain, and now we must live with it, so to speak.
With regard to diversification of our reserves, sterling has, in my opinion, received a severe blow because of this devaluation. Two devaluations in a space of 18 years are a bit heavy. There was another devaluation in the early 1930's. I believe sterling will continue as an international currency and the London money market will continue to give the service, perhaps in an attenuated form, that it did in the past, but it is open to doubt whether sterling will ever again come back as a reserve currency. Gold or the dollar is the more likely. There is a war between the dollar and gold at the moment and it is difficult to see what the outcome will be, but sterling has received a severe blow to its prestige, a blow from which I do not think it will recover in our lifetime.
I should like the Minister, when he comes to reply, to give us some concrete figures. I should like to know what this devaluation will cost us in foreign borrowings, the Reichsmark and the dollar. What will be the net loss on these borrowings as a result of devaluation? The Minister should be able to give us some fairly accurate figures on that. He might be able to give us approximate figures on the losses that may arise from purchases in non-devalued countries. In the first seven months of this year 35 per cent of our imports were from countries which have not devalued. What will we lose in our having to pay higher prices from our external reserves for our imports?
There seems to be some confusion about the effect of devaluation on the cost of living and on prices generally. I have not been able to follow the discussion. Neither did I understand the discussion on television. It is claimed that the cost of living will not increase by more than two per cent.
Only by lunatics.
(South Tipperary): The Minister in his television interview gave a very simple little formula. He said the 35 per cent of our imports were from the non-sterling area and he took 14 per cent of that and he arrived at a figure of two per cent. I do not know how accurate his calculation was. Economics is a dismal science and these figures very often turn out in practice to be completely wrong. The Second Programme for Economic Expansion is a classic example of that and no doubt the Minister will in future eschew any reference to quantitative projections or prognostications. Obviously, he has lost faith in economists' calculations and prefers to deal now with things in rather general terms. However, if we accept the claim that the cost of living will rise by only two per cent, I cannot reconcile that percentage with the Minister's own brief. He says in his brief:
Among the principal commodities which we import from non-devaluing countries are crude and partly-refined petroleum, wheat (imports of which vary according to our own harvest experience), coal, fertilisers and certain animal feeding stuffs, tea, tobacco, certain fresh and dried fruits, wines and brandy and various raw materials.
In regard to some of these commodities, such as tobacco, the greater part of the price is accounted for by taxation. I do not know if the Minister proposes to reduce the tax on petrol in order to keep down the price. With regard to tea, Ceylon has devalued while India has not. It is difficult to know what the position will be. Tractor fuel and machinery in general will cost more whether or not they come from non-devalued or devalued countries.
We must not do the ostrich and maintain there will not be a cash outflow from this country. On another occasion when there was a big difference in the bank rate here and in Britain there was not a substantial cash outflow, but we are today living in more sophisticated times and, while it is possible the present rate is temporary, there is a substantial difference between 4¾ per cent here and six per cent in Britain.
At a time when it is possible that there may be a more severe outflow of capital from here than obtained in previous times, that nearly two per cent of a difference is something that may influence people to remove their capital from here to Great Britain and that will give us scarcer money here. He did not mention the cost going up in such matters as Aer Lingus, where already it has gone up, the ESB or CIE nor did he advert to wage demands and their inflationary effect over the next 12 months or so. It is a situation which we must face as being likely to arise. Already the rumblings are there of increased demands to meet increased costs. All of these are factors, accumulating factors. I do not know how, by a simple mathematical formula, the Minister can tell us that the cost of living will not increase more than two per cent.
When the last devaluation took place, I understand that prices did not increase for about a year but other factors may have been operating as well. I do not know if food subsidies were in operation at that time. That would be a substantial factor.
They were.
(South Tipperary): There was also the fact that a different Government were in office. We can only hope that this Government will be able to hold our rising cost of living to that two per cent. If we add it to the rate of cost of living increase which has been going on now for a number of years we shall probably have a fairly substantial increase in the cost of living. If we add three per cent or perhaps four per cent to the basic increase which, all along the line, has been accruing, it is very doubtful if the Minister's notion of two per cent will, in fact, hold.
It has been suggested, as one of the benefits arising from this devaluation, that there may be improved investment possibilities here. That is a difficult question to judge because we have to consider the situation that exists in countries which are not devaluing. I do not know what conditions might arise in a country such as Germany or France. I very much doubt if, by virtue of our circumstances, there is a great possibility of improving investment from America in the next 12 months. She is passing through her own difficulties. She has a Vietnam war on her hands. She has a rush on her gold reserves. She has balance of payments difficulties. Congress has proved very sticky about giving President Johnson any tax increase. Therefore, she will have to withdraw her reserves and her money from abroad and will probably have to pursue a policy of cutting down on investment outside her own country. On that basis, although financial investment in this country would seem only a drop in the ocean to the United States, the possibilities of American investment here might not be too favourable in the coming year. I do not know what the position might be as regards other non-devaluing countries such as Germany but that would seem to be the position as regards the United States.
It is claimed that this deflation will help our exports. That may be so, if we are able to grasp what limited opportunities are provided. This 14.3 per cent devaluation means that we shall be selling at £86 and buying at £116. Roughly, that is what it means. It is not a clear equation. That refers to countries which have not devalued and, of course, most of the bigger countries have not devalued.
Against that, these advantages arise only in respect of countries which have not devalued. Three-quarters of our business being with the United Kingdom, we shall be trying to export to a country which is deliberately deflating because, devaluation plus the other credit mechanisms which she has put into operation, will clearly be deflationary. The removal of our export subsidies, and general measures which she has taken, will deflate the British economy. We must face the fact that our greatest customer in respect of our exports—Great Britain—will be a depressed market for probably a considerable time to come.
Consider our exports to non-devaluing countries such as the United States and EEC countries. If our exports are, say, 25 per cent, or perhaps the figure the Minister gives of 20 per cent exports to the non-devaluing countries, we must remember that, in respect of all of these countries, we have had, I think, a continuous negative balance of trade. Therefore, we are trying to improve our position with countries where we are selling cheaper and buying dearer and, at the same time, we have had a negative trade balance with those countries.
I do not see how that type of trading will help us until such time as we get over the summit—if we can—until such time as we run at par in terms of trade with them or until such time as our exports to are greater than our imports from those countries. If that should happen, we will benefit. That is a long-term view. In the short-term view, I believe it is quite likely that we shall have a very difficult time. There is the added factor that in our exports to the devalued countries, like Great Britain, which as I have mentioned, will have a depressed economy, we will be trying to export goods in which we will not have that 14.3 per cent advantage. It is estimated in respect of Great Britain, and this I believe is a very firm figure, that all she can hope for as an improvement in her exports is an eight per cent advantage when everything is taken into account, the increased cost for raw materials, increased transport and so on. That eight per cent might be eroded if she is not able to resist price and wage demands towards the end of the year. If Britain can only expect an eight per cent advantage through her industrialists, can we expect that our industries will have more than eight per cent? With our relatively undeveloped industrial arm it is doubtful if our industrialists will have even an eight per cent advantage accruing to them from devaluation.
Again, in the first eight months of this year our imports from the non-devaluing countries, according to the Minister, were 45 per cent of our total imports. Even allowing for switching of our imports to Great Britain, or even to some home manufacturers here, and even allowing for a certain reduction which foreign manufacturers might make to improve their competitive position to combat devaluation, we will still have to pay more for our imports. The remainder of our imports will have to come chiefly from Britain. As I said already, British industrial costs will go up, they will go up by the difference between this eight per cent and the 14.3 per cent which she gets by devaluation. It is probable that the full costs will go up by six or seven per cent by virtue of the increased prices she will have to pay for her manufactured goods and so will ours. Therefore, both from the countries which have devalued and from those which have not devalued, we will pay increased charges for our imports. These considerations are enough to show that devaluation is going to put considerable strains upon our economy.
There is a further factor arising when you come to examine the countries which have devalued and those which have not. The position would seem to favour Great Britain. If there is any advantage tradewise in devaluation for Great Britain she has it with the big industrialised countries which have not devalued. We are not in the same strong economic position to take the same advantage as Great Britain. On the other side of the picture, there is agriculture in which we would be interested. It should be noted that two countries which have devalued are two important suppliers of agricultural goods to Britain, Denmark and New Zealand. The fact that these have devalued is not so nice for us and it would have been better if Denmark had not devalued even though it was only by eight per cent. New Zealand has devalued by 19 per cent. Admittedly we do gain a little from the Argentine and a few other places but the two serious competitors we have, Denmark and New Zealand, have devalued. New Zealand has devalued even more than we have. As I said already, if there had been any question of what level we should have devalued to I would have said 15, 16 or 17 per cent rather than 10 or 12 per cent. New Zealand has seen fit to devalue to 19 per cent and Denmark, whose economy is more diversified and is not so dependent on Britain, has devalued to eight. These are important considerations and nullify considerably any advantage which otherwise we might have in the British market as regards agriculture.
There is one point which the Minister might clarify for me. It is in regard to agricultural exports to the continent, to the EEC countries. It would seem that here now is an advantage, that a 15 per cent devaluation would be practically equivalent to the Kennedy Round, that here we are in the Common Market without getting in, and despite de Gaulle, but I understand that this is not going to be the position and that they have some system of adjustable levies in regard to agricultural products and that it would seem we are not going to gain anything in particular as regards our continental agricultural exports through devaluation.
The lower we go the higher their level becomes.
(South Tipperary): Can the Minister clarify that and tell me if my suspicions are right, that we are not going to get anything in particular out of devaluation as far as the Continent is concerned.
Except the opportunity to subsidise continental farmers.
(South Tipperary): If I have criticism to make of the Government and the Minister it is on two grounds. The first I have mentioned, their failure to diversify our reserves and the second is their failure to loosen up our economy. We have sustained two long, sad years of economic depression since 1965, a depression induced by ourselves. We have nobody to blame on this occasion. We cannot blame John Bull. We have to blame the mismanagement of our affairs which led to quite unnecessary inflation followed by very necessary deflation and so panic-stricken have our Administration become that they have allowed deflation to carry over too far. This is particularly apparent now when the home-grown Lemass deflation, or the post-Lemass deflation, is to be followed by an imported Wilson deflation. We have got one dose of deflation and I do not think our economy can be improved by the second dose of imported deflation from Great Britain. Therefore, I think there is considerable merit in the case being pressed by Fine Gael that every effort should be made now to offset as far as possible the impact which the deflation of the British economy will have on us.
The Minister said that British devaluation was never very far from the surface in recent years. In other words, the Minister has said he was aware that devaluation was just around the corner. He has been so aware, and presumably so have the Government, for many years. I realise that this Government in 1965 had to introduce deflationary measures because expenditure had outrun productivity, mainly due to the intervention of the former Taoiseach, Deputy Lemass, who for base political reasons some months before two important by-elections, started the merry-go-round which led to the economic difficulties—economic difficulties which were not evident until after the general election. Neither people nor countries get poor overnight. We were suddenly faced with the austerity measures of June and July, 1965.
Having carried through the corrective measures necessary then, surely it should have been obvious to the Government and their economic advisers that if Britain devalued, apart altogether from the other package measures introduced with devaluation, it set a climate for deflation. Irish economists and the Government should have foreseen that. It should have been an incentive to them to refrain from deflating our economy for two and a half years longer. Precautions should have been taken at least 12 months or one and a half years earlier. If that had been done, the deflationary dampening down of our economy which will now occur —it cannot be altogether avoided because of the deflation Britain finds it necessary to introduce—could be over-ridden.
It is a question of too late and too little. The Government were in a panic and, having once put on the brakes, they were afraid to let go lest they might find themselves in a second cycle of inflation and panic. If they were as wise over the past three or four years in respect of devaluation and knew it was coming, they should have foreseen its effects and should have immediately relaxed in some measure the deflationary measures here, so that now they would not be faced with the position of a foreign introduced deflation following on the home-grown product sown here by Deputy Lemass three or four years ago.
In this debate we are seeking to bring to the floor of the House some of the problems that should be discussed at this time in regard to the devaluation of the British pound. Many people in the present Government are critical of the attitude of mind which would have Dáil Éireann discuss such matters. There are many people who would say that in the higher realms of finance the State has civil servants better qualified than the average Deputy to deal with such arcanal matters. Possibly such people can do the necessary things for us, but those of us concerned about democracy in this country would like to see the importance of this Legislature emphasised at such times and, as far as possible, the deliberations leading to such important decisions brought to the floor of the House.
The kind of debate which has gone on in the country in regard to devaluation has centred around its inevitability. There has been a remarkable absence of discussion of alternative courses, or even a suggestion that any other course was open to the Government. While the decision of the British Government to devalue has been met by the Tories in Britain with complete criticism, there has not been in this country a great volume of opinions which has discussed this matter in any distinct fashion from the way Government spokesmen have. All of this is eloquent evidence that the utter dependence of this country's economy on the British is now accepted on all sides here. So much so, that it was accepted implicitly in the Minister's statement from the very first line. In the modern world nobody denies the interdependence of one economy on another. With larger world markets this is an important and unavoidable fact. But the whole question turns on the degree of dependence of any economy on another. I do not know of any other example of a country of our size, in any part of the developed world at least, in which that economy is so utterly and cravenly dependent as we are on the British economy. Nobody looking at the Irish situation would have said we needed devaluation. Nobody looking at the facts of our economy would have said we needed deflation. Both these steps and, indeed the deflationary measures the Government have taken over the past two years, have been brought about by policies that were necessary to the British economy.
The latest devaluation step has been brought about by the international sickness of sterling as a currency and not by any domestic circumstances in this country. It is extraordinary to find a Minister defending the step of devaluation as though in fact it had been a creation of Government policy in this country. I feel sad that the Finance Minister of any Irish Government should have won the international race for devaluation as we did, stepping in one minute after the British Chancellor had given us his orders in this respect. It is an unenviable position that we should have been first in this respect. I do not know if the Fiji Islands followed after us, but we were 60 seconds after the British Chancellor in our declaration of devaluation.
It is important that this matter be discussed now in view of the fact that there will be very severe repercussions arising from this decision on events next year and the year after. From what I can see of the position it is not in accordance with the facts to suggest that the cost of living arising out of devaluation can be limited to a mere two per cent. While one may prove to one's satisfaction statistically that the cost of living will rise by two per cent, we have suggested here in these benches that we shall not be at all surprised to find that this cost-of-living increase in the months ahead amounts to something like six per cent; certainly the figure of a two per cent increase in prices put forward by the Taoiseach is not a realistic forecast of the price increase in the cost of living in the months ahead.
In this situation the Minister makes the point that if we are to enjoy the full advantage which he claims arises for this country as a result of devaluation, unit costs must be kept down, and, of course, the unit costs that he may try to keep down are wages. Here we must point out that the pendulum is swinging towards a demand by people who earn wages and salaries for a compensatory increase in their earnings to offset the obvious increase in the cost of living which is coming.
I do not know if the existing legislative machinery on prices will be strong enough to control price increases in the months ahead. We shall need to be extremely vigilant to see that there is not an extremely vicious race between prices and wages. If there is to be a movement on the wages front we must see to it that the major part of this movement does not result in a vicious circle, with rapidly increasing price rises following on wages increases.
Devaluation has undoubtedly brought problems to our economy. It has brought losses to many people in this country; we have lost a great deal of our investment abroad. The argument has been made that we are being given a certain amount of export competitiveness. However, such competitiveness can in many ways be exaggerated. In Britain manufacturers are crying out that they do not see how this great competitiveness can be fully exploited. We can see ourselves that it will not be a great advantage in regard to certain exports. For instance, there will be increased freight charges between this country and overseas. That is one element on the prices front that is already moving ahead very rapidly. I hope the Minister will be able to give some of his ideas on these increases in freight charges, because undoubtedly freight charges have a great influence on our export competitiveness.
If we are entering—as I think we are and as the Minister must be aware we are—a period of agitation on the economic front arising out of the increase in the cost of living, one may well ask and, I suppose, in vain: what exactly has happened to the policy enunciated at the time of the last wage agreement, when the Government claimed that an incomes policy would bring some kind of stability to wages and prices? I suppose one may look for the re-emergence of this idea in Government circles and we shall discover that they still have a mysterious incomes policy.
One regrets that in the years since the last movement on the wages front nothing whatever has been done on the NIEC suggestion of the full implementation of an incomes policy. We therefore are in the same position as we were some years ago when in their pamphlet Closing the Gap the Government indicated their attitude towards wage increases. We are in the same position today that we must protect our unit costs; in other words, hold wages at their present level when prices are moving away, and when other items, dividends and so on, are also moving away from their moorings at a very rapid pace.
One of the things one regrets in this devaluation question is the almost total absence of any financial control by means of a monetary policy by the elected authority of this State. I know this is an old chestnut, but it is regrettable that there appears to be so little we can do by way of adopting a distinctive monetary policy that would suit conditions in our country. One can exaggerate the importance of a monetary policy vis-à-vis the general economic policy, but undoubtedly it has a part to play in the creation of full employment, and it is regrettable that this great weapon is not at the disposal of any Minister for Finance in this State. It seems that our Minister is merely the caretaker for the British Chancellor of the Exchequer in the Twenty-Six Counties. Whatever one's politics it is regrettable that this should be the situation.
Since it appears to be accepted conventional wisdom that the most healthy future for this country is to be one capital market with Britain, one labour market with Britain, one wage market with Britain, one price market with Britain, there is very little one can do to influence matters of a monetary or fiscal nature in any direction that would benefit the domestic circumstances of this country. As long as we accept this utter dependence of our economy on that of the British—I do not say connection but utter dependence—there appears to be very little we can do about the level of our bank rate. It appears to have to keep in extremely close step with that of Britain, and the rate of interest in general also has to keep in step and in close unison with that of Britain.
At the same time, we cannot ignore the fact that our problems are completely different, that here we have had a unique position. For a great many years now we have had a very large pool of unemployment, far more percentagewise than would be tolerated in Britain. In fact, as we know, devaluation was forced on the British Government in an attempt to escape increasing the percentage of unemployment, a percentage which had brought that Government to defeat in several by-elections. We can understand that in an attempt to save the percentage of unemployment from growing in Britain the decision to devalue was taken. Whether that decision to devalue will in fact save them from further severe financial measures is an open question. Certainly whether stability will be reached in the international money markets is an open question from the evidence this week-end. It would be extremely imprudent to suggest that is the end of a series of economic actions on the part of the British Government.
At the same time, it appears that we accept willingly, and without any criticism, and without any feeling that we are tying our hands to a great degree, the inevitability of our being tied hand and foot to Britain's economy. It is evident from the lack of comment on this move that this is being more and more accepted by economists and people who generally comment on economic matters in the press. We have had a great deal of literature and a great deal of economic planning so far as text books are concerned. There has been a great deal of paper planning but I suggest that we will lose a great wealth of management in our modern economy if we do not examine once more the question as to whether we are wise to abdicate responsibility in matters of monetary and fiscal policy, and whether we are wise in the long run if the Minister for Finance is in the position of being the manager of a branch bank who receives orders from head office. That, I suggest, is the position of our Minister for Finance. He is the branch bank manager of the Twenty-Six Counties for the British Chancellor of the Exchequer and the Bank of England.
This interdependence between one economy and another is, I suggest, an extremely unhealthy state of affairs when we see the British economy embroiled in such difficulties, difficulties which are not of our making, difficulties which are substantially created by the international commitments of sterling as a reserve currency. We are willingly putting ourselves at the mercy, at the second remove, of the speculators and so-called gnomes of Zurich by accepting uncritically our complete and utter dependence on Britain's economy. I do not see how a full employment policy can ever be brought about if we do not re-examine this presupposition on the basis that one does not have to accept the political ideology of the left or the right to agree that one should have some control over one's fiscal and monetary policies. We should consider whether the time has come when this is no longer to be regarded as a sacred cow and when our dependence on Britain's economy should be re-examined. Has the time come for us to consider in our changed circumstances what the minority report of the Banking Commission had to say? Has the time come to question the wisdom of people like Professor O'Brien on the Banking Commission in relation to sterling being tied to gold and tying our pound to Britain's pound in complete parity?
Progress reported; Committee to sit again.
The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 29th November, 1967.